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

                                    FORM 10-K


 [X]Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
    Act of 1934
                      For the year ended September 30, 1999
                         Commission File Number 1-11046

                           GLOBAL TECHNOVATIONS, INC.
             (Exact name of Registrant as specified in its charter).

Delaware                                                 84-1027821
(State or other jurisdiction of                          (I.R.S. Employer
corporation or organization)                           Identification Number)

        7108 Fairway Drive, Suite 200, Palm Beach Gardens, Florida 33418
               (Address of Principal Executive Office) (Zip Code)

       Registrant's telephone number, including area code: (561) 775-5756

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

                              Name of each exchange
Title of each class                                on which registered
 Common Stock                                     American Stock Exchange

           Securities registered pursuant to Section 12(g) of the Act:
                 $.001 par value Common Stock (Title of Class)
                                      None

Indicate  by check  mark  whether  the  Registrant:  (1) has filed  all  reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934 during the preceding 12 months (or such shorter  period that the Registrant
was  required  to file such  reports);  and (2) has been  subject to such filing
requirements for the past 90 days. Yes X No


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

As of December 27, 1999,  29,799,281 shares of $.001 par value Common Stock (the
Registrant's only class of voting stock) were outstanding.  The aggregate market
value of the  common  shares of the  Registrant  on  December  27,  1999 (on the
closing sales price) held by non-affiliates of the Registrant, was approximately
$23,565,657.

                       Documents Incorporated by Reference
Location in Form 10-K                            Incorporated Document
Part III-Items 10, 11, & 12            Definitive Proxy Statement in connection
                                       with its Annual Meeting of Stockholders
                                       to be held on April 3, 2000
<PAGE>

                                     PART I

ITEM 1.  BUSINESS
A. General  Description of Business
Global Technovations, Inc. (the "Company") was organized in 1986 to distribute a
patented  overhead  mounted  speaker  system  ("OHSS")  for  vehicles.  With the
September 30, 1999 sale of the  Company's  OHSS assets,  the  Company's  primary
business  became the assembly,  sale, and lease of its  proprietary  on-site oil
analyzer  ("OSA-II"),  a second generation  proprietary oil analysis  instrument
that  combines  two  spectrometers  in order to analyze  both new or used oil in
approximately  five  minutes.  As a result of the sale of the OHSS  assets,  the
Company's automotive subsidiary,  Top Source Automotive,  Inc., ("TSA") became a
discontinued  operation  on  September  30,  1999.  The  Company's  oil analysis
business is conducted through a wholly-owned subsidiary,  Top Source Instruments
("TSI").

On December 14, 1999,  stockholders  approved a proposal to change the Company's
name to Global Technovations, Inc. from Top Source Technologies, Inc.

The  Company's  mission is to identify,  acquire,  and/or  incubate  proprietary
technologies  that address  specific  customer  needs.  The  Company's aim is to
maximize  technology  commercialization  through  strategic  relationships  with
business  entities,  which  share its  vision  and  possess  the  financial  and
organizational  resources  to realize  its goals.  As part of this  mission,  in
September 1999, the Company entered into an agreement with BioTek  Environmental
Services,  Inc.,  ("BioTek").  Under the terms of this  agreement,  the  Company
received exclusive world-wide rights to market and sell proprietary, hydrocarbon
eating  microbes in certain defined  markets,  many of which are primary markets
for the sale of the OSA-II - (see BioTek Agreement).



B.  Financial Information About Industry Segments

The Company currently has one industry segment:  oil analysis service.  Assuming
that the Company's marketing efforts are successful with the microbe technology,
the Company will enter a new segment in calendar 2000.


C.  Narrative Description of Business

General
The Company  assembles and markets one product  through the sales and leasing of
the OSA-II.  As a result of the sale of the OHSS assets on  September  30, 1999,
for accounting  purposes TSA's sales of approximately  $8,863,814 in fiscal 1999
have  been  classified  as  discontinued  operations  and  eliminated  from  the
Company's financial  statements.  Accordingly,  for accounting purposes,  OSA-II
sales accounted for all of the Company's revenues from continuing  operations in
fiscal 1999.  With the signing of the recent  agreement to distribute the BioTek
microbe technology,  the Company is now marketing two products.  During calendar
2000,  the  Company  plans to expand its  business  as  described  later in this
report.

ITEM 1.  BUSINESS (Continued)

Products and Technologies

Oil Analysis
Oil  analysis  service  requires  extracting  a small  sample  of used  oil from
oil-lubricated  equipment  and  sending  it to a  laboratory.  Scientific  tests
identify  and quantify  metal  debris that is the result of wear.  The amount of
metal  debris,  correlated  to time or mileage that the oil has been in service,
indicates if wear is normal or abnormal.  Other  laboratory  tests  indicate and
measure  if there is any  coolant or water in the oil,  the  amount of  airborne
dirt, viscosity,  acidity, depletion level of the additive package, flash point,
coloration  and many other  factors.  Oil analysis users select the tests from a
service  menu  based on their  particular  needs.  Once  the  empirical  data is
generated  by  laboratory  tests,  a trained  evaluator  reviews the results and
generates a report, which often contains service recommendations.  The report is
then sent to the end user.

Oil  analysis is now widely used for  diagnostic  and  preventative  maintenance
programs for  equipment in many  different  industries  including  those markets
where the Company is concentrating its marketing  efforts for the OSA-II.  These
markets are the truck market which includes truck stops,  truck  maintenance and
truck quick lube centers,  the automotive market which includes auto power train
development,  motorcycle engine development,  automobile dealerships, automotive
fleet maintenance,  and automobile auctions,  the consumer market which includes
retail automobile service outlets,  marine  applications,  the government market
which includes the United States military and municipalities, the industrial and
the heavy equipment market which includes railroads,  and mining.  Additionally,
the  Company is  marketing  the OSA-II  through  the  Internet,  direct mail and
through a stand-alone mini-lab.

OSA Development
It is  estimated  that the size of the oil  analysis  market is in excess of two
billion  dollars.  This  includes oil  analysis  performed  by  independent  and
in-house  laboratories.  The Company  believes that the use of oil analysis will
increase as a  preventative  maintenance  technology.  The Company also believes
that advances in oil analysis  technology owned by the Company will increase oil
analysis utilization in new and existing markets.

Earlier in the 1990s, the Company acquired two oil analysis laboratories,  which
it sold in October  1997.  Through  its  ownership  of these  laboratories,  the
Company  recognized  a potential  business  opportunity  if it could  develop an
on-site oil analyzer  which would  eliminate the use of a laboratory and provide
near instant results to the end-user.  Over the next three years, the Company in
conjunction  with a third  party  developed  the first  generation  on-site  oil
analyzer ("OSA" or "OSA-I"),  which was based upon a proprietary database of oil
analysis samples, which the Company acquired and further developed.

The  concept  behind  the OSA was  that the oil  sample  must be  tested  by two
distinctly  different  types  of  spectrometers:  an  emission  spectrometer  to
identify and quantify metal elements and an infrared spectrometer to measure the
physical and chemical  properties of the used oil. Other  specifications for the
instrument  included  parameters  such as:  user  friendly,  low  cost,  minimal
maintenance,  near laboratory accuracy and repeatability,  reliability and short
turn around time. The overall  objective was to provide high volume oil analysis
locations with an OSA that delivers acceptable data in minutes at about the same
price they pay for similar data by sending samples to a laboratory.

The Company has staffed TSI with spectroscopists,  instrument specialists, sales
and marketing,  systems and programmer  personnel as well as technicians capable
of assisting in installation, operation and training.

<PAGE>

ITEM 1.  BUSINESS (Continued)

OSA Development (Continued)
After completing  development of the OSA-I units, the Company began between 1995
and 1997 to place them in various test market  locations  in diverse  industries
and generated a minimal  amount of revenue.  Between 1997 and 1998,  the Company
sold five OSA-I units. Four of these five units were sold to automotive Original
Equipment Manufacturers ("OEMs")

At the end of fiscal 1997, TSI began the  development  of the second  generation
OSA-II unit. By August 1998,  TSI completed  the first  production  run of seven
OSA-II  units and  shipped  them for use in a  revenue-generating  trial,  which
commenced at a  Jacksonville,  Florida tire retailer in September  1998.  Due to
inconsistent  levels of interest  from store to store in March  1999,  all seven
OSA-II units were returned to the Company.

