U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
(Mark One)
[ ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 (FEE REQUIRED)
FOR THE EIGHT FISCAL YEARS ENDED OCTOBER 31, 1998
[ ]TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 ( NO FEE REQUIRED)
For the transition period from __________________ to _________________
Commission File No. 2-68701
TECHSCIENCE INDUSTRIES, INC.
-----------------------------------------------
(Name of Small Business Issuer in its charter)
Delaware 22-2298015
------------------------------- ------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3 ROCKAWAY PLACE, PARSIPPANY, NEW JERSEY 07054
- ---------------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
(903) 263-8951
-----------------------------------------------
(Issuer's Telephone Number Including Area Code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Check whether the Issuer (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registration was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
<PAGE>
YES [ ] NO [X]
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not contained in this form, and no disclosure will
be contained, to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. 9
State issuer's revenues for its most recent fiscal year. None
State the aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the stock was sold,
or the average bid and asked prices of such stock, as of a specified date within
the past 60 days. None
ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PAST FIVE YEARS
Check whether the issuer has filed all documents and reports required to be
filed by Section 12,13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes [ ] No [X]
APPLICABLE ONLY TO CORPORATE REGISTRANTS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date.
COMMON STOCK, $.01 PAR VALUE, 10,000,000 SHARES
DOCUMENTS INCORPORATED BY REFERENCE
None
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<PAGE>
PART I
ITEM 1. BUSINESS
(a) Business Development
The Registrant was incorporated in Delaware in 1978. Until 1991, the
Registrant was a development stage entity that sought, through a wholly owned
subsidiary, to become engaged in the conversion of municipal solid waste
material into compost and recyclable by means of a proprietary process. From
1991, through November 28, 1995, the Registrant was dormant with no operations.
During this period, the Registrant was disenfranchised by the State of Delaware
for non-payment of franchise taxes.
On November 30, 1995, and pursuant to the terms and conditions of a
written agreement of even date therewith (the "Gift Agreement"), Mr. Joseph
Hafesh, a principal stockholder of the Registrant and a former executive officer
and director thereof who resigned on August 25, 1993 ("Hafesh"), gifted an
aggregate of 1,889,000 issued and outstanding shares of the Registrant's Common
Stock, $.01 par value per share (the "Gift Shares") to Anthony Bertuzzi, a
non-affiliated individual (the "Donee"). No market existed for the Common Stock
of the Registrant since 1991 and no market exists as of the date of this Report.
As of November 30, 1995, the Gift Shares represented approximately 38% of the
Registrant's issued and outstanding Common Stock capitalization. As of the date
of this Report, the Gift Shares represent approximately 19% of the Registrant's
issued and outstanding Common Stock capitalization.
In the Gift Agreement, Hafesh declared his intent and desire to divest himself
of any and potential duty and/or obligation to report the nature and extent of
his ownership of the Gift Shares under the Federal securities laws. The Gift
Agreement was executed simultaneously and in conjunction with the Assignment and
Assumption Agreement (as hereinafter defined). The Donee made the customary
investment representations to Hafesh.
On November 30, 1995, and pursuant to the terms and conditions of a written
agreement of even date therewith between the Registrant and Hafesh (the
"Assignment and Assumption Agreement"), the Registrant transferred and delivered
to Hafesh certificate No.19 representing 4,740,000 issued and outstanding shares
of Common Stock, $.01 par value per share (the "Biocomp Shares") of Biocomp,
Inc., a Delaware corporation that until January 1993 was wholly owned subsidiary
of the Registrant ("Biocomp"). In addition, the Registrant paid an aggregate of
$75,000 to Hafesh (the "Cash Payment"). The Biocomp Shares represented an
approximate 10% equity interest in Biocomp on November 30, 1995.
In consideration for the Biocomp Shares and the Cash Payment, Hafesh took
possession, assumed all duties and obligations with respect to and released the
Registrant from: (i) an aggregate of $259,500 of debts and obligation of
Biocomp, as reflected on the Registrant's unaudited financial statements for the
nine months ended July 31, 1991 contained in its
3
<PAGE>
Form 10-Q Quarterly Report filed with the Securities and Exchange Commission;
and (ii) an aggregate of $208,333 of debts and obligation of Biocomp incurred
during the period August 1, 1991 through August 26, 1993, the last day of
operations thereof, and not reflected on the Company's unaudited financial
statements; or a total of $467,833 (the "Obligations").
In the Assignment and Assumption Agreement, and in addition to the customary
representations and warranties, the Registrant indemnified and held Hafesh
harmless from and against any and all costs and expenses, including reasonable
attorney's fees, attendant upon: (i) any third party claiming any interest in
the Biocomp Shares; and (ii) the first $12,500 in liabilities remaining in the
Registrant after the removal of the Obligations. Hafesh, by virtue of his former
position as President and Chief Executive Officer of the Registrant, indemnified
and held the Registrant harmless from and against any and all costs and
expenses, including reasonable attorney's fees, attendant upon the debts and
obligations of Biocomp in excess of the amount of the Obligations as well as the
liabilities of the Registrant in excess of the aforesaid $12,500.
On various dates between November 28, 1995 and June 16, 1996, the Registrant
sold an aggregate of 4,700,000 authorized but unissued shares of its Common
Stock, $.01 par value per share (the "Placement Shares") to 16 non-affiliated
individuals in consideration for an aggregate of $94,000 or $.02 per Placement
Share. In addition, and on November 29, 1995, the Registrant issued an aggregate
of 182,250 shares to a non-affiliated investor in consideration for a $50,000
short term working capital loan to the Registrant. The loan, evidenced by a six
month written promissory noted dated November 29, 1995, was repaid prior to its
due date together with interest of $2,500.
(b) Business of Issuer
The Registrant's business is confined to bringing its periodic reports
required to be filed under the Securities Exchange Act of 1934 current and the
active pursuit of a business combination partner. In connection therewith, and
during the eight fiscal years ended October 31, 1998, none of the information
required to be disclosed and enumerated in paragraphs (b)(1) through (b)(11) of
Item 101 of Regulation S-B was applicable to the Registrant or its business.
The Registrant does not employ any full time employees. The
Registrant's two executive officers and directors and a third director only
devote such percentage of their respective time and attention to the business of
the Registrant as is required.
ITEM 2. DESCRIPTION OF PROPERTY
(a) During the eight fiscal years ended October 31, 1998 the Registrant
did not maintain any offices or own any property. Since November 30, 1995, the
Registrant maintains its temporary executive offices at 3 Rockaway Place,
Parsippany, New Jersey 07054 where approximately 200 square feet of space was
subleased rent free from James
4
<PAGE>
T. Woll, the Registrant's President on a month to month basis without the
benefit of a written sublease.
ITEM 3. LEGAL PROCEEDINGS
During the eight fiscal years ended October 31, 1998, no material legal
proceeding were pending or threatened against or settled by the Registrant.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the eight fiscal years ended October 31, 1998, the Registrant
did not conduct any annual meetings of stockholders.
PART II
ITEM 5. MARKET FOR COMMON STOCK EQUITY AND RELATED STOCKHOLDER MATTERS.
(a) Market Information. The principal market for the Registrant's
Common Stock, its only class of equity securities, is the over-the-counter
market. However, and during the eight fiscal years ended October 31, 1998, there
has been no market for the Registrant's Common Stock, and no market exists as of
the date of this Report.
(b) Holders.
As of October 31, 1998, the approximate number of holders of record of
shares of the Registrant's Common Stock,$.01 par value per share, the
Registrant's only class of publicly owned securities, was believed by management
to be 530.
Management further believes there are many shareholders whose securities are
held in street name with various brokerage houses. The exact number is unknown
to Registrant.
(c) Dividends.
The Registrant has paid no dividends during the eight fiscal years
ended October 31, 1998. Other than the requirements of the Delaware General
Corporation Law that dividends be paid out of capital surplus only and that the
declaration and payment of a dividend not render the Registrant insolvent, there
are no restrictions on the Registrant's present or future ability to pay
dividends.
The payment by the Registrant of dividends, if any, in the future rests
within the discretion of its Board of Directors and will depend, among other
things, upon the Registrant's earnings, its capital requirements and its
financial conditions, as well as other relevant factors.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
(a) Plan of Operation. The Registrant's plan of action for the eight
fiscal years ended October 31, 1998, during which period no revenues from
operations were generated, was to complete the process of bring itself current
in its periodic reporting obligations under the Securities Exchange Act of
1934(the "34 Act"), preparing for an annual meeting of its stockholders as
required by the New Jersey Business Corporation Act, and preparing for the
filing of a Form 10-SB Registration Statement with a view towards registering
its Common Stock under Section 12(g) of the 34 Act. Ancillary to its principal
plan of operations, the Registrant sought to continue to pursue a business
combination with a profitable privately owned company. However, and until the
Registrant completed the process of bring itself current in its 34 Act
responsibilities, it was expected that the Registrant's pursuit of a business
combination partner was to be confined to searching for candidates and pursuing
preliminary conversations and negotiations. It was expected that the Registrant
would be able to implement its plan of operations without the raising of more
than the approximately $25,000 of additional capital that management estimated
it would cost to cover the fees and expenses of bringing the Registrant current.
