FORM 10-K

                                  UNITED STATE
                       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, 2000.

                                       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.
             (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.)

16 Cherry Street              Clifton, New Jersey                  07014
(Address of Principal Executive offices)                         (Zip Code)

Registrant's telephone number, including area code 973-777-2307

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                     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 $.15 on May 31, 2000, the aggregate market
value of the voting stock held by nonaffiliates of the registrant was
$1,561,844. The number of shares outstanding of the registrant's common stock,
$.001 par value was 22,143,988 on May 31, 2000.

                       DOCUMENTS INCORPORATED BY REFERENCE

Location in Form 10-K                                    Incorporated Document
-----------------------                                  ---------------------
Part IV, Item 14                                         Form 8-K/A filed on
                                                         July 14, 2000



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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                                                      29
Item 3.    Legal Proceedings                                               29
Item 4.    Submission of Matters to a Vote of Security                     30
           Holders

Part II
Item 5.    Market for Registrant's Common Equity and Related               30
           Stockholder Matters
Item 6.    Selected Financial Data                                         32
Item 7.    Management's Discussion and Analysis of Financial Condition     32
           and Results of Operations
Item 8.    Financial Statements and Supplementary Data                     37
Item 9.    Changes in and Disagreements with Accountants on                38
           Accounting and Financial Disclosure

Part III
Item 10.   Directors and Executive Officers of the Registrant              38
Item 11.   Executive Compensation                                          40
Item 12.   Security Ownership of Certain Beneficial Owners and             41
           Management
Item 13.   Certain Relationships and Related Transactions                  43

Part IV
Item 14.   Exhibits, Financial Statement Schedules, and Reports on Form
           8-K                                                             45


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                                     PART I

Item 1. Business and Risk Factors

Novex 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

Novex 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.

Our limited operating history makes it difficult for investors to evaluate our
business based on past performance - Novex has only had manufacturing operations
and related revenues since April 1998 and we have only owned the Por-Rok
business since August, 1999. As a result, it may be difficult for investors to
evaluate our business and its prospects based on prior performance.

Novex has had losses and may not be able to achieve profitability. Novex has
recorded net losses for each year of operation (1994-2000). In addition, a
significant portion of our assets are attributable to goodwill. In September
1998, Novex purchased Arm Pro, Inc., which resulted in goodwill of $347,095. In
August 1999, Novex purchased all the assets of Por-Rok, which resulted in
goodwill of $571,245 and is being amortized on a straight-line method over 10
years. As of May 31, 2000, goodwill net of accumulated amortization amounted to
$826,465. Amortization expense charged to operations for the fiscal year 2000
was approximately $61,000. Management will periodically review the
recoverability of goodwill to determine if it has been impaired. Events that may
cause an impairment would be the inability to successfully integrate the
operations of Sta-Dri (See Subsequent Events Note 19(a) of Consolidated
Financial Statements) with Novex, Novex's future intentions with regard to the
operations, and the operations forecasted undiscounted cash flows. Any reduction
in the value of goodwill would be to the extent that the present value of the
expected future cash flows are less than the carrying amount of goodwill. This
analysis may result in a complete or partial write-off or acceleration of the
amortization period. A write-down of part or all of this would hurt our results
of operations and make it even more difficult to achieve profitability in the
future. Going forward, we anticipate incurring significant expenses, including
product and service development expenses, sales and marketing costs and
administrative expenses, as well as other problems, expenses, delays and other
uncertainties inherent in a business with a relatively short history of
operations which is seeking to expand its operations. Accordingly, these factors
will also make it more difficult to achieve profitability in the near future.
See "Management's Discussion and Analysis of Financial Conditions and Results of
Operations" and "Consolidated Financial Statements and Notes."

If Novex cannot expand its limited product line, its ability to increase
revenues and become profitable will be hampered. In the construction products
industry, end-users would 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. We currently market only a limited number of
products and need to acquire companies with complementary products and/or
develop new products. Because of the uncertainties associated with obtaining
acquisition financing and with closing these transactions, we may not achieve
our objective to expand our product line this year. Furthermore, we do not
currently know when new products under development will be ready for
manufacturing, generate revenues, or whether they can be successfully

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marketed. If we are unable to acquire new products or develop new products,
our ability to achieve profitability through increased sales from an expanded
product line would be delayed. See "Business-The Company's Future Operations"
and"-Description of Products."

If Novex cannot acquire other companies, its ability to increase revenues and
become profitable will be hampered. Much of Novex' success depends upon its
ability to acquire companies having products which complement Novex' existing
product line. As of the date of this Form 10-K, Novex has reached no agreement
with any potential target, however on July 31, 2000 Novex reached and agreement
and acquired the assets of The Sta-Dri Company (See Subsequent Events). If Novex
cannot expand its product lines and revenues by acquiring companies and must
rely instead upon its own development of complementary products, it will take
even longer for Novex to achieve increased sales and profitability. See
"Business-The Company's Future Operations".

If Novex cannot obtain additional financing, it could default on its debt
obligations, lose the Por-Rok facility and suffer a decrease in revenues. For
the year ended May 31, 2000, Por-Rok represented $1,713,756 or approximately 92%
of net sales. On a pro forma basis, Por-Rok sales represents approximately 95%
for the year ended May 31, 2000. Novex is required to make monthly payments on
the $890,000 Secured Term Loan Promissory Note in favor of Dime Commercial Corp.
Our ability to pay off the debt owed to Dime Commercial Corp. will be dependent
to a large extent upon the success of our new marketing strategy, our
acquisition of additional brand products, the successful implementation of our
distribution strategy and our marketing and sales efforts. If the revenues
generated by our sales and marketing efforts are not sufficient to pay off the
debt owed to Dime Commercial Corp., we will need to obtain financing from an
outside source. If Novex shall need additional financing for working capital it
does not have any assets to pledge, therefore any future financing would have to
be in the form of unsecured debt financing that would be subordinated to current
secured loans, or equity financing such as the sale of preferred or common
stock. If Novex had to raise capital through unsecured debt the interest rate
would be much higher than secured financing and could be as high as 15%-20%. It
may also require the issuance of common stock or a warrant to purchase common
stock at favorable prices. On the other hand, if Novex had to raise financing
through the sale of preferred stock the dividend rate on the stock would likely
be in the 10%-15% range. A potential investor could also require that the
preferred stock be convertible into common stock at a future date on terms that
are not favorable to current common shareholders. Lastly, Novex could offer to
sell common stock to a prospective investor, however since the company has yet
to become profitable it is likely that this form of financing would be very
dilutive to current shareholders. If Novex is unable to obtain additional
financing, it could default on the loans made by Dime. Failure to make any of
the payments to Dime Commercial Corp. could result in a re-transfer of the
Por-Rok facility to Dime Commercial Corp. Any such re-transfer would reduce
Novex's operations substantially, adversely effect its financial condition and
results of operation and make it even more difficult to achieve profitability in
the future. See "Business", "Management's Discussion and Analysis of Condition
and Results of Operations" and "Financial Statements and Notes."

Because Novex has no patent protection for its product formulae, its
competitors could copy its products and market them under another name which
could decrease Novex's revenues and hamper its ability to achieve profitability.
Since the formulae would become public knowledge if Novex were to obtain patent
protection, Novex has chosen not to obtain patents on any of its proprietary
technology. Therefore, the absence of patent protection represents a risk in
that Novex will not be able to prevent other persons from developing competitive
products. If Novex's competitors were to learn of the secret formulae for making
its products, they could easily duplicate the products and offer them to Novex's
customers without any suggestion of patent infringement. As a result, Novex's
revenues would decline and its ability to achieve

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profitability would be hampered.

Novex has only one executive officer who is performing multiple functions and
may not be able to handle all financial and executive responsibilities required.
Novex relies considerably on the services of Mr. Daniel W. Dowe, its President
and Chief Executive Officer. At present, Mr. Dowe is the company's only
executive officer, in that the company's chief financial officer recently left
the company. Mr. Dowe is now handling all financial and executive
responsibilities. To the extent that the services of Mr. Dowe become
unavailable,it would be very difficult to attract or retain personnel who would
be able to adequately perform the functions previously performed by Mr. Dowe and
the company's ability to continue its operations until a replacement is hired
would be substantially hampered. See "Management".

Because our stock is presently considered to be a "penny stock", the
applicability of "Penny Stock Rules" could make it difficult for investors to
sell their shares in the future in the secondary trading market. Federal
regulations under the Exchange Act regulate the trading of so-called "penny
stocks" (the "Penny Stock Rules"), which are generally defined as any security
not listed on a national securities exchange or NASDAQ, priced at less than
$5.00 per share, and offered by an issuer with limited net tangible assets and
revenues. In addition, equity securities listed on NASDAQ that are priced at
less than $5.00 per share are deemed penny stocks for the limited purpose of
Section 15(b)(6) of the Exchange Act. Therefore, during the time which the
common stock is quoted on the NASDAQ OTC Bulletin Board at a price below $5.00
per share, trading of the common stock will be subject to the full range of the
Penny Stock Rules. Under these rules, broker dealers must take certain steps
prior to selling a "penny stock," which steps include: (i) obtaining financial
and investment information from the investor; (ii) obtaining a written
suitability questionnaire and purchase agreement signed by the investor; and
(iii) providing the investor a written identification of the shares being
offered and in what quantity. If the Penny Stock Rules are not followed by the
broker-dealer, the investor has no obligation to purchase the shares.
Accordingly, the application of the comprehensive Penny Stock Rules may be more
difficult for broker- dealers to sell the common stock, and purchasers of the
shares of common stock offered hereby may have difficulty in selling their
shares in the future in the secondary trading market.

If a trading market is not maintained, holders of the common stock may
experience difficulty in reselling such Common Shares or may be unable to resell
them at all. The Common Shares of the Company are presently quoted on the NASDAQ
Over-The-Counter (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 would
be subject to the limits imposed by the Securities Act, and the Securities
Exchange Act of 1934, as amended, ("Exchange Act") and it is possible that the
market in the common stock can be discontinued at any time. Accordingly, if
there is no active market available for the common shares, no liquidity or if
the market is discontinued, holders of the common stock may have difficulty or
may be unable to sell the shares which he or she may hold.


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Certain information included in this Form 10-K contain statements that are
forward-looking, such as statements relating to future anticipated direction of
Novex, 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 Novex.


                                    BUSINESS

     a. General Business Development

     Novex Systems International, Inc. ("Novex") is a corporation formed under
the laws of New York and has its principal place of business and executive
offices located at 16 Cherry Street, Clifton, New Jersey 07014, telephone
973-777-2307. Until May 11, 1999, Novex was known as Stratford Acquisition Corp.
and had been a corporation organized under the laws of Minnesota. Effective May
11, 1999, Stratford merged into its wholly-owned subsidiary, Novex Systems
International, Inc., a newly- formed New York corporation, which was the
surviving corporation. The purpose of the merger was to "redomesticate" the
company from the state of Minnesota where it had virtually no business activity,
to the State of New York where the company had its corporate headquarters.
Furthermore, it was management's belief that New York has a more developed body
of laws governing public companies than does Minnesota. For this reason, the new
entity, Novex, was incorporated in the State of New York, and the Minnesota
company, Stratford, was merged into Novex. As a result, the Minnesota company
essentially dissolved into and became a part of the surviving entity, Novex.

     Novex also has a wholly-owned operating subsidiary, Novex Systems
International, Ltd. (formerly known as Novacrete Technology (Canada) Inc.),
which is a company registered under 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").

     Before August 15, 1995, Stratford was a dormant corporation. On August 15,
1995, it acquired from the inventor, the exclusive right to manufacture and
market a proprietary admixture for the enhancement of cementitious products now
known as "Adment". Novex granted the inventor 500,000 shares of common stock and
a royalty of 2% of the gross sales of Adment up to a maximum royalty amount of
$500,000. The inventor is deceased and is now represented by his wife and
daughter who are not affiliated with Novex, other than through the royalty
agreement.

     Adment 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. For this reason, Adment causes cement to chemically react in a
manner that ultimately:

     1.  produces higher compressive, bonding, flexural and tensile strengths,
     2.  reduces shrinkage,
     3.  increases workability and, most importantly,

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     4.  increases resistance to penetration of water and chloride ions from
         de-icing salts.

     Upon acquiring the technology in 1995, Novex's initial plan was to conduct
further research and development of Adment with the intention of marketing
Adment and a line of pre-packaged concrete repair products using Adment. In the
two and one-half year period from August 15, 1995 through November, 1997 Novex
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, Novex made a major change in its business plan which
has resulted in significant advancements in all aspects of Novex's operations.
With the implementation of a 60 Day Business Development Plan that was announced
in December, 1997, Novex's new management increased the number and caliber of
its board of directors and senior management by appointing as chairman of the
board Mr. William K. Lavin who has substantial senior level management
experience with the Woolworth Corporation and Mr. Edward J. Malloy who, as
President of Building and Construction Labor Union in the Greater New York area
brings substantial experience in construction practices and contacts to Novex.
Novex then installed industrial level manufacturing and packaging equipment and
warehousing equipment for raw materials and finished goods. It refurbished its
executive offices at its Canadian operating plant and constructed an internal
testing laboratory. It also opened its first U.S. sales office in New Jersey and
closed on a working capital financing of $550,000. As a result of the 60-day
plan, Novex began to manufacture and package its Novacrete products, and to
execute a sales and marketing program in Canada and the East Coast of the United
States which lead Novex to book in April 1998 its first sale of pre-packaged
Novacrete repair products. Since that time, Novex has developed and marketed a
line of eight concrete repair products that it markets under the Novacrete name.

     In September 1998, Novex's wholly-owned subsidiary, Novex Canada purchased
all of the issued and outstanding common stock of ARM PRO Inc. ("ARM PRO"),
located in Ontario, Canada. The funds used to purchase ARM PRO were derived from
Novex's sale of a 9% $800,000 (U.S.) debenture due to mature on September 4,
2000 and which included a warrant to purchase 1,500,000 shares of Novex's common
stock at an exercise price of $.45 per share. The warrant expires on September
4, 2000. Since 1986, ARM PRO has manufactured and marketed the trademarked
FIBERFORCE line of polypropylene fibers. Polypropylene fibers are blended into
cementitious products to provide secondary reinforcement and reduce cracking.
Novex's overall plan was to consolidate the operations of the acquired company
with its existing operations, to realize greater operating efficiencies, and to
achieve its targeted gross margin of 50% of net sales. Accordingly, in December
1998 Novex closed ARM PRO's Teeswater, Ontario plant and merged the ARM PRO
operations into Novex's Mississauga, Ontario operating facility.

     On August 13, 1999, Novex acquired the Allied Composition/Por-Rok business
unit from The Sherwin-Williams Company ("Por-Rok"). Por-Rok manufactures a
well-known line of grouting and concrete patching products that are distributed
nationally. The purchase price for the Por-Rok acquisition 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. In exchange for the line of credit
from Dime, Novex was required to issue to Dime a warrant to purchase 233,365
shares of Novex's common stock. The warrants have an exercise price of $.25 per
share and an exercise period commencing upon issuance and terminating on August
13, 2002. The balance of the purchase price was provided by The Sherwin-
Williams Company in exchange for which Novex issued a 10% secured promissory
note in the amount of $1.3 million and 1 million shares of Novex's common stock.

     Novex believes that the Por-Rok product line is a natural extension of
Novex's line of concrete

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repair and flooring products that it markets under the Novacrete name. It is
management's opinion, based on an emerging trend in the industry, that end-users
would prefer to use one manufacturer's products in any given construction
project. Quite often, one project requires the use of various products. Under
these circumstances, the customer prefers to use products that are compatible
and are backed by the warranty of one manufacturer. By offering several products
as a complete repair system under one warranty, Novex believes it will increase
sales of all products to the end-user.

     Additionally, Novex believes that distributors would rather stock one
manufacturer's product line to reduce the number of vendors with which they have
to do business, meaning less shipments to their warehouses and less accounting
for only a few large vendors versus multiple smaller ones. Furthermore, with
larger orders, distributors are able to demand better pricing on all products.
Accordingly, Novex believes that by diversifying the array of products that
Novex can offer to distributors of building materials, it will become more
favorable to distributors as well.

     While having a smaller product line does not mean that Novex would be
unable to market its products, the company believes that as its product line
grows, it will become more favorable to end-users and distributor, resulting in
increased sales to both of these types of customers. For this reason, Novex is
proactively pursuing opportunities to acquire entire companies or selected
product lines from companies to further expand its line of speciality building
materials. Although there are no agreements or letters of intent to acquire any
companies as of the filing of this Prospectus, Novex has engaged in discussions
with several targets with the goal of closing at least two more transactions in
the next twelve months to expand the array of products that Novex offers and to
increase its market share in the United States and in Canada. To date, there
have been no discussions on price. In fact, the decision as to which companies
would be suitable acquisition candidates does not rest solely on price but also
upon other factors such as the breadth of its product line, its management, its
distribution channels and how easily its operations could be integrated with
Novex's existing facilities in Clifton, New Jersey or Mississauga, Ontario.
Although we have identified acquisition targets, there can be no assurances that
Novex will be able to reach agreements with any of the targets or that it can
close these transactions. Management anticipates that it will finance future
acquisitions in part with debt and equity. All assets acquired in an acquisition
will be used to raise secured debt financing which will be paid to the selling
entity. Management anticipates that it will continue to increase its debt
financing through Dime Commercial Corp. Therefore, any loans currently
outstanding with Dime should not be an impediment to future financings. If
additional financing is required to purchase a business this financing will need
to be in the form of unsecured loans or equity. In addition, management has
planned that as part of any future financing, it would seek to raise sufficient
capital to pay off the $1.3 million note owed to The Sherwin-Williams Company.
Assuming this

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type of financing arrangement could be achieved, Novex would not be hindered
from financing future acquisitions on account of its current financial
obligations.