On November 13, 1998, the Company entered into a strategic  alliance with Flying
J, Inc.  ("Flying J"), a company  engaged in various  facets of  highway-related
products and services  including  the  operation of large truck stops.  Flying J
agreed to purchase  and market  OSA-IIs in up to 100 of their truck stop service
centers.  The initial  purchase  order  placed by Flying J was for the  outright
purchase of 10 OSA-II units for  approximately  $700,000,  which represented the
largest single OSA-II order since the inception of the technology.

The  agreement  covered a  potential  purchase  of up to 100  OSA-IIs  and joint
development  and  marketing  of product  enhancements  to assist in the  further
commercialization  of the OSA-IIs within the truck stop industry.  After receipt
of the initial 10 OSA-IIs,  Flying J could  terminate the agreement  without any
liability.  In addition to the purchase  price of the OSA-II units,  Flying J is
obligated to pay the Company a per sample licensing fee which is reduced at such
time as Flying J has 36 OSA-II units operating.

Because of the nature of Flying J's business,  its management  determined that a
self-service  OSA-II  unit was more  appropriate  for the large  majority of its
service plazas. As a result,  Flying J has not ordered any additional units from
the Company.  The Company's  management has been in regular  communication  with
Flying  J's  management   concerning   development  of  a  self-service  OSA-II,
("OSA-II/SS"). Additionally, the Company's technical staff has commenced initial
development of the instrument and expended funds during fiscal 1999. The primary
issue for resolution concerns the sharing of the cost of approximately  $500,000
needed to complete  the  OSA-II/SS.  Management  believes  that it will reach an
agreement  with Flying J or another  customer or  strategic  partner  during the
quarter  ended  March 31,  2000,  although  no  assurances  can be given that an
agreement  can be  reached  on  sharing  of the  funding,  or that if funding is
obtained, that the Company can successfully produce a working OSA-II/SS unit.

Management  believes that the enhanced OSA-II is more  commercially  viable than
the OSA-I.  During  fiscal 1997 and 1998,  the Company  generated  $403,853  and
$392,653  in OSA-I  revenue,  respectively.  During  fiscal  1999,  the  Company
generated  $1,389,678  in revenues from OSA units.  Of this amount,  $205,622 of
revenue came from OSA-I units and $1,184,056 came from OSA-II units.  Management
believes during fiscal 2000 that it can  significantly  increase OSA-II revenues
over historical levels although there can be no assurances.
<PAGE>
ITEM 1.  BUSINESS (Continued)

Sale of TSA
On September 30, 1999, the Company sold  substantially  all of the assets of its
85% owned  subsidiary,  TSA,  and certain  intellectual  property  assets of the
Company  relating to TSA's OHSS business to Onkyo  America,  Inc.  ("Onkyo") for
total  consideration of $10,000,000  consisting of $2,500,000 cash, a $6,500,000
30-day note payable to TSA and a  $1,000,000  30-day note payable to the Company
in either cash or convertible  preferred stock of Onkyo. The $6,500,000 note and
accrued  interest of $46,479 was paid on October 29,  1999,  and the  $1,000,000
note was paid through  issuance of  $1,000,000  of Onkyo 5% Series A Convertible
Preferred Stock ("Onkyo  Preferred").  Of the $9,000,000 in cash received by the
Company,  $500,000 is being held in escrow for a 12-month  period until  October
2000 in the event that  undisclosed  TSA liabilities in excess of $50,000 arise.
Upon conclusion of the one-year period,  the funds plus interest will be paid to
TSA less any excess undisclosed  liabilities,  if any, in excess of $50,000.  No
accrual has been  recorded  for claims  against the  escrowed  funds as none are
anticipated at this time.

The  $1,000,000  Onkyo  Preferred  received  by the  Company  has the  following
attributes:

a.   Conversion.  In the event  that  Onkyo  prior to  redemption  completes  an
     initial public  offering for a minimum of $10,000,000  net of  underwriting
     discounts and commissions and the equity valuation of Onkyo is in excess of
     $25,000,000,  the Onkyo Preferred  automatically converts into Onkyo Common
     Stock,   equal  to  approximately  2.5%  of  the  number  of  common  stock
     outstanding prior to completion of the offering.


b.   Redemption.  After October 1, 2002,  either the Company or Onkyo may redeem
     the Series A Preferred  Stock based upon a formula equal to (i) the product
     of  multiplying  4.3 times Onkyo's  average,  annualized  net income before
     interest, taxes, depreciation, and amortization for the period beginning on
     September 1, 1999 (including  TSA's  operations for the period beginning on
     September 1, 1999); times (ii) the fully-diluted percentage of Common Stock
     into  which  the  Series  A  Preferred  Stock  is  convertible.   The  term
     "fully-diluted"  gives  effect to exercise of all  outstanding  options and
     warrants and conversion of all outstanding convertible securities;


c.   Dividends.   The  Series  A  Preferred  Stock  has  a  cumulative  dividend
     preference of 5% per annum payable at the end of each year.

d.   Liquidation  Preference.  Upon  liquidation  of  Onkyo  or  sale  of all or
     substantially  all of the  assets of Onkyo or similar  event,  the Series A
     Preferred  Stock is  entitled to a  $1,000,000  liquidation  preference  in
     addition to all cumulative and unpaid dividends; and

e.   Non-Voting.  The Series A Preferred Stock has no voting rights except those
     required by law.

Previously,  the Company and TSA had entered into a TSA Asset Purchase Agreement
with NCT Audio  Products,  Inc.  ("NCT")  on August  14,  1998 for a minimum  of
$10,000,000 in cash and up to $6,000,000 in a potential  earn-out based upon the
future operating results of the TSA business being sold. TSA received $1,450,000
in June  1998  and an  additional  $2,050,000  on  December  15,  1998  when the
Company's  stockholders approved the sale to NCT. As a result of the approval by
the Company's stockholders on December 15, 1998, NCT became the owner of 20% of



<PAGE>
ITEM 1.  BUSINESS (Continued)

Sale of TSA (Continued)
TSA's  CommonStock in exchange for the  $3,500,000 it paid.  During fiscal 1999,
the Company and TSA granted NCT two extensions to close the  transaction  with a
final  deadline  of  July  15,  1999.  As part of the  consideration  for  these
extensions, the Company received back 5% of TSA's Common Stock, thereby reducing
NCT's  ownership of TSA to 15%.  NCT's parent  company issued a press release on
July 16, 1999  stating that it was unable to obtain the  necessary  financing to
complete the transaction and acknowledging that NCT thereby let its rights under
the TSA Asset  Purchase  Agreement,  lapse.  As a result,  the  Company  and TSA
proceeded to negotiate a definitive  agreement and ultimately  close on the sale
of the assets to Onkyo on September 30, 1999. In September  1999,  NCT commenced
an  arbitration  proceeding  alleging  that the Company and TSA breached the TSA
Asset  Purchase  Agreement  and  sought to  obtain  injunctive  relief  from the
Delaware Court of Chancery  preventing the Company and TSA from consummating the
Onkyo  transaction.  The  arbitration  proceeding  in which NCT claims  damages,
beyond their 15% equity ownership of TSA, is pending. For information concerning
legal proceedings between the Company and NCT, (see Item 3.
Legal Proceedings.)


BioTek Agreement
In late November 1999, the Company entered into an agreement with BioTek,  which
gave the Company the  exclusive  world-wide  rights to market and sell  BioTek's
proprietary,  hydrocarbon eating microbes in certain defined markets.  While oil
and grease eating  microbes are not new,  widespread  commercial  acceptance has
been limited because previously available microbes worked too slowly. BioTek has
developed and "grows" the fast-eating oil and grease microbes. Prior to entering
into  the  agreement,  the  Company  conducted  a test  with  one of its  OSA-II
customers  and  received a  favorable  response  from the  customer,  as well as
indications of interest relating to a future order.


Under the terms of the agreement,  the Company received the exclusive world-wide
rights  to  market  and sell the  proprietary  microbe  biotechnology  under the
trademark  MightyClean 2000(TM) brand name in the automotive,  trucking and food
service businesses. This includes manufacturers,  dealers, servicers of cars and
trucks; gas stations, quick lube centers, and tire and battery stores; operators
of vehicle fleets  including  limousines,  taxis and buses;  overnight  delivery
services; and municipal, government and military fleets. Within the food service
industry,  the Company may market and sell MightyClean  2000(TM) to restaurants,
fast food stores,  wholesale food distributors and food manufacturers  including
meat,  poultry and  seafood  processors.  Because  many of the  existing  OSA-II
customers  are within the  exclusive  market  segments,  the Company  intends to
leverage its relationships with these customers to sell MightyClean  2000(TM) to
them.  In order to maintain its  exclusive  rights,  the Company  must  generate
$1,000,000  in sales by May 31,  2001.  In  December  1999,  the  Company  began
actively  marketing  MightyClean  2000(TM) and expects to begin  shipping it and
generating revenue during the first calendar quarter of 2000.


