FORM 10-K

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

(x) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE FISCAL YEAR ENDED MAY 31, 1999.

                                       OR

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES  EXCHANGE
ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________ TO __________.

                        NOVEX SYSTEMS INTERNATIONAL, INC.
                  (Formerly Stratford Acquisition Corporation)
             (Exact name of registrant as specified in its charter)

     New York                          0-26112                   41-1759882
(State of Jurisdiction)        (Commission File Number)    (IRS Employer ID No.)

67 Wall Street, Suite 2001,  New York, New York                     10005
(Address of Principal Executive offices)                          (Zip Code)

Registrant's telephone number, including area code 212-825-9292

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

                                             Name of each exchange on
     Title of each class                         which registered
     -------------------                         ----------------

Common Stock $.001 par value        NASD OTC Electronic Bulletin Board

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  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 filing  requirements for the
past 90 days. Yes _X_   No ___

Indicate by check mark if the disclosure of delinquent  filers  pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best  of  the  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendments to this Form 10-K. [ ].

Based on the closing sale price of $.20 on May 31, 1999,  the  aggregate  market
value  of  the  voting  stock  held  by  nonaffiliates  of  the  registrant  was
$1,161,003.  The number of shares outstanding of the registrant's  common stock,
$.001 par value was 15,250,771 on May 31, 1999.

                       DOCUMENTS INCORPORATED BY REFERENCE
                       -----------------------------------

Location in Form 10-K                                   Incorporated Document
---------------------                                   ---------------------
Part IV, Item 14                                          Form 8-K filed on
                                                          September 17, 1998

Part IV, Item 14                                          Form 8-K/A filed on
                                                          November 30, 1998

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                        NOVEX SYSTEMS INTERNATIONAL, INC.

                                Table of Contents



                                                                       Page No.
                                                                       --------
Part I

Item 1.    Business and Risk Factors                                      1
Item 2.    Properties                                                    21
Item 3.    Legal Proceedings                                             21
Item 4.    Submission of Matters to a Vote of Security
           Holders                                                       22
Part II
Item 5.    Market for Registrant's Common Equity and
           Related Stockholder Matters                                   23
Item 6.    Selected Financial Data                                       24
Item 7.    Management's Discussion and Analysis of
           Financial Condition and Results of Operations                 24
Item 8.    Financial Statements and Supplementary Data                   27
Item 9.    Changes in and Disagreements with Accountants
           on Accounting and Financial Disclosure                        28
Part III
Item 10.   Directors and Executive Officers of the
           Registrant                                                    28
Item 11.   Executive Compensation                                        29
Item 12.   Security Ownership of Certain Beneficial
           Owners and Management                                         30
Item 13.   Certain Relationships and Related Transactions                32
Part IV
Item 14.   Exhibits, Financial Statement Schedules, and
           Reports on Form 8-K                                           33


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                                     PART I

Item 1. Business and Risk Factors

     The  Company  will  be  subject  to  numerous  and  substantial   economic,
     operational and other risks which should be carefully evaluated. For a more
     detailed  discussion of the risk factors  involved in the investment  being
     offered in this offering, see the following "RISK FACTORS."

                                  RISK FACTORS

The Company evolved from the development stage in mid-1998 and any evaluation of
the Company and its  business  should only be made after  having  given  careful
consideration  to the  following  risk factors,  in addition to those  appearing
elsewhere in this Form 10-K.

Limited Operating History. Prior to the Company's September 16, 1998 acquisition
of Arm Pro,  Inc.,  the  manufacturer  and  marketer of the  Fiberforce  line of
polypropylene   fibers  which  provides  secondary   reinforcement  of  concrete
products,  the Company essentially had no operating history. Since August, 1995,
the Company has principally been engaged in research and development  activities
relating to the development of its  mineral-based  admixture which, when blended
with  a  cement-based  product  (mortars,   grouts,   concrete),   enhances  the
performance  characteristics  of the  products.  In Spring,  1998,  the  Company
emerged  from the  development  stage by  selling  small  amounts of its line of
pre-packaged  Novacrete  concrete repair  products.  With the acquisition of Arm
Pro,  Inc.,  the  Company  began   marketing  Arm  Pro's   Fiberforce   line  of
polypropylene fibers for concrete  reinforcement,  which on an annual historical
basis  generated  approximately  $300,000  in sales  and  positive  cash flow of
roughly $150,000 to the Company.  Upon the closing of the Company's  purchase of
the Allied  Composition/Por-Rok  business unit of The  Sherwin-Williams  Company
(hereinafter "Por-Rok")which took place on August 13, 1999, the Company will own
the Por-Rok  business  unit which  generated  $1,725,853  in revenues and earned
$201,208 in the calendar  year ending  December 31, 1998.  Even with the Por-Rok
unit the Company will still be considered  small and will continue to be subject
to  the  risks,  complications,  and  uncertainties  of  successfully  marketing
products with large competitors and the difficulties in recruiting and retaining
qualified personnel. (See Subsequent Events)

Lack of  Profitability.  The  Company has  recorded  net losses for each year of
operation  (1994-1998)  and will record a net loss in the fiscal year ending May
31,  1999 of  $1,392,340.  The  Company  will now have a  $5,325,024  cumulative
operating loss, most of which was accumulated  during the Company's research and
development stage and was largely generated from accounting charges for non-cash
compensation  that was paid in common  stock and common  stock  options  and not
solely from cash losses from  operations.  This operating loss is eligible to be
applied to income generated from future operations to minimize corporate taxes.

Limited  Product Line. The Company's  revenues will depend on the breadth of its
product line. Although the Company initially plans to expand its current product
lines  initially by acquiring  Por-Rok and other  companies that the Company has
targeted,  because of the  uncertainties  associated  with closing  transactions
there can be no assurances that the Company will achieve its objective to expand
its  product  line this year.  (See  Subsequent  Events;  The  Company's  Future
Operations; Company's Products)


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Uncertainty of Protection  Offered by Patents and Trade  Secrets.  The Company's
proprietary  technology is not protected by patents.  The Company  believes that
the patenting of its protects would increase the risk of competitors' infringing
on the technology. Competitors could easily infringe on the Company's technology
by integrating  other chemicals into the Company's  proprietary  formulations to
mask the  infringement  of the  Company's  technology.  The  absence  of  patent
protection  represents  a risk in that the  Company  will not be able to prevent
other persons from developing competitive products. In addition, there can be no
assurance  that the  Company's  technology  or products  will not  infringe on a
patent owned by another person.  To the extent the Company  currently  relies on
unpatented proprietary technology,  processes and know-how and the protection of
such  property by  confidentiality  agreements,  there can be no assurance  that
others may not independently develop similar technology and know-how or that the
confidentiality will not be breached by an unrelated party.

However,  the  Company's  products  and the Por-Rok  products  are  protected by
trademarks in the United States and some products are protected by trademarks in
Canada and the United Kingdom.  The Company  currently relies upon laws on trade
secrets to protect its  confidential  and  proprietary  technology and know how.
There  can be no  assurance  that  competitors  will not  independently  develop
substantially  equivalent  proprietary  information  and techniques or otherwise
gain access to the Company's trade secrets.  Even if there is an infringement of
any of the  Company's  trade  secrets,  the cost of  enforcing  its rights in an
infringement  action could be  substantial  and would divert funds and resources
that would otherwise be available for other aspects of the Company's operations.

Need for  Qualified  Personnel.  In order to meet its business  objectives,  the
Company will need to recruit additional  marketing and manufacturing  personnel.
The Company will be required to compete for such personnel with companies having
greater financial and other resources than the Company. Since the future success
of the  Company  will be  dependent,  in part,  upon its  ability to attract and
retain qualified personnel, its inability to do so could have a material adverse
effect upon the business of the Company.

Absence of Dividends.  The Company has not paid any cash  dividends and does not
anticipate  paying any dividends in the foreseeable  future.  Earnings,  if any,
will be retained to fund  development and expansion.  There is no assurance that
the Company will at any time pay cash dividends.

Seasonality.  Although the Company anticipates that the substantial  majority of
its sales will be derived from products  used for  residential,  commercial  and
industrial repair of deteriorating concrete structures and floors, the Company's
products  will incur some  degree of  seasonal  slow down  during the three main
winter months of December, January and February.

No Assurance of Market  Making  Activity.  The Common  Shares of the Company are
presently quoted on the OTC Bulletin Board, a regulated  quotation  service that
captures and displays real-time quotes and indications of interest in securities
not listed on The Nasdaq Stock  Market,  or any U.S.  securities  exchange.  The
current trading ticker symbol for the Common Shares is "HARD".  The Company may,
but has not,  entered into any agreements with market makers to make a market in
the Company's  common  stock.  In addition,  any such market making  activity is
subject to the limits  imposed by the Act,  and the  Securities  Exchange Act of
1934, as amended,  ("Exchange Act"). Accordingly, no assurance can be given that
an active  market will always be available for the Common  Shares,  or as to the
liquidity of the trading  market for the Common  Shares.  If a trading market is
not maintained, holders of the Common Shares may experience difficulty in

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reselling  such Common  Shares or may be unable to resell them at all.  Any such
market in the Common Stock may be discontinued  at any time. In addition,  there
is no assurance  that the price of the Common Shares in the market will be equal
to or greater than the offering price hereof, whether or not the Company employs
market makers to make a market in the Company's stock.

     a.   General Business Development

The  Company  is a  corporation  formed  under  the laws of New York and has its
principal  place of business and  executive  offices  located at 67 Wall Street,
Suite 2001,  New York,  New York 10005,  telephone  212-825-9292.  Until May 11,
1999,  the  Company  was known as  Stratford  Acquisition  Corp.  and had been a
corporation  organized under the laws of Minnesota.  Effective May 11, 1999, the
Company merged into its wholly-owned  subsidiary,  Novex Systems  International,
Inc., a newly-formed New York corporation,  which was the surviving corporation.
The  Company  also  has  a  wholly-owned  operating  subsidiary,  Novex  Systems
International,  Ltd.  (formerly  known as Novacrete  Technology  (Canada) Inc.),
which is a company  registered  pursuant to the laws of the Province of Ontario,
Canada and is located at 2525 Tedlo  Street,  Unit B,  Mississauga,  Ontario L5A
4A8, telephone 905-566-0716 ("Novex Canada").

Prior to August 15, 1995, the Company was a dormant  corporation.  On August 15,
1998, the Company acquired from the inventor, the exclusive right to manufacture
and market a proprietary  admixture for the enhancement of cementitious products
now known as the "Novacrete  Admixture".  The Novacrete  Admixture is a blend of
various  materials  which  when mixed with  portland  cement and water  causes a
chemical  reaction  that creates a calcium  silicate  hydrate (CSH) paste binder
that has a very dense  microscopic pore structure.  This change in the molecular
matrix of the cementitious  product  increases the bonding between the CSH paste
and the  aggregates  that are  mixed  into the  formula  to  create a mortar  or
concrete  product.  By having a denser pore  structure,  the end product becomes
more durable and  resistant to chemicals  and water  penetration.  As such,  the
Novacrete  Admixture  causes  cement  to  chemically  react  in  a  manner  that
ultimately produces higher compressive, bonding, flexural and tensile strengths,
reduces shrinkage,  increases workability and, most importantly,  because of its
dense  pore  structure  results  in a  product  having  a higher  resistance  to
penetration of water and chloride ions from de-icing salts.

Upon acquiring the technology in 1995, the Company's initial plan was to conduct
further  research and development of the Novacrete  Admixture with the intention
of marketing the Novacrete Admixture and a line of pre-packaged  concrete repair
products using the Novacrete Admixture. In the two and one-half year period from
August  15,  1995  through  November,  1997 the  Company  underwent  a series of
management  changes,  generated no revenues,  incurred an accumulated deficit of
approximately $3,000,000 and was still in the early development stage.

On November 17, 1997, the Company made a major change in its business plan which
has  resulted  in  significant  advancements  in all  aspects  of the  Company's
operations.  With the implementation of a 60 Day Business  Development Plan that
was announced in December,  1997,  the Company's  new  management  increased the
number and caliber of its board of directors  and senior  management,  installed
industrial level manufacturing and packaging equipment and warehousing equipment
for raw materials and finished goods,  refurbished its executive  offices at its
operating plant,  constructed an internal testing  laboratory,  opened its first
U.S.  sales office in New Jersey and closed on a working  capital  financing for
$550,000.  The result of this business  plan allowed the Company to  manufacture
and package its Novacrete  products,  execute a sales and  marketing  program in
Canada and the East Coast of the United  States  leading the Company to book its
first sale in April 1998 of pre-packaged Novacrete Repair Products. Since that

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time,  the Company has  developed and marketed a line of eight  concrete  repair
products that it markets under the Novacrete name.

In  September  1998,  the  Company's  wholly-owned  subsidiary,   Novex  Systems
International, Ltd. ("Novex Canada") purchased all of the issued and outstanding
common stock of ARM PRO Inc.  ("ARM  PRO"),  located in Ontario,  Canada.  Since
1986, ARM PRO has manufactured  and marketed the trademarked  FIBERFORCE line of
polypropylene  fibres.   Polypropylene  fibres  are  blended  into  cementitious
products to provide secondary  reinforcement and reduce cracking. As part of the
Company's  overall plan to consolidate the operations of an acquired  company to
realize greater  operating  efficiencies,  and enable the Company to achieve its
targeted  gross margin of 50% of net sales,  the Company in December 1998 merged
the operations of ARM PRO into its Mississauga,  Ontario operating  facility and
closed ARM PRO's Teeswater, Ontario plant.

On March 25,  1999,  the Company  announced  that it entered  into a  definitive
agreement  with The  Sherwin-Williams  Company to purchase the Por-Rok  business
unit which is located in Clifton, New Jersey. Por-Rok manufacturers a well-known
line of grouting and concrete patching products that are distributed nationally.
The acquisition was completed on August 13, 1999.

The Company believes that the Por-Rok product line is a natural extension of the
Company's  line of concrete  repair and flooring  products that it markets under
the Novacrete name. By  diversifying  the array of products that the Company can
offer to end-users and to  distributors  of building  materials it will increase
sales of all products since end-users prefer to use one manufacturer's  products
in any given construction project and distributors  generally prefer to stock an
expanded rather than a limited product line.

The  Company is also  engaged in  discussions  with two other  manufacturers  of
specialized  building  materials  about the  prospects  of  acquiring  these two
companies and merging their two operations  into Por-Rok's New Jersey  facility.
At the time of this filing the  discussions  were ongoing and no material  terms
were being considered.  The Company  anticipates that it will close at least two
more  transactions  in the next fiscal year to expand the array of products that
the Company  offers and to increase its market share in the United States and in
Canada.

     b.   Financial Information About Industry Segments

On account of the Company's small size and limited product line as of the filing
of this Form 10-K, it does not presently account for its business  operations in
separate industry segments. The assets,  revenues and operating expenses are all
part of the Company's sole  operation and are dedicated to one business  segment
--the manufacturing and marketing of the Novacrete  Admixture,  Novacrete repair
and flooring products and the Fiberforce line of synthetic fibers.

Based upon its current  operations and its operating activity for the past three
fiscal years, the Company believes that its financial  information is adequately
presented in its audited financial statements and is cross-referenced  herein to
the  Company's  Consolidated  Balance  sheet  and  Consolidated   Statements  of
Operations appearing on pages F-3 and F-4, respectively.

Additionally, the financial information accounts only for sales derived from the
Arm Pro transaction  since the date of the acquisition on September 16, 1999 and
the not the  entire  fiscal  year of 1999.  As such,  the  financial  statements
exclude the sales of Fiberforce products in June, July and August of 1998, which
historically have been the three strongest months for sales of these products.


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     c.   Subsequent Events

In August, 1999, the Company acquired Por-Rok.  Por-Rok  manufacturers a line of
grouting and concrete patching products. The purchase price was $2.1 million and
was paid for in part from the funds  derived  from a secured term loan from Dime
Commercial  Corp. in the amount of $890,000 and a revolving  line of credit that
is secured by the accounts  receivable  and  inventory  generated by the Company
(excluding Novex Canada) in exchange for which the Company was required to issue
to Dime a warrant to purchase  233,365 warrants having an exercise price of $.25
per share and an exercise  period  commencing  upon issuance and  terminating in
September  2002.  The balance of the purchase  price was paid for with a secured
note in the amount of $1.3 million and 1 million shares of common stock.

     d.   The Company's Current Business Operation

The Company is engaged in the business of  manufacturing  and marketing  premium
building  product  materials  that fit into two  categories.  The first category
consists  of a line  of  polypropylene  concrete  reinforcing  fibers  that  are
marketed  under the  Fiberforce  tradename  and a  proprietary  cement-enhancing
admixture  that the Company will be  marketing  under the  tradename  Novacrete.
These  products  are  promoted  directly  to  ready-mix  and  pre-cast  concrete
manufacturers.   The  second  category  of  products   consists  of  a  line  of
pre-packaged  concrete repair products that are marketed to contractors directly
and also to distributors of building material products. (See Company Products)

The Company currently has its executive  offices at 67 Wall Street,  Suite 2001,
New York, New York 10005. The Company's  manufacturing  operations are conducted
through its  wholly-owned  subsidiary,  Novex Canada,  in a leased 12,500 square
foot facility located at Mississauga, Ontario (20 minutes west of Toronto). This
operating  facility  is  divided  into the three  areas:  2,500  square  feet is
allocated to offices and a research  laboratory;  4,000 square feet is dedicated
to the  manufacturing of the Company's  Novacrete line of cementitious  concrete
repair  products and the remaining  6,000 square feet is used to manufacture the
Fiberforce line of polypropylene fibers and for inventorying finished goods.

Until  the  Company  acquires  The  Por-Rok  Division,   all  manufacturing  and
distribution  of the Company's  products will continue to be  centralized in its
Novex Canada  facility.  To eliminate  excessive  shipping costs associated with
delivering small quantities of product,  the Company sells larger  quantities of
products (full  truckload  orders) to distributors  that  ultimately  resell the
product into local markets.  In addition,  the Company has employed the use of a
public  warehouse in New Jersey that  warehouses  and ships product on behalf of
the  Company  for a per diem  handling  charge.  The  Company  will  use  public
warehouses  in areas where the sales volume  justifies  the need to have product
readily  available  in a local  market,  but where  there is not an  established
distributor that stocks the Company's products.  With the acquisition of Por-Rok
the New Jersey public warehouse will no longer be necessary.

The Company  plans to expand its product line  significantly  over the next five
years by acquiring  companies that  manufacture  and market  compatible  premium
building  material  products  that have already  gained an  acceptable  level of
market  penetration.  The building  material industry is large and encompasses a
wide  variety of products,  services and  equipment.  The Company,  however,  is
interested in acquiring  manufacturers  of premium  flooring and concrete repair
products and related  accessory  products,  and cement enhancing  admixtures for
concrete.  These types of products  command  higher  margins  since they are not
commodity products and are principally sold based on the product's  added-value.
Because   these   products   are   usually   made  and   packaged  in  either  a
fully-integrated  or,  in  some  instances,   a  semi-integrated   manufacturing
facility, large volumes of product can

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be produced in short-time periods and with minimal amounts of labor.

The consolidation  strategy is designed to reap the cost reductions  afforded by
the elimination of excess  facilities and overhead,  and to build a full service
specialty  product line associated with one-stop  shopping,  which  professional
contractors  have come to prefer  for  convenience,  product  compatibility  and
liability reasons.

     e.   The Classification of Building Materials

Building  material  products are  classified  in  accordance  with  standardized
performance  criteria  established by the American Society of Testing  Materials
(ASTM).  The  basic  performance   characteristics   that  are  considered  when
classifying the types of building products that the Company sells are:

          (1)  Compressive strength

          (2)  Flexural strength (flexibility)

          (3)  Tensile strength (splitting)

          (4)  Bonding strength (adherence)

          (5)  Shrinkage

          (6)  Resistance to water penetration

          (7)  Durability in freeze/thaw cycles


The Company has a research laboratory located in its Novex Canada facility,  and
a full-time  cement  chemist that oversees the  development  of new products and
performs the technical analysis on products that the Company may acquire.

The Company  follows a standard  format for  developing  new  building  material
products.  The initial step in the development of a building  product entails an
analysis of the market for a product and the cost to manufacture the product. If
the market for a product  and the cost to  manufacture  it are  acceptable,  the
Company's laboratory personnel develop a trial formulation for the product. Once
a trial  formulation has been  developed,  a sample of the product is given to a
qualified  independent  testing  laboratory,  and the above 7 properties,  among
others, are tested pursuant to established ASTM guidelines.

Standard  testing  generally  requires the recording of the above  properties at
1,3,7,  and 28 day intervals from the beginning of the test.  Early test results
are monitored to determine  certain  performance  criteria,  such as a product's
compressive  strength  within 24 to 72 hours after it has been  installed.  This
result is  particularly  important to end-users  that need products that will be
used to  repair  areas  that have  little  down  time,  such as  hospitals,  gas
stations,  parking garages and other 24 hour  operations.  Higher strengths over
time are important where load bearing floor areas are involved, or in areas that
are exposed to aggressive industrial environments, like waste hauling stations.

If the 1-3-7-28 day results are acceptable,  a full batch of the product is made
and samples of the product are generally given to contractors to use the product
on small job sites to observe the  product's  performance  under  non-laboratory
conditions.  If the 1-3-7-28 day results are  unacceptable,  or the field trials
fail, the trial  formulation is reworked and resubmitted for further  laboratory
testing.  In  instances  where  only a  slight  modification  to  the  product's
formulation  is  required,  the need for  additional  laboratory  testing may be
unnecessary. If the field trials are acceptable,  technical data sheets, package
design and  marketing  materials are finalized and the product is then ready for
market.

The ASTM laboratory test results are an important validation of a product's

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performance capabilities.  However, until a product has performed satisfactorily
in a number of projects,  end-users are reluctant to use a product.  The cost to
correct a project on account of a product  failing and the  resulting  damage to
the reputation of the  professional  contractor or the  specifying  architect or
engineer are the underlying reasons for this resistance.  The Company's products
have  successfully  passed these laboratory tests and have just commenced sales.
However,   by   selling   these   products   in   conjunction   with  Por  Rok's
well-established   product   lines  will  help  the  Company  to  overcome  this
resistance.

Accordingly,  although the Company has been selling its line of concrete  repair
products under the tradename Novacrete, the Company may consider marketing these
products  in the  future  under the name of either  Por-Rok  or one of the other
tradenames owned by Por-Rok.

     f.   Marketing Organization

The Company  currently  has two  full-time  salespersons  who are located in New
Jersey  and  Mississauga,   Ontario,   respectively,   and  four  manufacturers'
representatives,  three of whom are  located in various  regions of the  eastern
part of the United States and one of whom is located in the Canadian province of
Alberta.  The Company is in the process of hiring another full-time  salesperson
in Canada to specialize in sales of the  Novacrete and Por-Rok  products,  since
the other salesperson is principally focused on sales of Fiberforce fibers.

With  the   acquisition  of  Por-Rok,   the  Company  will  inherit  eleven  new
manufacturers'  representative organizations that comprise 25 sales persons that
will give the Company  coverage  in all eastern  states and as far west as North
Dakota. (See Manufacturing and Distribution)

     g.   Manufacturing and Distribution

The Company  manufactures  and  distributes  all of its products  from its Novex
Canada  operating  facility.  This facility has the annual  capacity on a single
shift basis to produce  11,000,000 lbs. of Novacrete  product and  approximately
750,000 lbs. of Fiberforce product.

With the  acquisition  of the Por-Rok  Division the  manufacturing  of Novacrete
products will be  transferred  to the Por-Rok  facility.  This  fully-integrated
blending and packaging  facility is already packaging  products for distribution
through  building supply yards and retail outlets in packages ranging from 1 and
5lb.  plastic  containers to 50lb. bags and pails, and will have the capacity to
produce  over  24,000,000  lbs. on a single  shift  basis.  This will become the
Company's distribution center for eastern United States.

The   Company   has  two   full-time   salespersons   and   six   manufacturer's
representatives  that market the Company's  products.  With the  acquisition  of
Por-Rok the Company will  acquire  eleven more  manufacturer's  representatives.
Based on the  territories  that these  individuals  are  presently  covering the
Company would have the personnel to effectively  service the following  areas of
the United States and Canada:



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New England Region

Maine                               Massachusetts
New Hampshire                       Connecticut
Vermont                             Rhode Island

New York/Philadelphia Region

New York                            Delaware
New Jersey                          Maryland
Pennsylvania                        Washington, D.C.

Midwest Region

Iowa                                North Dakota
Indiana                             South Dakota
Michigan                            Iowa
Illinois                            Nebraska
Wisconsin                           Kansas
Minnesota

Southeast Region

Missouri                            North Carolina
Arkansas                            South Carolina
Mississippi                         Tennessee
Louisiana                           Alabama
West Virginia                       Georgia
Virginia                            Florida
Kentucky

Canada Distribution

Western Canada                      Eastern Canada

Manitoba                            Ontario
Saskatchewan                        Quebec
Alberta
British Columbia

     h.   A Brief History of the Admixture Technology

The  Company's  NovaCrete  products  resulted  from  its  search  for a  way  to
strengthen  cement-based  products without the addition of polymers.  The cement
chemist that  invented the  Company's  admixture  formula  intended to develop a
purely cementitious product that would equal the performance  characteristics of
polymer-based products, but which would be significantly cheaper to manufacture.

Over the past four years,  the Company has  expended  considerable  resources to
develop its proprietary  cement-enhancing  admixture into a commercially  viable
product.  In this  period,  the  Company  has  employed  the  services of two of
Canada's  largest  independent  testing  laboratories  and  has  worked  with  a
well-known  New  Jersey-based  laboratory  to  conduct  field  trials  using the
admixture in concrete.

To date,  the Company  has  successfully  developed  a version of its  admixture
technology that can be used in formulations for concrete repair products to

                                        8

<PAGE>



enhance the compressive, bond and flexural strengths of the product and increase
the  density of the  molecular  matrix of the  product so that is can resist the
penetration of erosive elements like water and deicing salts.

The Company is still developing a final formulation of its admixture  technology
that can be used in new concrete.  The Company conducted  extensive field trials
last Fall with a large ready-mix  concrete  producer and achieved very promising
results regarding the admixture's  ability to increase the strength of concrete.
Additional  laboratory  work  and  field  trials  will be  required  to make the
admixture  product  acceptable to the industry and cost  effective for ready-mix
producers.

Although the Company can manufacture and distribute its final admixture  product
for concrete in various sizes ranging from 25lb. bags to bulk packages  weighing
2,000lbs.,   it  is  strongly  considering  licensing  the  completed  admixture
formulation  for concrete to a major chemical  company that markets  products to
concrete  producers.  Most large  chemical  companies that service the ready-mix
industry have the  necessary  equipment to transport the chemicals and load them
into bulk containers  (silos) at ready-mix  plants.  In addition,  many of these
companies actually loan dispensing equipment to ready-mix producers to eliminate
any  complications  with respect to loading the chemicals into a concrete truck.
By licensing  the  admixture  technology  for new  concrete to a large  chemical
company the Company will eliminate  most, if not all of the  transportation  and
dispensing  complications  associated  with  marketing  chemicals  to  ready-mix
concrete producers.

     i.   Market  Trends  for  Performance  Enhancing  Admixtures  and  Building
          Materials

The demand for high performance concrete and concrete repair products is growing
at a dramatic  pace.  The catalyst for the increased  use of admixtures  and the
need for  higher  performance  products  stems  from the  increasingly  rigorous
specifications  for new construction and concrete  rehabilitation  work. Federal
and state departments of transportation are increasing the performance standards
that need to be met in new construction and for the repair and rehabilitation of
roads and  bridges in order to expand the life of the  structures  and to reduce
future maintenance.

Infrastructure  in  both  developed  and  developing  countries  is  aging,  and
governments  with  stringent  fiscal  constraints  are looking for effective and
durable  alternatives to costly  demolition and rebuilding.  Repairs relating to
natural  disasters are also adding to this demand.  Other special  applications,
including the storage of nuclear and hazardous  waste,  the shielding of workers
in nuclear  medicine  and  radiology,  and the  disposal of  chemical  and other
hazardous wastes, are creating demand for high performance products.

A   study   by   the   Freedonia   group   estimates   that   the   market   for
performance-enhancing   additives  for  cementitious  products  will  grow  8.2%
annually,  and reach $850  million in the U.S.  alone by the Year 2000.  At that
time  the  value of  world-wide  markets  for  these  products  will  exceed  $2
billion.(1)

The growth will be based in part on expected  increases  in  infrastructure  and
major construction spending. But it will also be driven by the increased use of

----------
(1)  Freedonia  Group Study reported in  Construction  Marketing  Today,  April,
     1997.

                                        9

<PAGE>



admixtures in all types of cement,  and concrete and "the growing  popularity of
value-added proprietary admixture products in place of lower-cost generics."(2)

Markets  for new  concrete  reflect  a similar  trend  toward  high  performance
concerns. High performance is also required in various specialty niches, such as
fast-setting  products for road repairs and other commercial  applications where
the cost of shutdown is very high, and impermeable  products for hazardous waste
disposal and radiation shielding for nuclear  applications,  to name a couple of
examples. With increasing environmental awareness, communities are now demanding
products that are safe to use and non-toxic.

The market for concrete and masonry  products has been increasing  substantially
in the United States. With the federally-funded Transportation Equity Act of the
21st Century (TEA 21) having been signed into law last year  approximately  $216
billion.  will be spent over the next six year  period,  1998-2003,  where up to
$173 billion is provided for highways and an additional  $41 billion for transit
projects.  This bill  increases  the level of  highway  funding by over 30% when
compared  to  the  previous   Federal  highway  bill,  the  Intermodal   Surface
Transportation   Efficiency  Act  (ISTEA).   Approximately   $19.5  billion  was
programmed for federal highway spending under ISTEA.  ISTEA was augmented by the
1995 National Highway System Act that provided for an additional $5.2 billion in
funding.  In addition,  TEA 21 provides that the revenues generated from the 4.3
cents per  gallon gas tax now be  deposited  into the  Highway  Trust Fund to be
spent for the intended purposes, the construction and rehabilitation of highways
and bridges.

In addition,  with low interest rates and low inflation,  and increasing  market
prices for  residential  and  commercial  real estate,  the  development  of new
residential and commercial units and the  rehabilitation of existing  structures
is expected to continue over the foreseeable future.

The  United  States  and Canada  are not the only  geographic  areas  engaged in
significant infrastructure spending. Concrete structures -- buildings,  bridges,
highways, dams -- all over the world are in need of repair. Stringent government
capital  budgets  inhibit  replacement  of all  structures.  Municipalities  are
continually  searching  for ways to extend the useful  life of these  structures
through patching,  refinishing, and protecting the existing work. The world-wide
market for cement-based  products to repair concrete  structures is projected to
be close to as high as $100  billion per year.  The  additive  component of this
market is conservatively estimated at more than 2% or $2 billion.(3)

     j.   Competition

The industry for building material products is highly fragmented and has various
classes of competitors.  Competition ranges from large multi-national  companies
to local  manufacturers.  Because  the  transportation  of heavy  products  like
building materials  involves sizeable shipping costs,  hundreds of manufacturers
of building  products have been able to sustain  market share in local  markets,
thus resulting in a fragmented industry. The Company would like to capitalize on
this  opportunity by acquiring  selected  companies in various  regions of North
America to gain: (I) premium building products, (ii) market share, and (iii) the

--------
(2)  Freedonia  Group Study reported in  Construction  Marketing  Today,  April,
     1997.

(3)  Based on Statistics Canada Report.

                                       10

<PAGE>



opportunity to consolidate into certain selected  operating  facilities a number
of acquired companies,  thereby eliminating excess overhead prevalent throughout
the  industry.  Until the Company can effect its business  strategy,  which will
eliminate some  competition,  at least in certain markets,  the Company believes
the following companies will be its primary competitors.

Brand                                       Major Competitors

Por-Rok                                      Conspec
Anchoring Cement                             Custom Builders
                                             Master Builders
                                             Quikcrete
                                             Sonneborn
                                             Sternson
                                             W.R. Meadows
                                             ChemMasters
                                             Rockite
                                             C.G.M.

Super Por-Rok                                (Same as above)
Exterior Anchoring
Cement

Por-Rok                                      (Same as above)
Aqua Plug

Por-Rok                                      (Same as above)
Concrete Patch

Por-Rok                                      Mapei
Halco Grout

Por-Rok                                      Mascrete
Lev-L-Astic                                  WW Henry
                                             Dependable
                                             Mapei
                                             Dap

Por-Rok                                      Dependable
Dash Patch                                   Mascrete
                                             WW Henry
                                             CGM Underlayment
                                             Taylor Vitrex
                                             Umasco

All Novacrete Products                       Sika
                                             Masterbuilders
                                             Mapei
                                             Dayton-Richmond

All Fiberforce  Products                     Pro Mesh
                                             Fibermesh
                                             Forta
                                             Dura-Fiber
                                             Euclid
                                             W. R. Grace


                                       11

<PAGE>



     k.   Product Description - Novacrete Admixture

The  admixture  and concrete  repair  product  businesses  are  well-established
throughout  the world.  There are various  types of admixture  products that are
used in  construction  products and the  applications  for these  admixtures are
extensive.  The Novacrete  Admixture is a non-metallic,  powder-based  admixture
that  consists of various raw materials  that when  combined  together and mixed
with cement and water provides a chemical reaction which gives the final product
increased compressive and flexural strength, reduced shrinkage,  greater density
and therefore better resistance to water and deicing salt  penetration,  greater
flow and workability and improves the bonding  characteristics  and setting time
for the product to fully-cure.

The Novacrete  Admixture  has the physical  characteristics  of a  greyish-white
powder.  Admixtures can be in powder form or liquid and can be used for multiple
or limited  purposes  such as  slowing  or  increasing  the  setting  time for a
product.  Because of the reactive  effect of the raw  materials in the Novacrete
Admixture, the Novacrete Admixture should only be incorporated into cement-based
products where the other materials in the product are known and generally,  only
after a sample  test has been  conducted  to  determine  the  appropriate  level
(dosage rate) of Novacrete  Admixture  that should be used in the final product.
This approach  substantially reduces the risk of improperly mixing the Novacrete
Admixture with chemically adverse substances that could cause product failure.

The Novacrete Admixture is manufactured at the Company's  wholly-owned operating
subsidiary,  Novacrete  Canada,  and is directly marketed by the Company's sales
personnel in 22lb.  bags or in bulk  quantities to  end-users,  which range from
manufacturers  of  cementitious  products such as ready-mix  concrete,  pre-cast
concrete,  brick,  paver,  cinder block and other  manufacturers of cement-based
pre-packaged  products.  The Company also blends  another  admixture,  synthetic
polypropylene   fibres,   into  its  Novacrete  MPR  concrete  repair  products.
Polypropylene fibres provide  secondary-reinforcement  to cement-based  products
and help reduce internal  cracking (map cracking) of a product that derives from
the heat that is created  within a  cementitious  product  during the  hydration
process.

Upon the  completion  of its research and  development  program on the Novacrete
Admixture,  and assuming the test  results  support the use of the  admixture in
industry  applications that require the use of high-performance  concrete (HPC),
the Company will seek to implement a marketing  strategy to penetrate the market
for HPC. HPC can be defined as concrete that has high  compressive  and flexural
strengths and high resistance to chloride and water  penetration.  Use of HPC is
increasing  as  federal  and state  agencies  demand  greater  product  life and
ultimate product strength for high-end uses such as roads, bridges,  dams, ports
and other  concrete  applications  that  have  exceptionally  high load  bearing
requirements like building foundations, parking garages and bridge decks.

     l.   Products

As of the  filing of this Form 10-K,  the  following  is a list of the  Por-Rok,
Novacrete and Fiberforce products marketed by the Company:



                                       12

<PAGE>



POR-ROK PRODUCTS (A Line of Grouts and Patching Products)

POR-ROK Anchoring Cement - non-shrink  expansion cement that requires only water
at the job site to  create a  pourable,  yet  durable,  anchoring,  patching  or
grouting compound.

SUPER  POR-ROK  Exterior  Anchoring  Cement -  non-shrink  expansion  cement for
exterior  applications  that  requires  only  water  at the  jobsite  to  create
exceptionally high early strengths in the first three days from installation.

POR-ROK Halco Grout - contains  expansive  agents and flow  enhancers to provide
high strengths yet exceptional flowability for ease of application.

POR-ROK Aqua Plug - durable water resistant  hydraulic  cement which sets in 3-5
minutes. Designed to stop leaks or running water, patch cracks and fill holes in
masonry  surfaces.  Can be used in interior and exterior surfaces and sets under
water.

POR-ROK Concrete Patch - requires only mixing of water at jobsite, will level or
smooth  most  concrete or masonry  surfaces  and can be used to repair and patch
spalled  concrete,  cracks in masonry,  broken steps and porches.  Sets in 40-80
minutes and is stronger  than  ordinary  concrete.  Can be used in interior  and
exterior surfaces.

POR-ROK Dash Patch - powder-based  product that when mixed with water bonds well
to  concrete,  wood or  plaster  that is used to  smooth  surfaces  prior to the
placement of tile, carpeting or wood. Fills cracks, ruts and score lines, strong
bond adhesion and no shrinkage.

POR-ROK Lev-L-Astic - used as an underlayment over concrete,  wood, quarry tile,
terrazzo,  prior to installing asphalt or vinyl asbestos,  tile,  linoleum,  and
other  types of floor  surfaces.  Eliminates  the need for felt  paper over wood
surfaces,  eliminates high spots on floor, improves bonding base to new tile and
linoleum.

NOVACRETE PRODUCTS

ADMIXTURES

Novacrete Adment 77-A (Novacrete Admixture formulation)

STRUCTURAL MORTARS

Novacrete MP - single  component,  non-shrink,  high  performance  multi-purpose
concrete and masonry restoration mortar

Novacrete MPR - single component,  synthetic fibre-reinforced,  non-shrink, high
performance structural repair mortar

Novacrete FC - single component, fast-cure,  non-shrink, high bond repair mortar
capable of achieving  3,480 psi in four hours. FC can be walked upon in a little
less  than one hour  from  installation  and  driven  over  within  two hours of
installation.



                                       13

<PAGE>



FLOORING SYSTEMS

Novacrete  DURATOP  -  single  component,   aggregate  filled,  trowel  applied,
heavy-duty  floor  topping  to  provide  abrasion  and  chemical  resistance  in
aggressive service environments.

Novacrete  FLOOR  UNDERLAYMENT  -  single  component,  self-leveling,   flooring
underlayment  designed for ease of installation and to provide a smooth covering
over a  deteriorated  floor surface to enable tile,  linoleum or carpeting to be
applied to the underlayment for smooth even finish.

FIBERFORCE  PRODUCTS - All Fiberforce  products are made from  polypropylene and
are cut into various  lengths and shapes.  The Company  currently  manufacturers
three types of fibers which are  categorized as  monofilament,  fibrillated  and
Fiberforce  #1. All fiber products are packaged in 1.0, 1.5 and 2.0 lb. bags and
are  promoted to the  ready-mix  concrete  industry  and are  designed to reduce
cracking and provide secondary reinforcement.

     m.   Raw Materials

An important  aspect of the Company's  business is having an adequate  supply of
raw materials.  The raw materials used in manufacturing the Novacrete Admixture,
the Novacrete Repair,  Fiberforce, and the Por-Rok products are available in the
United  States and  Canada.  The  Company  currently  purchases  most of its raw
materials  from five  principal  suppliers  located  in Canada and has access to
numerous  suppliers in the United States.  The raw materials are purchased on an
as needed basis and at market  prices at the time of purchase.  The Company does
not anticipate  that the prices and supplies of the raw materials will fluctuate
substantially  since the majority of the raw materials are commodity  items such
as sands and cement. The Company currently owns a substantial supply of the main
component of its Novacrete  Admixture  that its  warehouses  in its  Mississauga
facility and in a public commercial warehouse.

     n.   Intellectual Property Rights

The Company does not have patents on any of its technology or its products.  The
Company  received a  certificate  of  registration  for the use of the trademark
Novacrete from the Canadian  Intellectual  Property Office on June 15, 1997. The
Certificate  remains  in effect  until  June 5, 2012 and can be  renewed  by the
Company.  On March 3, 1998,  the Company  received a  Certificate  of  trademark
Registration No. 2,140,062 to use the trademark  Novacrete in the United States.
The term of the U.S. trademark registration is for ten years.

With the Company's  acquisition of Por-Rok in August 1999, the Company  acquired
the registered tradenames for all Por-Rok products currently being produced.

The  Company  has not  filed  an  application  for a patent  on its  proprietary
technology.  The Company  believes that the Por-Rok  tradenames and trademark of
its  brand  name,   Novacrete  and  Fiberforce   will  be  more  useful  in  the
commercialization  of its products.  The core technology that is used in each of
the Company's  products is not easily replicated and if patented will ultimately
become  public  information.  The Company  has  developed  internal  controls to
protect the confidentiality of its technology and does not believe that the lack
of legal patent  protection will impair its ability to effectively  compete with
other  competitors  of like  products or cause the Company to incur  unnecessary
risk of loss of the technology.


                                       14

<PAGE>



Since the Company  owns the  trademark,  Novacrete,  for fourteen and ten years,
respectively,  in Canada and the United States,  with each country  allowing for
additional extensions of time, the Company believes that it will have ample time
to establish  brand  recognition of the Novacrete name and product line. Even if
the Company had patent protection over its technology, it still assumes the risk
that a competitor may  misappropriate  the technology and that its only recourse
would be to commence  costly and time  consuming  litigation.  The  existence or
absence of a patent poses no commercial  disadvantage to marketing the Novacrete
products.

     o.   Seasonality

As part of the  construction  business,  the  Company  is  currently  subject to
seasonal cycles which results in a major slow down in its operations  during the
months of  November  through  February.  March  begins the  increase in business
activity  which  continues  through  November,  with the peak sales months being
April through September.  This seasonal cycle is attributable to the slowdown in
outdoor  construction  activity  in Canada and the  northeastern  portion of the
United States  during the winter  months.  On account of the  Company's  current
operating  status it will be  subject  to the  seasonal  effects  of the  winter
months,  however the Company  has  already  begun to recruit  agents to sell its
products  in the  southeastern  portion  of the U.S.  and will  engage in a very
active recruiting program to enroll agents in this territory.

     p.   Working Capital Requirements

Since the Company's  principal market for the foreseeable future will consist of
the seven  southern  provinces of Canada and the East Coast of the United States
it  will  experience  cash  flow  fluctuations  that  will  track  the  seasonal
fluctuations in the Company's  business due to the construction  slowdown in the
winter  months.  From March to October the Company will  experience  its highest
level of working  capital  requirements to sustain higher levels of inventory to
meet the anticipated demand for finished products during these months.  With the
slowdown of  construction  in the winter months the Company  anticipates it will
generally  require less than two-thirds of the amount of working capital,  since
sales will likely  decrease to this level of average  monthly  sales in the peak
months. For the period ending May 31, 1999 the Company experienced a fluctuation
in its  working  capital  requirements  since  it was  just  emerging  from  the
development  stage and only  owned the  Fiberforce  product  line for two months
prior to the winter slowdown period. However, for the fiscal year ending May 31,
2000,  the Company will be much less likely to experience a  fluctuation  in its
working  capital  requirements  to finance its operations on account of the less
seasonal  nature of the Por-Rok  products  and the  $750,000  revolving  line of
credit that the Company now has with Dime Commercial Corp. To offset its working
capital  demands in 1999,  the  Company  secured a $250,000  bridge  loan from a
shareholder to cover the cash  shortfall and entered into a factoring  agreement
with Montcap Financial  Corporation which also provided the Company with $70,000
advance that is secured by substantially all assets of the Company's subsidiary.

In the  fiscal  year  1999 the net cash  used in the  Company's  operations  was
approximately  $1.0  million.  The  amount  was  needed  to fund  the  Company's
expansion  of its  operating  facility and for  operating  expenses  for:  rent,
payroll,  new operating  equipment,  raw  materials,  research and  development,
professional fees and trade debts.



                                       15

<PAGE>



To cover its  working  capital  requirements  in 1999,  the  Company  sold a 10%
Debenture in February  1998 of  $550,000.  Had the Company not been able to sell
the  debenture  and  notes to  generate  working  capital  it  would  have had a
substantial  negative cash flow and would likely have had to formally reorganize
or cease its operations.

On September 4, 1998 the Company  sold a 9% $800,000  Debenture  that matures on
September 4, 2000 and a warrant to purchase  1,500,000 shares of common stock at
$.45 per share for a period  expiring on September 4, 2000.  From these proceeds
the Company used $610,000 to purchase ARM PRO and reserve the remaining $190,000
for  working  capital  and  transaction  expenses.  Upon  closing  the  ARM  PRO
transaction, pursuant to the definitive purchase agreement, ARM PRO was required
to have approximately $175,000 of cash, $100,000 in account receivable, $100,000
in inventory and total liabilities not to exceed $50,000.

Although the Company's general credit policy is to invoice customers on a thirty
day payment basis, to encourage customers to take larger volume orders it may in
limited  circumstances  allow  for  payment  of an  invoice  in sixty  days.  In
addition, although invoices are stated as being due in thirty days, it is fairly
common practice in the construction  products industry for contractor  customers
to pay  outstanding  accounts  payable over a 45-day period.  This delay results
from the contractor  having to submit invoices for work completed which includes
the cost of  materials  used on the  project.  Although the Company will be very
aggressive in allowing extending payment terms to customers where it will result
in  additional  sales of the  Company's  products,  extended  payment terms will
generally be discouraged.

     q.   Customer Dependence

On account of the Company  having just started to sell its  products  during the
later part of this fiscal period it cannot be deemed as dependent  upon a single
customer.  In the future the Company will not be dependent on one customer since
its marketing strategy is to diversify its sales through major distributors that
are located in various  geographical areas and to a large number of construction
professionals, such as engineers, architects, contractors, construction managers
and  end-users  all of whom will likely be  involved  in  separate  construction
projects.  In addition the Fiberforce  products are sold to various outlets none
of which account for more than 5% of Fiberforce  product sales,  and the Company
does not  anticipate  that any customer  will account for ten percent or more of
its annual sales in the coming fiscal year.

     r.   No Backlog Orders

The Company does not have any backlog orders.

     s.   Government Contracts

The Company  does not have any material  contracts  with the  Government  or any
government  agency and  therefore  does not have any  exposure to these types of
agreement.

     t.   Research and Development

In each of the past  three  fiscal  years  the  Company  has  incurred  expenses
relating  to the  research  and  development  of  its  Novacrete  Admixture  and
Novacrete Repair Products. In fiscal year 1999, the Company spent

                                       16

<PAGE>



approximately   $30,000  on  fees   payable  to  outside   independent   testing
laboratories that were engaged to conduct various test procedures to improve the
Novacrete products and incurred  approximately $60,000 in expenses for personnel
and laboratory  equipment.  In fiscal year 1998 the Company spent  approximately
$40,000 on fees payable to outside  testing  laboratories  to advance testing of
the Novacrete MP and  Novacrete  MPR products.  Other than for a brief period in
1997  in  which  the  Company  employed  the  services  of a  cement  technology
consultant for  approximately  three months,  the Company did not have technical
personnel on staff from January, 1997 through February, 1998 to conduct research
and development on new products. In 1996, the Company spent less than $20,000 on
fees payable to outside testing laboratories to advance testing of the Novacrete
MP and an old formulation for a Novacrete  Fast-Set product that the Company has
since abandoned and replaced with a new formulation  that will be marketed under
the name Novacrete FC.

     u.   Environmental Compliance

The Company does not  manufacture  products or use raw materials in its products
that are deemed to be subject to rules or regulations  relating to the discharge
of certain materials into the environment.  Although the Company has installed a
compressed-air  dust control system in its facility to maintain a higher quality
of air in its operating plant this system is not mandatory.  The system cost the
Company  approximately  $20,000 and operates  during the  processing  of certain
products  that contain raw  materials  that have a very low density and have the
physical characteristics of dust-like particles.

As part of the Por-Rok  acquisition,  a Phase I Environmental  Compliance Review
was conducted at Por-Rok's  Clifton,  New Jersey plant and no material  findings
were reported.

With all shipment of product the Company issues a material safety and data sheet
(MSDS) which describes the product and its components and precautionary measures
when using the product. Since the Company's products are environmentally safe it
expects to expend a nominal  percentage of its operating budget on environmental
compliance for the next fiscal year and for the foreseeable  future,  unless new
regulations are adopted by the governments of Canada or the United States.

     v.   Number of Employees

As of May 31, 1999, the Company, on a consolidated basis, employed ten full-time
employees.  Of the ten  employees,  two were located in the Company's  principal
executive  offices in New York City,  one was  located  at the  Company's  Cedar
Grove, New Jersey sales office and seven were located at the Company's operating
subsidiary, Novex Canada. Of the nine employees: four persons were in management
positions,  three  persons  were in plant  operations  and two  person  occupied
administrative  assistant positions.  With the Por-Rok acquisition,  the Company
will gain two management employees and five plant employees.

     w.   Financial Information About Foreign and Domestic Operations and Export
          Sales.

Although the Company manufactured its products through a wholly-owned
operating subsidiary located in Canada it does not believe that it will be
subject to any material risks attendant with it being a foreign operation.
The Canadian government is stable and democratic and the Company does not
foresee any changing conditions that would adversely impact the Company.  (See

                                       17

<PAGE>



Financial Information about Industry Segments).  To the contrary, with the
recent reduction of the Canadian dollars to the U.S. dollar the Company has
benefitted by preferential exchange rates and lower cost of operations.

     x.   The Company's Future Operations

          Private  Litigation  Reform  Act of  1995  provides  a "safe
          harbor" for forward-looking statements.  Certain information
          included  in this  memorandum  contain  statements  that are
          forward-looking,  such  as  statements  relating  to  future
          anticipated  direction of the Company,  plans for expansion,
          corporate acquisitions, anticipated sales growth and capital
          funding sources.  Such forward-looking  information involves
          risks and  uncertainties  that  could  significantly  affect
          anticipated  results in the future,  and  accordingly,  such
          results may even  materially  differ from those expressed in
          any  forward-looking  statements made by or on behalf of the
          Company.

Upon the  closing of the Por-Rok  transaction,  the Company  will  transfer  the
manufacturing of its Novacrete products from its Novex Canada operating facility
to  Por-Rok's  25,000  square  foot  facility  located in  Clifton,  New Jersey.
Por-Rok's  fully-integrated  manufacturing plant has the capacity to manufacture
approximately  2 million  lbs.  of product  per month on a single  shift,  which
translates  into  roughly  $8  million  per  annum in sales.  Currently  Por-Rok
manufacturers  5.5  million  lbs. of product,  or $1.8  million in revenues  per
annum.

Por-Rok's  facility  consists of three buildings  located on a 1.6 acre tract of
commercially-zoned land. The main building is 15,000 square feet, of which 3,000
square feet in dedicated to office space and a reception  area and the remaining
12,000 square feet in allocated to the manufacturing of Por-Rok products and the
warehousing of certain raw materials. The majority of raw materials used at this
facility  are stored in silos  affixed to the roof of the  building.  Through an
automated raw material batching system that is controlled by a plant supervisor,
the raw materials are fed through the silo system and into mixing blenders. When
the raw materials have been blended into a finished product,  the finished batch
is forced from the blender by compressed air into an automated  packaging system
that packages the products into 50lb.  bags. The bags are then manually  stacked
onto wood pallets and are prepared for shipping. In addition, certain quantities
of the  blended  finished  product  are  transported  in large  metal  bins by a
forklift to another  packaging  system that  packages  the blended  product into
1lb.,  5lb., 7lb. and 50lb.  pails.  Most of the smaller quantity pails are then
repacked  into  cardboard  boxes in  quantities  of 4-8  items  per  carton  for
distribution to hardware and retail outlets.

The other two buildings at the Por-Rok facility are  approximately  5,000 square
feet each and are used for  warehousing  supplies,  raw  materials  and finished
goods. In addition, there is another 10,000 square feet of undeveloped land that
could be used to  expand  the  manufacturing  and  warehousing  capacity  of the
Por-Rok facility.

By shifting the Novacrete  product  manufacturing to the Por-Rok  facility,  the
Company  will have  adequate  space in its Novex  Canada  facility to  inventory
Novacrete,  Por-Rok and Fiberforce products for distribution  throughout eastern
Canada.  The Por-Rok  facility will also be used to warehouse  Fiberforce  fiber
inventory that will be distributed in the United States. This arrangement will

                                       18

<PAGE>



enable both facilities to serve as distribution centers for all Company products
and  will  allow  for each  facility  and its  personnel  to  specialize  in the
manufacturing of select products.

     y.   Company's Plan to Increase Sales

Although an integral  component of the Company's business plan and future growth
will be the acquisition of targeted  companies and product lines in the building
materials industry,  the Company's operating strategy will be to expand sales of
all its products.  The Company will seek to expand its sales through a number of
initiatives each of which is discussed in detail in this section.

     1.   Systems Approach to Selling Building Materials

In 1998, the Company  conducted  extensive  "hands-on" market research which has
become the underlying  basis for the Company's  "systems  approach" to marketing
building materials. End-users prefer to purchase complete repair "kits" from one
manufacturer than to purchase isolated products from various  manufacturers.  To
serve   end-users  that  desire  to  purchase   products  that  are  compatible,
distributors of building materials prefer to stock the products of manufacturers
that produce a full line of products that are intended to be used together.

Responding to market preferences,  the Company's foremost goal this year will be
to grow and diversify the Company's product line.  Growing through  acquisitions
(versus solely by research and development)  will shorten the time period needed
to achieve  this goal,  and will  provide  the  Company  with the  advantage  of
marketing compatible products that have already gained commercial acceptance.

An  everyday  concrete  repair  project,  such  as the  worn  floor  of a  large
industrial plant, could require a surface bonding agent, a very durable concrete
repair product,  a floor hardener or smoother  topping  product,  and possibly a
cure or sealing product to protect the  installation  from damage from water and
chemicals.  The Company  would like to be in the position to offer its customers
all of these products.  They in turn, prefer to use products that are compatible
and are backed by the warranty of one manufacturer. By offering all the products
as a complete  repair  system under one warranty,  the Company  believes it will
increase  both  sales  of all  products  and its  ability  to  attract  stocking
distributors that prefer to handle complete product lines.

     2.   One Label, One Store

The Company's One Label,  One Store  marketing  program will be presented to all
distribution  outlets that currently  stock products  offered by the Company and
Por-Rok.

"One Label,  One Store"  essentially  means that the Company  will be offering a
diversified  line of products that can be used  together  under one warranty and
all of the  Company's  products  will be available in most  locations.  One stop
shopping will benefit the customer and the distributor  alike by eliminating the
customer's need to source products at various  locations.  By purchasing a wider
array of products from one  manufacturer,  distributors will be satisfying their
customers  needs,  eliminating the stocking  logistics of using multiple vendors
and will obtain volume discounts.

This program will be offered to the 300+ outlets that distribute Por-Rok
products and to these new distributors and retail outlets that the Company will
be pursuing. In March, the Company first introduced the One Label, One Store

                                       19

<PAGE>



program to The Home Depot and, at the  initiation of Home Depot's  headquarters,
the  Company  has  had  a  second  meet  with  the   Northeastern  USA  Division
merchandising  manager and has been approved to begin  marketing its  Fiberforce
line of  products in five Home Depot  stores in  Ontario,  Canada as soon as the
Company can  complete a packaging  design for retail  distribution.  The Company
currently  packages  its  Fiberforce  products  in bags of 1lb.  or  larger  for
distribution to ready-mix producers.

To gain early  participation  into the One  Label,One  Store program the Company
will:  (i) offer early entry price  discounts  for  distributors  that  purchase
additional   products   that  the  Company  will  be   offering,   (ii)  arrange
pre-scheduled  store visits to  demonstrate  the benefits of the new products to
the distributors' customers and employees, (iii) provide point-of-purchase (POP)
displays and other marketing  materials to assist the distributors's sale of the
new products, and (iv) coordinate mailings of marketing pieces on the One Label,
One Store program to the distributors's customers.

     3.   Improve Por-Rok's Sales Organization.

Por-Rok currently markets its products by using the services of 11 manufacturing
representatives.  There are no full-time sales personnel to coordinate the sales
and marketing function. The Company plans to dedicate one full-time sales person
to work with 11 manufacturer's  representatives  to adequately train them on the
Por-Rok and Novacrete product lines,  along with other products that the Company
plans to acquire  and develop  internally,  and to make  personal  calls to each
Por-Rok customer to promote the One Label, One Store program.  In addition,  the
local  manufacturer's  representative  will be responsible  for making  periodic
follow-up  calls to  monitor  the sales  activity  of the  Por-Rok  distribution
outlets in his territory.

In addition,  the Company plans to advertise its product line (including Por-Rok
products) in trade journals and at trade shows.

     4.   Architect and Engineering Representative

The Company plans to hire a technical salesperson to coordinate the introduction
of the Company's  products to architects,  engineers and contractors  that write
specifications  for construction  projects.  Having its products "speced" into a
job will  create  product  demand in that the  contractor  that is  awarded  the
project is required to use the specified product. In addition,  as the Company's
products begin to appear in construction  project  specifications,  distributors
will become more interested in stocking the Company's products as the demand for
the products becomes established.

In addition,  the Company  plans to hire a full-time  sales person in Canada and
engage the services of one or two more  manufacturing  representatives  to cover
the  territory  consisting  of Eastern  Canada.  The  Company  currently  uses a
manufacturers'  representative  located in the  Province of Alberta to cover the
Western provinces of Canada, principally Alberta.

     5.   Future Acquisitions

The Company is currently  considering  the  acquisition  of companies that would
expand the Company's product line into specialized  flooring and concrete repair
products, cures and seals, moisture protection products,  specialized industrial
grouts, bonding agents, and other accessory products.


                                       20

<PAGE>



     6.   New Retail Channels

As part of the  Company's  efforts to expand  sales of products in all  possible
distribution  channels,  the Company will work  aggressively to expand Por-Rok's
existing  retail  base by  offering  promotional  discounts  to  other  regional
hardware  outlets and purchasing  cooperatives  along with "big-box" stores like
Home Depot and Lowe's.

     7.   Performance Based Compensation

The  Company  will  increase  the  performance-based   compensation  of  the  11
manufacturers'  representative  organizations that it will acquire with Por-Rok.
By  increasing  the  actual  percentage  of  sales  that  will be paid to  sales
personnel as commissions  and by offering them the opportunity to participate in
other  performance-based  compensation  the Company believes it will be offering
the  incentives  needed to  motivate  its sales  force and reduce  attrition  by
develop long-term relationships with these individuals.

     Item 2. Properties

The Company's principal  executive offices are located at 67 Wall Street,  Suite
2001,  New York, New York 10005,  212-825-9292,  pursuant to a sublease that the
Company has entered into with Dowe, Capetankis and Priete the primary tenant and
a law firm in which  Janet L. Dowe,  spouse of Daniel W. Dowe is a partner.  Mr.
Dowe has no affiliation with the firm or any duties to the firm.

The Company's  subsidiary,  Novex  Systems  International,  Ltd.operates  from a
facility  housing its executive  offices and a 12,500 square foot  manufacturing
facility located at 2525 Tedlo Street, Unit B, Mississauga,  Ontario, Canada L5A
4A8,  905-566-0716.  This facility is subject to a five year lease commencing on
May 1, 1997 and  expiring  on April 30,  2002.  The annual  lease  payments  are
$62,500 (CDN).

Upon the closing of The Sherwin-Williams  Transaction,  the Company will own all
the real  property,  buildings  and personal  property  being  located 16 Cherry
Street, Clifton, New Jersey 07014, 973-777-2307. The real property consists of a
1.58 acre tract of land with three separate buildings  consisting  approximately
of 15,000, 6,000 and 5,000 square feet, respectively.

In June,  1998 the  Company  entered  into a lease  agreement  to lease  offices
located at 98 Sand Park Road, Cedar Grove, New Jersey,  March, for a monthly sum
of $500,  973-571-0930.  This lease was on a month-to-month basis and expired in
August 1999 at which time the Company  acquired the Por-Rok facility in Clifton,
New Jersey, and relocated its Cedar Grove office to Clifton.

     Item 3. Legal Proceedings

On August 12, 1997, a shareholder, Mel Greenspoon, commenced an action against
the Company and its former President, Mr. A. Roy MacMillan, to enjoin the
Company and Mr. MacMillan from taking any action that would restrict the sale
of common stock that he allegedly owns. The Company has raised several defenses
to this action and believes the lawsuit is without merit.  Mel Greenspoon vs.
Stratford Acquisition Corporation, et. al., Ontario Court (General Division),
Index No. 97-CV-126814.



                                       21

<PAGE>



Item 4. Submission of Matters to a Vote of Security Holders

At the  Annual  Meeting of  Shareholders  that was held on April 29,  1999,  the
following proposals were submitted to a vote of the shareholders and approved by
the requisite number of votes.

I.   THE ELECTION OF DIRECTORS:

                    Nominees                                 Term
                    --------                                 ----
        Class 1: Edward J. Malloy                              1
        Class 2: William K. Lavin                              2
        Class 3: Daniel W. Dowe                                3
                 Douglas S. Friedenberg                        3

II.  A proposal to change the name of the  Company  from  Stratford  Acquisition
     Corp. to Novex Systems International, Inc.

III. Proposals  to  adopt  various  amendments  to  the  Company's  Articles  of
     Incorporation:

     A.   authorizing the Board of Directors to issue preferred stock.

     B.   authorizing the Board of Directors or 75% of the outstanding shares to
          amend the By-Laws of the Company;

     C.   authorizing the Chairman of the Board or the Secretary  within 10 days
          of  receipt  of a  written  request  from a  majority  of the Board of
          Directors to call a special meeting of shareholders;

     D.   authorizing  the Board of Directors to increase to no more than twelve
          or  decrease  to no less than  three the  number of  directors  of the
          Company and to establish a classified board of directors;

     E.   permitting  75% of the  outstanding  shares to remove a  director  for
          cause  only and only at an annual or special  meeting of  shareholders
          called for that purpose;

     F.   authorizing  the Company to limit the personal  liability of directors
          to the maximum extent permitted by law;

     G.   authorizing   the  Company  to  indemnify  the  officers,   directors,
          employees and agents of the Company to the maximum extent permitted by
          law; and

     H.   requiring the  affirmative  vote of 75% of all  outstanding  shares to
          make,  amend or repeal any provision in the Articles of  Incorporation
          relating  to any of  the  foregoing  proposed  resolutions  which  are
          adopted at the meeting.

IV.  A proposal to redomesticate  the Company from the State of Minnesota to the
     State of New York by way of a merger of the Company  into its  wholly-owned
     subsidiary, Novex Systems International, Inc.

V.   A proposal to approve and ratify the appointment of Feldman Sherb Ehrlich &
     Co.,  P.C.  (now  known  as  Feldman  Sherb  Horowitz  & Co.,  P.C.) as the
     Company's independent auditors.


                                       22

<PAGE>



PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

The Company's common stock,  $.001 par value, is traded on the  Over-the-Counter
Bulletin  Board  ("OTC")  operated by the  National  Association  of  Securities
Dealers  under the  ticker  symbol  HARD.  The tables  present  the high and low
closing  bid prices for each of the four  quarters in the fiscal year ending May
31, 1999.  The quotations  reflect  interdealer  prices without retail  mark-up,
mark-down or commissions and may not necessarily  represent actual transactions.
The  Company's  common stock became  actively  traded in July,  1995. On May 31,
1999,  the closing bid price was $.20. The Company has paid no cash dividends in
the fiscal  year ended May 31,  1999 and does not expect to change its  dividend
policy in the foreseeable future.

                     Quarterly Common Stock Bid Price Ranges

Quarter                   High              Low              Last Day of Quarter
-------                   ----              ---
1st                       $.50              $.27             August 31, 1998
2nd                       $.36              $.19             November 30, 1998
3rd                       $.20              $.13             February 28, 1999
4th                       $.38              $.13             May 31, 1999

Quarter                   High              Low              Last Day of Quarter
-------                   ----              ---
1st                       $.43              $.24             August 31, 1997
2nd                       $.52              $.25             November 30, 1997
3rd                       $.28              $.19             February 28, 1998
4th                       $.77              $.20             May 31, 1998

The number of shares of common stock issued and  outstanding  as of May 31, 1999
and May 31,  1998  were  15,250,771  and  11,965,646,  respectively.  On a fully
diluted  basis,  the number of shares of common stock issued and  outstanding on
May 31, 1999 was 20,918,047.  The Company has approximately  1,200  shareholders
holding stock in record and nominee name.



                                       23

<PAGE>



Item 6. Selected Financial Data

This  table  should  be read in  conjunction  with  the  consolidated  financial
statements and Management's  Discussion and Analysis of Finanical  Condition and
Results of Operations, provided elsewhere herein.


                                                Year End May 31,
                                   ----------------------------------------
                                       1999          1998          1997
                                   ------------  ------------  ------------

Net Sales(4):                         $321,311        $9,073            $0
Loss from
operations:                        ($1,181,253)    ($ 995,653) ($2,288,031)

Net loss from
operations
per weighted-average
share of common stock
outstanding:                             ($.10)        ($.10)         (.24)

Total Assets:                         $656,058      $318,540      $219,533

Long-Term Obligations:                $772,582            $0      $315,000

Cash Dividends:                             $0            $0            $0

Item 7. Management's Discussion and Analysis of Financial Condition and
        Results of Operations

Results of Operations

1999 vs. 1998

The fiscal  year ending May 31, 1999 was the first year in which the Company was
not in the  development  stage for the entire  year.  In  addition,  the Company
closed one  acquisition,  Arm Pro, Inc., and signed another contract to purchase
Por-Rok  which  transaction  closed after the fiscal year on August 13, 1999. In
this past year the  Company  generated  $321,311  in Net  sales  which  excludes
Fiberforce  sales during the first  quarter,  which is the strongest  period for
fiber sales, on account of the acquisition  having closed on September 16, 1998.
The Company generated a loss from operations of $1,181,253 of which $122,315 was
attributable to non-cash stock compensation.

As the operating  analysis  indicates the Company has formally  emerged from the
development  stage but was still required to rely on funds from external sources
to cover its cash shortfall from operations. To maintain a positive cash balance
the Company upon the  acquisition of Arm Pro,  Inc.'s common stock,  the Company
acquired  assets that  included the bank  accounts  owned by Arm Pro which had a
balance of $158,000 at the closing.  This cash,  along with the $175,000 balance
from the  $800,000  debenture  that  was sold to  purchase  Arm  Pro,  Inc.  for
$610,000,  plus transaction expenses, was used to fund the Company's operations.
To cut costs the employment of four persons having occupied  administrative  and
sales  positions  were  terminated.  The increase in general and  administrative
costs of approximately $400,000 is primarily due to the ArmPro acquisition.

In the 1999 fiscal period,  other than for  approximately  $75,000  derived from
sales of Novacrete products,  sales were generated from the Company's Fiberforce
line of products. Despite the lower than expected level of sales in what was

--------
(4)  The Company was in the development stage until Spring 1998.

                                       24

<PAGE>



first  post-development  stage year of operation  for  NovaCrete  products,  the
Company did exceed its targeted gross margin of 60% of net sales by generating a
65% gross margin, or $208,006 on sales of $321,311.

On May 31,  1999 the  Company  had  $252,785  in current  assets and  $80,914 of
property and equipment  and goodwill of $316,300.  The increase in good will was
attributable  to the excess of the purchase price for Arm Pro, Inc. over the net
assets acquired in the transaction.

As of May 31,  1999,  the Company had  $221,707 in  inventory.  Of this  amount,
$113,288  consisted of raw materials,  $3,217  consisted of work in progress and
$105,202  consisted of finished goods. A substantial  amount of the raw material
inventory  consists of the 600,000 lbs. of one raw material  that is used in the
Novacrete  Admixture.  The finished goods  inventory  consists of 55lb.  bags of
Novacrete  Repair  Products  that are stacked on wood  pallets  with each pallet
containing 56 bags and bags of Fiberforce  products that are packed in cardboard
boxes.  In the  increase in inventory  from was  primarily  attributable  to new
inventory of Fiberforce products and a build up of Novacrete products.

The Company had  $1,579,444 in total  liabilities  at the end of the fiscal year
which was an increase of 119% over the prior year.  The majority of the increase
in  liabilities  resulted from the Company's sale of an $800,000 note to acquire
Arm Pro,  Inc.  and a note for  $250,000  that  was  sold to the  holder  of the
$800,000 note to provide additional working capital to the Company.

As part of the Por-Rok  transaction,  the holder of the $800,000  note agreed to
convert the  principal  amount of the note into common  stock at $.17 per share.
The $250,000  working capital note was to be satisfied in full from the proceeds
of the $750,000 line of credit that the Company secured on August 13, 1999.

The increase in accounts payable and accrued expenses was directly  attributable
to the Company's expansion of its operations in the current fiscal year.

As part of the Por-Rok  transaction,  the current  portion of long-term  debt of
$393,548 net of the $250,000  working capital note will be converted into common
stock. (See Subsequent Events.)

1998 vs. 1997

After the senior management change in November,  1997, the Company significantly
advanced its plans to move from the development stage to the operating stage. On
March 15, 1997 the Company  officially began commercial  levels of production of
its Novacrete  products and recorded its first truckload  shipment of product in
April,  1998,  which was to a construction  products  distributor in Canada.  In
addition in May,  1998,  the Company  sold its first  truckload  of product to a
distributor in the United States. As a result of this activity, which began just
two and  one-half  months  prior to the close of this  fiscal  year the  Company
recorded $9,073 in gross revenues for the one truckload sales that took place in
April.  The  truckload  that was ordered in May was not shipped until early June
and appears as revenue in the first  quarter of the 1999 fiscal  year.  Although
this  increase in gross  revenues  represents a 100% increase over the operating
results in 1997, the percentage  increase  should be viewed in light of the fact
that the Company  recorded $0 in gross  revenue in the previous  fiscal year and
had very little  capability in the previous year to sell its products,  although
it did have inventory for sale.

In 1998,  the  Company  had  $122,134  in  inventory.  Of this  amount,  $76,276
consisted  of raw  materials,  $440  consisted  of work in process  and  $45,418
consisted of finished goods. A substantial  amount of the raw material inventory
consists of the 600,000 lbs. of one raw material  that is used in the  Novacrete
Admixture.  The finished  goods  inventory  consists of 55lb.  bags of Novacrete
Repair Products that are stacked on wood pallets with each pallet  containing 56
bags.

From June 1, 1997 to January,  1998 the Company's operations were funded through
sales of its common stock to affiliated and non-affiliated parties. In December,
1997, the Company under the direction of its current President and

                                       25

<PAGE>



Chief Executive  Officer announced a 60 Day Plan to advance the Company from the
development stage. In February,  1998, the Company sold a 10% $550,000 Debenture
that  matured on October  31,  1998,  to three  non-affiliated  persons who also
received  warrants to purchase  1,100,000  share of common stock at the exercise
price of $.30 per share for a three year period.  The proceeds of this debenture
were used principally to purchase the industrial  blending and bagging equipment
that was  installed in the  Company's  operating  subsidiary  in March 1998,  to
renovate the  Company's  offices and for working  capital to fund the  Company's
operations until sales of its product could materialize.

Operating  costs  relating to general and  administrative  cost  decreased  from
$927,106 in 1997 to $810,516 in 1998 or 12% from the previous year. The decrease
in operating costs was attributable primarily to the reduction of personnel from
November, 1997 to February, 1998, when the Company began to increase its payroll
with new personnel and with better  management  of the Company's  resources.  In
addition  non-cash  costs  attributable  to the  issuance of stock  compensation
decreased  substantially  in 1998 to $180,405  when  compared to the  $1,360,580
incurred in 1997.  The Company  fully  expects this trend to continue  since new
management  has  terminated the stock option plan that was initiated in 1996 and
which  resulted in the  excessive  issuance of common stock to insiders at below
market prices. In 1998, the Company incurred $17,548 of interest expenses versus
$12,917 in the  previous  year and  $15,267 of foreign  currency  losses  versus
$3,144 in the previous year. In addition the Company  amortized debt discount of
$84,535 in 1998 which  resulted  from the issuance of warrants to holders of the
debenture that was sold in February, 1998.

The net result of  operations  increase  in  operating  expenses  over  revenues
resulted  in a loss from  operations  of  $1,112,594  as compared to a loss from
operations of $2,303,778 in 1997.

On  account  of the  changes  that the  Company  made to  expand  and  equip its
operating  facility  and  to  recruit  experienced   personnel  to  oversee  the
technical,  operational and marketing aspects of the Company's  business and the
closing of the pending ARM PRO acquisition  (See Subsequent  Events) the Company
believes  that the fiscal year  ending May 31,  1999,  could  result in material
increases in revenue.

Liquidity and Financial Resources

The Company  ended the 1999 fiscal year with nominal  liquidity and a $1,181,253
in operating losses.  However,  since the Company has begun to sell its products
in commercial  quantities to large distributors of construction  products and to
ready-mix  concrete  producers it  anticipates  that it will have  substantially
improved its liquidity from  operations to cover its expenses.  In addition,  as
part of the Por-Rok  acquisition the Company obtained a $750,000 secured line of
credit from Dime Commercial Corp. With the Por-Rok  acquisition the Company will
also be acquiring a mature line of products  having a historical  level of sales
in the $2  million  range,  net income of  $201,000  and  positive  cash flow of
$350,000.  Based on the Company's  targeted gross margin of 60% of net sales the
Company  will need to generate  approximately  $3,000,000  of gross  revenues to
break-even   before   interest  and  debt   retirement.   Although  the  Company
substantially under performed this level of sales in 1999, the Arm Pro, Inc. and
Por-Rok  acquisitions  along with the additional year of marketing the Novacrete
products are expected to significantly enhance the Company's prospects for sales
in 2000.



                                       26

<PAGE>



In  September,  1998 the Company sold a 9% $800,000  Debenture to an entity that
had purchased $500,000 of the Debenture that was sold by the Company in February
1998.  The  holder  agreed to  convert  the  principal  amount  of the  $500,000
debenture which was due to mature on October 31, 1998 into the Company's  common
stock at a rate equal to the average of the eleven lowest closing trading prices
during the month of October, 1998.

Of the $800,000 note,  $610,000 was used to purchase ARM PRO Inc. The balance of
the proceeds was used for working capital, transaction expenses and primarily to
move the ARM PRO operations to the Company's Mississauga Canada facility.

In  addition,   Montcap   Financial   Corporation   advanced  to  the  Company's
wholly-owned  subsidary  $70,000 that is secured by substantially all the asests
of the Subsidiary.  One director loaned the Company $145,000 in notes during the
summer  of 1998 to  assist  with  cashflow  shortfalls  prior  to the  Company's
acquisition of Arm Pro and the Company received a bridge loan of $250,000 during
February 1999. (See Footnotes to Financial Statements)

Inflation and Changing Prices

The Company  does not  foresee  any risks  associated  with  inflation  or price
increases in the near future. In addition the raw materials that are used in the
manufacturing  of the  Company's  products are  available  locally  through many
sources and are generally commodity items.  Because the Company's operations are
in Canada,  the  devaluation of the Canadian  dollar against the U.S. dollar has
allowed the Company to  manufacture  its products less costly for the sales made
in the United  States and that any funds raised  through the sale of  securities
are U.S. dollar  denominated and then transferred to the Canadian  subsidiary at
favorable  exchange rates. As such, while the Company has exposure to inflation,
in  the  very  near  future  it  does  not  believe  that  inflation  will  bear
significantly on its financial position.

Year 2000 Compliance

Many currently  installed  computer  systems and software  products are coded to
accept  only  two-digit  entries  to  represent  years in the date  code  field.
Computer  systems and products that do not accept  four-digit  year entries will
need to be  upgraded or replaced  to accept  four-digit  entries to  distinguish
years  beginning  with 2000 from prior  years.  Management  is in the process of
becoming  compliant  with the  Year  2000  requirements  and  believes  that its
management  information  system will be compliant on a timely basis. The Company
currently does not anticipate that it will experience any material disruption to
its operations as a result of the failure of its management  information  system
to be Year 2000  compliant.  There can be no assurance,  however,  that computer
systems operated by third parties,  including  customers,  vendors,  credit card
transaction  processors,  and financial  institutions,  with which the company's
management information system interface will continue to properly interface with
the company's system and will otherwise be compliant on a timely basis with Year
2000  requirements.  The Company  currently is developing a plan to evaluate the
Year 2000 compliance  status of third parties with which its system  interfaces.
Any failure of the  Company's  management  information  system or the systems of
third  parties  to timely  achieve  Year 2000  compliance  could have a material
adverse effect on the company's  business,  financial  condition,  and operating
results.  The Company has not yet  established a  contingency  plan in the event
that it is unable to correct the Year 2000 problem.


<PAGE>


Item 8. Financial Statements and Supplementary Data
                                                                   Page

Index to Consolidated Financial Statements                         F-1

Independent Auditors Report                                        F-2

Financial Statements:

Consolidated Balance Sheets as of May 31, 1999 and 1998            F-3

Consolidated Statements of Operations for the years ended          F-4
May 31, 1999, 1998 and 1997

Consolidated Statements of Changes in Shareholders' Equity         F-5
(Deficiency) for the years ended May 31, 1999, 1998, and 1997

Consolidated Statements of Cash Flows for years ended May 31,      F-6
1999, 1998 and 1997

Notes to Consolidated Financial Statements                         F-7 - 21

Financial Statement Schedules
-----------------------------

Schedule II - Valuation and Qualifying Accounts                    F-22

Schedules not listed above have been omitted because they are
not applicable or are not required or the information
required to be set forth therein is included in the Consolidated
Financial Statements or Notes thereto.



                                       27


<PAGE>



                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
              (Formerly Stratford Acquisition Corp. and Subsidiary)

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


                                                                          Page

Independent Auditors' Report                                              F-2

Consolidated Balance Sheets
        as of May 31, 1999 and 1998                                       F-3

Consolidated Statements of Operations
       for the years ended  May 31, 1999, 1998 and  1997                  F-4

Consolidated Statement of Changes in Shareholders' Equity (Deficiency)
       for the years ended May 31, 1999, 1998, and 1997                   F-5

Consolidated Statements of Cash Flows
       for the years ended May 31, 1999, 1998 and 1997                    F-6

Notes to Consolidated Financial Statements                                F-7-21


Financial Statement Schedules

Schedule II - Valuation and Qualifying Accounts                           F-22

  Schedules not listed above have been omitted because they are not applicable
  or are not required or the information required to be set forth therein is
  included in the Consolidated Financial Statements or Notes thereto.




                                       F-1

<PAGE>


                          INDEPENDENT AUDITORS' REPORT


To the Shareholders and Board of Directors
Novex Systems International, Inc. and Subsidiary

We have audited the  accompanying  consolidated  balance sheets of Novex Systems
International,  Inc. and Subsidiary  (Formerly  Stratford  Acquisition Corp. and
Subsidiary) as of May 31, 1999 and 1998 and the related consolidated  statements
of operations,  changes in shareholders'  equity (deficiency) and cash flows for
the years ended May 31, 1999, 1998, and 1997. We have also audited the financial
statement  schedule  on page F-22.  These  financial  statements  and  financial
statement  schedule are the  responsibility  of the  Company's  management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements and financial statement schedule based on our audits.

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, the consolidated  financial statements referred to above present
fairly, in all material respects,  the consolidated  financial position of Novex
Systems International, Inc. and Subsidiary (Formerly Stratford Acquisition Corp.
and Subsidiary) as of May 31, 1999 and 1998 and the consolidated  results of its
operations,  changes in shareholders' equity (deficiency) and cash flows for the
years ended May 31, 1999,  1998 and 1997 in conformity  with generally  accepted
accounting  principles.  In addition,  in our opinion,  the financial  statement
schedule   referred  to  above,   when  considered  in  relation  to  the  basic
consolidated  financial  statements  taken as a whole,  present  fairly,  in all
material respects, the information required to be included therein.


                                          /s/ Feldman Sherb Horowitz & Co., P.C.
                                          Feldman Sherb Horowitz & Co., P.C.
                                          Certified Public Accountants

New York, New York
September 8, 1999

                                       F-2

<PAGE>


                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
              (Formerly Stratford Acquisition Corp. and Subsidiary)
                           CONSOLIDATED BALANCE SHEETS


                                     ASSETS

<TABLE>
<CAPTION>
                                                                     May 31,
                                                          --------------------------
                                                             1999            1998
                                                          -----------    -----------
<S>                                                       <C>            <C>
CURRENT ASSETS:
     Cash and cash equivalents                            $     1,788    $    49,108
     Accounts receivable, net of allowance for doubtful        20,690          9,250
         accounts of $890 in 1999 and $0 in 1998
     Inventory                                                221,707        122,134
     Other receivables                                           --           17,367
     Prepaid expenses and other current assets                  8,600          2,801
                                                          -----------    -----------

         Total Current Assets                                 252,785        200,660

PROPERTY AND EQUIPMENT, net of
     accumulated depreciation and amortization                 80,914        106,598

GOODWILL, net of accumulated amortization                     316,300           --

OTHER ASSETS                                                    6,059         11,282
                                                          -----------    -----------

                                                          $   656,058    $   318,540
                                                          ===========    ===========

                    LIABILITIES AND SHAREHOLDERS' DEFICIENCY

CURRENT LIABILITIES:
     Due to factor                                        $    56,700    $      --
     Current portion of long term debt                        393,548        520,470
     Accounts payable                                         241,424         84,968
     Advances from shareholder                                   --           37,000
     Accrued interest                                          63,729         17,515
     Accrued expenses and other current liabilities            51,461         59,632
                                                          -----------    -----------

         Total Current Liabilities                            806,862        719,585
                                                          -----------    -----------

COMMITMENTS AND CONTINGENCIES

LONG TERM DEBT, net of current portion                        772,582           --

SHAREHOLDERS' DEFICIENCY:
     Common stock -  $0.001 par value
         50,000,000 shares authorized
         15,250,771 and 11,965,646 shares
         issued and outstanding, respectively                  15,251         11,966
     Additional paid-in capital                             4,386,387      3,519,673
     Accumulated deficit                                   (5,325,024)    (3,932,684)
                                                          -----------    -----------

         Total shareholders' deficiency                      (923,386)      (401,045)
                                                          -----------    -----------

                                                          $   656,058    $   318,540
                                                          ===========    ===========
</TABLE>

                 See notes to consolidated financial statements.

                                       F-3
<PAGE>


                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
              (Formerly Stratford Acquisition Corp. and Subsidiary)
                     CONSOLIDATED STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                                                        Year ended May 31,
                                                           --------------------------------------------
                                                               1999            1998         1997
                                                           ------------    ------------    ------------
<S>                                                          <C>             <C>              <C>
NET SALES                                                  $    321,311    $      9,073    $       --
COST OF GOOD SOLD                                               113,305            --              --
                                                           ------------    ------------    ------------
GROSS PROFIT                                                    208,006           9,073            --
                                                           ------------    ------------    ------------

OPERATING EXPENSES:
     General and administrative costs                         1,211,760         810,516         927,106
     Depreciation and amortization                               55,184          13,805             345
     Stock compensation costs                                   122,315         180,405       1,360,580
                                                           ------------    ------------    ------------
         TOTAL OPERATING EXPENSES                             1,389,259       1,004,726       2,288,031
                                                           ------------    ------------    ------------

LOSS FROM OPERATIONS                                         (1,181,253)       (995,653)     (2,288,031)
                                                           ------------    ------------    ------------

OTHER INCOME (EXPENSES):
     Interest income                                                335             409             314
     Interest expense                                           (82,730)        (17,548)        (12,917)
     Stock issued for payment of interest expense               (15,175)           --              --
     Amortization of debt discount                             (146,674)        (84,535)           --
     Foreign currency gain (loss)                                33,157         (15,267)         (3,144)
                                                           ------------    ------------    ------------
        TOTAL NET OTHER EXPENSES                               (211,087)       (116,941)        (15,747)
                                                           ------------    ------------    ------------

NET LOSS                                                   $ (1,392,340)   $ (1,112,594)   $ (2,303,778)
                                                           ============    ============    ============

BASIC NET LOSS PER COMMON SHARE                            $      (0.10)   $      (0.10)   $      (0.24)
                                                           ============    ============    ============

WEIGHTED AVERAGE NUMBER OF COMMON
      SHARES OUTSTANDING                                     13,720,171      11,472,508       9,590,212
                                                           ============    ============    ============
</TABLE>



                 See notes to consolidated financial statements.


                                      F-4

<PAGE>

                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
              (Formerly Stratford Acquisition Corp. and Subsidiary)
      CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIENCY)


<TABLE>
<CAPTION>

                                                                Common Stock            Additional
                                                        --------------------------        Paid-in      Accumulated
                                                          Shares          Amount          Capital         Deficit          Total
                                                        -----------     -----------     -----------     -----------     -----------
<S>                                                      <C>            <C>             <C>             <C>             <C>
BALANCE, May 31, 1996                                     7,801,950     $     7,802     $   975,494     $  (516,312)    $   466,984

Sale of common stock                                      1,513,500           1,514         266,015            --           267,529
Issuance of common  stock
    for services                                            626,531             627       1,171,287            --         1,171,914
Issuance of options
    for services                                               --              --           128,666            --           128,666
Issuance of common  stock
    for compensation                                        171,400             171          59,829            --            60,000
Net loss                                                       --              --              --        (2,303,778)     (2,303,778)
                                                        -----------     -----------     -----------     -----------     -----------
BALANCE, May 31, 1997                                    10,113,381          10,114       2,601,291      (2,820,090)       (208,685)

Sale of common stock                                        720,750             721         258,521            --           259,242
Issuance of common  stock
    for services                                            295,000             295          47,505            --            47,800
Issuance of common  stock
    for debt                                                988,824             989         325,533            --           326,522
Issuance of common  stock
    for compensation                                        331,441             331          98,119            --            98,450
Redemption of common stock                                 (483,750)           (484)            484            --              --
Value of warrants issued with debt                             --              --           154,065            --           154,065
Value of warrants and options issued
    for services                                               --              --            34,155            --            34,155
Net loss                                                       --              --              --        (1,112,594)     (1,112,594)
                                                        -----------     -----------     -----------     -----------     -----------
BALANCE, May 31, 1998                                    11,965,646          11,966       3,519,673      (3,932,684)       (401,045)

Sale of common stock                                        300,000             300          97,700            --            98,000
Issuance of common  stock
    for services                                            179,164             179          48,437            --            48,616
Issuance of common  stock
    for debt                                              2,730,737           2,731         562,444            --           565,175
Issuance of common  stock
    for compensation                                        195,224             195          66,555            --            66,750
Redemption of common stock                                 (120,000)           (120)            120            --              --
Value of options issued for services                           --              --             6,949            --             6,949
Value of warrants issued with debt                             --              --           106,014            --           106,014
Cancellation of options issued for services                    --              --           (21,505)           --           (21,505)
Net loss                                                       --              --              --        (1,392,340)     (1,392,340)
                                                        -----------     -----------     -----------     -----------     -----------
BALANCE, May 31, 1999                                    15,250,771     $    15,251     $ 4,386,387     $(5,325,024)    $  (923,386)
                                                        ===========     ===========     ===========     ===========     ===========
</TABLE>


                 See notes to consolidated financial statements.


                                      F-5

<PAGE>

                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
              (Formerly Stratford Acquisition Corp. and Subsidiary)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                                 Years ended May 31,
                                                                                      ---------------------------------------------
                                                                                         1999             1998             1997
                                                                                      -----------      -----------      -----------
<S>                                                                                   <C>              <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net loss                                                                         $(1,392,340)     $(1,112,594)     $(2,303,778)
     Adjustments to reconcile net loss to net cash
         used in operating activities:
            Depreciation and amortization                                                  55,184           13,805              345
            Common stock and options issued for payment
              of services and compensation                                                122,315          146,250        1,231,914
            Common stock issued for payment of interest expense                            15,175           11,522             --
            Options issued as payment for services                                           --             34,155          128,666
            Cancellation of options for services                                          (21,505)            --               --
            Amortization of debt discount                                                 146,674           84,535             --
     Changes in assets and liabilities, net of the
         effect from acquisition:
            Accounts receivables                                                          (11,440)          (9,250)            --
            Inventory                                                                     (99,573)          21,179         (143,313)
            Other receivables                                                              17,367           23,212          (28,711)
            Prepaid and other current assets                                               (5,799)          (2,801)            --
            Refundable deposits                                                              --               --            178,148
            Other assets                                                                    5,223           (1,147)         (10,135)
            Accounts payable                                                              156,456           26,404           53,305
            Accrued interest                                                               46,214            5,868           12,077
            Accrued expenses and other current liabilities                                 (8,171)          16,625           35,205
                                                                                      -----------      -----------      -----------


NET CASH USED IN OPERATING ACTIVITIES                                                    (974,220)        (742,237)        (846,277)
                                                                                      -----------      -----------      -----------


CASH FLOWS FROM INVESTING ACTIVITIES:
         Acquisition of property and equipment                                            (15,564)        (118,246)          (2,503)
         Sale (purchase) of marketable securities                                            --             13,250          (13,250)
         Acquisition of business, net of cash acquired                                   (330,236)            --               --
                                                                                      -----------      -----------      -----------

NET CASH USED IN INVESTING ACTIVITIES                                                    (345,800)        (104,996)         (15,753)
                                                                                      -----------      -----------      -----------


CASH FLOWS FROM FINANCING ACTIVITIES:
         Due to factor                                                                     56,700             --               --
         (Decrease) increase in advance from shareholders                                 (37,000)          37,000          134,405
         Proceeds from debt financing                                                   1,155,000          480,470          265,230
         Proceeds from issuance of debt with warrants                                        --             69,530           49,770
         Proceeds from issuance of debt without warrants                                     --             40,000             --
         Proceeds from the sale of common stock
            and exercise of options                                                        98,000          259,243          267,529
                                                                                      -----------      -----------      -----------

NET CASH PROVIDED BY FINANCING ACTIVITIES                                               1,272,700          886,243          716,934
                                                                                      -----------      -----------      -----------


NET INCREASE (DECREASE) IN CASH AND
     CASH EQUIVALENTS                                                                     (47,320)          39,010         (145,096)

CASH AND CASH EQUIVALENTS AT
     BEGINNING OF YEAR                                                                     49,108           10,098          155,194
                                                                                      -----------      -----------      -----------

CASH AND CASH EQUIVALENTS AT END OF YEAR                                              $     1,788      $    49,108      $    10,098
                                                                                      ===========      ===========      ===========


SUPPLEMENTAL CASH FLOW INFORMATION:
         Cash paid during the period for:
                   Interest                                                           $    36,513      $       691      $     1,269
                                                                                      ===========      ===========      ===========
                   Income taxes                                                       $       689      $       689      $      --
                                                                                      ===========      ===========      ===========
         Non-cash financing and investing activities:
                Conversion of debt to equity                                          $   550,000      $   315,000      $      --
                                                                                      ===========      ===========      ===========
</TABLE>

                 See notes to consolidated financial statements.

                                       F-6
<PAGE>

                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
              (Formerly Stratford Acquisition Corp. and Subsidiary)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MAY 31, 1999, 1998 and 1997


1.   ORGANIZATION AND DESCRIPTION OF BUSINESS

     Novex Systems  International,  Inc. (the "Company") and, through its wholly
     owned subsidiary Novex Systems  International,  Ltd., (the "Subsidiary") is
     engaged in the  business  of  manufacturing  and  marketing  a  proprietary
     admixture for enhancing cement based products  (hereinafter  referred to as
     "Novacrete"),  various  finished  products for concrete repair and flooring
     projects,  and the manufacturing and marketing of polypropylene fibers used
     in concrete products.

     During January, 1997, the Company acquired 100% of the outstanding stock of
     Novacrete  Technology (Canada) Inc., a newly created company established to
     manufacture and distribute the Company's Novacrete product line.

     During September, 1998, the Company acquired all the issued and outstanding
     common stock of Arm Pro Inc., ("Arm Pro") located in Ontario,  Canada.  Arm
     Pro  manufactures and markets  polypropylene  fibers which are blended into
     cementitious  products  to provide  secondary  reenforcement  and to reduce
     cracking.

     In December,  1998, Arm Pro was merged into the  Subsidiary,  the surviving
     corporation.

     In  fiscal  1999,  the  Company  and  the  Subsidiary  (Formerly  Novacrete
     Technology  (Canada),  Inc.) were renamed to Novex  Systems  International,
     Inc. and Novex Systems International,  Ltd., respectively.  The Company, at
     this time reincorporated itself from the state of Minnesota to the state of
     New York.

     During fiscal 1998 and 1997, the Company was a development stage enterprise
     and in fiscal  1999,  the Company and its wholly owned  Subsidiary  emerged
     from the development stage.


                                       F-7

<PAGE>


                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
              (Formerly Stratford Acquisition Corp. and Subsidiary)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MAY 31, 1999, 1998 and 1997

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     (a)  Principles of  consolidation - The consolidated  financial  statements
          include the  accounts of the Company and its  Subsidiary  (hereinafter
          referred   to  as  the   "Companies").   All   material   intercompany
          transactions and balances have been eliminated.

     (b)  Cash and Cash  Equivalents - The Companies  maintains funds in both US
          and   Canadian   financial   institutions.   The   Company   considers
          highly-liquid  investments  with maturities of three months or less to
          be cash and cash equivalents.

     (c)  Income Taxes - The Companies  utilizes the asset and liability  method
          of accounting for income taxes as set forth in FASB Statement  No.109,
          "Accounting for Income Taxes".  Under the asset and liability  method,
          deferred  taxes are  determined  based on the  difference  between the
          financial  statement  and tax bases of assets  and  liabilities  using
          enacted tax rates in effect in the years in which the  differences are
          expected to reverse.

     (d)  Property and  Equipment - Property and equipment are recorded at cost.
          Depreciation  is provided on the  straight-line  method based upon the
          estimated  useful  lives  of  the  respective  assets.   Property  and
          equipment  are  being   depreciated  over  a  period  of  five  years.
          Maintenance,  repairs and minor  renewals are charged to operations as
          incurred,  whereas the cost of significant betterments is capitalized.
          Upon the sale or  retirement  of property and  equipment,  the related
          costs and  accumulated  depreciation  are eliminated from the accounts
          and gains or losses are reflected in operations.

     (e)  Inventories - Inventories  are stated at the lower of cost  (first-in,
          first-out method) or market.

     (f)  Fair Value of Financial  Instruments - The carrying  value of cash and
          cash  equivalents,  accounts  receivable,  other  receivables,  due to
          factor,  accounts payable and accrued expenses  approximate their fair
          values  based on the  short-term  maturity of these  instruments.  The
          carrying  amounts of long-term  debt was also estimated to approximate
          fair value.

     (g)  Loss Per  Share - Basic  net  loss per  common  share is  computed  by
          dividing net loss by the weighted  average  number of shares of common
          stock  outstanding.  For the years ended May 31, 1999,  1998 and 1997,
          diluted loss per share is the same as basic.


                                       F-8

<PAGE>


                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
              (Formerly Stratford Acquisition Corp. and Subsidiary)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MAY 31, 1999, 1998 and 1997


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     (h)  loss per share since the inclusion of stock options and warrants would
          be antidilutive.

     (i)  Foreign Currency  Translation - The Subsidiary  functional currency is
          the US dollar and  therefore  translates  the  nonmonetary  assets and
          liabilities at the historical  exchange  rates,  while monetary assets
          and liabilities are translated at the current exchange rates in effect
          at the balance  sheet date.  Sales and expenses are  translated at the
          weighted  average  exchange for the year.  Accordingly,  all gains and
          losses arising from foreign currency translation have been recorded in
          the accompanying consolidated statements of operations.

     (j)  Use  of  Estimates  -  The  preparation  of  financial  statements  in
          conformity  with generally  accepted  accounting  principles  requires
          management to make estimates and assumptions  that affect the reported
          amounts of assets and liabilities and disclosure of contingent  assets
          and  liabilities at the date of the financial  statements and revenues
          and expenses during the reporting period.  Actual results could differ
          from those estimates.

     (k)  Reclassification  -  Certain  reclassifications  have been made to the
          1998  consolidated  financial  statements in order to conform with the
          1999 presentation.

     (l)  Impairment  of  Long-Lived  Assets - The  Company  reviews  long-lived
          assets,  certain  identifiable  assets and  goodwill  related to those
          assets on a quarterly basis for impairment whenever  circumstances and
          situations  change such that there is an indication  that the carrying
          amounts may not be  recovered.  At May 31, 1999,  the Company does not
          believe that any impairment has occurred.

3.   CONCENTRATION OF CREDIT RISK

     (a)  Cash and Cash Equivalents

          The Companies  maintains  cash balances at several  commercial  banks.
          Accounts  at these  financial  institution  are insured by the Federal
          Deposit Insurance Corporation up to $100,000.

     (b)  Accounts Receivable

          The concentration of credit risk in the Company's accounts  receivable
          is  mitigated  by the  Company's  credit  evaluation  process,  credit
          limits,  monitoring  procedures and reasonably short collection terms.
          Credit  losses  have been  within  management's  expectations  and the
          Companies does not require collateral to support accounts receivable.


                                      F-9
<PAGE>




                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
              (Formerly Stratford Acquisition Corp. and Subsidiary)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MAY 31, 1999, 1998 and 1997


4.   INVENTORY


     Inventories at May 31, 1999 and 1998, consists of the following:


                                                       1999                1998
                                                    --------            --------
Raw Material                                        $113,288            $ 76,276
Work in Progress                                       3,217                 440
Finished Goods                                       105,202              45,418
                                                    --------            --------
                                                    $221,707            $122,134
                                                    ========            ========

5.   PROPERTY AND EQUIPMENT

     Property and equipment at May 31, 1999 and 1998, consists of the following:


                                                       1999              1998
                                                    ---------         ---------
Property and equipment                              $ 231,095         $ 103,247
Leasehold Improvements                                 17,330            17,330
                                                    ---------         ---------
                                                      248,425           120,577
Less: accumulated depreciation
        and amortization                             (167,511)          (13,979)
                                                    ---------         ---------
                                                    $  80,914         $ 106,598
                                                    =========         =========

6.   GOODWILL

     Goodwill arose in connection with the acquisition of Arm Pro by the Company
     in September, 1998, and is being amortized on the straight-line method over
     10 years. As of May 31, 1999, goodwill, net of accumulated  amortization of
     $30,795, is $316,300 (see Note 15).

7.   DUE TO FACTOR

     During  February 1999, the Subsidiary  entered into a commercial  factoring
     arrangement, with a Canadian financial institution, where they sold certain
     accounts receivable to the commercial factor,  with recourse.  In addition,
     this   arrangement   provides  for  advances   based  on  working   capital
     requirements.  Advances bear interest at the commercial factor's prime rate
     plus one thousand four hundred and twenty five basis points  (20.50% at May
     31, 1999).



                                      F-10
<PAGE>


                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
              (Formerly Stratford Acquisition Corp. and Subsidiary)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MAY 31, 1999, 1998 and 1997

7.   DUE TO FACTOR (Continued)

     At May 31,  1999,  receivables  assigned to the factor were offset  against
     factor advances of approximately $70,000.

     Advance availability is limited to the lesser of 75% of eligible inventory,
     not to exceed $25,000  (Canadian  dollars),  or 25% of the lower of cost or
     market value of the eligible  inventory,  not to exceed  $25,000  (Canadian
     dollar), plus 25% of the appraised value of the Subsidiary's equipment.

     The  arrangement  is  collateralized  by  substantially  all  assets of the
     Subsidiary and is guaranteed by the Company.  The arrangement also requires
     that the benefits of the Subsidiary's business insurance be assigned to the
     commercial factor.

8.   ADVANCES FROM SHAREHOLDERS

     During  fiscal  1998,  the  Company  was  advanced  $37,000  from  existing
     shareholders to provide working capital for operations. In fiscal 1999, the
     Company  issued 100,000 shares of its common stock as payment for the funds
     advanced in 1998.

9.   INCOME TAXES

     At May 31, 1999, the Company had federal, state and city net operating loss
     carryforwards  of  approximately   $3,175,000  resulting  from  accumulated
     operating losses through fiscal 1999. At May 31, 1999 and 1998, the Company
     have net  deferred tax assets of  approximately  $1,260,000  and  $848,000,
     respectively.  The Company has  established  a valuation  allowance for the
     full amount of such net  deferred  tax assets at May 31, 1999 and 1998,  as
     management  of the Company has not been able to  determine  that it is more
     likely than not that the deferred tax assets will be realized.

     The Company's  wholly owned  subsidiary has not had to pay Canadian  income
     taxes as they have generated operating losses since its inception.


                                      F-11
<PAGE>


                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
              (Formerly Stratford Acquisition Corp. and Subsidiary)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MAY 31, 1999, 1998 and 1997

10.  LONG TERM DEBT

     At May 31, long-term debt consists of:


                                                          1999          1998
                                                       ----------     ----------
Debentures payable (a)                                 $     --       $  550,000
Notes payable (b)                                          40,000         40,000
Debentures payable (c)                                    800,000           --
Debenture payable (d)                                     250,000           --
Notes payable (e)                                         105,000           --
                                                       ----------     ----------
                                                        1,195,000        590,000
Less: Unamortized discount on debentures                   28,870         69,530
                                                       ----------     ----------
                                                        1,166,130        520,470
Less: Current portion                                     393,548        520,470
                                                       ----------     ----------
                                                       $  772,582     $     --
                                                       ==========     ==========

     (a)  At May 31, 1998,  the Company was  obligated to debenture  holders for
          $550,000 with  1,100,000  detachable  stock  warrants  exercisable  at
          $0.30. A total of $104,296 was allocated to the warrant portion of the
          debt,  with  an  un-amortization  discount  of  $69,530  at  year  end
          resulting  in a net note  payable of  $480,470.  The  debentures  bore
          interest at 10% per annum and were converted with accrued  interest of
          $15,175 into 2,730,737  shares of common stock in October,  1998, (see
          Note 11(d)).

     (b)  In May 1998,  the Company issued notes payable for a total of $40,000,
          to  parties  associated  with a  director  of the  Company,  that bear
          interest  at 10%  per  annum.  The  principal  of the  notes  and  all
          outstanding  interest  are  due 90 days  from  the  date of  issuance.
          Interest on the notes,  are payable with the Company's common stock at
          the rate of $0.40 per share.  Furthermore,  if the notes are not fully
          satisfied at the maturity date, the Company is obligated to grant half
          of a warrant to purchase one share of its common stock for each dollar
          of the outstanding principal. As of May 31, 1999, these notes have not
          been satified (see Note 17).

     (c)  These debentures from September 4, 1998, bear interest at 9% per annum
          and mature on September 4, 2000.  There are 1,500,000  stock warrants,
          exercisable  at $0.45,  with an expiration  date of two years from the
          date of the notes' issuance. A total of $ 104,241 was allocated to the
          warrant portion of the debt, with an un-amortized  discount of $27,417
          as of May 31, 1999 (see Note 17).


                                      F-12
<PAGE>


                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
              (Formerly Stratford Acquisition Corp. and Subsidiary)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MAY 31, 1999, 1998 and 1997

10.  LONG TERM DEBT (Continued)

     (d)  This debenture from February 25, 1999, bears interest at 15% per annum
          and  matures  on May  31,  1999.  There  are  150,000  stock  warrants
          attached,  exercisable at $0.45,  with an expiration date of two years
          from the date of the notes' issuance.  A total of $1,773 was allocated
          to the warrant portion of the debt,  with an un-amortized  discount of
          $1,453 as of May 31, 1999 (see Note 17).

     (e)  At various dates during  fiscal 1999,  the Company  issued  promissory
          notes  payable for a total of $105,000  to parties  associated  with a
          director of the  Company,  that bear  interest  at 10% per annum.  The
          principal  of the notes and all  outstanding  interest are due 90 days
          from the date of issuance. Interest on the notes, are payable with the
          Company's common stock at the rate of $0.40 per share. Furthermore, if
          the notes are not fully satisfied at the maturity date, the Company is
          obligated  to grant  half of a warrant  to  purchase  one share of its
          common stock for each dollar of the outstanding  principal.  As of May
          31, 1999, these notes have not been satified (see Note 17).

11.  SHAREHOLDERS' EQUITY

     (a)  During fiscal 1996,  former management of the Company issued 1,800,000
          shares for an amount that present  management  is unable to determine.
          The  Company  has  been  contacting  the  registered  shareholders  to
          determine if appropriate  consideration was received for these shares.
          The shares have been  recorded as  outstanding  with no  consideration
          received for their  issuance.  During the years ended May 31, 1999 and
          1998,  a  total  of  120,000  and  483,750  shares  of  common  stock,
          respectively,  were returned by the registered  shareholders  and have
          been  canceled  by the  Company.  The  Company  intends to continue to
          pursue  litigation  against the remaining  shareholders who it alleges
          have received  securities  without  paying fair  consideration  to the
          Company.

     (b)  During fiscal 1997,  the Company issued 500,000 shares of common stock
          for the purchase of the Novacrete Admixture formulation.

          During fiscal 1997,  the Company's  president,  at the time,  accepted
          171,400  shares of the Company's  common stock as partial  payment for
          his  annual  salary.  The  shares  issued  were  based on  $60,000  of
          compensation  and the  remaining  unpaid  compensation  of $31,250 was
          included in accrued expenses and other current  liabilities at May 31,
          1997.  During fiscal 1998,  the Company issued 97,665 shares of common
          stock as payment for the $31,250 in compensation owed to him.

          During fiscal 1997, the Company issued 126,531 shares as consideration
          for various services.



                                      F-13
<PAGE>


                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
              (Formerly Stratford Acquisition Corp. and Subsidiary)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MAY 31, 1999, 1998 and 1997

11.  SHAREHOLDERS' EQUITY (Continued)

     (c)  During fiscal 1998,  the Company  issued  295,000 shares of its common
          stock as payment for services  provided by the current president prior
          to  assuming  his  role  as a  Company  officer,  and  to a  financial
          consultant.  These shares were valued at prices  ranging from $0.14 to
          $0.40 per share.

          In fiscal 1998,  the Company issued 331,441 of its common stock to its
          former and current president as compensation. These shares were valued
          at a price range of $ .20 to $ .35 per share.

          The Company  issued 988,824 shares of its common stock as full payment
          for the notes  payable of $315,000  plus  accrued  interest of $11,522
          during fiscal 1998.

          During  fiscal 1998,  the Company  sold  720,750  shares of its common
          stock to various shareholders,  at market prices ranging from $ .24 to
          $ .40 per share to raise working capital.

     (d)  During  fiscal 1999,  the Company  issued  96,474 shares of its common
          stock as compensation to three board members for their services. These
          shares were valued at prices ranging between $ .25 to $ .40 per share.

          The  Company  issued  98,750  shares of its  common  stock to  various
          employees as a work incentives  during fiscal 1999.  These shares were
          valued at prices ranging from $ .30 to $ .44 per share.

          The Company  issued  179,164 shares of its common stock for consulting
          services  during  fiscal  1999.  These  shares  were  valued at prices
          ranging from $.25 to $.33 per share.

          During fiscal 1999, the Company issued  2,730,737 shares of its common
          stock as full payment for debentures payable of $550,000  plus accrued
          interest of $15,175 (see note 10(a)).

          During  fiscal 1999,  the Company  sold  300,000  shares of its common
          stock to various shareholders,  at market prices ranging from $ .29 to
          $ .37 per share to raise working capital.



                                      F-14
<PAGE>


                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
              (Formerly Stratford Acquisition Corp. and Subsidiary)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MAY 31, 1999, 1998 and 1997

12.  STOCK OPTIONS

     The  following  table  summarizes  the activity  with regard to options and
     warrants  for the years ended May 31, 1999,  1998,  and 1997 (See page F-16
     for chart references).

<TABLE>
<CAPTION>
                                              Stock Options                                          Warrants
                         ---------------------------------------------        ---------------------------------------------
                                            Exercise                                             Exercise
                            Shares            Price         Exercisable         Shares            Price         Exercisable
                         -----------      -----------       -----------       ---------        -----------      -----------
<S>                          <C>           <C>                <C>               <C>            <C>                <C>
Outstanding at
May 31, 1996                        --     $         --              --               --        $         --            --
           Granted                  --               --              --  (3)      768,000               0.50        768,000
           Exercised                --               --              --          (768,000)                --       (768,000)
           Granted                  --               --              --  (3)       91,504               0.50         91,504
                           -----------      -----------       ---------         ---------        -----------      ---------
Outstanding at
May 31, 1997                         -                -               -            91,504               0.50         91,504
   (1)     Granted           1,727,772             0.50       1,727,772 (2)       308,000               0.35        308,000
   (3)     Granted              40,000             0.25          40,000 (3)        60,000               0.50         60,000
   (1)     Granted             300,000             0.40         300,000 (2)     1,100,000               0.30        308,000
   (1)     Granted              25,000             0.30          25,000                 -                  -              -
   (3)     Granted              20,000             0.25          20,000                 -                  -              -
   (1)     Granted              65,000             0.35          65,000                 -                  -              -
   (3)     Granted              25,000             0.31          25,000                 -                  -              -
                           -----------      -----------       ---------         ---------        -----------      ---------
Outstanding at
May  31, 1998                2,202,772      0.25 - 0.50       2,202,772         1,559,504        0.30 - 0.50      1,559,504
   (1)     Granted             195,000             0.40         195,000 (2)     1,650,000               0.45      1,650,000
   (1)     Granted             100,000             0.45         100,000 (2)         5,000               0.20          5,000
   (1)     Granted              12,500             0.30          12,500                 -                  -              -
   (1)     Granted              27,500             0.50          27,500                 -                  -              -
   (3)     Canceled            (60,000)           (0.25)        (60,000)                -                  -              -
   (3)     Canceled            (25,000)           (0.31)        (25,000)                -                  -              -
                           -----------      -----------       ---------         ---------        -----------      ---------
Outstanding at
May  31, 1999                2,452,772     $0.25 - 0.50       2,452,772         3,214,504      $ 0.20 - 0.50      3,214,504
                           ===========      ===========       =========         =========        ===========      =========
</TABLE>


                                      F-15
<PAGE>



12.  STOCK OPTIONS (Continued)

     (1)  issued for employee services, including directors fees
     (2)  issued with debt
     (3)  issued for consulting services

     During  fiscal 1997,  stock  options were granted and  exercised by certain
     individuals and organizations for insufficient  consideration  according to
     current  management and therefore no amount was originally  recorded in the
     accompanying  consolidated  financial statements.  The Company is currently
     seeking to have all shares issued to these parties returned and canceled.

     On April 1, 1998, the Company's board of directors approved a resolution to
     adopt  a  Non-Qualified  Stock  Option  Plan  which  shall  be  subject  to
     shareholder approval to become effective. During fiscal 1999, the Company's
     board of directors and management  decided not to establish a Non-Qualified
     Stock Option Plan and  therefore  no formal  shareholder  approval  will be
     required.

     The Company granted 135,000 options and warrants to various consultants for
     services  rendered  during the year ended May 31,  1998.  The  options  and
     warrants  expire  five  years  from the date of grant and have an  exercise
     price  ranging  from $ .25 to $ .50 per share.  The  Company  has  recorded
     $34,155 in consulting expenses in the accompanying  consolidated  statement
     of operations.

     During fiscal 1999, the Company granted  100,000 options for services.  The
     Company has  recorded  $6,949 in  consulting  expenses in the  accompanying
     consolidated statement of operations.

13.  STOCK-BASED COMPENSATION

     The  Company  accounts  for its  stock  option  plans  under  APB  No.  25,
     "Accounting  for Sock  Issued to  Employees,"  ("APB  25"),  under which no
     compensation  cost is recognized.  In fiscal 1997, the Company adopted SFAS
     no. 123 "Accounting for Stock-Based


                                      F-16
<PAGE>


                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
              (Formerly Stratford Acquisition Corp. and Subsidiary)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MAY 31, 1999, 1998 and 1997

13.  STOCK-BASED COMPENSATION (Continued)

     Compensation"  ("SFAS  123")  for  disclosure  purposes;   accordingly,  no
     compensation has been recognized in the results of operations for its stock
     option  plan as required  by APB 25,  other than for  options and  warrants
     issued for services or with debt.  The  valuation  for options and warrants
     issued for services during the years ended May 31, 1999, 1998, and 1997 was
     $6,949,  $34,155 and $128,666  respectively.  The valuation for options and
     warrants  issued with debt during the years ended May 31, 1999,  1998,  and
     1997 was $106,014, $154,065 and $0, respectively.

     For disclosure purposes, the fair value of options is estimated on the date
     of grant using the  Black-Scholes  option  pricing model with the following
     weighted  average  assumptions used for stock options granted during fiscal
     year ended May 31, 1999, 1998 and 1997  respectively:  annual  dividends of
     $0; expected volatility of 50%; risk free interest rate of 6%; and expected
     lives  ranging  from 2.5 to 5. The  weighted  average  fair values of stock
     options  granted  during the years ended May 31, 1999,  1998 and 1997,  was
     $0.17, $.20 and $.08 respectively.


                                          Year ended May 31,
                                 ---------------------------------------
                                 1999              1998             1997
                                 ----              ----             ----
Net loss to shareholders:
      As reported            $(1,392,340)     $(1,112,954)     $(2,303,778)
      Pro forma              $(1,432,076)     $(1,562,387)     $(2,320,553)
Net loss per share:
      As reported                 $(0.10)          $(0.10)          $(0.24)
      Pro forma                   $(0.10)          $(0.14)          $(0.24)

     The  Black-Scholes   option  valuation  model  was  developed  for  use  in
     estimating  the  fair  value  of  traded  options,  which  have no  vesting
     restrictions  and are fully  transferable.  In addition,  option  valuation
     models  require the input of highly  subjective  assumptions  including the
     expected stock price volatility.  The Companies employee stock options have
     characteristics  significantly  different from those of traded options, and
     since changes in subjective  input  assumptions  can materially  affect the
     fair value estimate,  in managements's  opinion, the existing models do not
     necessarily  provide a  reliable  single  measure  of the fair value of its
     employee stock options and warrants.



                                      F-17
<PAGE>


                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
              (Formerly Stratford Acquisition Corp. and Subsidiary)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MAY 31, 1999, 1998 and 1997

14.  SEGMENT INFORMATION

     The Companies  operate in the building material products industry and prior
     to its  acquisition  of Arm Pro,  its  operations  were in the  development
     stage. The Companies management has determined the operating segments based
     on how the business is managed and  operated.  The  Companies  manufacture,
     market and sell  cement  admixture  and  concrete  repair  products  to the
     building  material  industry.  The Companies sales and long-lived assets by
     operating  segment and country as of May 31,  1999,  1998 and 1997,  are as
     follows:


                                               United
                                               States     Canada    Consolidated
                                             ---------   ---------  ------------
For the year ended May 31, 1999:
          Sales to unaffiliated customers    $ 128,909   $ 192,402    $321,311
                                             =========   =========    ========
          Long-Lived assets                  $    --     $ 358,073    $358,073
                                             =========   =========    ========

For the year ended May 31, 1998:
          Sales to unaffiliated customers    $    --     $   9,073    $  9,073
                                             =========   =========    ========
          Long-Lived assets                  $    --     $ 106,598    $106,598
                                             =========   =========    ========

For the year ended May 31, 1997:
          Sales to unaffiliated customers    $    --     $    --      $   --
                                             =========   =========    ========
          Long-Lived assets                  $    --     $   2,899    $  2,899
                                             =========   =========    ========

15.  ACQUISITION

     On  September  16,  1999  the  Companies   purchased  all  the  issued  and
     outstanding  common  stock of Arm Pro.  The  purchase  price  was  $592,000
     ($891,000  Canadian  dollars)  and the funds used to purchase  Arm Pro were
     raised from the sale of  debentures  for  $800,000  (see Note  10(c)).  The
     acquisition  is  accounted  for as a  purchase  business  combination.  The
     following table summarizes the acquisition:



                                      F-18
<PAGE>


                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
              (Formerly Stratford Acquisition Corp. and Subsidiary)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MAY 31, 1999, 1998 and 1997

15.  ACQUISITION (Continued)


     Purchase price                      $592,400
     Acquisition costs                     10,638
                                        ---------
                                          603,038
                                        ---------
     Assets acquired                      403,313
     liabilities assumed                 (147,370)
                                        ---------
                                          255,943
                                        ---------
     Goodwill                             347,095
                                        =========

     The  following  schedule  combines  the  unaudited   pro-forma  results  of
     operations  of the Company and Arm Pro, as if the  acquisition  occurred on
     June 1, 1996 and includes such adjustments which are directly  attributable
     to the acquisition,  including the amortization of goodwill.  It should not
     be  considered  indicative of the results that would have been achieved had
     the  acquisition  not occurred or the results that would have been obtained
     had the acquisition actually occurred on June 1, 1996.


                                               Years ended May 31,
                                   ---------------------------------------------
                                      1999            1998            1997
                                   ------------    ------------    ------------
Net Sales                          $    421,305    $    327,554    $    373,712
Cost of sales                           212,059         133,988         174,364
                                   ------------    ------------    ------------
Gross profit                            209,246         193,566         199,348
Operating expenses                    1,406,026       1,189,113       2,576,302
                                   ------------    ------------    ------------
Loss from operations                 (1,196,780)       (995,547)     (2,376,954)
Net other expenses                      180,254         138,269           2,016
                                   ------------    ------------    ------------
Net loss                           $ (1,377,034)   $ (1,133,816)   $ (2,378,970)
                                   ============    ============    ============
Net loss per share                 $      (0.10)   $      (0.10)   $      (0.25)
                                   ============    ============    ============
Shares used in calculation           13,720,171      11,472,508       9,590,212
                                   ============    ============    ============



                                      F-19
<PAGE>



                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
              (Formerly Stratford Acquisition Corp. and Subsidiary)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MAY 31, 1999, 1998 and 1997

16.  COMMITMENTS AND CONTINGENCIES

     (a)  The Company has a verbal month to month sublease  arrangement  for its
          headquarters  in New York City as of fiscal 1999. The Subsidiary has a
          lease arrangement for office and production  facilities commencing May
          1, 1997 and expiring on April 30, 2002.  This lease  requires  monthly
          rental payments of approximately  $3,400 in the first two years of the
          lease and $3,600 in the last three years of the lease.

          The  Company  leases  telecommunication,   reproduction  and  computer
          equipment  and office  furnishings  under  long-term  operating  lease
          agreements. These lease agreements require cumulative monthly payments
          of  approximately  $1,656  per month  for the terms of the  respective
          leases expiring between October 1998 and January 2001.

          Future noncancellable lease payments are as follows:


          Year ending
             May 31,               Amount
           ----------             --------
               1999               $ 56,893
               2000                 57,137
               2001                 48,530
               2002                 40,115
                                  --------
            TOTALS                $202,675
                                  ========

          Total rental  expenses for the years ended May 31, 1999, 1998 and 1997
          was approximately $57,000, $61,000 and $64,000, respectively.

