<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
[X] EXCHANGE ACT OF 1934 [FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission File No. 0-8390
SPECTEX INDUSTRIES, INC.
------------------------
(Exact name of registrant as specified in its charter)
New York 13-6186951
- -----------------------------------------------------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
505 Carroll Street
Brooklyn, New York 11215
- -----------------------------------------------------------------------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code (718) 797-9400.
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.0l 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, Yes ____ No X.
---
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best or registrant's knowledge, in
definitive proxy or information incorporated by reference in Part III of this
Form l0-K or any amendment to this Form l0-K. [X]
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Exhibit Index at page 51.
Total Number of Sequentially Numbered Pages 54.
As of December 31, 1995, 4,338,520 common shares of the
registrant were outstanding. There being no established trading
market for these shares, the aggregate market value of shares held by
nonaffiliates of the registrant is not determinable.
Please refer to Item 5 in the text.
Documents incorporated by Reference: Exhibits number 10 (a) and
- -------------------------------------
10(b) are incorporated into Part IV by reference to the
registrant's Form l0-K for the year ended December 31, 1986 and
Exhibits number 10(c), 10(d) and 10(e) are incorporated into Part
IV by reference to the registrant's Form l0-K for the year ended
December 31, 1988. Exhibits number 2(a), 2(b) and 22 are
incorporated into Part IV by reference to the registrant's Form
10-K for the year ended December 31, 1987. Exhibits 10(e) and 10(g) are
incorporated into Part IV by reference to the Registrant's 10-K filing for year
ending in December 31, 1994.
[Balance of Page Intentionally Left Blank]
2
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PART 1
Item 1. The Business
- ------- ------------
Spectex Industries, Inc. (the "Registrant" or the "Company") is a New York
corporation organized in 1971. The Company is principally engaged in both the
knitted sweater business, which is operated by and through the Company, and
since July 15, 1981, in the wholesale distribution of dairy products. In 1995,
the Registrant's knitted sweater business resulted in an operating loss of
$156,874 before interest expense and income taxes. Registrant's dairy products
segment accounted for an operating profit of $342,107 before taking into account
interest expense, and income taxes. The dairy product business is operated by
J&J Farms Creamery, Inc. ("J&J"), a 51% owned subsidiary of the Registrant. The
remaining shares of J&J are held by Messrs. Simon Friedman and Morris Schlager,
the sons-in-law of the Registrant's President. Hereinafter, the use of "Company"
refers to the knit goods business only.
The Company designs, knits and manufactures cotton, wool and acrylic
sweaters and sportswear at its headquarter's premises in Brooklyn, New York.
Sales are made nationally to department stores, chain stores, discount stores,
jobbers and retail outlets as well as to the United States government. The
Company also operates through certain divisions and its subsidiaries: JA
Knitting Mills, Perfect Knitting Mills, Inc. and Special Studies Development
Corp. J&J purchases dairy and related food products from major food companies
and food distributors and sells and
3
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delivers such products to local retailers and distributors principally in the
New York city metropolitan area.
For the year ended December 31, 1995, the knit goods business accounted for
approximately 13% of consolidated sales and J&J accounted for the remaining 87%.
Contributions to net profits before taxes, interest expense and minority
interests, were earned 100% by J&J because the Company showed a $156874 loss for
1995. A statement of the Registrant's sales, operating profit and identifiable
assets attributable to each of its industry segments appears in Note 16 to the
Financial Report of the Registrant included herein.
Marketing and Customers
- -----------------------
The Company markets its products by direct sales or through sales
representatives and distributors. During 1995, the Company's major customers
were Norton McNaughton, whose aggregate purchases amounted to approximately 28%
of knit good sales, and Bedford Fair, whose aggregate purchases amounted to
approximately 16% of knit good sales and Donn Kenny whose aggregate purchaser
amounted to approximately 10% of knit good sales Decorp whose aggregate
purchases amounted to approximately 10% of knit good sales. The Company
routinely enters into contracts with its customers which typically provide for
payment thirty (30) days after invoicing. Goods are usually delivered from two
to nine months after an order is placed. The loss of the Company's major
customer could have a material adverse effect on the Company's knit goods
business
4
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segment. In recent years, however, the Company has managed to develop new
customers when sales to major customers have declined. A more detailed
statement of the Company's sales to major purchasers appears in Note 16 to the
Financial Report of the Registrant included herein. The Company currently has
approximately 100 customers.
J&J markets its products by selling and delivering directly to its
customers. There was no single customer of J&J that accounted for more than
10% of its total revenue. J&J currently has approximately 600 customers.
Supplies and Raw Materials
- --------------------------
The Company purchases most of its requirements for materials and supplies
from a number of different suppliers and is not dependent on any one source.
Necessary materials are generally available in adequate quantities. J&J
purchases approximately 30% of its supplies from one large national food
Company, Kraft, Inc. The loss of such supplier could disrupt the operations of
J&J. Consequently, J&J has been attempting to reduce its percentage of
purchases from Kraft and continues to seek additional suppliers, so as further
to reduce its reliance on Kraft, Inc. J&J presently has approximately 30 other
suppliers. Purchases by J&J are not subject to any written agreement.
Backlog.
- --------
As of December 31, 1995, the Company had a backlog of orders of
approximately $200,000. As of December 31, 1994, the Company had a backlog of
orders of approximately $500,000. The Company
5
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believes that such backlog is not a material factor in its business and all
orders are expected to be filled within the current fiscal year. No backlog has
ever represented more than three-months' production nor is it expected ever to
exceed six-months' production. All orders are filled in the regular course of
business as soon as practicable after receipt.
Backlog is not a material factor in the dairy operations of
J&J.
Competition.
- ------------
The Company's business is conducted under highly competitive conditions.
The knit goods industry includes hundreds of domestic and foreign manufacturers
of popularly priced women's sweaters and sportswear, as well as numerous
manufacturers of higher priced women's knitted apparel. The Company's knit
goods are manufactured for sale in the moderate price market. The Company
perceives importers of knitted goods to be its biggest competitors principally
because cheaper foreign labor costs make the imported goods less expensive than
goods produced in the United States. Through careful fashion design and
research and development, the Company has been able to compete successfully
with the import market on the basis of style and design. The Company maintains
a staff of designers and sample makers to modify garments in order to keep the
Company's knitwear current with fashion trends. The Company cannot state with
certainty its relative competitive position with respect to its principal
products and services. Many
6
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of the Company's competitors are substantially larger, more diversified and have
greater financial resources than the Company.
J&J also operates in a highly competitive environment in the New York City
area with price and service being the essential focus of competition.
Working Capital.
- ----------------
The Registrant believes it has adequate capital resources for its
operations. The Registrant tries to carry enough goods, raw materials and
inventory to assure itself of a continuous flow to meet customer orders on
timely basis.
Patents.
- --------
There are no patents, trademarks, licenses, franchises, or concessions held
by the Registrant which are material to its businesses.
Environmental Protection Expenditures.
- --------------------------------------
During 1995, there was no material effect upon capital expenditures,
earnings or competitive position of the Registrant caused by compliance with
federal, state and local provisions relating to the protection of the
environment. In the Registrant's opinion, compliance with federal, state and
local environmental protection regulations does not involve significant expenses
or have a material effect on the capital expenditures, earnings and competitive
position of the Registrant.
7
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Employees.
- ----------
At December 31, 1995, the Company had approximately 100 employees,
approximately 90 of whom were members of labor unions. The Company has not been
subject to any strikes or work stoppages in the last year. The Company is a
party to a collective bargaining agreement with the union representing the
Company's employees, which commenced in May 1994 and expires on May 1, 1997. At
December 31, 1995, J&J had approximately 22 employees, approximately 16 of whom
were members of labor unions. J&J has not been subject to any strikes or work
stoppages in the last year. J&J's current collective bargaining agreement was
entered into on or about March, 1993 and will expire in February 1998.
Seasonality.
- -----------
The Company is subject to the usual seasonal adjustments of the apparel
business, which is not considered significant to the Company's business. The
business of J&J is not affected by seasonal adjustments.
Foreign and Domestic Operations.
- --------------------------------
The Company's sales operations are nationwide and are not unduly
concentrated in any geographic area. J&J's business is presently confined to the
greater New York City area. No material portion of Company's operations is in
foreign countries, nor are sales or revenues materially generated from customers
in foreign countries.
8
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Renegotiation or Termination of Government Contracts.
-----------------------------------------------------
There is no portion of the Company's business that may be subject to
renegotiation of profits or termination of contracts or subcontracts at the
election of the Government.
Item 2. Properties.
- ------- ----------
The Company currently occupies 62,000 (of a total of 97,000) square feet of
manufacturing, warehousing, shipping and administrative space in a block-wide,
three-story brick building located at 530 President Street (505 Carroll Street),
Brooklyn, New York, under a sublease from 505 Carroll Street Realty Company. The
balance of the space is rented out by lessor to unaffiliated companies on
multiple year leases. The Company uses its entire premises for sales,
manufacturing and development. Management believes that the premises provide
adequate space and facilities for the Company's present and foreseeable
anticipated activities. The Company's premises are presently being used to
approximately sixty percent (60%) of its maximum capacity to produce 2,000 dozen
knitwear garments per week.