ARCS (Acceleration Restraint Curve Safety Seat)
Over the past  nine  years  the  Company  worked  on  developing  a  proprietary
technology  involving  controlled  seat  motion  that occurs at the instant of a
frontal  crash to help  restrain  vehicle  occupants  and assist  automakers  in
meeting Federal passive  restraint laws. The Company labeled the technology ARCS
(Acceleration  Restraint  Curve  Safety  Seat).  The primary  objective  of this
technology  is to  provide  supplemental  lower  torso  restraint  to  alleviate
abdominal,  hip, leg and ankle  injuries  caused by unwanted  lower torso motion
often experienced in a severe frontal crash.

<PAGE>


ITEM 1.  BUSINESS (Continued)

ARCS  (Acceleration  Restraint  Curve Safety  Seat)  (Continued)  Management  is
unaware of any other moving seat technology that has been successfully tested by
a major  automobile  manufacturer.  In December  1996,  the U.S.  Patent  Office
granted patent protection for ARCS technology.

The Company believes  research and development costs to the Company for the ARCS
is complete and all future development and application  engineering will be paid
for by the vehicle and/or seat  manufacturers.  Due to the requirement to design
and build actual  pre-production  hardware for automaker testing, the Company is
attempting  to  establish  a  strategic   partner   relationship   with  a  seat
manufacturer.  The Company hopes to sell the technology and maintain a long-term
opportunity  for future  royalty  income.  Based on lead times in the automobile
industry,  royalties  would not be generated for a minimum of four years after a
contract is signed;  however,  due to the increasing  regulation and scrutiny on
air  bag  technology,  the  time  period  for  implementation  of  an  alternate
technology could be shortened.


Significant Customer Information
During fiscal 1999,  approximately 65% of the Company's revenue was derived from
sales and lease of the OSA-II to two customers  (see  Financial  Statements  and
Supplementary Data).


Potential New Company Products
While OSA-II  addressees the condition of an engine and  transmission,  truckers
and the  organizations  that own, operate and service them, are still faced with
costly  oil  changes  and the high  price and  environmental  impact of used oil
disposal.  The Company has been  negotiating  an  agreement  with a third party,
which has developed proprietary  technology,  which extends the time between oil
changes. Assuming the Company is able to reach agreement with this party, during
calendar 2000, the Company  intends to market the concept of the  TruckCheck(TM)
Liquid Asset Management program that incorporates the technology of extended oil
drain filtering with on-site analysis to monitor engine  conditions  between oil
changes.  The  anticipated  product  launch,  which will include an extended oil
drain  filtering  system,  replacement  filter  inserts,  an  optional  additive
package,  and OSA-II on-site oil analysis,  expected to begin in the second half
of calendar year 2000, although there can be no assurances that an agreement can
be reached and that the program can be launched.


Another potential  enhancement of the OSA-II technology is the OSA-II/WF,  which
would be a quick, low-cost screener for water, fuel, or glycol in the oil. These
substances can cause severe damage or catastrophic engine failure. In the second
half of 2000, the Company expects to launch a MotorCheck(TM)  and TruckCheck(TM)
Quick Screen Analyzer using the OSA-II/WF unit, targeting fleet service centers,
oil change  centers,  oil  distributors  and  municipal  and state  governments.
Additionally,  once the OSA-II/SS is developed,  the Company intends to offer it
to retail  stores,  travel plaza and truck stops,  where  self-service  make oil
analysis far more feasible than attendant service. The OSA-II/SS,  as previously
described,  is also targeted for launch in the second half of 2000 assuming that
funding for the development  cost can be obtained from a third party.  There can
be no assurances that these new OSA products will be completed and launched when
anticipated.

<PAGE>

ITEM 1.  BUSINESS (Continued)

Potential New Company Products (Continued)
Additionally,  the Company has commenced  developing the  HairTek(TM)  hair care
system  based upon an  instrument  that would be  similar  to the  OSA-II.  With
HairTek(TM),  a strand of hair would be chemically and physically analyzed,  and
the  HairTek(TM)  hair care system  would  prescribe  a shampoo and  conditioner
formula  designed  to  remedy  dryness,  oiliness,  frizziness,  lack of body or
volume,  and/or other shortcomings unique to the hair sample. The products would
be mixed and  dispensed on the spot.  Once a prototype has been  developed,  the
Company  expects to launch it if it is able to secure a strategic  partner  with
the needed capital and distribution capability in the hair care business.  There
can  be no  assurances  that  the  Company  will  be  successful  in  completing
development  of the  instrument  or securing a strategic  partner to finance the
research, development and marketing of the technology.

Government Regulation
The  Company  is subject  to  government  regulations  generally  affecting  all
businesses. The Company believes that it is in material compliance with all such
regulations.

Seasonal Information
The Company's management believes that its business is not seasonal.

Offices and Employees
The Company maintains its administrative office in Palm Beach Gardens,  Florida.
Global  Technovations,  Inc. has a facility in Atlanta,  Georgia. As of December
27, 1999, the Company employs approximately 36 full-time people.

<PAGE>
ITEM 2. DESCRIPTION OF PROPERTY

The following table sets forth the location and use of the Company's facilities.
All of the facilities are leased.

             USE                LOCATION                        EXPIRATION
Corporate Headquarters         Palm Beach Gardens, Florida       January 2002
On-Site Analysis Division      Atlanta, Georgia                  September 2001

All  facilities   have  excess   capacity  and  the  capability  to  accommodate
significant future growth. Each of these facilities is in good condition.

ITEM 3. LEGAL PROCEEDINGS

On September 16, 1999,  NCT Audio  Products,  Inc.  ("NCT")  commenced an action
against Top Source  Technologies,  Inc. and Top Source Automotive,  Inc. ("TSA",
and collectively,  "Top Source") by filing a motion for a temporary  restraining
order and a  preliminary  injunction in the Delaware  Court of Chancery.  In its
motion, NCT sought to enjoin Top Source's sale of TSA's assets to Onkyo America,
Inc.  ("Onkyo")  on the ground that NCT was  entitled to purchase  TSA's  assets
pursuant to the terms of an Asset  Purchase  Agreement  among NCT and Top Source
dated August 14, 1998 (the "Asset Purchase Agreement").  On October 6, 1999, NCT
withdrew its motion for a temporary restraining order and preliminary injunction
following  the  closing  of a  transaction  pursuant  to which  Onkyo  purchased
substantially all of TSA's assets.


<PAGE>

ITEM 3. LEGAL PROCEEDINGS  (Continued)

Also on September 16, 1999, NCT commenced an arbitration  proceeding  before the
American  Arbitration  Association (the "AAA Action").  NCT's Statement of Claim
asserts  that Top  Source  committed  breach of  contract  and  fraud,  breached
fiduciary duties,  and violated Section 10(b) of the Securities  Exchange Act of
1934 and Rule 10b-5 promulgated  thereunder in connection with NCT's attempts to
acquire  substantially  all of the assets of TSA.  Specific  performance  of the
Asset Purchase Agreement and compensatory  damages in excess of $3.5 million are
sought.

On December 8, 1999,  Top Source filed an answer to NCT's  Statement of Claim in
which it sought a more specific statement of NCT's claims of wrongdoing,  denied
the claims  asserted  in the  statement  of Claim,  and  asserted  counterclaims
against NCT.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Company held its annual  meeting of  stockholders  on December 14, 1999. The
stockholders voted to elect David Natan and Ronald Burd to serve as directors of
the Company until 2002.  25,366,331  votes were cast in favor of this  proposal,
626,909 were cast against it, and 59,700 abstained.

The  stockholders  also voted to approve the selection of Arthur Andersen LLP as
the independent auditors of the Company for the fiscal year ending September 30,
1999, 25,748,260 were cast in favor of this proposal,  249,710 were cast against
it and 54,970 abstained.

The  stockholders  voted to approve the amendment to the 1993 Stock Option Plan.
23,760,505 votes in favor, 2,127,160 votes against and 165,275 votes abstained.

The fourth proposal to approve the amendment of the certificate of incorporation
changing the  Company's  name was voted as follows:  25,260,747  votes in favor,
624,073 votes against and 168,120 votes abstained.

ITEM 5.   MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED
             STOCKHOLDER MATTERS

Market Information For Common Stock
The following table sets forth for the periods  indicated the range of quarterly
high and low  representative  market prices for the Company's  Common Stock. The
Company's  Common Stock trades on the American  Stock  Exchange under the symbol
"TPS".

                               Fiscal 1999                    Fiscal 1998
                               -----------                   ------------
                                 High            Low       High           Low
First Quarter  (December 31)     1-5/16          1/2       2-1/16          1
Second Quarter (March 31)        1-3/4          13/16      1-1/2           1
Third Quarter  (June 30)         1-1/2          15/16      1-1/8         11/16
Fourth Quarter (September 30)    1-9/16         15/16      1-1/4          3/4

Holders
As of November 24, 1999, there were approximately 1,144 holders of record of the
Company's Common Stock.

<PAGE>

ITEM 5.   MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED
             STOCKHOLDER MATTERS  (Continued)

Dividend Policy
The  Company  has never  paid cash  dividends  on its Common  Stock.  Payment of
dividends is within the discretion of the Company's  Board of Directors and will
depend upon the  earnings,  capital  requirements  and  operating  and financial
condition of the Company,  and any  restrictions in loan agreements  among other
factors.  Currently,  the Company intends to follow a policy of retaining future
earnings in order to finance the growth and development of its businesses.


ITEM 6.  SELECTED FINANCIAL DATA

The following table summarizes  certain selected financial data of the Company's
financial  condition  and  results of  operations  as of and for the years ended
September 30, 1999,  1998,  1997,  1996 and 1995.  The selected  financial  data
should  be  read  in  conjunction   with  Item  8.   Financial   Statements  and
Supplementary Data and Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations. <TABLE>

===========================================================================================================================
AS OF AND FOR THE YEARS ENDED SEPTEMBER 30, 1999, 1998, 1997, 1996  AND 1995
----------------------------------------------------------------------------
===========================================================================================================================
==============================================================================================================================
<S>                                          <C>              <C>               <C>            <C>               <C>

Balance Sheet Data                            1999            1998             1997              1996             1995
==============================================================================================================================
==============================================================================================================================
Total Assets                                 $15,674,348      $6,621,299      $ 10,477,643     $ 14,521,298      $ 17,275,640
==============================================================================================================================
==============================================================================================================================
Long-term Debt                                       -0-       3,020,000         3,020,000        3,020,000         2,060,000
==============================================================================================================================
==============================================================================================================================
Total Liabilities                              7,158,293       6,164,328         5,993,190        5,604,573         2,870,542
==============================================================================================================================
==============================================================================================================================
Stockholders' Equity                           8,516,055         456,971         4,484,453        8,916,725        14,405,098
==============================================================================================================================
=============================================================================================================================
Statement of Operations Data
==============================================================================================================================
==============================================================================================================================
Net Sales                                     $1,389,678        $392,653          $403,853          $44,001          $ 13,895
==============================================================================================================================
==============================================================================================================================
Loss from Continuing
     Operations                              (4,073,409)     (7,440,667)       (6,156,550)      (7,796,081)       (6,010,605)
==============================================================================================================================
==============================================================================================================================
Net Income (Loss)                              3,973,882     (5,852,382)       (3,235,316)      (6,698,787)       (3,399,796)
==============================================================================================================================
==============================================================================================================================
Loss per Basic and
     Diluted Common Share(1)
     From Continuing Operations                   (0.18)          (0.28)            (0.22)           (0.28)            (0.22)
==============================================================================================================================
==============================================================================================================================
Net Income ( Loss) per Basic
    and Diluted Weighted
    Average Common Share                           .14            (0.21)            (o.12)           (0.24)            (0.12)
==============================================================================================================================
</TABLE>

See Notes to Consolidated  Financial  Statements for information on transactions
and accounting  classifications,  which have affected the  comparability  of the
periods  presented  above.  The Company has not declared  cash  dividends on its
Common Stock for any of the periods presented above.

(1)  Includes the  retroactive  implementation  of SFAS No. 128  ("Earnings  per
     Share"), which had no impact for all periods presented.

<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF INTERIM FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS

Results of Operations

The results of operations for all periods are based upon the Company's financial
statements  for all periods  treating  TSA as a  discontinued  operation  as the
result of the September  30, 1999 TSA asset sale.  Thus,  all  operations of TSA
have been excluded.

1999 Compared to 1998

Total revenue for the year ended  September 30, 1999 was $1,389,678  compared to
$392,653  for the same period in 1998.  Revenue in 1999 is comprised of sales of
OSA-II units amounting to $930,749 and leases amounting to $458,929, compared to
$195,676,  and $196,977,  respectively for the same period in 1998. The increase
in sales revenue of $735,073 or 375.7% is primarily  attributable to the sale of
13 OSA-II machines during the year ended September 30, 1999 compared to the sale
of 3 OSA-I machines during same period in 1998. The increase in lease revenue of
$261,952  or 133.0% is  primarily  attributable  to an increase in the number of
units leased and on trial  generating  various  levels of revenue (some of which
were  nominal)  compared to the number of units leased and on trial for the same
period in 1998.  As of December  27,  1999,  there were 59 units on lease and on
trial generating  approximately  $60,000 in monthly revenue,  compared to 39 and
$30,000 at the same time in 1998. The units  currently on lease and on trial are
in a variety of industries  which includes  automobile  dealerships,  mini labs,
truck   lube   centers,   truck   stops,   engine   development    laboratories,
municipalities, and others.

TSI gross profit  margin for year ended  September 30, 1999 was 9.6% compared to
-55.1% for the same period in 1998.  Gross  profit for the year ended  September
30,  1999  includes  the  expense of  $223,000  of  obsolete  parts and  ongoing
technology enhancements identified in fiscal 1999.

General and administrative expenses were $2,409,072 for the year ended September
30, 1999  compared to  $2,792,151  for the same period in 1998.  The decrease of
$383,079 or 13.7% is  attributable  to a reduction in expenses at the  corporate
office  offset  partially  by  increases  in  expenses at TSI as a result of the
growth and expansion of the business.

Selling and marketing  expenses  were $752,512 for the year ended  September 30,
1999  compared to $810,288 for the same period in 1998.  The decrease of $57,776
or 7.1% is attributable to a reduction in personnel expenses at TSI.

Write down of fixed  assets of $880,911  for the year ended  September  30, 1998
related to the  original  OSA-I  machines,  which were deemed to be impaired and
were written off. (See Item 8. Financial Statements and Supplementary Data, Note
2. Oil Analysis Service Segment.)

Severance  expense  of  $1,085,587  for the year  ended  September  30,  1998 is
attributable to the  resignation of the Company's  former Chairman and CEO. (See
Item 8. Financial  Statements  and  Supplementary  Data,  Note 13. Related Party
transactions).

Depreciation and amortization was $379,431 for the year ended September 30, 1999
compared to $853,971 for the same period in 1998.  This  decrease of $474,540 or
55.6% is primarily attributable to the write-down of the original OSA-I machines
in September 1998.

<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF INTERIM FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS   (Continued)

Results of Operations (Continued)
1999 Compared to 1998 (Continued)

Research and  development  was $146,896  for the year ended  September  30, 1999
compared to $286,341 for the same period in 1998.  This  decrease of $139,445 or
48.7% is primarily attributable to the initial costs incurred in the development
of the OSA-II machine in fiscal year 1998.

Interest  income was $81,815 for the year ended  September  30, 1999 compared to
$92,555  for the same  period  in 1998.  The  decrease  of  $10,740  or 11.6% is
primarily due to a decline in cash balances due to operating losses.

Interest  expense was $589,362 for the year ended September 30, 1999 compared to
$662,312 for the same period in 1998. The decrease of $72,950 or 11.0% is due to
a  decrease  in  interest  as a  result  of  the  restructuring  of  the  senior
subordinated  convertible  notes in November  and  December  1998,  offset by an
increase in interest expense associated with a loan from a trust controlled by a
director of the Company and issuance of warrants as additional consideration for
the loan.

Other income  (expense)  was  ($11,008)  for the year ended  September  30, 1999
compared  to $54,849 for the same  period in 1998.  This  decrease of $65,857 or
120.0% is primarily  attributable to the $100,000 redemption premium incurred in
connection  with the redemption of 50% of the Series A Preferred Stock offset by
an increase of $39,670 in royalty income.

Income from discontinued  operations was $1,232,451 for the year ended September
30,  1999  compared to $948,345  for the same  period in 1998.  The  increase of
$284,106 or 30.0% is primarily  as a result of a decrease in operating  expenses
including selling and marketing and engineering.

Gain on disposal of  discontinued  operations  was $8,030,832 for the year ended
September  30,  1999  compared  to  $962,760  for the same  period in 1998.  The
increase of $7,068,072 or 734.2% is primarily due to the sale of 14.5% equity in
TSA during the year ended  September 30, 1998 with the remainder  portion of the
sale completed during the year ended September 30, 1999.

Loss on  extinguishment of debt of $27,266 for the year ended September 30, 1999
represents  loss of $186,011 on early payoff the credit  facility  offset by the
gain of $158,745 from  restructuring of a portion of the outstanding  $3,020,000
of Notes. (See Note 4. Debt)

1998 Compared to 1997

Total  revenue for the year ended  September  30, 1998 was $392,653  compared to
$403,853 for the same period in 1997.  The decrease in sales  revenue of $99,024
or 33.6% is primarily  attributable to a reduction in the average sales price of
the OSA-I  machine in 1998 compared to 1997.  The Company sold 3 OSA-I  machines
during  the  year  ended  September  30,  1998  compared  to the sale of 2 OSA-I
machines  during same period in 1997. The increase in service revenue of $87,824
or 80.5% is primarily  attributable to an increase in the number of units leased
and on trial  generating  various levels of revenue (some of which were nominal)
compared to the number of units leased and on trial for the same period in 1997.
As of December 27, 1998, there were 39 units on lease  generating  approximately
$30,000 in monthly  revenue,  compared to 6 units and $8,000 at the same time in
1997.

<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF INTERIM FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS   (Continued)

Results of Operations (Continued)
1998 Compared to 1997 (Continued)

OSA-I gross profit margin for year ended  September 30, 1998 was -55.1% compared
to 73.5% for the same period in 1997.  The  decrease in gross  profit  margin is
attributable to the write-off of OSA-I inventory  during fiscal year 1998 due to
the completion and market  introduction of the OSA-II and a decreased  margin in
the service  revenue  segment due to the  outright  sale of OSA-I units in 1997,
that had a higher gross profit margin in fiscal 1997 compared to a larger number
of ongoing leases in fiscal 1998.

General and administrative expenses were $2,792,151 for the year ended September
30, 1998  compared to  $3,894,096  for the same period in 1997.  The decrease of
$1,101,945 or 28.3% is  attributable to the Company's  restructuring  which took
place in the fourth  quarter  of fiscal  1997 and  continued  efforts to contain
costs.

Selling and marketing  expenses  were $810,288 for the year ended  September 30,
1998  compared  to  $1,031,756  for the same  period in 1997.  The  decrease  of
$221,468 or 21.5% is primarily attributable to the closing of the TSI Farmington
Hills, Michigan location related to the OSA group.

Write down of fixed  assets of $880,911  for the year ended  September  30, 1998
related to the  original  OSA- I machines,  which were deemed to be impaired and
were written off. (See Item 8. Financial Statements and Supplementary Data, Note
2. Oil Analysis Service Segment.)

Severance  expense  of  $1,085,587  for the year  ended  September  30,  1998 is
attributable to the  resignation of the Company's  former Chairman and CEO. (See
Item 8. Financial  Statements  and  Supplementary  Data,  Note 13. Related Party
Transactions).

Depreciation and amortization was $853,971 for the year ended September 30, 1998
compared to $1,034,898 for the same period in 1997. This decrease of $180,927 or
17.5% is primarily attributable to the write-down of the original OSA-I machines
and a 56% decrease in purchases of fixed assets for the year ended September 30,
1997.

Research and  development  was $286,341  for the year ended  September  30, 1998
compared to $25,682 for the same  period in 1997.  This  increase of $260,659 or
1015.0% is primarily  attributable to the development of the OSA-II unit,  which
was designed by the Company in fiscal 1998.

Interest  income was $92,555 for the year ended  September  30, 1998 compared to
$132,526  for the same  period in 1997.  The  decrease  of  $39,971  or 30.2% is
primarily due to a decline in cash balances due to operating losses.

Interest  expense was $662,312 for the year ended September 30, 1998 compared to
$438,849  for the same period in 1997.  The increase of $223,463 or 50.9% is due
to the borrowings and  amortization of loan fees on its credit  facility,  which
was only in place for three  months in fiscal  1997.  The Company did not borrow
any funds during fiscal 1997 on the prior First Union credit facility

Other  income  (expense)  was  $54,849  for the year ended  September  30,  1998
compared  to $88,322 for the same  period in 1997.  This  decrease of $33,473 or
37.9% is primarily attributable to the decrease of $43,833 in royalty income.
<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF INTERIM FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS   - Continued

1998 Compared to 1997 (Continued)

Income from  discontinued  operations was $948,345 for the year ended  September
30, 1998  compared to  $2,921,234  for the same period in 1997.  The decrease of
$1,972,889 or 67.5% is primarily  attributable to the loss of the OHSS sales for
the Jeep Cherokee contract, which ended on June 30, 1997.

Gain on disposal of  discontinued  operations  was  $962,760  for the year ended
September 30, 1998 is the sale of 14.5% equity in TSA (See Item 1. Business Sale
of TSA).

Net Loss Analysis

In order to avoid current,  material,  ongoing operating losses, and an increase
in the operating loss after the sale of TSA assets (See Item 1.  Business),  the
Company must generate new,  material  ongoing OSA-II or other revenues in future
months.  Management  believes that the recent OSA-II activity  described in this
report will improve OSA-II visibility in the marketplace that which will lead to
significant  increases  in  future  OSA-II  revenues.  However,  there can be no
assurances.


Liquidity and Capital Resources

Net  cash  used in  operating  activities  was  $4,460,796  for the  year  ended
September  30,  1999.  This  usage  of cash  was  attributable  to a net loss of
$3,433,158,  which  excludes  depreciation,  amortization,  income  and  gain on
discontinued  operation and loss on  extinguishments  of debt.  In addition,  an
increase in accounts  receivable of $152,693 and an increase in  inventories  of
$795,312  and a net  decrease in accounts  payable  and accrued  liabilities  of
$359,746 contributed to net cash used in operating  activities.  The increase in
inventories  is  primarily  the  result  of the  build-up  of  OSA-II  units  in
anticipation of future OSA-II orders.

Net  cash  used in  investing  activities  was  $1,395,495  for the  year  ended
September 30, 1999. This decrease in cash was  attributable  expenditures by TSI
for capital assets.

Net cash provided by financing activities was $1,709,481, which consisted of net
proceeds  from  sales of common  stock  through  exercise  of stock  options  of
$26,878,  net proceeds from the sale of Series B preferred  stock of $3,370,299,
proceeds  from the  director's  loan of $500,000 and  proceeds of the  Company's
credit facility ("Credit  Facility") with NationsCredit  Commercial  Corporation
("Nations")  of  $595,151  offset by the  redemption  of 50% or  $500,000 of the
Series A preferred stock,  the repayment of the notes of $2,064,617,  payment of
$110,403  of  extinguishments  of debt  costs,  payment of  $107,827 of Series B
preferred stock dividends.

On  September  30,  1999,  the Company  completed  the sale to Onkyo  America of
substantially  all of the assets of TSA.  At the  closing,  the  Company and TSA
received  $2,000,000 in cash, a $6,500,000 9% secured note due to be paid to TSA
by October  31,  1999,  and a  $1,000,000  note due to be paid to the Company by
October 31, 1999 in cash or Onkyo Series A 5% Convertible  Preferred  Stock. Due
to the sale of the assets, the Company was required to simultaneously pay off in
full its Credit  Facility  with  Nations.  The  balance  paid off at closing was
approximately $1,914,000,  which included a prepayment penalty of $100,000. As a
result of the payoff of Nations, all liens on the Company's assets were released
and the Company no longer had any credit lines.

Subsequent to September 30, 1999, TSA received $6,500,000,  of which $500,000 is
being held in escrow. (See Item 1. Business - "Sale of TSA").

<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS (continued)

Liquidity and Capital Resources (Continued)

As of  December  27,  1999,  the Company had  approximately  $4,600,000  in cash
including  amounts  reserved  for the  potential  liability to NCT for their 15%
equity  ownership in TSA (see Item 3. Legal  Proceedings).  The Company believes
that current cash on hand will be sufficient to fund its operations for the next
12  months.  In the event  that the  Company  is unable  to reduce  its  current
operating losses, it will be required to seek new sources of capital to fund its
operations. There can be no assurances that the operating losses will be reduced
or that new financing will be available on acceptable terms.

Forward-Looking Statements

The  forward  looking  statements  discussed  in the Report  under the  Business
Section,  (Item 1.) and above in Liquidity and Capital  Resources  include those
relating  to the  Company's  expectations  about  (1)  generating  significantly
increased  revenue from OSA-II units above  historic  levels  during fiscal year
2000,  (2)  reaching  agreement  with a  strategic  partner or current  customer
regarding the sharing of the funding  necessary to complete the  development  of
the OSA-II/SS unit, (3) successfully developing an OSA-II/SS and OSA-II/WF unit,
(4) the  Company's  ability to begin  generating  revenue  from the  MightyClean
2000(TM) product,  (5) the introduction of the Liquid Asset Management  program,
(6) the development of a successful HairTek(TM)  prototype,  (7) the increase in
the usage of oil  analysis as a  preventative  maintenance  in new and  existing
markets,  (8) the adequacy of the Company's  working capital and liquidity,  and
(9) reducing net operating  losses,  are  forward-looking  statements within the
meaning of the Private Securities Litigation Reform Act of 1995.

Some or all of these forward-looking  statements may not occur. These statements
are subject to risks and uncertainties that could cause actual results to differ
materially from those  contemplated  in such  forward-looking  statements.  Such
risks and uncertainties include the following:  (1) the continued reliability of
the OSA technology over an extended period of time, (2) the Company's ability to
market OSA-IIs, (3) the acceptance of the OSA technology by the marketplace, (4)
the  general  tendency  of  large  corporations  to  slowly  change  from  known
technology to emerging new technology,  (5) potential  future  competition  from
third  parties that may develop  proprietary  technology,  which either does not
violate  the  Company's  proprietary  rights or is claimed  not to  violate  the
Company's proprietary rights, and (6) the Company's ability to attract strategic
partners for new OSA-II,  prototype  (7) the  Company's  ability to consummate a
strategic partnership with a filter company, (8) the Company ability to complete
the HairTek(TM)  prototype,  (9) the Company's  ability to consummate  strategic
partnership  for the  HairTek(TM)  project and for the Liquid  Asset  Management
Program project,  (10) the Company's ability to resolve  contractual issues with
potential strategic partners,  (11) whether the Company's  assessment of its new
technologies  will be accepted by potential  strategic  partners and  customers,
(12) the  assurance  by Y2K  vendors are  accurate,  (13)  unforeseen  technical
problems or patent issues with any of the Company's potential new products,  and
(14) delays of shipping  components  for new  products,  and (15) the  Company's
ability to market the MightyClean 2000(TM) product.

Inflation

The impact of inflation has become less significant with dormant inflation rates
in recent years. The Company believes inflation has not had a material effect on
the Company's operations.
<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF INTERIM FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS   - Continued

New Accounting Standards

In  June  1997,  the  Financial  Accounting  Standards  Board  ("FASB")"  issued
Statement of Financial Accounting Standards ("SFAS") No. 131, "Disclosures about
Segments  of an  Enterprise  and Related  Information",  which is required to be
adopted in fiscal  years  beginning  after  December 15,  1997.  This  statement
establishes standards for the way public business enterprises report information
about products,  services,  geographic  areas and major  customers.  The Company
has  adopted  SFAS No.  131 for fiscal  year ended  September  30,  1999.  The
adoption  of SFAS  No.  131 did not  have a  material  impact  on its  financial
position or results of operations.

Year 2000

The Company has  assessed the  potential  impact of the Year 2000 ("Y2K") on the
Company's  internal  business  systems,   products,   assembly   procedures  and
operations.  The  Company's Y2K  initiatives  included (i) testing and upgrading
internal  business  systems and  facilities;  and (ii) contacting key suppliers,
vendors and customers to determine their Y2K compliance state.

The Company has evaluated all of its information  technology  systems during the
fourth calendar quarter of 1999, and has spent approximately $30,000 on hardware
and software  upgrades.  The Company believes that all systems  company-wide are
Y2K compliant.

At TSI, the Company believes OSA-IIs are Y2K compliant. As of December 27, 1999,
the Company had 5 OSA-I units at customer locations.  The Company is negotiating
with these  customers to upgrade to OSA-II  units  because it believes the OSA-I
may not be Y2K  compliant.  The Company has  recorded a liability of $100,000 in
its financial  statements for the period ended  September 30, 1999, to cover the
cost of  replacing  these  units,  if  necessary.  During  the third and  fourth
calendar  quarters of 1999, the Company received  positive written Y2K readiness
assurances  from  substantially  all of the suppliers of parts necessary for the
assembly  OSA-II.  The Company has not  audited any of its  suppliers  readiness
statements,  however, it believes them to be accurate,  although there can be no
assurances. The Company cannot presently estimate what, if any, additional costs
it will incur if one or more of these suppliers are not Y2K compliant.

The Company has determined that four suppliers  provide  proprietary  components
integral  to the  OSA-II  for which  there  are  substitute  components  readily
available.  The Company's  current  inventory levels and parts supplies of these
components  are  sufficient  to  cover  a  temporary  short-term  disruption  in
shipment,  however,  any  delays in excess of two to three  months  would have a
material  adverse  impact on the  Company's  business  operations  and financial
condition.  The Company has no  contingency  plan beyond this step to cover this
and other Y2K problems should they arise.

Due to the  complexity  of the  Company's  technologies  and reliance upon third
parties to  produce  certain  components,  there can be no  assurances  that the
Company has identified all of the Y2K issues that could arise. While the Company
is   attempting  to  minimize  any  negative   consequences   arising  from  Y2K
non-compliance,  there  can be no  assurances  that Y2K  issues  will not have a
material  adverse  impact on the  Company's  business,  operations  or financial
condition.  Also,  if  any of  the  Company's  material  suppliers,  vendors  or
customers  experience business  disruptions due to Y2K issues, the Company might
also be materially  adversely  affected.  Any unexpected costs or delays arising
from Y2K issues could have a material adverse impact on the Company's  business,
operations and financial condition.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

<TABLE>

                                    INDEX                                                                               PAGE
------------------------------------------------------------------------------------------------------------------- -----------
------------------------------------------------------------------------------------------------------------------- -----------

------------------------------------------------------------------------------------------------------------------- -----------
------------------------------------------------------------------------------------------------------------------- -----------
<S>                                                                                                                  <C>

Report of Independent Certified Public Accountants                                                                      18
------------------------------------------------------------------------------------------------------------------- -----------
------------------------------------------------------------------------------------------------------------------- -----------
Consolidated Balance Sheets as of September 30, 1999 and 1998                                                           19
------------------------------------------------------------------------------------------------------------------- -----------
------------------------------------------------------------------------------------------------------------------- -----------
Consolidated Statements of Operations for the Years Ended September 30, 1999, 1998 and 1997                             20
------------------------------------------------------------------------------------------------------------------- -----------
------------------------------------------------------------------------------------------------------------------- -----------
Consolidated Statements of Stockholders' Equity for the Years Ended September 30, 1999, 1998 and 1997                   21
------------------------------------------------------------------------------------------------------------------- -----------
------------------------------------------------------------------------------------------------------------------- -----------
Consolidated Statements of Cash Flows for the Years Ended September 30, 1999, 1998 and 1997                             22
------------------------------------------------------------------------------------------------------------------- -----------
------------------------------------------------------------------------------------------------------------------- -----------
Notes to Consolidated Financial Statements                                                                              23
------------------------------------------------------------------------------------------------------------------- -----------
</TABLE>


<PAGE>

                              REPORT OF INDEPENDENT
                          CERTIFIED PUBLIC ACCOUNTANTS

To the Stockholders of Top Source Technologies, Inc.:

We have  audited  the  accompanying  consolidated  balance  sheets of Top Source
Technologies,  Inc., (a Delaware  corporation)  and subsidiaries as of September
30,  1999 and 1998,  and the  related  consolidated  statements  of  operations,
stockholders'  equity and cash  flows for each of the three  years in the period
ended September 30, 1999. These financial  statements are the  responsibility of
the Company's  management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of Top Source Technologies,  Inc.
and  subsidiaries  as of  September  30,  1999 and 1998 and the  results  of its
operations  and its cash flows for each of the three  years in the period  ended
September 30, 1999 in conformity with generally accepted accounting principles.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial statements taken as a whole.  Schedule II is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part of
the basic financial statements. This schedule has been subjected to the auditing
procedures  applied in the audit of the basic  financial  statements and, in our
opinion,  fairly states, in all material respects the financial data required to
be set forth therein in relation to the basic  financial  statements  taken as a
whole.



ARTHUR ANDERSEN LLP

West Palm Beach, Florida,
November 24, 1999

<PAGE>

                            Global Technovations, Inc.
                                   FORM 10-K
                           CONSOLIDATED BALANCE SHEETS
                        AS OF SEPTEMBER 30, 1999 and 1998
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
ASSETS                                                                          1999                          1998
                                                                          ------------------            -----------------
<S>                                                                             <C>                            <C>
Current Assets:
  Cash and cash equivalents                                                     $ 2,308,952                    $ 488,899
  Accounts receivable trade, net                                                    209,554                       56,861
  Due from buyer of automotive subsidiary                                         6,000,000                            -
  Inventories                                                                     1,935,832                    1,140,520
  Prepaid expenses                                                                   76,657                      115,296
  Other                                                                             102,867                      130,361
  Net assets from discontinued operations                                                 -                    1,780,990
                                                                          ------------------            -----------------
Total current assets                                                             10,633,862                    3,712,927
Property and equipment, net                                                       1,533,117                      551,478
Patents, net                                                                        143,881                      123,626
Capitalized database, net                                                         1,862,361                    2,073,194
Due from buyer of automotive subsidiary                                           1,500,000                            -
Note receivable from officer                                                              -                       26,260
Other assets, net                                                                     1,127                      133,814
                                                                          ------------------            -----------------
TOTAL ASSETS                                                                   $ 15,674,348                  $ 6,621,299
                                                                          ==================            =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
  Line of credit                                                                $ 1,913,986                  $ 1,318,835
  Senior subordinated convertible notes                                             707,000                            -
  Loan payable                                                                      506,712                            -
  Accounts payable                                                                  302,553                      597,307
  Accrued liabilities                                                             2,607,408                      798,662
  Payable to former buyer of automotive subsidiary                                1,030,835                            -
                                                                          ------------------            -----------------
Total current liabilities                                                         7,068,494                    2,714,804
  Senior subordinated convertible notes                                                   -                    3,020,000
  Other liabilities                                                                  89,799                      429,524
                                                                          ------------------            -----------------
Total liabilities                                                                 7,158,293                    6,164,328

Commitments and contingencies (See Note 10)                                               -                            -

Stockholders' equity:
  Preferred stock - $.10 par value, 5,000,000 shares
   authorized; 3,500 and 1,000 shares issued and                                  3,444,644                      943,807
   outstanding in 1999 and 1998, respectively
  Common stock-$.001 par value, 50,000,000 shares
   authorized; 29,799,281 and 29,053,803 shares issued and
   outstanding in 1999 and 1998, respectively                                        29,799                       29,054
  Additional paid-in capital                                                     31,208,571                   29,624,951
  Accumulated deficit                                                           (24,817,605)                 (28,791,487)
  Treasury stock-at cost; 466,234  shares                                        (1,349,354)                  (1,349,354)
                                                                          ------------------            -----------------
Total stockholders' equity                                                        8,516,055                      456,971
                                                                          ------------------            -----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                     $ 15,674,348                  $ 6,621,299
                                                                          ==================            =================
</TABLE>

The accompanying notes to consolidated financial statements are an integral part
of these consolidated statements.
<PAGE>

                           Global Technovations, Inc.
                                   FORM 10-K
                      CONSOLIDATED STATEMENTS OF OPERATIONS
              FOR THE YEARS ENDED SEPTEMBER 30, 1999, 1998 AND 1997

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
                                                                     1999              1998              1997
                                                                 ------------      ------------      ------------
<S>                                                              <C>               <C>               <C>
Revenue:
  Sales revenue                                                  $    930,749      $    195,676      $    294,700
  Service revenue                                                     458,929           196,977           109,153
                                                                 ------------      ------------      ------------
   Total revenue                                                    1,389,678           392,653           403,853
                                                                 ------------      ------------      ------------
Cost of sales and service                                           1,256,621           609,088           107,044
                                                                 ------------      ------------      ------------
Gross profit (loss)                                                   133,057          (216,435)          296,809
                                                                 ------------      ------------      ------------
Expenses:
  General and administrative                                        2,409,072         2,792,151         3,894,096
  Selling and marketing                                               752,512           810,288         1,031,756
  Write down of fixed assets                                               --           880,911                --
  Severance expense                                                        --         1,085,587                --
  Depreciation and amortization                                       379,431           853,971         1,034,898
  Research and development                                            146,896           286,341            25,682
                                                                 ------------      ------------      ------------
Total expenses                                                      3,687,911         6,709,249         5,986,432
                                                                 ------------      ------------      ------------
Loss from operations                                               (3,554,854)       (6,925,684)       (5,689,623)
Other income (expense):
  Interest income                                                      81,815            92,555           132,526
  Interest expense                                                   (589,362)         (662,312)         (438,849)
  Other (expense) income, net                                         (11,008)           54,849            88,322
                                                                 ------------      ------------      ------------
Net other income (expense)                                           (518,555)         (514,908)         (218,001)
                                                                 ------------      ------------      ------------
Loss before income taxes                                           (4,073,409)       (7,440,592)       (5,907,624)
Income tax expense                                                         --               (75)         (248,926)
                                                                 ------------      ------------      ------------
Loss from continuing operations before
discontinued operations and extraordinary item:                    (4,073,409)       (7,440,667)       (6,156,550)
                                                                 ------------      ------------      ------------
Discontinued operations:
Income from discontinued operations,
net of income taxes                                                 1,232,451           948,345         2,921,234
Gain on disposal of discontinued operations,
net of income taxes                                                 8,030,832           962,760                --
                                                                 ------------      ------------      ------------
Discontinued operations                                             9,263,283         1,911,105         2,921,234
                                                                 ------------      ------------      ------------
Income (loss) before extraordinary item                             5,189,874        (5,529,562)       (3,235,316)
 Loss on extinguishment of debt                                       (27,266)               --                --
                                                                 ------------      ------------      ------------
Net income (loss)                                                   5,162,608        (5,529,562)       (3,235,316)
Embedded dividend on preferred stock                                 (619,462)         (193,807)               --
Preferred dividends                                                  (277,458)          (20,034)               --
Value of warrants issued with preferred stock                        (291,806)         (108,979)               --
                                                                 ------------      ------------      ------------
Net income (loss) available to common stockholders               $  3,973,882      ($ 5,852,382)     ($ 3,235,316)
                                                                 ============      ============      ============
Basic and Diluted Earnings (Loss) Per Share
Continuing Operations                                                   (0.18)            (0.28)            (0.22)
Discontinued Operations                                                  0.32              0.07              0.10
Extraordinary item                                                      (0.00)               --                --
                                                                 ------------      ------------      ------------
Net Income (Loss)                                                        0.14             (0.21)            (0.12)
                                                                 ============      ============      ============
Basic and diluted weighted average common shares outstanding       29,108,705        28,242,005        28,065,563
                                                                 ============      ============      ============
</TABLE>

The accompanying notes to consolidated financial statements are an integral part
of these consolidated statements .
<PAGE>
                         Global Technovations, Inc.
                                   FORM 10-K
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
              FOR THE YEARS ENDED SEPTEMBER 30, 1999, 1998 AND 1997

<TABLE>
<CAPTION>

                                                                COMMON STOCK                         ADDITIONAL
                                                         --------------------------    PREFERRED      PAID-IN
                                                             SHARES        AMOUNT        STOCK        CAPITAL
                                                         ------------------------------------------------------
<S>                                                        <C>            <C>                       <C>
BALANCE, SEPTEMBER 30, 1996                                28,446,477     $ 28,446             -    $28,723,853

Exercise of stock options ($.5625 to $1.78 per share)          15,000           15             -         20,598
Treasury stock purchases                                            -            -             -              -
Net loss                                                            -            -             -              -
                                                         ------------------------------------------------------
BALANCE, SEPTEMBER 30, 1997                                28,461,477       28,461             -     28,744,451

Exercise of stock options ($.53 to $1.50 per share)           549,700          550             -        387,791
Issuance of convertible preferred stock - Series A                  -            -     1,000,000              -
Preferred stock issuance costs and fees                             -            -             -       (118,606)
Issuance of common stock for payment of dividend
   on preferred stock                                          42,626           43             -         19,991
Intrinsic value of preferred stock conversion feature               -            -      (250,000)       250,000
Preferred stock embedded dividend                                   -            -       193,807              -
Value of warrants issued with preferred stock                       -            -             -        108,979
Options and warrants issued for services                            -            -             -        232,345
Net loss                                                            -            -             -              -
                                                         ------------------------------------------------------
BALANCE, SEPTEMBER 30, 1998                                29,053,803       29,054       943,807     29,624,951

Exercise of stock options ($.53 to $.875 per share)            50,550           51             -         26,827
Redemption of convertible preferred stock - Series A                -            -      (500,000)             -
Conversion of convertible preferred stock - Series A
   to common stock                                            669,149          668      (500,000)       499,332
Issuance of convertible preferred stock - Series B                  -            -     3,500,000              -
Preferred stock issuance costs and fees                             -            -             -       (129,701)
Issuance of common stock for payment of dividend
   on preferred stock                                          25,779           26             -         12,105
Preferred stock dividend                                            -            -             -              -
Intrinsic value of preferred stock conversion feature               -            -      (618,625)       618,625
Preferred stock embedded dividend                                   -            -       619,462              -
Value of warrants issued with preferred stock                       -            -             -        291,806
Options and warrants issued for services                            -            -             -        264,626
Net Income                                                          -            -             -              -
                                                         ======================================================
BALANCE, SEPTEMBER 30, 1999                                29,799,281     $ 29,799   $ 3,444,644    $31,208,571
                                                         ======================================================
</TABLE>
<TABLE>
<CAPTION>
                                                                                                   TOTAL
                                                          ACCUMULATED       TREASURY           STOCKHOLDERS'
                                                            DEFICIT           STOCK                EQUITY
                                                         ---------------------------------------------------
<S>                                                      <C>              <C>                   <C>
BALANCE, SEPTEMBER 30, 1996                              $ (19,703,789)   $   (131,785)         $ 8,916,725

Exercise of stock options ($.5625 to $1.78 per share)                -               -               20,613
Treasury stock purchases                                             -      (1,217,569)          (1,217,569)
Net loss                                                    (3,235,316)              -           (3,235,316)
                                                         ---------------------------------------------------
BALANCE, SEPTEMBER 30, 1997                                (22,939,105)     (1,349,354)           4,484,453

Exercise of stock options ($.53 to $1.50 per share)                  -               -              388,341
Issuance of convertible preferred stock - Series A                   -               -            1,000,000
Preferred stock issuance costs and fees                              -               -             (118,606)
Issuance of common stock for payment of dividend
   on preferred stock                                          (20,034)              -                    -
Intrinsic value of preferred stock conversion feature                -               -                    -
Preferred stock embedded dividend                             (193,807)              -                    -
Value of warrants issued with preferred stock                 (108,979)              -                    -
Options and warrants issued for services                             -               -              232,345
Net loss                                                    (5,529,562)              -           (5,529,562)
                                                         ---------------------------------------------------
BALANCE, SEPTEMBER 30, 1998                                (28,791,487)     (1,349,354)             456,971

Exercise of stock options ($.53 to $.875 per share)                  -               -               26,878
Redemption of convertible preferred stock - Series A                 -               -             (500,000)
Conversion of convertible preferred stock - Series A
   to common stock                                                   -               -                    -
Issuance of convertible preferred stock - Series B                   -               -            3,500,000
Preferred stock issuance costs and fees                              -               -             (129,701)
Issuance of common stock for payment of dividend
   on preferred stock                                          (12,131)              -                    -
Preferred stock dividend                                      (265,327)              -             (265,327)
Intrinsic value of preferred stock conversion feature                -               -                    -
Preferred stock embedded dividend                             (619,462)              -                    -
Value of warrants issued with preferred stock                 (291,806)              -                    -
Options and warrants issued for services                             -               -              264,626
Net Income                                                   5,162,608               -            5,162,608
                                                         ===================================================
BALANCE, SEPTEMBER 30, 1999                              $ (24,817,605)   $ (1,349,354)         $ 8,516,055
                                                         ===================================================
</TABLE>

The accompanying notes to consolidated financial statements are an integral part
of these consolidated statements.

<PAGE>

                          Global Technovations, Inc.
                                    FORM 10-K
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED SEPTEMBER 30, 1999, 1998 AND 1997

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
                                                                  1999            1998              1997
                                                              -----------      -----------      -----------
<S>                                                           <C>              <C>              <C>
OPERATING ACTIVITIES:
    Net income (loss)                                         $ 5,162,608      $(5,529,562)     $(3,235,316)
    Adjustments to reconcile net income (loss) to
       net cash used in operating activities:
    Income from discontinued operations                        (1,232,451)        (948,345)      (2,921,234)
    Gain on disposal of discontinued operations                (8,030,832)        (962,760)              --
    Depreciation                                                  307,034          679,245          829,183
    Amortization                                                  333,217          294,150          232,756
    Write down of fixed assets and inventory                           --        1,294,045               --
    Loss on extinguishment of debt                                 27,266               --               --
    Loss on disposal of equipment                                   3,100          160,963          284,212
    Non cash value of services                                    184,620          232,345               --
    Decrease in deferred income tax assets, net                        --               --          245,926
    Repayments from (advances to) officers                         26,260          107,661         (133,921)
    (Increase) decrease in accounts receivable, net              (152,693)            (191)         574,025
    Increase in inventories                                      (795,312)      (1,437,419)         (75,118)
    Decrease in prepaid expenses                                   38,639           39,599           36,516
    Decrease (increase) in other assets                            27,494          729,556         (165,163)
    (Decrease) increase in accounts payable                      (294,754)         539,889         (542,780)
    Increase (decrease) in accrued liabilities                    274,733         (120,769)        (698,314)
    (Decrease) increase in other liabilities                     (339,725)         429,524               --
                                                              -----------      -----------      -----------
Net cash used in operating activities                          (4,460,796)      (4,492,069)      (5,569,228)
                                                              -----------      -----------      -----------
INVESTING ACTIVITIES:
    Purchases of property and equipment, net                   (1,291,773)        (582,132)        (820,421)
    Additions to patent costs, net                               (103,722)         (65,078)         (11,410)
                                                              -----------      -----------      -----------
Net cash used in investing activities                          (1,395,495)        (647,210)        (831,831)
                                                              -----------      -----------      -----------
FINANCING ACTIVITIES:
    Proceeds from exercises of stock options and warrants          26,878          388,341           20,613
    Preferred stock issuance, net                               3,370,299          881,394               --
    Proceeds from loan payable                                    500,000               --               --
    Repurchases of treasury stock                                      --               --       (1,217,569)
    Redemption of preferred stock Series A                       (500,000)              --               --
    Repayments of Senior Convertible Notes                     (2,064,617)              --               --
    Payment of extinguishment of debt costs                      (110,403)              --               --
    Payment of preferred stock dividend                          (107,827)              --               --
    Proceeds from (repayments of) borrowings                      595,151         (677,506)       1,996,341
                                                              -----------      -----------      -----------
Net cash provided by financing activities                       1,709,481          592,229          799,385
                                                              -----------      -----------      -----------
NET CASH USED IN CONTINUING OPERATIONS:                        (4,146,810)      (4,547,050)      (5,601,674)
                                                              -----------      -----------      -----------
CASH PROVIDED BY DISCONTINUED OPERATIONS:
    Operating Activities                                        1,488,397        1,731,370        3,796,011
    Investing Activities                                        4,478,466        1,200,900        3,256,213
                                                              -----------      -----------      -----------
Net cash provided by discontinued operations                    5,966,863        2,932,270        7,052,224
                                                              -----------      -----------      -----------
Net increase (decrease) in cash and cash equivalents            1,820,053       (1,614,780)       1,450,550
Cash and cash equivalents at beginning of period                  488,899        2,103,679          653,129
                                                              -----------      -----------      -----------
Cash and cash equivalents at end of period                    $ 2,308,952      $   488,899      $ 2,103,679
                                                              ===========      ===========      ===========

</TABLE>

The accompanying notes to consolidated financial statements are an integral part
of these consolidated statements.

<PAGE>

                         Global Technovations, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUSINESS AND BASIS OF PRESENTATION - Currently, the Company has three wholly
owned subsidiaries, Top Source Instruments, Inc. ("TSI"), which markets, leases
and sells oil analysis services with the OSA-II, Top Source Oil Analysis, Inc.
("TSOA"), which became a discontinued operation on September 30, 1996, and ARCS
Safety Seat, Inc. ("ARCS"), which is inactive. Additionally, the Company has one
85% owned subsidiary, Top Source Automotive, Inc. ("TSA"), which became a
discontinued operation on September 30, 1999. (See Note 3. