FORM 10-KSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
-----------------
Commission File Number 0-17264
-------
ALFA INTERNATIONAL CORP.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
NEW JERSEY 22-2216835
- ------------------------------ ---------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
50 South Buckhout Street, Irvington, N.Y. 10533
-----------------------------------------------
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (914) 591-1994
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
----------------------------
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. [x] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K (229.405 of this chapter) is not
contained herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-
KSB or any amendment to this Form 10-KSB. [ ]
The aggregate market value of the voting stock held by non-
affiliates of the registrant (based upon the average of the high
and low bid prices) on March 15, 1997 was unable to be determined.
(SEE:"Market for Common Equity and Related Stockholder Matters").
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
[x] Yes [ ] No
As of March 15, 1997 the Company had outstanding 3,543,896 shares
of common stock (CUSIP # 015389-30-7), par value $.01 per share
("Common Stock")
The Index to Exhibits appears on page 14.
DOCUMENTS INCORPORATED BY REFERENCE
Registration Statement on Form S-1, File No. 33-18591, and Annual
Report on Form 10-KSB for the Fiscal Year Ended December 31, 1995,
Part III -Exhibits.
BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK
ALFA INTERNATIONAL CORP.
Table of Contents to Annual Report on Form 10-KSB
Year Ended December 31, 1996
Page
----
Part I
------
Item 1. Description of Business................... 1
Item 2. Description of Property................... 2
Item 3. Legal Proceedings......................... 2
Item 4. Submission of Matters to a Vote
of Security Holders..................... 2
Part II
-------
Item 5. Market for Common Equity
and Related Stockholder Matters......... 3
Item 6. Management's Discussion and Analysis or
Plan of Operation......................... 4
Item 7. Financial Statements...................... 6
Item 8. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure................... 6
Part III
--------
Item 9. Directors, Executive Officers, Promoters
and Control Persons; Compliance with
Section 16(a) of the Exchange Act... 6
Item 10. Executive Compensation................... 8
Item 11. Security Ownership and Certain Beneficial
Owners and Management.................. 12
Item 12. Certain Relationships and Related
Transactions.......................... 13
Item 13. Exhibits and Reports on Form 8-K........ 14
PART I
Item 1. Description of Business
Introduction
- ------------
Alfa International Corp. ("Alfa" or the "Company") was
formed in 1978. On August 4, 1995 the U.S Bankruptcy Court for the
District of Arizona ("Court") issued an order confirming the
Company's Plan of Reorganization ("Plan") and on August 12, 1996
the Court issued its "Final Decree" discharging the Company from
bankruptcy proceedings and releasing the Company from the
supervision of the Court. (See: "Legal Proceedings")
Pursuant to an Agreement and Plan of Merger (the "Merger
Agreement") dated January 9, 1997 among the Company, Alfa
Acquisition Corp., a New York corporation and wholly owned
subsidiary of the Company ("AAC"), and Ty-Breakers (NY) Corp.
("TYNY"), on January 23, 1997, TYNY was merged with and into AAC
(the "Merger"). Subsequent to the Merger, AAC changed its corporate
name to Ty-Breakers Corp.("Ty-Breakers"). Ty-Breakers is now a
wholly owned subsidiary of the Company. Ty-Breakers is engaged in
the business of manufacturing and marketing apparel, mostly
jackets, made from Tyvek(R) and Kensel. Tyvek is a registered
trademark of the DuPont Company. Kensel is a trademark of Ty-
Breakers used to identify Ty-Breakers' patented fabric material.
On December 6, 1996 the Company, Frank J. Drohan and Auto-
Pilot, Inc., a Delaware corporation ("API"), entered into an
investment banking agreement ("I.B. Agreement") with Old Dominion
Growth Fund Limited, a British Virgin Islands corporation ("Old
Dominion"). The term of the I.B. Agreement expired on March 24,
1997. The I.B. Agreement contemplated, among other things, an
offering by the Company of up to $1,500,000 of its securities
("Offering") with Old Dominion acting as placement manager for such
Offering. The Company is presently in negotiations with Old
Dominion regarding an extension of the I.B. Agreement, thereby
extending the time within which the Offering may be made. If these
negotiations are unsuccessful, the Company will seek alternate
sources for its required equity financing. (SEE: "Exhibits")
It remains management's intention to conduct the Offering and
use the proceeds to implement the Ty-Breakers' sales and marketing
plan for its Tyvek(R) and Kensel jackets. Specifically the Company,
through its Ty-Breakers subsidiary, intends to market jackets and
other apparel made from Tyvek and from Ty-Breakers' patented Kensel
material to retail stores and to the premium and incentive market.
(See: "Management's Discussion and Analysis and Plan of
Operation").
The Company's executive offices are located at 50 South
Buckhout Street, Irvington-on-Hudson, New York 10533. Its telephone
number is 914-591-1994.
Page 1
<PAGE>
Employees
- ---------
The Company presently has no employees. The President and
Secretary serve as the sole officers and directors of the Company
but without compensation from the Company. Likewise they serve as
the sole officers and directors of the Company's wholly owned
subsidiary Ty-Breakers but without compensation from Ty-Breakers.
When the proceeds from the Offering (or alternate source of
financing) is obtained the President and Secretary will be hired
by Ty-Breakers as employees. (See "Executive Compensation" and
"Directors and Executive Officers of the Registrant").
Item 2. Description of Property
The Company currently has no lease obligations and shares the
offices of its wholly owned subsidiary Ty-Breakers. Ty-Breakers
maintains its executive offices and warehouse facilities occupying
8,000 square feet in Irvington-on-Hudson, New York.
Item 3. Legal Proceedings
On August 12, 1996 the Court issued its "Final Decree"
discharging the Company from bankruptcy proceedings and releasing
the Company from the supervision of the Court.
In accordance with the Plan, the Company (a) issued 303,672
shares of its Common Stock to the 27 pre-petition creditors who
had filed a proof of claim in exchange for the cancellation of pre-
petition debt of $303,672, (b) issued 21,600 shares of its Common
Stock to 2 individuals in exchange for the cancellation of all of
Alfa's pre-petition issued and outstanding preferred stock and
accumulated dividends and interest thereon, (c) issued 498,241
shares of its Common Stock to Frank J. Drohan, the Company's
president, in exchange for cancellation of Mr. Drohan's post-
petition administrative claim of $4,982.41, (d) paid all Alfa's
other post-petition administrative claims in cash, and (e) reverse
split all Alfa's 6,545,006 shares of common stock (CUSIP # 015389-
10-9) which were outstanding as of August 4, 1995 (the "Old Common
Stock") at the rate of one share of Common Stock for each twenty-
five shares of Old Common Stock.
Other than the above the Company knows of no material legal
proceedings, pending or threatened, or judgments entered against
the Company or any present or former Director or Executive Officer
of the Company in his capacity as such.
Item 4. Submission of Matters to a Vote of Security Holders
None
Page 2
<PAGE>
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.
Until March 31, 1997 Alfa's Old Common Stock traded in the
over the counter market and was listed on NASDAQ's OTC Electronic
Bulletin Board under the symbol "ALFE". In January 1997, concurrent
with the effectiveness on NASDAQ's OTC Electronic Bulletin Board
of the Company's reverse split of the Old Common Stock pursuant to
the Plan, the Company applied for a new trading symbol for its
Common Stock. On March 20, 1997 the Company's Common Stock was
approved by the NASD for listing on NASDAQ's OTC Electronic
Bulletin Board under the symbol "TYBR". The Company has been
informed by several market-makers that they have filed the
necessary forms and documentation to begin making a market in the
Company's Common Stock under the TYBR symbol, but no assurance can
be given at this time that any such market-maker will actually make
such a market.
The Company also issued shares of its Common Stock pursuant
to the Plan. (SEE: "Legal Proceedings").
Pursuant to the I.B. Agreement the Company issued 1,250,000
shares of its Common Stock to Old Dominion. As of the date hereof
Old Dominion is obligated to return to the Company for cancellation
the aforementioned 1,250,000 shares of Common Stock. (SEE:
"Description of Business" and "Management's Discussion and Analysis
or Plan of Operation").
Under a stock grant approved by the Board of Directors in
December 1996, the Company issued 164,175 shares of its Common
Stock to its President, Frank J. Drohan and 60,000 shares of its
Common Stock to its Vice-President, Charles P. Kuczynski, all at
a price of $.01 per share.
Pursuant to the Merger, the Company issued 984,408 shares of
its Common Stock to the shareholders of TYNY in exchange for all
of the outstanding capital stock of TYNY. (SEE: "Description of
Business" and "Management's Discussion and Analysis or Plan of
Operation").
At March 15, 1997 the Company had 3,543,896 shares of its
Common Stock issued and outstanding and there were approximately
1,900 holders of record of such Common Stock. As of the date hereof
the Company has no shares of preferred stock issued or outstanding.
