SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
Annual Report Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the Fiscal Year May 31, 1996 Commission File No, 0-9966
HABER, INC,
(Exact name of registrant as specified in its character)
Delaware 22-2305613
(State or other jurisdiction of (I.R.S, Employer
incorporation or organization) Identification No.)
470 Main Road Towaco, New Jersey 07082
(Address or principal executive office) (Zip Code)
Registrant's registered pursuant to Section 12 (b) of
the Act:
None
Securities registered pursuant to Section 12 (q) of
the Act:
Common Stock, par value $0.01 per share
$2.00 Convertible Voting Preferred Stock,
par value $10 per share
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
ruling requirements for the past 90 days:
Yes [X] No[ ]
As of May 31, 1996, the aggregate market value of the voting stock held by
non-affiliates of the Registrant was approximately $6,083,801
As of May 31, 1996, the number of shares outstanding of the Registrant's
common stock was: 27,052,368 shares.
Documents incorporated by reference: None
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ITEM 1. BUSINESS
General
The Registrant has developed advanced chemical and electrochemical process
technologies for separations, extractions and purifications. The Company will
now focus on commercializing these technologies through joint ventures or
subsidiaries.
The Registrant's strategy is to develop and market application devices
based upon its Electro Molecular Propulsion ("EMP") technology and to acquire
interests, assets and earnings in exchange for rights to use its technologies.
The Registrant may also seek to directly acquire technology or may seek
licenses, joint venture or other arrangements with larger industrial partners.
Patents and Trade Secrets
A U.S. patent covering EMP technology was granted to Norman Haber in 1976
and an extension of that patent was granted to Mr. Haber in 1979, The patent
would have expired in April of 1993. However, recent changes in U.S. patents add
three more years until 1996. The original patents covering the EMP technology,
which were granted to Mr. Haber in 16 foreign countries and assigned to the
Registrant, expired in 1996.
The Registrant is in a position for prioritizing its advanced EMP
technology and know-how for further patent application. It is prepared to file
additional patent applications or prioritization relating to specific aspects of
the EMP technology with the U.S. Patent Office.
In addition to patent protection filed or intended, the Registrant expects
to rely to a material extent on selected unpatented proprietary know-how with
respect to its various technologies. However, there can be no assurance that
others will not independently develop such know-how or otherwise obtain access
to the Registrant's know-how despite the Registrant's efforts to maintain its
confidentiality, which includes obtaining secrecy agreements from its employees.
Employees
In 1996, the Company retained 2 employees and 4 independent consultants.
Government Regulation
If Haber, Inc. markets its EMP instruments for use in clinical
applications, blood analyzers other medical devices it will be subject to
regulation by the Bureau of Medical Devices of the United States Food and Drug
Administration. A principal feature of such regulation is that, if the devices
should be deemed not to be substantially equivalent to those already on the
market, they could not be used until specifically approved by the Bureau of
Medical Devices. The Registrant did not consider to seek approval or to seek a
determination whether any such devices will require such
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approval or that seeking such approvals would not present a major obstacle. The
process of obtaining approval, or a determination that approval is not required,
could cause material delay in the introduction of any of these products,
However, it is not anticipated that this would necessarily occur.
ITEM 2. PROPERTIES
The Registrant maintains laboratory and general office facilities in one
building leased by the registrant and located in Towaco, New Jersey, The
building has a total of approximately 2,500 square feet of space. Included in
these facilities are six laboratories, a prototype machine shop, and a small
area for pre-piloting processing. These facilities house the equipment necessary
for the Registrant to conduct its research and development activities for the
foreseeable future.
ITEM 3. LEGAL PROCEEDINGS
The Registrant is in contention with the Department of Environmental
Protection ("DEP") in New Jersey and currently has appeared informally before
the court judge and with a legal representative of the DEP to try to determine a
settlement penalty with the Registrant for having neglected two filings of
septic sampling and analysis not timely reported in 1990, The DEP is cognizant
that the Registrant operated an analytical laboratory that is duly authorized by
the DEP in New Jersey and qualified before the U.S. Environmental Protection
Agency.
In September 1993, the Company settled this penalty for $22,500 to be paid
in four semi-annual installments of $5,000 and one final semi-annual installment
of $2,500 plus interest at 5.5% beginning October 1993. Since only one payment
has been made on the settlement to date, the entire amount which totals $19,700
including interest, is currently due and is included in accounts payable.
There are no other material pending legal proceedings to which the
Registrant is a party or of which any of their property is subject.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS.
NONE.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
The Registrant's common stock is traded "over the counter" and is listed in
the National Market System. The table below sets forth the ranges of the last
sales prices of the Common Stock during each quarter after June 1, 1994. The
quotations reflect dealer prices without mark-up, markdown or commissions and do
not necessarily represent actual transactions,
High Low
Quarter Ended
1995
08/31/94 1/4 1/8
11/30/94 1/4 1/2
02/28/95 1/2 1/2
05/31/95 1/2 1/4
1996
08/31/95 1/4 1/8
11/30/95 1/4 1/8
02/28/96 1/4 1/8
05/31/96 1/4 1/8
On May 31, 1996, the last sale price of the Registrant's common stock was
$.25 and the number of holders of record of the Registrant's Common Stock was
approximately 2204.
No cash dividends have been paid on the Common Stock of the Registrant
since its incorporation and the Registrant intends to retain its earnings, if
any, for use in its business.
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HABER, INC.===================================== A Development Stage Enterprise
Selected Financial Data Item 6.
===============================================================================
<TABLE>
<CAPTION>
Cumulative
from
Inception 1996 1995 1994 1993 1992
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Statement of Operations Data
Revenues $ 1,933,429 $ - $ - $ 14,833 $ 49,953 $ -
Direct expenses 1,370,748 - - 3,000 9,892 -
General and administrative expenses 10,697,480 252,374 360,524 195,424 314,583 407,501
Research and development expenses 5,027,520 - 3,455 65,278 77,533 113,613
Operating (loss) (15,882,572) (284,628) (363,979) (248,869) (352,055) (521,114)
Interest income 1,015,770 - - 2 7 438
Net (loss) (20,012,722) (359,728) (401,483) (300,091) (348,661) (530,965)
Net (loss) per share (.01) (.02) (.01) (.01) (.03)
Balance Sheet Data
Working capital (286,932) (555,697) (274,977) (254,265) (328,802)
Total assets 62,521 58,150 57,808 72,760 81,800
Total liabilities 311,518 566,601 285,613 275,154 380,493
Stockholders' (deficit) (248,997) (508,351) (227,805) (202,394) (298,693)
</TABLE>
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS AND RESULTS OF OPERATION.
Results of Operations
The Registrant controls the proprietary operational features and key
science insights for the technology called ElectroMolecular Propulsion ("EMP"),
which it believes has broad application in the chemical, biomedical and
electronic fields. EMP is a fundamental electrokinetic technology invented by
Norman Haber. Essentially, EMP is a method of transporting a broad variety of
molecules by means of an electrical field. This ability, enhanced by other
characteristics of the technology, indicates that EMP has a range of
applications in chemical analytical instrumentation, extraction, purifications,
control of chemical reactions, electronic imaging and other electronic uses.
More than 100 application protocols have been completed for use with the
EMP instrument for use with dyes, proteins, etc. Such prefigured protocols are
an important user friendly feature for the sale and use of the 15K-l instrument
in niche markets. It enables the user to program the EMP instrument for their
particular application chemistry, analysis and quality control.
The Registrant will continue to effect reductions in its operating
expenditures while conforming with continuing operations with the limited amount
of working capital available. This policy will continue until revenue from sales
or adequate refinancing enables otherwise. The Company is currently leasing its
facility in Towaco, N.J. It is anticipated that the Registrant will continue to
lease its site at the current address in 1997.
1996 Compared with 1995
The net loss for 1996 decreased by $41,755 due mainly to decreased legal and
other costs associated with raising capital.
The Registrant has continued its activities regarding the development of niche
market applications for its EMP analytical instrumentation. Having decided on
applications for the dye industry, Registrant joined the American Association of
Textile Chemists and Colorists (AATCC) and attended the annual AATCC meeting and
exhibition in Louisville, Ky. Other application projects and technical
publications describing EMP instrumentation application also are being
considered. The Registrant has undertaken steps toward the re-engineering of its
EMP 15K model with the view of producing an upgraded digitalized and computer
compatible instrument. These units can be subcontracted through instrument
manufacturers. Marine Electric Instruments of Clifton, N.J. has suggested that
they will re-engineer the EMP 15K instrument in this manner in exchange for a
manufacturing agreement for the EMP instrument.
Dr. Henry Rosenberg PhD. (Chemistry) has joined the Company and has become
conversant with both the EMP technology and the proprietary "Haber Gold
Process". Dr. Rosenberg has had extensive sales and marketing experience with
scientific instrumentation and shall also serve for
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marketing EMP instrumentation.
1995 Compared with 1994
The net loss for 1995 increased by $101,392 to $401,483 due mainly to
increased legal and other costs associated with raising capital.
Liquidity and Capital Resources
The Registrant's working capital deficiency, which fluctuates, must be
supplemented in order to meet the demands upon working capital occasioned by the
Registrant's continued operating losses. There continued an on going need for
additional funds to finance development and commercialization of projects built
around the Registrant's technologies, During the year ended May 31, 1996, the
Registrant issued 2,310,200 shares of common stock for $ 218,540 in cash.
There can be no assurance that the Registrant will have continuing success
in any of these efforts. The effects of inflation during he recent years has had
little impact on the Registrant and will continue to be insignificant.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTING DATA
See Index to Financial Statements, Financial Statement Schedule
and Exhibits in Item 14.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The Executive Officers and Directors of the Registrant are as follows:
Director Position with
Name Age the Registrant Since
Norman Haber 67 Chairman 1967
President, CEO
& Director
Warren Donohue 56 Director l989
Paul Buiar 71 Acting Director 1996
Mr. Haber is the founder of the Registrant, and has been its Chairman,
President and Chief Executive Officer since inception. Mr. Haber holds a B.S.
degree in chemistry and an M.A. in physiology and biological sciences from the
New York city University System, He is the Registrant's principal scientist. Mr.
Haber is the inventor of the EMP technology and co-developer of the Haber Gold,
Alpha and Haber-Lee Processes. His work on EMP has appeared in the Proceedings
of the National Academy of Sciences.
Mr. Donohue has been the Executive Manager, Sales Administration, of Volvo
Cars North America for 33 years. He studied business at Fairleigh Dickinson
University, He is presently serving his third term as Councilman and
Commissioner on the Recreation Committee in Alpine, New Jersey where he resides.
Mr. Paul Buiar is a specialist in political relations, communications and
news media, especially as related to national and international politics
including national presidential campaigns, governor and mayoralty campaigns
(NYC). He has also been involved with international presidential campaigns. Mr.
Buiar has served as President of the International Association of Political
Consultants. For more than 20 years, he has also been the Executive Director of
the Inner Circle, a prestigious NYC based organization of current and former
journalists.
* The term of each officer of the Registrant expires at the next annual
meeting of its Board of Directors.
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ITEM 11. EXECUTIVE COMPENSATION
Cash Compensation
The following table sets forth the total cash compensation paid by the
Registrant during the fiscal year May 31, 1996 and 1995 to the executive
officers whose total cash compensation to all executive officers as a group:
Capacities in Cash
Name Which Served Compensation
1996 1995
All executive officers as a group
(two persons) -0- -0-
The Registrant has no employee agreements and there is no compensation
proposed to be paid in the future to the Registrant's executive officers
pursuant to any on-going plan or arrangement except that the executive officers
from time to time be granted options under the Registrant's stock option plan or
warrants.