     Increasing Novex's product line and hiring additional staff to help
management the business will be very challenging, but not impossible. To expand
the product line apart from acquisitions, Novex would be required to undertake
internal research and development by using the resources of its staff cement
chemist. The cost to develop new products is minimal given the cost of the
materials required for the desired products and the fact that we have an
in-house chemist. Although Novex currently has the financial capability to
develop these new products, the real "cost" in developing these products is the
time needed to ensure that a new product will perform satisfactorily under field
conditions and whether the product will gain market acceptance once it is
completed. One advantage Novex has is that the brand name "Por-Rok" is well
known and any new products that are marketed under the brand name Por-Rok should
be easier to market than a "no-name" product. Nevertheless, until the new
product is offered for sale, no one can actually gauge how successfully the
product will sell. For this reason, management prefers to purchase products that
are already accepted and have a loyal customer base rather than rely upon the
development of new products. If Novex acquires a company having just a few
products, it can then offer its own Por-Rok products to customers that purchase
products offered by the newly acquired company. This is called "cross-marketing"
which management believes is the most suitable approach to growing its product
line.

     At present, the company has sufficient cash flow to hire one to two
additional plant workers (although there is no present need to do so) and one
salesman which the company is in the process of recruiting. Even if we were to
acquire additional products, whether through acquisition or internal
development, our existing manufacturing staff plus one or two more plant workers
would be capable of manufacturing the new products until additional shifts were
needed to meet increased demand. Furthermore, since the new products would be
sold primarily to our existing customers, we would continue to use the
manufacturers' representatives who presently market our products.

     A benefit of making acquisitions is that quality personnel that have
considerable experience often can be attracted to stay with the acquiring
company. For example, when Novex acquired ARM PRO and Por-Rok it retained all
the key employees that now contribute greatly to Novex's daily operations.
However, if Novex does not make any acquisitions this year, which is possible,
it will have to compete with other companies for talented management personnel.
When this happens, especially in a "tight" job market which we are currently
experiencing, key personnel can be very costly to attract and Novex may not have
the resources to compete with large companies that can offer more attractive
compensation packages. On the other hand, one benefit we can offer individuals
with an entrepreneurial bent is the opportunity to become key personnel and part
of senior-level management group which is building a company. Nonetheless,
finding high-quality people that can get the job done and help grow a small
company like ours is always difficult. Since the future success of Novex will be
dependent, in part, upon its ability to attract and retain qualified personnel,
our inability to do so could have a material adverse effect upon our business.

     In addition, Novex's success depends, to a large extent, on certain
economic factors that are beyond its control. Unfavorable changes in factors
such as general economic conditions, levels of unemployment, interest rates, tax
rates at all levels of government, competition and other factors beyond Novex's
control may have an adverse effect on its ability to sell its products and to
collect its receivables.


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     b. Financial Information About Industry Segments

     All assets, revenues and operating expenses are dedicated to one business
segment -- the manufacturing and marketing of construction products.
Accordingly, Novex accounts for its business operations within one industry,
i.e. the building materials industry. The company has two operating segments
within the building materials industry, namely the fiber business and the Allied
Por-Rok business. For information relating to these two operating segments, see
Note 15 to Novex's Consolidated Financial Statements.

     Based upon its current operations and its operating activity for the past
three fiscal years, Novex believes that its financial information is adequately
presented in its audited financial statements and is cross-referenced in this
Form 10-K to Novex's consolidated balance sheet and consolidated statement of
operations appearing on pages F-3 and F-4, respectively.

     Additionally, the financial information accounts only for sales derived
from the Por-Rok transaction since the date of the acquisition on August 13,
1999 and the not the entire fiscal year of 2000. As such, the financial
statements exclude the sales of the Por-Rok products in June, July and one-half
of August of 1999, which historically have been strong months for sales of these
products.

     c. Subsequent Events

     On August 1, 2000, Novex acquired substantially all of the assets of the
The Sta-Dri Company located in Odenton, Maryland ("Sta-Dri"). Sta-Dri
manufactures a well-known line of waterproofing and building material products.
The purchase price for the Por-Rok acquisition was 1,000,000 shares of Novex'
common stock that was valued at $137,000 based on the average trading price
three days before and after the date the acquisition was agreed to and
announced, which was August 1, 2000. In addition Novex' President issued a check
in the amount of $72,000 to the Sta-Dri shareholders that is collateralized by
350,000 shares of common stock owned by the President that is to be payable in
October. The company's president and the company have entered into a agreement
whereby the company will pay the president the full amount of the $72,000 paid
to the Sta-Dri shareholders on behalf of the company. As part of the terms to
the acquisition, the Company has provided the Selling Shareholders with certain
piggyback registration rights. Therefore, in the event that the Company shall
register any shares of its common stock with one year from August 1, 2000, the
Company will register any of the unregistered and non-freely tradeable shares of
common sock issued to the Sta-Dri shareholders. Additionally, the company has
provided the Sta-Dri shareholders with the right to purchase any shares of the
Novex common stock offered for sale or securities convertible into its common
stock from August 1, 2000 until August 12, 2002. As of August 1, 2001 and until
August 1, 2002, Novex will have to pay an additional $6,000 each month in the
aggregate to the Sta-Dri shareholders in the event that the common stock of the
Company has not traded above $1.00 per share for twenty consecutive trading days
prior to August 1, 2001. If and when Novex common stock shall trade in excess of
$1.00 per share for twenty consecutive trading days the $6,000 monthly
obligation shall terminate. Regardless of the stock price, Novex's obligation to
pay $6,000 to the Sta-Dri shareholders shall cease on August 1, 2002.

     On August 7, 2000, Novex and The Sherwin-Williams Company entered into an
agreement whereby, Sherwin-Williams agreed to convert the entire principal
amount of its outstanding note having a face value of $1,281,351, plus all
accrued and outstanding interest of $109,037 into 1,390,388 shares of Series A
Redeemable Convertible Preferred Stock ("Preferred Stock"). The Series A
Redeemable Preferred Stock pays an annual dividend of 139,038 shares of
Preferred Stock for two consecutive years and if the Preferred Stock is not
redeemed prior to August 7, 2002, an additional 208,558 shares of Preferred
Stock shall be issued to Sherwin-Williams. If on August 7, 2002, any of the
Preferred Stock that

                                        8

<PAGE>


has not been redeemed shall be converted into common stock at a rate equal to
85% of the Novex' average closing trading price for Novex' $.001 par value
common stock for twenty consecutive trading days prior to August 7, 2002.

     On September 1, 2000, Dime Commercial Corp. issued a formal default notice
to the company and demanded full payment of its two notes. No final date of
repayment was set in the letter and the company has continued amicable
discussions with representatives of Dime Commercial about: (i) the prospects of
bringing in new equity capital which would likely result in a retraction of the
default notice, (ii)completing a sale of the company's subsidiary's assets which
the Company has been planning to due prior to its receipt of the notification
letter from Dime the proceeds of which will be used to pay down a portion of its
notes outstanding, (iii) arranging to secure new financing from another bank or
other debt sources to pay-off part or all of the notes outstanding. If Novex is
successful in completing (i) or (ii) above, Dime has expressed its interest in
withdrawing its demand letter and continuing to finance Novex' operations. If
Novex is successful in completing (iii) above it will payoff the entire proceeds
notes owing to Dime Commercial Corp.

     d. Novex's Current Business Operation

     Novex is engaged in the business of manufacturing and marketing two lines
of premium building product materials. The first is a line of polypropylene
concrete reinforcing fibers that are marketed under the Fiberforce trade name
and a proprietary cement-enhancing admixture that Novex will be marketing under
the trade name Por-Rok. These products are promoted directly to ready-mix and
pre-cast concrete manufacturers. The second is a line of pre-packaged concrete
repair products that are marketed to contractors directly and also to
distributors of building material products. (See Description of Products).

     Novex currently has its executive offices at 16 Cherry Street, Clifton, New
Jersey 07014. Novex's manufacturing operations are conducted at its 25,000
square foot facility in Clifton, New Jersey and through its wholly-owned
subsidiary, Novex Canada, in a leased 12,500 square foot facility located at
Mississauga, Ontario (20 minutes west of Toronto).

     The Clifton operating facility is a fully-integrated manufacturing plant
with the capacity to manufacture approximately 30 million lbs. of product per
annum on a single shift basis, which translates into roughly $10-12 million per
annum in sales. Although Novex has the capacity to produce this quantity of
product, it does not currently sell all that the company can produce. This
operating plant currently runs at approximately 20% of its capacity on a single
shift level. At present, the Clifton facility manufacturers 7.5 million lbs. of
product (including the Sta-Dri product line), or approximately $2.5 million in
revenues per annum.

     Novex 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. In particular, it is
interested in acquiring manufacturers of premium flooring and concrete repair
products and related accessory products as well as cement enhancing admixtures
for concrete. These types of products usually achieve 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 be produced in short time periods with
minimal labor.

     Our consolidation strategy is aimed at reaping the cost reductions afforded
by eliminating excess

                                       9

<PAGE>


facilities and overhead while building a full service specialty product line
thereby offering one-stop shopping to professional contractors who prefer
to choose from one line of products for convenience, product compatibility and
warranty and liability reasons.

     e. How Novex Manufactures and Distributes Its Products

     Novex manufactures and distributes all of its products from its New Jersey
and Canadian operating facilities. The Clifton facility is a fully-integrated
blending and packaging facility having the capacity to produce over 30,000,000
lbs. on a single shift basis, although the company's current level of sales does
not match its production abilities. The facility consists of three buildings
located on a 1.6 acre tract of commercially-zoned land. The majority of raw
materials used at this facility are stored in silos affixed to the roof of one
of the buildings. 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 pails per carton for distribution to hardware and retail outlets.



                                       10

<PAGE>

     This facility currently packages products for distribution through building
supply yards and retail outlets in packages ranging from 1 and 5lb. plastic
containers to 50lb. bags and pails. To eliminate excessive shipping costs
associated with delivering small quantities of product, Novex sells larger
quantities of products (full truckload orders) to distributors that ultimately
resell the product into local markets. Before the acquisition of Por-Rok, Novex
used a public warehouse in New Jersey to warehouse and ship product on its
behalf for a per diem handling charge. The Clifton facility now serves as
Novex's distribution center for eastern United States. Novex will continue to
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 Novex's products.

     The Canadian facility has the annual capacity on a single shift basis to
produce approximately 750,000 lbs. of Fiberforce product, although the company's
current sales does not meet the level of its production. All Fiberforce products
are made from polypropylene strands that are cut into various lengths and
shapes. Novex currently manufacturers three types of fibers which are
categorized as multifilament, 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.

     f. How Novex Markets Its Products

     Novex currently has one full-time salesperson located in Mississauga,
Ontario, and 14 manufacturers' representatives, giving Novex coverage in most
eastern states and in certain areas of Canada and the United States. These
individuals are presently covering the following areas of the United States and
Canada:

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.

Southeast Region

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

Canada Distribution


                                       11

<PAGE>



Eastern Canada

Ontario
Quebec

     Novex is in the process of hiring another full-time salesperson in Canada
to specialize in sales of its Por-Rok and Sta-Dri products, since the other
salesperson is principally focused on sales of Fiberforce fibers.

     g. How Novex's Products Are Graded By Industry Standards

     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 Novex 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


     Novex 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 Novex acquires.

     Novex 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, Novex'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 with 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 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

                                       12

<PAGE>


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
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 if a product were to fail and the resultant damage to the
reputation of the professional contractor or the specifying architect or
engineer are the underlying reasons for this resistance. While our Novacrete
products have successfully passed these laboratory tests and marketing of the
products has commenced, we believe that selling these new products in
conjunction with Por Rok's well-established product lines will help us to
overcome this resistance.

     For this reason, Novex intends to market the Novacrete products in the
future under the name of either Por-Rok or one of the other trade names acquired
in the Por-Rok transaction.

     h. A Brief History On Novex's Admixture Product

     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.

     Adment 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 Adment, it 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 Adment that should be used in
the final product. This approach substantially reduces the risk of improperly
mixing the Adment with chemically adverse substances that could cause product
failure.

     Novex'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 Novex'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 less expensive to manufacture.

     Over the past four years, Novex has expended considerable resources to
develop its proprietary cement-enhancing admixture into a commercially viable
product. During this period, Novex 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, Novex has successfully developed a version of its admixture
technology that can be used in formulations for concrete repair products to
enhance the compressive, bond and flexural strengths of the product and increase
the density of the product so that it resists penetration by erosive elements
like water and deicing salts. It is manufactured at Novex's wholly-owned
operating subsidiary, Novacrete Canada, and is directly marketed by Novex's
sales personnel in 22lb. bags or in bulk quantities to end-users, which

                                       13

<PAGE>

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.

     Novex is still developing a final formulation of its admixture technology
that can be used in new concrete. It intends to manufacture and distribute its
final admixture product for concrete in various sizes ranging from 25lb. bags to
bulk packages weighing 2,000 lbs. Novex has conducted extensive field trials
with a large ready-mix concrete producer and has achieved very promising results
in the admixture's ability to increase the strength of

                                       14

<PAGE>

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.

     We estimate the cost to complete the final admixture's development to be
$10,000-$20,000 in laboratory work to monitor field trials. The real "cost"
involved in finalizing its development is the time required to work with
end-users to convince them of the benefits of using the admixture. Since
concrete is structural in nature, concrete producers generally approach new
products with a great degree of caution before they accept the liability of
selling concrete that contains the new product. If a foundation to a home fails,
the cost to correct the problem could be exorbitant. For this reason, the
end-user of the admixture exercises considerable caution to ensure that the
product performs as proclaimed. For this reason, we are working with local
ready-mix concrete producers that are familiar with our company and our testing
laboratory and that are slightly less reluctant to try our new product. As the
product is used locally and performs well it will likely gain market acceptance
and we can then branch out to a wider region until the products have achieved a
general level of credibility in the industry. At this time, we cannot gauge the
amount of time that will be required before we gain customer acceptance and the
demand for the product increases.

     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 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.

     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 admixtures in all types of cement, and concrete and "the growing popularity
of value-added proprietary admixture products in place of lower- cost
generics."(1)

     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 can be 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

--------

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

                                       15

<PAGE>

States. With the federally-funded Transportation Equity Act of the 21st Century
(TEA 21) having been signed into law in 1997 an estimated $216 billion will be
spent over the six year period 1998-2003 where up to $173 billion has been
provided for highways and an additional $41 billion for transit projects. This
bill increased 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 construction and
rehabilitation of highways and bridges.

     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 as high as $100 billion per year. The additive component of this market is
conservatively estimated at more than 2% or $2 billion.(2)

     In the Spring 2000, Novex will seek to implement a marketing strategy to
penetrate the market for high-performance concrete (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.

     j. A Description of Novex's Products

     As of the filing of this registration statement, the following is a list of
the Por-Rok and Fiberforce products marketed by Novex:

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.

--------

(2)  Based on Statistics Canada Report.

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<PAGE>



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 before 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, before 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.

POR-ROK All Purpose Underlayment - used as an underlayment over concrete, wood,
quarry tile, terrazzo, before 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.

POR-ROK Adment - a proprietary, powder-based admixture that enhances the
physical characteristics of cement-based products.

POR-ROK Levelon - 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.

STA-DRI PRODUCTS (Products were acquired on August 1, 2000)

STA-DRI Waterproofing Paint (Powder form) - this product is a cement-based
product that is mixed with water and can be applied to all types of interior and
exterior masonry surfaces with a brush or roller to provide a waterproof
surface.

STA-DRI Heavy-Duty Waterproofing Paint - this product is an oil-based redi-mixed
product that can be applied with a brush or roller and required no addition of
water. It can be used on interior and exterior masonry surfaces and can be
tinted with different color additives.

STA-DRI Latex Waterproofing Paint - this product is a latex-based redi-mixed
product that can be applied with a brush or roller and required no addition of
water. It can be used on interior and exterior masonry surfaces and can be
tinted with different color additives.

Sta-Dri All Purpose Sealer - Clear, colorless sealer for all masonry and wood
surfaces. Can be used as a primer for most paint systems, and as a curing
membrane for new concrete. The product is designed to protect surfaces against
deterioration and weathering.

LINK Superbonding Agrent - Liquid bonding agent that enhances the bond of most
surface applied products to masonry. Can be used as a primer for hard-to-paint
surfaces and when mixed with STA-DRI Waterproofing Paint (Powder form) it
enhances the adhesion of this product, al it would for most paints and coatings.