The Company has never declared any dividends and it is
anticipated that any earnings will be retained for the Company's
business in the foreseeable future. Any declaration in the future
of any cash or stock dividends will be at the discretion of the
Board of Directors and will depend upon, among other things,
earnings, the operating and financial condition of the Company,
Page 3
<PAGE>
capital requirements, and general business conditions.
The transfer agent for the Company's Common Stock is
Continental Stock Transfer and Trust Company, 2 Broadway, New York,
New York 10004.
Item 6. Management's Discussion and Analysis or Plan of Operation
On August 12, 1996 the Court issued its "Final Decree"
discharging the Company from bankruptcy proceedings and releasing
the Company from the supervision of the Court. (See: "Legal
Proceedings"). Subsequent to that date the Company took several
actions to effect its previously reported plan of (1) raising
equity capital, and (2) consummating a merger or acquisition with
a company or companies seeking to become publicly held, thereby
providing Alfa with an operating business or businesses.
On November 13, 1996 Old Dominion loaned the Company $100,000.
Such loan is evidenced by a promissory note ("Note") dated November
13, 1996. The Company's president, Frank J. Drohan, has pledged
605,201 shares of Common Stock owned by him as collateral for the
payment in full by the Company of all amounts owing under the Note.
The Note is payable on the earlier of (a) ten business days after
the consummation of the initial sale or sales of securities of Alfa
for cash next following the consummation of the Merger, of which
sale the net proceeds to Alfa are in at least the amount then due
and owing under the Note, or (b) on November 13, 1997.
On December 6, 1996 the Company, Frank J. Drohan and Auto-
Pilot, Inc., a Delaware corporation ("API"), entered into an
investment banking agreement ("I.B. Agreement") with Old Dominion.
The I.B. Agreement contemplated, among other things, an offering
by the Company of up to $1,500,000 of its securities ("Offering")
with Old Dominion acting as placement manager for such Offering.
Additionally on December 6, 1996 the Company and Old Dominion
entered into a stock redemption agreement ("Redemption Agreement")
requiring Old Dominion, depending upon the amount of proceeds the
Company receives in the Offering, to contribute all, some or none
of the 1,250,000 shares of Common Stock owned by it to the Company.
In accordance with the provisions of the I.B. Agreement, Old
Dominion was required to deliver a minimum of $500,000 in proceeds
from the Offering to the Company within sixty (60) days after
January 23, 1997 (the "Merger Date"). As of the date hereof Old
Dominion has failed to deliver such $500,000 to the Company and the
I.B. Agreement expired on March 24, 1997.
Since the I.B. Agreement has expired and the Offering has not
yet occurred, Old Dominion is obligated, in accordance with the
terms of the Redemption Agreement, to return to the Company for
cancellation the 1,250,000 shares of Common Stock owned by it. The
Company has not yet enforced the Redemption Agreement and is
Page 4
<PAGE>
presently in negotiations with Old Dominion regarding an extension
of the I.B. Agreement, thereby extending both the time within which
the Offering may be made and the date the 1,250,000 shares must be
returned to the Company. (SEE: "Exhibits")
All of the Company's operations are conducted through its
wholly owned subsidiary, Ty-Breakers, which the Company acquired
on January 23, 1997. Ty-Breakers is engaged in the business of
manufacturing and marketing apparel, mostly jackets, made from
Tyvek(R) and Kensel. Tyvek is a registered trademark of the DuPont
Company. Kensel is a trademark of Ty-Breakers used to identify Ty-
Breakers' patented fabric material.
It is was managements' intention to conduct the Offering and
use the proceeds to implement Ty-Breakers' sales and marketing plan
for its Tyvek(R) and Kensel jackets. Should the ongoing negotiations
with Old Dominion be successful, management intends to carry out
that plan. Should the ongoing negotiations with Old Dominion be
unsuccessful, management intends to seek alternate sources of
financing to carry out that plan. The Company, through its wholly
owned subsidiary Ty-Breakers, markets jackets and other apparel
made from DuPont's Tyvek material and from Ty-Breakers' patented
Kensel material. The expanded marketing plan is targeted at retail
stores and catalog companies. Ty-Breakers presently markets its
products almost exclusively to the premium and incentive market.
Although preliminary discussions with respect to its
acquisition by Alfa have been held with Auto-Pilot,Inc. ("API"),
a Delaware corporation involved in the development of micro-
computer products, no assurance can be given at this time that such
an acquisition can or will be consummated. Any such acquisition by
the Company is contingent upon many factors, including the
provision by Old Dominion (or an alternate source of financing) of
at least $500,000 of financing for the Company (in addition to that
described above and in the I.B. Agreement) specifically for the use
by API in carrying out its business plan. API is controlled by the
Company's president and members of his family.
Any potential business combination with API is conditional
upon, among other things, the successful conclusion of the
aforementioned financing efforts for the Company.
If the Company and Old Dominion are able to successfully
conclude the Offering (or if alternate financing is secured by the
Company), management believes that the Company will have sufficient
cash to meet its requirements for the next twelve months. If the
Company and Old Dominion are not able to successfully conclude the
Offering (or if alternate financing is not secured), management
does not believe the Company will have sufficient cash to meet its
requirements for the next twelve months or to continue as a going
concern.
Page 5
<PAGE>
The Company presently has no employees. Absent a successful
conclusion to its ongoing financing efforts, the Company does not
intend to hire any employees.
Net sales revenue was zero during fiscal year 1996 and fiscal
year 1995. The Company had no sales during 1996 and 1995 since it
discontinued all operations effective March 31, 1993. The Company
acquired TYNY on January 23, 1997 and the results of Ty-Breakers'
operations will be included in the Company's consolidated financial
statements beginning with the period ending March 31, 1997.
Item 7. Financial Statements
The response to this item is submitted as a separate section
to this report commencing on Page A-1.
Item 8. Changes In and Disagreements With Accountants
on Accounting and Financial Disclosure
None
PART III
Item 9. Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a) of the Exchange
Act.
The present Directors and Executive Officers of the Company
are as follows:
Name Age Position
- ---- --- --------
Frank J. Drohan 52 Chairman of the Board of
Directors, President, Chief
Executive & Financial
Officer
Charles P. Kuczynski 43 Vice-President, Secretary
and Director
In accordance with the terms of the I.B. Agreement, the
Company issued 1,250,000 shares of Common Stock to Old Dominion in
December 1996 and agreed to appoint a nominee of Old Dominion to
the Company's Board of Directors. The term of the I.B. Agreement
expired on March 24, 1997. As of the date hereof, the Company is
no longer required to appoint such nominee of Old Dominion to its
Board of Directors. In accordance with the terms of the Redemption
Agreement, Old Dominion is required as of the date hereof to return
Page 6
<PAGE>
to the Company for cancellation the 1,250,000 shares of Common
Stock it owns. The Company has not yet enforced the Redemption
Agreement and is presently in negotiations with Old Dominion
regarding an extension of the I.B. Agreement, thereby re-instating
the Company's obligation to appoint an Old Dominion nominee to its
Board of Directors and extending both the time within which the
Offering may be made and the date after which all or part of the
1,250,000 shares owned by Old Dominion must be contributed to the
Company.
Frank J. Drohan has served as a Director, Chairman of the
Board and Chief Executive Officer of the Company since June 26,
1991 and as Secretary and sole director of the Company from October
30, 1993 until February 15, 1996. Mr.Drohan has also served as
Chief Financial Officer of the Company since November 15, 1989, as
President of the Company since July 1, 1989 and as a Director of
the Company for a short period of time in 1987. Mr. Drohan has
worked for the Company without compensation during 1996. Mr. Drohan
was until November 1992, and had been since 1986, Chairman of the
Board of Nieman Machine Company, formerly the Company's wholly
owned subsidiary. Mr. Drohan is also President of Auto-Pilot,Inc.,
("API") a privately held Delaware corporation involved in the
development of micro computer products. From 1977 until January 23,
1997 (the Merger Date), Mr. Drohan was also Chairman of the Board
and President of Ty-Breakers (NY) Corp. [formerly: Rif
International Corp.] ("TYNY") a privately held New York company.
TYNY (now Ty-Breakers) was acquired by the Company on January 23,
1997 and is engaged in the business of manufacturing and marketing
apparel, mostly jackets, made from Tyvek(R) and Kensel. Mr. Drohan
has worked for TYNY without compensation during 1996 and continues
to serve as President of the Company's wholly owned subsidiary Ty-
Breakers without compensation. Prior to 1977 Mr. Drohan held
various executive, sales management and financial positions with
Biddle Purchasing Company, Harcourt Brace Jovanovich, Inc. and
Bordens, Inc. Mr. Drohan holds a Bachelor of Science degree in
Economics and Political Science from Manhattan College in New York
City.