Stock Options
The Registrant maintains a 1985 Officers' Stock Option Plan (the "Officers'
Plan").
The Officer's Plan provides that options to purchase the Registrant's
Common Stock may be awarded to officers of the Registrant by a committee
comprised of at least three directors who are not eligible under the Officer's
Plan.
Options granted under the Officer's Plan are non-incentive options and
stock appreciation rights may be provided at any time until the options are
exercised, terminated or canceled. The exercise price of the options can be
fixed by the committee administering the Officers Plan at any amount which is
not less than the par value of the shares subject to option, An optionee may pay
the exercise price of the options in cash or with the Registrant's stock or with
other property.
All options under the Officer's Plan will become exercisable as determined
by the committee administering the plan, and the committee may at any time
accelerate the time at which an option may be exercised. All options will be
nontransferable except by the laws of descent and distribution and, generally,
will be exercisable by the optionee only during the time he is employed by the
Registrant or within three months thereafter.
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Compensation of Directors
Directors of the Registrant receive no cash compensation or expense
reimbursement in connection with their services as Directors.
ITEM 12. SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The table below sets forth certain information relating to the ownership of
the Registrant's Common Stock, as of December 1, 1992, by (I) the only person
who was known to the Registrant to be the beneficial owner of more than five
percent of such stock, ii) each of the Registrant's Directors and (iii) all
Directors and Officers of the Registrant as a group. Each of the persons listed
has sole voting and investment power with respect to his shares unless otherwise
indicated in the notes of the table.
No. of Shares of Common Stock
Name of and Nature of Beneficial %
Beneficial Owner Beneficial Ownership of Class
Norman Haber 1,732,868(1) 4.2%
Warren Donohue 929,987 2.2%
Paul Buiar 54,308*
* Less than 1%
(1) Mr. Haber has the sole voting and investment power with respect to all
such shares except for 330,130 shares which are owned by his wife, individually
or as custodian for their two children.
ITEMS 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
It is anticipated that, as incentives to retain management, the
Registrant's officers may be offered the opportunity to participate in the
equity of future ventures in which the Registrant may become involved.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES, AND REPORTS
ON FORM 8-K.
(a) The following documents are filed as a part of this report.
1. Financial statements: Page
Report of Independent Certified Public Accountants F-1...F-2
Balance Sheets as of May 31, 1996 and 1995 F-3...F-4
Statements of Income (Loss) and Retained Earnings F-5
(Deficit) for the years ended May 31, 1996, 1995
1994 and from the inception to May 31, 1995.
Statements of Changes in Stockholders' Equity F-6...F-11
from inception to May 31, 1996.
Statements of Cash Flows for the years ended F-12...F-13
May 31, 1996, 1995, and 1994 and from the
inception to May 31, 1996.
Notes to Financial Statement F-14...F-20
2. Schedule II - Valuation and Qualifying Accounts F-21
3. Exhibit 11 - Statement re: computation of earnings F-22
per share
3(a) (I) Restated Certificate of Incorporation
of the Registrant, filed November 9,
1984. Incorporated by reference to
exhibit 2 (a) to the Registrant's
Registration Statement on Form 8-A
filed with Commission on April 30,
1985 (Commission File No. 0-9966).
(a) (ii) Certified of Designations of Series
A Preferred Stock of the Registrant,
filed November 20, 1984, Incorporated
by reference to exhibit 2 (b) to the
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Exhibits Number Description of Exhibit
Registrant's Registration Statement
on Form 8-A filed with the
Commission on April 30, 1985
(Commission File
No. 0-9966).
(b) By-laws of the Registrant. (5)
4(a) Specimen for of certificate for
Common Stock (1)
(b) Form of representative's Warrant (7)
(c) (I) Specimen form of certificate for
Convertible Preferred Stock (8)
(ii) Form of Class A Warrant (7)
(iii) Form of Class B Warrant (7)
(iv) Form of Warrant Agreement among the
Registrant and Continental Stock
Transfer & Trust Company (8)
(The Registrant will furnish the
Securities and Exchange Commission
upon request a copy of each
Instrument defining the rights of
the holders of the Registrant's long
term debt.
10(a) (I) Limited Partnership Agreement of
Lodestone Partners, Ltd. (3)
(a) (ii) Research and Development Agreement between
the Registrant and Lodestone Partners,
Ltd., dated October 10, 1980. (1)
(a) (iii) Agreement for sale of EMP Precious Metals
Application and Technology
(a) (iv) Amendment No. 1 to Agreement of Limited
Partnership of Lodestone Partners, Ltd.(3)
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Exhibit Number Description of Exhibits
(a) (v) Amendment No. 1 to Agreement for Research
and Development between the Registrant and
Lodestone Partners, Ltd. dated October 10,
1980.(3)
(a) (vi) Amendment No.1 to Agreement for sale of
EMP Precious Metals Application and
Technology between the Registrant and
Lodestone Partners, Ltd. dated October
10, 1980.
(a) (vii) Agreement dated as of October 10, 1980
among the Registrant and Lodestone
Partners, Ltd.(7)
(a) (viii) Agreement dated May 30, 1984 among the
Registrant, Norman Haber and Lodestone
Partners, Ltd.(7)
(b) License Agreement between the Registrant
and Life Signs, Inc, (formerly Sepradyne
Corp.) dated September 30, 1980(1)
(b) (I) Amendment dated June 30, 1983 to License
Agreement dated September 30, 1980
between the Registrant and Life Signs,
Inc. (formerly Sepradyne Corp.) (4)
(c) Agreement dated January 1981 between
Vascular Laboratory, Inc, and Life
Signs, Inc. (formerly Sepradyne Corp.)
(1)
(d) 1981 Employee's Incentive Stock Option
Plan. (2)
(e) (I) Limited Partnership Agreement of Life
Signs Research Associates. (3)
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Exhibit Number Description of Exhibit
(e) (ii) Agreement for Research and Development
between the Registrant and Life Signs
Research Associates, dated December 28,
1981 (3)
(e) (iii) Agreement for Sales of Technology between
the Registrant and Life Signs Research
Associates, dated December 28, 1981. (3)
(e) License Agreement between the Registrant
and Life Signs, Inc, (formerly Sepradyne
Corp.) and Life Signs Research Associates
dated December 28, 1981 (3)
(e) (v) Amendment No.1 to Agreement of Limited
Partnership of Life Signs Research
Associates. (3)
(e) (vi) Amendment No.2 to Agreement to Limited
Partnership of Life Signs, Research
Associates. (3)
(e) (vii) Amendment No.l to Agreement for Research
and Development between the Registrant
and Life Signs Research Associates.(3)
(e) (viii) Amendment No.2 to Agreement for Research
and Development between the Registrant
and Life Signs Research Associates. (6)
(e) (ix) Agreement dated as of May 30, 1984 among
Life Signs Research Associates, Life
Signs, Inc. and Life Signs/Boston Inc.(7)
(e) (x) Amendment No.1 to License Agreement
dated December 28, 1981 between the
Registrant, Life Signs, Inc. and Life
Signs/Boston, Inc. (7)
(e) (xi) Amendment No.3 to Agreement for Research
and Development between the Registrant
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Exhibit Number Description of Exhibit
and Life Signs Research Associates. (5)
(e) (xii) Amendment No.l to Agreement for Sales of
Technology between the Registrant and
Life Signs Research Associates. (5)
(e) (xiii) Supplement dated May 30, 1984 to the
Agreement of Limited Partnership of Life
Signs Research Associates. (7)
(f) (I) Lease dated September 19, 1982 between
Net Properties Management, Inc, and the
Registrant.
(f) (ii) Amendment dated March 31, 1983 to lease
dated September 19, 1982 between Net
Properties Management, Inc., and the
Registrant. (3)
(g) (I) Shareholders agreement among Silver Tech
Mines, Inc., ("Silver Tech"), the
Registrant and Houston Mining a
Resources, Inc. ("HMR") (3)
(g) (ii) Ancillary Agreement between the
Registrant and HMR. (3)
(g) (iii) License Agreement between the Registrant
and Silver Tech. (3)
(g) (iv) Mining deed dated August 22, 1983 by HMR
to Silver Tech (4)
(g) (v) Assignment of Leases dated, August 22,
1983 by HMR to Silver Tech. (4)
(g) (vi) Letter agreement between Cochise Limited
Partnership and Silver Tech executed by
Cochise Limited Partnership. (3)
(h) Agreement dated January 11, 1981 between
the Registrant and HMR.(6)
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Exhibit Number Description of Exhibit
(h) (I) Agreement dated May 11, 1984 between the
Registrant and GRI Mines, Corp, (6)
(h) (ii) Letter dated July 19, 1984 from GRI
Mining Corp. to the Registrant. (7)
(I) (I) Stock Purchase Agreement dated April 24,
1985 between Life Signs, Inc, ("Life Signs Inc.),
("Life Signs"), Martin Kaplitt ("Kaplitt"), Steven Frantz
("Frantz"),Leonard Epifano ("Epifano") and Richard Saitta
("Saitta").(9)
(ii) Indemnity Agreement dated July 31, 1985
among Life Signs, American Cardiovascular
Management, Inc. ("ACM"), Vascular
Diagnostic Associates, P.C. ("VDA"),
Kaplitt, Frantz, Saitta and Epifano. (9)
(iii) Option Agreement dated July 31, 1985 among
Life Signs, Kaplitt, Frantz, Saitta, Epifano and
Sandra Methlie ("Methlie") (9)
(v) Employment Agreement dated July 31, 1985
by and between ACM and Methlie (9)
(vi) Consultants Agreement dated July 31, 1985
by and between Life Signs and Frantz (9)
(j) (I) Joint Venture Agreement dated as of
September 27, 1985 between the Registrant
and Mining Technology Australia, Ltd.
("MTA") (10)
(j) (ii) Licensing and Operating
Agreement dated as of September 27,
1985 between the Registrant and the
Joint Venture between the Registrant
and MTA formed pursuant to the Joint
Venture Agreement (10)
(k) (I) Stock Purchase Agreement dated September
5, 1986 among Life Signs and Kaplitt,
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Exhibit Number Description of Exhibit
Frantz, Saitta, Epifano and Methlie.
(10)
(k) (ii) Services Agreement dated September 2, 1986
between National Diagnostics Management
Services, Inc. and Kaplitt and Frantz.
(10)
11 Statement re: computation of earnings per share
14 (a)
(b) Belgium Patent No. 845,787 issued September 30,
1979 to Norman Haber (1)
(c) Canada Patent No. 1065274 issued October 30,
1979 to Norman Haber (1)
(d) Great Britain Patent No. 1,556,024) issued
March 12, 1980 to Norman Haber.
(e) South Africa (including Bophuthatswana,
Transkei and Venda) Patent No. 76/5067
issued November 3, 1977 to Norman Haber
(1)
(f) U.S. Patent No. 3,984,298 issued October
5, 1976 to Norman Haber
(g) U.S. Patent No. 4,146,454 issued March
27, 1979 to Norman Haber (2)
(h) Assignment dated December 24, 1970 of
U.S. Patent No. 3,984,298 and foreign
patent rights to the Registrant (4)
(I) Assignment dated July 21, 1976 of U.S.
Patent No. 4,146,454 and foreign patent
rights to the Registrant (4)
(j) Israel Patent No, 50224 issued April 1, 1987 to
Norman Haber
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Exhibit Number Description of Exhibit
(k) Switzerland Patent No. 628527 issued
March 15, 1982 to Norman Haber (4)
(1) Brazil Patent No. PI 7605832 issued
March 30, 1982 to Norman Haber (4)
(m) France Patent No. 76,26821 issued
November 8, 1982 to Norman Haber (4)
22 List of subsidiaries of the Registrant
(1) Incorporated by reference to the corresponding exhibit to
the Registrant's Registration Statement on Form 10 (file
0-9966).
