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.
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.
Employees
In 2000, the Company retained: 1 employee and 2 independent consultants.
Government Regulation
If Haber, Inc. markets its EMP instruments for use in clinical applications, blood analyzers and 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, that this would necessarily occur.
ITEM 2
ITEM 2 PROPERTIES
The Registrant maintains laboratory and general office facilities in one building leased by the registrant and located in Towaco, New Jersey. The building has a total of approximately 2,500 square feet of space. Included in these facilities 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.
ITEM 3
ITEM 3 LEGAL PROCEEDINGS
The Registrant is in contention with the Department of Environmental Protection ("DEP") in New Jersey and currently has appeared informally before the court 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 pending legal proceedings to which the Registrant is a party or of which any of their property is subject.
ITEM 4
ITEM 4 SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
NONE
PART II
MARKET FOR REGISTRANT'S COMMON EQUITY & 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, 1999. The quotations reflect dealer prices without markup, markdown or commissions and do not necessarily represent actual transactions.
Quarter Ended: 2000 High Low
8/31/99 .068 .059 11/30/99 .095 .075 2/28/00 .078 .078 5/31/00 .078 .078
1999 High Low
08/31/98 .096 .075 11/30/98 .087 .061 2/28/99 .070 .040 5/31/99 .120 .061
On May 31, 2000, the last sale price of the Registrant's common stock was $.078 and the number of holders of record of the Registrant's Common Stock was approximately 1,983.
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
ITEM 6
Cumulative From Inception 2000 1999 1998 1997 1996
Statement of Operations Data - - Revenues $ 1,960,068 $ - $ - $ 14,891 $ 11,748 $ - - - Directed Expenses 1,519,485 - - 105,113 43,724 - - - General Administrative Expenses 13,518,834 1,037,907 261,993 245,208 278,477 252,374 - - Research Development Expenses (5,049,940) 1,542 20,878 - - - - - Operating (loss) (19,133,072)(1,039,449)(1,282,871) (335,330) (310,453) (284,628) - - Interest Income 1,025,917 - 3,135 747 - - - - Net (loss) (22,907,339) (978,458)(1,279,736) (337,220) (301,344) (359,728) - - Net (loss) per share (.01) (.18) (.01) (.01) (.01)
Balance Sheet Data
- - Working Capital (281,025) (177,786) (304,803)(225,463) (286,932) - - Total assets 38,892 97,565 61,570 58,842 82,521 - - Total Liabilities 319,917 260,335 322,661 243,744 311,518 - - Stockholders' (deficit) (260,629) (159,880) (261,091)(184,900) (246,997)
Item 7
Item 7
MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITIONS & RESULTS OF OPERATIONS
Results of Operations
The Registrant controls the proprietary operational features and key science insights for the technology called ElectroMolecular Propulsion ("EMP"), which it believes has broad application in the chemical, biomedical and electronic fields. EMP is a fundamental electrokinetic technology invented by Norman Haber. Essentially, EMP is a method of transporting a broad variety of molecules by means of an electrical field. This ability, enhanced by other characteristics of the technology, indicates that EMP has a range of applications in chemical analytical instrumentation, extraction, purifications, control of chemical reactions, electronic imaging and other electronic uses.
More than 100 application protocols have been completed for use with the EMP instrument for use with dyes, proteins, etc. Such 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.
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.
2000 Compared with 1999
The net loss for 2000 decreased by $301,278 to $978,458 due mainly to decrease and expenses and sales of tax losses.
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 1999, the Registrant issued 4,926,334 shares of common stock for $190,900 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
ITEM 8 FINANCIAL STATEMENTS & SUPPLEMENTING DATA
See Index to Financial Statements, Financial Statement Schedules and Exhibits in Item 14.
ITEM 9
ITEM 9 DISAGREEMENTS ON ACCOUNTING & FINANCIAL DISCLOSURE
None
PART III
ITEM 10
ITEM 10 DIRECTORS & EXECUTIVE OFFICERS OF THE REGISTRANT
The Executive Officer and Directors of the Registrant are as follows:
PRIVATE Director name Age Position with the Registrant Since (date) - - Norman Haber 72 Chairman, President, CEO & Director 1967 - - Paul Buiar 76 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. 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
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, 1999 and 1998 to the executive officers and to all executive officers as a group:
Name Capacities in Cash Which Served Compensation
2000 1999 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. If the accumulated arrearages was recorded in the financial statements for the year ended May 31, 2000, there would be an additional loss of $1,462,000 and this would also, increase liabilities, reduce stockholders equity and increase loss per share, by similar amounts.