Charles P. Kuczynski has served as a Director and Secretary
of the Company since February 1996 and has worked for the Company
without compensation during 1996. Between 1988 and March 1993,
Mr. Kuczynski was an employee of the Company. He was the Secretary
and a Director of the Company from April 1989 until March 1993.
Since April 1993 Mr. Kuczynski has served as Vice-President of
Sales for TYNY (now Ty-Breakers). He served as the Secretary and
a Director of TYNY since November 1993 and since the Merger Date
serves as the Secretary and a Director of Ty-Breakers. Mr.
Kuczynski has worked for TYNY without compensation during 1996 and
continues to work for Ty-Breakers without compensation. Mr.
Kuczynski is the inventor of KENSEL and a patent for KENSEL was
Page 7
<PAGE>
issued in his name in September 1992, which patent subsequently was
assigned first to TYNY in March 1993 and then to Ty-Breakers on
the Merger Date. Mr. Kuczynski holds a Bachelor of Arts degree from
Merrimack College, Massachusetts.
At December 31, 1996 the Board of Directors of Alfa consisted
of Frank J. Drohan and Charles P. Kuczynski. Messrs. Drohan and
Kuczynski continue to serve without compensation as the Company's
only officers and directors.
Directors are elected to serve for one-year terms or until
their successors are duly elected and qualified. Officers serve at
the discretion of the Board of Directors. Directors receive no fees
for acting as such and are entitled to reimbursement for reasonable
out-of-pocket expenses incurred in attending meetings.
On March 7, 1997 Frank J. Drohan filed a report on Schedule
13D (the "13D Filing") with the Securities and Exchange Commission
("SEC") covering all transactions through March 7, 1997 by him in
the Common Stock, including but not limited to those transactions
which resulted from the reverse split of the Company's Common Stock
and the issuance of new shares pursuant to the Company's Plan of
Reorganization and those transactions which resulted from the
Merger. The 13D Filing is incorporated herein by reference. (SEE:
"Exhibits")
To the best of the Company's knowledge, as of the date hereof,
Old Dominion has not filed any report with the SEC covering the
issuance by the Company to Old Dominion of the 1,250,000 shares
pursuant to the I.B. Agreement.
Item 10. Executive Compensation
The following table sets forth information relating to the
aggregate cash compensation received by the then current Executive
Officers of Alfa for services in all capacities during the calendar
year ended December 31, 1996 for (i) each then current Executive
Officer whose total cash compensation exceeded $60,000 and (ii) all
then current Executive Officers of Alfa as a group.
Name of individual Capacities in Cash
or number in group which served Compensation
- ------------------ ------------ -----------
Frank J Drohan Chairman of Board -0-
of Directors, President,
Chief Executive
Charles P. Kuczynski Director, Vice-President -0-
All Executive Officers -0-
as a group (2 persons)
Page 8
<PAGE>
EMPLOYMENT AGREEMENTS
- ---------------------
The Company presently has no employment agreement with any
party.
Frank J. Drohan and Charles P. Kuczynski are each parties to
5 year employment agreements dated January 2, 1997 with the
Company's wholly owned subsidiary Ty-Breakers Corp. A condition
precedent to the effectiveness of the employment agreements (which
condition has not been fulfilled as of the date hereof) is the
receipt by the Company of at least $500,000 proceeds from the
Offering. (SEE: "Exhibits")
EMPLOYMENT BENEFITS
- -------------------
The Company has no employees and no employment benefits.
Directors received no remuneration during the fiscal year
ended December 31, 1996 and the Company does not intend to
compensate any Directors for serving as members of its Board during
the fiscal year ending December 31, 1997.
Stock Options
- -------------
On December 28, 1987, Alfa adopted the Stock Option Plan. The
purpose of the Stock Option Plan is to attract and retain qualified
managers, employees and consultants,and to encourage such managers,
employees and consultants to enhance operations and increase the
profitability of the Company. The Stock Option Plan provides for
the granting of options to purchase up to 750,000 shares of the
Company's Common Stock, some or all of which options may be
incentive stock options within the meaning the Internal Revenue
Code of 1986, as amended (the "I.R. Code"). The Stock Option Plan
and authority to grant options thereunder will terminate on
December 27, 1997.
The Stock Option Plan provides that it may be
administered by the Board of Directors or a committee appointed by
the Board of Directors (the "Stock Option Committee"). Subject to
the provisions of the Stock Option Plan, the Board of Directors or
the Stock Option Committee determines when and to whom options are
granted, the number of shares of Common Stock subject to each
option, whether or not (subject to the provisions of the I.R. Code)
options shall be incentive stock options or non-qualified stock
options, the exercise price of such options and the period during
which such options may be exercised. The Board of Directors or the
Stock Option Committee shall interpret the Stock Option Plan and
may accept the exchange of any such options for the granting of new
options.
Page 9
<PAGE>
Key employees of the Company, including officers and
directors, whom the Board of Directors or Stock Option Committee
determines are responsible, in some significant way, for the
success of the Company, and that perform special services for the
Company, are eligible to receive incentive stock options. In
addition to employees of the Company a director, consultant,
attorney, advisor or other person who is not an employee, but
performs services of special importance with respect to the
management, operations and development of the Company, is eligible
to receive non-qualified stock options under the Stock Option Plan.
Under the Stock Option Plan, each incentive stock option shall
have a term of five years and an exercise price of not less than
100% of the fair market value of the Common Stock on the date of
grant, except for 10% or greater shareholders whose exercise price
must be at least 110% of the fair market value of the Common Stock
on the date of grant, and may be exercised on a cumulative basis
to the extent of 20% of the amount of stock covered by the option
at the end of each of the first, second, third, fourth and fifth
years after the option is granted. Generally, the holder of an
incentive stock option will not be entitled to exercise any option,
or portion thereof, unless he is an employee at the time of
exercise.
Under the Stock Option Plan, non-qualified stock options may
also be granted for a term of up to five (5) years at an exercise
price not less than one hundred percent (100%) of the fair market
value of the Common Stock on the date of grant. The holder of a
non-qualified stock option shall have the right to exercise the
option on such terms and conditions as the Board of Directors or
the Stock Option Committee may determine at the time of grant,
including the requirement that the holder remain employed by the
Company for a period of one (1) year from the date of grant.
During the life of a person granted stock options under the
Stock Option Plan (an "Optionee"), such options are only
exercisable by the Optionee and no assignment or transfer of such
options is permitted. Upon the death of an Optionee, the unexpired
stock options previously granted to the deceased Optionee by the
Company may be transferred by will or through the laws of descent
and distribution.
If the employment or services of an Optionee are terminated
for any reason other than retirement or death, such Optionee shall
have the right to exercise any options fully vested and exercisable
on the day immediately preceding such termination at any time
within 3 months, or for options granted after April 27, 1990,
within 60 days, after such termination. However, such options may
be cancelled within the 60 day period if the Optionee engages in
employment or activities which, in the judgement of the Board of
Page 10
<PAGE>
Directors or the Stock Option Committee are contrary to the
Company's best interests. If the employment or services of an
Optionee are terminated by reason of retirement, the Optionee shall
have the right to exercise any options fully vested and exercisable
on the day immediately preceding such termination at any time
within 90 days after such termination. Upon the death of an
Optionee, all unexpired stock options granted to such Optionee
become fully vested and such options may be exercised in full by
the Optionee's representative of heirs at any time within 6 months
of such Optionee's death.
The Stock Option Plan also contains certain "anti-dilution"
provisions which serve to protect each Optionee's respective
percentage ownership and economic interest in the Common Stock
issued in the event of a stock split, stock dividend,
recapitalization, merger or consolidation or certain other
specified events.
The Board of Directors or the Stock Option committee may amend
or terminate the Stock Option Plan at any time, subject to the
rights of the Optionees who then hold unexpired stock options.
Shareholder approval is required, however to (i) adopt any
amendment to or terminate the Stock Option Plan in a manner which
would affect any stock option previously granted, (ii) alter the
total number of shares of Common Stock available under the Stock
Option Plan, (iii) change the minimum exercise prices set forth in
such Plan, or (iv) change the classes of persons eligible to
receive stock options thereunder.
The Board of Directors and the Stock Option Committee are
indemnified by the Company under the Stock Option Plan against all
costs and expenses reasonably incurred by them in connection with
any action, suit or proceeding to which they become a party by
reason of any action or omission to act under or in connection with
the Stock Option Plan, and all amounts paid in settlement of, or
to satisfy any judgement arising from, any such action, suit or
proceeding, except a judgement based upon a finding of bad faith.