(2) Incorporated by reference to the corresponding exhibit to
the Registrant's Annual Report on Form O-k for the
fiscal year ended May 31, 1982 (File No. 0-9966).
(3) Incorporated by reference to the corresponding exhibit to
the Registrant's Annual Report on Form 10-k for the
fiscal year ended May 31, 1983 (File No. 0-9966).
(4) Incorporated by reference to the corresponding exhibit to
the Registrant's Amendment No. 1 on Form 8 to its Annual
Report on Form 10-k for the fiscal year ended May 31,
1983 (File No. 0-9966).
(5) Incorporated by reference to the corresponding exhibit to
the Registrant's Annual Report on Form 10-k for the
fiscal year ended May 31, 1985 (File No. 00-9966).
(6) Incorporated by reference to the corresponding exhibit
to the Registrant's Registration Statement on Form S-l
filed with the Commission on May 31, 1985 (File No,
2091444).
(7) Incorporated by reference to the corresponding exhibit to
Amendment No. 3 to the Registrant's Registration Statement
on Form S-l filed with the Commission on November 6, 1984
(File No. 2-91444).
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Exhibit Number Description of Exhibit
(8) Incorporated by reference to the corresponding exhibit
to Amendment No. 4 to the Registrant's Registration
Statement on Form S-l filed with the Commission on
November 16, 1984 (File No. k2-91444).
(9) Incorporated by reference to Exhibit 10.1 to the
Registrant's Current Report on Form 8-K filed with the
Commission in connection with events of August 1, 1985
(File No. 0-9966).
(10) Incorporated by reference to the corresponding exhibit
to Registrant's Annual Report on Form 10K for the fiscal
year ended May 31, 1986 (File No. 6-9966).
(11) Incorporated by reference to the corresponding exhibit
to Registrant's Annual Report on Form 10-K for the
fiscal year ended May 31, 1987 (File No. 6-9966).
(12) Incorporated by reference to the corresponding exhibit
to Registrant's Annual Report on Form 10-K for the
fiscal year ended May 31,1988 (File No. 6-9966).
(b) reports on Form 8-K:
The Registrant did not file any reports on Form
8-K during the last quarter of the period covered
by this report.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, The Registrant has duly undersigned, thereunto duly
authorized.
Dated: May 31, 1996
HABER, INC.
(Registrant)
/s/ Norman Haber, Chairman
- --------------------------------------
Norman Haber, Chairman
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 the capacities and on the dates indicated.
Date: May 31, 1996
/s/ Norman Haber, Chairman
--------------------------------------
Norman Haber
Haber Inc., Chief Executive Officer and Director
(Principal Executive Officer)
Date: May 31, 1996
/s/ Warren Donohue
-------------------------------------
Warren Donohue, Director
20
<PAGE>
Report of Independent Certified Public Accountants
To the Stockholders and Board of Directors
Haber, Inc.
470 Main Road
Towaco, New Jersey 07082
We have audited the balance sheets of Haber, Inc. (a development stage
enterprise) as of May 31, 1996 and 1995, and the related statements of
operations, changes in stockholders' equity, and cash flows from inception
through May 31, 1996 and for each of the three years in the period ended May 31,
1996. These financial statements are the responsibility of the management of
Haber, Inc. Our responsibility is to express an opinion on these financial
statements based on our audits.
Except as discussed in the following paragraph, 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.
We were unable to obtain written representations from current and prior
consultants to the Company responsible for financial matters concerning
transactions in the three years ended May 31, 1996.
In our opinion, except for the effects of such adjustments, if any, as might be
determined to be necessary had the written representations referred to in the
previous paragraph been furnished to us by management, the financial statements
referred to above present fairly, in all material respects, the consolidated
financial position of Haber, Inc. at May 31, 1996 and 1995 and the results of
their operations and their changes in stockholders' equity and their cash flows
from inception through May 31, 1996 and for each of the three years in the
period ended May 31, 1996 in conformity with generally accepted accounting
principles.
F-1
<PAGE>
To the Stockholders and Board of Directors
Haber, Inc.
Page Two
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company has suffered recurring losses from operations
and has a net capital deficiency that raise substantial doubt about their
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 3. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
Our audits were made to form an opinion on the basic financial statements taken
as a whole. The supplemental schedules listed in the index to the financial
statements and schedules are presented to comply with rules and regulations
under the Securities and Exchange Act of 1934 and are not otherwise a required
part of the basic financial statements. The supplemental schedules for each of
the three years in the period ended May 31, 1996 have been subjected to the
auditing procedures applied in the audits of the basic financial statements. In
our opinion, except for the effects of such adjustments, if any, as might be
determined to be necessary had the written representations referred to above
been furnished to us by management, the supplemental schedules referred to above
fairly state in all material respects the financial data required to be set
forth therein in relation to the basic financial statements taken as a whole.
/s/RAICH ENDE MALTER LERNER & CO.
- ---------------------------------
RAICH ENDE MALTER LERNER & CO.
East Meadow, New York
December 12, 1996
F-2
<PAGE>
HABER, INC.====================================== A Development Stage Enterprise
Balance Sheets
================================================================================
May 31,
-----------------
1996 1995
=================
Assets
Current Assets
Cash $ 12,860 $ --
Inventory 11,726 10,804
-------- --------
24,586 10,804
-------- --------
Furniture and Equipment
Equipment 329,326 328,207
Furniture and fixtures 99,514 99,514
-------- --------
428,840 427,721
Less: Accumulated depreciation
and amortization 418,960 410,062
-------- --------
9,880 17,659
-------- --------
Other Assets
Patent costs and licenses -
net of accumulated amortization
of $29,751 and $28,730, respectively 908 1,929
Security deposit 25,000 25,000
Other assets 2,147 2,758
-------- --------
28,055 29,687
-------- --------
$ 62,521 $ 58,150
======== ========
See notes to financial statements.
F-3
<PAGE>
HABER, INC.====================================== A Development Stage Enterprise
Balance Sheets
================================================================================
<TABLE>
<CAPTION>
May 31,
-------------------
1996 1995
===================
<S> <C> <C>
Liabilities and Stockholders' (Deficit)
Current Liabilities
Cash overdraft $ -- $ 4,502
Accounts payable 59,896 54,178
Accrued expenses 16,151 30,461
Due to related parties 199,323 129,655
Current maturities of capital lease obligations -- 576
Payroll taxes payable 36,148 43,548
Recision obligation -- 303,581
------------ ------------
Total Liabilities 311,518 566,501
------------ ------------
Commitments and Contingencies
Stockholders' (Deficit)
Common stock - $.01 par value-
25,000,000 shares authorized;
42,684,007 and 27,052,368 shares
issued, respectively 426,840 270,524
Preferred stock - $10 par value - 600,000 shares
authorized; 146,308 shares issued in 1996 and 1995 1,463,080 1,463,080
Capital in excess of par value 19,291,239 18,786,723
Stock subscription receivable (41,750) --
(Deficit) accumulated during the development stage (20,012,722) (19,652,994)
------------ ------------
1,126,687 867,333
Less: Treasury stock - 116,625 shares - at cost 1,375,684 1,375,684
------------ ------------
(248,997) (508,351)
------------ ------------
$ 62,521 $ 58,150
============ ============
</TABLE>
See notes to financial statements.
F-4
<PAGE>
HABER, INC.====================================== A Development Stage Enterprise
Balance Sheets
================================================================================
<TABLE>
<CAPTION>
For the Years Ended
Cumulative May 31,
from --------------------------------------------
Inception 1996 1995 1994
============================================================
<S> <C> <C> <C> <C>
Revenues $ 1,933,429 $ -- $ -- $ 14,833
Direct Expenses 1,370,748 -- -- 3,000
------------ ------------ ------------ ------------
Gross Profit 562,681 -- -- 11,833
------------ ------------ ------------ ------------
General and Administrative
Expenses 10,697,480 252,374 360,524 195,424
Research and Development
Expenses 5,027,520 -- 3,455 65,278
Provision for Uncollectible
Advances to Affiliates 1,004,881 32,254 -- --
------------ ------------ ------------ ------------
16,729,881 284,628 363,979 260,702
------------ ------------ ------------ ------------
(Loss) Before Other Income
(Expenses) (16,167,200) (284,628) (363,979) (248,869)
------------ ------------ ------------ ------------
Other Income (Expenses)
Interest income 1,015,770 -- -- 2
Other income 332,110 -- -- --
Interest (expense) (93,692) (2,100) (4,538) (6,466)
(Loss) on investments in affiliates (5,142,591) (73,000) (35,160) (44,758)
Gain on disposition of fixed assets 42,881 -- 2,194 --
------------ ------------ ------------ ------------
(3,845,522) (75,100) (37,504) (51,222)
------------ ------------ ------------ ------------
Net (Loss) $(20,012,722) $ (359,728) $ (401,483) $ (300,091)
============ ============ ============ ============
(Loss) per Share $ (.01) $ (.02) $ (.01)
============ ============ ============
Weighted Average Common Shares
Outstanding During the Period 40,088,454 25,252,483 24,294,163
============ ============ ============
</TABLE>
See notes to financial statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
HABER, INC.========================================================================================== A Development Stage Enterprise
Statements of Changes in Stockholders' Equity Inception Through May 31, 1996 (Page 1 of 6)
====================================================================================================================================
Special Voting Convertible
Common Stock Common Stock Preferred Stock
--------------------- --------------------- ---------------------
Shares Amount Shares Amount Shares Amount
=====================================================================================
<S> <C> <C> <C> <C> <C> <C>
Inception
Authorized 200 shares - $.10 par
value -- $ -- -- $-- -- $--
Issuance of common stock for
donated capital 100 10 -- -- -- --
Net (loss) for the year -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Balance - May 31, 1968 100 10 -- -- -- --
Exchange of issued common stock
for new shares 367,400 36,740 -- -- -- --
Issuance of common stock for cash
in private offering 100,000 10,000 -- -- -- --
Issuance for services valued at par 6,900 690 -- -- -- --
Issuance of common stock to
associates 22,500 2,250 -- -- -- --
(Reduction) for cost of issuance -- -- -- -- -- --
Net (loss) for the year -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Balance - May 31, 1969 496,900 49,690 -- -- -- --
