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SECURITIES AND EXCHANGE COMMISSION PRIVATE
Washington, D.C. 20549
Form 10-K
Annual Report Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the Fiscal Year May 31, 1998 Commission File No, 0-9966
Haber, Inc.
(Exact name of registrant as specified in its charter)
Delaware 22-2305613
State or other jurisdiction of (I.R.S., Employer
incorporation or organization) Identification No.)
470 Main Road Towaco, New Jersey 07082
(Address or principal executive office) (Zip Code)
Securities registered pursuant to Section 12 (b) of the Act:
None
Securities registered pursuant to Section 12 (q) of the Act:
Common Stock, par value $0.01 par share
$2.00 Convertible Voting Preferred Stock,
par value $10 par share
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such ruling requirements for the past 90 days:
Yes __X___ No _____
As of May 31, 1998, the aggregate market value of the voting stock held by
non-affiliates of the Registrant was approximately $6,083,801.
As of May 31, 1998, the number of shares outstanding of the Registrant's
common stock was: 56,754,373 shares.
Documents incorporated by reference: None
ITEM 1
"BUSINESS"
"General"
The Registrant* has developed advanced chemical and electrochemical process
technologies for separations, extractions and purifications. The Company will
now focus on commercializing these technologies through joint ventures or
subsidiaries.
The Registrant's strategy is to develop and market application devices upon
its ElectroMolecular Propulsion ('EMP') technology and to acquire interests,
assets and earnings in exchange for rights to use its technologies. The
Registrant may also seek to directly acquire technology or may seek licenses,
joint venture or other arrangements with larger industrial partners.
PRIVATE Patents and Trade Secrets tc \l 1 "Patents and Trade Secrets"
A U.S. patent covering EMP technology was granted to Norman Haber in 1976 and
an extension of that patent was granted to Mr. Haber in 1979. The patents
would have expired in April of 1993. However, recent changes in U.S. patents
add three more years until 1996. The original patents covering the EMP
technology, which were granted to Mr. Haber in 16 foreign countries and
assigned to the Registrant, expired in 1996.
The Registrant is in a position for prioritizing its advanced EMP technology
and Know-how for further patent application. It is prepared to file
additional patent applications or prioritization relating to specific aspects
of the EMP technology with the U.S. Patent Office.
In addition to patent protection filed or intended, the Registrant expects to
rely on a material extent on selected unpatented proprietary know-how with
respect to its various technologies. However, there can be no assurances that
others will not independently develop such know-how or otherwise obtain access
to the Registrant's know-how despite the Registrant's efforts to maintain its
confidentiality, which includes obtaining secrecy agreements from its
employees.
PRIVATE Employees tc \l 3 "Employees"
In 1998, the Company retained: 1 employees and 4 independent consultants.
PRIVATE Government Regulation tc \l 3 "Government Regulation"
If Haber, Inc. markets its EMP instruments for use in clinical applications,
blood analyzers other medical devices, it will be subject to regulation by the
Bureau of Medical Devices of the United States Food and Drug Administration.
A principal feature of such regulation is that, if the devices should be
deemed not to be substantially equivalent to those already on the market, they
could not be used until specifically approved by the Bureau of Medical
Devices. The Registrant did not consider to seek approval or to seek a
determination whether any such devices will require such approval or that
seeking such approvals would not present a major obstacle. The process of
obtaining approval, or a determination that approval is not required, could
cause material delay in the introduction of any of these products. However,
it is not anticipated however, that this would necessarily occur.
ITEM 2
PRIVATE PROPERTIES tc \l 5 "PROPERTIES"
The Registrant maintains laboratory and general office facilities in one
building leased by the registrant and located in Towaco, New Jersey. The
building has a total of approximately 2,500 square feet of space. Included in
these facilities 3 laboratories, a prototype machine shop, and a small
area for pre-piloting processing. These facilities house the equipment
necessary for the Registrant to conduct its research and development
activities for the foreseeable future.
PRIVATE ITEM 3 tc \l 2 "ITEM 3"
PRIVATE LEGAL PROCEEDINGS tc \l 5 "LEGAL PROCEEDINGS"
The Registrant is in contention with the Department of Environmental
Protection ("DEP") in New Jersey and currently has appeared informally before
the court and with a legal representative of the DEP to try to determine
a settlement penalty with the Registrant for having neglected two filings of
septic sampling and analysis not timely reported in 1990. The DEP is
cognizant that the Registrant operated an analytical laboratory that is duly
authorized by the DEP in New Jersey and qualified before the U.S.
Environmental Protection Agency.
In September 1993, the Company settled this penalty for $22,500 to be paid in
four semi-annual installments of $5,000 and one final semi-annual installment
of $2,500 plus interest at 5.5% beginning October 1993. Since only one
payment has been made on the settlement to date, the entire amount which
totals $21,927 including interest, is currently due and is included in
accounts payable.
There are no other materials pending legal proceedings to which the Registrant
is a party or of which any of their property is subject.
PRIVATE ITEM 4 tc \l 5 "ITEM 4"
PRIVATE SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS tc
\l 5 "SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS"
NONE
PART II
PRIVATE Item 5 tc \l 5 "Item 5"
PRIVATE MARKET FOR REGISTRANT'S COMMON EQUITY tc \l 5 "MARKET
FOR REGISTRANT'S COMMON EQUITY"
PRIVATE & RELATED STOCKHOLDER MATTERS tc \l 5 "& RELATED
STOCKHOLDER MATTERS"
The Registrant's common stock is traded "over the counter" and is listed in
the National Market System. The table below sets forth the ranges of the
last sales prices of the Common Stock during each quarter after June 1,
1997. The quotations reflect dealer prices without markup, markdown or
commissions and do not necessarily represent actual transactions.
Quarter Ended: 1998 High Low
8/31/97 .25 .08
11/30/97 .25 .08
2/28/98 .06 .04
5/31/98 .13 .08
1997 High Low
08/31/96 .25 .08
11/30/96 .08 .08
2/28/97 .08 .08
5/31/97 .08 .08
On May 31, 1998, the last sale price of the Registrant's common stock was
$.10 and the number of holders of record of the Registrant's Common Stock
was approximately 2,152.
No cash dividends have been paid on the Common Stock of the Registrant
since its incorporation and the Registrant intends to retain its earnings,
if any, for use in its business.
HABER, INC. A Development Stage Enterprise
PRIVATE Selected Financial Data
ITEM 6
Cumulative
From Inception 1998 1997 1996 1995 1994
Statement of Operations Data
- - Revenues $ 1,960,068 $ 14,891 $ 11,748 $ - $ - $ 14,833
- - Directed
Expenses 1,519,575 105,103 43,724 - - 3,000
- - General
Administrative
Expenses 11,221,165 245,208 278,477 252,374 360,524 195,424
- - Research
Development
Expenses 5,027,520 - - - 3,455 65,278
- - Operating
(loss) (16,812,983) (335,330) (310,453) (284,628) (363,979) (248,869)
- - Interest Income 1,025,626 747 - - - 2
- - Net (loss) (20,651,286) (337,220) (301,344) (359,728) (401,483) (300,091)
- - Net (loss)
par share - (.01) (.01) (.01) (.02) (.01)
PRIVATE Balance Sheet
Data tc \l 5 "Balance
Sheet Data"
- - Working Capital (304,803) (225,463) (286,932) (555,697) (274,977)
- - Total assets 61,570 58,842 82,521 58,150 57,808
- - Total Liabilities 322,661 243,744 311,518 566,601 285,613
- - Stockholders' (deficit) (261,091) (184,900) (246,997) (508,351) (227,805)
Item 7
MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITIONS
& RESULTS OF OPERATIONS
Results of Operations
The Registrant's controls the proprietary operational features and key
science insights for the technology called ElectroMolecular Propulsion
("EMP"), which it believes has broad application in the chemical,
biomedical and electronic fields. EMP is a fundamental electrokinetic
technology invented by Norman Haber. Essentially, EMP is a method of
transporting a broad variety of molecules by means of an electrical field.
This ability, enhanced by other characteristics of the technology,
indicates that EMP has a range of applications in chemical analytical
instrumentation, extraction, purifications, control of chemical reactions,
electronic imaging and other electronic uses.