It was similarly expected that the aforesaid $25,000 would be sufficient capital
to satisfy the Registrant's capital requirements during the approximately six
months management estimated it would take to bring the Registrant current.
During the eight fiscal years ended October 31, 1998, the Registrant did not:
(i) expend any funds on product research or development; (ii) purchase or plan
to purchase any plant or equipment; (iii) have any employees other than its part
time executive officers and directors.
SUPPLEMENTAL FINANCIAL INFORMATION
In accordance with Regulation 229.302 (Item 302 of Regulation S-B), the
following is a summary of the major statement of operations categories of the
Registrant by quarter for the two fiscal years ended October 31, 1997 and 1998.
<TABLE>
<CAPTION>
LOSS BEFORE
NET GROSS EXTRAORDINARY NET
SALES PROFIT ITEMS LOSS
-----------------------------------------------------------
<S> <C> <C> <C> <C>
1ST QUARTER 1997 $ -- $ -- $ -- $ --
2ND QUARTER 1997 -- -- (4,707) (4,707)
3RD QUARTER 1997 -- -- (3,545) (3,545)
4TH QUARTER 1997 -- -- (45) (45)
-----------------------------------------------------------
TOTAL 1997 $ -- $ -- $(8,297) $(8,297)
===========================================================
1ST QUARTER 1998 $ -- $ -- $ (45) $ (45)
2ND QUARTER 1998 -- -- (45) (45)
3RD QUARTER 1998 -- -- -- --
4TH QUARTER 1998 -- -- (6,582) (6,582)
-----------------------------------------------------------
TOTAL 1998 $ -- $ -- $(6,672) $(6,672)
===========================================================
</TABLE>
5
<PAGE>
ITEM 7. FINANCIAL STATEMENTS
Financial statements meeting the requirements of Item 310 of Regulation
S-B, for the eight fiscal years ending October 31, 1998 were prepared by Wiss &
Company LLP, and are annexed as a separate section to this Report.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
(a) During the eight fiscal years ended October 31,1998, the Registrant
did not experience a change of independent accountants.
(b) That with respect to the financial statements of the Registrant for
the eight fiscal years ended October 31, 1998, there were no disagreements
between the Registrant and any accountant on any matter of accounting principles
or practices, financial statement disclosure or auditing scope or procedure
which disagreements if not resolved to the satisfaction of the accountants
involved would have caused them to make reference in connection with their
report to the subject matter of the disagreement.
6
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT
(a) Identify Directors And Executive Officers.
The following table sets forth: (1) names and ages of all persons who
presently are and who have been selected as directors of the Registrant; (2) all
positions and offices with the Registrant held by each such person; (3) the term
or office of each person named as a director; and (4) any period during which he
or she has served a such:
Duration and
Expiration Position & Age and
Date of Office with Director
Name Present Term Registrant Since
- ---- ------------ ----------- --------
James T. Woll Next Annual President, Chief 53, November 30, 1995(1)
Meeting of Executive Officer
Stockholders and Director
Gary W. Gill Next Annual Chief Financial 43, November 30, 1995(1)
Meeting of Officer and Director
Stockholders
James S. Gallo Next Annual Director 54, November 30, 1995(1)
Meeting of
Stockholders
- --------------------
(1) Joseph Hafesh resigned as President, Chief Financial Officer and
Director of the Registrant on August 25, 1993. William V. Breshlian resigned as
a Director of the Registrant on November 17, 1995 and Gary W. Gill was elected
in his place and stead to serve until the next annual meeting of the Board of
Directors. William Steinberg resigned as a Director of the Registrant on
November 17, 1995 and James T. Woll was elected in his place and stead to serve
until the next annual meeting of the Board of Directors. Thereafter, and on the
same day, Messrs. Gill and Woll elected James S. Gallo as a Director of the
Registrant, and elected Mr. Woll as President and Chief executive Officer and
Mr. Gill as Chief Financial Officer.
There is no understanding or arrangement between any directors or any
other person or persons pursuant to which such individual was or is to be
selected as a director or nominee of the Registrant.
(4) BUSINESS EXPERIENCE
7
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The following is a brief account of the experience, during the past
five years, of each director and executive officers of the Registrant:
JAMES T. WOLL, has been the Registrant's President and Chief Executive Officer
and a director since November 17, 1995. Simultaneously therewith and since 1987,
Mr. Woll has been a self employed insurance, real estate, business and
management consultant in Parsippany, New Jersey. Simultaneously therewith, and
from 1987 to 1993, Mr. Woll served as the president and Chief Executive Officer
of A.T. Wall Street Inc., a registered New Jersey Broker Dealer.
GARY W. GILL, has been the Chief Financial Officer and a director of the
Registrant since November 17, 1995. Simultaneously therewith and since 1977, Mr.
Gill has been the President of Gary W. Gill & Associates, a Clarksboro, New
Jersey sole-proprietorship engaged in offering general accounting and tax
services to individuals, firms and entities located primarily in the State of
New Jersey. Mr. Gill received a Bachelor of Science Degree in accounting from
Bloomsburg State College in Bloomsburg, Pennsylvania in 1976.
JAMES S. GALLO, has been a director of the Registrant since November 17, 1995.
Simultaneously therewith and since 1989, Mr. Gallo has been self employed real
estate and business consultants well as a builder of commercial real estate
projects in Sparta, New Jersey. Prior thereto since 1969, Mr. Gallo was the sole
stockholder and President of Gallo Catering, Inc., a privately owned New Jersey
corporation engaged in the off-premises catering business which he sold in 1989.
Mr. Gallo is a licensed real estate broker in the State of New Jersey.
(5) DIRECTORSHIP
Each Director of the Registrant has indicated to the Registrant that he or she
is not a director in any other Registrant with a class of securities registered
pursuant to Section 12 of the 34 Act or subject to the requirements of Section
15(d) of such act or any investment Registrant registered under the Investment
Registrant Act of 1940.
(b) Identification of Certain Significant Employees
The Registrant does not presently employ any person as a significant
employee who is not an executive officer but who makes or is expected to make a
significant contribution to the business of the Registrant.
(c) Family Relationships
No family relationship exist between any director or executive officers
of the Registrant.
(d) Involvement in Certain Legal Proceedings
8
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No event listed in Sub-paragraphs (1) through (4) of Subparagraph (d)
of Item 401 of Regulation S-B, as occurred with respect to any present executive
officer or director of the Registrant or any nominee for director during the
past five years and which is material to an evaluation of the ability or
integrity of such director or officer.
ITEM 10. EXECUTIVE COMPENSATION.
(a) GENERAL
(1) through (9) ALL COMPENSATION COVERED. During the eight fiscal years
ended October 31,1998, no compensation was paid to, accrued or set aside for any
executive officer or director of the Registrant.
(b) SUMMARY COMPENSATION TABLE.
During the eight fiscal years ended October 31,1998, no compensation of the type
required to be disclosed in this table was paid to, accrued or set aside for any
executive officer or director of the Registrant.
(c) OPTION/SAR GRANT TABLE. During the eight fiscal years ended October
31,1998, no grants of stock options or freestanding SAR's were made by the
Registrant.
(d) AGGREGATE OPTION/SAR EXERCISES AND FISCAL YEAR- END OPTION/SAR
VALUE TABLE. No stock options or freestanding SAR's are issued or outstanding.
Accordingly, and during the eight fiscal years ended October 31, 1998, no stock
options or freestanding SAR's were exercised. Notwithstanding the foregoing, an
aggregate of 450,000 shares of the Registrant's Common Stock, $.01 par value per
share are reserved for issuance pursuant to the Registrant's long-term incentive
plan adopted by the Registrant's Board of Directors and stockholders in 1984.
(e) LONG-TERM INCENTIVE PLAN ("LTIP") AWARDS TABLE. During the eight
fiscal years ended October 31,1998, no LTIP awards were made by the Registrant.
(f) COMPENSATION OF DIRECTORS. (1) and (2). During the eight fiscal
years ended October 31,1998, no director of the Registrant received any
compensation, whether pursuant to any standard or other arrangement or
otherwise.
(g) EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT, AND CHANGE-IN
CONTROL ARRANGEMENTS. (1) and (2). No executive officer, director or employee of
the Registrant is serving pursuant to the terms of a written employment or other
compensation agreement, understanding or arrangement with the Registrant; and no
such agreement was entered into during the eight fiscal years ended October
31,1998.