Net (loss) for the year -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Balance - May 31, 1970 496,900 49,690 -- -- -- --
Net (loss) for the year -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Balance - May 31, 1971 496,900 49,690 -- -- -- --
Net (loss) for the year -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Balance - May 31, 1972 496,900 49,690 -- -- -- --
Issuance of common stock for cash 15,300 1,530 -- -- -- --
Net (loss) for the year -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Balance - May 31, 1973 512,200 51,220 -- -- -- --
Net (loss) for the year -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Balance - May 31, 1974 512,200 51,220 -- -- -- --
Issuance of common stock for cash 10,000 1,000 -- -- -- --
Net (loss) for the year -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Balance - May 31, 1975 522,200 52,220 -- -- -- --
Net (loss) for the year -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Balance - May 31, 1976 522,200 52,220 -- -- -- --
Net (loss) for the year -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Balance Forward - May 31, 1977 522,200 $ 52,220 -- $-- -- $--
See notes to financial statements
<CAPTION>
Special Voting
Preferred Stock Capital in Retained
---------------------- Excess of Warrants Subscription Earnings
Shares Amount Par Value Amount Receivable (Deficit)
=====================================================================================
<S> <C> <C> <C> <C> <C> <C>
Inception
Authorized 200 shares - $.10 par
value -- $-- $ -- $-- $-- $ --
Issuance of common stock for
donated capital -- -- 36,740 -- -- --
Net (loss) for the year -- -- -- -- -- (6,879)
-------- -------- -------- -------- -------- --------
Balance - May 31, 1968 -- -- 36,740 -- -- (6,879)
Exchange of issued common stock
for new shares -- -- (36,740) -- -- --
Issuance of common stock for cash
in private offering -- -- 290,000 -- -- --
Issuance for services valued at par -- -- -- -- -- --
Issuance of common stock to
associates -- -- 20,250 -- -- --
(Reduction) for cost of issuance -- -- (13,258) -- -- --
Net (loss) for the year -- -- -- -- -- (47,217)
-------- -------- -------- -------- -------- --------
Balance - May 31, 1969 -- -- 296,992 -- -- (54,096)
Net (loss) for the year -- -- -- -- -- (101,331)
-------- -------- -------- -------- -------- --------
Balance - May 31, 1970 -- -- 296,992 -- -- (155,427)
Net (loss) for the year -- -- -- -- -- (96,306)
-------- -------- -------- -------- -------- --------
Balance - May 31, 1971 -- -- 296,992 -- -- (251,733)
Net (loss) for the year -- -- -- -- -- (14,699)
-------- -------- -------- -------- -------- --------
Balance - May 31, 1972 -- -- 296,992 -- -- (266,432)
Issuance of common stock for cash -- -- 37,195 -- -- --
Net (loss) for the year -- -- -- -- -- (50,148)
-------- -------- -------- -------- -------- --------
Balance - May 31, 1973 -- -- 334,187 -- -- (316,580)
Net (loss) for the year -- -- -- -- -- (21,891)
-------- -------- -------- -------- -------- --------
Balance - May 31, 1974 -- -- 334,187 -- -- (338,471)
Issuance of common stock for cash -- -- 15,150 -- -- --
Net (loss) for the year -- -- -- -- -- (26,010)
-------- -------- -------- -------- -------- --------
Balance - May 31, 1975 -- -- 349,337 -- -- (364,481)
Net (loss) for the year -- -- -- -- -- (26,542)
-------- -------- -------- -------- -------- --------
Balance - May 31, 1976 -- -- 349,337 -- -- (391,023)
Net (loss) for the year -- -- -- -- -- (24,717)
-------- -------- -------- -------- -------- --------
Balance Forward - May 31, 1977 -- $-- $ 349,337 $-- $-- $ (415,740)
See notes to financial statements
<CAPTION>
Deferred
Unearned Total
Treasury Stock Compensation Stockholders'
--------------------- Stock Option Equity
Shares Amount Plan (Deficit)
=======================================================
<S> <C> <C> <C> <C>
Inception
Authorized 200 shares - $.10 par
value -- $-- $-- $ --
Issuance of common stock for
donated capital -- -- -- 36,750
Net (loss) for the year -- -- -- (6,879)
-------- -------- -------- --------
Balance - May 31, 1968 -- -- -- 29,871
Exchange of issued common stock
for new shares -- -- -- --
Issuance of common stock for cash
in private offering -- -- -- 300,000
Issuance for services valued at par -- -- -- 690
Issuance of common stock to
associates -- -- -- 22,500
(Reduction) for cost of issuance -- -- -- (13,258)
Net (loss) for the year -- -- -- (47,217)
-------- -------- -------- --------
Balance - May 31, 1969 -- -- -- 292,586
Net (loss) for the year -- -- -- (101,331)
-------- -------- -------- --------
Balance - May 31, 1970 -- -- -- 191,255
Net (loss) for the year -- -- -- (96,306)
-------- -------- -------- --------
Balance - May 31, 1971 -- -- -- 94,949
Net (loss) for the year -- -- -- (14,699)
-------- -------- -------- --------
Balance - May 31, 1972 -- -- -- 80,250
Issuance of common stock for cash -- -- -- 38,725
Net (loss) for the year -- -- -- (50,148)
-------- -------- -------- --------
Balance - May 31, 1973 -- -- -- 68,827
Net (loss) for the year -- -- -- (21,891)
-------- -------- -------- --------
Balance - May 31, 1974 -- -- -- 46,936
Issuance of common stock for cash -- -- -- 16,150
Net (loss) for the year -- -- -- (26,010)
-------- -------- -------- --------
Balance - May 31, 1975 -- -- -- 37,076
Net (loss) for the year -- -- -- (26,542)
-------- -------- -------- --------
Balance - May 31, 1976 -- -- -- 10,534
Net (loss) for the year -- -- -- (24,717)
-------- -------- -------- --------
Balance Forward - May 31, 1977 -- $-- $-- $(14,183)
See notes to financial statements
</TABLE>
F-6
<PAGE>
<TABLE>
<CAPTION>
HABER, INC.========================================================================================== A Development Stage Enterprise
Statements of Changes in Stockholders' Equity Inception Through May 31, 1996 (Page 1 of 6)
====================================================================================================================================
Special Voting Convertible
Common Stock Common Stock Preferred Stock
--------------------- ------------------- --------------------
Shares Amount Shares Amount Shares Amount
=====================================================================================
<S> <C> <C> <C> <C> <C> <C>
Balance Forward - May 31, 1977 522,200 $ 52,220 -- $ -- -- $ --
Issuance of common stock for cash 91,527 9,153 -- -- -- --
Issuance for services valued at par-
various 29,402 2,940 -- -- -- --
Net (loss) for the year -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Balance - May 31, 1978 643,129 64,313 -- -- -- --
Issuance of stock for cash 6,770 677 -- -- -- --
Issuance for services 3,300 330 -- -- -- --
Issuance of common stock for cash
in private offering 100,000 10,000 -- -- -- --
Net (loss) for the year -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Balance - 1979 753,199 75,320 -- -- -- --
Net (loss) for the year -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Balance - May 31, 1980 753,199 75,320 -- -- -- --
Issuance for service - Board Advisors-
valued at par 500 50 -- -- -- --
Issuance for cash and services:
Services - various 39,072 3,907 -- -- -- --
Cash 15,077 1,508 -- -- -- --
Authorization of two-for-one stock
split - additional shares issued 807,848 -- -- -- -- --
Cash in private offering 128,600 12,860 -- -- -- --
Issuance for services - commission
on sales of stock units 16,154 162 -- -- -- --
Authorization of two-for-one stock
split - additional shares issued 1,760,450 -- -- -- -- --
(Decrease) in par value from $.10 to
$.01 - reclass to capital in excess
of par -- (58,598) -- -- -- --
(Reduction) for cost of issuance -- -- -- -- -- --
Issuance for cash and services:
Cash 22,000 220 -- -- -- --
Services - professional 10,250 103 -- -- -- --
Net (loss) for the year -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Balance - May 31, 1981 3,553,150 35,532 -- -- -- --
Issuance for cash and services:
Cash - option 3,400 34 -- -- -- --
- new issuance 15,000 150 -- -- -- --
- services 12,500 125 -- -- -- --
Special voting stock dividend -- -- 445,755 4,457 -- --
Special voting stock converted
one-to-one 8,411 84 (8,411) (84) -- --
Net (loss) for the year -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Balance Forward - May 31, 1982 3,592,461 $ 35,925 437,344 $ 4,373 -- $ --
See notes to financial statements
<CAPTION>
Special Voting
Preferred Stock Capital in Retained
---------------------- Excess of Warrants Subscription Earnings
Shares Amount Par Value Amount Receivable (Deficit)
=====================================================================================
<S> <C> <C> <C> <C> <C> <C>
Balance Forward - May 31, 1977 -- $ -- $ 349,337 $ -- $ -- $(415,740)
Issuance of common stock for cash -- -- 174,318 -- -- --
Issuance for services valued at par-
various -- -- -- -- -- --
Net (loss) for the year -- -- -- -- -- (164,493)
-------- -------- -------- -------- -------- --------
Balance - May 31, 1978 -- -- 523,655 -- -- (580,233)
Issuance of stock for cash -- -- 24,644 -- -- --
Issuance for services -- -- 7,372 -- -- --
Issuance of common stock for cash
in private offering -- -- 490,000 -- -- --
Net (loss) for the year -- -- -- -- -- (64,775)
-------- -------- -------- -------- -------- --------
Balance - 1979 -- -- 1,045,671 -- -- (645,008)
Net (loss) for the year -- -- -- -- -- (229,658)
-------- -------- -------- -------- -------- --------
Balance - May 31, 1980 -- -- 1,045,671 -- -- (874,666)
Issuance for service - Board Advisors-
valued at par -- -- -- -- -- --
Issuance for cash and services:
Services - various -- -- -- -- -- --
Cash -- -- 9,443 -- -- --
Authorization of two-for-one stock
split - additional shares issued -- -- -- -- -- --
Cash in private offering -- -- 582,473 -- -- --
Issuance for services - commission
on sales of stock units -- -- -- -- -- --
Authorization of two-for-one stock
split - additional shares issued -- -- -- -- -- --
(Decrease) in par value from $.10 to
$.01 - reclass to capital in excess
of par -- -- 58,598 -- -- --
(Reduction) for cost of issuance -- -- (7,500) -- -- --
Issuance for cash and services:
Cash -- -- 15,660 -- -- --
Services - professional -- -- 51,752 -- -- --
Net (loss) for the year -- -- -- -- -- (353,626)
-------- -------- -------- -------- -------- --------
Balance - May 31, 1981 -- -- 1,756,097 -- -- (1,228,292)
Issuance for cash and services:
Cash - option -- -- 3,516 -- -- --
- new issuance -- -- 149,850 -- -- --
- services -- -- 29,915 -- -- --
Special voting stock dividend -- -- (4,457) -- -- --
Special voting stock converted
one-to-one -- -- -- -- -- --
Net (loss) for the year -- -- -- -- -- (418,205)
-------- -------- -------- -------- -------- --------
Balance Forward - May 31, 1982 -- $ -- $ 1,934,921 $ -- $ -- $(1,646,497)
See notes to financial statements
<CAPTION>
Deferred
Unearned Total
Treasury Stock Compensation Stockholders'
--------------------- Stock Option Equity
Shares Amount Plan (Deficit)
=======================================================
<S> <C> <C> <C> <C>
Balance Forward - May 31, 1977 -- $ -- $ -- $ (14,183)
Issuance of common stock for cash -- -- -- 183,471
Issuance for services valued at par-
various -- -- -- 2,940
Net (loss) for the year -- -- -- (164,493)
-------- -------- -------- --------
Balance - May 31, 1978 -- -- -- 7,735
Issuance of stock for cash -- -- -- 25,321
Issuance for services -- -- -- 7,702
Issuance of common stock for cash
in private offering -- -- -- 500,000