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
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.
Name of No. of shares of Common % Beneficial Owner Stock and Nature of Beneficial of class
Norman Haber 3,373,159 (1) 4.4% Warren Donohue 310,000 * Paul Buiar 171,308 * All directors a group 3,854,467 4.4% * 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 565,508 shares which are owned by his wife, individually or as custodian for their two children.
ITEM 13
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
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 Balance Sheets as of May 31, 2000 and 1999 Statements of Income (Loss) and Retained Earnings (deficit) for the years ended May 31, 2000, 1999, 1998, and from the inception to May 31, 2000.
Statements of Changes in Stockholder's Equity from Inception to May 31, 2000.
Statements of Cash Flows for the years ended May 31, 2000, 1999, 1998 and 1997 and from the inception to May 31, 2000.
Notes to Financial Statement
2. Schedule II - Valuation and Qualifying Accounts
3. Exhibit 11 - Statement re: computation of earnings par share
3(a) (I) Restated Certificate of Incorporation of the Registrant filed November 9 1984. Incorporated by reference to exhibit 2 (a) to the Registrant's. Registration Statement on Form 8-A. 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
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)
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: January 4, 2001
HABER, INC. (Registrant) ______________________ 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: January 4, 2001
_________________________ Norman Haber Haber Inc., Chief Executive Officer and Director (Principal Executive Officer)
Dated: January 4, 2001
_________________________ Paul Buiar
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 31,2000 and May 31, 1999 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. We have been asked to express an opinion on these financial statements based on our audit.
We conducted our audit 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 audit provide a reasonable basis for opinion.
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 its 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.
In our opinion the financial statements at May 31 2000 and May 31, 1999 present fairly, in all material respects, the financial position of Haber, Inc. The results of their cash flows from inception through May 31, 2000 and for each of the three years in the three-year period ended May 31, 2000, in conformity with generally accepted accounting principles.
Our audits were made to form an opinion on the basis of the financial Statements taken as a whole. The supplemental schedules listed in the index to the financial statements and schedules are presented to comply with rules and regulations under the Securities and Exchange Act of 1934 and are not otherwise a required part of the basic financial statements. The supplemental schedules for the periods ended May 31, 2000 and May 31, 1999 have been subjected to the auditing procedures applied in the audits of the basis financial statements.
In our opinion, the supplemental schedules for the period ended May 31, 2000 and May 31, 1999 fairly states 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 Hackensack, NJ January 5, 2001
Haber, Inc. A Development Stage Enterprise
Balance Sheets
May 31 2000 1999 Assets - - Currents Assets Cash $ 25,392 $70,799 Inventory 9,000 11,750 Loans Receivable 4,500 -0- -------- ------- 38,892 82,549 -------- -------
- - Furniture and Equipment Equipment 343,702 339,167 Furniture and Fixtures 104,679 99,514 -------- ------- 448,381 438,681 Less: Accumulated depreciation and amortization 432,180 428,814 -------- ------- 16,201 9,867 -------- ------- Other Assets - - Security deposit 3,703 2,149 - - Other assets 492 3,000 -------- ------- 4,195 5,149 -------- -------
59,288 97,565 -------- ------- -------- -------
See notes to financial Statement
Haber, Inc . A Development Stage Enterprise
Balance Sheets
May 31 2000 1999 Liabilities and Stockholders (Deficit)
- - Currents Liabilities Accounts payable $ 86,835 $ 62,746 Accrued expenses 32,900 -0- Due to related parties 188,062 189,270 Payroll other taxes payable 2,120 1,860 Deposit payable 10,000 3,570 ---------- ----------
Total Liabilities 319,917 257,446 ---------- -----------