Frank J. Drohan and Charles P. Kuczynski are each parties to
5 year employment agreements dated January 2, 1997 with the
Company's wholly owned subsidiary Ty-Breakers Corp. These
employment agreements contemplate the grant to Mr. Drohan of stock
options covering 250,000 shares of Common Stock and the grant to
Mr. Kuczynski of stock options covering 125,000 shares of Common
Stock. A condition precedent to the effectiveness of the employment
agreements and the grant of such options (which condition has not
been fulfilled as of the date hereof) is the receipt by the Company
of at least $500,000 proceeds from the Offering. If and when such
options are issued, they will be exercisable at a price of $1.00
per share, will vest at the rate of 50,000 and 25,000 per year
Page 11
<PAGE>
respectively, and will be contingent upon Mr. Drohan's or Mr.
Kuczynski's, as the case may be, continual employment with the
Company.
As of December 31, 1996 there were no stock options
outstanding under the Stock Option Plan.
Item 11. Security Ownership and Certain Beneficial Owners and
Management.
The following table sets forth, as of March 15, 1997, the
number of shares of the Company's Common Stock beneficially owned
by (a) owners of more than five percent of the Company's
outstanding Common Stock who are known to the Company and (b) the
Directors of the Company, individually, and the Officers and
Directors of the Company as a group, and (ii) the percentage of
ownership of the outstanding Common Stock represented by such
shares.
Percentage of
Beneficial Common Stock
Name and Address Ownership(3) Outstanding
- ---------------- ------------ ---------
Frank J. Drohan (1) 1,583,726 44.6%
Charles P. Kuczynski (1) 82,163 2.3%
Old Dominion Growth Fund Ltd.(2) 1,250,000 (4) 35.3%
All officers and Directors as a 1,665,889 47.0%
Group of 2 Persons
- ---------------
(1) The address for each of these individuals is c/o the Company
and each is an officer and director of the Company.
(2) The address for Old Dominion Growth Fund Ltd. is:
P.O. Box 556, Main Street
Charleston, Isle of Nevis
British West Indies
(3) None of these shares are subject to rights to acquire
beneficial ownership, as specified in Rule 13d-3 (d) (1) under
the Securities Exchange Act of 1934, as amended, and the
beneficial owner has sole voting and investment power, subject
to community property laws where applicable.
(4) As of the date hereof, all 1,250,000 of these shares are
subject to redemption and cancellation by the Company in
accordance with the terms of the Redemption Agreement (SEE:
Page 12
<PAGE>
"Exhibits" and "Management's Discussion and Analysis or Plan
of Operation"). The I.B. Agreement expired on March 24, 1997.
Pursuant to the terms of the Redemption Agreement, as of the
date hereof, Old Dominion is required to return to the Company
for cancellation the 1,250,000 shares of Common Stock that it
owns. The Company has not yet enforced the Redemption
Agreement and is presently in negotiations with Old Dominion
regarding an extension of the I.B. Agreement, thereby
extending both the time within which the Offering may be made
and the date after which all or part of the 1,250,000 shares
must be returned to the Company for cancellation pursuant to
the Redemption Agreement.
The Company and Old Dominion are parties to a promissory note
dated November 13, 1996 ("Note"), and Frank J. Drohan ("Drohan")
and Old Dominion are parties to an escrow agreement dated November
13, 1996 ("Escrow Agreement"). The Note and the Escrow Agreement
are attached as exhibits to Drohan's report on Schedule D filed
with the Commission on March 7, 1997 (the "13D Filing") and are
incorporated herein by reference thereto. Pursuant to the Note,
Old Dominion loaned the Company $100,000 and pursuant to the terms
of the Note and the Escrow Agreement, Drohan pledged 605,201 shares
of Common Stock owned by him as security for the repayment to Old
Dominion by the Company of all amounts due under the Note. The Note
is payable on the earlier of (a) ten business days after the
consummation of the initial sale or sales of securities of the
Company for cash next following the consummation of the Merger, of
which sale the net proceeds to the Company are in at least the
amount then due and owing under the Note, or on November 13, 1997.
(SEE: "Exhibits")
Item 12. Certain Relationships and Related Transactions
Ty-Breakers (NY) Corp.
- ----------------------
Ty-Breakers (NY) Corp. [formerly Rif International Corp.]
("TYNY") was a privately held company whose majority shareholder
was Frank J. Drohan, the Company's president. On March 22, 1993,
the Court issued an order authorizing the sale by the Company of
substantially all of its assets to TYNY (the "Asset Sale"). The
Asset Sale closed on March 31, 1993. Under the terms of the Asset
Sale substantially all of Alfa's assets were sold to TYNY free and
clear of all liens.
Pursuant to the Merger of TYNY with and into Alfa Acquisition
Corp. which was consummated on January 23, 1997, Mr. Drohan
exchanged his 2,970,000 shares of TYNY common stock, constituting
approximately 75.4% of the then outstanding shares of TYNY common
stock on a fully diluted basis, for 742,500 shares of Alfa's Common
Stock.
Page 13
<PAGE>
Under a stock grant approved by the Board of Directors in
December 1996, the Company issued 164,175 shares of its Common
Stock to its President, Frank J. Drohan and 60,000 shares of its
Common Stock to its Vice-President, Charles P. Kuczynski, all at
a price of $.01 per share.
Mr. Drohan is an executive officer, one of the two members of
the Board of Directors and a principal shareholder of the Company.
He was also the principal shareholder, a director and an executive
officer of TYNY. Mr. Kuczynski is an executive officer, one of the
two members of the Board of Directors and a shareholder of the
Company. He was also a shareholder, a director and an executive
officer of TYNY.
Item 13. Exhibits and Reports on Form 8-K
(a) (3). Exhibits (numbered in accordance with Item 601
of Regulation S-B).
Exhibit Page
Numbers Description Number
- ------- ----------- ----
2.1 Plan Of Reorganization & Order
Confirming the Plan **
2.2 The Merger Agreement ***
3.1 Articles of Incorporation, as amended *
3.2 By-Laws *
10.2 The Investment Banking Agreement ****
10.3 The Promissory Note ****
10.4 The Escrow Agreement ****
10.5 The Redemption Agreement E-01
10.6 Drohan Employment Agreement ****
10.7 Kuczynski Employment Agreement E-04
21.1 Subsidiaries ***
* Previously filed as exhibits to the Company's Registration
Statement on Form S-1 (File No. 33-18591) filed with the
Securities and Exchange Commission and incorporated herein by
reference thereto.
Page 14
<PAGE>
** Previously filed with the Securities and Exchange Commission
as exhibits to the Company's Report on Form 8-K dated August
9, 1995.
*** Previously filed with the Securities and Exchange Commission
as an exhibit to the Company's Report on Form 8-K dated
January 27, 1997.
**** Previously filed with the Securities and Exchange Commission
as exhibits to Frank J. Drohan's Report on Schedule 13D dated
March 7, 1997
(b) Reports on Form 8-K
Report dated August 19, 1996
Report dated January 27, 1997
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Alfa International Corp.
By: /s/ Frank J. Drohan
---------------------
FRANK J. DROHAN, Chairman
of the Board of Directors,
President and Chief
Executive & Financial
Officer
By: /s/ Charles P. Kuczynski
------------------------
CHARLES P. KUCZYNSKI,
Secretary and Director
Dated: April 14, 1997
Page 15
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of
1934, this Annual Report has been signed below by the following
person who is the Principal Executive Officer and the Principal
Financial Officer and a Director on behalf of the Registrant and
in the capacity and on the date indicated.
Name Title Date
Chairman of the Board,
/s/ Frank J. Drohan President and Chief April 14, 1997
- ------------------- Executive & Financial
FRANK J. DROHAN Officer
Page 16
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Alfa International Corp.
We have audited the accompanying consolidated balance sheets of
Alfa International Corp. and subsidiary as of December 31, 1996 and
1995 and the related consolidated statements of operations, changes
in stockholders' equity (deficiency) and cash flows for the years
then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards required that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of Alfa International Corp. and subsidiary at
December 31, 1996 and 1995, and the results of their operations and
their cash flows for the years then ended in conformity with
generally accepted accounting principles.
The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going
concern. As discussed in Note 3 to the consolidated financial
statements, the Company has no financial resources to fund operations.