Net (loss) for the year -- -- -- (64,775)
-------- -------- -------- --------
Balance - 1979 -- -- -- 475,983
Net (loss) for the year -- -- -- (229,658)
-------- -------- -------- --------
Balance - May 31, 1980 -- -- -- 246,325
Issuance for service - Board Advisors-
valued at par -- -- -- 50
Issuance for cash and services:
Services - various -- -- -- 3,907
Cash -- -- -- 10,951
Authorization of two-for-one stock
split - additional shares issued -- -- -- --
Cash in private offering -- -- -- 595,333
Issuance for services - commission
on sales of stock units -- -- -- 162
Authorization of two-for-one stock
split - additional shares issued -- -- -- --
(Decrease) in par value from $.10 to
$.01 - reclass to capital in excess
of par -- -- -- --
(Reduction) for cost of issuance -- -- -- (7,500)
Issuance for cash and services:
Cash -- -- -- 15,880
Services - professional -- -- -- 51,855
Net (loss) for the year -- -- -- (353,626)
-------- -------- -------- --------
Balance - May 31, 1981 -- -- -- 563,337
Issuance for cash and services:
Cash - option -- -- -- 3,550
- new issuance -- -- -- 150,000
- services -- -- -- 30,040
Special voting stock dividend -- -- -- --
Special voting stock converted
one-to-one -- -- -- --
Net (loss) for the year -- -- -- (418,205)
-------- -------- -------- --------
Balance Forward - May 31, 1982 -- $ -- $ -- $ 328,722
</TABLE>
See notes to financial statements
F-7
<PAGE>
<TABLE>
<CAPTION>
HABER, INC. ==========================================================================================A Development Stage Enterprise
Statements of Changes in Stockholders' Equity Inception Through May 31, 1996 (Page 3 of 6)
====================================================================================================================================
Special Voting Convertible
Common Stock Common Stock Preferred Stock
-------------------- ------------------- ------------------
Shares Amount Shares Amount Shares Amount
==================================================================================
<S> <C> <C> <C> <C> <C> <C>
Balance Forward - May 31, 1982 3,592,461 $ 35,925 437,344 $ 4,373 -- $ --
Special voting stock converted
one-to-one -- -- (437,344) (4,373) -- --
Preferred stock converted
one-to-one 437,344 4,373 -- -- -- --
Cash in private offering 84,200 842 -- -- -- --
(Reduction) for cost of issuance -- -- -- -- -- --
Warrants and options exercised 158,414 1,584 -- -- -- --
Special voting stock dividend -- -- 20,125 201 -- --
Special voting stock converted
one-to-one -- -- (20,125) (201) -- --
Preferred stock converted
one-to-one 20,125 201 -- -- -- --
Presplit shares for warrants
exercised during the year 2,000 20 -- -- -- --
Common stock required by company
and held in treasury -- -- -- -- -- --
Net (loss) for the year -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Balance - May 31, 1983 4,294,544 42,945 -- -- -- --
Cash in private offering 224,244 2,243 -- -- -- --
Warrants and options exercised 10,197 102 -- -- -- --
Authorization of six-for-five share stock
split - additional shares issued 905,571 9,056 -- -- -- --
Correction of prior issuance 516 5 -- -- -- --
Net (loss) for the year -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Balance - May 31, 1984 5,435,072 54,351 -- -- -- --
Cash in public offering -- -- -- -- 175,000 1,750,000
Warrants and options exercised 47,449 474 -- -- -- --
Conversion of preferred stock 2,746 27 -- -- (2,300) (23,000)
Purchase of treasury stock -- -- -- -- -- --
Insider sale profit -- -- -- -- -- --
Stock issued for services 12,260 122 -- -- -- --
Earned compensation - stock option
plan -- -- -- -- -- --
Deferred compensation - stock option
plan -- -- -- -- -- --
Dividends paid -- -- -- -- -- --
Net (loss) for the year -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Balance Forward - May 31, 1985 5,497,527 $ 54,974 -- $ -- 172,700 $ 1,727,000
<CAPTION>
Special Voting
Preferred Stock Capital in Retained
------------------------- Excess of Warrants Subscription Earnings
Shares Amount Par Value Amount Receivable (Deficit)
====================================================================================
<S> <C> <C> <C> <C> <C> <C>
Balance Forward - May 31, 1982 -- $ -- $ 1,934,921 $ -- $ -- $(1,646,497)
Special voting stock converted
one-to-one 437,344 4,373 -- -- -- --
Preferred stock converted
one-to-one (437,344) (4,373) -- -- -- --
Cash in private offering -- -- 483,308 21,050 -- --
(Reduction) for cost of issuance -- -- (29,475) -- --
Warrants and options exercised -- -- 225,994 -- -- --
Special voting stock dividend -- -- (201) -- -- --
Special voting stock converted
one-to-one 20,125 201 -- -- -- --
Preferred stock converted
one-to-one (20,125) (201) -- -- -- --
Presplit shares for warrants
exercised during the year -- -- -- -- -- --
Common stock required by company
and held in treasury -- -- -- --
Net (loss) for the year -- -- -- -- -- (482,633)
----------- ----------- ----------- ----------- ----- -----------
Balance - May 31, 1983 -- -- 2,614,547 21,050 -- (2,129,130)
Cash in private offering -- -- 1,503,491 56,061 -- --
Warrants and options exercised -- -- 36,025 (375) -- --
Authorization of six-for-five share stock
split - additional shares issued -- -- (9,056) -- -- --
Correction of prior issuance -- -- -- -- -- --
Net (loss) for the year -- -- -- -- -- (1,611,144)
----------- ----------- ----------- ----------- ----- -----------
Balance - May 31, 1984 -- -- 4,145,007 76,736 -- (3,740,274)
Cash in public offering -- -- 418,832 437,500 -- --
Warrants and options exercised -- -- 476,578 (20,677) -- --
Conversion of preferred stock -- -- 22,973 -- --
Purchase of treasury stock -- -- -- -- -- --
Insider sale profit -- -- 17,198 -- -- --
Stock issued for services -- -- 35,700 -- -- --
Earned compensation - stock option
plan -- -- 700,938 -- -- --
Deferred compensation - stock option
plan -- -- -- -- -- --
Dividends paid -- -- (172,700) -- -- --
Net (loss) for the year -- -- -- -- -- (1,841,205)
----------- ----------- ----------- ----------- ----- -----------
Balance Forward - May 31, 1985 -- $ -- $ 5,644,526 $ 493,559 -- $ 5,581,479)
<CAPTION>
Deferred
Unearned Total
Treasury Stock Compensation Stockholders'
------------------------ Stock Option Equity
Shares Amount Plan (Deficit)
=====================================================================
<S> <C> <C> <C> <C>
Balance Forward - May 31, 1982 $ -- -- $ -- $ 328,722
Special voting stock converted
one-to-one -- -- -- --
Preferred stock converted
one-to-one -- -- -- --
Cash in private offering -- -- -- 505,200
(Reduction) for cost of issuance -- -- -- (29,475)
Warrants and options exercised -- -- -- 227,578
Special voting stock dividend -- -- -- --
Special voting stock converted
one-to-one -- -- -- --
Preferred stock converted
one-to-one -- -- -- --
Presplit shares for warrants
exercised during the year -- -- -- 20
Common stock required by company
and held in treasury 3,228 (52,587) -- (52,587)
Net (loss) for the year -- -- -- (482,633)
----------- ----------- ----------- -----------
Balance - May 31, 1983 3,228 (52,587) -- 496,825
Cash in private offering -- -- -- 1,561,795
Warrants and options exercised -- -- -- 35,752
Authorization of six-for-five share stock
split - additional shares issued 645 -- -- --
Correction of prior issuance -- -- -- 5
Net (loss) for the year -- -- -- (1,611,144)
----------- ----------- ----------- -----------
Balance - May 31, 1984 3,873 (52,587) -- 483,233
Cash in public offering -- -- -- 2,606,332
Warrants and options exercised -- -- -- 456,375
Conversion of preferred stock -- -- -- --
Purchase of treasury stock 1,920 (32,161) -- (32,161)
Insider sale profit -- -- -- 17,198
Stock issued for services -- -- -- 35,822
Earned compensation - stock option
plan -- -- -- 700,938
Deferred compensation - stock option
plan (216,783) -- (216,783) (216,783)
Dividends paid -- -- -- (172,700)
Net (loss) for the year -- -- -- (1,841,205)
----------- ----------- ----------- -----------
Balance Forward - May 31, 1985 $ 5,793 (84,748) $ (216,783) $ 2,037,049
</TABLE>
See notes to financial statements
F-8
<PAGE>
<TABLE>
<CAPTION>
HABER, INC. ========================================================================================= A Development Stage Enterprise
Statements of Changes in Stockholders' Equity Inception Through May 31, 1996 (Page 4 of 6)
====================================================================================================================================
Special Voting Convertible Special Voting
Common Stock Common Stock Preferred Stock Preferred Stock
-------------------------- ------------- ----------------------- ---------------
Shares Amount Shares Amount Shares Amount Shares Amount
========================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance Forward - May 31, 1985 5,497,527 $54,974 -- $ -- 172,700 $1,727,000 -- $ --
Warrants and options exercised 423,119 4,232 -- -- -- -- -- --
Authorization of seven-for-five share
stock split - additional shares
issued 2,199,049 21,990 -- -- -- -- -- --
Conversion of preferred stock 20,266 203 -- -- (12,124) (121,240) -- --
Purchase of treasury stock -- -- -- -- -- -- -- --
Stock issued for services 29,950 300 -- -- -- -- -- --
Earned compensation - stock option
plan -- -- -- -- -- -- -- --
Dividends paid -- -- -- -- -- -- -- --
Net (loss) for the year -- -- -- -- -- -- -- --
---------- ---------- ----- ----- ---------- --------- ----- -----
Balance - May 31, 1986 8,169,911 81,699 -- -- 160,576 1,605,760 -- --
Stock issued for services 8,186 82 -- -- -- -- -- --
Cash in private offering 661,750 6,617 -- -- -- -- -- --
Purchase of treasury stock -- -- -- -- -- -- -- --
Warrants expired -- -- -- -- -- -- -- --
Stocks issued in exchange for stock
of subsidiary 100,000 1,000 -- -- -- -- -- --
Net (loss) for the year -- -- -- -- -- -- -- --
---------- ---------- ----- ----- ---------- --------- ----- -----
Balance - May 31, 1987 8,939,847 89,398 -- -- 160,576 1,605,760 -- --
Stock issued for services 51,600 516 -- -- -- -- -- --
Cash in private offering 1,261,057 12,610 -- -- -- -- -- --
Purchase of treasury stock -- -- -- -- -- -- -- --
Options exercised 21,860 219 -- -- -- -- -- --
Stock issued in exchange for stock
of joint venture 71,476 715 -- -- -- -- -- --
Conversion of preferred stock 12,782 128 -- -- (7,650) (76,500) -- --
Stock issued for compensation 251,000 2,510 -- -- -- -- -- --
Net (loss) for the year -- -- -- -- -- -- -- --
---------- ---------- ----- ----- ---------- --------- ----- -----
Balance - May 31, 1988 10,609,622 106,096 -- -- 152,926 1,529,260 -- --
Stock issued for services 6,375 64 -- -- -- -- -- --
Conversion of preferred stock 1,838 18 -- -- (1,100) (11,000) -- --
Stock issued as collateral 165,000 1,650 -- -- -- -- -- --
Cash in private offering 837,239 8,372 -- -- -- -- -- --
Correction of prior issuance (23,174) (231) -- -- -- -- -- --
Warrants expired -- -- -- -- -- -- -- --
Stock issued in payment of interest 30,000 300 -- -- -- -- -- --
Equity resulting from outside
investment in subsidiary -- -- -- -- -- -- -- --
Net (loss) for the year -- -- -- -- -- -- -- --
---------- ---------- ----- ----- ---------- --------- ----- -----
Balance Forward - May 31, 1989 11,626,900 $116,269 -- $ -- 151,826 $1,518,260 -- $ --
<CAPTION>
Capital in Retained Treasury Stock
Excess of Warrants Subscription Earnings ------------------------