More than 100 application protocols have been completed for use with the
EMP instrument for use with dyes, proteins, etc. Such pre-figured
protocols are an important user-friendly feature for the sale and use of
the 15K-1 instrument in niche markets. It enables the user to program the
EMP instrument for their particular application chemistry, analysis and
quality control.
The Registrant will continue to effect reductions in its operating expenses
while conforming with continuing operations with the limited amount of
working capital available. This policy will continue until revenue from
sales or adequate refinancing enables otherwise. The Company is currently
leasing its facility in Towaco, NJ. It is anticipated that the Registrant
will continue to lease its site at the current address in 1999.
1998 Compared with 1997
The net loss for 1998 increased by $35,876 due mainly to increases in
direct costs.
The Registrant has continued its activities regarding the development of
niche market applications for its EMP analytical instrumentation. Having
decided on applications for the dye industry, Registrant joined the
American Association of Textile Chemists and Colorists (AATCC) and attended
the annual AATCC meeting and exhibition in Louisville, KY. Other
application projects and technical publications describing EMP
instrumentation application also are being considered.
The Registrant has undertaken steps toward the re-engineering of its EMP
15K model with the view of producing an upgraded digitized and computer
compatible instrument. These units can be subcontracted through instrument
manufacturers.
Dr. Henry Rosenberg Ph.D. (chemistry) has joined the Company and has become
conversant with both the EMP technology and the proprietary "Haber Gold
Process". Dr. Rosenberg has had extensive sales and marketing experience
with scientific instrumentation and shall also serve for marketing EMP
instrumentation.
1997 Compared with 1996
The net loss for 1996 decreased by $58,384 to $301,344 due mainly to prior
year losses from investments in affiliates.
Liquidity and Capital Resources
The Registrant's working capital deficiency, which fluctuates, must be
supplemented in order to meet the demands upon working capital occasioned
by the Registrant's continued operating losses. There continues to be an
ongoing need for additional funds to finance development and
commercialization of projects built around the Registrant's technologies.
During the year ended May 31 1998, the Registrant issued 6,275,000 shares
of common stock for $169,000 in cash.
There can be no assurance that the Registrant will have continuing success
in any of these efforts. The effects of inflation during the recent years
has had little impact on the Registrant and will continue to be
insignificant.
ITEM 8
FINANCIAL STATEMENTS & SUPPLEMENTING DATA
See Index to Financial Statements, Financial Statement Schedules and
Exhibits in Item 14.
ITEM 9
DISAGREEMENTS ON ACCOUNTING & FINANCIAL DISCLOSURE
None
PART III
ITEM 10
DIRECTORS & EXECUTIVE OFFICERS OF THE REGISTRANT
The Executive Officers and Directors of the Registrant are as follows:
PRIVATE
Director name Age Position with the Registrant Since
(date)
- - Norman Haber 69 Chairman, President, CEO & Director 1967
- - Warren Donohue 58 Director 1989
- - Paul Buiar 73 Acting Director 1996
Mr. Haber is the founder of the Registrant, and has been its Chairman,
President and Chief Executive Officer since inception. Mr. Haber holds a
BS degree in chemistry and an M.A in physiology and biological sciences
from the New York City University System. He is the Registrant's principal
scientist. Mr. Haber is the inventor of the EMP technology and co-
developer of the Haber Gold, Alpha and Haber-Lee Process. His work on EMP
has appeared in the Proceedings of the National Academy of Sciences.
Mr. Donohue has been the Executive Manager, Sales Administration, of Volvo
Cars North America for 33 years. He studied business at Fairleigh Dickinson
University. He is presently serving his third term as Councilman and
Commissioner of police in Alpine, New Jersey where he resides.
Mr. Paul Buiar is a specialist in political relations, communications and
news media, especially as related to national and international politics
including national presidential campaigns, governor and mayoralty campaigns
(NYC). He has also been involved with international campaigns. Mr. Buiar
has served as President of the International Association of Political
Consultants. For more than 20 years, he has also been the Executive
Director of the Inner Circle, a prestigious NYC based organization of
current and former journalists.
*The term of each officer of the Registrant expires at the next annual
meeting of its Board of Directors.
Item 11
EXECUTIVE COMPENSATION
Cash Compensation
The following table sets forth the total cash compensation paid by the
Registrant during the fiscal year May 31, 1998 and 1997 to the executive
officers and to all executive officers as a
group:
Name Capacities in Cash
Which Served Compensation
1998 1997
All executive officers as a group -0- -0-
(two persons)
Under the terms of understanding as approved and as indicated in the May
31, 1985 notes to financial statement Mr. Haber was awarded compensation
$86,000 per annum. Since 1989 Mr. Haber has received no cash compensation. It
is anticipated the Mr. Haber will receive compensation in future years
which will also include a portion of arrearages.
Stock Options
The Registrant maintains a 1985 Officer's Stock Option Plan (the "Officers'
Plan").
The Officer's Plan provides that options to purchase the Registrant's
Common Stock may be awarded to officers of the Registrant by a committee
comprised of at least three directors who are not eligible under the
Officers Plan.
Options granted under the Officers Plan are non-incentive options and stock
appreciation rights may be provided at any time until the options are
exercised, terminated or cancelled. The exercise price of the options can
be fixed by the committee administering the Officers Plan at any amount,
which is not less than the par value of the shares subject to option. An
optionee may pay the exercise price of the options in cash or with the
Registrant's stock or with other property.
All options under the Officer's Plan will become exercisable as determined
by the committee administering the plan, and the committee may at any time
accelerate the time at which an option may be exercised. All options will
be nontransferable except by the laws of descent and distribution and,
generally, will be exercisable by the optionee only during the time he is
employed by the Registrant or within three months thereafter.
Compensation of Directors
Directors of the Registrant receive no cash compensation or expense
reimbursement in connection with their services as Directors.
ITEM 12
SECURITIES OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS & MANAGEMENT
The table below sets forth certain information relating to the ownership of
the Registrant's Common Stock, as of December 1, 1992, by (1) the only
person who was known to the Registrant to be the beneficial owner of more
than five percent of such stock, (2) each of the Registrant's Directors and
(3) all Directors and Officers of the Registrant as a group. Each of the
persons listed has sole voting and investment power with respect to his
shares unless otherwise indicated in the notes of the table.
PRIVATE
Name of No. of shares of Common %
Beneficial Owner Stock and Nature of Beneficial of class
Norman Haber 1,732,868 (1) 3.1%
Warren Donohue 929,987 1.6%
Paul Buiar 54,308 *
All directors a group 2,717,163 4.7%
* Less than 1%
Nature of Beneficial Ownership
(1) Mr. Haber has the sole voting and investment power with respect to all
such shares except for 330,130 shares which are owned by his wife,
individually or as custodian for their two children.
ITEM 13
CERTAIN RELATIONSHIPS & RELATED TRANSACTIONS
It is also anticipated that, as incentives to retain management, the
Registrant's officers may be offered the opportunity to participate in the
equity of future ventures in which the Registrant may become involved.
PART IV
ITEM 14
EXHIBITS, FINANCIAL STATEMENTS,
SCHEDULES & REPORTS ON FORM 8-K
The following documents are filed as a part of this report.
1. Financial statements Page
Report of Independent Certified Public Accountants F-1 F-2
Balance Sheets as of May 31, 1998 and 1997 F-3 F-4
Statements of Income (Loss) and Retained Earnings
(deficit) for the years ended May 31, 1998, 1997,
1996 and from the inception to May 31, 1998 F-5
Statements of Changes in Stockholder's Equity from
Inception to May 31, 1998. F-6 F-11
Statements of Cash Flows for the years ended May 31,
1998, 1997 and 1996 and from the inception to
May 31, 1998. F-12 F-13
Notes to Financial Statement F-14 F-20
2. Schedule II - Valuation and Qualifying Accounts F-21
3. Exhibit 11 - Statement re: computation of earnings par
share F-22
PRIVATE
3(a) (I) Restated Certificate of Incorporation of the
Registrant filed November 9 1984.
Incorporated by reference to exhibit 2 (a)
to the Registrant's. Registration Statement
on Form 8-A. Files with Commission on April
30, 1985 (commission File No. 0-9966).
(a) (ii) Certified of Designations of Series.