This raises substantial doubt about the Company's ability to
continue as a going concern. Management's plans in regard to
these matters are also described in Note 3. The consolidated
financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ WISS & COMPANY, LLP
WISS & COMPANY, LLP
Livingston, New Jersey
March 31, 1997
A-1
<TABLE>
ALFA INTERNATIONAL CORP. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<CAPTION>
December 31,
ASSETS 1996 1995
___________ ____________
<S> <C> <C>
CASH $ 57 $ -
OTHER ASSETS:
Due from affiliate 49,511 -
Deferred offering costs 12,500 -
----------- ------------
62,011 -
----------- ------------
$ 62,068 $ -
----------- ------------
LIABILITIES AND STOCKHOLDERS
EQUITY (DEFICIENCY)
CURRENT LIABILITIES
Accounts payable $ 4,286 $ 27,669
Note Payable 100,000 -
----------- ------------
104,286 27,669
----------- ------------
STOCKHOLDERS' EQUITY (DEFICIENCY):
Common stock $.01 par value;
Authorized 15,000,000 shares;
issued and outstanding 2,559,488
shares in 1996 and 1,085,313 shares
in 1995 25,595 10,853
Series A preferred stock, par value
$.01 per share; Authorized 978,400
shares - -
Capital in excess of par value 3,053,721 3,053,721
Retained earnings (deficit) (3,121,534) (3,092,243)
---------- -----------
Total Stockholders' Equity
(Deficiency) (42,218) (27,669)
---------- -----------
$ 62,068 $ -
---------- -----------
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
A-2
<PAGE>
<TABLE>
ALFA INTERNATIONAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
Year Ended December 31,
1996 1995
______________________
<S> <C> <C>
EXPENSES:
Selling, general and
administrative $ (29,291) $ (648)
__________ __________
LOSS BEFORE REORGANIZATION ITEM (29,291) (648)
REORGANIZATION ITEM - LEGAL FEES - 10,606
__________ __________
LOSS BEFORE EXTRAORDINARY ITEM (29,291) (11,254)
EXTRAORDINARY GAIN ON EXTINGUISHMENT
OF DEBT - 219,085
__________ __________
NET INCOME (LOSS) $ (29,291) $ 207,831
INCOME (LOSS) PER SHARE OF
COMMON STOCK:
Loss from operations before
extraordinary gain $ (.02) $ (.02)
Extraordinary gain - .37
__________ __________
Net income (loss) $ (.02) $ .35
---------- ----------
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 1,186,203 597,974
---------- ----------
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
A-3
<PAGE>
<TABLE>
ALFA INTERNATIONAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
<CAPTION>
Preferred Stock Common Stock Capital in Retained
Stated Par Excess of Earnings
Shares Value Shares Value Par Value (Deficit)
<S> <C> <C> <C> <C> <C> <C>
BALANCES AT DECEMBER 31, 1994
21,600 648,000 261,800 $ 2,618 2,105,302 $(3,300,074)
YEAR ENDED DECEMBER 31, 1995:
Issuance of common stock per
court confirmed plan of
reorganization to preferred
shareholders in exchange for
preferred stock (21,600)(648,000) 21,600 216 647,784 -
To creditors in exchange for
pre-petition debt - - 303,672 3,037 300,635 -
To the president in exchange
for post-petition debt - - 498,241 4,982 - -
Net Income - - - - - 207,831
_______ ________ _________ ________ _________ ___________
BALANCES AT DECEMBER 31, 1995 - - 1,085,313 10,853 3,053,721 (3,092,243)
YEAR ENDED DECEMBER 31, 1996:
Issuance of common stock for
investment banking services - - 1,250,000 12,500 - -
Issuance of common stock for
compensation - - 224,175 2,242 - -
Net loss - - - - - (29,291)
------- -------- --------- -------- --------- -----------
BALANCES AT DECEMBER 31, 1996 $ - $ - $2,559,488 $25,595 $3,053,721 $(3,121,534)
------- -------- --------- -------- --------- -----------
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
A-4
<PAGE>
<TABLE>
ALFA INTERNATIONAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Year Ended December 31,
1996 1995
___________ ___________
<S> <C> <C>
OPERATING CASH FLOWS FROM REORGANIZATION ITEMS:
Professionals' fees for services rendered in
connection with the Chapter 11 proceeding $ - $ 10,606
Net cash flows from operating activities (50,431) (10,620)
__________ __________
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of note payable 100,000 -
Loan to affiliate (49,512) -
__________ __________
50,488 -
---------- ----------
NET CHANGE IN CASH 57 (14)
CASH AND EQUIVALENTS, BEGINNING OF YEAR - 14
__________ __________
CASH AND EQUIVALENTS, END OF YEAR $ 57 $ -
---------- ----------
RECONCILIATION OF NET INCOME (LOSS) TO NET CASH
FLOWS FROM OPERATING ACTIVITIES -
Net income (loss) $ (29,291) $ 207,831
ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO NET
CASH FLOWS FROM OPERATING ACTIVITIES:
Gain on extinguishment of debt - (219,085)
Post-petition payable - 634
Accounts payable (23,382) -
Issuance of common stock for compensation 2,243 -
__________ _________
21,140 -
__________ _________
NET CASH FLOWS FROM OPERATING ACTIVITIES $ (50,431) $ (10,620)
__________ _________
SUPPLEMENTAL SCHEDULE OF NON CASH FINANCING ACTIVITIES:
Issuance of common stock for investment banking
services $ 12,500 $ -
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
A-5
<PAGE>
ALFA INTERNATIONAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1:
NATURE OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES:
NATURE OF THE BUSINESS - Alfa International Corp. ("Alfa" or the
"Company") and its wholly-owned inactive subsidiary have no
operating business.
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements
include the accounts of the Company and its wholly-owned
subsidiary. All intercompany transactions have been eliminated in
consolidation.
FINANCIAL INSTRUMENTS - Financial instruments include cash,
accounts receivable and accounts payable. The amounts reported
for financial instruments are considered to be reasonable
approximations of their values, based on market information
available to management.
ESTIMATES AND UNCERTAINTIES - The preparation of financial
statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results, as
determined at a later date, could differ from those estimates.
DEFERRED COSTS - The Company has deferred costs in connection with
a proposed offering of common stock. Upon consummation of the
proposed offering, these deferred costs and any additional costs
incurred will be charged against capital in excess of par value.
INCOME TAXES - The Company is subject to income taxes at both the
Federal and state level. Separate state income tax returns are
filed with each state in which the Company conducts business.
Deferred tax assets and liabilities are recognized based on
differences between the book and tax bases of assets and
liabilities using presently enacted income tax rates. The
provision for income taxes is determined by applying the provisions of
the applicable enacted tax laws to taxable income for that period and the
net change during the period in the Company's deferred tax assets and
liabilities. Valuation allowances are established when necessary to reduce
deferred tax assets to the amount expected to be realized.
PER SHARE DATA - Per share data is based on weighted number of
shares of common stock, convertible preferred stock and common
stock equivalents (options, preferred stock) outstanding during
each year. Common stock equivalents have been excluded due to operating
losses during each year.
A-6
<PAGE>
ALFA INTERNATIONAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2:
BANKRUPTCY:
On December 9, 1992, Alfa filed a petition for reorganization
("Petition") under Chapter 11 of the Federal Bankruptcy Code
in the United States Bankruptcy Court ("Court") for the District
of Arizona. Under Chapter 11, certain claims against Alfa in
existence prior to the filing of the Petition were stayed while Alfa
continued business operations as a debtor-in-possession. These
claims were reflected on the Company's 1993 and 1994 balance sheets
as "Liabilities Subject to Compromise." In 1993 Alfa sold
substantially all of its assets to a company controlled by Alfa's
President. On April 25, 1994 Alfa filed a disclosure statement and
a Plan of Reorganization ("Plan") with the Court. On August 4,
1995 the Court issued an order confirming the Plan.
In accordance with the confirmed Plan, the Company took the
following actions:
1. The Company reverse split, on a 1 for 25 basis, the
6,545,006 shares of its issued and outstanding $.01 par
value common stock.
2. The Company issued 303,672 shares of its common stock to
its pre-petition creditors who had filed a proof of claim
with the Court to discharge a total of $522,757 in
liabilities.
3. The Company issued 21,600 shares of common stock to its
preferred stockholders in exchange for their preferred
shares.
4. The Company issued 498,241 shares of common stock to its
President, Frank J. Drohan in satisfaction of his
post-petition claim of $4,982.
On August 12, 1996 the Court issued a Final Decree approving the
consummation of the Plan, releasing the Company from the
supervision of the Court and discharging the Company from
bankruptcy proceedings.
NOTE 3:
MANAGEMENT'S PLANS:
During January 1997 Alfa acquired Ty-Breakers (NY) Corp.
("Ty-Breakers") merging it into its wholly-owned subsidiary Alfa
Acquisition Corp. Ty-Breakers is a manufacturer of apparel made
from Tyvek(R) and Kensel(TM). Management has entered into an agreement
with an underwriter in order to raise capital to fund Ty-Breakers. The
agreement expired on March 24, 1997. The Company is presently in
negotiations with the underwriter to extend the agreement. Should
the Company be unsuccessful in its attempts to raise capital and/or
increase sales, the Company may not be able to continue operations.
A-7
<PAGE>
ALFA INTERNATIONAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4:
NOTE PAYABLE:
On November 13, 1996, the Company borrowed $100,000 under a note
payable which becomes payable on the earlier of 1) ten business days
after the consummation of the initital sale of securities of Alfa for which
the net proceeds to Alfa are in at least the amount then due and owing under
the note or 2) November 13, 1997. The note bears interest at 6% per annum
and is collateralized by 605,201 shares of the Company's common stock owned by
the Company's President and Chairman of the Board, Frank J. Drohan.