- - Commitments and Contingencies
- - Stockholder (Deficit) Common stock-$.01 par value-150,000,000 shares authorized; 85,757,492 and 76,667,567 shares issued, respectively. 857,875 766,676 - - Preferred stock - $10 par value - 600,000 shares authorized; 145,408 shares and 146,308 shares issued respectively. 1,454.080 1,463,080 - - Capital in excess of par value 21,748,703 20,953,192 - - Stock subscription receivable ( 36,033) (36,033) - - (Deficit) accumulated during the development stage. (22,909,570) (21,931,112) ------------- --------- 1,115,055 1,215,803 Less: Treasury stock - 116,625 shares - at cost 1,375,684 1,375,684 ------------ ----------- (260,629) (159,881) ------------ ------------ $ 59,288 97,565 ----------- ------------ ----------- ------------
See notes to financial statements
Haber, Inc. A Development Stage Enterprise
Statements of Operations
Cumulative For the Years Ended from Inception May 31
2000 1999 1998 - - Revenues 1,960,068 - - $ 14,891 - - Direct Expenses 1,519,485 - - 105,013 ---------- -------- --------- ---------- - - Gross Profit (loss) 440,583 - - (90,122) ---------- -------- --------- ---------- - - General and Administrative Expenses 13,518,834 1,037,907 1,261,993 245,208
- - Research and Development Expenses 5,049,940 1,542 20,878 - - - Provision for Uncollectible Advances to Affiliates 1,004,881 - - - ----------- --------- ---------- --------- 19,573,655 1,039,449 1,282,871 245,208 ----------- --------- ---------- --------- - - (Loss) Before Other Income (Expenses) (19,133,072) (1,039,449) (1,282,871) (335,330) ------------ ----------- ---------- ---------
- - Other Income (Expenses) Interest Income 1,025,917 - 381 747 Other Income 450,119 115,255 2,754 - Interest (expense) (96,329) - - (2,637) (Loss) on investments in affiliates (5,196,855) (54,264) - -
Gain on disposition of fixed assets 42,881 - - - ----------- ----------- ----------- -------- (3,774,267) 60,991 3,135 (1,890) ----------- ----------- ----------- --------
- - Net (Loss) $(22,907,339) $(978,458) ($1,279,736) $(337,220) ------------ ----------- ----------- ---------
- - (Loss) per Share - $ (.012) $ (.018) $ (.007) - - Weighted Average Common Shares Outstanding During the Period - 83,471,973 69,955,262 $49,799,193
See notes to Financial statements
Haber, Inc. A Development Stage Enterprise Statement of Changes in Stockholder's Equity
Inception through May 31, 2000
Convertible Common Stock Preferred Stock Shares Amounts Shares Amounts Inception (1967) through May 31, 1988 10,609,622 106,096 152,926 1,529,260 Stock issued for services 6,375 64 - - Conversion of preferred stock 1,838 18 (1,100) (11,000) Stock issued as collateral 165,000 1,650 - - Cash in private offering 837,239 8,372 - - Correction of prior issuance (23,174) (231) - - Warrants expired - - - - Stock issued in payment of interest 30,000 300 - - Equity resulting from outside - - - - Investment in subsidiary - - - - Net (loss) for the year - - - - ---------- ------- ------- ---------
Balance Forward - May 31,1989 11,626,900 116,269 151,826 1,518,260
Treasury shares previously arising in consolidation - - - - Stock issued for services 400,000 4,000 - - Conversion of preferred stock 1,503 15 (900) (9,000) Stock issued in payment of 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 15,952,326 159,523 150,926 1,509,260 Stock issued for services 1,850,993 18,510 - - Conversion of warrants 200,000 2,000 - - Cash in private offering 1,517,641 15,177 - - Correction of prior issuance 20,400 204 - - Conversion of preferred stock - - - - Net (loss) for the year - - - - ---------- -------- ------- --------- Balance - May 31, 1991 19,541,360 195,414 150,926 1,509,260
See notes to financial statements
Haber, Inc. A Development Stage Enterprise
Statements of Changes in Stockholders' Equity Inception Through May 31, 2000
Capital in Warrants Subscription Retained Excess of Amount Receivable Earnings Par Value (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)
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)
See notes to financial statements
Haber, Inc. A Development Stage Enterprise
Statements of Changes in Stockholders' Equity Inception Through May, 31 2000 Total Treasury Stock Shareholder Equity Shares Amount (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 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)
See notes to financial statements
Haber, Inc. A Development Stage Enterprise
Statements of Changes in Stockholders' Equity Inception Through May, 31 2000
Common Stock Convertible Preferred Stock
Shares Amount Shares Amount
Balance - May 31, 1991 19,541,360 195,414 150,926 1,509,260 Stock issued for services 461,875 4,619 - - Stock issued in payment of liabilities 755,040 7,550 - - Cash in private offering 1,404,995 14,050 - - Correction of prior issuance (90,767) (908) - - Conversion of preferred stock 2,304 23 (1,379) (13,790) Conversion of warrants 915,000 9,150 - - Net (loss) for the year - - - - ---------- -------- ------- --------- Balance forward-May 31, 1992 22,989,807 229,898 149,547 1,495,470
Stock issued for services 629,800 6,298 - - Cash in private offering 1,274,343 12,743 - - Net (loss) for the year - - - - ---------- ------- ------- --------- Balance - May 31, 1993 24,893,950 248,939 149,547 1,495,470
Cash in private offering 993,703 9,937 - - Shares issued for services 463,000 4,630 - - Conversion of warrants 87,000 870 - - Stock returned from directors (1,709,915) (17,099) - - Net (loss) for the year - - - - Stock issued by unconsolidated subsidiary - - - - ----------- ------- ------- -------- Balance Forward May 31, 1994 24,727,738 247,277 149,547 1,495,470
See notes to financial statements
Haber, Inc. A Development Stage Enterprise
Statements of Changes in Stockholders' Equity Inception Through May, 31 2000
Capital in Excess of Subscription Retained Par Value Receivable Earnings (Deficit)
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 - 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, 1994 $18,656,643 $ - $(19,251,511)
See notes to financial statements
Haber, Inc. A Development Stage Enterprise Statements of Changes in Stockholders' Equity Inception Through May, 31 2000
Treasury Stock Total Shares Amount Stockholders (Equity) (Deficit)
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 - 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
Haber, Inc. A Development Stage Enterprise
Statements of Changes in Stockholders' Equity Inception Through May, 31 2000
Convertible Common Stock Preferred Shares Amount Stock Shares Amount
Balance Forward - May 31, 1994 24,727,738 247,277 149,547 1,495,470 Cash in private offering 411,547 4,116 - - Shares issued for services 2,012,590 20,126 - - Conversion of warrants 105,081 1,051 - - Stock returned from directors (210,000) (2,100) - - Conversion of preferred stock 5,412 54 (3,239) (32,390) Stock issued by unconsolidated subsidiary - - - - Net (loss) for year - - - - --------- ------- ------- -------- 146,308 1,463,080 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 - - Rescission obligation converted stock 1,304,949 13,049 - - Repayment of borrowed shares 1,820,379 18,204 - - Acquisition of equity interest in Medco Health Corp. 7,300,000 73,000 - - Net (loss) for the year - - - - --------- ------- -------- --------
Balance - May 31, 1996 42,684,007 426,840 146,308 1,463,080 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 46,480,800 464,808 146,308 1,463,080
See notes to financial statements
Haber, Inc. A Development Stage Enterprise Statements of Changes in Stockholders Equity Inception Through May 31, 2000
Capital in Subscription Retained Excess of Receivable Earnings Par value (Deficit)
Balance Forward - -May 31, 1994 18,656,643 - (19,251,511) Cash in private offering 48,579 - - Shares issued for services 5,323 - - Conversion of warrants 24,549 - - Stock returned from directors 2,100 - - Conversion of preferred stock 32,336 - - Stock issued by unconsolidated subsidiary 17,193 - - Net (loss) for 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, 2000
Total Stockholders Treasury Stock Equity Shares Amount (Deficit) 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
Statements of Changes in Stockholders' Equity
Inception Through May, 31 2000
Convertible Preferred Common Stock Stock Shares Amount Shares Amount
Balance May 31, 1997 46,480,800 464,808 146,308 1,463,080 Sale of stock 6,275,000 27,250 - - Stock issued for services 3,998,573 39,986 - - Conversions of warrants - - - - Stock issued in payment of liabilities - - - - Net (loss) for the year - - - - --------- ------- --------- ---------