A Preferred Stock of the Registrant, filed
A November 20, 1984, Incorporated by
reference to exhibit 2 (b) to the
PRIVATE
Exhibits Number Description of Exhibit
Registrant's Registration Statement
on Form 8-A filed with the
Commission on April 30, 1985
(Commission File No. 0-9966).
(b) By-Laws of the Registrant. (5)
4(a) Specimen of certificate for Common
Stock (1)
(b) Form of representative's Warrant (7)
(c) (i) Specimen form of certificate for
Convertible Preferred Stock (8)
(ii) Form of Class A Warrant (7)
(iii) Form of Class B Warrant (7)
(iv) Form of Warrant Agreement among the
Registrant and Continental Stock
Transfer & Trust Company (8)
(The Registrant will furnish the
Securities and Exchange Commission
upon request a copy of each
Instrument defining the rights of
the holders of the Registrant's long
term debt.
10(a) (i) Limited Partnership Agreement of
Lodestone Partners, Ltd. (3)
(a) (ii) Research and Development Agreement
between the Registrant and Lodestone
Partners, Ltd., dated October 10,
1980. (1)
(a) (iii) Agreement for sale of EMP Precious
Metals Application and Technology
(a) (iv) Amendment No. 1 to Agreement of
Limited Partnership of Lodestone
Partners, Ltd.(3)
(a) (v) Amendment No. 1 to Agreement for
Research and Development between the
Registrant and Lodestone Partners,
Ltd. dated October 10, 1980. (3)
Exhibit Number Description of Exhibits
(a) (vi) Amendment No.1 to Agreement for sale
of EMP Precious Metals Applications
and Technology between the
Registrant and Lodestone Partners,
Ltd. dated October 10, 1980.
(a) (vii) Agreement dated as of October 10,
1980 among the Registrant and
Lodestone Partners, LTD.(7)
(a) (viii) Agreement dated May 30, 1984 among
the Registrant, Norman Haber and
Lodestone Partners, Ltd.(7)
11 Statement re: computation of
earnings par share
22 List of subsidiaries of the
Registrant
(1) Incorporated by reference to the
corresponding exhibit to the
Registrant's Registration Statement
on Form 10 (file 0-9966)
(2) Incorporated by reference to the
corresponding exhibit to the
Registrant's Annual Report on Form
10-K for the fiscal year ended May
31, 1982 (File No. 0-9966)
(3) Incorporated by reference to the
corresponding exhibit to the
Registrant's Annual Report on Form
10-K for the fiscal year ended May
31, 1983 (File No. 0-9966)
(4) Incorporated by reference to the
corresponding exhibit to the
Registrant's Amendment No. 1 on Form
8 to its Annual Report on Form 10-K
for the fiscal year ended May 31,
1983 (File No. 0-9966)
(5) Incorporated by reference to the
corresponding exhibit to the
Registrant's Annual Report on Form
10-K for the fiscal year ended May
31, 1985 (File No. 00-9966)
PRIVATE
Exhibit Number Description of Exhibits
(6) Incorporated by reference to the
corresponding exhibit to the
Registrant's Registration Statement
on Form S-l filed with the
Commission on May 31, 1985 (File No.
2-91444).
(7) Incorporated by reference to the
corresponding exhibit to Amendment
No. 3 to the Registrant's
Registration Statement on Form S-1
files with the commission on
November 6, 1984 (File No. 2-91444)
(8) Incorporated by reference to the
corresponding exhibit to Amendment
No.4 to the Registrant's Registration
Statement on Form S-1 filed with the
commission on November 16, 1984
(File No. 2-91444)
(9) Incorporated by reference to Exhibit
10.1 to the Registrant's Current
Report on Form 8-K filed with the
Commission in connection with events
of August 1, 1985 (File No. 0-9966).
(10) Incorporated by reference to the
corresponding exhibit to Registrant's
Annual Report on Form 10K for the
fiscal year ended May 31, 1986 (File
No. 0-9966).
(11) Incorporated by reference to the
corresponding exhibit to Registrant's
Annual Report on Form 10-K for the
fiscal year ended May 31, 1987 (File
No. 0-9966).
(12) Incorporated by reference to the
corresponding exhibit to Registrant's
Annual Report in Form 10-K for the
fiscal year ended May 31, 1988 (File
No. 0-9966).
(b) reports on Form 8-K
The Registrant did not file any
reports on Form 8-K during the last
quarter of the period covered by
this report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly undersigned, thereunto duly
authorized.
Dated: May 31, 1998
HABER, INC.
(Registrant)
Norman Haber
______________________
Norman Haber, Chairman
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Dated: May 31, 1998
Norman Haber
_________________________
Norman Haber
Haber Inc., Chief Executive Officer and Director
(Principal Executive Officer)
Dated: May 31, 1998
Warren Donohue
_________________________
Warren Donohue, Director
GERALD BRIGNOLA, CPA., P.A.
CERTIFIED PUBLIC ACCOUNTANT
A Professional Corporation
One University Plaza, Suite 505, Hackensack, NJ 07601
201-343-8130 - Fax 201-343-9224
Gerald Brignola Michael Chase
Anthony Capricuso Michael J. Nardino
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Stockholders and Board of Directors
Haber, Inc.
470 Main Road
Towaco, New Jersey 07082
We have audited the accompanying balance sheets of Haber, Inc. as of May 31,
1998 and May 31, 1997 and the related statements of income, retained earnings,
and cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit. The financial
statements of Haber, Inc. for the year ended May 31, 1996, were audited by
other auditors whose report thereon dated December 12, 1996, expressed a
qualified opinion, because the prior accountants were unable to obtain
written representations from current and prior consultants to the Company
responsible for financial maters concerning transactions in the two years
ended May 31, 1996.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, except for the cumulative effects of such adjustments, if any,
as might be determined to be necessary had the written representations
referred to in the previous paragraph been furnished to prior accountants
management, the financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Haber, Inc., at
May 31, 1998 and 1997 and the results of their operations and their changes in
stockholders equity and their cash flows from inception through May 31,
1998 and for each of the three years in the three year period ended May 31,
1998 in conformity with generally accepted accounting principles.
To the Stockholders and Board of Directors
Haber, Inc.
Page two
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company has suffered recurring losses from
operations and has a net capital deficiency that raise substantial doubt
about their ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 3. The financial
statements do not include any adjustments that might result from the
outcome of this uncertainty.
Our audits were made to form an opinion on the basic financial statements
taken ads a whole. The supplemental schedules listed in the index to the
financial statements and schedules are presented to comply with rules and
regulations under the Securities and Exchange Act of 1934 and are not
otherwise a required part of the basic financial statements. The
supplemental schedules for each of the three years in the period ended May
31, 1998 and May 31, 1997 have been subjected to the auditing procedures
applied in the audits of the basic financial statements. In our opinion,
except for the effects of such adjustments for the year ended May 31, 1996,
if any, as might be determined to be necessary had the written representations
referred to above been furnished to prior accountants by management, the
supplemental schedules referred to above fairly state in all material
respects the financial data required to be set forth therein in relation to
the basic financial statements taken as a whole.