In December of 1986, Parkside Realty Co. ("Parkside"), the owner and lessor
of the Company's premises, sold the premises to the New York City Industrial
Development Agency (the "IDA") in connection with a $1,600,000 IDA bond
financing. Parkside was a partnership composed of Pearl Oberlander, an officer,
director and principal shareholder of the Registrant, and Eva Eisenberger, a
former principal stockholder. The proceeds of such financing were
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applied (i) to purchase the partnership interest of Eva Eisenberger in Parkside,
(il) to satisfy certain indebtedness encumbering the premises, and (iii) to
purchase from the Registrant certain machinery and equipment purchased by the
Registrant in anticipation of such financing. concurrently with such financing,
the IDA leased the premises, together with the machinery and equipment
purchased, to 505 Carroll Street Realty Company, a partnership of which Michael
Oberlander and Pearl Oberlander, officers, directors and the principal
stockholders of the Registrant, were the sole partners. Under the financing
arrangement, 505 Carroll Street Realty Company entered into a sublease agreement
with the Company, dated as of December 1, 1986, which provides that the Company
will occupy the premises and lease the machinery and equipment under a 15-year
sublease through December 1, 2001 at an annual rental adequate to cover all the
net carrying costs of the building, including payments due from 505 Carroll
Street Realty Company to the IDA under the lease. As lessee from the IDA, 505
Carroll Street Realty Company has the right to purchase the premises and the
leased machinery and equipment at any time after January 1, 1987, for an amount
equal to the outstanding balance of the bonds plus $1.00. In connection with its
sublease of the premises and the leased machinery and equipment, the Company
guaranteed the payment of principal and interest by 505 Carroll Street Realty
Company to the IDA in the aggregate principal amount of $1,600,000. In the
opinion of the Registrant's management, the rentals paid by the Registrant for
its premises and certain machinery and equipment
10
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as a result of the IDA bond financing are at least as favorable to the
Registrant as those that would obtain in transactions with unaffiliated third
parties. The balance of such loan as of December 31, 1995, was $636,923.
J&J conducts its business from 57-48 49th Place, Maspeth, New York. On
December 23, 1987, the Company entered into a contract to sell J&J's former
premises located at 96-16 Atlantic Avenue, Ozone Park, New York for $960,000.
Subsequently, J&J entered into a contract to purchase its current operating
premises for $3,425,000. The acquisition of J&J's new building was financed by
means of bonds issued by the New York City Industrial Development Agency in the
amount of $3,000,000. The balance of this loan was $1,830,000 as of December 31,
1995. Additional information pertaining to the purchase of J&J's new premises is
contained in Notes 9 and 12 to the Financial Report of the Registrant included
herein.
Item 3. Legal Proceedings.
- ------- ------------------
Neither the Company nor any of its subsidiaries is a party to, nor are any
of their respective properties the subject of, any material pending legal
proceedings.
In 1976, the Company acquired a minority partnership share interest as a
passive investment in an unaffiliated and unrelated business. The partnerships
reported that the Company's share of loss in 1976 was approximately $89,000. The
Company included this partnership loss as deductions in preparing its own 1976
corporate income tax return. Since then the Internal Revenue Service denied
11
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these deductions and assessed the Company income tax taxes, interest and
penalties in the combined total of approximately $176,000. The Company's tax
counsel had made an offer in compromise to the Internal Revenue Service which
has now been rejected and a $176,000 tax liability has been in assessed. In
1996, the Company intends to pay this assessment from operating proceeds. For
accounting purposes the Company has already accrued this amount as a liability
in 1994. The Company does not anticipate that payment of this tax assessment in
1996 will have a materially negative effect on its operations.
Item 4. Submission of Matters to a Vote of Security Holders.
- ------- ----------------------------------------------------
No matters were submitted to a vote of security holders during the last
quarter of the Company's fiscal year.
(Balance of Page Intentionally Left Blank)
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Item 5. Market for Registrant's Common Stock and Related Security Holders
- ------- -----------------------------------------------------------------
Matters
-------
Although the common stock of the Company is traded in the over-the-
counter market, there is no established trading market for such stock. The stock
of this company is known as a bulletin board stock. The quotations below,
represent prices between dealers and do not include retail markup, markdown or
commission. They do not represent actual transactions and have not been adjusted
for stock dividends or splits.
BID PRICES ASK PRICES
1995 High Low High Low
------- -------- ------- -------
1st Qtr. $0.0625 $O.03125 $0.9375 $0.5625
2nd Qtr. $0.0625 $0.0200 $0.5000 $0.4375
3rd Qtr. $0.2500 $0.03125 $0.9375 $0.5625
4th Qtr. $0.2500 $0.0625 $0.9375 $0.4687
BID PRICES ASK PRICES
1994 High Low High Low
------- -------- ------- -------
1st Qtr. $0.0625 $O.03125 $0.5625 $0.5625
2nd Qtr. $0.0625 $0.0100 $0.5625 $0.5100
3rd Qtr. $O.1875 $0.0625 $0.9375 $0.5625
4th Qtr. $0.2500 $0.0625 $l.2500 $0.5625
As of December 31, 1995, there were 772 holders of record of the Company's
common stock. The Company did not pay dividends on its common stock in 1995 or
1994 and does not anticipate paying dividends in 1996. The Transfer Agent of the
Company's common stock is Registrar and Transfer Company, 10 Commerce Drive,
Cranford, New Jersey 07016.
(THE BALANCE OF THIS PAGE IS INTENTIONALLY BLANK)
13
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Item 6.
- -------
SELECTED FINANCIAL DATA
-----------------------
SPECTEX INDUSTRIES, INC.
FIVE YEARS ENDED DECEMBER 31, 1995
----------------------------------
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenues $34,696,815 $33,252,671 $31,597,930 $30,847,659 $29,758,959
Income, Loss Be- (45,885) 194,473 194,088 (620,444) 226,718
fore Extraordinary
items and Taxes
Net Income (loss) (148,770) 57,833 380,094 (641,795) 58,195
Net Income (loss) (.03) 0.01 0.08 (0.15) 0.01
per Share
Long term Debt 2,119,198 2,669,641 2,940,549 3,212,901 3,449,530
Book Value per .88 0.91 0.90 0.85 1.00
Common Share
Total Assets 8,908,594 9,573,797 9,453,256 10,173,559 11,143,696
Weighted Average 4,338,520* 4,338,520 4,388,520 4,138,520 4,138,520
Numbers of Shares
</TABLE>
**
* Includes outstanding common stock and treasury shares.
** No cash Dividends paid in any of the above years.
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Item 7. Management's Discussion and Analysis of Financial
- ------- -------------------------------------------------
Conditions and Results of Operations
------------------------------------
Liquidity and Capital Resources
- -------------------------------
Liquidity is the Company's ability to generate, internally and externally,
the necessary cash resources to meet short-term and long-term business plan
objectives. The Company relies upon its net earnings from operations as its
primary source of cash, although it does employ cash reserves and short-term
bank loans to provide additional liquidity. This is true for both the Company's
knitwear segment and its dairy products segment. In 1995, the Company purchased
virtually no new machinery as compared to 1994 when it purchased new machinery
outright for approximately $314,379. Selling, general and administrative
expenses as a percentage of sales remained, to a great extent, in line with the
two previous years and, thus, had little effect on liquidity. The Company has
entered into no material leases of machinery and equipment or any other off-
balance sheet financing. Any additional purchases by the Company, however, are
expected to be limited to the extent that they will not materially affect
liquidity.
The Company expects to continue to rely on cash and bank loans for its
liquidity in 1996. while it has no formal commitment from its bank, the Company
maintains a line of credit of up to $500,000 to provide additional liquidity for
its knitwear segment. Interest is payable on loans made under such line at a
rate of prime plus 1/2%.
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J&J has benefited from increasing liquidity from operations. Nevertheless,
the 1988 purchase of its warehouse facility for $3,425,000, as well as
continuing purchases of trucks and machinery will continue to have an impact
upon liquidity in 1995. J&J's IDA bond financing, which is described under Item
2, Properties, above, has contributed additional capital to enable J&J to
acquire its new premises, purchase additional equipment and expand its
operations. Accordingly, J&J also expects to rely upon cash reserves and bank
financing for additional cash resources. While it has no formal commitment from
its bank J&J expects that it will be able to borrow up to $500,000, as
necessary, to provide additional liquidity.
By converting in 1991, a portion of the Registrant's cash reserves into a
long-term investment, the Registrant's investment of $635,000 in a real estate
development corporation, as described under Item 13, Certain Relationships and
Related Transactions, had the effect of reducing the Registrant's liquidity.
Management believes, however, that loss resulting from such investment will
not have a material adverse effect on the Registrant's liquidity in view of its
anticipated cash needs and current capital resources. The Registrant is not
aware of any trends, demands, commitments, events or uncertainties which would
materially affect the liquidity of the Company or J&J. However, a general
increase in interest rates in 1996 would increase J&J's interest expense on its
IDA financing, since such is computed at a variable rate.
Consolidated revenues of the Registrant increased by approximately
$1,444,144 in 1995 as compared to 1994 and by
16
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approximately $1,654,741 in 1994 as compared to 1993, and by approximately
$750,000 in 1993 as compared to 1992. The increase in revenues in 1995 was
solely attributable to an increase in revenues of the Company's dairy segment to
$30,294,695 in 1995 from $28,361,000 in 1994, or an increase of $1,933,695 (6%).