Balance May 31, 1998 56,754,373 532,044 146,308 1,463,080 Sale of stock 4,926,334 49,264 - - Stock issued for services 13,320,195 168,701 - - Conversions of warrants - - - - Stock issued in payment of liabilities 1,666,667 16,667 - - Net (loss) for the year - - - - --------- ------- --------- ---------
Balance May 31, 1999 76,667,569 766,676 146,308 1,463,080 Conversions of stock 1,169 11 (900) (9,000) Sale of stock 1,838,754 18,388 - - Stock issued for services 6,180,000 61,800 - - Stock issued in payment of liabilities 140,000 1,400 - - Buyout of Investment - - - - Net (loss) for the year 960,000 9,600 - - --------- ------- --------- ---------
Balance May 31, 2000 85,787,492 857,875 145,408 1,454,080
See notes to financial statements
Haber, Inc. A Development Stage Enterprise Statements of Changes in Stockholders Equity
Inception Through May 31, 2000
Capital in Subscription Retained Excess of Receivable Earnings Par value (Deficit)
Balance May 31, 1997 19,681,662 (104,700) (20,314,066) Sale of stock 141,750 ( 3,033) - Stock issued for services 55,076 - - Conversions of warrants - - - Stock issued in payment of liabilities - - - Net (loss) for the year (337,200) -------- --------- -----------
Balance May 31, 1998 19,878,488 (107,733) (20,651,286) Sale of stock 141,636 71,700 - Stock issued for services 899,735 - - Conversions of warrants - - - Stock issued in payment of liabilities 33,333 - (1,279,736) Net (loss) for the year - - - ----------- --------- -----------
Balance May 31, 1999 20,953,192 (36,033) (21,931,112) Conversions of stock 8,989 - - Sale of stock 106,517 - - Stock issued for services 628,827 - - Stock issued in payment of liabilities 6,514 - - Buyout of Investment 44,664 - - Net (loss) for the year - - (978,458) -------- --------- -----------
Balance May 31, 2000 21,748,703 (36,033) (22,909,570)
Haber, Inc A Development Stage Enterprise Statements of Changes in Stockholders Equity Inception Through May 31, 2000
Total Stockholders Treasury Stock Equity Shares Amount (Deficit)
Balance May 31, 1997 116,625 1,375,684 (184,900) Sale of stock - - 165,967 Stock issued for services - - 95,062 Conversions of warrants - - - Stock issued in payment of liabilities - - - Net (loss) for the year (337,200) -------- --------- -----------
Balance May 31, 1998 116,625 (1,375,684) (261,091) Sale of stock - - 262,600 Stock issued for services - - 1,068,435 Conversions of warrants - - - Stock issued in payment of liabilities - - 50,000 Net (loss) for the year - - (1,279,736) ----------- --------- -----------
Balance May 31, 1999 116,625 (1,375,684) (159,881) Conversions of stock - - - Sale of stock - - 124,905 Stock issued for services - - 690,627 Stock issued in payment of liabilities - - 7,914 Buyout of Investment - - 54,264 Net (loss) for the year - - (978,458) ----------- --------- ------------
Balance May 31, 2000 116,625 (1,375,684) (260,629)
Haber, Inc. A Development Stage Enterprise
Statements of Cash Flows Page 1 of 2
Cumulative For the Years Ended from Inception May 31 2000 1999 1998
Cash Flows from Financing Activities - - Net (loss) (22,909,570) (978,458) (1,279,736) (337,220) - - Adjustments to reconcile net (loss) to net cash used for operating activities: - - Depreciation 1,656,568 (3,366) 3,051 1,230 Amortization 1,116,210 752,803 - - (Gain) on disposal of fixed assets (42,881) - - - Stock issued for services 3,647,941 - 106,843 196,826 Compensation recognized under employees' stock opinion plans 808,458 - - - Loss on investments in affiliates 5,142,591 - - - Provision for uncollectible advances to affiliates 1,004,881 - - - (Increase) decrease in current assets (13,500) (1,750) - 250 Increase (decrease) in current liabilities 132,477 63,679 (35,590) 44,069 ---------- ---------- ----------- ------- (9,456,825) (160,360) (243,840) (94,845)
Cash Flows from Investing Activities
- -Patent costs and licenses (30,659) - - - - -Purchase of fixed assets (2,412,244) (9,700) (6,209) (3,632) - -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 (4,285) 954 31,764 (747) ---------- ---------- -------- ------- (6,359,358) (8,746) 25,555 (4,379) ----------- ---------- -------- -------
See notes to financial statements
Haber, Inc. A Development Stage Enterprise
Statements of Cash Flows Page 2 of 2
Cumulative For the Years Ended from Inception May 31 2000 1999 1998
Cash Flows from Financing Activities - - Proceeds from issuance of stock 17,058,190 124,906 282,651 67,236 - - 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) - - - - - Advances from related parties 1,172,738 54,800 - 53,500 - - Repayments to related parties (185,206) (56,007) (29,625) (18,651) - - 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) - - - - - Stock subscription receivable (36,033) - 29,950 (3,033) ----------- ------- -------- ------- 15,841,575 123,699 282,976 99,052 ----------- ------- ------- ------- Net increase (Decrease) in Cash 25,392 (45,407) 64,691 (172) Cash-beginning - 70,799 6,108 6,280 ----------- ------- -------- ------- Cash-End $ 25,392 25,392 70,799 $ 6,108 ----------- ------- -------- ------
Supplemental Disclosures - - - - Cash Paid - - - - Interest $ - - - $ 2,637 ----------- -------- -------- -------- ----------- -------- -------- --------
Haber, Inc. A Development Stage Enterprise
For the Years Ended May 31 2000 1999 1998
Non-Cash Investing and Financing Activities Stock issued in payment of debt and interest 11,000,000 - 390,423 ------- -------- ------- ------- -------- ------- Common stock returned by directors - - - -------- -------- ------- -------- -------- ------- Fixed assets purchased with common stock - - - -------- -------- ------- -------- -------- ------- Preferred stock converted into common 900 - - -------- -------- ------- -------- -------- ------- Stock issued for acquisition of equity interest in Medco Health Corporation - - - -------- --------- ------- -------- --------- -------
See notes to financial statements
Haber, Inc. A Development Stage Enterprise
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, 1999 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. $1,542 has been charged to expense the year ended May 31, 2000.
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. 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 2000 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
(a)Payables have been generated by transactions with related parties which are detailed as follows:
May 31 2000 1999 Shareholders $ 192,354 $ 172,427 Corporate officers and directors (4,563) 16,572 Joint Venture 271 271 ----------- ------------ $ 188,062 $ 189,270 ----------- ------------
The amounts due to shareholder, corporate officers and directors and the joint venture have no fixed terms of repayment and bear no interest.
(b) During the fiscal year Ended May 31, 1999, the Company's Chairman authorized the issuance of 1,990,332 shares of Haber, Inc. common stock to himself and various members of his family, for repayments of loans purportedly made to Haber, Inc., dating back to 1992. These individuals were not able to substantiate these loan and therefore agreed to rescind the entire transaction. All shares were returned to the transfer agent on December 31, 1999, to be cancelled of record.
5) Income Taxes
As of May 31, 2000, the Company has a net operating loss and investment tax credit carry forward for federal income tax purposes of 13,105,383 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, PRIOR $ 7,100 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 - 2014 1,279,736 - 2015 978,458 -
---------- ------------- $ 13,105,383 $ 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 $4,620,004 and $5,419,259 at May 31, 2000 and 1999 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
242,984 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.
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.
c.On March 9, 1999, the Board of Directors adopted a resolution to increase the number of authorized shares of common stock to 150,000,000, which represents an increase of 75,000,000 shares from the year ended May 31, 1999. On April 1, 1999 the Board of Directors approved a resolution to offer a significant premium to induce conversion of convertible voting preferred stock into common 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.
9)Options issued in exchange for services.
FAS 123 encourages the use of a fair value method of accounting for stock based awards under which the fair value of the stock options is determined on the date of grant, and expensed over the vesting period. The value of these options have not been recorded due to the immaterial amounts.
Under APB-25 compensation expense is generally not recommended when both the exercise price is the same as the market price, and the number of shares to be issued is set on the date the stock option is granted.