Par Value Amount Receivable (Deficit) Shares Amount
========================================================================================
<S> <C> <C> <C> <C> <C> <C>
Balance Forward - May 31, 1985 $ 5,644,526 $ 493,559 $ -- $(5,581,479) 5,793 $ (84,748)
Warrants and options exercised 3,236,380 737,511 -- -- 4,770 (66,436)
Authorization of seven-for-five share
stock split - additional shares
issued (27,914) -- -- -- 2,317 --
Conversion of preferred stock 121,037 -- -- -- -- --
Purchase of treasury stock -- -- -- -- 100,600 (1,201,640)
Stock issued for services 198,793 -- -- -- -- --
Earned compensation - stock option
plan -- -- -- -- -- --
Dividends paid (333,276) -- -- -- -- --
Net (loss) for the year -- -- -- (2,849,497) -- --
---------- ---------- ----------- ------------ -------- -----------
Balance - May 31, 1986 8,839,546 1,231,070 -- (8,430,976) 113,480 (1,352,824)
Stock issued for services 27,554 -- -- -- -- --
Cash in private offering 1,226,595 34,188 -- -- -- --
Purchase of treasury stock -- -- -- -- 1,278 (11,425)
Warrants expired 7,125 (7,125) -- -- -- --
Stocks issued in exchange for stock
of subsidiary -- -- -- -- 100,000 (1,000)
Net (loss) for the year -- -- -- (2,185,691) -- --
---------- ---------- ----------- ------------ -------- -----------
Balance - May 31, 1987 10,100,820 1,258,133 -- (10,616,667) 214,758 (1,365,249)
Stock issued for services 121,084 -- -- -- -- --
Cash in private offering 1,530,979 -- -- -- -- --
Purchase of treasury stock -- -- -- -- 8,280 (32,195)
Options exercised 32,571 -- -- -- -- --
Stock issued in exchange for stock
of joint venture -- -- -- -- -- --
Conversion of preferred stock 76,372 -- -- -- -- --
Stock issued for compensation 248,490 -- -- -- -- --
Net (loss) for the year -- -- -- (3,083,441) -- --
---------- ---------- ----------- ------------ -------- -----------
Balance - May 31, 1988 12,110,316 1,258,133 -- (13,700,108) 223,038 (1,397,444)
Stock issued for services -- -- -- -- -- --
Conversion of preferred stock 10,982 -- -- -- -- --
Stock issued as collateral (1,650) -- -- -- -- --
Cash in private offering 535,228 -- -- -- -- --
Correction of prior issuance (20,622) -- -- -- (6,413) 20,760
Warrants expired 1,258,133 (1,258,133) -- -- -- --
Stock issued in payment of interest -- -- -- -- -- --
Equity resulting from outside
investment in subsidiary 1,770,187 -- -- -- -- --
Net (loss) for the year -- -- -- (2,613,093) -- --
---------- ---------- ----------- ------------ -------- -----------
Balance Forward - May 31, 1989 $15,662,574 $ -- $ -- $(16,313,201) 216,625 $(1,376,684)
<CAPTION>
Deferred
Unearned Total
Compensation Stockholders'
Stock Option Equity
Plan (Deficit)
============ ============
<S> <C> <C>
Balance Forward - May 31, 1985 $(216,783) $ 2,037,049
Warrants and options exercised -- 3,911,687
Authorization of seven-for-five share
stock split - additional shares
issued -- (5,924)
Conversion of preferred stock -- --
Purchase of treasury stock -- (1,201,640)
Stock issued for services -- 199,093
Earned compensation - stock option
plan 216,783 216,783
Dividends paid -- (333,276)
Net (loss) for the year -- (2,849,497)
----------- -----------
Balance - May 31, 1986 -- 1,974,275
Stock issued for services -- 27,636
Cash in private offering -- 1,267,400
Purchase of treasury stock -- (11,425)
Warrants expired -- --
Stocks issued in exchange for stock
of subsidiary -- --
Net (loss) for the year -- (2,185,691)
----------- -----------
Balance - May 31, 1987 -- 1,072,195
Stock issued for services -- 121,600
Cash in private offering -- 1,543,589
Purchase of treasury stock -- (32,195)
Options exercised -- 32,790
Stock issued in exchange for stock
of joint venture -- 715
Conversion of preferred stock -- --
Stock issued for compensation -- 251,000
Net (loss) for the year -- (3,083,441)
----------- -----------
Balance - May 31, 1988 -- (93,747)
Stock issued for services -- 64
Conversion of preferred stock -- --
Stock issued as collateral -- --
Cash in private offering -- 543,600
Correction of prior issuance -- (93)
Warrants expired -- --
Stock issued in payment of interest -- 300
Equity resulting from outside
investment in subsidiary -- 1,770,187
Net (loss) for the year -- (2,613,093)
----------- -----------
Balance Forward - May 31, 1989 $ -- $ (392,782)
</TABLE>
See notes to financial statements.
F-9
<PAGE>
<TABLE>
<CAPTION>
HABER, INC.========================================================================================== A Development Stage Enterprise
Statements of Changes in Stockholders' Equity Inception Through May 31, 1996 (Page 5 of 6)
====================================================================================================================================
Special Voting Convertible Special Voting
Common Stock Common Stock Preferred Stock Preferred Stock
-------------------- ------------- ------------------ ---------------
Shares Amount Shares Amount Shares Amount Shares Amount
===================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance Forward -- May 31, 1989 11,626,900 $ 116,269 -- $ -- 151,826 $1,518,260 -- $ --
Treasury shares previously arising
in consolidation -- -- -- -- -- -- -- --
Stock issued for services 400,000 4,000 -- -- -- -- -- --
Conversion of preferred stock 1,503 15 -- -- (900) (9,000) -- --
Stock issued in payment of debt
and interest 3,634,809 36,348 -- -- -- -- -- --
Cash in private offering 40,000 400 -- -- -- -- -- --
Correction of private issuance (2,000) (20) -- -- -- -- -- --
Stock issued for compensation 251,114 2,511 -- -- -- -- -- --
Warrants issued for compensation -- -- -- -- -- -- -- --
Net (loss) for the year -- -- -- -- -- -- -- --
---------- --------- ------- ----- ------- ---------- ---- -----
Balance - May 31, 1990 15,952,326 159,523 -- -- 150,926 1,509,260 -- --
Stock issued for services 1,850,993 18,510 -- -- -- -- -- --
Conversion of warrants 200,000 2,000 -- -- -- -- -- --
Cash in private offering 1,517,641 15,177 -- -- -- -- -- --
Correction of prior issuance 20,400 204 -- -- -- -- -- --
Net (loss) for the year -- -- -- -- -- -- -- --
---------- --------- ------- ----- ------- ---------- ---- -----
Balance - May 31, 1991 19,541,360 195,414 -- -- 150,926 1,509,260 -- --
Stock issued for services 461,875 4,619 -- -- -- -- -- --
Stock issued in payment of liabilities 755,040 7,550 -- -- -- -- -- --
Cash in private offering 1,404,995 14,050 -- -- -- -- -- --
Correction of prior issuance (90,767) (908) -- -- -- -- -- --
Conversion of preferred stock 2,304 23 -- -- (1,379) (13,790) -- --
Conversion of warrants 915,000 9,150 -- -- -- -- -- --
Net (loss) for the year -- -- -- -- -- -- -- --
---------- --------- ------- ----- ------- ---------- ---- -----
Balance - May 31, 1992 22,989,807 229,898 -- -- 149,547 1,495,470 -- --
Stock issued for services 629,800 6,298 -- -- -- -- -- --
Cash in private offering 1,274,343 12,743 -- -- -- -- -- --
Net (loss) for the year -- -- -- -- -- -- -- --
---------- --------- ------- ----- ------- ---------- ---- -----
Balance - May 31, 1993 24,893,950 248,939 -- -- 149,547 1,495,470 -- --
Cash in private offering 993,703 9,937 -- -- -- -- -- --
Shares issued for services 463,000 4,630 -- -- -- -- -- --
Conversion of warrants 87,000 870 -- -- -- -- -- --
Stock returned from directors (1,709,915) (17,099) -- -- -- -- -- --
Net (loss) for the year -- -- -- -- -- -- -- --
Stock issued by unconsolidated
subsidiary -- -- -- -- -- -- --
---------- --------- ------- ----- ------- ---------- ---- -----
Balance Forward - May 31, 1994 24,727,738 $ 247,277 -- $ -- 149,547 $1,495,470 -- $ --
<CAPTION>
Deferred Total
Subscrip- Unearned Stock-
Capital in tion Retained Treasury Stock Compensation holders'
Excess of Warrants Receiv- Earnings ----------------- Stock Option Equity
Par Value Amount able (Deficit) Shares Amount Plan (Deficit)
=========================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance Forward -- May 31, 1989 $15,662,574 $ -- -- $(16,313,201) 216,625 $(1,376,684) $ -- $(392,782)
Treasury shares previously arising
in consolidation -- -- -- -- 100,000 1,000 -- 1,000
Stock issued for services 55,400 -- -- -- -- -- -- 59,400
Conversion of preferred stock 8,985 -- -- -- -- -- -- --
Stock issued in payment of debt
and interest 910,910 -- -- -- -- -- -- 947,258
Cash in private offering 9,600 -- -- -- -- -- -- 10,000
Correction of private issuance -- -- -- -- -- -- -- (20)
Stock issued for compensation 66,353 -- -- -- -- -- -- 68,864
Warrants issued for compensation 107,520 -- -- -- -- -- -- 107,520
Net (loss) for the year -- -- -- (982,263) -- -- -- (982,263)
---------- -------- ----- ------------- ------- ----------- ---- --------
Balance - May 31, 1990 16,821,342 -- -- (17,295,464) 116,625 (1,375,684) -- (181,023)
Stock issued for services 99,236 -- -- -- -- -- -- 117,746
Conversion of warrants 8,000 -- -- -- -- -- -- 10,000
Cash in private offering 211,649 -- -- -- -- -- -- 226,826
Correction of prior issuance 396 -- -- -- -- -- -- 600
Net (loss) for the year -- -- -- (776,330) -- -- -- (776,330)
---------- -------- ----- ------------- ------- ---------- ---- --------
Balance - May 31, 1991 17,140,623 -- -- (18,071,794) 116,625 (1,375,684) -- (602,181)
Stock issued for services 91,282 -- -- -- -- -- -- 95,901
Stock issued in payment of liabilities 218,260 -- -- -- -- -- -- 225,810
Cash in private offering 471,450 -- -- -- -- -- -- 485,500
Correction of prior issuance -- -- -- -- -- -- -- (908)
Conversion of preferred stock 13,767 -- -- -- -- -- -- --
Conversion of warrants 19,000 -- -- -- -- -- -- 28,150
Net (loss) for the year -- -- -- (530,965) -- -- -- (530,965)
---------- -------- ----- ------------- ------- ---------- ---- --------
Balance - May 31, 1992 17,954,382 -- -- (18,602,759) 116,625 (1,375,684) -- (298,693)
Stock issued for services 63,817 -- -- -- -- -- -- 70,115
Cash in private offering 362,102 -- -- -- -- -- -- 374,845
Net (loss) for the year -- -- -- (348,661) -- -- -- (348,661)
---------- -------- ----- ------------ ------- ---------- ---- --------
Balance - May 31, 1993 18,380,301 -- -- (18,951,420) 116,625 (1,375,684) -- (202,394)
Cash in private offering 107,703 -- -- -- -- -- -- 117,640
Shares issued for services -- -- -- -- -- -- -- 4,630
Conversion of warrants 1,820 -- -- -- -- -- -- 2,690
Stock returned from directors 17,099 -- -- -- -- -- -- --
Net (loss) for the year -- -- -- (300,091) -- -- -- (300,091)
Stock issued by unconsolidated
subsidiary -- 149,720 -- -- -- -- -- 149,720
---------- -------- ----- ------------ ------- ---------- ---- --------
Balance Forward - May 31, 1994 $18,656,643 $ -- $ -- $(19,251,511) 116,625 $(1,375,684) $ -- $(227,805)
</TABLE>
F-10
<PAGE>
<TABLE>
<CAPTION>
HABER, INC.========================================================================================== A Development Stage Enterprise
Statements of Changes in Stockholders' Equity Inception Through May 31, 1996 (Page 5 of 6)
====================================================================================================================================
Special Voting Convertible
Common Stock Common Stock Preferred Stock
Shares Amount Shares Amount Shares Amount
===========================================================================================
<S> <C> <C> <C> <C> <C> <C>
Balance Forward -- May 31, 1994 24,727,738 $ 247,277 -- $ -- 149,547 $ 1,495,470
Cash in private offering 411,547 4,116 -- -- -- --
Shares issued for services 2,012,590 20,126 -- -- -- --