                                       17

<PAGE>



STA-DRI Concrete Patch - acrylic resin fortified material that is mixed with
water and used to patch all types of concrete surfaces: sidewalks, patios,
driveways and walls.

STA-DRI Waterstop - quick-setting cement product that is mixed with water and
can be used to plug holes in concrete surfaces even if and will water may be
trickling through. The product hardens in 3-5 minutes and can be applied under
water.

STA-DRI Anchoring Cement - fast-setting expanding cement that is mixed with
water and used to anchor posts, railings, mailboxes, bolts, hooks and other
devises that require a strong, permanent attachment to a wall or floor surface.

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

     k. Novex's Competitors

     The principal methods of competition in our industry are price, service and
the reliability of the product as demonstrated by performance. Except for the
admixture product, each of the products which Novex currently offers has been on
the market for at least 10 years and in some cases over 25 years. Because the
products have been used for so long, they have achieved a level of market
acceptance. It is very unlikely that someone would claim that our Por-Rok or
Fiberforce products don't work inasmuch as customers have been using them for
years. Our prices are competitive with other like products. We do not aim to be
the lowest nor the highest price on the market, but to be competitive. When it
comes to competing with major manufacturers, we cannot offer the full range of
products that they can. Consequently we cannot offer volume price discounts to
the extent our larger competitors can. Until we expand our product line, we
cannot offer the complete repair kits which some of our larger competitors can.
To remain competitive in the interim, we aim to provide customers with
exceptional service and very favorable pricing and payment terms with respect to
the product currently in our line.

     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. Novex would like to
capitalize on this situation by acquiring selected companies in various regions
of North America for the purpose of:

     o    acquiring additional premium building products,

     o    increasing market share, and

     o    improving operating margins by consolidating operating facilities to
          eliminate excess overhead which is prevalent in the industry.

     As of the filing of this registration statement, Novex competes with
several other companies nationwide that manufacture and distribute construction
products that are substantially similar to those manufactured and distributed by
Novex. Until Novex can effect its business strategy, which will eliminate

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<PAGE>

some competition, at least in certain markets, Novex believes the following
companies will be its primary competitors.


Brand                                                Major Competitors
-----                                                -----------------

Por-Rok                                              Conspec
Anchoring Cement                                     Tamms
                                                     Master Builders
                                                     Quikcrete
                                                     Sonneborn
                                                     Sternson
                                                     W.R. Meadows
                                                     ChemMasters
                                                     Rockite
                                                     UGL
                                                     THORO

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

Por-Rok                                              (Same as above)
Aqua Plug &                                          Bondex
Sta-Dri Waterstop                                    Thoro

Por-Rok                                              (Same as above)
Concrete Patch &
Sta-Dri Concrete Patch

Por-Rok                                              Mapei
Halco Grout                                          Tamms

Por-Rok                                              Mascrete
Lev-L-Astic                                          Tamms
                                                     Dependable
                                                     Mapei
                                                     Dap

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

Por-Rok Floorcap                                     Masterbuilders
                                                     Mapei
                                                     Dayton-Richmond

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<PAGE>



Sta-Dri Waterproofing Paint (Powder)                 Thoro
                                                     UGL
                                                     Quikcrete

Sta-Dri Waterproofing Paint (Latex)                  Thoro
                                                     UGL
                                                     Quikcrete

Sta-Dri Waterproofing Paint (Oil)                    Thoro
                                                     UGL
                                                     Quikcrete

Sta-Dri Sealer                                       Thompson

Link All Purpose Sealer                              Thoro
                                                     Quikcrete

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

Adment                                               W. R. Grace
                                                     Masterbuilders
                                                     Norchem

     Some of Novex's competitors may be better capitalized, better financed,
more established and more experienced than Novex and may offer products at lower
prices or with greater concessions than Novex. Should Novex be unable to compete
effectively, Novex's results of operations and financial position would be
materially and adversely affected.

     l. Seasonality

     As part of the construction business, Novex is currently subject to
seasonal cycles which historically results in a significant slow down in its
operations during the months of December 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. With the addition of the
Por-Rok line of products, Novex 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 and sold into
commercial and building product outlets like home centers and independent
hardware stores. Although Novex may still be subject to the seasonal effects of
the winter months, it 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 in addition to the other
25 representatives currently employed throughout the United States.


                                       20

<PAGE>

     m. Customer Dependence

     Novex is not dependent upon any one customer nor does it anticipate
becoming dependent upon one customer in the future. 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 are involved in separate construction projects. In addition the Fiberforce
and Por-Rok products are sold to various distributors and retailers none of
which account for more than 5% of the respective line of product sales. Novex
does not anticipate that any one customer will account for ten percent or more
of its annual sales in the coming fiscal year.

     n. Raw Materials

     An important aspect of Novex's business is having an adequate supply of raw
materials. The raw materials used in manufacturing the Por-Rok products are
readily available in the United States and Canada. Novex currently purchases
most of its raw materials from ten principal suppliers located in Canada and the
United States 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. Novex 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. Nor does Novex anticipate
difficulty in obtaining these products if its relationship with one or more of
its suppliers were to end. Novex further believes that the loss of any one
supplier will not adversely affect Novex's business. Novex currently owns a
substantial supply of the main component of its Adment product that it
warehouses in its Mississauga facility and in a public commercial warehouse.

     o. Intellectual Property Rights

     Novex 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 Novex. On
March 3, 1998, Novex 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 Novex's acquisition of
Por-Rok in August 1999, Novex acquired the registered trade names for all
Por-Rok products currently being produced.



                                       21

<PAGE>



     Novex has not filed an application for a patent on its proprietary
technology. The core technology that is used in each of Novex's products is not
easily replicated. However, if patented the technology would ultimately become
public information. Novex 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
manufacturers of like products or cause Novex to incur unnecessary risk of loss
of the technology. Even if Novex had patent protection over its technology, it
still assumes the risk that a competitor may misappropriate the technology and
then 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 Novex's products.

     On an internal basis, any proprietary technology is maintained by the
manager of research and development and Novex's senior management on a
"need-to-know" basis in order to perform their jobs. By keeping all laboratory
developments in close confidence Novex seeks to limit misappropriation of
company secrets by employees or third parties. Previously, Novex had required
that employees at the Mississauga facility dealing with the Novacrete Admixture
sign confidentiality agreements. Although Novex had initially thought to require
its Por-Rok employees to sign similar agreements relating to the Por-Rok
products, upon reconsideration, the company has determined it will not require
them to sign confidentiality agreements since these products have been
manufactured for up to 40 years under previous management without
confidentiality agreements in place.

     Novex has learned that other companies have been issued a trademark for the
name "Novex". We do not believe that our company will be injured by these uses
of the name Novex nor do we consider our use of the name Novex to be an
infringement upon any of these trademarks since these trademarks relate to
companies, goods and services which are entirely distinguishable and unrelated
to the construction products industry. Even if Novex were required to change its
corporate name, this would not diminish our sales since our products are
marketed under the brand names "Por-Rok" and "Fiberforce". These product names
are protected by registered trademarks in the United States, Canada and the
United Kingdom.

     As part of its acquisition of certain assets owed by the Sta-Dri company,
Novex acquire full legal right to the Sta-Dri tradename and trademarks and all
the product tradenames that were registered under the name of the previous owner
of Sta-Dri.

     p. Novex's Working Capital Requirements To Operate Its Business

     Novex has historically experienced cash flow fluctuations that track the
seasonal fluctuations in its business due to the construction slowdown in the
winter months. In the fiscal years 1998 and 1999 Novex experienced negative cash
flow and required financing from outside sources to sustain its business
operation. From March to October Novex 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 Novex 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 Novex 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 before the winter slowdown
period. However, for the fiscal year ending May 31, 2000, Novex expects to
experience less fluctuations in its working capital requirements to finance its
operations due to the less seasonal nature of the Por-Rok products as well as
the $750,000 revolving line of credit that Novex now has with Dime Commercial
Corp.


                                       22

<PAGE>

     To cover its working capital requirements in 1999, Novex sold a 10%
Debenture in February 1998 of $550,000. Had Novex been unable 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. In the fiscal year 1999 the net cash used in Novex's operations
including investing activities was approximately $1.4 million. This amount was
needed to fund Novex's expansion of its operating facility and for operating
expenses for such as rent, payroll, new operating equipment, raw materials,
research and development, professional fees and trade debts.

     On September 4, 1998 Novex 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
Novex used $610,000 to purchase ARM PRO and reserved 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.

     To further offset its working capital demands in 1999, Novex also 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 Novex with $70,000 note that is secured by equipment located at its
Mississauga facility.

     Although Novex's general credit policy is to invoice customers on a thirty
day payment basis, to encourage customers to take larger volume orders Novex
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 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 Novex will be very aggressive in allowing extending
payment terms to customers where it will result in additional sales of Novex's
products, extended payment terms will generally be discouraged.

     q. No Backlog Orders

     As of May 31, 2000, the company did not have any backlog orders.

     r. Government Contracts

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

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

     Although Novex manufactures some of 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 Novex does not foresee any
changing conditions that would adversely impact Novex. (See Note 16 Segment
Information of Consolidated Financial Statements).


                                       23
<PAGE>

     t. Novex's Research and Development Activities

     In each of the past three fiscal years Novex has incurred expenses relating
to the research and development of its Adment product and Concrete Repair
Products that were formerly marketed as Novacrete and which are now being
marketed under the Por-Rok tradename. In fiscal year 1999, Novex spent
approximately $30,000 on fees payable to outside independent testing
laboratories that were engaged to conduct various testing procedures to improve
the Novacrete products. We further incurred approximately $60,000 in expenses
for personnel and laboratory equipment. In fiscal year 1998 Novex spent
approximately $40,000 on fees payable to outside testing laboratories to advance
testing of its Novacrete products. Other than for a brief period in 1997 in
which Novex employed the services of a cement technology consultant for
approximately three months, Novex did not have any technical personnel on staff
from January, 1997 through February, 1998 to conduct research and development on
new products. In 1996, Novex spent less than $20,000 on fees payable to outside
testing laboratories to advance testing of its Novacrete products and an old
formulation for a Novacrete Fast-Set product that Novex has since abandoned and
replaced with a new formulation to be marketed under the name Por- Rok.

     u. Environmental Compliance

     Novex 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 Novex has installed a
compressed-air dust control system in its facilities to maintain a higher
quality of air in its operating plant this system is not mandatory. The system
installed in Novex Canada cost Novex approximately $20,000 and operates during
the processing of certain products that contain raw materials having 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 the Clifton, New Jersey plant. No material findings were
reported. The Clifton plant also has a dust collection system.

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

     v. Novex's Future Operations

     Although an integral component of Novex's business plan and future growth
will be the acquisition of targeted companies and product lines in the building
materials industry, Novex's operating strategy will also include the following
initiatives:

          o    Consolidation of Manufacturing Operations

               With the closing of the Por-Rok transaction, Novex transferred
          the manufacturing of its Novacrete products from its Novex Canada
          operating facility to Por-Rok's 25,000 square foot

                                       24

<PAGE>



          facility located in Clifton, New Jersey. Por-Rok's fully-integrated
          manufacturing plant has the capacity to manufacture approximately 30
          million lbs. of product per month on a single shift, which translates
          into roughly $10-12 million per annum in sales. The Mississauga
          facility is capable of producing 750,000 lbs. of Fiberforce products.
          Although, Novex has the capacity to produce this quantity of product,
          this does not mean that it will sell all that the company can produce.
          It only means that Novex would not have to make a major capital
          investment until it achieves approximately $16 million in sales of its
          Por-Rok products and about $1.5 million is sales of its Fiberforce
          product. Currently Por-Rok manufacturers 5.5 million lbs. of product
          annually, or $1.8 million in revenues per annum and Fiberforce
          manufactures approximately 325,000 lbs. of product annually, or
          approximately $485,000 in revenues per annum.

               By shifting the Novacrete product manufacturing to the Por-Rok
          facility, Novex will have adequate space in its Novex Canada facility
          to inventory 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 enable both facilities to serve
          as distribution centers for all Novex products and will allow for each
          facility and its personnel to specialize in the manufacturing of
          select products.

               In addition, during the month of August, 2000 Novex merged into
          the Por-Rok facility the Sta-Dri manufacturing operation. Novex
          purchased limited manufacturing equipment and already had the capacity
          to manufacture Sta-Dri products at its Por-Rok facility. All Sta-Dri
          products are now manufactured, shipped and invoiced from its Por-Rok
          facility.


          o    Novex's Plan to Increase Sales

               Novex will seek to expand its sales and its customer base through
          a number of initiatives each of which is discussed in detail in this
          section.

               Systems Approach to Selling Building Materials

                    In 1998, Novex conducted extensive "hands-on" market
               research which has become the underlying basis for Novex's
               "systems approach" to marketing building materials. This research
               revealed that the usual concrete repair project, such as the
               repair of a worn floor of a large industrial plant, could require
               the use of several products including a surface bonding agent, a
               durable concrete repair product, a floor hardener or smoother
               topping product, and possibly a cure or sealing product to
               further protect the installation from damage from water and
               chemicals. Through its research, Novex learned that end-users
               prefer to use products that are compatible with one another and
               that are backed by the warranty of one manufacturer. As a result,
               they look to purchase complete repair "kits" from one
               manufacturer rather than to purchase isolated products from
               various manufacturers. To accommodate end-users who desire to
               purchase products in this manner, distributors of building
               materials prefer to stock the products of manufacturers that
               produce a full line of products that can be used together.

                    Several of our competitors already offer complete "kits" to
               repair damaged concrete, a floor or a wall. Therefore, responding
               to market preferences and competitive

                                       25

<PAGE>

               forces, Novex's foremost goal this year will be to grow and
               diversify its product line. By offering all the products as a
               complete repair system under one warranty, Novex believes it will
               increase sales to end-users of all products as well as attract
               stocking distributors that prefer to handle complete product
               lines. Growing through acquisitions (versus solely by research
               and development) will shorten the time period needed to achieve
               this goal, and will provide Novex with the advantage of marketing
               compatible products together with those that have already gained
               commercial acceptance.

               One Label, One Store

                    "One Label, One Store" essentially means that Novex will be
               offering a diversified line of products that can be used together
               under one warranty and all of Novex's products will be available
               in most locations. The program will be offered to the 300+
               outlets that currently distribute Por-Rok products and to new
               distributors and retail outlets that Novex will be pursuing. 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 satisfy their customers' demands,
               eliminate the logistics of stocking multiple vendors and obtain
               volume discounts.

                    Novex first introduced the One Label, One Store program to
               The Home Depot and has received approval to begin marketing its
               Fiberforce line of products in five Home Depot stores in Ontario,
               Canada as soon as Novex can complete a packaging design for
               retail distribution. Novex currently packages its Fiberforce
               products in bags of 1lb. or larger for distribution to ready-mix
               producers.

                    To encourage early participation in the One Label, One Store
               program Novex will:

                    o    offer early entry price discounts for distributors that
                         purchase additional products from Novex;

                    o    arrange pre-scheduled store visits to demonstrate to
                         the distributors' customers and employees the benefits
                         of the new products;

                    o    provide point-of-purchase (POP) displays and other
                         marketing materials to assist the distributors' sale of
                         the new products; and

                    o    coordinate mailings of marketing pieces on the One
                         Label, One Store program to the distributors's
                         customers.

                    The existing line of Por-Rok products is sufficient to
               implement the One Label, One Store program since most retail
               customers, i.e. the "do-it-yourself" customers, do not typically
               have the need, experience or skill to work with the more
               sophisticated construction products required by professional
               contractors. The Por-Rok product line currently consists of six
               products, including a relatively new product called Levelon, that
               can be used for most home repairs and maintenance including
               indoor floor and wall repair as well as for outside uses such as
               repair of concrete sidewalks, driveways, patios and to install
               poles and railings.



                                       26

<PAGE>


                    Before the One Store, One Label program can be offered to
               distributors of building materials, however, the product line
               will need to include a line of curing and sealing products,
               epoxy-based products, cement-based and latex waterproofing
               products and some additional flooring products. It is Novex's
               intention to add these products to its line by way of
               acquisition. Assuming an acquisition could be completed before
               the end of its fiscal year, this program could be implemented on
               the distribution side by the end of this calendar year. If we are
               unable to add the desired products to our line by way of
               acquisition, our ability to implement the one store, one label
               program could be delayed for a period of up to two years.

                    Both retail and distributor programs will require additional
               marketing material such as direct mailers and promotional
               materials that can be delivered with the products or by sales
               representatives. The costs associated with producing these
               materials is estimated to be $25,000-$30,000. We are unable to
               quantify the cost of acquiring companies with complementary
               products since this would depend upon a multitude of factors
               including the types of products they offer, their revenues,
               market share and distribution channels, and the size of their
               facilities, to name a few. For the immediate future, we would
               expect to finance any such transaction through outside financing
               rather than working capital. At present we do not have any
               financing in place nor would we seek any financing until an
               agreement had been reached with a potential target.

               Improve Por-Rok's Sales Organization

                    Por-Rok currently markets its products by using the services
               of 25 manufacturing representatives. There are no full-time sales
               personnel to coordinate the sales and marketing function. Novex
               plans to dedicate one full-time salesperson to work with the 25
               manufacturer's representatives to adequately train them on the
               Fiberforce and Por-Rok product lines, along with other products
               that Novex plans to acquire and develop internally. This
               salesperson will also 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 obtaining new accounts in his territory,
               increasing sales of products to existing accounts in his
               territory and monitoring the sales activity of the Por-Rok and
               Fiberforce distribution outlets in his territory.