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(h) REPORT ON REPRICING OF OPTIONS/SAR'S. No stock options or
freestanding SAR's are issued or outstanding. Accordingly, AND during the eight
fiscal years ended October 31,1998, no stock options or freestanding SAR's were
repriced.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNER. The information is furnished
as of October 31, 1998, as to the number of shares of the Registrant's Common
Stock, $.01 par value per share owned beneficially or is known by the Registrant
to own beneficially more than 5% of any class of such security:
Name and Address Amount and Nature
of Beneficial of Beneficial
Owner Ownership Percentage of Class
- ---------------- ----------------- -------------------
Jean Appello
67 Hook Mountain Road
Montville, NJ 07045 900,000 9%
Anthony Bertuzzi
14 Hitchcock Ave.
Staten Island, NY 10306 1,736,200 17%
Judy Cabrera
19 Colt Road
Franklin, MA 02038 750,000 7%
Joyce Cohen
3500 Mystic Point Drive
Tower 400, Apt. 3103
Aventura, FL 33180 700,000 7%
James T. Patten
460 Claremont Road
Bernardsville, NJ 07924 875,000 9%
Ellen Rosenberg
Post Office Box 1223
Long Beach, NY 11561 1,127,800 11%
(b) SECURITY OWNERSHIP OF MANAGEMENT. The information is furnished as of October
31, 1998, as to the number of shares of the Registrant's Common Stock, $.01 par
value per share owned beneficially by each executive officer and director of the
Registrant and by all executive officers and directors as a group:
10
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Name and Address Amount and Nature
of Beneficial of Beneficial
Owner Ownership Percentage of Class
- ---------------- ----------------- -------------------
James T. Woll 100,000 1%
3 Rockaway Place
Parsippany, NJ 07054
Gary W.Gill 100,000 1%
38 W. Wolfelt Station Rd.
Mickleton, NJ 08056
James S. Gallo 100,000 1%
173 Andover Road
Sparta, NJ 07871
All Officers and
Directors as a Group
(3 persons) 300,000 3%
(c) CHANGES IN CONTROL. As of the date of this Report, the Registrant
has not entered into any agreements, the operation of which may at a subsequent
date result in a change of control of the Registrant.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a)(b) During the eight fiscal years ended October 31, 1998, and except
as enumerated in Item 1a of this Report no officer, director or relative or
spouse of the foregoing persons or any relative of such person who has the same
home as such person, or is a director or other officer of any parent or
subsidiary of the Registrant or any shareholder known by the Registrant to own
of record or beneficially more than five (5%) percent of the Registrant's Common
Stock, had a direct or indirect material interest in any transaction or
presently proposed transaction to which the Registrant or any of its parents or
subsidiaries was or is a party.
(c) PARENTS. Joseph Hafesh, the founder of the Registrant and until
November 28, 1995 was the record and beneficial owner of an aggregate of
1,889,000 shares of the Registrant's Common Stock, may be deemed to be a parent
of the Registrant.
(d) TRANSACTIONS WITH PROMOTERS. Inapplicable.
ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K
(a) Exhibits and Index Required.
(1) EXHIBIT INDEX
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Description of Document Location
- ----------------------- --------
(1) Underwriting Agreement Exhibit 1 filed with Form S-2
Registration Statement No.
2-68701, effective October 22,
1980
(2) Plan of Acquisition, Reorganization, N/A
Arrangement, Liquidation, or Succession
(3) (i) Certificate of Incorporation Exhibit 2-A filed with
Form S-2 Registration
Statement No. 2-68701,
effective October 22, 1980
(3) (i)(a) Certificate of Amendment to Exhibit 2-A1 filed with Form
Certificate of Incorporation S-2 Registration Statement No.
2-68701, effective October 22,
1980
(3) (ii) By-Laws Exhibit 2-B filed with Form
S-2 Registration Statement No.
2-68701, effective October 22,
1980
(4) Instruments defining the
rights of security holders,
including indentures
(a) Common Stock Exhibit 3 filed with Form S-2
Registration Statement No.
2-68701, effective October 22,
1980
(b) Underwriters Common Exhibit 5 filed with Form S-2
Stock Purchase Warrant Registration Statement No.
2-68701, effective October 22,
1980
(5) Opinion re: legality Exhibit 4 filed with Form S-2
Registration Statement No.
2-68701, effective October 22,
1980
(10) Material Contracts, Filed herewith
10 (a) Gift Agreement dated
November 30, 1995
10 (b) Assignment and Assumption Filed herewith
Agreement dated November 30, 1995
(11) Statement re: computation of N/A
per share earnings
(12) No exhibit required
12
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(13) Annual or quarterly reports, Filed concurrent with this
Form 10-Q and Form 10-QSB report
(14) Material foreign patents N/A
(15) Letter on unaudited interim N/A
financial information
(16) Letter on change in certifying N/A
accountants
(17) Letter on director resignation N/A
(18) Letter re changes in N/A
accounting principles
(19) Reports furnished to N/A
security holders
(20) Other documents or statements N/A
to security holders
(21) Subsidiaries of the Registrant None
as of October 31, 1998:
(22) Published report regarding N/A
matters submitted to vote
(23) Consents to experts and counsel Exhibit 4 filed with Form S-2
Registration Statement No.
2-68701, effective October 22,
1980
(24) Power of Attorney N/A
(25) Statement of eligibility of trustee N/A
(26) Invitations for competitive bids N/A
(27) Financial data schedules Filed herewith
(28) Information from reports N/A
furnished to State insurance
regulatory authorities
(99) Additional exhibits N/A
13
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(b) Reports on Form 8-K. During the last quarter of the
Registrant's fiscal year ended
October 31,1998, no reports on
Form 8-K were prepared and
filed by the Registrant.
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
Board of Directors
Techscience Industries, Inc.
We have audited the accompanying consolidated balance sheets of Techscience
Industries, Inc. and subsidiaries (Development Stage Companies) as of October
31, 1998, 1997, 1996, 1995, 1994, 1993, 1992 and 1991 and the related
consolidated statements of operations, changes in stockholders' equity
(deficiency) and cash flows for the years then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Techscience
Industries, Inc. and subsidiaries at October 31, 1998, 1997, 1996, 1995, 1994,
1993, 1992 and 1991, and the results of their operations and their cash flows
for the years then ended in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has suffered recurring losses from operations
and has a net capital deficiency that raise substantial doubt about its ability
to continue as a going concern. Management's plans in regard to these matters
are also described in Note 2. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
WISS & COMPANY, LLP
Livingston, New Jersey
April 29, 1999
<PAGE>
TECHSCIENCE INDUSTRIES, INC.
AND SUBSIDIARIES
(DEVELOPMENT STAGE COMPANIES)
FINANCIAL STATEMENTS
OCTOBER 31, 1998
<PAGE>
TECHSCIENCE INDUSTRIES, INC. AND SUBSIDIARIES
(DEVELOPMENT STAGE COMPANIES)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
OCTOBER 31,
--------------------------------------------------------
ASSETS 1991 1992 1993 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
CURRENT ASSETS -
Cash $ 28,796 $ 5,852 $ -- $ --
=========== =========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIENCY)
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 296,999 $ 396,999 $ -- $ --
----------- ----------- ----------- -----------
STOCKHOLDERS' EQUITY (DEFICIENCY):
Common stock, $.01 par value:
authorized 20,000,000 shares
issued and outstanding 794,840 at,
October 31, 1991, 818,840 at October 31,
1992, 1993, 1994 and 1995 and 1,600,000 at
October 31, 1996, 1997 and 1998 7,948 8,188 8,188 8,188
Preferred stock, $.01 par value; authorized
2,000,000 shares, none issued and outstanding -- -- -- --
Capital in excess of par value 1,131,717 1,156,477 1,171,477 1,171,477
Deficit accumulated during the development stage (1,407,868) (1,555,812) (1,179,665) (1,179,665)
----------- ----------- ----------- -----------
Total Stockholders' Equity (Deficiency) (268,203) (391,147) -- --
----------- ----------- ----------- -----------
$ 28,796 $ 5,852 $ -- $ --
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
OCTOBER 31,
--------------------------------------------------------
ASSETS 1995 1996 1997 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
CURRENT ASSETS -
Cash $ -- $ 7,101 $ 2,304 $ 2,214
=========== =========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIENCY)
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ -- $ -- $ 3,500 $ 10,082
----------- ----------- ----------- -----------
STOCKHOLDERS' EQUITY (DEFICIENCY):
Common stock, $.01 par value:
authorized 20,000,000 shares
issued and outstanding 794,840 at,