Conversion of warrants 105,081 1,051 -- -- -- --
Stock returned from directors (210,000) (2,100) -- -- -- --
Conversion of preferred stock 5,412 54 -- -- (3,239) (32,390)
Stock issued by unconsolidated
subsidiary -- -- -- -- -- --
Net (loss) for year -- -- -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
Balance -- May 31, 1995 27,052,368 270,524 -- -- 146,308 1,463,080
Sale of stock 2,301,000 23,010 -- -- -- --
Stock issued for services 2,896,111 28,961 -- -- -- --
Conversion of warrants 9,200 92 -- -- -- --
Recision obligation converted stock 1,304,949 13,049 -- -- -- --
Repayment of borrowed shares 1,820,379 18,204 -- -- -- --
Acquisition of equity interest in
Medco Health Corp. 7,300,000 73,000 -- -- --
Net (loss) for the year -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
Balance -- May 31, 1996 42,684,007 $ 426,840 -- $ -- 146,308 $ 1,463,080
------------ ------------ ------------ ------------ ------------ ------------
<CAPTION>
Special Voting Capital in Retained
Preferred Stock Excess of Warrants Subscription Earnings
Shares Amount Par Value Amount Receivable (Deficit)
===========================================================================================
<S> <C> <C> <C> <C> <C> <C>
Balance Forward -- May 31, 1994 -- $ -- $ 18,656,643 $ -- $ -- $(19,251,511)
Cash in private offering -- -- 48,579 -- -- --
Shares issued for services -- -- 5,323 -- -- --
Conversion of warrants -- -- 24,549 -- -- --
Stock returned from directors -- -- 2,100 -- -- --
Conversion of preferred stock -- -- 32,336 -- -- --
Stock issued by unconsolidated
subsidiary -- -- 17,193 -- -- --
Net (loss) for year -- -- -- -- -- (401,483)
----------- ------------ ------------ ------------ ------------ ------------
Balance -- May 31, 1995 -- -- 18,786,723 -- -- (19,652,994)
Sale of stock -- -- 237,188 -- (41,750) --
Stock issued for services -- -- -- -- -- --
Conversion of warrants -- -- -- -- -- --
Recision obligation converted stock -- -- 285,532 -- -- --
Repayment of borrowed shares -- -- (18,204) -- -- --
Acquisition of equity interest in
Medco Health Corp. -- -- -- -- -- --
Net (loss) for the year -- -- -- -- -- --
----------- ------------ ------------ ------------ ------------ ------------
Balance -- May 31, 1996 -- $ -- $ 19,291,239 $ -- $ (41,750) $(20,012,722)
----------- ------------ ------------ ------------ ------------ ------------
<CAPTION>
Deferred
Unearned Total
Compensation Stockholders'
Treasury Stock Stock Option Equity
Shares Amount Plan (Deficit)
==================================================
<S> <C> <C> <C> <C>
Balance Forward -- May 31, 1994 116,625 $(1,375,684) $ -- $(227,805)
Cash in private offering -- -- -- 52,695
Shares issued for services -- -- -- 25,449
Conversion of warrants -- -- -- 25,600
Stock returned from directors -- -- -- --
Conversion of preferred stock -- -- -- --
Stock issued by unconsolidated
subsidiary -- -- -- --
Net (loss) for year -- -- -- (401,483)
--------- ------------ --------- ----------
Balance -- May 31, 1995 116,625 (1,375,684) -- (508,351)
Sale of stock -- -- -- 218,448
Stock issued for services -- -- -- 28,961
Conversion of warrants -- -- -- 92
Recision obligation converted stock -- -- -- 298,581
Repayment of borrowed shares -- -- -- --
Acquisition of equity interest in
Medco Health Corp. -- -- -- 73,000
Net (loss) for the year -- -- -- (359,728)
--------- ------------ --------- ----------
Balance -- May 31, 1996 116,625 $(1,375,684) $ -- $(508,351)
--------- ------------ --------- ----------
</TABLE>
F-11
<PAGE>
<TABLE>
<CAPTION>
HABER, INC. ======================================================================================== A Development Stage Enterprise
Statements of Cash Flows Page 1 of 2
====================================================================================================================================
For the Years Ended
Cumulative May 31,
from ------------------------------------------------
Inception 1996 1995 1994
-------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash Flows from Operating Activities
Net (loss) $(20,012,722) $ (359,728) $ (401,483) $ (300,091)
Adjustments to reconcile net (loss) to
net cash (used for) operating activities:
Depreciation 1,643,349 8,898 6,124 10,662
Amortization 1,115,302 1,021 1,021 1,022
(Gain) on disposal of fixed assets (42,881) -- (2,194) --
Stock issued for services 1,239,454 28,961 19,949 7,320
Compensation recognized under
employees' stock option plans 808,458 -- -- --
Loss on investments in affiliates 5,142,591 73,000 35,160 44,758
Provision for uncollectible advances
to affiliates 1,004,881 -- -- --
Increase (decrease) in current assets (11,726) (922) (2,566) (3,115)
Increase (decrease) in current
liabilities 112,195 (15,992) (19,555) 38,258
------------ ------------ ------------ ------------
(9,001,099) (264,762) (363,544) (201,186)
------------ ------------ ------------ ------------
Cash Flows from Investing Activities
Patent costs and licenses (30,659) -- -- --
Purchase of fixed assets (2,392,703) (1,119) (8,175) --
Proceeds from sale of fixed assets 1,086,007 -- -- --
Investments in and advances to
affiliates (3,912,626) -- -- --
Goodwill acquired (1,085,551) -- -- --
(Increase) decrease in other assets (27,147) 611 -- --
------------ ------------ ------------ ------------
(6,362,679) (508) (8,175) --
------------ ------------ ------------ ------------
</TABLE>
See notes to financial statements.
F-12
<PAGE>
<TABLE>
<CAPTION>
HABER, INC. ======================================================================================== A Development Stage Enterprise
Statements of Cash Flows Page 2 of 2
====================================================================================================================================
For the Years Ended
Cumulative May 31,
from ------------------------------------------------
Inception 1996 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Cash Flows from Financing Activities
Proceeds from issuance of stock $ 16,545,429 $ 218,540 $ 78,295 $ 217,640
Cash dividends (505,976) -- -- --
Purchase of treasury stock (1,375,684) -- -- --
Recovery of insider's selling profit 17,198 -- -- --
Payment of capital lease obligation (303,652) (576) (4,590) (48,956)
Advances from related parties 1,064,438 69,668 (5,086) 27,096
(Repayments to) related parties (65,115) -- -- --
Increase in long-term debt 1,138,477 -- -- --
Payment against long-term debt (1,138,477) -- -- --
Proceeds of notes payable 25,976 -- -- --
Repayment of notes payable (25,976) -- -- --
Increase (decrease) in cash overdraft -- (4,502) (481) 4,983
Recision obligation -- (5,000) 303,581 --
------------ ------------ ------------ ------------
15,376,638 278,130 371,719 200,763
------------ ------------ ------------ ------------
Net Increase (Decrease) in Cash 12,860 12,860 -- (423)
Cash - beginning -- -- -- 423
------------ ------------ ------------ ------------
Cash - end $ 12,860 $ 12,860 $ -- $ --
============ ============ ============ ============
Supplemental Disclosures
Cash Paid
Interest $ 2,100 $ -- $ 3,619
============ ============ ============
Non-Cash Investing and Financing
Activities
Stock issued in payment of debt
and interest $ 298,581 $ 19,949 $ 7,320
============ ============ ============
Common stock returned by directors $ -- $ 2,100 $ 17,099
============ ============ ============
Fixed assets purchased with common
stock $ -- $ 5,500 $ --
============ ============ ============
Preferred stock converted into common
stock $ -- $ 32,390 $ --
============ ============ ============
Stock issued for acquisition of equity
interest in Medco Health Corporation $ 73,000 $ -- $ --
============ ============ ============
</TABLE>
F-13
<PAGE>
HABER, INC. =====================================A Development Stage Enterprise
Notes to Financial Statements May 31, 1996, 1995 and 1994
===============================================================================
1 - The Company
The Company was founded in 1967 as Haber Instruments, Inc., a New York
corporation. On April 1, 1980, Haber Instruments, Inc. was acquired through
a migratory merger by Haber, Inc. (the "Company"), which had been
incorporated in Delaware in October, 1979. The only effect of the merger
was a change in the state of incorporation and a change in name. The
Company relocated its corporate office to Towaco, New Jersey and has been
there since 1982.
From its formation in 1967, and with the grant of its patents in 1976 and
1979, the Company has operated as a development stage enterprise, directing
its efforts towards understanding its technology and establishing patents
in the fields of chemical and electrochemical process technologies,
primarily as the basis for cardiovascular diagnostic instrumentation and
for the extraction and purification of high-value metals. The Company owns
the fundamental patent to a process called Electro Molecular Propulsion
("EMP").
2 - Summary of Significant Accounting Policies
a. Patents and Licenses - Represents accumulated legal costs capitalized
and amortized over their estimated useful lives of 17 years,
commencing with the date of issuance of the related patents.
b. Inventory - Inventory consists of supplies of parts and are valued at
the lower of cost (specifically identified) or market.
c. Furniture and Depreciation - Furniture and equipment are carried at
cost. Depreciation is computed on the straight-line or accelerated
methods over periods of three to seven years, which corresponds to the
useful lives of the assets.
d. Earnings Per Share - Computed by dividing the net loss by the weighted
average number of shares outstanding during the year. Common stock
equivalents have not been included in the earnings-per-share
computation because of their anti-dilutive effect.
e. Research and Development Costs - The Company charges research and
development costs which are not incurred in conjunction with
contractual obligations to expense as incurred.
f. 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 dates of the financial statements and the reported amounts of
revenues and expenses during the reporting periods. Actual results
could differ from those estimates.
Continued
F-14
<PAGE>
g. Unconsolidated Subsidiaries - The Company accounts for its investments
in unconsolidated subsidiaries on the equity method. All intercompany
transactions are eliminated. Losses beyond the initial investment are
not recognized if it is not the Company's obligation to fund such
losses.
h. Reclassifications - Certain items have been reclassified to conform
with the current year's presentation.
3 - Status of the Company
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business.
The Company makes use of equity financings to provide funds for operations.
Its ability to operate is dependent upon its ability to obtain working
capital until regular positive cash flow is attained. It is management's
intention to minimize operating costs until such time as sales can be
increased enough to fund its operations.
The main on-going activity of the Company's business through 1996 was the
furthering of its technology, EMP. This comprised the completion and
introductory sales of its EMP 15K-1 instrument and selected reagents for
its use. Also, provision for preparation of pertinent new patent
applications have been completed, with appropriate notification of the U.S.
Patent Office to prioritize the same.