     (b)  The Companies have a licensing  agreement for certain concrete related
          products,  including  an admixture  that is capable of  enhancing  the
          basic  characteristic  of  cementitious  products.  The  Companies are
          obligated to pay royalties based on a percentage of sales,  subject to
          an annual guaranteed minimum royalty.  Currently,  the Company has not
          had to pay  royalties  as  the  licensed  products  are  still  in the
          development  stage  and  therefore  have  not been  ready  for sale to
          customers.  Furthermore,  the Company has had several discussions with
          the  licensor  who has agreed to defer the  minimum  royalty  payments
          until the Novacrete  Admixture  product  emerges from the research and
          development stage.


                                      F-20
<PAGE>


                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
              (Formerly Stratford Acquisition Corp. and Subsidiary)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MAY 31, 1999, 1998 and 1997

16.  COMMITMENTS AND CONTINGENCIES (Continued)

     (c)  During  fiscal 1997,  a  shareholder  commenced an action  against the
          Company and its former  President to enjoin the Company and the former
          President  from  taking any action  that  would  restrict  the sale of
          common stock that he  allegedly  owns.  In the opinion of  management,
          this  action is  without  merit and will not have a  material  adverse
          effect on the Companies financial position or results of operations.

17.  SUBSEQUENT EVENT

     During August 1999, the Company acquired from the Sherwin-Williams  Company
     ("Sherwin")  substantially  all the assets of their Allied  Composition and
     Por-Rok  ("Por-Rok")  business line.  Por-Rok  manufactures and distributes
     specialty building products.

     Pursuant  to the  purchase  agreement  the  Company  (i) paid  $800,000  to
     Sherwin, (ii) issued 1,000,000 shares of restricted common stock to Sherwin
     with the  requirement  to register the common stock with the Securities and
     Exchange  Commission and (iii) issued a note payable for  $1,300,000  which
     bears  interest at 10% per annum and is payable over a one year period.  In
     order,  to induce  Sherwin to accept the note  payable,  the Company had to
     convert all the previously  issued debt to equity,  except for the $250,000
     debenture  which will it be paid as a condition of the Por-Rok  acquisition
     (see Note 10).  Further,  Sherwin has a subordinated  security  interest in
     substantially all the assets of the Companies.

     The  Company  has  entered  into a  $890,000  installment  term note with a
     commercial  bank of which $800,000 was used for the purchase of Por-Rok and
     the  remaining  $90,000 was used for working  capital needs in fiscal 2000.
     This  financing  arrangement  also provides for a $750,000  revolving  note
     payable to fund future  working  capital  requirements.  In  addition,  the
     Company  granted class B warrants to purchase  233,365 shares of restricted
     common  stock at an  exercise  price of $.25 to the  commercial  bank.  The
     commercial  bank has a senior  secured  interest in  substantially  all the
     assets of the Companies.



                                      F-21
<PAGE>


                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
              (Formerly Stratford Acquisition Corp. and Subsidiary)

                                   SCHEDULE II
                        VALUATION AND QUALIFYING ACCOUNTS

                     Years ended May 31, 1999, 1998 and 1997





                                           Additions
                            Balance at    charged to                  Balance at
                            beginning      cost and     Deductions-    end of
     Description             of year       expenses      describe       year
     -----------             -------       --------     ----------    ---------
Allowance for doubtful
accounts
Year ended May 31, 1997        $--          $ --         $ --           $ --
Year ended May 31, 1998         --            --           --             --
Year ended May 31, 1999         --           890           --            890



                                      F-22
<PAGE>






Item  9.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
          Financial Disclosure

The Company has engaged the certified public  accounting firm of Feldman Sherb &
Horowitz  as its  outside  auditors  to audit  the  Company's  annual  financial
statements for the fiscal year ending May 31, 1999 and has had no  disagreements
with them.

                                    PART III

Item 10. Directors and Executive Officers of the Registrant

The  following  provides  certain  information   concerning  the  directors  and
executive officers of the Company and its subsidiaries as of May 31, 1999.

Name                               Age              Position
----                               ---              --------

William K. Lavin                   55            Chairman, Secretary

Daniel W. Dowe                     37            Director, President
                                                 and Chief Executive Officer

D. Friedenberg                     47            Director, Treasurer

Edward J. Malloy                   63            Director

* At the annual shareholders meeting held on April 29, 1999, Messrs. Friedenberg
and Dowe were  elected to serve as directors  for a period of three  years;  Mr.
Lavin for a period of two years and Mr. Malloy for one year.

William K. Lavin.  Mr.  Lavin became a director in October,  1997 and  currently
operates his own  consulting  business that he formed in 1994.  Prior to forming
his firm,  he was Chief  Executive  Officer of  Woolworth  Corporation  (renamed
"Venator")  from 1993-1994 and  immediately  prior to that position he served as
Woolworth's Chief  Administrative and Financial Officer. Mr. Lavin serves on the
board of  directors of the  Allegheny  Corporation  (NYSE:Y)  and Chicago  Title
Corporation (NYSE:CTZ).

Daniel W. Dowe. Mr. Dowe became a director in March,  1997,  Acting President on
November 17, 1997 and  President and Chief  Executive  Officer on April 1, 1998.
Mr. Dowe has agreed to serve in this  capacity for a three year period  pursuant
to a  written  employment  agreement  and  will  have an  option  to  serve  for
additional  three year  period.  He was the  founder of Dowe & Dowe,  a New York
City-based law firm that provided  legal  services to the Company.  From 1993 to
November 17, 1997, Mr. Dowe was  practicing  corporate and securities law at his
firm. From 1990 to 1993, Mr. Dowe was an associate with Donohue & Donohue, a New
York City-based law firm concentrating on international trade matters.  Prior to
practicing law, he was employed by Alliance Capital Management Company,  Salomon
Brothers  (Salomon Smith Barney, a division of Citigroup,  Inc.) and J.P. Morgan
Bank.

Douglas S.  Friedenberg.  Mr.  Friedenberg  has been a director since  November,
1996. He has been the President of Firebird Capital Management, a financial

                                       28

<PAGE>



advisory firm, since March, 1993. In 1991, he co-founded and became President of
Unicorn Capital Management, an investment management firm. From 1983 to 1991, he
managed private investment portfolios for Morgan Stanley, Inc., a large New York
City-based  investment  banking  firm.  Mr.  Friedenberg  currently  serves as a
Director of Datametrics Corporation (AMEX:DC).

Edward J. Malloy. Mr. Malloy became a director in January, 1998. He is currently
President  of the  Building and  Construction  Council of Greater New York.  Mr.
Malloy  represents  the  interests  of over  200,000  laborers  involved  in the
building  trades  in the  Greater  New York City  area.  He is  responsible  for
developing  building  projects in both the public and private  sectors to ensure
for an adequate  level of work for his union  members.  Mr. Malloy brings to the
Company an extensive level of contacts and industry experience.

Item 11. Executive Compensation

The  following  table shows all  remuneration  in excess of $100,000 paid by the
Company and its  subsidiaries  through  March 31,  1999,  to all  directors  and
officers:

                                     Table 1

                           Summary Compensation Table
<TABLE>
<CAPTION>
                                                                           Long-Term Compensation
                          Annual compensation                               Awards        Payouts
                          -------------------                               ------        -------

                                                                        Securi-
                                                                         ties
Name                                          Other                     Underly-                   All
and                                           Annual       Restrict-      ing                      Other
Princi-                                       Compen-       ed Stock    Options         LTIP      Compen-
pal            Fisc.  Salary        Bonus     sation        Awards        SARs         Payout     sation
Position       Year    ($)          ($)         ($)          (#)          (#)           ($)        ($)
---------------------------------------------------------------------------------------------------------
<S>           <C>   <C>             <C>        <C>          <C>         <C>           <C>         <C>
Daniel
Dowe
President     1996  n/a
(1)(2)(3)     1997  n/a
              1998  $89,850                                 432,357     575,924
              1999 $180,000
</TABLE>



(1) From  November 17, 1997 through  March 31, 1998,  during which time Mr. Dowe
served  as  interim  president  of  the  Company,  he  earned  $52,500  in  cash
compensation.  Commencing  April 1, 1998,  Mr.  Dowe  became an  employee of the
Company at an annual salary of $180,000. In the fiscal year ending May 31, 1999,
Mr. Dowe  received  $150,000 in cash  compensation  and deferred  the  remaining
$30,000 until the Company closed the Por-Rok transaction.  In addition, Mr. Dowe
loaned the  Company  $29,000 in the fiscal  year 1999 to cover  working  capital
shortfalls. Mr. Dowe does not receive any additional remuneration for serving as
a director.

(2) Prior to  becoming  an employee of the  Company,  Mr. Dowe  received  64,857
shares of common stock in payment for $22,700 of legal services  rendered to the
Company through November, 1997. From November 17, 1997 through March

                                       29

<PAGE>



31, 1998, during which time Mr. Dowe served as interim president of the Company,
he earned 97,500 shares of Common Stock. When Mr. Dowe became an employee of the
Company,  he received 270,000 shares of Common Stock representing  30,000 shares
per month for the remainder of the calendar year.

(3) On June 25, 1997, the Company issued an aggregate of 1,727,772 stock options
to its directors as an incentive for future performance.  Of these options,  Mr.
Dowe received 575,924 options. The stock options were exercisable when issued at
then current market price of $.37 per Share and will expire on June 25, 2002. As
part of the financing of the Por-Rok acquisition Mr. Friedenberg agreed to waive
his ownership interest in his option to purchase 575,924 shares of common stock.
In addition as part of his severance from the Company, Mr. MacMillan also agreed
to waive his  ownership  interest  in his option to purchase  575,924  shares of
common stock.

Item 12. Security Ownership of Certain Beneficial Owners

                        DIRECTORS AND EXECUTIVE OFFICERS

The following table shows the amount of common stock owned as of May 31, 1999 by
each director and officer and  affiliates and by all directors and officers as a
group. Each individual has beneficial  ownership of the shares which are subject
to unexercised stock options and stock warrants held by him, and each individual
has sole voting  power and sole  investment  power with respect to the number of
shares beneficially owned:



                                       30

<PAGE>



                                     Table 1

Security Ownership of Certain Beneficial Owners and Management

                                       Amount and Nature
Name and Address                         of Beneficial         Percent
of Beneficial owner                       Ownership            Class(1)
-------------------                       ---------            --------

Douglas Friedenberg,                        2,879,883            13.74%
Director, Treasurer
67 Wall Street, Suite 2001
New York, New York 10005

Daniel W. Dowe                              1,008,281            4.81%
Director, President,
Chief Executive Officer
67 Wall Street, Suite 2001
New York, New York 10005

William K. Lavin                              222,158            1.07%
Chairman, Secretary
67 Wall Street, Suite 2001
New York, New York 10005

Edward J. Malloy                              222,158            1.07%
Director
71 West 23rd Street
New York, New York 10010

All Directors and Officers
as a group                                  4,332,480           20.91%

(1) The class includes stock options and stock warrants granted to the directors
and  officers  prior to May 31,  1999  which  are  deemed by the  Company  to be
acquirable by the  beneficial  owner within 60 days of the date of this offering
memorandum by exercise of the option or warrant.  As of May 31, 1999, there were
15,250,771  shares issued and outstanding,  20,918,047 on a fully diluted basis.
Percentages are stated on a fully diluted basis.

Except for Mr. Dowe, the three  remaining  directors  receive $2,500 per quarter
for services  rendered as directors of the company,  which is paid in restricted
common stock based on the average bid and closing prices of the company's common
stock on the last trading day for the months ending March,  June,  September and
December.  In addition each  non-employee  director  shall receive an additional
$10,000 per annum, payable in equally quarterly installments if such director is
a member of a committee of the board of directors that actually meets during the
quarterly period. During the fiscal year 1999, there were no committee meetings.



                                       31

<PAGE>



                                     Table 2

                 Security Ownership of Certain Beneficial Owners

                                (Non-Management)

Set forth below is certain  information  about the only shareholder known by the
Company  (other  than Mr.  Friedenberg  and his  affiliated  companies)  to be a
beneficial owner of more than 5% of the outstanding Common Shares of the Company
as of the May 31, 1999:

Name and Address                   Amount and Nature        Percent
of Beneficial Owner of             Beneficial Ownership    of Class(1)
----------------------------------------------------------------------
Quilcap Corporation                5,113,277                  24.40%
375 Park Avenue
Suite 1404
New York, New York

(1) Percentage is stated on a fully diluted basis.

Item 13. Certain Relationships and Related Transactions

Mr. Friedenberg is a principal shareholder of the Company in addition to being a
director and officer.  Mr.  Friedenberg does not receive a salary, but from time
to time is compensated by the Company for services rendered on various financial
projects.

Mr. Dowe's spouse Janet L. Dowe is a partner in the law firm Dowe, Capetanakis &
Priete,  which occasionally  provides legal services to the Company, and sublets
office space to the Company.  Any  payments to Dowe,  Capetankis  and Priete for
services  rendered to the Company must be approved by the Audit Committee of the
Board of Directors, which consists of Messrs. Friedenberg and Lavin.

In addition to serving as an unpaid  director of the Company,  Mr. Lavin, or his
consulting firm WKL, Inc. will receive compensation for services rendered to the
Company for various acquisition projects.



                                       32

<PAGE>



Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

                                                                   Page

(A)  The following  financial statements and supplementary
     data are included in Part II Item 8

Index to Consolidated Financial Statements                         F-1

Independent Auditors' Report                                       F-2

Financial Statements:

Consolidated Balance Sheets as of May 31, 1999 and 1998            F-3

Consolidated Statements of Operations for the years ended          F-4
May 31, 1999, 1998 and 1997

Consolidated Statements of Changes in Shareholders' Equity         F-5
(Deficiency) for the years ended May 31, 1999, 1998, and 1997

Consolidated Statements of Cash Flows for years ended May 31,      F-6
1999, 1998 and 1997

Notes to Consolidated Financial Statements                         F-7 - 21

Financial Statement Schedules
-----------------------------

Schedule II - Valuation and Qualifying Accounts                    F-22

Schedules not listed above have been omitted because they are
not applicable or are not required or the information
required to be set forth therein is included in the Consolidated
Financial Statements or Notes thereto.


All other  schedules are omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto.

(B)  Exhibits to be incorporated herein by reference:

Exhibit                                         Incorporated Document
-------                                         ---------------------

3(i)    -     Articles of Incorporation          Form 10-K/A for the
              of Stratford Acquisition           period ending May 31,
              Corp.                              1996

4       -     10% $550,000 Convertible           Form 10-K for the
              Debenture and Stock Warrant        period ending May 31,
              Agreement                          1998

99      -     Battista Agreement                 Form 10-K/A for the
                                                 period ending May 31,
                                                 1997.

99      -     Supercrete N/A Limited             Form 10-K for the period
              Agreement dated December           ending May 31, 1997
              20, 1996

99      -     Employment Agreement for           Form 10-K for the period
              Daniel W. Dowe dated               ending May 31, 1998
              April 1, 1998



                                       33

<PAGE>


(B) Exhibits filed herein:

Exhibit

3(i)                       Certificate of Incorporation of
                           Novex Systems International, Inc.

                           Plan of Merger of Stratford
                           Acquisition Corp. And Novex Systems
                           International, Inc. Into Novex Systems
                           International, Inc.

                           New York Certificate of Merger of
                           Stratford Acquisition Corp. into
                           Novex Systems International, Inc.

                           Minnesota Articles of Merger of
                           Stratford Acquisition Corp. Into
                           Novex Systems International, Inc.

3(ii)             By-Laws

4        -                 9% $800,000 Convertible
                           Debenture and Stock Warrant
                           Agreement

                           15% $250,000 Senior Debenture and
                           Stock Warrant Agreement

                           Terms Sheets re Director Loans to Company dated July
                           29, 1998; August 13, 1998; August 20, 1998; August
                           27, 1998; September 4, 1998; and May 14, 1999

21       -                 Subsidiaries of the Company


(c) Reports on Form 8-K

Part IV, Item 14                                  Form 8-K filed on
                                                  October 2, 1998

Part IV, Item 14                                  Form 8-K/A filed on
                                                  November 30, 1998






                                       34

<PAGE>


                                   SIGNATURES

Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities  and
Exchange Act of 1934,  Stratford  Acquisition  Corporation  has duly caused this
report to be signed on its behalf by the undersigned thereunto duly authorized:

NOVEX SYSTEMS INTERNATIONAL CORPORATION


By:       /s/ Daniel W. Dowe
          ----------------------------------
          Daniel W. Dowe, President


By:       /s/ Douglas Friedenberg
          ----------------------------------
          Douglas Friedenberg, Treasurer


Dated: September 13, 1999

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 capacities and on the dates indicated:


                                                  Dated
                                                  -----
/s/ Daniel W. Dowe
---------------------     Director          September 13, 1999
Daniel W. Dowe

/s/ William K. Lavin
---------------------     Director          September 13, 1999
William K. Lavin

/s/ Douglas Friedenberg
---------------------     Director          September 13, 1999
Douglas Friedenberg

/s/ Edward J. Malloy
---------------------     Director          September 13, 1999
Edward J. Malloy




                                       35