October 31, 1991, 818,840 at October 31,
1992, 1993, 1994 and 1995 and 1,600,000 at
October 31, 1996, 1997 and 1998 8,188 16,000 16,000 16,000
Preferred stock, $.01 par value; authorized
2,000,000 shares, none issued and outstanding -- -- -- --
Capital in excess of par value 1,171,477 1,261,310 1,261,310 1,261,310
Deficit accumulated during the development stage (1,179,665) (1,270,209) (1,178,506) (1,285,178)
----------- ----------- ----------- -----------
Total Stockholders' Equity (Deficiency) -- 7,101 (1,196) (7,868)
----------- ----------- ----------- -----------
$ -- $ 7,101 $ 2,304 $ 2,214
=========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-2
<PAGE>
TECHSCIENCE INDUSTRIES, INC. AND SUBSIDIARIES
(DEVELOPMENT STAGE COMPANIES)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended October 31,
====================================================
1991 1992 1993 1994
----------- ----------- ----------- -------
<S> <C> <C> <C> <C>
INTEREST INCOME $ -- $ -- $ -- $ --
RENT INCOME -- -- -- --
OTHER INCOME 4,012 -- -- --
----------- ----------- ----------- -------
4,012 -- -- --
----------- ----------- ----------- -------
COSTS AND EXPENSES:
Compensation to officers 180,777 100,000 19,271 --
Consulting fee to officer -- -- -- --
Other salaries -- 3,123 1,783
Payroll taxes -- -- -- --
Subcontractors 2,150 3,750 2,545 --
Rent 9,600 7,675 3,800
Telephone and utilities 984 5,002 2,854 --
Repairs and maintenance -- 359 190 --
Insurance 1,978 7,278 5,992
Travel and entertainment 7,697 12,504 2,804 --
Interest expense -- -- -- --
Legal and professional fees 4,148 930 -- --
Consulting fees 16,600 -- --
Office supplies and expense 4,319 1,948 884 --
Dues and subscriptions -- 1,865 -- --
Miscellaneous and other 8,106 3,510 --
Taxes, other than income -- -- -- --
Research and development -- -- -- --
Depreciation and amortization -- -- --
Income taxes -- -- -- --
Minority interest in net loss of subsidiary -- -- -- --
Loss on disposal of assets 9,000 -- -- --
(Gain) loss on deconsolidation of subsidiary -- -- (416,270) --
----------- ----------- ----------- -------
245,359 147,944 (376,147) --
----------- ----------- ----------- -------
INCOME (LOSS) FROM CONTINUING OPERATIONS (241,347) (147,944) 376,147 --
DISCONTINUED OPERATIONS:
Equity in loss of General Fiber Optics, Inc. -- -- --
Gain on liquidation of General Fiber Optics, Inc. -- -- -- --
----------- ----------- ----------- -------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM (241,347) (147,944) 376,147 --
TAX BENEFIT OF NET OPERATING LOSS CARRYFORWARD -- -- -- --
----------- ----------- ----------- -------
NET INCOME (LOSS) $ (241,347) $ (147,944) $ 376,147 $ --
=========== =========== =========== =======
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING 794,840 818,840 818,840 818,840
=========== =========== =========== =======
BASIC AND DILUTED NET INCOME (LOSS) PER COMMON SHARE $ (.30) $ (.18) $ .46 $ --
=========== =========== =========== =======
</TABLE>
<TABLE>
<CAPTION>
From Inception,
November 29,
Year Ended October 31, 1978 to
======================================================= October 31,
1995 1996 1997 1998 1998
----------- ----------- ----------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
INTEREST INCOME $ -- $ -- $ -- $ -- $ 686,293
RENT INCOME -- -- -- -- 70,568
OTHER INCOME -- -- -- -- 4,012
----------- ----------- ----------- ----------- -----------
-- -- -- -- 760,873
----------- ----------- ----------- ----------- -----------
COSTS AND EXPENSES:
Compensation to officers -- -- -- -- 1,113,653
Consulting fee to officer -- -- -- -- 19,500
Other salaries -- -- -- -- 177,734
Payroll taxes -- -- -- -- 77,266
Subcontractors -- -- -- -- 8,445
Rent -- -- -- -- 132,781
Telephone and utilities -- -- -- -- 161,486
Repairs and maintenance -- -- -- -- 549
Insurance -- -- -- -- 15,248
Travel and entertainment -- -- -- -- 170,654
Interest expense -- 6,145 -- -- 6,145
Legal and professional fees -- 8,574 6,119 5,000 156,111
Consulting fees -- -- -- -- 143,801
Office supplies and expense -- 90 -- -- 34,436
Dues and subscriptions -- -- -- -- 23,401
Miscellaneous and other -- 735 2,178 1,672 114,978
Taxes, other than income -- -- -- -- 14,581
Research and development -- -- -- -- 7,000
Depreciation and amortization -- -- -- -- 64,293
Income taxes -- -- -- -- 14,845
Minority interest in net loss of subsidiary -- -- -- -- (22,717)
Loss on disposal of assets -- -- -- -- 9,000
(Gain) loss on deconsolidation of subsidiary -- 75,000 -- -- (341,270)
----------- ----------- ----------- ----------- -----------
-- 90,544 8,297 6,672 2,101,920
----------- ----------- ----------- ----------- -----------
INCOME (LOSS) FROM CONTINUING OPERATIONS -- (90,544) (8,297) (6,672) (1,341,047)
DISCONTINUED OPERATIONS:
Equity in loss of General Fiber Optics, Inc. -- -- -- -- (44,910)
Gain on liquidation of General Fiber Optics, Inc. -- -- -- -- 92,379
----------- ----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM -- (90,544) (8,297) (6,672) (1,293,578)
TAX BENEFIT OF NET OPERATING LOSS CARRYFORWARD -- -- -- -- 8,400
----------- ----------- ----------- ----------- -----------
NET INCOME (LOSS) $ -- $ (90,544) $ (8,297) $ (6,672) $(1,285,178)
=========== =========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING 818,840 1,600,000 16,000,000 1,600,000
=========== =========== =========== ===========
BASIC AND DILUTED NET INCOME (LOSS) PER COMMON SHARE $ -- $ (.06) $ (.01) $ --
=========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
TECHSCIENCE INDUSTRIES, INC. AND SUBSIDIARIES
(DEVELOPMENT STAGE COMPANIES)
CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS' EQUITY (DEFICIENCY)
<TABLE>
<CAPTION>
Deficit
Accumulated
Consideration Common Stock Capital in During the
------------------ ------------------------------- Excess of Development
Per Share Total Shares Issued $(.01) Par Value Par Value Stage
--------- ------- ------------- ---------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCES, OCTOBER 31, 1990 730,840 $ 7,308 $1,065,757 $(1,166,521)
YEAR ENDED OCTOBER 31, 1991:
Issuance of common stock for
consulting services $ 1.0375 $16,600 16,000 160 16,440 --
Issuance of common stock for cash $ 1.0375 $50,000 48,000 480 49,520 --
Net loss -- -- -- (241,347)
--------- ----------- ---------- -----------
BALANCES, OCTOBER 31, 1991 794,840 7,948 1,131,717 (1,407,868)
YEAR ENDED OCTOBER 31, 1992:
Issuance of common stock for cash $ 1.0417 $25,000 24,000 240 24,760 --
Net loss -- -- -- (147,944)
--------- ----------- ---------- -----------
BALANCES. OCTOBER 31, 1992 818,840 8,188 1,156,477 (1,555,812)
YEAR ENDED OCTOBER 31, 1993:
Capital contributed by officer $15,000 -- -- 15,000 --
Net income -- -- -- 376,147
--------- ----------- ---------- -----------
BALANCE, OCTOBER 31, 1993, 1994 and 1995 818,840 8,188 1,171,477 (1,179,665)
YEAR ENDED OCTOBER 31, 1996:
Issuance of common stock for cash $ 0.1250 $94,000 752,000 7,520 86,480 --
Issuance of common stock for loan $ 0.1250 $ 3,645 29,160 292 3,353 --
Net loss -- -- -- (90,544)
--------- ----------- ---------- -----------
BALANCE, OCTOBER 31, 1996 1,600,000 16,000 1,261,310 (1,270,209)
YEAR ENDED OCTOBER 31, 1997:
Net loss -- -- -- (8,297)
--------- ----------- ---------- -----------
BALANCE OCTOBER 31, 1997: 1,600,000 16,000 1,261,310 (1,278,506)
YEAR ENDED OCTOBER 31, 1998 -
Net loss -- -- -- (6,672)
========= =========== ========== ===========
BALANCE, OCTOBER 31, 1998 1,600,000 $ 16,000 $1,261,310 $(1,285,178)
========= =========== ========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
TECHSCIENCE INDUSTRIES, INC. AND SUBSIDIARIES
(DEVELOPMENT STAGE COMPANIES)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended October 31,
----------------------------------------------------------
1991 1992 1993 1994 1995
----------- ----------- ----------- ----- -----
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (241,347) $ (147,944) $ 376,147 $ -- $ --
Adjustments to reconcile net loss to net cash
flows from operating activities:
Depreciation and amortization -- -- -- -- --
Minority interest in dividends of subsidiary -- -- -- -- --
Loss on sale or disposal of equipment 9,000 -- -- -- --
Minority interest in loss of subsidiary -- -- -- -- --
Equity in loss of affiliate -- -- -- -- --
(Gain) loss on deconsolidation of subsidiary -- -- (416,270) -- --
Gain on liquidation of affiliate -- -- -- -- --
Issuance of common stock for loan -- -- -- -- --
Stock issued for services 16,600 -- -- -- --
Changes in operating assets and liabilities:
Prepaid expenses and other current assets -- -- -- -- --
Other assets 450 -- -- -- --
Other -- -- -- -- --
Accounts payable and accrued expenses 179,223 100,000 19,271 -- --
----------- ----------- ----------- ----- -----
Net cash flows - operating activities (36,074) (47,944) (20,852) -- --
----------- ----------- ----------- ----- -----
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property and equipment -- -- -- -- --
Proceeds from sale of subsidiary's common stock -- -- -- -- --
Net proceeds from liquidation of affiliate -- -- -- -- --
Investment in affiliate -- -- -- -- --
Increase (decrease) in notes receivable 13,310 -- -- -- --
----------- ----------- ----------- ----- -----
Net cash flows - investing activities 13,310 -- -- -- --
----------- ----------- ----------- ----- -----
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock
and warrants 50,000 25,000 -- -- --
Proceeds from borrowings -- -- -- -- --
Principal payments on borrowings -- -- -- -- --
Dividends paid -- -- -- -- --
Contribution from officer -- -- 15,000 -- --
----------- ----------- ----------- ----- -----
Net cash flows - financing activities 50,000 25,000 15,000 -- --
----------- ----------- ----------- ----- -----
NET CHANGE IN CASH 27,236 (22,944) (5,852) -- --
CASH, BEGINNING OF YEAR 1,560 28,796 5,852 -- --
----------- ----------- ----------- ----- -----
CASH, END OF YEAR $ 28,796 $ 5,852 $ -- $ -- $ --
=========== =========== =========== ===== =====
SUPPLEMENTAL INFORMATION:
Interest paid $ -- $ -- $ -- $ -- $ --
=========== =========== =========== ===== =====
Note received on liquidation of affiliate $ -- $ -- $ -- $ -- $ --
=========== =========== =========== ===== =====
From Inception,
November 29,
Year Ended October 31, 1978 to
----------------------------------------- October 31,
1996 1997 1998 1998
----------- ----------- ----------- --------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (90,544) $ (8,297) $ (6,672) $(1,285,178)
Adjustments to reconcile net loss to net cash
flows from operating activities:
Depreciation and amortization -- -- -- 64,816
Minority interest in dividends of subsidiary -- -- -- (2,454)
Loss on sale or disposal of equipment -- -- -- 15,674
Minority interest in loss of subsidiary -- -- -- (22,717)
Equity in loss of affiliate -- -- -- 44,910
(Gain) loss on deconsolidation of subsidiary -- -- -- (416,270)
Gain on liquidation of affiliate -- -- -- (72,879)
Issuance of common stock for loan 3,645 -- -- 3,645
Stock issued for services -- -- -- 16,600
Changes in operating assets and liabilities:
Prepaid expenses and other current assets -- -- -- --
Other assets -- -- -- (6,641)
Other -- -- -- 8,981
Accounts payable and accrued expenses -- 3,500 6,582 456,618
----------- ----------- ----------- -----------
Net cash flows - operating activities (86,899) (4,797) (90) (1,194,895)
----------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property and equipment -- -- -- (75,577)
Proceeds from sale of subsidiary's common stock -- -- -- 141,600
Net proceeds from liquidation of affiliate -- -- -- 37,879
Investment in affiliate -- -- -- (35,791)
Increase (decrease) in notes receivable -- -- -- 25,881
----------- ----------- ----------- -----------
Net cash flows - investing activities -- -- -- 93,992
----------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock
and warrants 94,000 -- -- 1,554,444
Proceeds from borrowings 55,000 -- -- 55,000
Principal payments on borrowings (55,000) -- -- (55,000)
Dividends paid -- -- -- (466,327)
Contribution from officer -- -- -- 15,000
Net cash flows - financing activities 94,000 -- -- 1,103,117
----------- ----------- ----------- -----------
NET CHANGE IN CASH 7,101 (4,797) (90) 2,214
CASH, BEGINNING OF YEAR -- 7,101 2,304 --
----------- ----------- ----------- -----------
CASH, END OF YEAR $ 7,101 $ 2,304 $ 2,214 $ 2,214
=========== =========== =========== ===========
SUPPLEMENTAL INFORMATION:
Interest paid $ 2,500 $ -- $ -- $ 2,500
=========== =========== =========== ===========
Note received on liquidation of affiliate $ -- $ -- $ -- $ 50,000
=========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
TECHSCIENCE INDUSTRIES, INC. AND SUBSIDIARIES
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - NATURE OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTANT
POLICIES:
NATURE OF THE BUSINESS - The Company was incorporated on
November 29, 1978 for the purpose of developing and selling a
solid waste disposal process which converts solid waste into a
marketable fertilizer by a special compost process. Since
inception, the Company has been in the development stage and
has had no operating revenues. Presently the Company is
pursuing a plan of acquisitions, mergers or joint ventures
which include businesses other than waste disposal.
PRINCIPLES OF CONSOLIDATION -The consolidated financial
statements include the accounts of Techscience Industries,
Inc. and Biocomp, Inc., through January, 1993 (see Note 3) its
majority owned subsidiary. All significant intercompany
transactions and accounts have been eliminated in
consolidation.
USE OF ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues
and expenses during the reporting periods. Actual results, as
determined at a later date, could differ from those estimates.
FINANCIAL INSTRUMENTS - Financial instruments include cash,
accounts payable and accrued expenses. The amounts reported
for financial instruments are considered to be reasonable
approximations of their fair value.
DEFERRED TAXES - Deferred income taxes arise from temporary
differences between financial and tax reporting, principally
net operating losses. A 100% valuation allowance is placed on
the deferred tax asset resulting from the net operating losses
as it is more likely than not based on the Company's losses
since inception that the asset will not be utilized.
EARNINGS (LOSS) PER SHARE - Basic earnings per share excludes
any dilutive effects of options, warrants, and convertible
securities. Basic earnings per share is computed using the
weighted-average number of common shares outstanding during
the period. Diluted earnings per share is computed using the
weighted-average number of common and common stock equivalent
shares outstanding during the period. Common equivalent shares
are excluded from the computation if their effect is
antidilutive.
F-6
<PAGE>
TECHSCIENCE INDUSTRIES, INC. AND SUBSIDIARIES
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - BASIS OF PRESENTATION:
The Company's financial statements have been presented on the
basis that it is a going concern, which contemplates the
realization of assets and the satisfactions of liabilities in
the normal course of business. The Company reported net losses
of $241,347, $147,944 and $104,186 for the years ended October
31, 1991, 1992 and 1993 and $90,544, $8,297 and $6,672 for the
years ended October 31, 1996, 1997 and 1998. In addition, the
Company has had no operating revenues since its inception in
1978.
The Company is pursuing a plan of acquisitions, mergers or
joint ventures which include businesses other than waste
disposal. Techscience Industries, Inc. in November 1995
assigned its remaining equity interest of Biocomp, Inc., its
former subsidiary, along with related liabilities of $467,833,
and all of its stock to Biocomp, Inc.
Management believes through acquisition, merger or joint
venture that the Company will be able to obtain additional
working capital and ultimately, achieve profitable operations.
NOTE 3 - RELATED PARTY INFORMATION:
In January 1993 the Company's officer received an approximate
90% interest in Biocomp resulting a gain of $416,270 from the
deconsolidation of Biocomp.
Biocomp was indebted to a former officer for compensation
totalling $284,499 in 1991, and $384,499 in 1992 (included in
accounts payable) and $467,833, at October 31, 1993, 1994 and
1995. The compensation was earned for services performed prior
to the officer's resignation on August 26, 1993. In November
of 1995, the Company paid $75,000 and assigned to Biocomp all
remaining shares of Biocomp owned by the Company.
NOTE 4 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES:
Accounts payable and accrued expenses are comprised of the
following:
Officer
October 31, Salary Other
----------- --------- ---------
1991 $284,499 $ 12,500
1992 384,399 --
1993 -- --
1994 -- --
1995 -- --
1996 -- --
1997 -- 3,500
1998 -- 10,082
F-7
<PAGE>
TECHSCIENCE INDUSTRIES, INC. AND SUBSIDIARIES
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 - PRIVATE PLACEMENT:
On December 8, 1995, the Company issued, through a private
placement, 781,160 shares of common stock, par value $0.01 per
share at an issued price of approximately $0.12 per share. The
proceeds were used principally to settle outstanding
obligations to creditors.
NOTE 6 - INCOME TAXES:
The Company and its former subsidiaries filed separate federal
income tax returns. At October 31, 1998, the Company and its
subsidiaries had approximately $1,400,000 in combined net
operating losses to be carried forward to offset future
taxable income through 2018.
The Company has paid dividends in the past because, in the
opinion of counsel, the nature of the Company's revenues and
concentration of its stockholders, would have rendered the
Company a Personal Holding Company as defined under the
Internal Revenue Code. Accordingly, dividends were paid to
avoid a penalty tax applicable to personal holding companies.