GERALD BRIGNOLA, CPA., PA
September 23, 1999
Haber, Inc. A Development Stage Enterprise
Balance Sheets
May 31 PRIVATE
PRIVATE 1998 1997
Assets
- - Currents Assets
Cash $ 6,108 $ 6,280
Inventory 11,750 12,000
------- -------
17,858 18,280
------- -------
- - Furniture and Equipment
Equipment 332,958 329,326
Furniture and Fixtures 99,514 99,514
_______ _______
432,472 428,840
Less:Accumulated depreciation and amortization 425,763 424,533
_______ _______
6,709 4,307
------- -------
Other Assets
- - Patent costs and licenses - net of accumulated
amortization of $30,659 and $30,659, respectively. 0 0
- - Security deposit 37,003 36,256
- - Other assets 0 0
37,003 36,256
------ ------
$ 61,570 $ 58,843
------ ------
See notes to financial Statement
PRIVATE Haber, Inc. A Development Stage Enterprise
2
Balance Sheets
PRIVATE
May 31
PRIVATE
1998 1997
Liabilities and Stockholders (Deficit)
- - Currents Liabilities
Accounts payable $ 51,682 $ 43,759
Accrued expenses 19,383 10,845
Due to related parties 218,895 184,047
Payroll other taxes payable 15,201 5,092
Deposit payable 17,500 0
___________ ___________
Total Liabilities 322,661 243,743
----------- -----------
- - Commitments and Contingencies
- - Stockholder (Deficit)
Common stock - $.01 par value - 75,000,000
shares authorized; 56,754,373 and
46,480,800 shares issued, respectively. 532,044 464,808
- - Preferred stock - $10 par value - 600,000
shares authorized; 146,308 shares issued
in 1998 and 1997. 1,463,080 1,463,080
- - Capital in excess of par value 19,878,488 19,681,662
- - Stock subscription receivable ( 107,733) ( 104,700)
- - (Deficit) accumulated during the
development stage. (20,651,286) (20,314,066)
------------ ------------
1,114,593 1,190,784
Less: Treasury stock - 116,625 shares
- at cost 1,375,684 1,375,684
----------- ------------
(261,091) (184,900)
----------- ------------
$ 61,570 $ 58,843
----------- ------------
----------- ------------
See notes to financial statements
PRIVATE Haber, Inc. A Development Stage Enterprise
Statements of Operations
PRIVATE
Cumulative For the Years Ended
from Inception May 31
PRIVATE
1998 1997 1996
- - Revenues $ 1,960,068 $ 14,891 $ 11,748 $ -
- - Direct Expenses 1,519,485 105,013 43,724 -
---------- ------- ------- -------
- - Gross Profit (loss) 440,583 (90,122) (31,976) -
---------- ------- ------- -------
- - General and Administrative
Expenses 11,221,165 245,208 278,477 252,374
- - Research and Development
Expenses 5,027,520 - -
- - Provision for Uncollectible
Advances to Affiliates 1,004,881 - - 32,254
----------- --------- -------- --------
17,253,566 245,208 278,477 284,628
----------- --------- -------- --------
- - (Loss) Before Other Income
(Expenses) (16,812,983) (335,330) (310,453) (284,628)
------------ --------- --------- --------
------------ --------- --------- --------
- - Other Income (Expenses)
Interest Income 1,025,626 747 9,109 -
Other Income 332,110 - - -
Interest (expense) (96,329) (2,637) - (2,100)
(Loss) on investments in
affiliates (5,142,591) - - (73,000)
Gain on disposition of
fixed assets 42,881 - - -
------------ ------- ------- --------
(3,838,303) (1,890) 9,109 (75,100)
------------ ------- ------- --------
------------ ------- ------- --------
- - Net (Loss) $(20,651,286) $(337,220) $(301,344) $(359,728)
------------ ---------- ---------- ---------
- - (Loss) per Share $ (.01) $ (.01) $ (.01)
- - Weighted Average Common Shares
Outstanding During the Period 49,799,193 45,773,094 40,088,454
PRIVATE
See notes to Financial statements
PRIVATE Haber, Inc. A Development Stage Enterprise
Statement of Changes in Stockholder's Equity
Inception through May 31, 1998
Special Voting
Common Stock Common Stock
Shares Amounts Shares Amounts
Inception (1967) through
May 31, 1988 10,609,622 106,096 - -
Stock issued for services 6,375 64 - -
Conversion of preferred stock 1,838 18 - -
Stock issued as collateral 165,000 1,650 - -
Cash in private offering 837,239 8,372 - -
Correction of prior issuance (23,174) (231) - -
Warrants expired - - - -
Stock issued in payment
of interest 30,000 300 - -
Equity resulting from outside - - - -
Investment in subsidiary - - - -
Net (loss) for the year - - - -
---------- ------- ------- -------
Balance Forward - May 31,1989 11,626,900 116,269 - -
See notes to financial statements
PRIVATE Haber, Inc. A Development Stage Enterprise
3
PRIVATE Statements of Changes in Stockholders' Equity
Inception Through May, 31 1998
4
PRIVATE
Convertible Special Voting
Preferred Stock Preferred Stock
PRIVATE
Shares Amounts Shares Amounts
Inception (1967) through
May 31, 1988 152,926 1,529,260 - -
Stock issued for services - - - -
Conversion of preferred stock (1,100) (11,000) - -
Stock issued as collateral - - - -
Cash in private offering - - - -
Correction of prior issuance - - - -
Warrants expired - - - -
Stock issued in payment
of interest - - - -
Equity resulting from outside - - - -
Investment in subsidiary - - - -
Net (loss) for the year - - - -
________ _________ ________ ________
Balance Forward - May 31,1989 151,826 1,518,260 - -
See notes to financial statements
PRIVATE Haber, Inc. A Development Stage Enterprise
5
PRIVATE Statements of Changes in Stockholders' Equity
Inception Through May, 31 1998
6
PRIVATE
Capital in Subscription Retained
Excess of Receivable Earnings
Par Value Warrants (Deficit)
Inception (1967)
through May 31, 1988 12,110,316 1,258,133 - (13,700,108)
Stock issued for services - - - -
Conversion of preferred stock 10,982 - - -
Stock issued as collateral (1,650) - - -
Cash in private offering 535,228 - - -
Correction of prior issuance (20,622) - - -
Warrants expired 1,258,133 (1,258,133) - -
Stock issued in payment
of interest - - - -
Equity resulting from outside - - - -
Investment in subsidiary 1,770,187 - - -
Net (loss) for the year - - - (2,613,093)
_________ __________ __________ ___________
Balance Forward-May 31,1989 15,662,574 - - (16,313,201)
See notes to financial statements
PRIVATE Haber, Inc. A Development Stage Enterprise
7
PRIVATE Statements of Changes in Stockholders' Equity
Inception Through May, 31 1998
8
PRIVATE
Deferred
Unearned Total
Treasury Stock Compensation Shareholder
Stock Option Equity
Shares Amount Plan (Deficit)
Inception (1967) through
May 31, 1988 223,038 (1,397,444) - (93,747)
Stock issued for services - - - 64
Conversion of preferred stock - - - -
Stock issued as collateral - - - -
Cash in private offering - - - 543,600
Correction of prior issuance (6,413) 20,760 - (93)
Warrants expired - - - -
Stock issued in payment
of interest - - - 300
Equity resulting
from outside - - - -
Investment in subsidiary - - - 1,770,187
Net (loss) for the year - - - (2,613,093)
------- ---------- -------- ----------
Balance Forward- May 31 ,1989 216,625 (1,376,684) - (392,782)
------- ---------- -------- ----------
See notes to financial statements
PRIVATE Haber, Inc. A Development Stage Enterprise
9
PRIVATE Statements of Changes in Stockholders' Equity
Inception Through May, 31 1998
10
PRIVATE
Special Voting
Common Stock Common Stock
Shares Amount Shares Amount
Balance Forward-May 31, 1989 11,626,900 116,269 - -
Treasury shares previously
arising in consolidation - - - -
Stock issued for services 400,000 4,000 - -
Conversion of preferred
stock 1,503 15 - -
Stock issued in payment of
debit and interest 3,634,809 36,348 - -
Cash in private offering 40,000 400 - -
Correction of private issuance (2,000) (20) - -
Stock issued for compensation 251,114 2,511 - -
Warrants issued for
compensation - - - -
Net (loss) for the year - - - -
---------- ------- -------- --------
Balance - May 31, 1990 15,952,326 159,523 - -
Stock issued for services 1,850,993 18,510 - -
Conversion of warrants 200,000 2,000 - -
Cash in private offering 1,517,641 15,177 - -
Correction of prior issuance 20,400 204 - -
Net (loss) for the year - - - -
---------- ------- -------- -------
Balance - May 31, 1991 19,541,360 195,414 - -
Stock issued for services 461,875 4,619 - -
Stock issued in payment