                    In addition, Novex plans to hire a full-time salesperson in
               Canada and engage the services of one or two more manufacturing
               representatives to cover Eastern Canada. Novex currently uses a
               manufacturers' representative located in the Province of Alberta
               to cover principally the Alberta area as well as other locations
               in the western provinces of Canada.

               Performance Based Compensation

                    Novex has increased the performance-based compensation of
               the 25 manufacturers' representative organizations that it
               acquired 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,

                                       27

<PAGE>


               Novex believes it will be offering the incentives needed to
               motivate its sales force and reduce attrition by developing
               long-term relationships with these individuals.

               Architect and Engineering Representative

                    Novex plans to hire a technical salesperson to coordinate
               the introduction of Novex's products to architects, engineers and
               contractors that write specifications for construction projects.
               Having its products "specified" 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 Novex's
               products begin to appear in construction project specifications,
               distributors will become more interested in stocking Novex's
               products as the demand for the products increases.

               New Retail Channels

                    As part of Novex's efforts to expand sales of products in
               all possible distribution channels, Novex 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 The Home Depot and
               Lowe's.

               Advertising

                    Novex intends to present to the construction industry and
               the consumer an ongoing marketing campaign. To achieve this,
               Novex will establish and maintain an advertising and marketing
               budget. The budget will be used primarily to participate in trade
               shows and trade journal advertising. Where possible, Novex will
               participate in cooperative advertising. Novex is also creating
               promotional materials and has formulated marketing plans to
               increase sales by Novex and other representatives throughout the
               U.S. and Canada.

               Future Acquisitions

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

         w.    Number of Employees


     As of May 31, 2000, Novex, on a consolidated basis, employed fifteen (15)
full-time employees. Of the 15 employees, eleven are located in Novex's
principal executive offices and manufacturing facility in Clifton, New Jersey,
and four are located at Novex's operating subsidiary, Novex Canada. Of the 15
employees, five persons are in management positions, nine persons are in plant
operations and two persons occupies an administrative assistant position. With
the Por-Rok acquisition, Novex now has a collective bargaining agreement with
the plant personnel in Clifton. Novex has not experienced any work stoppages as
a result of labor disputes and considers its employee relations to be good.


                                       28

<PAGE>


Item 2. Properties.

     In November, 1999 Novex's principal executive offices were moved from 67
Wall Street, Suite 2001, New York, New York 10005, 212-825-9292 to 16 Cherry
Street, Clifton, New Jersey 07014 973- 777-2307, which is the location of the
offices and manufacturing operation that Novex acquired from The
Sherwin-Williams Company in August 1999. Upon closing that transaction, Novex
became the owner of all the real property, buildings and personal property
located at 16 Cherry Street, Clifton, New Jersey. The real property consists of
a 1.58 acre tract of commercially-zoned land with three separate buildings. The
main building is 15,000 square feet, of which 3,000 square feet is dedicated to
office space and a reception area and the remaining 12,000 square feet is
allocated to the manufacturing of Por- Rok products and the warehousing of
certain raw materials. 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 this facility. This operating plant currently runs at
approximately 25% of its capacity on a two shift level.

     The subletting agreement that Novex had entered into with Dowe, Capetanakis
& Preite which is the primary tenant of Novex's former office on Wall Street,
will end in February, 2000. Janet L. Dowe, the spouse of Daniel W. Dowe is a
partner of the law firm Dowe, Capetanakis & Preite. Mr. Dowe has no affiliation
with the firm. Total monthly payments under the lease agreement are
approximately $3,500 subject to adjustment for office supplies and services.
Management of Novex believes that the rent paid by it under this lease agreement
is less than the fair market value of similar office space in the surrounding
area.

     Novex's subsidiary, Novex Canada 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 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 Novex'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. The Canadian
facility is subject to a five year lease commencing on May 1, 1997 and expiring
on April 30, 2002. There is no option to renew the lease. The annual lease
payments are $62,500 (CAN). Management of Novex believes that the rent paid by
it under this lease agreement is less than the fair market value of similar
space in the surrounding area. This operating plant currently runs at
approximately 30% of its capacity on a two shift level.

     Management believes that the facilities used by it in the operation of its
business are adequately covered by insurance and are suitable and adequate for
their respective purposes.

Item 3. Legal Proceedings

         On August 12, 1997, a shareholder who was once a director and officer
of Novex ("the Plaintiff") commenced an action against Novex and its former
president, Mr. A. Roy Macmillan, to enjoin Novex from taking any action that
would restrict the sale of up to 300,000 shares of common stock that he
allegedly owns and for the costs he will incur to conduct the lawsuit. He has
not asked for, nor does Novex expect him to ask for, damages. The Plaintiff has
since named Novex's current president, Mr. Dowe, in the

                                       29

<PAGE>

lawsuit. The Plaintiff has no other affiliation with Novex other than for
being a shareholder. The plaintiff submitted a motion for summary judgment which
the court denied. Novex has raised several defenses to this action and believes
that plaintiff's claims are without merit. Novex has also asserted multiple
counterclaims against the plaintiff and, in December, 1999, it asserted multiple
claims against two third-party defendants, Herbert Adams, a former consultant to
the company, and Colin Raynor, a former director and former outside counsel to
the company Novex has alleged that the plaintiff and the two third-party
defendants (none of whom are presently affiliated with Novex) had caused the
company to issue them stock for work that was never done and at a time when
current management believes that fraudulent activities were being undertaken
which caused the company's stock price to be overinflated. All three individuals
are claiming that they received stock as compensation for services rendered.
When Novex investigated the matter it found virtually no records of any tangible
service. Their actions and omissions caused the U.S. Securities and Exchange
Commission in or about 1997 to commence an investigation of the company, then
known as Stratford Acquisition Corp. It is Novex's understanding that the
investigation is still pending and the Company has no information as to what
action, if any, the SEC may take pursuant to the investigation. Mel Greenspoon
vs. Stratford Acquisition Corporation, et. al., Ontario Court (General
Division), Index No. 97-CV-126814.


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

     During the fiscal year ended May 31, 2000, there were no proposals
submitted to a vote of the shareholders. The company intends to call a
shareholders meeting at the beginning of the calendar year.


                                     PART II

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

     Novex's common stock, $.001 par value, is traded on the Over-the-Counter
("OTC") Bulletin Board operated by the National Association of Securities
Dealers under the ticker symbol "HARD". The table below presents the high and
low closing bid prices for each of the first two quarters of the fiscal year
ending May 31, 2000 the four quarters in the fiscal year ending May 31, 1999 and
May 31, 1998, respectively. The quotations reflect interdealer prices without
retail mark-up, mark-down or commissions and may not necessarily represent
actual transactions. Novex's common stock became actively traded in July, 1995.
On January 28, 2000, the closing bid price was $.18. Novex 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                $.32             $.31              August 31, 1999
   2nd                $.19             $.17              November 30, 1999
   3rd                $.25             $.15              February 28, 2000
   4th                $.28             $.14              May 31, 2000



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<PAGE>


   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


     Novex may, but has not, entered into any agreements with market makers to
make a market in Novex's common stock. In addition, any market making activity
would be subject to the limits imposed by the Securities Act, and the Securities
Exchange Act of 1934, as amended. For example, federal regulations under the
Exchange Act regulate the trading of so-called "penny stocks" (the "Penny Stock
Rules"), which are generally defined as any security not listed on a national
securities exchange or NASDAQ, priced at less than $5.00 per share, and offered
by an issuer with limited net tangible assets and revenues. In addition, equity
securities listed on NASDAQ that are priced at less than $5.00 per share are
deemed penny stocks for the limited purpose of Section 15(b)(6) of the Exchange
Act. Therefore, during the time which the common stock is quoted on the NASDAQ
OTC Bulletin Board at a price below $5.00 per share, trading of the common stock
will be subject to the full range of the Penny Stock Rules. Under these rules,
broker dealers must take certain steps before selling a "penny stock," which
steps include: (i) obtaining financial and investment information from the
investor; (ii) obtaining a written suitability questionnaire and purchase
agreement signed by the investor; and (iii) providing the investor a written
identification of the shares being offered and in what quantity. If the Penny
Stock Rules are not followed by the broker-dealer, the investor has no
obligation to purchase the shares. Given the application of the comprehensive
Penny Stock Rules it may be more difficult for broker-dealers to sell the common
stock.

     Accordingly, no assurance can be given that an active market will always be
available for the Common stock, or as to the liquidity of the trading market for
the Common stock. If a trading market is not maintained, holders of the Common
stock may experience difficulty in reselling them or may be unable to resell
them at all. In addition, there is no assurance that the price of the Common
stock in the market will be equal to or greater than the offering price when a
particular offer of securities is made by or on behalf of a Selling
Securityholder, whether or not Novex employs market makers to make a market in
Novex's stock.


                                       31

<PAGE>



Item 6.           Selected Financial Data

     The following selected historical consolidated statement of operations for
the three years ended May 31, 2000, 1999 and 1998 and balance sheet as of May
31, 2000 and 1999 have been derived from the consolidated financial statements
of Novex that are included elsewhere in this Form 10-K and that have been
audited by Feldman Sherb & Co., P.C. whose reports with respect to the
consolidated financial statements are also included elsewhere in this
Prospectus. This information should be read in conjunction with the consolidated
financial statements and notes to the consolidated financial statements
appearing elsewhere in this Form 10-K and "Management's Discussion and Analysis
of Financial Condition and Results of Operations".

<TABLE>
<CAPTION>

                                                                   Years Ended May 31
                                                     -----------------------------------------------
                                                         1998             1999              2000
                                                     ------------     ------------      ------------
<S>                                                  <C>              <C>               <C>

STATEMENT OF OPERATIONS
    DATA:
Net Sales ......................................     $     9,073      $   321,311       $ 1,862,083
Gross Profit ...................................           5,444          208,006           708,923
Net Loss .......................................      (1,112,594)      (1,392,340)       (1,217,656)

Net Loss  Per Common Share .....................     $      (.10)     $      (.10)      $      (.06)

BALANCE SHEET DATA:
Working Capital Deficiency .....................     $  (518,925)     $  (554,077)      $(2,972,578)
Goodwill, net ..................................             -0-          316,300           826,465
Total Assets ...................................         318,540          656,058       $ 3,188,424
Long Term Debt .................................             -0-          772,582              --
Stockholders' Deficiency .......................        (401,045)        (923,386)         (735,327)

</TABLE>

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

Results of Operations

Year ended May 31, 2000 (Fiscal 2000) as compared to May 31, 1999 (Fiscal 1999)

     While net sales for the year ending May 31, 2000 was $1,862,083 net sales
for the same period ended May 31, 1999, were $321,311. The increase in sales was
attributable principally to the Company's acquisition of the Allied
Composition/Por-Rok business unit from The Sherwin-Williams Company ("Por-Rok
Unit") on August 13, 1999.

     Novex only achieved a gross margin of 38% for the year ending May 31, 2000.
The decrease in gross margin during this period was attributable to two factors.
The first factor being that for the year ended May 31 1999, the Novex's revenues
were primarily derived from the sale of its Fiberforce products which have
considerably higher gross margins whereas for the year ended May 31, 2000, Novex
generated a much higher volume of sales of its Por-Rok product line which has a
lower gross margin than the Fiberforce products. Secondly, Novex made a
substantial sale of its Fiberforce product at wholesale prices to a reseller of
fiber. This also contributed to the lower margin. Management does not expect any
further

                                       32

<PAGE>

decline in the gross margin. Rather it expects the gross margin to reach a
higher level with sales volume increases which will reduce the percentage of
fixed factory overhead as a percentage of total net sales. . Any further change
in the gross margin will result directly from changes in product sales mix and
sales volume.

     For the year ending May 31, 2000, the Company generated a loss from
operations of $895,839. The Company also incurred approximately $270,000 in
outgoing freight expenses which the Company will pass on to its customers
through a new pricing and shipping policy that became effective on June 1, 2000.
Although the new pricing and shipping policy was mailed to all Por-Rok customers
in March, its implementation was delayed until June to accommodate major
customers who wanted 90 days to implement the new policy within their own
organizations. Also, in this period, the Company incurred non-cash charges for
depreciation and amortization (including amortization of debt discount) of
$163,760 and incurred non-recurring charges of approximately $20,000 relating to
the service agreement it entered into with Sherwin-Williams which terminated on
February 29, 2000 . In addition, as part of its acquisition of the Por-Rok
business, Novex was required to register the stock issued to Sherwin-Williams
which cost approximately $100,000 in auditing, legal internal accounting charges
to complete the work. The net effect of the non-cash accounting charges,
non-recurring costs and the freight expenses, would have resulted in the Company
posting a net operating loss of $342,079 before expenses for interest which for
the year totaled $261,480 and foreign currency loss of $41,487 which reflects
the difference in currency exchanges between the United States and Canada for
funds transferred by the Company to Novex, Ltd. for operating expenses.

     For the year ended May 31, 2000, the Company's overall operating results do
not reflect a normalized operation on a consolidated basis due to the seasonal
slowdown at Novex, Ltd. in this period. In addition, these results reflect only
nine and one-half months of the Por-Rok operation which was acquired on August
13, 1999.

     As of May 31, 2000, the Company had $951,173 in current assets, which
consisted principally of accounts receivable of $553,270 and inventory of
$389,578. The Company's net property, plant and equipment totaled $1,399,341 and
goodwill of $826,465 which is attributable to the two acquisitions that the
Company completed in 1998 and 1999. All of the Company's asset categories
increased substantially when compared to its year ending balance sheet dated May
31, 1999 due to the integration of the assets it acquired in August 1999 as part
of the Por-Rok transaction.

Year ended May 31, 1999 (Fiscal 1999) as compared to May 31, 1998 (Fiscal 1998)

     The fiscal year ending May 31, 1999 was the first year in which Novex was
not in the development stage for the entire year. In this period, Novex made its
first acquisition by purchasing, ARM PRO, Inc. on September 16, 1998, and it
signed another contract to purchase Por-Rok. That transaction closed on August
13, 1999, after Novex's fiscal year ending May 31, 2000. In fiscal 1999, Novex
generated $321,311 in net sales, which excludes sales of Novex's line of
Fiberforce concrete reinforcing fibers that it acquired from ARM PRO, for the
period from June 1, 1998 to September 16, 1998, which is the strongest period
for fiber sales. Novex generated a loss from operations of $1,181,253 of which
$122,315 was attributable to non-cash imputed stock compensation.

     As the operating analysis indicates Novex has formally emerged from the
development stage, but was still required to rely on funds from external sources
to cover a cash shortfall from its operations.

                                       33

<PAGE>

When we acquired ARM PRO, we acquired its bank accounts which had a balance of
$158,000 at closing. This cash, along with the $190,000 balance from the
$800,000 note that was sold by Novex to purchase ARM PRO, Inc. was used to fund
Novex's operations. To cut costs four administrative and sales positions were
eliminated and Novex relocated ARM PRO's operations by merging it into its
facility in Mississauga, Ontario. The increase in general and administrative
costs of approximately $400,000 is primarily due to the ARM PRO acquisition.

     In the 1999 fiscal period, other than for approximately $75,000 derived
from sales of Novacrete products, sales were generated from Novex's Fiberforce
line of products.

     On May 31, 1999 Novex had $252,785 in current assets and $80,914 of net
property and equipment and goodwill of $316,300. The increase in goodwill 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, Novex 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
Adment product. 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. The
increase in inventory was primarily attributable to new inventory of Fiberforce
products and a build up of Novacrete products.

     Novex 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 Novex's sale of an $800,000 note to acquire ARM
PRO, Inc. and a note for $250,000 that was sold to the holders of the $800,000
note to provide additional working capital to Novex.

     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 Novex secured on August 13, 1999.

     The increase in accounts payable and accrued expenses was directly
attributable to Novex'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.

Liquidity and Financial Resources

     As of May 31, 2000, the Company had $3,923,751 in current liabilities,
which includes a seller's note for $1,281,351 that was issued to The
Sherwin-Williams Company upon the acquisition of the Por- Rok Unit
("Sherwin-Williams Note"). On August 7, 2000, the Sherwin-Williams Note,
including all outstanding interest, was converted into 1,390,388 share of
preferred stock. The Company also had $701,310 outstanding on its secured
revolving line of credit with Dime Commercial Corp. which is used to fund the
Company's operations. It had accounts payable of $615,965, accrued expenses
included interest totalling $155,933 and a cash overdraft of $40,297. The
shareholder's loan of $71,488, net of a debt discount of $3,750, includes
$35,925 that was made to Novex by its current President, Daniel W. Dowe, in June
and July, 1999 to assist Novex with its operating cash flow needs before we

                                       34

<PAGE>



acquired the Por-Rok Unit and opened the line of credit with Dime Commercial
Corp. Mr. Dowe has entered into an agreement with Novex's board of directors to
have the loan repaid without interest. There is no agreement between Novex's
board of directors and Mr. Dowe to repay the loan on a specified date. However,
if Novex has adequate cash on hand after it finances another acquisition, or if
it becomes profitable Novex and Mr. Dowe will agree to a mutually acceptable
payment plan. At the present time, Mr. Dowe has agreed to allow Novex time to
repay the loan with no set conditions for repayment.

     The current portion of the long-term debt consists of a three year term
loan and put warrant totalling $864,223 that was made by Dime Commercial Corp.
to enable the Company to acquire the Por-Rok Unit. The remaining portion of the
purchase price for the Por-Rok Unit was paid with the Sherwin-Williams Note. The
$68,184 obligation listed as "Due to Factor" is the value of an equipment loan
made to Novex, Ltd. denominated in United States dollars.

     The Dime Note is secured by all the assets that are located at the Por-Rok
operation at 16 Cherry Street, Clifton, New Jersey. These assets include the
land (1.58 acres), the main manufacturing building and the two warehouses,
including all the equipment in these buildings and all trademarks owned by
Novex. In addition, the revolving line of credit that Novex has with Dime is
secured by the accounts receivable generated at the Por-Rok unit and all
inventory. Since all the assets at the Por-Rok operation are secured by the Dime
Note, there are no other assets that can be used to secure new financing if it
were needed.

As of May 31, 2000, the Company was not in compliance with several of the
financial covenants. On September 1, 2000, the commercial bank notified the
company that the company is in default on its financing arrangement and demanded
payment of the line of credit and the Dime note payable. While such notification
was given under the company's agreement with the bank, management views it as
technical in nature. The bank continues to work with the company to continue
financing its operations and has given the company some additional flexibility
with respect to the line of credit. Since September 1, 2000, the company has
cured a number of the defaults by becoming current in its reporting obligations
under its agreement with the bank and, following the filing of this Form 10-K,
the company intends to bring in equity financing to meet its final obligation
under the default notice. Once the equity condition is met, the company fully
anticipates that the default notice will be retracted and that the company will
continue to work with the bank.

     In September, 1998 Novex sold a 9% $800,000 Debenture to the same entity
that had purchased $500,000 of the debenture that was sold by Novex in February
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 Novex's Mississauga, Ontario
facility. The debenture holder agreed to convert the principal amount of the
February debenture which was due to mature on October 31, 1998 into Novex's
common stock at a rate equal to the average of the eleven lowest closing trading
prices during the month of October, 1998, which was $.17 per share and resulted
in the issuance of 2,730,737 shares of Novex's common stock.

     In addition, Montcap Financial Corporation, loaned Novex Canada $70,000
that is secured by equipment at the Mississauga location, and Mr. Friedenberg
loaned Novex a total of $145,000 in notes to assist with cashflow shortfalls
during the summer of 1998 before Novex acquired ARM PRO and received a bridge
loan of $250,000 during February 1999. (See Notes 7 and 12(a) and (c) to
Consolidated Financial Statements)

     For the year ended May 31, 2000, Novex has been able to increase sales
volume while selling, general and administrative expenses have remained
relatively constant when compared to year ended May 31, 1999. The increase in
sales has resulted in higher levels of accounts receivable and inventory as well
as accounts payable and accrued expenses. In addition, the acquisition of
Por-Rok has increased the amount of debt, which has resulted in higher amounts
of interest payments that Novex needs to fund from operations. Therefore, while
there has been a decline in negative cash flows from operations from $974,220
for the year ended May 31, 1999 to $752,930 for the year ended May 31, 2000,
Novex still has generated negative cash flows from operations. Thus, while
future operating cash inflows should continue to increase, unless Novex's sales
volume increases, the company will not have sufficient cash flow to cover its
operating, investing and debt payment requirements. Therefore, Novex has
developed plans to improve profitability and cash flows and to raising capital,
if necessary.

                                       35

<PAGE>


     To improve Novex's profitability, management is undertaking a number of
initiatives to increase sales and reduce expenses. For example, Novex has issued
a new price list and freight policy that became effective June 1, 2000. The new
price list will improve Novex's margins on sales of its Por-Rok products and the
new freight policy will pass all outgoing freight charges to the customers.
Novex will also begin marketing some of its former Novacrete products under the
Por-Rok brandname to existing Por-Rok customers. In addition, management is
aggressively pursuing sales of the Por-Rok products to large home center stores
and major cooperative retailers of building materials.

     To improve cash flow, Novex has been able to procure more favorable payment
terms from vendors by extending the payment due date for raw materials and
supplies used in manufacturing. These vendors had initially been willing to
extend only limited credit to Novex soon after its acquisition of the Por-Rok
product line from The Sherwin-Williams, due to the company's small size. At the
time, the limited credit terms increased our need to use cash for operations.

     If these efforts do not generate additional sales to enable Novex to meet
all of its operating and financing expense requirements, it would then seek
additional financing from third-party sources. Although the Novex's assets are
fully secured by loans outstanding to Dime Commercial Corp. and Montcap
Financial Corp., Novex would seek to raise additional capital through the sales
of unsecured debt securities, unsecured debt combined with equity securities or
preferred and common stock. It is likely, however, that any unsecured debt
financing would carry a higher interest rate than secured financing or that any
equity financing might be on terms which are not favorable to Novex and which
are dilutive to existing shareholders.

Inflation and Changing Prices

     Novex does not foresee any risks associated with inflation or substantial
price increase in the near future. In addition, the raw materials that are used
by Novex in the manufacturing of its materials are available locally through
many sources and are for the most part commodity products. The one raw material
that Novex uses in all its products that cannot be classified as a pure
commodity is currently in sufficient supply. In addition, Novex presently owns
approximately 600,000 lbs. of this product. For these reasons, while Novex will
always have exposure to inflationary risks, it does not believe that inflation
will have any materially significant impact on its operations in the near
future.



                                       36

<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, 2000 and 1999                   F-3

Consolidated Statements of Operations for the years ended
May 31, 2000, 1999 and 1998                                               F-4

Consolidated Statements of Changes in Shareholders'
Deficiency for the years ended May 31, 2000, 1999 and 1998                F-5

Consolidated Statements of Cash Flows for years ended May 31,
2000, 1999 and 1998                                                       F-6

Notes to Consolidated Financial Statements                                F-7-27

Financial Statement Schedules

Schedule II - Valuation and Qualifying Accounts                           F-28

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.


                                       37
<PAGE>


                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
                        CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED MAY 31, 2000, 1999 AND 1998


                                                                          Page
                                                                          ----

Independent Auditors' Report                                              F-2

Consolidated Balance Sheets
   as of May 31, 2000 and 1999                                            F-3

Consolidated Statements of Operations
   for the years ended  May 31, 2000, 1999 and  1998                      F-4

Consolidated Statements of Changes in Shareholders' Deficiency
   for the years ended May 31, 2000, 1999, and 1998                       F-5

Consolidated Statements of Cash Flows
   for the years ended May 31, 2000, 1999 and 1998                        F-6

Notes to Consolidated Financial Statements                                F-7-27


Financial Statement Schedules

Schedule II - Valuation and Qualifying Accounts                           F-28

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, 2000 and 1999 and the related consolidated statements
of operations, changes in shareholders' deficiency and cash flows for the years
ended May 31, 2000, 1999, and 1998. We have also audited the financial statement
schedule on page F-28. 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, 2000 and 1999 and the consolidated results of its
operations, changes in shareholders' deficiency and cash flows for the years
ended May 31, 2000, 1999 and 1998 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.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2(a) to
the consolidated financial statements, the Company has incurred a net loss of
$1,217,656 during the year ended May 31, 2000, and, as of that date had a
working capital deficiency of $2,201,021 and a shareholders' deficiency of
$735,327. As more fully described in Notes 11 and 12 (d) to the consolidated
financial statements, the Company is not in compliance with several of the
financial covenants with a bank, and is in arrears on accounts with certain
vendor creditors. The Company's business plan for year ended May 31, 2001, which
is described in Note 2 (a) to the financial statements, contemplates obtaining
additional working capital, and the refinancing or restructuring of its debt.
The Company's ability to achieve the foregoing elements of its business plan,
which may be necessary to permit the realization of assets and satisfaction of
liabilities in the ordinary course of business, is uncertain. Those conditions
raise substantial doubt about the Company's ability to continue as a going
concern. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.


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

New York, New York
September 26, 2000


                                      F-2
<PAGE>


                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                     ASSETS
                                                                                  May 31,
                                                                       ------------------------------
                                                                           2000               1999
                                                                       -----------        -----------
<S>                                                                    <C>                <C>
CURRENT ASSETS:
      Cash and cash equivalents                                        $       285        $     1,788
      Accounts receivable, net of allowance for doubtful
          accounts of $14,660 in 2000 and $890 in 1999                     553,270             20,690
      Inventories                                                          389,578            221,707
      Prepaid expenses and other current assets                              8,040              8,600
                                                                       -----------        -----------

          Total Current Assets                                             951,173            252,785

PROPERTY AND EQUIPMENT, net of
      accumulated depreciation and amortization                          1,399,341             80,914

GOODWILL, net of accumulated amortization                                  826,465            316,300

OTHER ASSETS                                                                11,445              6,059
                                                                       -----------        -----------

                                                                       $ 3,188,424        $   656,058
                                                                       ===========        ===========


                    LIABILITIES AND SHAREHOLDERS' DEFICIENCY

CURRENT LIABILITIES:

      Cash overdraft                                                   $    40,297        $      --
      Current portion of long term debt                                    989,223            393,548
      Due to factor                                                         68,184             56,700
      Note payable                                                       1,281,351               --
      Bank line of credit                                                  701,310               --
      Accounts payable                                                     615,965            241,424
      Loans payable -  shareholder                                          71,488               --
      Accrued interest                                                     105,155             63,729
      Accrued expenses and other current liabilities                        50,778             51,461
                                                                       -----------        -----------

          Total Current Liabilities                                      3,923,751            806,862
                                                                       -----------        -----------

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,
          22,143,988 and 15,250,771 shares
          issued and outstanding, respectively                              22,144             15,251
      Additional paid-in capital                                         5,807,575          4,408,753
      Accumulated deficit                                               (6,565,046)        (5,347,390)
                                                                       -----------        -----------

          Total shareholders' deficiency                                  (735,327)          (923,386)
                                                                       -----------        -----------

                                                                       $ 3,188,424        $   656,058
                                                                       ===========        ===========
</TABLE>


                 See notes to consolidated financial statements


                                       F-3
<PAGE>


                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                                                                             Year Ended May 31,
                                                                         ----------------------------------------------------------
                                                                             2000                   1999                    1998
                                                                         ------------           ------------           ------------
<S>                                                                      <C>                    <C>                    <C>
NET SALES                                                                $  1,862,083           $    321,311           $      9,073
COST OF GOOD SOLD                                                           1,153,160                113,305                  5,444
                                                                         ------------           ------------           ------------
GROSS PROFIT                                                                  708,923                208,006                  3,629

SELLING, GENERAL AND ADMINISTRATIVE                                         1,604,762              1,389,259                999,282
                                                                         ------------           ------------           ------------

LOSS FROM OPERATIONS                                                         (895,839)            (1,181,253)              (995,653)
                                                                         ------------           ------------           ------------

OTHER INCOME (EXPENSES):
      Interest income                                                            --                      335                    409
      Interest expense                                                       (261,480)               (97,905)               (17,548)
      Amortization of debt discount                                           (34,583)              (146,674)               (84,535)
      Gain on change in valuation of warrant                                   15,733                   --                     --
      Foreign currency gain (loss)                                            (41,487)                33,157                (15,267)
                                                                         ------------           ------------           ------------
          OTHER EXPENSES, net                                                (321,817)              (211,087)              (116,941)
                                                                         ------------           ------------           ------------

NET LOSS                                                                 $ (1,217,656)          $ (1,392,340)          $ (1,112,594)
                                                                         ============           ============           ============

NET LOSS PER COMMON SHARE, basic and diluted                             $      (0.06)          $      (0.10)          $      (0.10)
                                                                         ============           ============           ============

WEIGHTED AVERAGE NUMBER OF COMMON
      SHARES OUTSTANDING, basic and diluted                                19,516,019             13,720,171             11,472,508
                                                                         ============           ============           ============
</TABLE>

                 See notes to consolidated financial statements


                                       F-4
<PAGE>

                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
          CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' DEFICIENCY

<TABLE>
<CAPTION>
                                                               Common Stock             Additional
                                                        ---------------------------       Paid-in       Accumulated
                                                           Shares          Amount         Capital         Deficit          Total
                                                        -----------     -----------     -----------     -----------     -----------
<S>                                                      <C>            <C>             <C>             <C>             <C>
BALANCE, May 31, 1997                                    10,113,381          10,114       2,623,657      (2,842,456)       (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       3,542,039      (3,955,050)       (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     $ 4,408,753     $(5,347,390)    $  (923,386)

Issuance of common stock
    in connection with acquisition                        1,000,000           1,000         259,000            --           260,000
Issuance of common stock
    for services                                            150,000             150          23,280                          23,430
Issuance of common stock
    for debt                                              5,647,493           5,648       1,028,102            --         1,033,750
Issuance of common stock for cash                            40,000              40           9,960                          10,000
Issuance of common stock
    for compensation                                         99,474              99          22,401            --            22,500
Redemption of common stock                                  (43,750)            (44)             44            --              --
Value of options issued for services                           --              --            56,035                          56,035
Net loss                                                       --              --              --        (1,217,656)     (1,217,656)
                                                        -----------     -----------     -----------     -----------     -----------
BALANCE, May 31, 2000                                    22,143,988     $    22,144     $ 5,807,575     $(6,565,046)    $  (735,327)
                                                        ===========     ===========     ===========     ===========     ===========
</TABLE>

                 See notes to consolidated financial statements.


                                       F-5
<PAGE>

                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                                    Year Ended May 31,
                                                                                        -------------------------------------------
                                                                                            2000            1999            1998
                                                                                        -----------     -----------     -----------
<S>                                                                                     <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
      Net loss                                                                          $(1,217,656)    $(1,392,340)    $(1,112,594)
      Adjustments to reconcile net loss to net cash
          used in operating activities:
               Depreciation and amortization                                                134,577          55,184          13,805
               Common stock and options issued for payment
                   of services and compensation                                              45,930         122,315         146,250
               Common stock issued for payment of interest expense                           15,175          11,522
               Options issued as payment for services                                        56,035            --            34,155
               Cancellation of options for services                                            --           (21,505)           --
               Amortization of debt discount                                                 34,583         146,674          84,535
      Changes in assets and liabilities, net of the effect from acquisition:
               Accounts receivables                                                        (338,566)        (11,440)         (9,250)
               Inventory                                                                     57,790         (99,573)         21,179
               Other receivables                                                               --            17,367          23,212
               Prepaid and other current assets                                                 560          (5,799)         (2,801)
               Other assets                                                                  (5,386)          5,223          (1,147)
               Accounts payable                                                             374,541         156,456          26,404
               Accrued interest                                                             105,345          46,214           5,868
               Accrued expenses and other current liabilities                                  (683)         (8,171)         16,625
                                                                                        -----------     -----------     -----------
NET CASH USED IN OPERATING ACTIVITIES                                                      (752,930)       (974,220)       (742,237)
                                                                                        -----------     -----------     -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
          Acquisition of property and equipment                                             (20,412)        (15,564)       (118,246)
          Sale (purchase) of marketable securities                                             --              --            13,250
          Acquisition of business, net of cash acquired                                    (800,000)       (330,236)           --
                                                                                        -----------     -----------     -----------
NET CASH USED IN INVESTING ACTIVITIES                                                      (820,412)       (345,800)       (104,996)
                                                                                        -----------     -----------     -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
          Cash overdraft                                                                     40,297            --              --
          Due to factor                                                                      11,484          56,700            --
          Advance from shareholders                                                          74,925         (37,000)         37,000
          Proceeds from bank line of credit                                                 701,310            --              --
          Proceeds from debt financing                                                         --         1,155,000         480,470
          Repayment of note payable                                                        (125,000)           --              --
          Proceeds from issuance of debt with warrants                                      858,823            --            69,530
          Proceeds from issuance of debt without warrants                                      --              --            40,000
          Proceeds from the sale of common stock
               and exercise of options                                                       10,000          98,000         259,243
                                                                                        -----------     -----------     -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                                 1,571,839       1,272,700         886,243
                                                                                        -----------     -----------     -----------

NET INCREASE (DECREASE) IN CASH AND
      CASH EQUIVALENTS                                                                       (1,503)        (47,320)         39,010
CASH AND CASH EQUIVALENTS AT
      BEGINNING OF YEAR                                                                       1,788          49,108          10,098
                                                                                        -----------     -----------     -----------

CASH AND CASH EQUIVALENTS AT END OF YEAR                                                $       285     $     1,788     $    49,108
                                                                                        ===========     ===========     ===========


SUPPLEMENTAL CASH FLOW INFORMATION:
          Cash paid during the period for:
                   Interest                                                             $    71,324     $    36,513     $       691
                                                                                        ===========     ===========     ===========
                   Income taxes                                                         $      --       $       689     $       689
                                                                                        ===========     ===========     ===========
          Non-cash financing and investing activities:
                   Conversion of debt to equity                                         $ 1,033,750     $   565,175     $   326,522
                                                                                        ===========     ===========     ===========
                   Common stock issued for assets acquired                              $   260,000     $      --       $      --
                                                                                        ===========     ===========     ===========
          Note payable issued for assets acquired                                       $ 1,281,351     $      --       $      --
                                                                                        ===========     ===========     ===========
</TABLE>

                 See notes to consolidated financial statements.


                                       F-6
<PAGE>

                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
                        CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED MAY 31, 2000, 1999 AND 1998


1.   ORGANIZATION AND DESCRIPTION OF BUSINESS

     Novex Systems  International , Inc. ("Novex") (formerly known as "Stratford
     Acquisition Corp.") and, through its wholly-owned Subsidiary, Novex Systems
     International,   Ltd.  ("Novex  Canada")(collectively  the  "Company"),  is
     engaged in the business of  manufacturing  and marketing a diversified line
     of construction  products  including a proprietary  admixture for enhancing
     cement based products ("Novacrete products"),  polypropylene fibers used in
     concrete products, and pre-packaged concrete repair,  grouting and patching
     products ("Por-Rok products").

     In fiscal  1999,  Novacrete  Technology  (Canada)  Inc.  was renamed  Novex
     Systems  International,  Ltd. Effective May 11, 1999, Stratford Acquisition
     Corp. merged into its newly-formed  wholly-owned subsidiary,  Novex Systems
     International,  Inc., for the purpose of re-domesticating  the Company from
     the  State  of  Minnesota  to the  State  of  New  York.  Accordingly,  all
     historical financial information presented is that of Stratford Acquisition
     Corporation.  On May 11, 1999,  Novex  Systems  International,  Inc. had no
     assets or operations.

     In January,  1997, Novex, which was then operating as Stratford Acquisition
     Company,  acquired  100%  of the  outstanding  stock  of  Novex  Canada,  a
     newly-created   company  established  to  manufacture  and  distribute  the
     Company's  Novacrete  product line. The  acquisition was accounted for as a
     purchase  whereby the Company,  in exchange for having  incorporated  Novex
     Canada,  received 100% of its common stock.  The cost of  incorporation  of
     $636 represents the Company's  investment in Novex Canada,  and accordingly
     has  been  eliminated  in  consolidation.   No  goodwill  arose  from  this
     acquisition  because  the cost of the  purchase  was equal to the net asset
     acquired.

     In September  1998,  Novex Canada  acquired all the issued and  outstanding
     common  stock of Arm Pro  Inc.,  located  in  Teeswater,  Ontario.  Arm Pro
     manufactured  and  marketed  polypropylene  fibers,  which are blended into
     cementitious  products  to provide  secondary  reinforcement  and to reduce
     cracking.

     In December  1998,  Arm Pro was merged  into Novex  Canada,  the  surviving
     corporation.  During  fiscal  1998,  the  Company was a  development  stage
     enterprise,  in  fiscal  1999  Novex  and  Novex  Canada  emerged  from the
     development stage.


                                      F-7
<PAGE>

                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
                        CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED MAY 31, 2000, 1999 AND 1998


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     a.   Basis  of  Presentation  -  The  accompanying  consolidated  financial
          statements have been prepared  assuming that the Company will continue
          as a going concern. The Company has incurred net losses of $1,217,656,
          $1,392,340 and $1,112,594 for the years ended May 31, 2000,  1999, and
          1998, respectively.  Additionally, the Company had approximately a net
          working capital  deficiency of $2,972,578,  an accumulated  deficit of
          $6,565,046 at May 31, 2000 and negative cash flow from  operations for
          the years ended December 31, 2000,  1999,  and 1998, of  approximately
          $753,000, $974,000 and $742,000,  respectively. Those conditions raise
          substantial  doubt about the Company's  ability to continue as a going
          concern.  Management  expects  to  incur  additional  losses  for  the
          foreseeable future and recognizes the need to raise capital to achieve
          their business plans. In August 2000, the Company converted $1,281,351
          of notes payable into  cumulative 10% series A convertible  redeemable
          preferred  stock  (see  Note  19(b)).   The  Company  plans  to  raise
          additional  capital  through  various  methods  including  the private
          placements  of  securities,  and the  issuance of debt.  Further,  the
          Company  plans to enhance its existing  product line and is developing
          new  marketing  strategies.  In addition,  the Company will search for
          potential  strategic  acquisitions  that will complement the Company's
          existing  products  and that are  synergistic  with its future  growth
          prospects.  The accompanying  consolidated financial statements do not
          include any adjustments  that might be necessary should the Company be
          unable to continue as a going concern.

     b.   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.

     c.   Cash and Cash  Equivalents - The Companies  maintain  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.

     d.   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.


                                      F-8
<PAGE>

                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MAY 31, 2000, 1999 AND 1998


     e.   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.

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

     g.   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 were also estimated to approximate
          fair value.

     h.   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, 2000,  1999 and 1998,
          diluted  loss per share is the same as basic 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.   Stock Options -The Company accounts for all  transactions  under which
          employees,  officers  and  directors  receive  shares  of stock in the
          Company in accordance  with the  provisions  of Accounting  Principles
          Board Opinion No. 25.  "Accounting  for Stock Issued to Employees." In
          accordance  with Statement of Financial  Accounting  Standards No. 123
          ("SFAS 123"),  "Accounting for Stock-Based  Compensation," the Company
          adopted   the  pro  forma   disclosure   requirements   of  SFAS  123.
          Accordingly,  no  compensation  has been  recognized in the results of
          operations for the employees, officers and directors stock option plan
          other  than  for  options  issued  to  non-employees   for  consulting
          services.


                                      F-9
<PAGE>

                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MAY 31, 2000, 1999 AND 1998


     k.   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.

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

     m.   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.

     n.   Revenue  Recognition  - Revenue  is  recognized  when the  product  is
          shipped to the customer.  Allowances  for  estimated bad debts,  sales
          returns and allowances are provided when sales are recorded.

     o.   Advertising  Costs  - All  advertising  costs,  excluding  cooperative
          advertising  programs,  are expensed as incurred or the first time the
          advertisement   takes  place.   Novex  establishes  an  allowance  for
          cooperative  advertising  costs  at  the  time  the  related  sale  is
          recognized.  Advertising  expense  charge to operations  for the years
          ended May 31, 2000,  1999 and 1998 amounted to  approximately $ 8,500,
          $12,700 and $1,100, respectively.

3.   CONCENTRATION OF CREDIT RISK

     a.   Cash

          The  Companies  maintain cash  balances at several  commercial  banks.
          Accounts at these  financial  institutions  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 do not require  collateral to support  accounts  receivable.


                                      F-10
<PAGE>

                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MAY 31, 2000, 1999 AND 1998


4.   INVENTORIES

     At May 31, inventories consists of the following:

                                                   2000           1999
                                               -----------    -----------
           Raw Material                        $    83,142    $   113,288

           Work in Progress                         88,174          3,217

           Finished Goods                          218,261        105,202
                                               -----------    -----------
                                               $   389,577    $   221,707
                                               ===========    ===========

5.   PROPERTY AND EQUIPMENT

     At May 31, property and equipment consists of the following:

                                                   2000           1999
                                               -----------    -----------
          Land                                 $   400,000    $      --

          Building                                 415,000           --

          Property and equipment                   784,711        231,095

          Leasehold Improvements                    50,486         17,330
                                               -----------    -----------

                                                 1,650,196        248,425

          Less: accumulated depreciation and
          amortization                            (250,855)      (167,511)
                                               -----------    -----------

                                               $ 1,399,341    $    80,914
                                               ===========    ===========

6.   GOODWILL

     Goodwill arose in connection with the  acquisitions of Arm Pro in September
     1998,  and with the  acquisition  of Allied / Por-Rok  lines in August 1999
     (see Note 17). Goodwill is being amortized on the straight-line method over
     10 years for Arm Pro and over 15 years for Allied / Por-Rok.  As of May 31,
     2000,  goodwill,  net of accumulated  amortization of $91,874,  is $826,465
     (see Note 17).  Amortization  expense charged to operations for fiscal year
     2000 and 1999 was approximately  $61,000 and $31,000,  respectively.  There
     was no amortization expense for fiscal years 1998.


                                      F-11
<PAGE>

                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MAY 31, 2000, 1999 AND 1998


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  as  to
     nonpayment  of  customer's  receivable  at  maturity.  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  (22.25 % at May 31,
     2000).

     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.

     During Fiscal 2000 the Company terminated their factoring  arrangement with
     this  financial  institution,  and no  longer  factors  their  receivables.
     However,  advances by the factor of $68,975, accrued interest of $1,920 and
     fees of $5,885  remain  outstanding  at May 31,2000.  On May 10, 2000,  the
     Company  entered  into  a  forbearance   agreement,   to  halt  foreclosure
     proceedings,  and agreed to a repayment schedule for the advances,  accrued
     interest and fees totaling  $76,780.  The repayment  schedule  requires six
     payments,  whereby the balance  will be repaid by October 31,  2000.  As of
     September 26, 2000, the Company has repaid $38,500.

8.   LOANS PAYABLE - SHAREHOLDERS

     During fiscal 1999, the Company was advanced  $74,925 from  shareholders to
     provide working capital for operations. The total of $54,925 of these loans
     payable are non-interest  bearing,  have no specific due date for repayment
     and are  uncollateralized.  The  remaining  $20,000  of  these  loans  were
     advanced  in May 2000 and bear  interest at 10% per annum.  These  interest
     bearing   advances  have  no  specific  due  date  for  repayment  and  are
     uncollateralized.  In connection with these interest bearing advances,  the
     Company was required to issue  20,000  shares of common  stock.  At May 31,
     2000,  the balance of $71,488 has been  recorded net of a debt  discount of
     $3,750 in  connection  with the  issuance of common  stock,  which is being
     amortized  over a period of one year.  The  amortization  of debt  discount
     charged to operations for fiscal 2000 was approximately $300.


                                      F-12
<PAGE>

                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MAY 31, 2000, 1999 AND 1998


9.   INCOME TAXES

     At May 31, 2000, the Company had federal, state and city net operating loss
     carryforwards  of  approximately   $4,350,000  resulting  from  accumulated
     operating losses through fiscal 2000. At May 31, 2000 and 1999, the Company
     has net deferred tax assets of  approximately  $1,630,000  and  $1,260,000,
     respectively.  The Company has  established  a valuation  allowance for the
     full amount of such net  deferred  tax assets at May 31, 2000 and 1999,  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.

                                                           May 31,
                                                  --------------------------
                                                      2000           1999
                                                  -----------    -----------
     Deferred tax asset:

           Net operating loss carryforward        $ 1,479,000    $ 1,260,000

           Valuation allowance                     (1,479,000)    (1,260,000)
                                                  -----------    -----------

     Net deferred tax asset                       $      --      $      --
                                                  ===========    ===========

10.  NOTES PAYABLE

     Notes  payable at May 31,  2000  include  $1,281,351  owing to The  Sherwin
     Williams  Company in connection with the acquisition of the  Allied/Por-Rok
     division by Novex Systems  International,  Inc. (See Note 17). The terms of
     the note call for no  principle  payments and for interest to accrue at the
     rate of 10% per annum.  Payment of  interest  is at the rate of 5% per year
     with the balance  payable  when the note  matures on August 12,  2000.  The
     Sherwin  Williams Company has a security  interest in substantially  all of
     the assets of the company, which is subordinate to the security interest of
     Dime  Commercial  Corp.  On August 7, 2000,  the  Company  issued  Series A
     preferred  stock for the notes  payable  plus  accrued  interest  (see Note
     19(b)).

11.  BANK LINE OF CREDIT

     In connection  with the acquisition of the  Allied/Por-Rok  division of The
     Sherwin Williams  Company,  Novex Systems  International,  Inc.  obtained a
     $750,000  line of  credit  from Dime  Commercial  Corp.  The line  provides
     working  capital  and is  secured by  accounts  receivable  and  inventory.
     Advances under the line are based on 80% of eligible  accounts  receivables
     and


                                      F-13
<PAGE>

                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MAY 31, 2000, 1999 AND 1998


     50% of eligible inventory.  As of May 31, 2000, the Bank Line of Credit was
     $708,323  inclusive of accrued interest of $7,013.  Interest is computed on
     the average  monthly balance under the line based on 2% over the prime rate
     (currently 11.50%).

     As of May 31, 2000,  the Company was not in compliance  with several of the
     financial covenants. On September 1, 2000, the commercial bank notified the
     Company that the Company is in default on its  financing  arrangement  and,
     therefore, demanded payment of the line of credit and the Dime Note Payable
     (see Note 12(d)).

12.  LONG TERM DEBT

     Long-term debt consists of:

                                                            May 31,
                                                    -----------------------
                                                       2000         1999
                                                    ----------   ----------
     Notes payable (a)                              $     --     $  145,000

     Debentures payable (b)                               --        800,000

     Debenture payable (c)                             125,000      250,000

     Dime note payable (d)                             859,556         --

     Dime put warrant (d)                                4,667         --
                                                    ----------   ----------
                                                       989,223    1,195,000

     Less: Unamortized discount on debentures             --         28,870
                                                    ----------   ----------
                                                       989,223    1,166,130

     Less: Current portion                             217,666      393,548
                                                    ----------   ----------
                                                    $  771,557   $  772,582
                                                    ==========   ==========

     (a)  In May 1998,  and at various  dates during  fiscal  1999,  the Company
          issued notes  payable for a total of $145,000,  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.  In September 1999,  these notes,  plus accrued interest of
          approximately  $14,750,  were  converted  into  585,924  shares of the
          Company's common stock (see Notes 13(c) and 17).


                                      F-14
<PAGE>

                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MAY 31, 2000, 1999 AND 1998


     (b)  Included in long-term debt are debentures owing to various stockholder
          of the  Company,  in the amount of  $800,000.  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  attached,
          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,  which has been  expensed.  In September
          1999, these notes,  plus accrued  interest of  approximately  $71,250,
          were converted into 5,041,569 shares of the Company's common stock. As
          part of the debt conversion  into common stock all 1,500,000  warrants
          were surrendered and cancelled (see Notes 13(c) and 17).

     (c)  Included in long-term  debt are  debentures  owing to a stockholder of
          the company, Quilcap, Corp., in the amount of $250,000. This debenture
          from February 25, 1999,  bears interest at 15% per annum and mature 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,  which has been  expensed.  In October 1999,  the
          Company repaid $125,000 of these  debentures,  plus accrued  interest.
          The remaining balance of $125,000 is outstanding as of May 31, 2000.

     (d)  The Company is obligated to Dime Commercial Corp. for $874,556 under a
          term  loan.  The term  loan has been  recorded  net of a  discount  of
          $15,000  as a result  of the put  warrant.  Amortization  of  discount
          charged  to  operations  for  fiscal  year 2000 was  $5,400.  The loan
          provides for monthly  interest  payments  based on the prime rate plus
          two percent (currently 11.50%).  Installments due under the loan begin
          on March 13, 2000 in the amount of $7,722 per month.  The loan matures
          on August 13, 2002 with a balloon payment of $655,000. There was a put
          warrant granted with the term loan,  exercisable at $.25 and having an
          expiration  date of September 1, 2002.  In  accordance  with  Emerging
          Issues  Task Force No.  96-13  "Accounting  for  Derivative  Financial
          Instruments  Indexed to, and  Potentially  Settled In, a Company's Own
          Stock," we have allocated  $4,667, to the put warrant and recorded the
          amount as part of long-term  debt as of May 31,  2000.  As a result of
          the change in  valuation  from $20,400 on August 13, 1999 to $4,667 as
          of May 31,  2000 the  Company  recognized  $15,733  in  other  income.
          Subsequent  changes in the  measure  of fair value of the put  warrant
          will  be  reported  in  the  statement  of  operations.  The  note  is
          collateralized  by all of Novex's  plant and  equipment at the Clifton
          facility  (see Note 17). On September  1, 2000,  the  commercial  bank
          notified the Company  that the Company is in default on its  financing
          arrangement and, therefore,  demanded payment of the Dime Note Payable
          and line of credit (see Note 11).

13.  SHAREHOLDERS' DEFICIENCY

     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


                                      F-15
<PAGE>

                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MAY 31, 2000, 1999 AND 1998


          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 that it alleges have received  securities  without paying
          fair consideration to the Company.

     b.   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 for debentures  payable at May 31, 1998 for $565,175,  including
          accrued interest of $15,175.

          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.

     c.   In August  2000,  the Company  issued  1,000,000  shares of its common
          stock  in  connection  with  the  acquisition  of  the  Allied/Por-Rok
          business.  These shares were valued at market prices of  approximately
          $.26 per share.

          During the year ended May 31, 2000 the Company  issued  150,000 shares
          of its common stock in connection with investor services. These shares
          were valued at market prices of approximately $.16 per share.

          In September 1999, the Company converted  approximately  $1,031,000 of
          various notes and  debentures  debt  including  accrued  interest into
          5,627,493  shares of its common  stock.  These  shares  were valued at
          market  prices  ranging  from $.18 to $.27 per share (See Notes 12 (a)
          and (b)).


                                      F-16
<PAGE>

                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MAY 31, 2000, 1999 AND 1998


          During the year ended May 31, 2000,  the Company  issued 99,474 shares
          of its common stock as  compensation  to three board members for their
          services.  These shares were valued at prices ranging  between $.19 to
          $.25 per share.

          During the year ended May 31, 2000, the Company renegotiated the terms
          of prior  employment and consulting  agreements.  As a result of these
          discussions with various  employees and consultants,  they voluntarily
          agreed to  surrender  43,750  shares of common  stock  issued for past
          services. These shares were recorded as a reduction to additional paid
          in capital.

14.  STOCK OPTIONS

     The  following  table  summarizes  the activity  with regard to options and
     warrants  for the years ended May 31, 2000,  1999,  and 1998 (See page F-18
     for chart references).

<TABLE>
<CAPTION>
                                     Stock Options                                        Warrants
                   ----------------------------------------------        -------------------------------------------
                     Shares         Exercise Price    Exercisable          Shares      Exercise Price    Exercisable
                   ----------       --------------    -----------        ----------    --------------    -----------
<S>                <C>              <C>               <C>                <C>           <C>               <C>
June 1, 1997             --                 --              --               91,504            0.50          91,504

  Granted(1)        1,727,772               0.50       1,727,772(2)         308,000            0.35         308,000

  Granted(3)           40,000               0.25          40,000(3)          60,000            0.50          60,000

  Granted(1)          300,000               0.40         300,000(2)       1,100,000            0.30         308,000

  Granted(1)           25,000               0.30          25,000               --              --              --

  Granted(3)           20,000               0.25          20,000               --              --              --

  Granted(1)           65,000               0.35          65,000               --              --              --

  Granted(3)           25,000               0.31          25,000               --              --              --
                   ----------       ------------      ----------         ----------    ------------      ----------

May  31, 1998       2,202,772        0.25 - 0.50       2,202,772          1,559,504     0.30 - 0.50       1,559,504

  Granted(1)          195,000               0.40         195,000(2)       1,650,000            0.45       1,650,000

  Granted(1)          100,000               0.45         100,000(2)           5,000            0.20           5,000

  Granted(1)           12,500               0.30          12,500               --              --              --

  Granted(1)           27,500               0.50          27,500               --              --              --

  Canceled(3)         (60,000)             (0.25)        (60,000)              --              --              --

  Canceled(3)         (25,000)             (0.31)        (25,000)              --              --              --
                   ----------       ------------      ----------         ----------    ------------      ----------


                                      F-17
<PAGE>

                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MAY 31, 2000, 1999 AND 1998


May 31, 1999        2,452,772       $0.25 - 0.50       2,452,772          3,214,504    $0.20 - 0.50       3,214,504

  Granted(1)           72,500         (0.30-.35)          72,500(2)         233,365            0.25         233,365

  Granted                                                       (3)          32,000            0.25          32,000

  Granted                                                       (3)         305,000            0.50         305,000

  Cancelled(1)     (1,151,848)             (0.35)     (1,151,848)(2)     (2,650,000)     (0.30-.45)      (2,650,000)

  Expired                                                       (4)        (308,000)     (0.35-0.50)       (308,000)

  Cancelled                                                     (2)         (91,504)          (0.35)        (91,504)
                   ----------       ------------      ----------         ----------    ------------      ----------
May  31, 2000       1,373,424       $0.25 - 0.50       2,452,772            735,365    $0.20 - 0.50         735,365
                   ==========       ============      ==========         ==========    ============      ==========
</TABLE>

     (1)  issued for employee services, including directors fees

     (2)  issued with debt

     (3)  issued for consulting services

     (4)  expired warrants issued to employees and issued with debt

     a.   During  fiscal  1997,  stock  options  were  granted and  exercised by
          certain  individuals and organizations.  These options were granted at
          an  exercise  price of $.50 and  expire  five  years  from the date of
          grant.  Novex has  recorded  $22,366  in  consulting  expenses  in the
          accompanying  consolidated  statement  of  operations.   According  to
          current  management,  the individuals and organizations  that received
          the grants have not earned them. Therefore, Novex is currently seeking
          to have all shares issued to these parties returned and canceled.

     b.   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 $0.25 to $0.50 per share.  The
          Company  has   recorded   $34,155  in   consulting   expenses  in  the
          accompanying consolidated statement of operations.


                                      F-18
<PAGE>

                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MAY 31, 2000, 1999 AND 1998


     c.   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.

     d.   During  fiscal 2000 the  Company  issued  337,000  warrants to various
          consultants for services  rendered during the year ended May 31, 2000.
          The warrants  expire  three years from the various  dates of grant and
          have an  exercise  price  ranging  from $0.25 to $0.50 per share.  The
          Company  has   recorded   $56,035  in   consulting   expenses  in  the
          accompanying consolidated statement of operations.

     e.   The Company in the year ended May 31, 2000 cancelled  575,924 options,
          issued to a director of the Company.

     f.   The  Company  in the year  ended May 31,  2000,  resolved  outstanding
          financial and legal matters with the Company's former  president.  The
          Company agreed to pay $10,000 to the former president,  and to release
          all restricted  common stock  registered in the former president name.
          In  addition,  the  former  president  agreed  to  surrender  and have
          cancelled  575,924  options and 91,504  warrants that were  previously
          issued.

15.  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   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,  2000,  1999,  and  1998  was  $56,035,  $6,949and  $34,155
     respectively.  The  valuation  for  options and  warrants  issued with debt
     during the years ended May 31, 2000,  1999,  and 1998 was $0,  $106,014 and
     $154,065, 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, 2000, 1999 and 1998  respectively:  annual  dividends of
     $0;  expected  volatility  of 195%,  50% and 50% for the years ended May31,
     2000,  1999 and 1998,  respectively;  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, 2000,  1999, and 1998,
     was $0.32, $0.17and $0.20, respectively.


                                      F-19
<PAGE>

                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MAY 31, 2000, 1999 AND 1998


                                               Year ended May 31,
                                   -------------------------------------------
                                       2000            1999           1998
                                   -----------     -----------     -----------

     Net loss to shareholders:

        As reported                $(1,217,656)    $(1,392,340)    $(1,112,954)

        Pro forma                  $(1,237,931)    $(1,432,076)    $(1,562,387)

     Net loss per share:

        As reported                $     (0.06)    $     (0.10)    $     (0.10)

        Pro forma                  $     (0.06)    $     (0.10)    $     (0.14)

     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 management's  opinion,  the existing models do not
     necessarily  provide a  reliable  single  measure  of the fair value of its
     employee stock options and warrants.

16.  SEGMENT INFORMATION

     The Company adopted  Statement of Financial  Accounting  Standards No. 131,
     "Disclosures  about  Segments of an  Enterprise  and  Related  Information"
     ("SFAS  131")  as of June 1,  1997.  SFAS  131  establishes  standards  for
     reporting  information  regarding  operating  segments in annual  financial
     statements  and  requires  selected  information  for those  segments to be
     presented in interim  financial  reports issued to  stockholders.  SFAS 131
     also  establishes  standards  for related  disclosures  about  products and
     services,  and  geographic  areas.  Operating  segments are  identified  as
     components  of  an  enterprise  about  which  separate  discrete  financial
     information  is available for  evaluation by the chief  operation  decision
     maker or  decision  making  group,  in  making  decisions  how to  allocate
     resources  and assess  performance.  To date,  the  Company  has viewed its
     operations as principally one segment.


                                      F-20
<PAGE>

                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MAY 31, 2000, 1999 AND 1998


     Key financial information for the one segment by country is as follows:

<TABLE>
<CAPTION>
                                         United                     Adjustments
                                         States         Canada          (1)        Consolidated
                                       ----------     ----------    -----------    ------------
<S>                                    <C>            <C>            <C>            <C>
Year Ended May 31, 2000:

   Sales to unaffiliated customers     $1,713,756     $  148,326     $     --       $1,862,082

   Interest expense                       223,752         37,728           --          261,480

   Deprecation and amortization            88,752         45,825           --          134,577

   Segment loss                           868,049        349,607           --        1,217,656

   Segment assets                       2,718,059        470,365           --        3,188,424

   Long lived asset expenditures          818,957          1,455           --          820,412

Year Ended May 31, 1999:

   Sales to unaffiliated customers     $  128,909     $  192,402     $     --       $  321,311

   Interest income                           --             --              335            335

   Interest expense                          --           66,640         31,265         97,905

   Deprecation and amortization              --           50,182          5,002         55,184

   Segment loss                              --        1,017,944        374,396      1,392,340

   Segment assets                            --          604,961         51,097        656,058

   Long lived asset expenditures             --          345,800           --          345,800

Year Ended May 31, 1998:

   Sales to unaffiliated customers     $     --       $    9,703     $     --       $    9,703

   Interest income                           --             --              409            409

   Interest expense                          --           15,666          1,882         17,548

   Deprecation and amortization              --           13,805           --           13,805

   Segment loss                              --          368,637        743,957      1,112,594

   Segment assets                            --          311,777          6,763        318,540

   Long lived asset expenditures             --          118,246           --          118,246
</TABLE>

     (1)  This column represents the amount of non-segment information necessary
          to reconcile reportable segment information with consolidated totals.


                                      F-21
<PAGE>

                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MAY 31, 2000, 1999 AND 1998


17.  ACQUISITIONS

     On August 13, 1999, the Company  acquired from The Sherwin Williams Company
     ("Sherwin")  certain assets  representing  their  Allied/Por-Rok  business.
     Pursuant to the purchase agreement Novex (i) paid $800,000 to Sherwin, (ii)
     issued 1,000,000 shares of restricted common stock, valued at $260,000,  to
     Sherwin  with  the  requirement  to  register  the  common  stock  with the
     Securities  and  Exchange  Commission  and (iii)  issued a note payable for
     $1,281,351,  as adjusted from  $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 be
     paid as a condition of the Allied/Por-Rok acquisition. At May 31, 2000, the
     outstanding  balance  on the  debenture  is  $125,000  (see  Note 12  (c)).
     Further,  Sherwin has a subordinated security interest in substantially all
     the assets of the company.

     Novex  has  entered  into  a  $890,000  installment  term  note  with  Dime
     Commercial Corp. of which $800,000 was used for the purchase of Allied /Por
     Rok and the remaining  $90,000 was used for working capital needs in fiscal
     2000 (see Note  12(d)).  This  financing  arrangement  also  provided for a
     $750,000 revolving note payable to fund future working capital requirements
     (see Note 11). The bank has a senior secured interest in substantially  all
     the assets of Novex.  In  addition,  the Company  granted a class B warrant
     with a "put" right to purchase 233,365 shares of restricted common stock at
     an exercise price of $.25.  Dime  Commercial  Corp. has the right to demand
     the purchase of the warrant if Novex  completes a  refinancing  of all or a
     portion of the Dime term loan  and/or  revolving  line of credit from funds
     provided  by someone  other than  Dime.  Therefore,  Dime has the option of
     requesting  payment  in cash or  waiving  its right to sell the  warrant to
     Novex. If Dime requests  payment the amount they will receive is either (i)
     if the  closing  stock price is less than or equal to the  exercise  price,
     then Novex pays  $58,341,  which is the  exercise  price  times the 233,365
     shares  underlying  the  warrant or (ii) if the closing  price  exceeds the
     exercise  price,  then Novex pays the closing price up to a maximum of $.51
     per share  underlying  the  warrant  or  $119,016.  Alternatively,  if Dime
     decided  to  exercise  the  warrant,  they can issue a 60-day  non-interest
     bearing note for the entire  amount due to Novex for the 233,365  shares of
     common stock underlying the warrant.

     A total of $20,400 has been  allocated to the put  warrant,  resulting in a
     liability.  (See  Note 12 (d)).  The  fair  value  of the put  warrant  was
     estimated on the date of grant using the Black-Scholes option pricing model
     with the  following  assumptions:  stock  price of $.26 per  share;  annual
     dividend of $0; expected  volatility of 50%; risk free interest rate of 6%;
     and an expected life of two years.


                                      F-22
<PAGE>

                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MAY 31, 2000, 1999 AND 1998


     Goodwill of $571,245  resulted from this  acquisition  and is determined as
     follows:

     Assets acquired:
       Accounts receivable                                       $  311,983
       Inventory                                                    225,661
       Furniture and equipment                                      566,360
       Building                                                     415,000
       Land                                                         400,000
                                                                 ----------
               Total                                              1,919,004
     Purchase price                                               2,341,351
                                                                 ----------
                                                                    422,347
     Acquisition costs                                              148,898
                                                                 ----------
     Goodwill                                                    $  571,245
                                                                 ==========

     The  following  schedule  combines  the  unaudited   pro-forma  results  of
     operations  of  the  Company  and  Allied/Por-Rok,  as if  the  acquisition
     occurred on June 1, 1998 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, 1998.

                                                  Years ended May 31,
                                            ------------------------------
                                                2000              1999
                                            ------------      ------------

     Net Sales                              $  2,231,742      $  1,960,388

     Cost of sales                             1,418,809         1,499,638
                                            ------------      ------------
     Gross profit                                812,933           460,750

     Operating expenses                        1,665,736         1,672,142
                                            ------------      ------------
     Loss from operations                       (852,803)       (1,211,392)

     Net other expenses                         (383,553)         (452,239)
                                            ------------      ------------
     Net loss                               $ (1,236,356)     $ (1,663,627)
                                            ------------      ------------
     Net loss per share                     $      (0.06)     $      (0.11)
                                            ------------      ------------
     Shares used in calculation               19,716,019        14,720,171
                                            ============      ============


                                      F-23
<PAGE>

                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MAY 31, 2000, 1999 AND 1998


     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 12 (b)).  The
     acquisition is accounted for as a purchase business combination.

     The following table summarizes the acquisition:

                 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
                                            ------------      ------------

     Net Sales                              $    421,305      $    327,554

     Cost of sales                               212,059           133,988
                                            ------------      ------------
     Gross profit                                209,246           193,566

     Operating expenses                        1,406,026         1,189,113
                                            ------------      ------------
     Loss from operations                     (1,196,780)         (995,547)

     Net other expenses                          180,254           138,269
                                            ------------      ------------
     Net loss                               $ (1,377,034)     $ (1,133,816)
                                            ------------      ------------
     Net loss per share                     $      (0.10)     $      (0.10)
                                            ------------      ------------
     Shares used in calculation               13,720,171        11,472,508
                                            ============      ============


                                      F-24
<PAGE>

                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MAY 31, 2000, 1999 AND 1998


18.  COMMITMENTS AND CONTINGENCIES

     a.   The Company had a verbal month to month sublease  arrangement  for its
          headquarters  in New York City in fiscal  1999.  In fiscal  2000,  the
          Company  moved  their   headquarters   to  the  Clifton,   New  Jersey
          manufacturing  facility.  The Subsidiary has a lease  arrangement  for
          office  and  production  facilities  that  commenced  May 1,  1997 and
          expires on April 30, 2002. This lease requires monthly rental payments
          of approximately $2,300 in the first two years of the lease and $2,400
          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
            -----------                  ------
                2001                    $ 36,977

                2002                      30,726

                2003                       2,400
                                        --------
                                        $ 70,103
                                        ========

          Total rental expenses for the years ended May 31, 2000, 1999, and 1998
          was approximately $48,000, $57,000 and $61,000, 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-25
<PAGE>

                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MAY 31, 2000, 1999 AND 1998


     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.

     d.   SEC  Investigation  - The Company was informed  that the United States
          Securities  and  Exchange  Commission  (the  "SEC") had  commenced  an
          investigation  involving the Company.  The Company has cooperated with
          the SEC.  Although the Company has not received any further  inquiries
          from  the  SEC  regarding  this  investigation,  it is  the  Company's
          understanding that the investigation is still pending. The Company has
          no information as to the results,  if any, of such  investigation,  or
          what action, if any, the SEC may take pursuant to the investigation.

19.  SUBSEQUENT EVENTS

     a.   On August 1,  2000,  the  Company  acquired  certain  assets  from The
          Sta-Dri Company of Odenton, Maryland. In exchange, the Chief Executive
          Officer of the Company  paid $72,000 and has given  750,000  shares of
          his  registered  common  stock  along with the  Company's  issuance of
          250,000 shares of restricted common stock to the majority  shareholder
          of The Sta-Dri  Company  ("Selling  Shareholder").  In  addition,  the
          Company has issued 750,000  shares of restricted  common stock to, and
          has entered into an agreement  with,  the Chief  Executive  Officer to
          repay the  $72,000.  The total of  1,000,000  shares of the  Company's
          common stock was valued at $137,000 based on the average trading price
          three days before and after the date of the  acquisition was agreed to
          and announced, which was August 1, 2000.

          As part of the terms to the acquisition,  the Company has provided the
          Selling  Shareholder  with  certain  piggyback   registration  rights.
          Therefore,  in the event that the Company shall register any shares of
          its common  stock with in one year from  August 1, 2000,  the  Company
          will register the 250,000 shares of restricted  common stock issued in
          this  acquisition  along  with the other  shares  in the  registration
          statement.

          Additionally,  the Company has provided the Selling  Shareholder  with
          the right to purchase any shares of the Company's common stock offered
          for sale or securities  convertible  into its common stock from August
          1, 2000 until August 12, 2000.