Effective October 1, 1993, the Company adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("FAS 109"). FAS 109 requires a change from the
deferred method of accounting for income taxes of APB Opinion
11 to the asset and liability method of accounting for income
taxes. Under FAS 109, deferred income taxes are determined
based on the differences between the financial statement and
tax bases of assets and liabilities, using enacted tax rates
in effect in the years in which the differences are expected
to reverse.
The principal effect of adoption was recognition of a deferred
tax asset which was offset by a valuation allowance of the
same amount. A valuation allowance is provided when it is more
likely than not that some portion of the deferred tax asset
will not be realized. The management of the Company determined
that a full valuation allowance was appropriate for the years
ended October 31, 1994, 1995, 1996, 1997 and 1998.
NOTE 7 - SUBSEQUENT EVENTS:
REVERSE STOCK SPLIT - In February 1999, the Company's Board of
Directors approved and received consent from a majority of its
shareholders to increase the number of authorized shares to
20,000,000 shares of common stock and 2,000,000 shares of
preferred stock and affect a four-for twenty-five reverse
stock split. Common shares and per share amounts have been
retroactively restated for all periods presented to reflect
the reverse stock split.
F-8
<PAGE>
TECHSCIENCE INDUSTRIES, INC. AND SUBSIDIARIES
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PROPOSED ACQUISITION AGREEMENT - On February 10, 1999, the
Company signed a letter of intent with PetPlanet.com, Inc., a
non-affiliated California corporation ("PPI"). The letter of
intent calls for a reverse merger business combination with
PPI whereby the Company will exchange 7,325,000 authorized but
as yet unissued shares of its $.01 par value common stock in
exchange for all of PPI's common stock. As part of the merger,
the Company will change its name to PetPlanet.com, Inc.
In addition, as part of the agreement, the Company made a
$150,000 bridge loan to PPI, with interest at 10% per annum,
collateralized by 51% of PPI's common stock. The loan, which
has an original due date of the earlier of the closing of the
proposed merger or May 15, 1999, can be extended to October 1,
1999.
Upon the closing of the reorganization, the Company has the
option to convert $50,000 of the $150,000 debt into 100,000
shares of PPI's no par value common stock, with the remaining
balance payable at closing.
CONVERTIBLE DEBT SUBSCRIPTION AGREEMENT - On February 5, 1999,
the Company offered two subscriptions of convertible debt
securities, each up to $12,400, pursuant to Rule 506 of
Regulation D of the Securities Act of 1933, (the "Debt
Securities"). The Debt Securities are thirty day notes which
bear interest at 9.6% per annum and are convertible into the
Company's $.01 par value per share restricted common stock at
$.062 per share, for a total of 400,000 shares. Through May
12, 1999, the Company has collected $24,800 from this
agreement.
PRIVATE PLACEMENT OF COMPANY'S SECURITIES - On February 19,
1999, the Company offered accredited investors under Rule 506
of Regulation D of the Securities Act of 1933, 60 units at
$25,000 per unit. Each unit consists of 6,250 shares of the
Company's $.01 par value per share common stock at $4.00 per
share, for a total of 375,000 shares. Through May 12, 1999,
the Company has collected $1,000,000 from this agreement.
BRIDGE PRIVATE OFFERING - On February 19, 1999, pursuant to
the terms and conditions of the Accredited Investor
Subscription Agreement (See Convertible Debt Subscription
Agreement), the Company consummated a private placement under
Rule 506 of Regulation D of the Securities Act of 1933. The
offering, which provided the funding for the Company's bridge
loan to PPI, was comprised of $150,000 principal amount of 10%
promissory notes and 100,000 unregistered shares of the
Company's $.01 par value common stock. The notes are due and
payable and the shares are issuable at the closing date of the
reorganization with PPI. $75,000 of the offering was received
from a stockholder holding 875,000 shares of the Company's
common stock.
F-9
<PAGE>
TECHSCIENCE INDUSTRIES, INC. AND SUBSIDIARIES
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1999 LONG-TERM INCENTIVE PLAN - In February 1999, the Board
of Directors approved a resolution to amend the Company's
1984 Incentive Stock Option Plan creating the 1999 Long-Term
Incentive Plan (the "1999 Plan"), whereby an aggregate of
2,500,000 shares are reserve for issuance under the 1999
Plan. No awards have been made under the Plan through May 4,
1999.
NOTE 8 - NEW ACCOUNTING PRONOUNCEMENTS - NEW ACCOUNTING PRONOUNCEMENTS
- In March 1998, the Accounting Standards Executive Committee
issued Statement of Position 98-1 ("SOP 98-1"), Accounting for
the Costs of Computer Software Developed or Obtained for
Internal Use. SOP 98-1 requires all costs related to the
development of internal use software other than those incurred
during the application development stage to be expensed as
incurred. Costs incurred during the application development
stage are required to be capitalized and amortized over the
estimated useful life of the software. SOP 98-1 is effective
for the Company's fiscal year ending March 31, 2000.
In April 1998, the American Institute of Certified Public
Accountants issued SOP 98-5, Reporting on The Costs of
Start-Up Activities. SOP 98-5 is effective for the Company's
fiscal year ending March 31, 2000. SOP 98-5 requires costs of
start-up activities and organization costs to be expensed as
incurred.
In addition to the aforementioned pronouncements, SFAS 133,
Accounting for Derivative Instruments and Hedging Activities
was issued in June 1998 for years ending after June 15, 1998.
The Company does not expect that any of the aforementioned
pronouncements will have a significant effect on its financial
statements.
F-10
<PAGE>
SCHEDULE A
DEBTS AND OBLIGATIONS OF BIOCOMP, INC. AS REFLECTED ON THE COMPANY'S UNAUDITED
FINANCIAL STATEMENT FOR THE NINE MONTHS ENDED JULY 31, 1991 CONTAINED IN ITS
FORM 10Q.
JWH ACCRUED SALARY ALL OTHER DEBT
$232,300 $ 27,200
TOTAL $259,500
SCHEDULE B
THE DEBTS OF BIOCOMP, INC. INCURRED DURING THE PERIOD OF AUGUST 1, 1991
THROUGH AUGUST 26, 1993.
JWH ACCRUED SALARY ALL OTHER DEBT
$160,000 $ 48,333
TOTAL $208,333
SCHEDULE C
TECHSCIENCE INDUSTRIES, INC.
LIABILITIES TO BE SETTLED.
TRUST CO. OF NJ
ALL OTHER DEBTS
$ 600* $11,900
TOTAL $12,500
*See attached August 13, 1992 letter from Trust Company of New Jersey.
F-11
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned thereunto duly authorized.
Dated: Parsippany, New Jersey
May 13, 1999
TECHSCIENCE INDUSTRIES, INC.
BY: /s/ JAMES T. WOLL
--------------------------------
James T. Woll, President and
Chief Executive Officer
BY: /s/ GARY W. GILL
--------------------------------
Gary W. Gill, Chief
Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in their capacities and on the dates indicated.
Dated: Parsippany, New Jersey
May 12, 1999
/s/ JAMES T. WOLL
--------------------------------
James T. Woll, Director
Dated: Parsippany, New Jersey
May 12, 1999
/s/ GARY W. GILL
--------------------------------
Gary W. Gill, Director
Dated: Parsippany, New Jersey
May 12, 1999
/s/ JAMES S. GALLO
--------------------------------
James S. Gallo, Director
F-12
ANTHONY BERTUZZI
14 Hitchcock Avenue
Staten Island, NY 10306
(718) 667-6807
November 30, 1995
Joseph W. Hafesh
300 Winston Dr. Apt. 2704
Cliffside Park, NJ 07010
Dear Mr. Hafesh:
This letter agreement (the "Agreement") will serve to confirm our recent
conversations and negotiations concerning the parameters attendant upon the
receipt by the undersigned (the "Donee") of securities constituting a
controlling equity interest in Techscience Industries, Inc., a publicly owned
Delaware corporation ("TSCI") with a class of securities registered pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 (the"34 Act"). This
Agreement is and is intended to be confidential and no public or other
announcement is or will be made by TSCI or Donee until and unless the same is
mandated by the federal securities laws or counsel to either party.
1. GIFT. Simultaneously with the execution of this Agreement at a
mutually agreeable time and place (the"Hafesh Closing"), the Donee will be the
recipient from Joseph W. Hafesh ("Hafesh") of a gift of an aggregate of
1,889,000 issued and outstanding shares of TSCI's Common Stock, $.01 par value
per share owned beneficially and of record by Hafesh since 1978 (the "Gift
Shares"). The Gift Shares, which represent approximately 38% of TSCI's total
issued and outstanding Common Stock capitalization as of the date hereof, are
being delivered to the Donee without consideration.
2. BUSINESS PURPOSE. Hafesh, an executive officer and director of TSCI
who resigned these positions on August 25, 1993, hereby declares his express
written intent in executing and performing this Agreement is to free himself
from any and all potential obligations under Section 16 of the Securities
Exchange Act of 1934, by divesting himself of securities that have had little or
no value since 1991.
3. OUTSTANDING CAPITALIZATION. At the Hafesh Closing, TSCI's issued and
outstanding capitalization shall consist of 5,017,750 shares of common stock,
its only class of equity or debt securities.
4. INVESTMENT INTENT. The Donee hereby represents, warrants covenants
and agrees that he has been advised, and by the execution of this Agreement,
hereby agrees, accepts and acknowledges as follows with respect to the Gift
Shares:
1
<PAGE>
(a) That none of the Gift Shares to be delivered hereunder
shall have been registered under the Securities Act of 1933, as amended (the
"Securities Act") or under any state securities law, and that Hafesh will be
relying upon an exemption from registration based upon the investment
representations of the Donee;
(b) The Donee will be acquiring the Gift Shares for investment
purposes and without any view to the transfer or resale thereof and that such
shares shall not be sold, transferred, assigned, pledged or hypothecated in
violation of the Security Act, or the applicable securities laws of any state;
and
(c) The certificates representing all of the Gift Shares to be
delivered pursuant to this Agreement, shall bear a restrictive legend in
substantially the following form and shall be subject to the imposition of a
standard stop transfer order on the books and records of TSCI:
"The Shares represented by this certificate have not been
registered under the Securities Act of 1933 as amended. They
may not be sold, assigned or transferred in the absence of an
effective registration statement for the Shares under the said
Securities Act; receipt of a 'no action' letter from the
Securities and Exchange Commission or an opinion of counsel
satisfactory to the Issuer that registration is no required
under said Securities Act."
5. EXPENSES. The Donee and Hafesh shall bear his and its own expenses
in connection with the preparation for and consummation of the transaction
contemplated by this Agreement.
6. ACCESS AND INFORMATION. Hafesh shall afford to the Donee and his
accountants, counsel and other duly authorized representatives access, during
normal business hours and on reasonable advance notice, during the period after
execution of this Agreement and prior to the Hafesh Closing, the right to make
copies of all properties, books, contracts, commitments and records (including
but not limited to tax returns) concerning TSCI that Hafesh happens to have
stored for TSCI. In the event the Hafesh Closing does not take place as
hereinabove provided, and except for publicly available information or material,
the Donee shall return to Hafesh all documents, work papers and other material
obtained by or on his behalf as a result of this Agreement or in connection
herewith whether obtained before or after the execution hereof, and the Donee
shall hold such information in confidence until such time as such information is
otherwise publicly available.
7. NO BREACH. The execution and delivery of this Agreement does not,
and the consummation by the Donee and Hafesh of the transactions contemplated
hereby will not, violate any provision of, or result in a default or
acceleration of any obligation under, or result in any change in the rights or
obligations of the Donee, Hafesh or TSCI under any lien, agreement, contract,
instrument, order, arbitration award, judgment, or decree to which the Donee,
Hafesh or TSCI, is a party or by which the Donee, Hafesh or TSCI is bound, or to
which any property of the Donee, Hafesh or TSCI is subject. No default or breach
will occur in any material respect by virtue of the consummation of the
transactions contemplated herein under any material contract, agreement,
indenture or other instrument entered into by the Donee, Hafesh or TSCI;
2
<PAGE>
8. CONFIDENTIALITY AND PUBLICITY. Due to the nature of the discussion
being conducted hereunder, the parties hereby covenant and agree, one to the
other, to keep all joint discussions, this Agreement and all other documents
related hereto, or which may be reviewed by the parties hereto, their agents or
affiliates, as part of the due diligence process described above, in strict
confidence. Neither party shall make any public announcement of the transactions
contemplated hereby without the prior consent of the other party hereto, except
that any party may make such disclosures as are, in the opinion of its counsel,
required by any applicable law, rules or regulations, in which event the party
making such disclosure shall give the other party notice of and a copy of the
text or proposed text of such disclosure, and shall use its best efforts to
provide such notice and copy to the other party prior to making the required
disclosure.
9. MISCELLANEOUS. (a) This Agreement may be executed in counterparts
each of which so executed shall be deemed an original and constitute one and the
same agreement. (b) Each party shall at all times keep the other informed of its
principal place of business if different from that stated herein, and shall
promptly notify the other of any change, giving the address of the new principal
place of business or residence. (c) All notices that are required to be or may
be sent pursuant to the provision of this Agreement shall be sent by certified
mail, return receipt requested, or by overnight package delivery service, to
each of the parties at the address appearing herein, and shall count from the
date of mailing or the validated airbill. (d) A modification or waiver of any of
the provisions of this Agreement or any amendment to this Agreement shall be
effective only if made in writing and executed with the same formality as this
Agreement. (e) The failure of any party to insist upon strict performance of any
of the provisions of this Agreement shall not be construed as a waiver of any
subsequent default of the same or similar nature or of any other nature or kind.
(f) Each party is, shall be, and be deemed to be, an independent contractor in
the performance of its duties hereunder, any law of any jurisdiction to the
contrary notwithstanding. (g) This Agreement is binding upon and shall inure to
the benefit of and shall be enforceable against the parties hereto and their
respective successors and assigns. (h) This Agreement shall not be assigned or
amended without the prior written consent of the other party. (i) This Agreement
represents the entire agreement and understanding of the parties with respect to
the subject matter hereof. There are no representations, warranties and/or
covenants not set forth herein.
If the foregoing correctly sets forth our understanding and agreement, please
confirm the accuracy and completeness of this Agreement by signing the enclosed
copy in the indicated space and returning the executed document to the
undersigned as soon as practicable.
Very truly yours,
/s/ ANTHONY BERTUZZI
--------------------------------------
Anthony Bertuzzi
AGREED TO AND ACCEPTED:
/s/ JOSEPH W. HAFESH
- ---------------------------
Joseph W. Hafesh
3
ASSIGNMENT AND ASSUMPTION AGREEMENT made this 30th day of November, 1995
between Techscience Industries, Inc., a publicly owned Delaware corporation with
a class of securities registered pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (the"34 Act") with temporary offices at 3
Rockaway Place, Parsippany, New Jersey 07054 (the "Company") and Joseph W.
Hafesh, residing at 300 Winston Drive. Apt. 2704 Cliffside Park, NJ 07010
("Hafesh"), in his capacity as sole agent for and on behalf of Biocomp, Inc., a
Delaware corporation that operated as a wholly owned subsidiary of the Company
("Bio").
W I T N E S E T H:
WHEREAS, The Company is the record and beneficial owner of certificate
No.19 representing all 4,740,000 issued and outstanding shares of Common Stock,
$.01 par value per share (the "Shares") of Bio;
WHEREAS, The debts and obligation of Bio, as reflected on the Company's
unaudited financial statements for the nine months ended July 31, 1991 contained
in its Form 10-Q Quarterly Report filed with the Securities and Exchange
Commission aggregated approximately $259,500 and which are enumerated on
Schedule "A" annexed to this agreement (the "Agreement") and hereby incorporated
herein by reference (the "Reported Obligations"); and
WHEREAS, The debts and obligation of Bio, incurred during the period
August 1, 1991 through August 26, 1993, the last day of operations thereof, and
not reflected on the Company's unaudited financial statements aggregated
$208,333 and which are enumerated on Schedule "B" annexed to this Agreement and
hereby incorporated herein by reference (the"Non-Reported Obligations"); and
WHEREAS, The Company desires to transfer the Reported Obligations and
the Non-Reported Obligations, aggregating $467,833 (hereinafter collectively
referred to as the "Obligations") and the Shares to Hafesh, and Hafesh is
willing to assume the Obligations and accept the Shares from the Company on the
terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises, mutual covenants
hereinafter set forth, and mutual benefits to be derived herefrom, the
existence, receipt and adequacy of which are hereby acknowledged and accepted,
the parties hereby agree as follows:
1. RECITALS CONFIRMED. All of the recitals hereinabove stated are
confirmed by each of the parties hereto as being in all respects true and
correct and the same are hereby incorporated into this agreement (the
"Agreement") by reference.
2. TRANSFER OF THE SHARES. The Company hereby, assigns, transfers and
delivers the Shares to Hafesh and Hafesh hereby accepts a certificate
representing the Shares in transferrable form, with stock power attached,
endorsed in blank with signature guaranteed. The Shares represent and constitute
the Company's entire equity interest in Bio.
1
<PAGE>
3. ASSUMPTION OF THE OBLIGATIONS. Upon delivery of the Shares, and
solely by virtue of his taking possession thereof, Hafesh shall assume and
thereafter be solely responsible for the payment and discharge of the
Obligations. In this regard, it is the specific intent of Hafesh and the Company
and they hereby agree, accept and consent that this Agreement is and shall be
the legal and practical equivalent of a bill of sale of the Obligations from the
Company to Hafesh, that after the execution of this Agreement Hafesh shall be
the sole record and beneficial owner of the Obligations and the Company shall
have no further duty with respect thereto.