of liabilities 755,040 7,550 - -
Cash in private offering 1,404,995 14,050 - -
Correction of prior issuance (90,767) (908) - -
Conversion of preferred stock 2,304 23 - -
Conversion of warrants 915,000 9,150 - -
Net (loss) for the year - - - -
---------- ------- -------- --------
Balance forward-May 31, 1991 22,989,807 229,898 - -
See notes to financial statements
PRIVATE Haber, Inc. A Development Stage Enterprise
67
PRIVATE
Statements of Changes in Stockholders' Equity
Inception Through May, 31 1998
68
PRIVATE
Convertible Special Voting
Preferred Stock Preferred Stock
Shares Amount Shares Amount
Balance Forward-May 31, 1989 151,826 1,518,260 - -
Treasury shares previously
arisingin consolidation - - - -
Stock issued for services - - - -
Conversion of preferred stock (900) (9,000) - -
Stock issued in payment
of debit and interest - - -
Correction of private issuance - - - -
Stock issued for compensation - - - -
Warrants issued for compensation - - - -
Net (loss) for the year - - - -
_______ _________ __________ _________
Balance - May 31, 1990 150,926 1,509,260 - -
Stock issued for services - - - -
Conversion of warrants - - - -
Cash in private offering - - - -
Correction of prior issuance - - - -
Net (loss) for the year - - - -
_______ ________ _________ ________
Balance - May 31, 1991 150,926 1,509,260 - -
Stock issued for services - - - -
Stock issued in payment
of liabilities - - - -
Cash in private offering - - - -
Correction of prior issuance - - - -
Conversion of preferred stock (1,379) (13,790) - -
Conversion of warrants - - - -
Net (loss) for the year - - - -
-------- --------- ---------- -------
Balance forward - May 31, 1991 149,547 1,495,470 - -
See notes to financial statements
PRIVATE Haber, Inc. A Development Stage Enterprise
69
PRIVATE Statements of Changes in Stockholders' Equity
Inception Through May, 31 1998
70
PRIVATE
Capital in Warrants Subscription Retained
Excess of Amount Receivable Earnings
Par Value (Deficit)
PRIVATE
Balance Forward-May 31,1989 $15,662,574 $ - $ - $(16,313,201)
Treasury shares previously
arising in consolidation - - - -
Stock issued for services 55,400 - - -
Conversion of preferred
stock 8,985 - - -
Stock issued in payment
of debit and interest 910,910 - - -
Cash in private offering 9,600 - - -
Correction of private
issuance - - - -
Stock issued for
compensation 66,353 - - -
Warrants issued for
compensation 107,520 - - -
Net (loss) for the year - - - (982,263)
--------- -------- -------- -----------
Balance - May 31, 1990 16,821,342 - - (17,295,464)
Stock issued for services 99,236 - - -
Conversion of warrants 8,000 - - -
Cash in private offering 211,649 - - -
Correction of prior issuance 396 - - -
Net (loss) for the year - - - (776,330)
---------- -------- --------- -----------
Balance - May 31, 1991 17,140,623 - - (18,071,794)
Stock issued for services 91,282 - - -
Stock issued in payment
of liabilities 218,260 - - -
Cash in private offering 471,450 - - -
Correction of prior issuance - - -
Conversion of preferred stock 13,767 - - -
Conversion of warrants 19,000 - - -
Net (loss) for the year - - - (530,965)
---------- -------- --------- ------------
Balance forward-May 31, 1991 17,954,382 - - (18,602,759)
See notes to financial statements
PRIVATE Haber, Inc. A Development Stage Enterprise
71
PRIVATE Statements of Changes in Stockholders' Equity
Inception Through May, 31 1998
72
PRIVATE
Deferred Total
Treasury Stock Unearned Stockholders
Compensation Equity
Shares Amount Plan (Deficit)
Balance Forward
- -May 31, 1989 216,625 (1,376,684) - (392,782)
Treasury shares previously
arising in consolidation (100,000) 1,000 - 1,000
Stock issued for services - - - 59,400
Conversion of preferred
stock - - - -
Stock issued in payment
of debit and interest - - - 947,258
Cash in private offering - - - 10,000
Correction of private
issuance - - - (20)
Stock issued for
compensation - - - (68,864)
Warrants issued for
compensation - - - 107,520
Net (loss) for the year - - - (982,263)
------- ---------- --------- ------------
Balance - May 31, 1990 116,625 (1,375,684) - (181,023)
Stock issued for services - - - 117,746
Conversion of warrants - - - 10,000
Cash in private offering - - - 226,826
Correction of prior issuance - - - 600
Net (loss) for the year - - - (776,330)
-------- ---------- ---------- -----------
Balance - May 31, 1991 116,625 (1,375,684) - (602,181)
Stock issued for services - - - 95,901
Stock issued in payment
of liabilities - - - 225,810
Cash in private offering - - - 485,500
Correction of prior issuance - - - (908)
Conversion of preferred stock - - - -
Conversion of warrants - - - 28,150
Net (loss) for the year - - - (530,965)
--------- ---------- --------- -----------
Balance foward-May 31, 1991 116,625 (1,375,684) - (298,693)
See notes to financial statements
PRIVATE Haber, Inc. A Development Stage Enterprise
73
PRIVATE Statements of Changes in Stockholders' Equity
Inception Through May, 31 1998
74
PRIVATE
Common Stock Special Voting
Common Stock
Shares Amount Shares Amount
PRIVATE
Balance - May 31, 1992
22,989,807 229,898 - -
Stock issued for services 629,800 6,298 - -
Cash in private offering 1,274,343 12,743 - -
Net (loss) for the year - - - -
---------- ------- ------- -------
Balance - May 31, 1993
24,893,950 248,939 - -
Cash in private offering 993,703 9,937 - -
Shares issued for services 463,000 4,630 - -
Conversion of warrants 87,000 870 - -
Stock returned from directors (1,709,915) (17,099) - -
Net (loss) for the year - - - -
Stock issued by unconsolidated
subsidiary - - - -
----------- -------- -------- -------
Balance Forward May 31, 1993 24,727,738 247,277 - -
See notes to financial statements
PRIVATE Haber, Inc. A Development Stage Enterprise
75
PRIVATE Statements of Changes in Stockholders' Equity
Inception Through May, 31 1998
76
PRIVATE
Convertible Special Voting
Preferred Stock Preferred Stock
Shares Amount Shares Amount
Balance - May 31, 1992 149,547 1,495,470 - -
Stock issued for services - - - -
Cash in private offering - - - -
Net (loss) for the year - - - -
Balance - May 31, 1993 149,547 1,495,470 - -
Cash in private offering - - - -
Conversion of warrants - - - -
Stock resumed from directors - - - -
Net (loss) for the year - - - -
------- --------- ------- ---------
Balance forward - May 31, 1993 149,547 1,495,470
See notes to financial statements
PRIVATE Haber, Inc. A Development Stage Enterprise
77
PRIVATE Statements of Changes in Stockholders' Equity
Inception Through May, 31 1998
78
PRIVATE
Capital in
Excess of Warrants Subscription Retained
Par Value Amount Receivable Earnings
(Deficit)
Balance - May 31, 1992 17,954,382 - - (18,602,759)
Stock issued for services 63,817 - - -
Cash in private offering 362,102 - - -
Net (loss) for the year - - - (348,661)
__________ _______ __________ __________
Balance - May 31, 1993 18,380,301 - - (18,951,420)
Cash in private offering 107,703 - - -
Shares issued for services - - - -
Conversion of warrants 1,820 - - -
Stock returned from directors 17,099 - - (300,091)
Net (loss) for the year - - - -
Stock issued by unconsolidated
subsidiary 149,720 - - -
__________ _______ _________ __________
Balance forward-May 31, 1993 $18,656,643 $ - $ - $(19,251,511)
See notes to financial statements
PRIVATE Haber, Inc. A Development Stage Enterprise
Statements of Changes in Stockholders' Equity
Inception Through May, 31 1998
PRIVATE
Treasury Stock Deferred Total
Shares Amount Unearned Stockholders
Compensation (Equity)
Plan (Deficit)
Balance - May 31, 1992 116,625 (1,375,684) - (298,693)
Stock issued for services - - - 70,115
Cash in private offering - - - 374,845
Net (loss) for the year - - - (348,661)
_______ __________ ________ __________
Balance - May 31, 1993 116,625 (1,375,684) - (202,394)
Cash in private offering - - - 117,640
Shares issued for services - - - 4,630
Conversion of warrants - - - 2,690
Stock resumed from directors - - - -
Net (loss) for the year - - - (300,091)
Stock issued by
unconsolidated subsidiary - - - 149,720