NOTE 5:
COMMON STOCK, PREFERRED STOCK AND STOCK OPTION PLAN:
COMMON STOCK SPLIT - On August 7, 1995, the Board of Directors
declared a one for 25 reverse common stock split distributable on
August 4, 1995 to shareholders of record at the close of business
on August 4, 1995. All references to per share amounts and number
of shares except shares authorized, have been restated to reflect
the stock split on a retroactive basis. In addition, an amount
equal to the par value of the shares of common stock outstanding
prior to the split was transferred from capital in excess of par
value to common stock.
PREFERRED STOCK - The Company has 978,400 shares of undesignated
preferred stock which may be issued with such rights and
preferences as the Board of Directors may determine. Therefore,
the undesignated preferred stock may be issued with liquidation,
dividend, voting and other rights superior to those of existing
common shareholders, including the right to elect a controlling
number of directors as a class.
STOCK OPTION PLAN - The Company's Stock Option Plan provides for
the granting of Incentive Stock Options and Non-qualified Stock
Options to all employees and others who perform key services to
purchase up to 750,000 shares of common stock at an exercise price
equal to at least the fair market value of a share of common stock
at the date of grant (exercise prices for incentive options for
holders of more than 10% of the outstanding common stock must be
at least 110% of the fair market value on the date of grant).
Incentive stock options are exercisable in 20% increments
commencing one year after the date of grant and generally expire
five years after the date of grant. The Stock Option Plan expires
on December 27, 1997.
At December 31, 1995, there were no stock options outstanding under
the Stock Option Plan.
COMMON STOCK - On December 6, 1996 the Company's board of directors
approved a stock grant to two officers (also members of the board
of directors) of 224,175 shares of common stock at $.01 per share,
the fair market value per share, as compensation for past services.
A-8
<PAGE>
ALFA INTERNATIONAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Pursuant to the terms of an Investment Banking Agreement and a Stock
Redemption Agreement, each dated December 6, 1996, the Company issued
1,250,000 shares of its common stock to an investment banker who is attempting
to raise capital for the Company. An amount equal to the fair market value of
the common stock ($12,500) has been recorded as a deferred asset at December
31, 1996. In accordance with the provisions of the Stock Redemption
Agreement, the underwriter is obligated to return these shares to the Company
since it did not raise the minimum capital required by March 24, 1997. The
Company has not yet enforced the Stock Redemption Agreement and is presently
negotiating with the underwriter regarding an extension of time for both
agreements.
NOTE 6:
PROVISION FOR INCOME TAXES:
Deferred tax asset is comprised of the following:
December 31,
1996 1995
---------- ----------
Federal net operating
loss carryforwards $1,150,000 $1,140,000
State net operating
loss carryforwards
net of federal tax
benefit 100,000 180,000
__________ __________
1,250,000 1,320,000
Less:
Valuation allowance 1,250,000 1,320,000
__________ __________
$ - $ -
---------- ----------
The Company's effective tax rate differs from the expected federal
income tax rate due to changes in the valuation allowance at
December 31, 1996 and 1995.
Management has determined, based on the Company's current
condition, that a full valuation allowance is appropriate at
December 31, 1996.
At December 31, 1996, the Company had Federal net operating loss
carryforwards of approximately $3,370,000 which expire beginning
in 2004. The Company's issuance of shares during fiscal 1995 and
subsequent thereto results in a "Change of Ownership" as defined
by the Internal Revenue Code of 1986, which limits the Company's
use of these net operating loss carryforwards.
A-9
<PAGE>
ALFA INTERNATIONAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7:
SUBSEQUENT EVENT:
On January 23, 1997, The Company's wholly-owned subsidiary acquired
Ty-Breakers. Substantially all of the assets of the Company had been sold
by the Company to Ty-Breakers in 1993.
In connection with the merger, the Company issued 984,408 shares of its
common stock in exchange for 100% of the outstanding capital stock of
Ty-Breakers. The Company's Chairman of the Board, who owned approximately
75% of Ty-Breakers common stock, was issued 742,500 of such shares.
The following unaudited pro forma summary for the year ended
December 31, 1996, presents the consolidated balance sheet and statement
of operations as if the acquisition of Ty-Breakers had occurred at the
beginning of the 1996 fiscal year after giving effect to certain adjustments
including amortization of goodwill on the statement of operations. These
pro forma results have been prepared for comparative purposes only and do not
purport to be indicative of what would have occurred had the acquisition been
made as of that date.
A-10
<PAGE>
<TABLE>
ALFA INTERNATIONAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BALANCE SHEET DATA AT DECEMBER 31, 1996 (UNAUDITED)
<CAPTION>
Proforma
--------
<S> <C>
Current assets $ 51,621
Current liability 289,154
___________
Working capital (237,533)
Other assets 361,632<F1>
Other liabilities 156,441
-----------
Stockholders' equity
(deficiency) (32,342)<F2>
-----------
<FN>
<F1>
Includes goodwill of $270,315.
<F2>
Included issuance of 984,408 shares of common stock.
</FN>
</TABLE>
A-11
<PAGE>
<TABLE>
ALFA INTERNATIONAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS DATA
FOR THE YEAR ENDED DECEMBER 31, 1996 (UNAUDITED)
<CAPTION>
Proforma
--------
<S> <C>
Revenues $ 121,994
___________
Net loss $ 295,977<F3>
___________
Net loss per share $ .14
___________
<FN>
<F3>
Includes amortization of goodwill over five years.
</FN>
</TABLE>
A-12
STOCK REDEMPTION AGREEMENT
("Agreement") dated as of
December 6, 1996 between Old
Dominion Growth Fund Limited
("Old Dominion") and Alfa
International Corp., a New
Jersey corporation (the
"Company").
R E C I T A L S :
A. Old Dominion desires to have the Company enter that
certain Investment Banking Agreement between the Company and Old
Dominion ("IB Agreement") of even date with this Agreement
B. Pursuant to the IB Agreement, Old Dominion has
purchased 1,250,000 shares of the Company's $.01 par value common
stock (the "Shares").
C. To induce the Company to enter the IB Agreement, Old
Dominion has entered this Agreement.
D. All capitalized terms in this Agreement, unless
otherwise defined herein, shall have the meaning assigned them in
the IB Agreement.
A G R E E M E N T :
In consideration of the mutual promises contained in this
Agreement and other good and valuable consideration, the receipt
and sufficiency of which the parties acknowledge, the parties agree
as follows:
1. Old Dominion Contributions.
1.1 If during the Term (as defined in the IB
Agreement), the Company sells all of the Units,
then Old Dominion will not contribute any of
the 1,250,000 of the Shares to the Company.
1.2 If, during the Term (as defined in the IB
Agreement), the Company sells none of the
Units, then Old Dominion will, on the next
business day following the last day of the
Term, contribute all 1,250,000 of the Shares
to the Company.
Page E-01
<PAGE>
1.3 If, during the Term (as defined in the IB
Agreement), the Company sells at least one Unit
but less than all 1,000 Units in the Offering,
then Old Dominion will, on the next business
day following the last day of the Term,
contribute a pro rata amount of the Shares to
the Company, which pro rata amount of Shares
is calculated by subtracting the number of
Units sold by the Company in the Offering from
1,000 and multiplying the result by 1,250.
2. Use of Contributed Shares. The Company shall cancel
any shares that Old Dominion contributes under paragraph 1 upon
receipt thereof.
3. Representations, Warranties, and Covenants. Old
Dominion represents and warrants that, as of the date of this
Agreement, it owns the Shares. Until the next business day
following the last day of the Term (as defined in the IB
Agreement), Old Dominion will not dispose of or incumber in any
manner the Shares that Old Dominion must deliver to the Company to
meet its obligations under this Agreement. Notwithstanding anything
to the contrary contained in this Agreement the Company agrees that
the Shares which are owned by Old Dominion are those Shares as
defined in the IB Agreement.
4. Miscellaneous.
4.1 Assignments and Binding Effect. Neither party
may assign its rights and responsibilities under this Agreement
without the prior written consent of the other party. This
Agreement shall bind and inure to the benefit of all parties to
this Agreement and their respective heirs, successors, and assigns.
4.2 Attorneys Fees; Governing Law. In the event
a dispute arises from this Agreement, the prevailing party shall
be entitled to collect its reasonable costs and expenses, including
reasonable attorneys fees from the losing party. This Agreement
shall be governed by, and construed and enforced in accordance
with, the laws of the State of New York applicable to contracts
made and to be entirely performed therein and without regard to
principles of conflict of laws.
4.3 Counterparts. The parties may execute this
Agreement in one or more counterparts, each of which shall
constitute an original, but all of which together shall constitute
one and the same instrument.
4.4 Entire Agreement. This Agreement sets forth
the parties' complete agreement respecting its subject matter and
supersedes all prior agreements and negotiations.
Page E-02
<PAGE>
4.5 Notices. Unless otherwise specifically
provided in this Agreement, all notices, requests, consents,
approvals, agreements or other communications required or permitted
to be given under this Agreement shall be in writing and shall be
delivered by one of the following means: (a) by hand; (b) by
facsimile transmission to those parties with facsimile numbers
listed below (with subsequent written confirmation by another means
in compliance with this Section 4.5); (c) by registered or
certified mail, first class postage prepaid, return receipt
requested; or (d) by nationally recognized overnight courier,
addressed to the respective addresses of the parties as follows:
If to the Company: With a Copy to:
Alfa International Corp. Kramer, Levin, Naftalis &
Frankel
50 South Buckhout St. 919 Third Avenue
Irvington, New York New York, N.Y.
10533 10022
Att: President Att: David S. Frankel, Esq.
Fax: 914-591-1997 Fax: 212-715-8000
If to Old Dominion: With a Copy to:
Old Dominion Growth Fund Ltd. Krieger & Prager, Esqs.
P.O. Box 556 319 Fifth Avenue
Main Street New York, N.Y. 10016
Charleston Att: Samuel Krieger, Esq.
Isle of Nevis Fax: 212-213-2077
British West Indies
or to such other address as any party may designate for himself or
itself by notice to the other parties given in accordance herewith.
Any such notice or other communication shall be deemed to have been
given or made (i) upon delivery, if delivered personally, (ii) one
(1) business day after transmission, if delivered by facsimile
transmission during normal business hours, (iii) three (3) business
days after mailing, if mailed, or (iv) one (1) business day after
delivery to the courier, if delivered by overnight courier service.
Alfa International Corp. Old Dominion Growth Fund Ltd.
a New Jersey corporation a British Virgin Islands
corporation
By: By:
Frank J. Drohan,
President
Page E-03
EMPLOYMENT AGREEMENT
dated as of January 2, 1997 by and between
Alfa Acquisition Corp.
a New York Corporation, with its address at
50 South Buckhout Street
Irvington-On-Hudson
New York 10533 (the "Company")
and Charles P. Kuczynski (the "Employee")
(the "Agreement")
RECITALS:
A. The Company desires to secure the services of Employee,
and Employee desires to furnish services to the Company,
on the terms and conditions set forth in this Agreement.
B. Subject to the terms and conditions of that certain
merger agreement of even date with this Agreement among
Alfa International Corp, a publicly traded New Jersey
corporation ("Alfa"), Ty-Breakers (NY) Corp., a New York
corporation ("TYBR"), and the Company which is a wholly
owned subsidiary of Alfa; TYBR intends to merge with and
into the Company (the "Merger"). As soon as practicable
after the consummation of the Merger, Alfa intends to
make an offering of up to $1,000,000 of its securities
(the "Offering") to non U.S. residents. Notwithstanding
anything to the contrary contained elsewhere in this
Agreement, Employee and the Company agree that the
conditions precedent to all of the Company's obligations
under this Agreement are (i) the receipt by Alfa of gross
proceeds of at least $500,000 from the Offering, and (ii)
the advance by Alfa to the Company of an aggregate of
$500,000. The day that the Company receives all or the
final installment of such $500,000 from Alfa is
hereinafter defined as the "Receipt Date". Until the
Receipt Date, neither Employee nor the Company shall have
any obligations under this Agreement.
AGREEMENT:
In consideration of the mutual promises contained in this
Agreement and other good and valuable consideration, the receipt
and sufficiency of which the parties acknowledge, the parties agree
as follows:
Page E-04
<PAGE>
1. Employment Term. Subject to the satisfaction of the
conditions precedents required by Recital B hereof, the Company
agrees to employ Employee, and Employee agrees to enter the
Company's employment, for a period of five years (the "Employment
Term") commencing on the first business day subsequent to the
Receipt Date (the "Commencement Date"). Employee may terminate this
Agreement at any time after two years after the first day of the
Employment Term by giving the Company at least sixty days prior
written notice.
2. Office and Duties. During the Employment Term, the Company
shall employ Employee and Employee shall serve as the Company's
Vice President of Sales and Secretary. In such capacity, Employee
shall exercise all rights and powers of those offices as set forth
in the Company's Articles of Incorporation and Bylaws. Employee
also shall perform such other duties and exercise such powers as
the Company's President or Board of Directors may reasonably
require.
3. Sole Employment. Employee agrees that his employment by the
Company as set forth herein shall be his sole employment and he
shall not perform any advisory, or in any other capacity, work for
any other individual, firm or company, other than Alfa, without the
prior written consent of the Company. Employee shall devote all of
his business time and attention to the Company's and/or Alfa's
business and affairs.
4. Compensation.
4.1 Salary. In consideration of the services to be
rendered by Employee, the Company agrees to pay Employee, and
Employee agrees to accept, an annual salary of $45,000 during each
year of the Employment Term. On each anniversary of the first day
of the Employment Term, the Company shall increase the salary that
the Company must pay Employee during the year following such
anniversary by multiplying $45,000 by the following fraction: The
fraction's denominator shall be the "consumer price index" in
effect on the first day of the Employment Term and the fraction's
numerator shall be the "consumer price index" in effect on the
anniversary date on which Employee's salary is recomputed. For
purposes of this paragraph 4.1, the "consumer price index" shall
mean the "consumer price index" for all urban consumers--U.S. city
average (all items; 1967 = 100 base) as published by the United
States Bureau of Labor Statistics (or any successor agency) or any
other index that the Bureau of Labor Statistics may employ in lieu
of the "consumer price index". In no year shall the Company
decrease Employee's salary prevailing at the end of the preceding
year, but, upon approval of the Board of Directors, the Company
may, based on Employee's performance, increase the employee's
salary any time during the Employment Term. The Company shall pay
Employee's salary in accordance with the Company's regular payroll
practices.
Page E-05
<PAGE>
4.2 Bonus. For each of the Company's fiscal years that
fall, in whole or in part, within the Employment Term, the Company
shall, based upon sales performance in such fiscal year, pay
Employee an annual bonus equal to a percentage of the Employee's
salary for such fiscal year, based on the Company's total net
sales, as determined in accordance with generally accepted
accounting principles, ("Net Sales") in such fiscal year, as
follows:
Net Sales do not include sales of any subsidiary company(s),
if any, which the Company or Alfa may acquire at any time,
unless such subsidiary company(s) are in substantially the
same business as the business presently being conducted by
TYBR, in which case the net sales of such similar
subsidiary(s) will be included in Net Sales. During each
fiscal year within the Employment Term the Company will pay
Employee a bonus calculated by multiplying the Employee's
salary for such fiscal year by a fraction rounded to the
nearest hundredth. The numerator of this fraction is the Net
Sales for such fiscal year, rounded to the nearest thousand
dollars and the denominator is 4,000. For example; if the
Company had Net Sales of $1,836,279 in its 1997 fiscal year,
then the Employee's bonus for the 1997 fiscal year would be
calculated as follows:
Bonus = 1,836 divided by 4,000 times $45,000
= 0.459 x $45,000
= 0.46 x $45,000
= $20,700
The Company shall pay each annual bonus on a quarterly basis
as such bonus accrues, within two months after the end of each
quarter. If the Employment Term begins on a day other than the
first day of the Company's fiscal year, the bonus for fiscal years
ending immediately after the beginning and the end of the
Employment Term shall be prorated.
4.3 Stock Options. Subject to the satisfaction of the
conditions precedent required by Recital B hereof, Employee shall,
in accordance with the terms and conditions of the "Alfa
International Corp. 1987 Stock Option Plan (the "Plan"), have the
option to purchase up to 25,000 shares of Alfa's $0.01 par value
common stock (the "Alfa Common Stock") during each year of the
Employment Term, at an exercise price equal to $1.00. Employee's
right to purchase the aforesaid Alfa Common Stock shall be governed
by the terms and conditions of the Plan, all of which are
incorporated herein by reference.
Page E-06
<PAGE>
4.4 Signing Bonus. Subject to the satisfaction of the
conditions precedent required by Recital B hereof, and in order to
induce Employee to enter into and perform this Agreement, the
Company agrees that, in addition to any other compensation called
for by this paragraph 4, Employee shall be paid a one time bonus
of $25,000 as follows: $12,500 on the Commencement Date and $12,500
on the first day of the month of the sixth month subsequent to the
Commencement Date, provided Employee is still employed by the
Company on such date.
5. Employee Benefits.
5.1 Insurance. During the Employment Term, the
Company shall, in accordance with then prevailing Company policy,
provide Employee with health and life insurance coverage under its
group policies, if and when such group policies come into effect.
5.2 Other Benefits. The Company shall provide
Employee with any pension plan that the Company offers any of its
executives at any time during the Employment Term. The Company
shall offer such pension plan to Employee on the most favorable
terms and under the most favorable conditions as such plan is
offered to any other Company executive.
5.3 Deferred Compensation. Subject to the approval of
Alfa's Board of Directors, Employee may, if offered to him by the
Company and at his option, enter into a "Deferred Compensation
Plan" with the Company whereby Employee may defer some portion of
his compensation. The terms and conditions of any such Deferred
Compensation Plan, if any, will control the rights and obligations
of the parties thereto and will be determined by and approved by
the Board of Directors of Alfa.
6. Expenses. The Company agrees to pay, or reimburse
Employee for, all travel, entertainment and other business expenses
incurred or expended by Employee in performing his duties and
responsibilities on behalf of the Company under this Agreement.
Employee agrees to provide proof of the expenses for which he seeks
reimbursement in accordance with the Company's present expense
reporting policies.
7. Vacations. Employee shall be entitled to and shall accrue
vacation time at the rate of three weeks per year of the Employment
Term. Employee's vacation time shall accumulate from year to year.
8. Termination of Employment / Agreement.
8.1 Cause The Company may terminate Employee's employment
for cause upon thirty days written notice if (i) Employee is
convicted, by a court of competent and final jurisdiction, of any
crime which constitutes a felony in the jurisdiction involved, (ii)
Page E-07
<PAGE>
Employee commits any act of fraud against or breaches a fiduciary
obligation to the Company, (iii) Employee shall incur any liability
on the Company's behalf not in the ordinary course of the Company's
business (iv) the representation contained in paragraph 10 of this
Agreement is false or (v) Employee fails or refuses in any respect
to perform his duties under this Agreement. If, for any reason, the
Company terminates Employee's employment without cause, Employee
shall be entitled to receive the salary provided for in paragraph
4.1, the bonus described in paragraph 4.2, and the stock options
described in paragraphs 4.3 and the benefits (to the full extent
not disallowed by the terms of their contracts) described in
paragraph 5 until the end of the Employment Term, and to retain the
signing bonus described in paragraph 4.4 hereof.
8.2 Death or Permanent Disability. If, during the
Employment Term, Employee shall die or become permanently disabled
(as defined in sub paragraph 8.3) his Employment under this
Agreement shall terminate. In the event of Employee's death during
the Employment Term and in addition to any payments to Employee's
beneficiary or estate made with respect to any insurance contracts
entered under the terms of this Agreement, the Company shall pay
the personal representative of Employee's estate the salary and
bonus provided for in Paragraphs 4.1 and 4.2 through the end of the
month after the month in which Employee's death occurs. Thereafter
this Agreement will automatically terminate.
8.3 Disability. If, during the Employment Term, Employee
shall become physically or mentally disabled so as to be unable to
perform any of his material duties hereunder, he shall nonetheless
continue to receive his full salary (but not his bonus) for a
period of six months or any part thereof for any continuous
disability, less any amounts received by him from any disability
insurance policy then in effect for his benefit. At any time
subsequent to the expiration of such six month period, the Company
may cancel this Agreement upon ten days written notice to the
Employee.
No disability shall be deemed to exist until after the
Employee shall have been unable to perform any of his duties
hereunder for a period of thirty consecutive days, but if such
disability continues for sixty consecutive days, then the same
shall be deemed to have existed from the first day of such
disability.
If the Employee shall have been disabled and shall have
returned to work after the end of such disability, any new
disability commencing within ninety days of the termination of the
prior disability shall be deemed a continuation of the prior
disability, and the period of all such disabilities shall be added
together to determine the rights of the Employee and the Company
hereunder.
Page E-08
<PAGE>
At the end of any temporary disability, Employee shall return
to work and this Agreement shall continue as though such disability
had not occurred, except where specifically provided to the
contrary herein. During any period of disability, Employee shall
not receive any allowance for expenses.
8.4 Termination of Agreement. Notwithstanding anything
to the contrary contained elsewhere in this Agreement, if the
Receipt Date shall not have occurred on or before February 28,
1997, then this Agreement and all obligations of the parties to
each other hereunder shall thereupon automatically terminate.
9. Non-Competition Covenant. For a period of one year
after the termination (for any reason whatsoever) or expiration of
this Agreement, Employee shall not, directly or indirectly, solicit
or service any accounts, customers, vendors, suppliers or other
persons or entities with which Employee or the Company has done
business, negotiated or otherwise had business dealings, at any
time during the three years prior to such termination or expiration
date. In the event of Employee's actual or threatened breach of
provisions of this paragraph, the Company shall be entitled to any
injunction restraining Employee therefrom. Nothing contained herein
shall be construed as prohibiting the Company from pursuing any
other available remedies for such breach or threatened breach,
including recovery of damages from Employee.
10. Representation. Employee, in order to induce the
Company to enter into and perform this Agreement, hereby represents
and warrants to the Company that he is not a party to any contract,
agreement or understanding which prevents or prohibits, or with
notice or the passage of time or both, would prevent or prohibit
Employee from entering into this Agreement or fully performing all
of his obligations hereunder or which would be breached thereby.
11. Miscellaneous.
11.1 Assignment. This Agreement shall inure to the
benefit of and shall be binding upon the heirs and personal
representative of Employee and shall inure to the benefit of and
be binding upon the Company and its successors and assigns.
However, neither party may assign, transfer, pledge, encumber,
hypothecate or otherwise dispose of this Agreement or any of its
or his rights hereunder without the prior written consent of the
other party, and any such attempt to assign, transfer, pledge,
encumber or hypothecate without such consent shall be null and
void.
11.2 Governing Law. This Agreement is executed and
delivered in New York. The laws of the state of New York shall
govern its validity, interpretation and enforcement.
Page E-09
<PAGE>
11.3 Attorney's Fees. If a dispute arises from this
Agreement, the prevailing party shall be entitled to collect its
reasonable costs and expenses, including reasonable attorneys'
fees, from the losing party.
11.4 Complete Agreement. This Agreement supersedes any
and all prior agreements and understandings between the parties
with respect to the Company's employment of Employee and
constitutes the complete understanding between the parties with
respect to the Company's employment of Employee. No statement,
representation, warranty or covenant made by either party with
respect to Employee's employment will be binding unless expressly
set forth in this Agreement. This Agreement may not be altered,
modified or amended except by written instrument signed by each of
the parties. Recital A and Recital B set forth in the beginning of
this Agreement are incorporated herein as if set forth in the body
of this Agreement.
11.5 Counterparts. The parties may execute this
Agreement in counterparts, each of which shall constitute an
original, but all of which together shall constitute one and the
same instrument.
11.6 Headings. The paragraph headings of this Agreement
are for convenience of reference only and shall not expand, modify,
limit or define the text of this Agreement.
11.7 Notices. Any notice or other communication required
or made under this Agreement shall be in writing and shall be
delivered personally, telegraphed, or sent by registered, certified
or express mail, postage prepaid, and shall be deemed given when
so delivered personally, telegraphed, or, if mailed, two days after
the date of mailing, to the recipient at the following address (or
to such other address as the recipient may designate by giving
written notice):
To Employee: Charles P. Kuczynski
20 West 13th Street
Bayonne, New Jersey 07002
To the Company: Alfa Acquisition Corp.
50 South Buckhout Street
Irvington-On-Hudson
New York 10533
ATT: President
Page E-10
<PAGE>
11.8 Severability. In the event that any one or more of
the provisions of this Agreement shall be deemed to be invalid,
illegal or unenforceable in any respect, in whole or in part, the
validity, legality and enforceability of the remainder of the
provisions of this Agreement shall not in any way be affected.
11.9 Waivers. A written waiver, or successive written
waivers, by either party of any breach or default by the other
party of any of the terms and provisions of this Agreement, shall
not operate as a waiver, or custom of waiver, of any other breach
or default, whether similar to or different from the breach or
default waived. No waiver shall be effective unless in writing and
signed by the party to be charged.
Alfa Acquisition Corp., Employee
a New York corporation
By By
Frank J. Drohan Charles P. Kuczynski
President
As to Paragraphs 4.3 and 5.3 only,
Alfa International Corp.,
a New Jersey corporation
By
Frank J. Drohan
President
Page E-11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
See accompanying notes to consolidated financial statements.
</LEGEND>
<CIK> 0000820600
<NAME> ALFA INTERNATIONAL CORP.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 57
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 57
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 62,068
<CURRENT-LIABILITIES> 104,268
<BONDS> 0
0
0
<COMMON> 25,595<F1>
<OTHER-SE> (42,218)
<TOTAL-LIABILITY-AND-EQUITY> 62,068
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 29,291
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 29,291
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (29,291)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
<FN>
<F1>Common Stock - $.01 par value; Authorized 15,000,000 shares; issued and
outstanding 2,559,488 shares in 1996 and 1,085,313 in 1995.
</FN>
</TABLE>