4. PURCHASE PRICE. Simultaneously with the execution of this Agreement,
the Company shall pay to Hafesh for Hafesh's assumption of the Obligations, and
Hafesh hereby accepts as full and fair consideration for the risks attendant
upon his assumption of the Obligations, the aggregate sum of Seventy Five
Thousand and 00/100 ($75,000.00) Dollars, the receipt and adequacy of which is
hereby acknowledged and accepted by Hafesh (the "Consideration"). By virtue of
their respective execution of this Agreement, the parties hereby acknowledge and
accept that the Consideration represents a fair, just and reasonable price for
the assumption of the Obligations and the attendant transfer of the Shares
attendant upon the ownership thereof.
5. CLOSING AND CONSUMMATION. The transfer of the Shares and the
assumption of the Obligations shall be consummated simultaneously with the
execution of this Agreement or as soon thereafter as possible. The Company shall
make delivery to Hafesh of a certificate or certificates representing the Shares
made the subject hereof in transferable form together with a certified or
cashier's cheek representing the Consideration.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company, by
virtue of its execution of this Agreement, hereby represents and warrants to
Hafesh as follows:
(a) The Company is the sole record and beneficial owner of the
Shares which Shares are duly and validly issued, fully paid, non-assessable, and
are free and clear of any and all liens, claims and encumbrances of any kind,
nature or description;
(b) The Company has full power, right and authority to execute and
perform this Agreement in the time and manner contemplated; and to transfer the
Shares made the subject hereof. The execution and performance of this Agreement
and the delivery of the Shares will not result in a breach of or violate the
provisions of any contract or agreement to which the Company is a party or to
which the Shares are or may be the subject;
(c) The Shares represent the Company's entire equity and/or other
interest in Bio and following the sale and delivery of the Shares to Hafesh, the
Company will have no further ownership interest in the Shares or the assets or
liabilities of Bio represented thereby; Company;
2
<PAGE>
(d) The Obligations represent all of the debts and obligation of
Bio known to the
(e) The Company hereby remises and releases Bio from any and all
debts or obligations owed by it directly to the Company, whether for cash
advances or otherwise as well as for any claim to the assets of Bio including
the Techscience logo; and
(f) The Company will utilize its best efforts to settle and/or
compromise the $12,500 in Reported Obligations remaining with the Company for as
small a monetary amount as may be possible; and in connection therewith, will
sollicit the aid and assistance of Hafesh.
7. REPRESENTATIONS AND WARRANTIES OF HAFESH. By virtue of the execution
of this Agreement, Hafesh hereby represents and warrants to the Company as
follows:
(a) Hafesh has full power and authority to assume the Obligations,
accept the Shares and execute this Agreement;
(b) Hafesh or his representatives have had access to such records
of the Company and Bio as he and/or they wish to examine and are relying and
entering into this Agreement upon their own independent findings and due
diligence investigations concerning Bio and upon no representations, statements
or warranties or any obligations to make any representations of the Company;
(c) The execution of this Agreement will not result in a beach of
or constitute a default under any existing agreement, indenture or other
instrument to which Hafesh is a party or by which Hafesh, the Obligations or the
Shares may be bound or affected;
(d) Hafesh has not relied upon or been induced by any statements,
representations or warranties (whether expressed, implied in fact or implied by
law) of any kind, nature or description made by the Company concerning the
business or affairs of Bio, its chances of success or any capital appreciation
that may occur with respect to the Shares; and has accepted the Shares in
accordance with and subject to the terms hereof and premises covered hereunder
strictly and only on an "as is" basis; and
(e) The Reported Obligations represent all but $12,500 of the total
liabilities of the Company as reflected in its periodic filings under the
Securities Exchange Act of 1934; and there are no other debts, obligations,
lawsuits or liabilities for which the Company is responsible.
8. NO RESTRICTIONS ON TRANSFER. The Company hereby warrants and
represents that there are no restrictions on the transfer of the Shares except
such, if any, as appear on the face of the certificates or are imposed by
operation of law, that there are not options, warrants or rights pertaining
thereto, and that the Company has the right to transfer such stock free of any
encumbrances and without the consent of any person, or any governmental agency
whatsoever.
3
<PAGE>
9. INDEMNIFICATION. The Company hereby indemnifies and holds Hafesh
harmless from and against any and all costs and expenses, including reasonable
attorney's fees, attendant upon: (i) any third party claiming any interest in
the Shares; and (ii) the first $12,500 in liabilities remaining in the Company
after the removal of the Obligations. Hafesh, by virtue of his former position
as President and Chief Executive Officer of the Company, hereby indemnifies and
holds the Company harmless fi.om and against any and all costs and expenses,
including reasonable attorney's fees, attendant upon the debts and obligations
of Bio in excess of the amount of the Obligations as well as the liabilities of
the Company in excess of the $12,500 referenced in Paragraph 7(e).
10. INVESTMENT INTENT. Hafesh hereby represents, warrants covenants and
agrees that it has been advised, and by the execution of this Agreement, hereby
agrees, accepts and acknowledges as follows with respect to the Shares:
(a) That none of the Shares have been registered under the
Securities Act of 1933, as amended (the "Securities Act") or under any state
securities law, and that the Company will be relying upon an exemption from
registration based upon the investment representations of Hafesh; and
(b) Hafesh will be acquiring the Shares for investment purposes and
without any view to the transfer or resale thereof and that such shares shall
not be sold, transferred, assigned, pledged or hypothecated in violation of the
Security Act, or the applicable securities laws of any state.
11. ASSIGNMENTS. All of the terms and provisions of this Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto.
12. ENTIRE AGREEMENT. Each of the parties hereby covenants that this
Agreement is intended to and does contain and embody herein all of the
understandings and agreements, both written and oral, of the parties with
respect to the subject matter of this Agreement, and that there exists nor oral
agreement or understanding, express or implied liability, whereby the absolute
final and unconditional character and nature of said Agreement shall be in any
way invalidated, empowered or affected. There are no representations or
warranties other than those set forth herein.
13. LAWS OF THE STATE OF NEW JERSEY. This Agreement shall be governed
by and interpreted under and construed in all respects in accordance with the
laws of the State of New Jersey irrespective of the place of domicile or
residence of either party. In the event of a controversy arising out of the
interpretation, construction, performance or breach of this Agreement, the
parties hereby agree and consent to the jurisdiction and venue of the Superior
Court of the State of New Jersey, Essex County, and further agree and consent
that service of process in any such action or proceeding outside of the State of
New Jersey
4
<PAGE>
or Essex County shall be tantamount to service in person within Essex County,
New Jersey, and shall confer personal jurisdiction upon the said court.
14. NOTICES. Ail notices that are required to be or may be sent
pursuant to the provisions of this Agreement shall be in writing, mailed by
certified or registered mail, return receipt requested or overnight package
delivery service, shall be addressed to the other at his address as hereinbefore
stated or to such other address as may have been furnished by any party to the
other in writing, and shall be deemed to be given on the date of mailing thereof
or the date of the airbill in accordance with the foregoing.
15. ORIGINALS. This Agreement may be executed in counterparts each of
which so executed shall be deemed an original and constitute one and the same
agreement.
16. ADDRESS OF PARTIES. Each party shall at all times keep the other
informed of its principal place of business or residence if different from that
stated herein, and shall promptly notify the other of any change, giving the
address of the new principal place of business or residence.
17. MODIFICATION AND WAIVER. A modification or waiver of any of the
provisions of this Agreement shall be effective only if made in writing and
executed with the same formality as this Agreement. The failure of any party to
insist upon strict performance of any of the provisions of this Agreement shall
not be construed as a waiver of any subsequent default of the same or similar
nature or of any other nature or kind.
18. EXPENSES. Regardless of whether or not the transaction contemplated
herein is consummated, each party shall pay and be responsible for its own share
of costs and expenses incurred in connection with this Agreement and
transactions contemplated hereby.
19. BROKER'S FEE. The Secured Party and Hafesh hereby represent and
warrant to each other that no broker is entitled to any brokerage commission in
connection with the transaction contemplated herein.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
/s/ JOSEPH HAFESH
-------------------------------
Joseph W. Hafesh
Techscience Industries, Inc.
By: /s/ JAMES T. WOLL
-------------------------------
James T. Woll, President
5
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's audited financial statements for the year ended October 31, 1998 (as
filed with the Company's annual report on Form 10-KSB for such year) and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000318523
<NAME> Techscience Industries, Inc.
<MULTIPLIER> 1,000
<CURRENCY> USD
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> OCT-31-1998
<EXCHANGE-RATE> 1
<CASH> 2
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2
<CURRENT-LIABILITIES> 10
<BONDS> 0
0
0
<COMMON> 16<F1>
<OTHER-SE> (24)
<TOTAL-LIABILITY-AND-EQUITY> 2
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 7
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (7)
<INCOME-TAX> 0
<INCOME-CONTINUING> (7)
<DISCONTINUED> 0
<EXTRAORDINARY> 8
<CHANGES> 0
<NET-INCOME> 7
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1> Gives affect to a 1-for-10 reverse stock split effective at the close of
business on January 4, 1999. Prior financial data schedules have not been
restated to reflect such reverse stock split.
</FN>
</TABLE>