__________ _________ ________ __________
Balance forward
May 31, 1994 $ 116,625 $(1,375,684) $ - $ (227,805)
See notes to financial statements
PRIVATE Haber, Inc. A Development Stage Enterprise
79
PRIVATE Statements of Changes in Stockholders' Equity
Inception Through May, 31 1998
80
PRIVATE
Special Voting
Common Stock Common Stock
Shares Amount Shares Amount
PRIVATE
Balance Forward - May 31, 1994 24,727,738 247,277 - -
Cash in private offering 411,547 4,116 - -
Shares issued for services 2,012,590 20,126 - -
Conversion of warrants 105,081 1,051 - -
Stock returned from directors (210,000) (2,100) - -
Conversion of preferred stock 5,412 54 - -
Stock issued by unconsolidated
subsidiary - - - -
Net (loss) for year - - - -
--------- ------- -------- --------
Balance - May 31, 1995 27,052,368 270,524
Sale of Stock 2,301,000 23,010 - -
Stock issued for services 2,896,111 28,961 - -
Conversion of warrants 9,200 92 - -
Recision obligation
converted stock 1,304,949 13,049 - -
Repayment of borrowed shares 1,820,379 18,204 - -
Acquisition of equity
interest in Medco Health Corp. 7,300,000 73,000 - -
Net (loss) for the year - - - -
--------- ------- --------- ---------
Balance - May 31, 1996 42,684,007 426,840 - -
Sale of stock 2,744,474 27,445 - -
Stock issued for services 661,319 6,613 - -
Conversions of warrants - - - -
Stock issued in payment
of liabilities 391,000 3,910 - -
Net (loss) for the year - - - -
--------- ------- --------- --------
Balance forward May 31, 1997 46,480,800 464,808 - -
See notes to financial statements
PRIVATE Haber, Inc. A Development Stage Enterprise
81
PRIVATE Statements of Changes in Stockholders' Equity
Inception Through May, 31 1998
82
PRIVATE
Convertible Special Voting
Preferred Preferred
Stock Stock
Shares Amount Shares Amount
Balance Forward-May 31, 1994 149,547 1,495,470 $ - $ -
Cash in private offering - - - -
Shares issued for services - - - -
Conversion of warrants - - - -
Stock returned from directors - - - -
Conversion of preferred stock (3,239) (32,390) - -
Stock issued by unconsolidated
subsidiary - - - -
Net (loss) for the year - - - -
------- -------- -------- ----------
Balance May 31, 1995 146,308 1,463,080 - -
Sale of Stock - - - -
Stock issued for services - - - -
Conversion of warrants - - - -
Recision obligation converted
stock - - - -
Repayment of borrowed shares - - - -
Acquisition of equity interest
in Medco Health Corp. - - - -
Net (loss) for the year - - - -
-------- -------- -------- ----------
Balance - May 31, 1996 146,308 1,463,080 - -
Sale of Stock - - - -
Stock issued for services - - - -
Conversions of warrants - - - -
Stock issued in payment
of liabilities - - - -
Net (loss) for the year - - - -
-------- -------- -------- ----------
Balance forward May 31, 1997 146,308 1,463,080 - -
Haber, Inc. A Development Stage Enterprise
Statements of Changes in Stockholders Euity
Inception Through May 31, 1998
Capital in Warrants Subscription Retained
Excess of Amount Receivable Earnings
Par value (Deficit)
Balance Foward
- -May 31, 1994 18,656,643 - - (19,251,511)
Cash in private offering 48,579 - - -
Shares issued for services 5,323 - - -
Conversion of warrants 24,549 - - -
Stock returned from
directors 2,100 - - -
Conversion of preferred
stock 32,336 - - -
Stock issued by
unconsolidated subsidiary 17,193 - - -
Net (loss) for the year - - - (401,483)
---------- -------- ----------- ----------
Balance May 31, 1995 18,786,723 - (41,750) (19,652,994)
Sale of Stock 237,188 - - -
Stock issued for
services - - - -
Conversion of Warrants - - - -
Recision obligation
converted stock 285,532 - - -
Repayment of borrowed
shares (18,204) - - -
Acquisition of equity
interest Medco Health Corp. - - - -
Net (loss) for the year - - - (359,728)
---------- -------- ---------- ------------
Balance May 31, 1996 19,291,239 - (41,750) (20,012,722)
Sale of Stock 251,555 - (62,950) -
Stock issued for services 98,850 - - -
Conversion of warrants - - - -
Stock issued in payment
of liabilities 40,018 - - -
Net (loss) for the year - - - (301,344)
----------- -------- --------- ------------
Balance forward
May 31, 1997 19,681,662 - (104,700) (20,314,066)
See note to financial statements
Haber, Inc A Development Stage Enterprise
Statements of Changes in Stockholders Equity
Inception Through May 31, 1998
Deferred Total
Unearned Stockholders
Treasury Stock Compensation Equity
Shares Amount Stock Option (Deficit)
Shares Amount
Balance forward
- -May 31, 1994 116,625 (1,375,684) - (227,805)
Cash in private offering - - - 52,695
Shares issued for services - - - 25,449
Conversion of warrants - - - 25,600
Stock returned from directors - - - -
Conversion of preferred Stock - - - -
Stock issued by
unconsolidated subsidiary - - - -
Net (Loss) for the year - - - (401,483)
-------- ---------- --------- ---------
Balance May 31, 1995 116,625 (1,375,684) - (508,351)
Sale of Stock - - - 218,448
Stock issued for services - - - 28,961
Conversion of warrants - - - 92
Recision obligation
converted stock - - - 298,581
Repayment of borrowed shares - - - -
Acquisition of equity
interest Medco Health Corp. - - - 73,000
Net (loss) for the year - - - (359,728)
-------- ---------- --------- ---------
Balance May 31, 1996 116,625 (1,375,684) - (248,997)
Sale of Stock - - - 216,050
Stock issued for services - - - 105,463
Conversions of warrants - - - -
Stock issued in payment
of liabilities - - - 43,928
Net (loss) for the year - - - (301,344)
-------- ---------- --------- ---------
Balance forward
May 31, 1997 116,625 (1,375,684) - (184,900)
See notes to financial statements
Haber, Inc. A Development Stage Enterprise
87
Statements of Changes in Stockholders' Equity
Inception Through May, 31 1998
88
Common Stock Special Voting
Shares Amount Common Stock
Shares Amount
Balance Forward May 31, 1997 46,480,800 464,808 _ -
Sale of Stock 6,275,000 27,250 - -
Stock Issued for Services 3,998,573 39,986 - -
Conversion of warrants - - - -
Stock Issued in Payment
of Liabilities - - - -
Net (Loss) for the year - - - -
---------- ------- --------- -------
Balance - May 31, 1998 56,754,373 532,044 - -
See Notes to Financial Statements
Haber, Inc. A Development Stage Enterprise
87
Statements of Changes in Stockholders' Equity
Inception Through May, 31 1998
88
Convertible Special Voting
Preferred Stock Preferred Stock
Shares Amount Shares Amount
Balance Forward May 31, 1997 146,308 1,463,080 -------- ---------
Sale of Stock - - - -
Stock Issued for Services - - - -
Conversion of warrants - - - -
Stock Issued in Payment
of Liabilities - - - -
Net (Loss)for the year - - - -
-------- --------- -------- ----------
Balance - May 31, 1998 146,308 1,463,080 - -
See notes to financial statements
Haber, Inc. A Development Stage Enterprise
89
Statements of Changes in Stockholders' Equity
Inception Through May, 31 1998
Capital in Warrants Subscription
Excess of Amount Receivable
Par Value
Balance Foward May 31, 1997 $19,681,662 - (104,700)
Sale of Stock 141,750 - (3,033)
Stock Issued for Services 55,076 - -
Conversion of warrants - - -
Stock Issued in Payment
of Liabilities - - -
Net (Loss)for the year - - -
------------ ---------- -----------
Balance - May 31, 1998 $19,878,488 - (107,733)
------------ ---------- -----------
See notes to financial statements
Haber, Inc. A Developemtn Stage Enterprise
Statements of Changes in Stockholder's Equity
Inception Through May, 31 1998
Retained Treasury Stock
Earnings Shares Amount
(Deficit)
Balance Forward May 31, 1997 (20,314,066) 116,625 (1,375,684)
Sale of Stock - - -
Stock Issued for Services - - -
Conversion of warrants - - -
Stock Issued in Payment
of Liabilities - - -
Net (loss) for the year (337,220) - -
------------ --------- -----------
Balance May 31, 1998 (20,651,286) 116,625 (1,375,684)
------------ --------- -----------
See notes to financial statements
Haber, Inc. A Development Stage Enterprise
Statements of Changes in Stockholder's Equity
Inception Through May, 31 1998
Deferred Earned Total