          As of August 1, 2001 and until  August 1, 2002,  the Company will have
          to pay an additional  $6,000 each month to the Selling  Shareholder in
          the event that common  stock of the Company has not traded above $1.00
          per share for twenty  consecutive


                                      F-26
<PAGE>

                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MAY 31, 2000, 1999 AND 1998


          trading days in each month.  In the event that the common stock trades
          in excess of $1.00 per share for  twenty  consecutive  days the $6,000
          monthly obligation shall terminate.

          The  acquisition  will  be  recorded  using  the  purchase  method  of
          accounting.

     b.   On  August  7,  2000,  the  Company  issued  cumulative  10%  series A
          convertible  redeemable  preferred stock ("series A preferred  stock")
          for $1,281,351 in notes payable plus accrued interest of $109,037. The
          series A preferred  stock has a  liquidation  preference  of $1.00 per
          share plus declared and unpaid dividends. The series A preferred stock
          can be redeem at the  option of the  issuer at any time and any number
          of shares  including unpaid dividends until August 7, 2002. The series
          A preferred stock shall accrue dividends at a rate of 10% per year and
          on each  anniversary  date of the issuance of these shares the Company
          will issue one additional  share of series A preferred  stock for each
          one-dollar amount of unpaid dividends payable.

          After  August 7, 2002,  if any shares of the series A preferred  stock
          are  outstanding,  including  unpaid  dividends,  the Company  will be
          required to declare a "special  dividend" equal to 15% of the value of
          the series A preferred stock and therefore issues additional shares of
          series A preferred stock.  Further,  the series A preferred stock will
          automatically  convert to common  stock at a rate equal to 85% percent
          of the average trading price for the twenty  consecutive days prior to
          August 7, 2002.

          Furthermore,  the  Company has  provided  the holder with the right to
          purchase any shares of the Company's  common stock offered for sale or
          securities convertible into its common stock from August 7, 2000 until
          August 12, 2002.

          Additionally,  the  Company  cannot  declare and pay any cash or stock
          dividends to any other class of equity  securities  until the series A
          preferred stock has been redeemed or converted to common stock.


                                      F-27
<PAGE>

                NOVEX SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MAY 31, 2000, 1999 AND 1998


                                   SCHEDULE II
                        VALUATION AND QUALIFYING ACCOUNTS
                     Years Ended May 31, 2000,1999 and 1998

<TABLE>
<CAPTION>
                                                        Additions
                                         Balance at     charged to
                                         beginning       cost and      Deductions-       Balance at
            Description                   of year        expenses       describe        end of Year
            -----------                   -------        --------       --------        -----------
<S>                                        <C>          <C>                <C>          <C>
Allowance for doubtful accounts

    Year ended May 31, 2000                $890         $13,770            $--          $14,660

    Year ended May 31, 1999                $--             $890            $--             $890

    Year ended May 31, 1998                $--             $--             $--             $--
</TABLE>


                                      F-28
<PAGE>


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

     Novex has engaged the certified public accounting firm of Feldman Sherb &
Co., P.C. as its outside auditors to audit the company's annual financial
statements for the fiscal year ending May 31, 2000 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 Novex and its subsidiaries as of May 31, 2000.

Name                             Aqe                         Position
----                             ---                         --------

William K. Lavin                 56                 Chairman, Secretary

Daniel W. Dowe                   38                 Director, President
                                                    and Chief Executive Officer

D. Friedenberg                   48                 Director, Treasurer

Edward J. Malloy                 64                 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. Before forming his
firm, he was Chief Executive Officer of Woolworth Corporation (renamed
"Venator") from 1993 to 1994 and immediately before that position he served as
Woolworth's Chief Administrative and Financial Officer. Mr. Lavin also 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 an
additional three year period. He was the founder of Dowe & Dowe, a New York
City-based law firm that provided legal services to Novex. From 1993 to November
17, 1997, Mr. Dowe practiced 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. Before 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 of Novex since
November, 1996 and is currently employed as a financial advisor with American
High Growth Co. He has been the President of

                                       38

<PAGE>



Firebird Capital Management, a financial 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 also serves as a Director of Datametrics
Corporation (AMEX:DC).

Edward J. Malloy. Mr. Malloy became a director of Novex in January, 1998. Since
1993 he has been 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 an
adequate level of work for his union members. Mr. Malloy brings to Novex an
extensive level of contacts and industry experience.

Committees of the Board of Directors

     The Board of Directors does not have a standing audit or nominating
committee or any other committees performing similar functions. Novex does have
a compensation committee consisting of Messrs. Lavin, Friedenberg and Malloy
(the "Compensation Committee") which had one meeting in each of the fiscal years
ending May 31, 1998 and 1999. The Compensation Committee is responsible for
assuring that the officers and key management of Novex are effectively
compensated in terms of salaries, incentive compensation and benefits which are
internally equitable and externally competitive. The Compensation Committee is
responsible for setting the compensation of the executive officers.

Executive Officers

     At present, Mr. Dowe is Novex's only executive officer inasmuch as its
chief financial officer has recently left the company. As a result, Mr. Dowe is
now handling all financial matters with certain bookkeeping and administrative
duties being peformed by clerical workers and certain accounting and tax-related
matters being performed by outside professionals.


                                       39

<PAGE>


Item 11. Executive Compensation

The following table shows all remuneration in excess of $100,000 paid by Novex
and its subsidiaries through May 31, 2000, 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                       Salary  Bonus   sation     Awards      SARs          Payout            sation
Position      Year        ($)     ($)                ($)         ($)           (#)               (#)       ($)
----------------------------------------------------------------------------------------------------------------
<S>           <C>         <C>     <C>     <C>        <C>         <C>             <C>               <C>     <C>

Daniel
Dowe
President     2000        $180,000
(1)(2)(3)     1999        $180,000
              1998         $89,850                   432,357     575,924

</TABLE>

(1)  From November 17, 1997 through March 31, 1998, during which time Mr. Dowe
     served as interim president of Novex, he earned $52,500 in cash
     compensation. Commencing April 1, 1998, Mr. Dowe became an employee of
     Novex 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 Novex closed the Por-Rok transaction. As of the
     filing of this registration statement, Novex has paid to Mr. Dowe the
     balance of the deferred compensation. In addition, Mr. Dowe made an
     interest-free loan to Novex of $30,378 in the fiscal year 1999 to cover
     working capital shortfalls. None of the loan has been repaid as of the date
     of this registration statement. Mr. Dowe does not receive any additional
     remuneration for serving as a director.

(2)  Before becoming an employee of Novex, Mr. Dowe received 64,857 shares of
     common stock in payment for $22,700 of legal services rendered to Novex
     through November 17, 1997. From November 17, 1997 through March 31, 1998,
     during which time Mr. Dowe served as interim president of Novex, he earned
     97,500 shares of common stock. When Mr. Dowe became an employee of Novex,
     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, Novex 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 the then current market price of $.35 per share and will expire
     on June 25, 2002.

(4)  On April 1, 1998, Novex entered a three-year employment agreement with Mr.
     Dowe providing for an additional three years at his option and a minimum
     annual salary of $180,000 which the Compensation Committee reviews
     annually. As of the date of this registration statement, the Agreement has
     been amended to include a payment from Novex to Mr. Dowe in the amount of
     $800,000 if a Change of Control were to occur on or before

                                       40

<PAGE>

          November 10, 2000. The term "Change of Control" is defined in the
          Agreement as:

          (i)  termination of Mr. Dowe's employment by Novex for reasons other
               than for cause;

          (ii) a significant reduction by Novex of his position, duties or
               responsibilities;

         (iii) the removal and/or replacement or any increase in the number of
               directors of Novex which removal, replacement or increase shall
               result in a change of 50% or more of the current board of
               directors, or

          (iv) the accumulation or acquisition by any one shareholder or group
               of shareholders acting in concert resulting in that
               shareholder(s)' control over or beneficial ownership of 40% or
               more of Novex outstanding capital 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, 2000 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:

                                     Table 1

         Security Ownership of Certain Beneficial Owners and Management

                                Amount and Nature
Name and Address                  of Beneficial            Percent of
of Beneficial owner (1)           Ownership(2)               Class(2)
-----------------------         -----------------          ----------

Douglas Friedenberg,                2,858,077                11.87%
Director, Treasurer(3)

Daniel W. Dowe                      3,445,658                14.31%
Director, President,
Chief Executive Officer(4)

William K. Lavin                      295,316                 1.23%
Chairman, Secretary(5)

Edward J. Malloy
Director(6)                           255,316                 1.06%
                                    ---------                -----

All Directors and Officers
as a group                          6,859,367                28.47%
                                    ---------                -----


A.   The address for Messrs. Friedenberg, Dowe, Lavin and Malloy is 16 Cherry
     Street, Clifton, New Jersey 07014.

B.   The class includes stock options and stock warrants granted to the
     directors and officers before January 10, 2000 which are deemed by Novex to
     be acquirable by the beneficial owner within 60

                                       41

<PAGE>



     days of the date of this offering memorandum by exercise of the option or
     warrant. As of January 10, 2000 there were 21,987,738 shares issued and
     outstanding, 24,084,527 on a fully diluted basis. Percentages are stated on
     a fully diluted basis.

C.   Mr Friedenberg and various entities for which Mr. Friedenberg exercises
     sole voting and investment power as investment advisor presently hold an
     aggregate of 2,553,077 shares of common stock. Certain of the entities have
     the right to acquire beneficial ownership of an aggregate of 305,000
     additional shares upon the exercise of 305,000 Class B warrants held by the
     entities.

D.   Mr. Dowe presently owns 2,869,734 shares of common stock (of which Mr. Dowe
     purchased 2,437,377 shares of common stock from Little Wing, L.P. for
     $500,000 which is payable by a 10% promissory noted maturing on November 4,
     2000) and has the right to acquire beneficial ownership of 575,924
     additional shares upon exercise of an equal number of common stock options.

E.   Mr. Lavin presently owns 95,316 shares of common stock and has the right to
     acquire beneficial ownership of 200,000 additional shares upon exercise of
     an equal number of common stock options.

F.   Mr. Malloy presently owns 55,316 shares of common stock and has the right
     to acquire beneficial ownership of 200,000 additional shares upon exercise
     of an equal number of common stock options.

Director Compensation

     Except for Mr. Dowe, the three remaining directors receive $2,500 per
quarter for services rendered as directors of Novex which is paid in restricted
common stock based on the average bid and closing price of Novex's common stock
on the last trading day for the months ending March, June, September and
December. In addition, each non-employee director receives an additional $10,000
per annum, payable in equal quarterly installments if the director is a member
of a committee of the board of directors that actually meets during the
quarterly period. During the fiscal year 2000, there were no committee meetings.

                                     Table 2

                 Security Ownership of Certain Beneficial Owners
                                (Non-Management)

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

Parker Quillen                     5,041,569                     20.93%
c/o Quilcap Corporation
375 Park Avenue
Suite 1404
New York, New York

(1)  As of January 10, 2000 there were 21,987,738 shares issued and outstanding,
     24,084,527 on a fully diluted basis. Percentage is stated on a fully
     diluted basis.


                                       42

<PAGE>



Item 13. Certain Relationships and Related Transactions

     On June 25, 1997, Novex issued an aggregate of 1,727,772 common stock
options to its directors as an incentive for future performance. Of these
options, Mr. Roy MacMillan (the former president of Novex), Mr. Dowe and Mr.
Friedenberg each received 575,924 common stock options. The options were
exercisable when issued at then current market price of $.35 per share and will
expire on June 25, 2002. As part of his severance from Novex, Mr. MacMillan
agreed to waive his option to purchase 575,924 shares of common stock. In August
1999, to facilitate the raising of the acquisition financing, Mr. Friedenberg
voluntarily agreed to the cancellation of his 575,924 common stock options.

     Before becoming an employee of Novex, Mr. Dowe received 64,857 shares of
common stock in payment for $22,700 of legal services rendered to Novex through
November, 1997. From November 17, 1997 through March 31, 1998, during which time
Mr. Dowe served as interim president of Novex, he earned $52,500 in cash
compensation and received 97,500 shares of common stock. When Mr. Dowe became an
employee of Novex, he received 270,000 shares of common stock representing
30,000 shares per month for the remainder of the calendar year.

     As directors of Novex, Messrs. Friedenberg, Lavin and Malloy receive $2500
per quarter for services rendered as directors of Novex which is paid in
restricted common stock based on the average bid and closing price of Novex's
common stock on the last trading day for the months ending March, June,
September and December.

     Mr. Friedenberg does not receive a salary, but from time to time is
compensated by Novex for services rendered on various financial projects. In
addition to serving as an unpaid director of Novex, Mr. Lavin, or his consulting
firm WKL, Inc. receive compensation for services rendered to Novex for various
acquisition projects.

     In December 1998, Novex entered into a subletting agreement with Dowe,
Capetanakis & Preite for the use of approximately 1,600 square feet of office
space located at 67 Wall Street, Suite 2001, New York, New York. Mr. Dowe's
spouse, Janet L. Dowe was a partner in the law firm Dowe, Capetanakis & Preite.
The subletting agreement ended in February 2000. During the period December 1998
through January 2000, the monthly rent under the lease agreement was
approximately $3,500, after adjustment for office equipment, supplies and
services. Management believes that the rent paid by Novex under this lease
agreement is less than what it would have been required to pay for similar
premises within the area in which Novex's executive offices were located.

     In addition, the law firm of Dowe Capetanakis & Preite occasionally
provided legal services to Novex. Any payments to Dowe, Capetanakis and Preite
for services rendered to Novex were approved by the Board of Directors, except
for Mr. Dowe who was not entitled to vote on these matters. Since May 2000, Mrs.
Dowe has rendered administrative as well as legal services to Novex. Any
payments to Mrs. Dowe for legal services rendered to Novex were approved by the
Board of Directors, except for Mr. Dowe who was not entitled to vote on these
matters.

     In May 1999, Mr. Daniel Dowe made an interest free loan to Novex in the
amount of $30,378 to provide it with cash flow during the operating deficit that
occurred during the last quarter of fiscal 1999. Novex expects to repay Mr. Dowe
during the third and fourth quarters of fiscal 2000.

     With respect to the foregoing transactions, Novex believes that the terms
of these transactions


                                       43

<PAGE>

were as fair to Novex as could be obtained from an unrelated third party. Future
transactions with affiliates including loans will be on terms no less favorable
than could be obtained from unaffiliated parties and will be approved by a
majority of the independent disinterested members of the board of directors.


                                       44

<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 Sheet as of May 31, 2000 and 1999                  F-3

Consolidated Statement of Operations for the years ended
May 31, 2000, 1999 and 1998                                             F-4

Consolidated Statement of Changes in Shareholders' Deficiency
for the years ended May 31, 2000, 1999 and 1998                         F-5

Consolidated Statement of Cash Flows for years ended May 31,
2000, 1999 and 1998                                                     F-6

Notes to Consolidated Financial Statements                              F-7-27

Financial Statement Schedules

Schedule II - Valuation and Qualifying Accounts                         F-28

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.


(B) Exhibits to be incorporated herein by reference:

Exhibit
   No.        Description of Exhibit
-------       ----------------------

2.1      Plan of Merger of Stratford Acquisition Corp. and the Registrant into
         the Registrant

3.1(i)   Articles of Incorporation of Stratford Acquisition Corp.
3.1(ii)  Certificate of Incorporation of the Registrant
3.1(iii) New York Certificate of Merger of Stratford Acquisition Corp. into
         Registrant
3.1(iv)  Minnesota Certificate of Merger of Stratford Acquisition Corp. into
         Registrant
3.2      By-Laws


                                       45

<PAGE>

4.1      Specimen Common Stock Certificate
4.2      Form of Class B Warrants
4.3      Form of 10% $550,000 Convertible Debenture and Stock Warrant Agreement
4.4      Form of 9% $800,000 Convertible Debenture and Stock Warrant Agreement
4.5      Form of 15% $250,000 Senior Debenture and Stock Warrant Agreement
4.6      Term 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

10.1     Employment Agreement between Registrant and Daniel W. Dowe
10.2     Amendment to Employment Agreement between Registrant and Daniel W. Dowe
10.3     Amended and Restated Purchase Agreement between The Sherwin-Williams
         Company and Registrant
10.4     Form of Promissory Note to Dime Commercial Corp.
10.5     Form of Promissory Note to The Sherwin-Williams Company
10.6     Bill of Sale from The Sherwin-Williams Company to Registrant

24.1     Power of Attorney (contained on signature pageof this Prospectus).

99.1     Battista Agreement
99.2     Supercrete N/A Limited Agreement dated December 20, 1996

(B) Exhibits filed herein:

21.1     Subsidiaries of Novex
27.1     Financial Data Sheet



                                       46

<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:
    -----------------------------------
    Daniel W. Dowe, President


By:
    -----------------------------------
    Douglas Friedenberg, Treasurer


Dated: October 13, 2000

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
                                                              ----------------

                                               Director       October 13, 2000
----------------------------------------
Daniel W. Dowe


                                               Director       October 13, 2000
----------------------------------------
William K. Lavin


                                               Director       October 13, 2000
----------------------------------------
Douglas Friedenberg


                                               Director       October 13, 2000
----------------------------------------
Edward J. Malloy




                                       47