Warrant activity for the period was as follows:
Shares Option Value Total Per Share Value
Balance at May 31, 1998 393,000 .0186 7,318 Issued for Service 3,111,167 .138 429,353 Issued in Lieu of Interest 60,000 .036 2,160 Issued in Connection with Stock Purchase 9,000 .136 243 Expired (3,080,000) .027 (425,040) ----------- .138 --------- Balance as of May 31, 1999 493,000 - 14,034
Issued in Connection with Stock Purchase 100,000 .023 $ 2,300 ---------- ---------
Balance at May 31, 2000 593,000 16,334 ---------- --------- ---------- ---------
10) Leases
The company is obligated under a verbal month-to-month lease agreement on its primary office space in Towaco, NJ. The rent is $3,000.00 per month. This will terminate in October 31, 2000.
On May 3, 2000 Haber, Inc. entered into a new lease agreement for an office space approximately 3,000 square feet located at 2262, N US1 Hwy. Fort Pierce, Florida. The lease commenced July 1, 2000, and terminates June 30, 2001. The rent shall be $1,750.00 + sales tax of $113.75 per month.
The following is the company's liabilities
For the year ended		 Amount 5/31/01				35,501.25 5/31/02				 1,863.75 ---------- 37,365.00
11) Commitments and Contingencies
(A)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 $23,169 including interest, is currently due and is included in accounts payable.
(B)During the fiscal year ended May 31, 1999, the Company entered into the following agreements whereby the Company issued common stock for services rendered in lieu of cash payments as follows:
(1)Financial Consulting Services - Issued or to be issued; 3,950,000 shares in a combination of restricted and unrestricted common stock.
(2) Public Relation Services - On September 1, 1998, 7,500,000 shares of unrestricted common stock was issued to Startec Media Corporation.
During the course of our audit, it was discovered by that Corporate Counsel disavowed a letter ostensibly written by him on his letterhead, to authorize the company's Transfer Agent to issue the 7,500,000 shares to Startec Media Corporation. We were also unable to verify whether any public relation services were provided to the Company. This transaction represents $491,250 of the total loss reported for the fiscal year ended May 31, 1999.
Orex issued 600,000 shares of restricted common shares to Haber, Inc., Haber, Inc. contends that the shares should have been unrestricted and returned all shares to Orex Gold Mines, Inc., requesting that the shares be reissued without a restrictive legend. To date, Orex Gold Mines, Inc. has not reissued the shares to Haber, Inc.
12) Other Matters:
(A)	The Company is in the process of selling their unused State of New Jersey Corporation tax losses to New Jersey Economic Development Authority. On November 23, 1999, Haber, Inc. received a letter from the State of New Jersey confirming the amount of the unused carry forward losses of $2,037,184 for the period of 1993 through 1998. Haber, Inc. has sold these losses for $115,255.
(B)	On September 13, 1999, the Board of Directors authorized the issuance of 960,000 shares of restricted common stock to buy out all of the limited partnership units held by the limited partners of the Lodestone Partners.
13) Selected Quarterly Financial Information (Unaudited)
First Second Third Fourth Quarter Quarter Quarter Quarter
Net sales - - - - Gross profit - - - - Operating income - - - - Net (loss) (195,357) (672,809) (29,761) (80,531) Net (loss) per common share (.002) (.008) (.000) (.001)
Net sales - - - - Gross (loss) - - - - Operating Income - - - - Net (loss) (368,887) (325,493) (246,372) (339,004) Net (loss) per common share (.006) (.005) (.003) (.004)
Haber, Inc. A Development Stage Enterprise
14)Computation of Fully Diluted Earnings Par Common Share
May 31, 2000 1999 1998
Earnings (Losses) (978,458) (1,279,736) (337,220)
Shares Weighted average number of common shares outstanding 83,471,973 69,955,262 49,799,193 Additional shares assuming conversion of Convertible preferred stock 242,984 242,984 244,153 Warrants reduced by the number of shares which could have been purchased with proceeds from the exercise of such warrants - - -
Weighted Average Number of Common Shares Outstanding as Adjusted 83,714,957 198,246 50,043,346
(Loss) Par Common Share Assuming Full Dilution (.012) (.018) (.007)
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.