The major factor in the 1995 increase in sales was the increase in dairy sales
to local customers. The Company's revenues from its apparel business decrease in
1995 to $4,402,120 from $4,891,548 in 1994 which resulted in a net operating
loss for this segment in 1995 of $156,874.
The Company's operating profit before provision for the 1992 investment loss
of $635,000, taxes, interest expense and minority interest decreased by $184,593
in 1995 as compared to 1994. The Company's operating profit before provision for
the 1992 investment loss of $635,000, taxes, interest expense and minority
interest decreased by $37,445 in 1994 as compared to 1993, and increased by
approximately $258,973 in 1993 as compared to 1992. The 1995 decrease was
attributable to a $156,874 loss in the operation of the garment segment before
minority interest, taxes and interest expenses. The 1994 decrease was
attributable to a $52,899 decrease in the operating profit of the garment
segment before minority interest, taxes and interest expenses. The 1993 increase
was attributable to $218,468 increase in the operating profit in the dairy
segment before minority interest, taxes and interest expenses.
As a result of competing in two highly competitive businesses,
17
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the Registrant's operating margins are low. The interest rates on both the
Company's and J&J's debt are variable, and thus a general increase in interest
rates in 1996 would increase the Registrant's overall interest expense. The
Company anticipates that in 1996 sales of its knitwear segment will remain
constant or slightly decrease and sales of its dairy products segment will
increase.
Item 8. Financial Statements and Supplementary Data.
- ------- --------------------------------------------
FINANCIAL STATEMENTS AND EXHIBITS FILED
Accountants'
Report Pages
------------
(1) Index to Financial Statements and
Schedules 2
(2) Report of Independent Certified Public
Accountants 3
(3) Consolidated Balance Sheet - Two Years Ended
December 31, 1994 and December 31, 1993 4
(4) Consolidated Statements of Income - Three
Years Ended December 31 1995,
December 31, 1994, and December 31, 1993 5
(5) Consolidated Statements of Changes in
stockholders' Equity -- Three Years
Ended December 31, 1995, December 31, 1994,
and December 31, 1993 6
(6) Consolidated Statements of Cash Flow --
Three Years ended December 31, 1995,
December 31, 1994, and December 31, 1993 7
(7) Notes to consolidated Financial statements 8-16
(8) Schedules
I - Marketable Securities 17
II - Amounts due from (to) Directors, Officers
and Principal Holders of Equity
Securities other than Affiliates 18
18
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v - Property, Plant and Equipment-
Consolidated 19
VI - Accumulated Depreciation and
Amortization of Plant, Property and
Equipment-Consolidated 20
VIII- Valuation of Qualifying Accounts
and Reserves 21
X - Supplementary Profit and Loss
Information 22
All other schedules are omitted because they are not applicable, or
the required information is shown in the financial statements or notes thereto.
Columns omitted from schedules filed have been omitted because the information
is not applicable. The report of the Company's independent certified public
accountants and the consolidated statements are filed as part of this report.
Item 9. Changes in and Disagreements with Accountants and
- ------- -------------------------------------------------
Accounting Financial Disclosure.
--------------------------------
None.
SPECTEX INDUSTRIES, INC.
AND SUBSIDIARIES
ANNUAL REPORT
DECEMBER 31, 1995
19
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SPECTEX INDUSTRIES, INC.
AND SUBSIDIARIES
FORM 10-K ITEM 8
Index to Financial Statements and Exhibits
Page
(1) Report of Independent Certified Public Accountants 3
(2) Consolidated Balance Sheets 4
(3) Consolidated Statements of Operations 5
(4) Consolidated Statements of Changes in Stockholders' Equity 6
(5) Consolidated Statements of Cash Flows 7
(6) Notes to Consolidated Financial Statements 8-16
(7) Schedules:
I-Marketable Securities & Other Investments 17
II-Amounts due from Directors, Officers and
Principal Holders of Equity Securities other
than Affiliates 18
V-Property, Plant, and Equipment 19
VI-Accumulated Depreciation and Amortization of
Property, Plant and Equipment 20
VIII-Valuation of Qualifying Accounts & Reserves 21
X-Supplementary Income Statement Information 22
All other schedules are omitted because they are not applicable, or the required
information is shown in the financial statements, or
20
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in notes thereto. Columns omitted from schedules filed have been omitted
because the information is not applicable.
INDEPENDENT AUDITORS' REPORT
----------------------------
To The Board of Directors & Stockholders
Spectex Industries, Inc.
Brooklyn, New York 11215
We have audited the accompanying consolidated balance sheets of Spectex
Industries, Inc. & Subsidiaries (the "Company") as of December 31, 1995 and 1994
and the related consolidated statements of operations, changes in stockholders'
equity, and cash flows, for each of the three years in the period ended December
31, 1995. Our audit also includes the financial statement schedules listed in
the foregoing index for each of the three years in the period ended December 31,
1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and financial statement schedules based on our audits.
We have conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Company as of
December 31, 1995 and 1994, and the results of their operations and their cash
flows, for each of the years in the three year period ended December 31, 1995 in
conformity with generally accepted accounting principles. Also in our opinion,
the financial statement schedules, when considered in relation to the basic
consolidated financial statements taken as a whole, present fairly in all
material respects, the information set forth therein.
SCHWARTZ & COMPANY
Certified Public Accountants
New York, New York
March 15, 1996
*See note on next page
21
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Except for note 12(b)
which is dated July 17, 1996
22
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SPECTEX INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31,
ASSETS
------ 1995 1994
Current Assets: ---------- ----------
Cash $ 785,764 $ 873,371
Accounts receivable 1,669,718 1,686,481
Other receivables 11,036 36,175
Inventory 1,667,018 1,772,697
Prepaid expenses 65,278 49,557
Mortgages receivable 153,540 144,845
Marketable securities 218,928 96,979
---------- ----------
---------- ----------
---------- ----------
Other Assets:
Loan receivable from shareholder 292,366 304,815
Deferred taxes 119,576 111,677
Deferred charges-net of accumulated
amortization, $323,559 in 1995; $285,539 in 1994 169,548 207,568
---------- ----------
---------- ----------
Total Assets $8,908,594 $9,573,797
========== ==========
LIABILITIES & STOCKHOLDERS' EQUITY
----------------------------------
Current Liabilities:
Accounts payable-trade $1,275,792 $1,515,995
Accrued expenses 166,162 169,248
Income taxes payable 229,204 242,602
---------- ----------
---------- ----------
Long-term debt, notes payable-less current
---------- ----------
---------- ----------
Stockholders' Equity:
Common stock-$.01 par value-authorized 5,000,000
shares and 4,338,520 shares issued 43,383 43,383
Capital in excess of par 846,660 846,660
Retained earnings 2,941,243 3,090,013
---------- ----------
Total 3,831,286 3,980,056
Less: Treasury stock 87,940
shares at cost (20,467) (20,467)
---------- ----------
Net Stockholders' Equity 3,810,819 3,959,589
---------- ----------
Total $8,908,594 $9,573,797
========== ==========
23
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See Notes to Consolidated Financial Statements.
SPECTEX INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Revenues $34,696,815 $33,252,671 $31,597,930
----------- ----------- -----------
Cost of Goods Sold:
Inventory-beginning 1,772,697 1,138,367 1,599,627
Purchases 29,380,606 28,538,774 26,020,883
Labor 2,209,971 2,157,023 1,929,628
Factory overhead 906,850 856,876 934,285
----------- ----------- -----------
Total 34,270,124 32,691,040 30,484,423
Less: Inventory-end 1,667,018 1,772,697 1,138,367
----------- ----------- -----------
Cost of Goods Sold 32,603,106 30,918,343 29,346,056
----------- ----------- -----------
Gross Profit 2,093,709 2,334,328 2,251,874
Selling, general and
administrative expenses 1,992,568 1,874,383 1,830,279
----------- ----------- -----------
Income from Operations 101,141 459,945 421,595
Interest expense (179,814) (343,486) (173,857)
Investment income or (loss) 65,455 89,143 (34,011)
Interest income from shareholder 18,637 20,738 19,687
----------- ----------- -----------
Income before income taxes
taxes, and minority
interest participation 5,419 226,340 233,414
Minority interest participation in
operations of subsidiaries 51,304 31,867 39,326
----------- ----------- -----------
Income (Loss) before provision
for income tax (or benefit) (45,885) 194,473 194,088
Provision for income tax (or benefit)
- current 110,783 136,640 (63,323)
Provision for income tax (or benefit)
- deferred (7,898) -0- (71,565)
----------- ----------- -----------
(Loss) Income before cumulative
effect of the adoption of
FASB-109 (148,770) 57,833 328,976
Cumulative effect of application of 19
FASB-109 -0- -0- (51,118)
----------- ----------- -----------
Net (loss) income transferred to
Retained Earnings $ (148,770) $ 57,833 $ 380,094
=========== =========== ===========
Earnings or (Loss) per share before
cumulative effect of FASB-109 adoption $(.03) $.01 $.08
=========== =========== ===========
Earnings or (Loss) per share on
net income $(.03) $.01 $.09
=========== =========== ===========
Dividends $ -0- $ -0- $ -0-
=========== =========== ===========
Weighted average number of shares
outstanding used in determining
</TABLE>
24
<PAGE>
<TABLE>
<S> <C> <C> <C>
earnings per share 4,250,580 4,250,580 4,250,580
=========== =========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
SPECTEX INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
THREE YEARS ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Treasury
stock Additional Total
Capital at cost Paid-in Retained Stockholders'
Stock (87,940 shs) Capital Earnings Equity
------- ------------ ---------- ----------- --------------
<S> <C> <C> <C> <C> <C>
BALANCE-December 31, 1992 $43,383 $(20,467) $846,660 $2,652,086 $3,521,662
Plus: Net Income-1993 -0- -0- -0- 380,094 380,094
------- -------- -------- ---------- ----------
BALANCE-December 31, 1993 43,383 (20,467) 846,660 3,032,180 3,901,756
Plus: Net Income-1994 -0- -0- -0- 57,833 57,833
------- -------- -------- ---------- ----------
BALANCE-December 31, 1994 43,383 (20,467) 846,660 3,090,013 3,959,589
Less: Net Loss-1995 -0- -0- -0- (148,770) (148,770)
------- -------- -------- ---------- ----------
BALANCE-December 31, 1995 $43,383 $(20,467) $846,660 $2,941,243 $3,810,819
======= ======== ======== ========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
25
<PAGE>
SPECTEX INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31,
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net (Loss) Income $(148,77 0) $ 57,833 $ 380,094
Adjustments to reconcile net income to
net cash from operating activities:
Minority interest in participation
of subsidiary 51,304 31,867 39,326
Write down of investment in 0 148 1,758
securities
Depreciation & amortization 390,948 386,960 409,975
Deferred income taxes (7,899) 51,298 (122,683 )
Deferred credit amortization -0- (47,523) (69,192)
Loss on sale of building 60,300 -0- -0-
Changes in Operating Assets and
Liabilities:
Decrease in accounts receivable 16,763 277,888 668,736
Decrease (Increase) in inventory 105,679 (634,330 ) 461,260
(Increase) Decrease in prepaid (18,721) 23,088 14,457
expenses
(Decrease) Increase in accounts (240,203 ) 216,701 (724,847 )
payable
Increase (Decrease) in accrued
expenses
and taxes payable 41,414 53,852 (9,835)
(Decrease) Increase in income taxes (57,898) 41,338 (75,599)
payable
---------- ---------- ----------
Net Cash Provided by Operating
Activities 192,917 459,120 973,450
---------- ---------- ----------
Cash Flows From Investing Activities:
Investment in securities (100,000 ) (95,051) -0-
Investment in mortgage note -0- -0- (240,000 )
Decrease (Increase) in investment
of
affiliate -0- 105,559 (55,757)
Purchase of fixed assets (18,937) (314,379 ) (97,223)
Decrease (Increase) in other 37,588 (56,990) 94,826
receivables
Proceeds from mortgage receivables 83,845 156,351 100,000
Proceeds from sale of building 43,049 -0- -0-
---------- ---------- ----------
Net Cash Used in Investing 45,545 (204,510 ) (198,154 )
Activities
---------- ---------- ----------
Cash Flows From Financing Activities:
Principal payments on IDA loan
(J&J building) (150,000 ) (162,500 ) (137,500 )
Principal payments on IDA loan
(505 Carroll Street) (106,680 ) (106,679 ) (106,678 )
Payments of mortgage debt (13,049) (9,435) (8,625)
Principal payments on auto &
equipment
loans (56,340) (4,913) (7,447)
---------- ---------- ----------
Net Cash Used in Financing (326,069 ) (283,527 ) (260,250 )
Activities
---------- ---------- ----------
Net (Decrease) Increase in (87,607) (28,917) 515,046
Cash
Cash, beginning of year 873,371 902,288 387,242
---------- ---------- ----------
Cash, end of year $ 785,764 $ 873,371 $ 902,288
</TABLE>
26
<PAGE>
- ------------------------
<TABLE>
<S> <C> <C> <C>
Supplemental Cash Flow Information:
i. Cash paid during current year for interest $ 181,487 $ 183,811 $ 166,414
========== ========== =========
ii. Cash paid during current year for income taxes $ 111,833 $ 45,518 $ 29,904
========== ========== =========
</TABLE>
iii. Obligation of $15,020 incurred upon
the purchase of a new vehicle in 1995.
iv. A note receivable in amount of $43,000 was
received upon sale of a building in 1995.
See Notes to Consolidated Financial Statements.
27
<PAGE>
SPECTEX INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE A - THE COMPANY'S BUSINESSES:
- ---------------------------------
The Company operates the following businesses: (1) the apparel manufacturing
(mostly sweaters) business, (the Company manufactures and sells mens and ladies
sweaters to various chain stores throughout the country), and (2) the
distribution of wholesale dairy products to several hundred retail stores and
other wholesalers within the greater New York City area.
NOTE B - ACCOUNTING POLICIES:
- ----------------------------
(1) Fiscal Year - The consolidated company's fiscal year ends on December 31
-----------
for financial reporting purposes. Spectex reports on June 30 year end for
tax purposes; the subsidiaries have various tax fiscal year ends. Each
company files its own separate tax return.
(2) Principles of Consolidation - The consolidated financial statements include
---------------------------
the accounts of the Company and its subsidiaries. Intercompany accounts
and transactions have been eliminated.
These financial statements include the assets, liabilities and operations
of the partnership that owns the building in which Spectex operates (See
Note 12).
(3) Inventory - Inventories are stated at the lower of cost or market. Raw
---------
materials are valued generally at average cost; work-in-process and
finished goods are valued generally on a first-in, first-out basis.
(4) Investments
-----------
Investments are carried at cost, which approximates market. Investments
consist primarily of US Government securities, and money market funds. The
Company considers all highly liquid investments with original maturities of
three months or less, to be cash equivalents.
(5) Property, Plant & Equipment and Depreciation - Property, plant and
--------------------------------------------
equipment are shown at cost net of accumulated depreciation and
amortization. Depreciation and amortization of property, plant and
equipment are computed on the straight-line or accelerated methods, based
upon various useful lives.
28
<PAGE>
(6) Revenue Recognition - The Company recognizes revenue at the time title to
-------------------
the goods sold, passes to the customer.
(7) Reclassification: Certain items in the 1994 balance sheet have been
----------------
reclassified to conform with the 1995 presentation.
29
<PAGE>
SPECTEX INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE 1 - PRINCIPLES OF CONSOLIDATION: The financial statements include the
- ------------------------------------
accounts of Spectex Industries, Inc. A/K/A J.A. Knitting Mills and its
subsidiaries, (a) Special Studies Development Corp., (b) Perfect Knitting Mills
Inc., and (c) J&J Farms Creamery, Inc. All significant intercompany
transactions and balances have been eliminated in the consolidation.
NOTE 2 - ACCOUNTS RECEIVABLE: Accounts receivable are shown net of allowances
- ----------------------------
for doubtful accounts of $ -0- for December 31, 1995 and 1994.
NOTE 3 - RELATED PARTY RECEIVABLES: At December 31, 1995 and 1994, the Company
- ----------------------------------
had receivables from its President and former shareholder of $292,366 and
$304,815, respectively. These amounts are due on demand and bear interest of 8%
per annum.
NOTE 4 - INVENTORY: Inventory represents products owned by J.A. Knitting Mills,
- ------------------
consisting of yarns, fabrics, trimming and finished goods manufactured by the
Company, and the dairy products of J&J Farms Creamery. Inventories were
generally priced at lower of cost or market on a first-in-first-out basis and
are classified as follows:
1995 1994
---------- ----------
Raw materials $ 398,296 $ 399,954
Supplies 95,172 98,986
Work in Process 162,326 123,182
Finished apparel goods 85,438 219,395
Dairy products 925,786 931,180
---------- ----------
Totals $1,667,018 $1,772,697
========== ==========
NOTE 5 - PROPERTY, PLANT AND EQUIPMENT: Depreciation is provided either on the
- --------------------------------------
straight line or accelerated methods. Fixed assets shown at cost, are as
follows:
1995 1994
---------- ----------
Land, building & improvements $4,747,415 $4,926,670
Furniture & fixtures 186,485 177,993
Automobiles & delivery
equipment 271,782 246,317
Machinery & equipment 1,633,643 1,633,643
---------- ----------
Totals 6,839,325 6,984,623
30
<PAGE>
Less: Accumulated depreciation 3,172,767 2,833,795
---------- ----------
Net Book Value $3,666,558 $4,150,828
========== ==========
NOTE 6 - MORTGAGE RECEIVABLE: On June 1, 1988 the Company loaned money to an
- ----------------------------
unrelated party as a mortgage receivable of $510,000 with interest at 12% per
annum; of this amount $449,000 has been repaid. The note has been revised to
reflect a balance of $61,000, which is due in 1996.
In 1993 J&J Farms Creamery, Inc. loaned money to an unrelated party as a
mortgage receivable of $240,000, payable at the rate of 10% per annum fully
amortized over a five year period. The balance due on this loan at December 31,
1995 was $138,804.
In May 1995 the dairy segment sold a building, which it had acquired in 1993 as
payment for an outstanding accounts receivable. The building was sold for
$105,000, of which $43,000 was received as a mortgage receivable due in May
1996.
NOTE 7 - DEFERRED CHARGES:
- -------------------------
a) Deferred Charges includes covenants not to compete and the balance of
unamortized mortgage refinancing costs in connection with the NYC
Industrial Development Agency financings (Note 12), which are being
amortized over their respective terms.
b) $79,284 of deferred income taxes represents taxes that would have been
incurred or will reasonably be expected to be incurred in the next two
years (FASB 109) had the Company not had available net operating loss
carryforwards. At June 30, 1995 the Company has a net operating loss
carryforward of approximately $182,519 for federal income tax purposes. If
not offset against taxable income, the tax basis net operating loss
carryforward will expire in 2009. $40,292 of deferred income taxes
represents differences due to non-used capital losses in the amount of
$126,653, which are being carried forward for federal income tax purposes.
The cumulative effect of the adoption of FASB-109 as of January 1, 1993 is
reflected in the Statement of Operations for that year.
NOTE 8 - ACCRUED EXPENSES:
- -------------------------
Included hereunder are the following:
1995 1994
-------- --------
Interest $127,878 $114,344
Commissions 14,392 -0-
Payroll related taxes 18,581 30,093
31
<PAGE>
Other expenses 5,311 24,811
-------- ----------
Total $166,162 $ 169,248
======== ==========
NOTE 9 - NOTES PAYABLE:
- ------------------------------------------
as at December 31, 1995
- ------------------------------------------
Current Long-Term
Maturities Debt Total
---------- ---------- ----------
Notes payable-secured by auto and
equipment $ 3,405 $ 8,955 $ 12,360
Notes payable to minority share-
holders of J&J Farms Creamery, Inc.
(due 6/30/08)-unsecured (Note (c)) -0- 200,000 200,000
Notes payable to NYC Industrial
Development Agency (Note (a)) 106,680 530,243 636,923
Notes payable to NYC Industrial
Development Agency (Note (b)) 450,000 1,380,000 1,830,000
-------- ---------- ----------
Totals $560,085 $2,119,198 $2,679,283
======== ========== ==========
as at December 31, 1994
--------------------------------
Current Long-Term
Maturities Debt Total
---------- ---------- --------
Mortgage payable on property acquired in
recovery of an account receivable $ 10,319 $ 2,730 $ 13,049
Notes payable-secured by auto and
equipment 53,681 -0- 53,681
Notes payable to minority share-
holders of J&J Farms Creamery, Inc.
(due 6/30/08)-unsecured (Note (c)) -0- 200,000 200,000
Notes payable to NYC Industrial
Development Agency (Note (a)) 106,692 636,911 743,603
Notes payable to NYC Industrial
Development Agency (Note (b)) 150,000 1,830,000 1,980,000
-------- ---------- ----------
Totals $320,692 $2,669,641 $2,990,333
======== ========== ==========
Note: (a) Notes payable to the New York City
32
<PAGE>
Industrial Development Agency are scheduled to be repaid over a
15 year term with monthly principal payments of $8,890 plus
interest at 75% of the bank's floating prime rate (Note 12).
(b) Notes payable to the New York City Industrial Development Agency are
scheduled to be repaid over a twenty year term with monthly principal
payments of $12,500 plus interest at floating rates (Note 12(b)).
NOTE 9 - NOTES PAYABLE: (cont'd.)
- ----------------------
(c) The notes payable to minority shareholders are non-interest bearing.
(d) Annual maturities of long-term debt for the next five years is as
follows:
1996 $560,091
1997 $260,443
1998 $260,831
1999 $258,534
2000 $256,680
NOTE 10 - MINORITY INTERESTS IN EQUITY OF SUBSIDIARIES: Four and one-half
- ------------------------------------------------------
percent of Special Studies Development Corp. and forty-nine percent of J&J Farms
Creamery, Inc. are owned by stockholders other than the parent company. The
Stockholders' Equity of those companies applicable to minority shareholders were
as follows at December 31,
Subsidiaries 1995 1994
------------ -------- --------
Special Studies Development Corp. $ 4,659 $ 6,106
J & J Farms Creamery, Inc. 742,675 689,924
-------- --------
Total $747,334 $696,030
======== ========
NOTE 11 - LOAN RECEIVABLE FROM MME POWER ENTERPRISES, INC.: In 1990 the Company
- ----------------------------------------------------------
advanced $635,000 to MME Power Enterprises, Inc., which was developing
residential real estate in Peekskill, New York. The former shareholder and
current President of Spectex Industries, Inc. owns 25% of MME Power Enterprises,
Inc. The loan was due to be paid May 1, 1995.
At December 31, 1992 this loan was deemed uncollectible since MME Power
Enterprises, Inc. developed serious financial difficulties, resulting in its
bank "calling" the loan, which MME was unable to
33
<PAGE>
pay. The difficulties arose from the bankruptcy of the general contractor of
the real estate project. In 1993 MME Power Enterprises, Inc. filed for Chapter
XI protection under provisions of the US Bankruptcy Code.
NOTE 12 - COMMITMENTS, CONTINGENCIES & RELATED MATTERS:
- ------------------------------------------------------
(a) Spectex Industries' apparel plant and premises are "owned" by an affiliate,
505 Carroll Street Realty Co., which is a partnership composed of the
principal stockholders of Spectex Industries, Inc. In December 1986 the
affiliate completed arrangements with the New York City Industrial
Development Agency (IDA) to finance (through the sale of bonds of
$1,600,000), the acquisition of additional parts of the property previously
not owned, and to add certain improvements to the premises and to purchase
equipment. These fixed assets are pledged to the NYC IDA as collateral for
the loan. The bonds are to be repaid over a 15 year term (terminating
2001), with interest at 75% of the bank's floating prime rate.
Spectex is guarantor of the bonds. On the financial statements of Spectex
Industries, Inc. the transaction is reflected as a capitalized lease-
purchase. This is in accordance with a Securities and Exchange Commission
directive which requires the IDA debt to be reflected on the financial
statements of the operating entity. The building and the equipment are
being depreciated using the straight line method, over 15 years and 7 year
periods, respectively.
(b) 1. The acquisition of the J&J Farms Creamery building in 1986 was
financed through the sale of bonds issued by the New York City
Industrial Development Agency in the amount of $3,000,000 with a
letter of credit issued by ABN Amro Bank N.V.. The transaction is
reflected as a capitalized lease-purchase on the books of the Company.
The mortgage liability is payable (in monthly installments over 20
years - terminating 2006) to the Bank of New York, as trustee, with
flexible rates of interest recomputed weekly, based on rates of
similar instruments. Spectex Industries, Inc. as parent, is a
guarantor of the bonds.
2. The mortgage liability has certain financial covenants including
current ratio, working capital, debt/equity ratio and a limit on
capital expenditures. At December 31, 1994 J&J Farm was in violation
of the working
34
<PAGE>
NOTE 12 - COMMITMENTS, CONTINGENCIES & RELATED MATTERS: (cont'd.)
- ------------------------------------------------------
capital and capital expenditure covenants (1994 only) of the IDA
agreement. These violations were waived by the participating bank in
a letter dated April 4, 1995. Therefore, the debt was reflected as
non-current in the financial statements.
3. On July 16, 1996 the ABN Amro Bank N.V. agreed to waive the non-
compliance at December 31, 1995 of certain covenants by J&J Farms
Creamery, Inc. contained in its agreement with the Industrial
Development Agency.
4. In order to obtain the waiver, J&J Farms agreed to pay certain fees
and to pay down the debt by $300,000 as soon as possible. This has
not been completed as of the date of this statement.
5. The principal non-compliance issue occurred when Michael Oberlander, a
personal guarantor of the IDA debt, pledged his shares of stock in
Spectex Industries, Inc. to guarantee a personal loan. Michael
Oberlander subsequently sold his shares in the Company to pay part of
this personal debt. This constituted a violation of a covenant in the
IDA loan agreement.
(c) The Company's garment division banks at Bank Leumi and its dairy division
banks primarily at Chemical Bank. Pursuant to FASB 105 it is noted that
the FDIC insures these separate accounts up to $100,000 each. Amounts in
excess of $100,000 are not insured.
(d) Spectex's income tax returns for 1976 have been adjusted based on the final
outcome of an Internal Revenue Service audit of a non-affiliated
partnership investment. The federal and state tax adjustment amounted to
$44,496; the accrued interest amounted to $175,504, and was reflected in
1994.
NOTE 13 - PROVISION FOR INCOME TAXES:
- ------------------------------------
a) A recapitulation of provision for income taxes is given below:
1995 1994 1993
--------- --------- ----------
Income before income taxes $148,770 $194,473 $ 194,088
======== ======== =========
35
<PAGE>
Income taxes:
Federal income tax, or (credit) $ 50,582 $ 66,121 $ (65,990)
Surtax exemption -0- ( 7,027) -0-
Deferred tax benefit (7,898) -0- (52,251)
N.Y.S. Corp. tax, net
of federal tax benefit 29,276 15,839 ( 7,458)
N.Y.C. Corp. tax, net of
federal tax benefit 30,925 17,211 ( 9,189)
Tax audit adjustment-Note 12(e) -0- 44,496 -0-
-------- -------- ---------
Total Income Tax
(or Benefit) $102,885 $136,640 $(134,888)
======== ======== =========
b) Following is a reconciliation of the Federal Statutory income tax rate to
the total effective tax rates:
Federal Statutory income tax rate 34.0% 34.0% (34.0%)
Increase (reduction) in tax rates
resulting from:
Surtax exemption -0- (3.6%) -0-
Deferred tax benefit (5.3%) -0- (26.9%)
State & City income taxes,
net of federal tax benefits 40.5% 17.0% ( 8.6%)
Tax audit adjustment 0% 22.9% 0%
----- ---- ------
Total Effective Tax Rates $69.2% 70.3% (69.5%)
===== ==== ======
36
<PAGE>
SPECTEX INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE YEARS ENDED DECEMBER 31,
NOTE 16 - INDUSTRY SEGMENTS & CONCENTRATION:
- -------------------------------------------
<TABLE>
<CAPTION>
1995 1994
-------------------------------------- -------------------------------------
Apparel Dairy Consolidated Apparel Dairy Consolidated
----------- ----------- ------------ ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Revenues $4,402,120 $30,294,695 $34,696,815 $4,891,548 $28,361,123 $33,252,671
========== =========== ============ ========== =========== ============
Operating
profit (loss) before
minority interests,
interest expense &
income taxes $ (156,874) $ 342,107 $ 185,233 $ 139,585 $ 230,241 $ 369,826
========== =========== ============ ========== =========== ============
Approximate
identifiable
assets $4,000,000 $ 5,000,000 $ 9,000,000 $4,000,000 $ 5,000,000 $ 9,000,000
========== =========== ============ ========== =========== ============
Depreciation $ 256,441 $ 96,486 $ 352,927 $ 248,319 $ 100,621 $ 348,940
========== =========== ============ ========== =========== ===========
Capital
expenditures $ 31,230 $ 2,727 $ 33,957 $ 253,997 $ 110,382 $ 364,379
========== =========== =========== ========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
1995
--------------------------------------
Apparel Dairy Consolidated
----------- ----------- ------------
<S> <C> <C> <C>
Revenues $5,686,266 $25,911,664 $31,597,930
========== =========== ===========
Operating
profit (loss) before
minority interests,
interest expense &
income taxes $ 192,484 $ 214,787 $ 407,271
=========== =========== ============
Approximate
identifiable
assets $ 4,000,000 $ 5,000,000 $ 9,000,000
========== =========== ============
Depreciation $ 277,390 $ 94,565 $ 371,955
=========== =========== ============
Capital
expenditures $ 57,709 $ 39,514 $ 97,223
============ =========== ============
</TABLE>
The Company has no foreign operaions. Most of the Company's apparel sales are
with customers located in the eastern section of the United States. The dairy
industry segment had no sales to any single customer totalling more than 10% of
sales of that segment during 1995, 1994, or 1993. Al dairy sales are in the
metropolitan New York City area. 10% to any customer are as follows:
1995 1994 1993
---------------- --------------- ----------------
Avon $ N/A $ 687,541 (14%) $ N/A
Norton McNaughton $1,224,770 (28%) 842,175 (17%) $2,592,680 (46%)
Bedford Fair $ 696,027 (16%) $ 735,361 (15%) $ 802,144 (14%)
R&R Uniform $ N/A $ N/A $ 588,055 (10%)
37
<PAGE>
Decorp. $ 447,636 (10%) $ N/A $ N/A
Donnkenny $ 463,871 (11%) $ N/A $ N/A
38
<PAGE>
SPECTEX INDUSTRIES, INC. AND SUBSIDIARIES
SCHEDULE I - MARKETABLE SECURITIES
THREE YEARS ENDED DECEMBER 31,
Cost Market
Name of Issuer of Issue Value
- ----------------- -------- --------
1995-
United States
Treasury Bill $195,051 $225,433
Silver Screen
Partnership 5,000 2,185
-------- --------
$200,051 $227 618
======== ========
- -------------------------------------
1994-
United States
Treasury Bill $ 95,051 $ 97,382
Silver Screen
Partnership 5,000 1,928
-------- --------
$100,051 $ 99 310
======== ========
- -------------------------------------
1993-
Silver Screen
Partnership $ 5,000 $ 2,076
======== ========
39
<PAGE>
SPECTEX INDUSTRIES, INC. & SUBSIDIARIES
SCHEDULE II - AMOUNTS DUE FROM DIRECTORS, OFFICERS AND
PRINCIPAL HOLDERS OF EQUITY SECURITIES - OTHER THAN AFFILIATES
THREE YEARS ENDED DECEMBER 31,
- -----------------------------------------------------------------------
Balances
receivable Balance
at Amounts receivable
Name of beginning written at close
Debtor of period Additions off Collections of period
- ---------------- ---------- ---------- ----- ----------- ---------
1995
Michael
Oberlander (1) $304,815 $47,551 $-0- $60,000 $292,366
========== ========== ===== =========== =========
- -----------------------------------------------------------------------
1994
Michael
Oberlander (1) $262,503 $42,312 $-0- $ -0- $304,815
========== ========== ===== =========== =========
================================================================================
1993
Michael
Oberlander (1) $224,064 $235,000 $ -0- $196,561 $262,503
======== ======== ======= ======== ========
================================================================================
(1) President of Spectex Industries, Inc. and formerly a shareholder.
40
<PAGE>
SPECTEX INDUSTRIES, INC. & SUBSIDIARIES
SCHEDULE V - PROPERTY, PLANT & EQUIPMENT
THREE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
Balance at Balance
beginning Additions Retirements or at close
of period at cost sales of period
------------ ---------- --------------- ----------
<S> <C> <C> <C> <C>
1995
- ------------------------------
Furniture and fixtures $ 177,993 $ 8,492 $ 186,485
Buildings & improvements 4,198,944 $(179,255) 4,019,689
Land 727,726 -0- 727,726
Automobile and delivery
equipment 246,317 25,465 271,782
Machinery and equipment 1,633,643 -0- 1,633,643
---------- --------- ----------
Totals $6,984,623 $ 33,957 $(179,255) $6,839,325
========== ========== ========= ==========
- -------------------------------------------------------------------------------------
1994
- ------------------------------
Furniture and fixtures $ 257,376 $ 10,932 $( 87,823) $ 177,993
Buildings & improvements 4,127,683 70,750 ( 1,981) 4,198,944
Land 727,726 -0- -0- 727,726
Automobile and delivery
equipment 248,538 50,000 ( 52,221) 246,317
Machinery and equipment 1,406,096 232,697 ( 5,150) 1,633,643
---------- ---------- --------- ----------
Totals $6,767,419 $ 364,379 $(147,175) $6,984,623
========== ========== ========= ==========
- -------------------------------------------------------------------------------------
1993
- ------------------------------
Furniture and fixtures $ 316,554 $ 2,492 $( 61,670) $ 257,376
Building and improvements 4,160,333 -0- ( 32,650) 4,127,683
Land 727,726 -0- -0- 727,726
Automobile and delivery
equipment 226,883 39,514 ( 17,859) 248,538
Machinery and equipment 1,889,654 55,217 $(538,775) 1,406,096
---------- ---------- --------- ----------
Totals $7,321,150 $ 97,223 $(650,954) $6,767,419
========== ========== ========= ==========
</TABLE>
================================================================================
41
<PAGE>
SPECTEX INDUSTRIES, INC. & SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT &
EQUIPMENT
THREE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
Balance at Balance
beginning Retirements or at close
of period Depreciation sales of period
---------- ------------ --------------- ----------
<S> <C> <C> <C> <C>
1995
- -------------------------------
Furniture and fixtures $ 106,636 $ 11,681 $ 118,317
Building & improvements 711,334 104,959 $ (13,956) 802,337
Automobile and delivery
equipment 134,950 28,452 163,402
Machinery and equipment 1,880,875 207 836 2,088,711
---------- --------- ----------
Totals $2,833,795 $352,928 $3,172,767
========== ======== ==========
- --------------------------------------------------------------------------------------
1994
- -------------------------------
Furniture and fixtures $ 183,758 $ 10,701 $( 87,823) $ 106,636
Land, building & improvements 608,242 105,173 ( 1,981) 711,334
Automobile and delivery
equipment 157,392 29,779 ( 52,221) 134,950
Machinery and equipment 1,682,638 203,388 ( 5,150) 1,880,875
---------- -------- --------- ----------
Totals $2,632,030 $348,940 $(147,175) $2,833,795
========== ======== ========= ==========
- --------------------------------------------------------------------------------------
1993
- -------------------------------
Furniture and fixtures $ 226,874 $ 18,554 $( 61,670) $ 183,758
Land and building 534,698 106,194 ( 32,650) 608,242
Automobile and delivery
equipment 157,283 17,968 ( 17,859) 157,392
Machinery and equipment 1,992,174 229,239 $(538,775) 1,682,638
---------- -------- --------- ----------
Totals $2,911,029 $371,955 $(650,954) $2,632,030
========== ======== ========= ==========
- --------------------------------------------------------------------------------------
</TABLE>
SPECTEX INDUSTRIES, INC. AND SUBSIDIARIES
VIII-VALUATION OF QUALIFYING ACCOUNTS AND RESERVES
THREE YEARS ENDED DECEMBER 31,
Balance at Balance at
beginning Additions close of
of period (Deductions) period
---------- ------------ ----------
1995
- ----
Allowance for
doubtful accounts $ -0- $ -0- $ -0-
======= ======== ======
Valuation allowance on
marketable securities $ 2,924 $ 109 $2,815
======= ======== ======
================================================================
42
<PAGE>
1994
- ------------------------
Allowance for
doubtful accounts $ -0- $ -0- $ -0-
======= ======== ======
Valuation allowance on
marketable securities $ 2,924 $ -0- $2,924
======= ======== ======
==============================================================
1993
- ------------------------
Allowance for
doubtful accounts $77,445 $(77,445) $ -0-
======= ======== ======
Valuation allowance on
marketable securities $ 1,166 $ 1,758 $2,924
======= ======== ======
================================================================================
SPECTEX INDUSTRIES, INC. & SUBSIDIARIES
SCHEDULE X-SUPPLEMENTARY PROFIT & LOSS INFORMATION
THREE YEARS ENDED DECEMBER 31,
Charged
directly
to cost
of goods
sold or
operating Charged to
expenses other accounts Total
---------- -------------- -----
1995
- ------------------
Maintenance and
repairs $175,265 $175,265
Taxes other than
income $304,435 $304,435
- --------------------------------------------
1994
- ------------------
Maintenance and
repairs $130,894 $130,894
Taxes other than
income $255,605 $255,605
- --------------------------------------------
1993
- ------------------
43
<PAGE>
Maintenance and
repairs $120,277 $120,277
Taxes other than
income $245,797 $245,797
PART III
--------
Item 10. Directors and Executives Officers of the Registrant.