4 - Due to Related Parties
Payables have been generated by transactions with related parties which are
detailed as follows:
May 31,
------------------------------------
1996 1995
------------------------------------
Shareholders $ 151,264 $ 29,991
Corporate officers and directors 45,829 96,603
Joint venture 2,230 3,061
----------- ------------
$ 199,323 $ 129,655
=========== ============
The amounts due to shareholder, corporate officers and directors and the
joint venture have no fixed terms of repayment and bear interest at rates
ranging from 0 to 15%.
Continued
F-15
<PAGE>
5 - Income Taxes
As of May 31, 1996, the Company has a net operating loss and investment tax
credit carryforward for federal income tax purposes of $11,349,595 and
$34,120, respectively. If not offset against taxable income, the operating
loss carryforward will expire as follows:
Net Operating Investment Tax Credit
Loss Carryforward Carryforward
-----------------------------------------
Year End May 31, 1997 $ 323,200 $ 1,000
1998 252,700 2,600
1999 1,341,400 4,500
2000 322,178 14,067
2001 2,177,631 11,953
2002 1,268,752 --
2003 2,414,382 --
2004 2,267,089 --
2005 982,263 --
----------- -----------
$11,349,595 $ 34,120
=========== ===========
Had the Company filed its federal tax returns for the years ended May 31,
1991 through May 31, 1996, it would have had an additional net operating
loss carryforward of $2,717,259, expiring as follows:
Year End May 31, 2006 $ 776,330
2007 530,966
2008 348,661
2009 300,091
2010 401,483
2011 359,728
-----------
$ 2,717,259
===========
These carryforwards are not expected to be utilized. Based on a 35% federal
tax rate, the Company has deferred tax assets of approximately $4,960,000
and $4,834,000 at May 31, 1996 and 1995, respectively, which were totally
offset by valuation allowances.
F-16
Comntinued
<PAGE>
6 - Capital Stock
On November 15, 1984, the Board of Directors adopted a resolution reserving
the following shares of $.01 par value common stock of the Company:
Shares Reserved Reason
-----------------------------------------------------
292,530 Conversion of convertible preferred stock
245,000 Exercise of: Class A Warrants
245,000 Class B Warrants
62,385 Underwriters' Warrants
At May 31, 1995, the shares issuable on exercise of all outstanding
warrants exceeded the amount reserved above by 5,646,377 shares and the
amount of shares issuable on exercise of all convertible securities would
exceed the number of authorized shares by 5,896,360 shares.
In June, 1993, the board of directors established an anti-dilution
provision such that their percentage of ownership is maintained until
December 31, 1994. Such ownership adjustments will be made semi-annually in
the form of warrants at $.25 per share exercisable for a period of seven
years.
In 1994 and 1995, the board members returned a total of 1,919,915 shares
which were canceled and new shares reissued to outside investors.
7 - Redeemable Preferred Stock
As a result of the public offering of its securities in November, 1984:
a. Shares of convertible preferred stock are redeemable in whole or in
part at the option of the Company at a price of $20 per share plus any
accrued, unpaid cumulative dividends, at any time after November 25,
1988. In addition, the shares may be redeemed at the same price if at
any time prior to November 26, 1988 the closing price of the common
stock on the National Market System of the National Association of
Securities Dealers Automated Quotations System (or, if the common
stock is not reported on such system, the highest of the closing
prices of the common stock on any stock exchange in which the common
stock is traded or the daily high bid price for the common stock in
the over-the-counter market, as the case may be) shall have equaled or
exceeded $26.80 per share for any 20 consecutive trading days.
b. Shares of convertible preferred stock are convertible at the option of
the registered holder thereof, into shares of common stock, par value
$.01 per share, of the Company ("common stock") at the rate of 1.6716
shares of common stock for each share of convertible preferred stock.
F-17
Continued
<PAGE>
8 - Options and Warrants
The Company maintains an Employees' Incentive Stock Option Plan and a 1985
Officers' Stock Option Plan and issues unregistered warrants.
All options have expired as of May 31, 1993.
Warrant activity for the period was as follows:
Price
Shares Per Share Total
-------------------------------------
Balance at May 31, 1993 8,561,233 $.01 - $ .30 $529,430
Issued for services 31,500 .25 7,875
Issued with purchase of stock 91,409 .12 - .50 19,593
Issued in lieu of interest 50,000 .25 12,500
Issued for services (87,000) .10 - .12 (9,240)
Exercised (286,319) .05 - .20 (35,181)
--------- ------------- --------
Balance at May 31, 1994 8,360,823 .01 - .50 524,977
Issued for services 100,000 .25 25,000
Issued with purchase of stock 21,000 .25 5,250
Exercised (105,081) .24 - .25 (26,100)
Expired (2,655,833) .01 - .30 (50,159)
--------- ------------- --------
Balance at May 31, 1995 5,720,909 .01 - .30 478,968
Issued for services 40,200 .25 10,050
Reissued 5,125 .50 2,563
Exercised (9,200) .25 (2,300)
Expired (834,009) .01 - .05 (25,243)
--------- ------------- --------
Balance at May 31, 1996 4,923,025 $.01 - $ .05 $464,038
========= ============= ========
9 - Leases
The Company is obligated under a lease for office space. As of June 1,
1990, the Company entered into a verbal "month-to-month" lease agreement on
its primary office space. The rent is $3,000 per month. For the years ended
May 31, 1996 and 1995, rental expense was $36,000 and $34,975,
respectively.
F-18
Continued
<PAGE>
10 - Recision Obligation
During fiscal year ended May 31, 1995, the Company attempted to make a
private placement of its securities and issue unrestricted stock in
reliance upon the exemption from the registration requirements of Section 5
of the Securities Act of 1933 (the "Act") provided by Rule 504 of
Regulation D. Subsequent to the receipt of approximately $300,000 in funds,
legal counsel advised the Company it was not eligible to use the Rule 504
exemption. On October 11, 1995, the Company received an opinion from legal
counsel that the offer, issuance and sale of the stock constituted an
exempt transaction under Section 4(2) of the Act. Therefore, these funds
were converted into common stock and are shown in equity at May 31, 1996.
11 - Commitments and Contingencies
The Company is in contention with the Department of Environmental
Protection ("DEP") in New Jersey and currently has appeared before the
court with a legal representative of the DEP to try to determine a
settlement penalty for neglecting to report timely two filings of septic
sampling and analysis in 1990.
In September, 1993, the Company settled this penalty for $22,500 to be paid
in four semi-annual installments of $5,000 and one final semi-annual
installment of $2,500 plus interest at 5.5% beginning October, 1993. Since
only one payment has been made on this settlement to date, the entire
amount, which totals $19,700 including interest, is currently due and is
included in accounts payable.
12 - Acquisition
During the year, the Company issued 7,300,000 shares of its stock for
1,500,000 shares of Medco Health Corporation. The Company valued this
investment at the par value of its stock, $73,000. Due to the fact that
there is no market for Medco Health Corporation stock, the Company has
established a valuation allowance of $73,000 for this investment.
F-19
<PAGE>
13 - Selected Quarterly Financial Information (Unaudited)
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
-----------------------------------------------------------
<S> <C> <C> <C> <C>
1996
Net sales $ -- $ -- $ -- $ --
Gross profit -- -- -- --
Operating income -- -- -- --
Net (loss) (58,662) (84,154) (43,640) (173,272)
Net (loss) per common share (.002) (.003) (.001) (.003)
1995
Net sales -- -- -- --
Gross profit -- -- -- --
Operating income -- -- -- --
Net (loss) (81,270) (124,143) (48,319) (147,751)
Net (loss) per common share (.003) (.005) (.002) (.003)
</TABLE>
F-20
<PAGE>
HABER, INC. =====================================A Development Stage Enterprise
Valuation and Qualifying Amounts Schedule II
===============================================================================
<TABLE>
<CAPTION>
Balance at
Year Ended Beginning of Amounts Balance at
May 31, Name of Debtor Period Additions Written-Off End of Period
- ---------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C>
1994 Amerigold, Inc. $ 3,750 $ 15,700 $ -- $ 19,450
Life Signs, Inc. -- 5,960 -- 5,960
--------- ------------ ---------- ----------
$ 3,750 $ 21,660 $ -- $ 25,410
========= ============ ========== ==========
1995 Amerigold, Inc. $ 19,450 $ 60 $ -- $ 19,510
Life Signs, Inc. 5,960 -- 5,960 --
--------- ------------ ---------- ----------
$ 25,410 $ 60 $ 5,960 $ 19,510
========= ============ ========== ==========
1996 Amerigold, Inc. $ 19,510 $ 32,254 $ 51,764 $ --
Medco Health
Corporation -- 73,000 -- 73,000
--------- ------------ ---------- ----------
$ 19,510 $ 105,254 $ 51,764 $ 73,000
========= ============ ========== ==========
</TABLE>
F-21
<PAGE>
HABER, INC. =====================================A Development Stage Enterprise
Computation of Fully Diluted Earnings Per Common Share Exhibit 11
===============================================================================
<TABLE>
<CAPTION>
May 31,
----------------------------------------------
1996 1995 1994
----------------------------------------------
<S> <C> <C> <C>
Earnings
(Loss) applicable to common stock $ (359,728) $ (401,483) $ (300,091)
============ ============ ============
Shares
Weighted average number of common shares
outstanding 35,852,411 25,252,483 24,294,163
Additional shares assuming conversion of:
Convertible preferred stock 244,568 247,276 249,983
Warrants reduced by the number of shares
which could have been purchased with
proceeds from the exercise of such warrants 3,991,475 5,032,976 6,352,214
------------ ------------ ------------
Weighted Average Number of Common Shares
Outstanding as Adjusted 40,088,454 30,532,735 30,896,360
============ ============ ============
(Loss) Per Common Share Assuming Full
Dilution $ (.01) $ (.01) $ (.01)
============ ============ ============
</TABLE>
* This calculation is submitted in accordance with Regulation S-K, Item
601(b)(11) although it is contrary to paragraph 40 of APB Opinion No. 15
because it produces an anti-dilutive result.
F-22
<PAGE>
HABER, INC. =====================================A Development Stage Enterprise
Selected Financial Data Item 6.
===============================================================================
<TABLE>
<CAPTION>
Cumulative
from
Inception 1996 1995 1994 1993 1992
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Statement of Operations Data
Revenues $ 1,933,429 $ -- $ -- $ 14,833 $ 49,953 $ --
Direct expenses 1,370,748 -- -- 3,000 9,892 --
General and administrative expenses 10,697,480 252,374 360,524 195,424 314,583 407,501
Research and development expenses 5,027,520 -- 3,455 65,278 77,533 113,613
Operating (loss) (15,882,572) (284,628) (363,979) (248,869) (352,055) (521,114)
Interest income 1,015,770 -- -- 2 7 438
Net (loss) (20,012,722) (359,728) (401,483) (300,091) (348,661) (530,965)
Net (loss) per share (.01) (.02) (.01) (.01) (.03)
Balance Sheet Data
Working capital (286,932) (555,697) (274,977) (254,265) (328,802)
Total assets 62,521 58,150 57,808 72,760 81,800
Total liabilities 311,518 566,601 285,613 275,154 380,493
Stockholders' (deficit) (248,997) (508,351) (227,805) (202,394) (298,693)
</TABLE>
-6-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-START> JUN-01-1995
<PERIOD-END> MAY-31-1996
<CASH> 12,860
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 11,726
<CURRENT-ASSETS> 24,586
<PP&E> 428,840
<DEPRECIATION> 418,960
<TOTAL-ASSETS> 62,521
<CURRENT-LIABILITIES> 311,518
<BONDS> 0
0
0
<COMMON> 426,840
<OTHER-SE> (675,837)
<TOTAL-LIABILITY-AND-EQUITY> 62,521
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 284,628
<OTHER-EXPENSES> 73,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,100
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (359,728)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (359,728)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