Compensation Stockholders
Stock Option Equity
(Deficit)
Balance Forward May 31, 1997 - (184,900)
Sale of Stock - 165,967
Stock Issued for Services - 95,062
Conversion of warrants - -
Stock issued in payment
of Liabilities - -
Net (loss) for the year - (337,220)
------------- -----------
- (261,091)
------------- -----------
See notes to financial statements
Haber, Inc. A Development Stage Enterprise
87
Statements of Cash Flows Page 1 of 2
Cumulative For the Years Ended
from Inception May 31
1998 1997 1996
Cash Flows from Financing
Activities
- - Net (loss) (20,651,286) (337,220) (301,344) (359,728)
- - Adjustments to reconcile net
(loss) to net cash used
for operating activities:
- - Depreciation 1,650,151 1,230 5,572 8,898
Amortization 1,116,210 - 908 1,021
(Gain) on disposal of
fixed assets (42,881) - - -
Stock issued for services 1,826,703 196,826 390,423 28,961
Compensation recognized
under employees' stock
opinion plans 808,458 - - -
Loss on investments in
affiliates 5,142,591 - - 73,000
Provision for uncollectible
advances to affiliates 1,004,881 - - -
(Increase) decrease
in current assets (11,750) 250 (274) (922)
Increase (decrease)
in current liabilities 104,298 44,069 (51,966) (15,992)
------------ ------- -------- --------
(9,052,625) (94,845) 43,319 (264,762)
Cash Flows from Investing
Activities
- -Patent costs and licenses (30,659) - -
- -Purchase of fixed assets (2,396,335) (3,632) (1,119)
- -Proceeds from sale of fixed
assets 1,086,007 - - -
- -Investments and advances to
affiliates (3,912,626) - - -
- -Goodwill acquired (1,085,551) - - -
- -(Increase) decrease in other
assets (37,003) (747) (9109) 611
----------- -------- -------- -------
(6,376,167) (4,379) (9109) (508)
------------ -------- -------- -------
See notes to financial statements
Haber, Inc. A Development Stage Enterprise
87
Statements of Cash Flows Page 2 of 2
Cumulative For the Years Ended
from Inception May 31
1998 1997 1996
Cash Flows from Financing
Activities
- - Proceeds from issuance of
stock 16,650,633 67,236 37,968 218,540
- - Cash dividends (505,976) - - -
- - Purchase of treasury stock (1,375,684) - - -
- - Recovery of insider's selling
profit 17,198 - - -
- - Payment of capital
lease obligation (303,652) - - (576)
- - Advances from related parties 1,117,938 53,500 - 69,668
- - Repayments to related
parties (99,574) (18,651) (15,808) -
- - Increase in long-term debt 1,138,477 - - -
- - Payment against long-term debt (1,138,477) - - -
- - Proceeds of notes payable 25,976 - - -
- - Repayment of notes payable (25,976) - - -
- - Increase (decrease) in cash
overdraft - - - (4,502)
- - Recision obligation - - - (5,000)
- - Stock subscription receivable (65,983) (3,033) (62,950) -
----------- -------- ------- --------
15,434,900 99,052 (40,790) (278,130)
----------- -------- ------- --------
Net increase (Decrease) in Cash 6,108 (172) (6,580) 12,860
Cash-beginning - 6,250 12,860 -
----------- -------- ------- --------
Cash-End $ 6,108 $ 6,108 $ 6,280 $ 12,860
----------- -------- ------- --------
Supplemental Disclosures - - - -
Cash Paid - - - -
Interest $ - $ 2,637 $ - $ 2,100
----------- -------- -------- --------
----------- -------- -------- --------
Non-Cash Investing and Financing
Activities
Stock issued in payment
of debt and interest - 390,423 28,961
-------- ------- ------
-------- ------- ------
Common stock returned
by directors - - -
-------- ------- -------
-------- ------- -------
Fixed assets purchased with
common stock - - -
-------- ------- -------
-------- ------- -------
Preferred stock converted
into common - - -
-------- ------- --------
-------- ------- --------
Stock issued for acquisition
of equity interest in
Medco Health Corporation - - 73,000
--------- ------- --------
--------- ------- --------
See notes to financial statements
Haber, Inc. A Development Stage Enterprise
88
1) The Company
The Company was founded in 1967 as Haber instruments, Inc., a New York
corporation. On April 1, 1980, Haber Instruments, Inc. was acquired through
a migratory merger by Haber, Inc. (the"Company"), which had been incorporated
in Delaware in October, 1979. The only effect of the merger was a change in
the state of incorporation and a change in name. The Company relocated its
corporate office to Towaco, New Jersey and has been there since 1982.
From its formation in 1967, and with the grant of its patents in 1976 and
1979, the Company has operated as a development stage enterprise, directing
its efforts towards understanding its technology and establishing patents in
the fields of chemical and electrochemical process technologies, primarily as
the basis for cardiovascular diagnostic instrumentation and for the
extraction and purification of high-value metals. The Company owns the
fundamental patent to a process called ElectroMolecular Propulsion
2) Summary of Significant Accounting Policies
a. Patents and Licenses: Represents accumulated legalese costs capitalized
and amortized over their estimated useful lives of 17 years, commencing with
the date of issuance of the related patents. As of May 31, 1998 patents and
license costs have been completely amortized.
b. Inventory: Inventory consists of supplies of parts and are valued at the
lower of cost (specifically identified) or market.
c. Furniture and Depreciation: Furniture and equipment are carried at cost.
Depreciation is computed on the straight-line or accelerated methods over
periods of three to seven years, which corresponds to the useful lives of the
assets.
d. Earnings Par Share: Computed by dividing the net loss by the weighted
average number of shares outstanding during the year. Common stock
equivalents have been included in the earnings-per-share computation because
of their anti-dilutive effect.
e. Research and Development Costs: The Company charges research and
development costs, which are not incurred in conjunction with contractual
obligations to expense as incurred.
f. Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumption that effect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the dates
of the financial statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from those estimates.
g. Unconsolidated Subsidiaries: The Company accounts for its investments
in unconsolidated subsidiaries on the equity method. All inter-company
transactions are eliminated. Losses beyond the initial investment are not
recognized if its not the Company's obligation to fund such losses.
h. Reclassifications: Certain items have been reclassified to conform with
the current years presentation.
i. Insurance The company does not maintain any business insurance coverage
including workmens compensation and product liability.
3) Status of the Company
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business.
The Company makes use of equity financing to provide funds for operations.
Its ability to operate is dependent upon its ability to obtain working
capital until regular positive cash flow is attained. It is management's
intention to minimize operating costs until such time as sales can be
increased enough to fund its operations.
The Main on-going activity of the Company's business through 1998 was the
furthering of its technology, EMP. This comprised the completion and
introductory sales of its EMP 15K-1 instrument and selected reagents for
its use. Also, provision for preparation of pertinent new patent
applications have been completed, with appropriate notification of the
U.S. Patent Office to prioritize the same.
4) Due to Related Parties
Payables have been generated by transactions with related parties which
are detailed as follows:
May 31
1998 1997
Shareholders $ 176,141 $ 148,961
Corporate officers and directors 32,659 34,815
Joint Venture 271 271
----------- ----------
$ 209,071 $ 184,047
----------- ----------
The amounts due to shareholder, corporate officers and directors and the
joint venture have no fixed terms of repayment and bear interest at rates
ranging from 0 to 15%.
5) Income Taxes
As of May 31, 1998, the Company has a net operating loss and investment
tax credit carry forward for federal income tax purposes of 12,441,289
and 33,120, respectively. If not offset against taxable income, the
operating loss carry forward will expire as follows:
Net Operating Investment Tax
Loss Carry Credit
forward Carry forward
Year End May 31, 1998 $ 252,700 $ 2,600
1999 1,341,400 4,500
2000 322,178 14,067
2001 2,177,631 11,953
2002 1,268,752 -
2003 2,414,382 -
2004 2,267,089 -
2005 982,263 -
2006 776,330 -
2012 301,344 -
2013 337,220 -
---------- -------------
$ 12,441,289 $ 33,120
---------- -------------
Had the Company filed its federal tax returns for the years ended
May 31, 1992 through May 31, 1996 it would have had an additional
net operating loss carry forward 1,940,929 of expiring as follows:
Net Operating
Loss Carry forward
Year End May 31, 2007 $ 530,966
2008 348,661
2009 300,091
2010 401,483
2011 359,728
-------------
$ 1,940,929
These carry forwards are not expected to be utilized. Based on a 35%
federal tax rate, the Company has deferred tax assets of approximately
$4,950,000 and $5,066,000 at May 31, 1997 and 1998 respectively, which
were totally offset by valuation allowances.
6) Capital Stock
On November 15, 1984, the Board of Directors adopted a resolution reserving
the following shares of .01 par value common stock of the Company:
Shares
Reserved Reason
244,568 Conversion of convertible preferred stock
245,000 Exercise of: Class A Warrants
245,000 Class B Warrants
62,385 Under-writers' Warrants
In June, 1993, the board of directors established an anti-dilution provision
such that their percentage of ownership is maintained until December 31, 1994.
Such ownership adjustments will be made semi-annually in the form of warrants
at .25 per share exercisable for a period of seven years.
In 1994 and 1995, the board members returned a total 1,919,915 shares which
were canceled and new shares reissued to outside investors.
7) Redeemable Preferred Stock
As a result of the public offering of its securities in November, 1984:
a. Shares of convertible preferred stock are redeemable in whole or in
part at the option of the Company at a price of $20 par share plus any
accrued, unpaid cumulative dividends, at any time after November 25, 1988.
In addition, the shares may be redeemed at the same price if at any time
prior to November 26, 1988 the closing price of the common stock on the
National Market System of the National Association of Securities Dealers
Automated Quotations System (or, if the common stock is not reported on
closing prices of the common stock on any stock exchange in which the
common stock is traded on the daily high bid price for the common stock in
the over-the-counter market, as the case may be shall have equaled or
exceeded 26.80 par share for any 20 consecutive trading days.
b. Shares of convertible preferred stock are convertible at the option
of the registered holder thereof, into shares of common stock, par value
.01 par share, of the Company (common stock) at the rate of 1.6716 shares
of common stock for each share of convertible preferred stock.
8) Options and Warrants
The Company maintains an Employees' Incentive Stock Option Plan and a 1985
Officers' Stock Option Plan and issues unregistered warrants.
All options have expired as of May 31, 1993.
Warrant activity for the period was as follows:
Shares Price Total
Par Share
Balance at May 31, 1995 5,720,909 .01 .30 478,968
Issued for Services 40,200 .25 10,050
Reissued 5,125 .50 2,563
Exercised (9,200) .25 (2,300)
Expired (834,009) .01 .05 (25,243)
---------- ---------
Balance at May 31, 1996 4,923,025 .01 .05 464,038
--------- ---------
--------- ---------
Issued for service -0-
Issued in Lieu of Interest 50,000 .25 .25 125,000
Expired (3,292,025) .01 .50 (56,288)
Balance as of May 31, 1997 1,681,000 .25 .25 420,250
Issued for Service 33,000 .01 .30 9,900
Issued for Service 50,000 .01 .25 12,500
Issued in Lieu of Interest 160,000 .01 .25 40,000
Expired (1,531,000) .01 .25 (382,750)
----------- ---------
Balance as of May 31, 1998 393,000 99,900
----------- ---------
----------- ---------
9) Leases
The Company is obligated under a lease for office space. As of June 1,
1990, the Company entered into a verbal "month-to-month" lease agreement
on its primary office space. The rent is 3,000 per month. For the years
ended May 31, 1998 and 1998 rental expense was $36,000 and, $36,000
respectively.
10) Recision Obligation
During fiscal year May 31, 1995, the Company attempted to make a private
placement of its securities and issue unrestricted stock in reliance upon
the exemption from the registration requirements of Section 5 of the
Securities Act of 1933 ("the Act") provide by Rule 504 of Regulation D.
Subsequent to the receipt of approximately 300,000 in funds, legal counsel
advised the Company it was not eligible to use the Rule 504 exemption.
On October 11, 1995, the Company received an opinion fro legal counsel
advised de Company it was not eligible to use the Rule 504 exemption.
On October 11, 1995, the Company received an opinion from legal counsel that
the, issuance and sale of the stock constituted an exempt transaction under
Section 4(2) of the Act. Therefore, these funds were converted into common
stock and are shown in equity at May 31, 1996.
11) Commitments and Contingencies
The Company is in contention with the Department of Environmental Protection
("DEP") in New Jersey and currently has appeared before the court with a
legal representative of the DEP to try to determine a settlement penalty for
neglecting to report timely two filings of septic sampling and analysis in 1990.
In September, 1993, the Company settled this penalty for $21,927 to be paid
in four semi-annual installments of 5,000 and one final semi-annual
installment of 2,500 plus interest at 5.5% beginning October, 1993. Since
only one payment has been made on this settlement to date, the entire amount,
which totals $20,784 including interest, is currently due and is included in
accounts payable.
12) Acquisition
During the fiscal year ended May 31, 1996, the Company issued 7,300,000
shares of its stock for 1,500,000 shares of Medco Health Corporation.
The Company valued this investment at the par value of its stock, $73,000.
Due to the fact that there is no market for Medco Health Corporation stock,
the Company has established a valuation allowance of $73,000 for this
investment.
OTHER MATTER
Management has informed us that they anticipate no problems with their
computer system and the year 2000. They informed us that their current
computer software will recognize a date using (00) as the year 2000 and not
1900. Therefore, Management does not anticipate any expenditure related to
this situation.
SUBSEQUENT EVENTS
During the next fiscal year ending May 31, 1999, the Company issued an
additional 21,044,724 shares, for a combination of investments and services
rendered.
13) Selected Quarterly Financial Information (Unaudited)
First Second Third Fourth
Quarter Quarter Quarter Quarter
1997
Net sales - - - 11,748
Gross (loss) - - - (31,976)
Operating Income - - - -
Net (loss) (73,221) (103,453) (58,681) (65,989)
Net (loss) per common share (.002) (.002) (.001) (.001)
1998
Net sales - - 14,894 -
Gross profit - - 14,894 -
Operating income - - - -
Net (loss) (60,146) (71,585) (43,172) (162,317)
Net (loss) per common share (.001) (.001) (.001) (.003)
Haber, Inc. A Development Stage Enterprise
89
Valuation and Qualifying Amounts Schedule II
90
Year Ended Name of Balance at Additions Amounts Balance at
May 31, Debtor Beginning Written End of Period
of Period off
1994 Amerigold, Inc. 3,750 15,700 - 19,450
Life Signs, Inc. - 5,960 - 5,960
3,750 21,660 - 25,410
1995 Amerigold, Inc. 19,450 60 - 19,510
Life Signs, Inc. 5,960 - 5,960 -
25,410 60 5,960 19,510
1996
Amerigold, Inc. 19,510 32,254 51,764 -
Medco Health Corp. - 73,000 73,000 -
------ ------- ------- --------
19,510 105,254 124,764 -
------ ------- ------- --------
------ ------- ------- --------
Haber, Inc. A Development Stage Enterprise
91
Computation of Fully Diluted Earnings Par Common Share - Exhibit 11
92
May 31,
1998 1997 1996
Earnings (337,220) (301,344) (359,728)
Shares
Weighted average number of common
shares outstanding 49,799,193 45,528,941 35,852,411
Additional shares assuming conversion
of Convertible preferred stock 297,913 244,153 244,568
Warrants reduced by the number of shares
which could have been purchased with
proceeds from the exercise of such
warrants - - 3,991,475
Weighted Average Number of Common Shares
Outstanding as Adjusted 50,097,106 45,773,094 40,088,454
(Loss) Par Common Share Assuming Full
Dilution (.001) (.001) (.001)
This calculation is submitted in accordance with Regulation S-K,Item 601
(b)(11) although it is contrary to paragraph 40 of ABP Opinion No. 15
because it produces an anti-dilutive result.
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