- -------- ----------------------------------------------------
(a) Directors. The following is a list of each of the Directors of
---------
the Company, and identifies each Director who is also an Executive Officer of
the Company. The list indicates each Director's position with the Company and
the period of time during which each has served as such.
Directors are elected at the annual meeting of shareholders and serve
until the next annual meeting of shareholders and until their successors are
duly qualified and elected. There are no arrangements or understandings
between any Director and any other person pursuant to which any Director was
elected as such. Directors are not compensated for their services as Directors
of the Company.
MICHAEL OBERLANDER
- ------------------
Mr. Michael Oberlander is the President and Chief Executive officer of
the Company. He is a founder of the Company and has been the Chief Executive
officer and Director of the Company since its inception in 1972. He is 65
years of age. He is employed by the Company in various executive capacities,
including sales, financial planning, designing, new product development and
planning for business growth. He is the husband of Pearl Oberlander, a
Director and Secretary of the Company, the father of Salamon Oberlander, a
Director and Vice President of the Company, father-in-law of
44
<PAGE>
Simon Friedman, Treasurer of the Company, and brother-in-law of Martin
Rubenstein, a Director of the Company. In March of 1996, all of Michael
Oberlander's stocks (1,707,450) of the Registrant were sold at a private auction
to Samuel Guttman who is not related to Mr. Oberlander or his family members.
His stocks were sold after he defaulted on a personal loan for which his stock
were collateral. The Company filed a Form 8-K in March 1996, the contents of
which and details of that auction are herein incorporated.
JUDITH GOTTESMAN
- ----------------
Ms. Judith Gottesman is an executive employee of the Company. She has
been involved in administration, design and purchasing programs of the Company
since 1978. She is 57 years of age and has been a Director of the Company
since March, 1985.
SALAMON OBERLANDER
- ------------------
Mr. Salamon Oberlander is the Vice President of the Company and the son
of Michael and Pearl Oberlander, the President and Secretary of the Company,
respectively. He has been employed by the Company as Assistant Vice
President since 1983 and as Vice-president since September, 1985. He is 34
years of age and has been a Director of the Company since March 1985.
MARTIN RUBENSTEIN
- -----------------
Mr. Martin Rubenstein was formerly a principal of HATCO Novelty Knitting
Contractor, Inc., located in Brooklyn, New York, a position he held from 1970 to
1988, and was employed by ALIT Manufacturing Company, Brooklyn, N.Y., until
1990. HATCO and ALIT were engaged in the knitting business. Mr. Rubenstein is 65
years of age and is the brother-in-law of Michael Oberlander. He has been a
Director of the Company since March, 1985, and is
45
<PAGE>
not otherwise currently employed.
PEARL OBERLANDER
- ----------------
Mrs. Pearl Oberlander is the Secretary of the Company, the wife of Michael
Oberlander, President and Chief Executive officer and a Director of the Company,
the mother of Salamon Oberlander, Vice President and a Director of the Company,
and mother-in-law of Simon Friedman, the Treasurer of the Company. She is a
sample maker for the Company and has acted as Secretary of the Company since
March, 1985, and prior thereto was a Director of the Company. Mrs. Oberlander is
60 years of age.
(b) Executive Officers and Key Employees. In addition to the Directors of
-------------------------------------
the Company who are also Executive Officers as described above, Simon Friedman
serves as an Executive officer of the Company. Mr. Friedman, who is 43 years of
age, is the Treasurer of the Company. Mr. Friedman has been employed by the
Company in an executive capacity since 1981 and has been Treasurer since March,
1985. He also serves as Secretary and Chief Manager of J&J Farms Creamery, Inc.,
the Company's 51% owned subsidiary. Mr. Friedman is the son-in-law of Michael
and Pearl Oberlander, the Registrant's President and Secretary, respectively.
Mr. Morris Schlager, age 38, is a Vice President of J&J and a significant
employee of the Registrant. His duties with J&J include purchasing merchandise
and scheduling deliveries. He has been employed by J&J since 1981 and is the
son-in-law of Michael and Pearl Oberlander the Registrant's President and
Secretary, respectively. All executive officers of the Company serve at the
discretion of the Board of Directors.
46
<PAGE>
Item 11. Executive Compensation.
- ------- -----------------------
No Executive officer or Director of the Registrant received a total
remuneration in excess of $100,000 during the year ended December 31, 1995.
The table sets forth certain information concerning remuneration paid or
accrued in that year to all Executive Officers and Directors as a group:
Name of
Individual or
Number of Persons Capacity in Cash
in Group Which Served Compensation
- -------------------- ------------ ------------
Michael Oberlander President $55,499
and Director
All Executive Officers $253,999
and Directors as a Group
(7 persons in such Group
of which 6 persons
received remuneration)
The Registrant has no stock option, pension or profit sharing plans. The
amounts reported in the remuneration table do not include the cost or value of
personal benefits, if any, to the individuals resulting from the incidental
personal use of four automobiles furnished by the Company to facilitate the
conduct of the Company's business. The Company does not require employees to
maintain records as to the personal use, if any, of such automobiles as they are
considered perquisites which are job-related and are intended to improve
performance and are not considered by the Company to be excessive or unusual.
The value to any executive officer of the personal use of such automobiles does
not exceed 10% of his cash compensation, and such value to all executive
officers as a Group does not exceed lob of the aggregate compensation reported
in the foregoing tables.
Item 12. Security Ownership of Certain Beneficial Members
- -------- ------------------------------------------------
and Management.
---------------
47
<PAGE>
The following table sets forth, as of January 31, 1996, the shares of
the Company's Common Stock owned beneficially by Officers and Directors of the
Company individually, and by all Directors and Officers of the Company as a
group:
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership(1) of Class
- --------------------- ----------------------- ---------
Michael Oberlander
166 Hewes Street
Brooklyn, N.Y. 11211 1,707,450 (2) (3) (4) 41.26%
Pearl Oberlander
166 Hewes Street
Brooklyn, N.Y. 11211 1,692,450 (3) (4) 40.89%
Simon Friedman
166 Hewes Street
Brooklyn, N.Y. 11211 228,244 (3) (4) 5.52%
All Directors and
officers as a group
(6 persons) 3,699,850 (5) 87.40%
__________________________________
(1) All shares are owned directly.
(2) As mentioned under Part III at page 19, Michael Oberlander's complete
stockholding in the registrant were sold to Samuel Guttman in a private
auction by Mr. Oberlander's lender of a personal loan where his stock was
collateral for such loan.
(3) Although Pearl Oberlander, Salamon Oberlander, her son and Simon
Friedman, her son-in-law, may be deemed the beneficial owners of the shares
owned by all of them collectively, each has reported to the Company that he
or she has sole voting and sole investment power as to the shares held in
their individual names and disclaims beneficial ownership with respect to
the shares owned by the others. Simon Friedman owns 24.5% of the shares
and is the Secretary of J&J Farms Creamery, Inc., a 51% owned subsidiary of
the Company.
(4) Directors Salamon Oberlander, Judith Gottesman and Martin Rubenstein
own no shares of the Company's Common stock. As of January 31, 1996,
Michael Oberlander, Pearl Oberlander, Salamon Oberlander and Simon Friedman
together own 3,699,850 shares of the Company's Common stock or 89.40% of
all outstanding Common stock. There are no agreements or
48
<PAGE>
arrangements as to the voting of such shares. However, it is expected that
the Oberlanders and Mr. Friedman will vote such shares concordantly.
(5) In the Company's Annual Report filed for year ending December 31,
1994, it stated that on February 18, 1994, Salamon Oberlander transferred
by way of gift 71,806 shares of the Company to Batsheva Lazer. This
statement was incorrect, actually Salamon Oberlander sold those shares to
Ms. Lazer for $7,180.
Item 13. Certain Relationships and Related Transactions.
- -------- -----------------------------------------------
In December, 1986, Parkside Realty Company, the owner of the Company's
knitwear premises, entered into an agreement to sell such premises to the New
York City Industrial Development Agency for a purchase price of $1,600,000. At
the time of the closing of such sale, Parkside was owned by Eva Eisenberger and
Pearl Oberlander, former and current principal stockholders of the Company,
respectively. Under the terms of the sale, the IDA leased the premises and
certain machinery and equipment purchased with the proceeds of the financing to
505 Carroll street Realty Company, which is a partnership owned solely by
Michael Oberlander and Pearl Oberlander, former and current principal
stockholders, Executive Officers and Directors of the Company. 505 Carroll
Street Realty Company, in turn, subleased the premises and such machinery and
equipment to the Company. In connection with its sublease, the Company has
guaranteed the lease payments due from 505 Carroll Street Realty Company to the
IDA. The lease and sublease payments will be equal to the amounts payable by the
IDA to the bondholders to satisfy all principal and interest payments due on the
IDA bonds. Upon payment in full of the IDA bonds, 505 Carroll Street Realty
Company will have the option to purchase the premises, machinery and equipment
for $1.00, at which tine 505 Carroll Street Realty Company will become the
owner. The balance of such loan as of December 31, 1995, was $636,923.
On May 7, 1990, the Registrant made a payment in the amount of $635,000 to
The Mount Florence Group, the Seller of certain real property to MME Power
Enterprises, Inc., a New York corporation ("MME") . This payment was previously
reported as having been made as a capital contribution to MME in connection with
an exchange of 450 shares of MME capital stock (comprising a 45% interest in
MME) from a partnership consisting of Michael oberlander, the President and a
Director of the Registrant, and Salamon Oberlander, the Vice President and a
Director of the Registrant, to the Registrant in exchange for 100,000 shares of
the Registrant's common stock. The shares of MME's capital stock, however, were
not delivered to the Registrant, nor were the shares of the Registrant's common
stock issued to Michael or Salamon Oberlander. In reviewing the 1991 financial
statements of MME for purposes of this Report, it was determined that MME
recorded this transaction as a loan of $610,000 from the Registrant and a loan
of $25,000 from Michael and Salamon Oberlander that was transferred to the
Registrant. Because of the inconsistency in the treatment of the transaction
between the Registrant and MME, the Registrant has agreed to treat it as a loan
from the Registrant to MME. This loan is evidenced by a promissory note from MME
to the Registrant, a copy of which was appended to the 1994 10-K Report as
Exhibit 10(f). The 1990 financial statements of the Registrant have been
restated to reflect the transaction as a loan rather than an equity investment.
In
49
<PAGE>
February, 1993, MME was unable to complete its renewal of mortgage financing for
development of certain real property. In addition, the Attorney General Of the
State of New York directed MME to cease all sales activities. As a result of the
foregoing, the Registrant has declared its investment worthless. On or about
March 18, 1993, MME's mortgage financing lender instituted proceedings in
foreclosure against MME, its principals which included Michael Oberlander and
Salamon Oberlander. The matter is pending in New York State Supreme Court,
Westchester County. on December 1, 1993, MME filed bankruptcy seeking to
reorganize pursuant to Chapter 11 of the Bankruptcy Code.
In 1990 and 1991, the Registrant made loans to Michael Oberlander, a
Director and its President and, as of December 31, 1995, the loan balance was
$292,366. Such loans bear interest at the rate of 8% per year and are payable on
demand by the Registrant. A copy of the promissory note evidencing such loans
was appended to 1994 10-K Report as Exhibit 10(g). Section 714 of the New York
Business Corporation Law states that "a loan shall not be made by a corporation
to any director unless it is authorized by a vote of the shareholders." Contrary
to such Section, the loans to Mr. Michael Oberlander were not authorized by a
vote of the shareholders. Ratification of such loans will be submitted to the
shareholders of the Registrant for approval at the next meeting of shareholders
if they remain unpaid at that time.
50
<PAGE>
INDEX
PART IV
Spectex Industries, Inc
Form 1O-K Annual Report
For the Year Ended December 31, 1995
The following exhibits are Incorporated herein by reference
2(a) Articles of Incorporation, as
amended to date (Previously filed as
Exhibit 3(a) to the Registrant's
Form 10-K for the fiscal year ended
December 21, 1987)
2(b) By-laws, as amended to date
(Previously filed as Exhibit 3(b) to
the Registrant's Form 10-K for the
fiscal year ended December 31, 1987)
10 (a) Agreement of Sublease, dated as of
December 1, 1986, between Spectex
Industries, Inc and 505 Carroll
Street Realty Company. (Previously
filed as Exhibit 10 (a) to
Registrant's Form 10-K for the
fiscal year ended December 31, 1986)
10(b) Guaranty, dated as of December 1,
1986, from Spectex Industries, Inc.
to the United States Trust Company
of New York (Previously filed as
Exhibit 10(b) to Registrant's Form
10-K for the fiscal year ended
December 31, 1986)
10(c) Lease Agreement, dated as of May 1,
1988, between the New York City
Industrial Development Agency and
J&J Farms Creamery, Inc. (Previously
filed as Exhibit 10(c) to the
Registrant's Form 10-K for the
fiscal year ended December 21, 1988)
10(d) Guaranty, dated as of May 1, 1988
from Spectex Industries, Inc., to
Perfect Knitting Mills, Inc., Cue-
Knits, Inc., Special Studies
Development Corp. All-State
Knitting Mills, Inc., Fisher Foods
of Queens Corp., 505 Carroll Street
51
<PAGE>
Realty Company, Michael Oberlander,
Pearl Oberlander, Simon Friedman and
Morris Schlager to the Bank of New
York. (Previously filed as Exhibit
10(d) to The Registrant's Form 10-K
for the fiscal year ended December
31, 1988)
10(e) Intercompany Dealings Agreement,
dated as of May 1, 1988, from J&J
Farms Creamery, Inc., Spectex
Industries, Inc~, Perfect Knitting
Mills, Inc., Cue-Knits, Inc.,
Special Studies Development Corp.,
All-state Knitting Mills, Inc.,
Fisher Foods of Queens Corp., 505
Carroll Street Realty Company,
Michael Oberlander, Pearl
Oberlander, Simon Friedman and
Morris Schlager to the Bank of New
York, New York City Industrial
Development Agency, Financial
Services Corporation of New York
City, and Algemene Bank Nederland
N.V. (Previously filed as Exhibit
10(e) to the Registrant's Form 10-K
for the fiscal year ended December
31, 1988)
22 List of Subsidiaries (Previously
filed as Exhibit 22 to the
Registrant's Form 10-K for the
fiscal year ended December 31, 1987)
10(f) Promissory Note, dated as of May 7,
1991, in the principal amount of
$635,000 from MME Power Enterprises,
Inc. to the Registrant (previously filed
as exhibit 10(f) to Registrant's form
10-K for fiscal year ending in December 31, 1994).
10(g) Promissory Note, dated March 2,
1992, as of January 1,1992,from
Michael Oberlander to the
Registrant (previously filed as exhibit
10(g) to Registrant's form 10-K for fiscal year
ending in December 31, 1994).
The Following exhibits are attached hereto:
52
<PAGE>
(a) Financial statements
1. Consolidated Financial Statements - attached.
2. Financial Statement schedules:
I Marketable Securities.
II Amounts due from Directors, Officers and
Principal Holders of Equity securities
other than Affiliates.
V Property, Plant, and Equipment,
VI Accumulated Depreciation and Amortization
of Plant, Property and Equipment-
consolidated
VIII Valuation of Qualifying Accounts and
Reserves.
x Supplementary Income Statement Informa-
tion
All other schedules are omitted because they are not appli-
cable or the required information is shown in the financial
statements or notes thereto. Columns omitted from schedules
filed have been omitted because the information is not appli-
cable.
(b) Reports on Form 8-K.
There was one report filed on Form 8-K March, 1996. This
report concerned the auction of Michael Oberlander's stock
and sale to Samuel Guttman.
SIGNATURES
Pursuant to the requirements of section 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.
53
<PAGE>
Dated: July , 1996
SPECTEX INDUSTRIES, INC
By:_______________________
Michael Oberlander
President and Chief
Executive Officer
By: _______________________
Simon Friedman
Chief Accounting officer
Pursuant to the requirements of the Securities
Exchange Act of 1934 this report has been signed below by the
following persons on behalf of the Registrant and in the
capacity and on the dates indicated,
By:/s/Michael Oberlander By:/s/ Pearl Oberlander
--------------------- --------------------
Michael Oberlander Pearl Oberlander
President and Director Secretary and Director
Date: July 12, 1996 Date: July 12, 1996
By:/s/Salomon Oberlander /s/ Martin Rubenstein
--------------------- ---------------------
Salamon Oberlander Martin Rubenstein
Vice President and Director
Date: July 12 , 1996 Date: July 12, 1996
By:/s/Judith Gottesman
---------------------
Judith Gottesman
Director
Date: July 12, 1996
54
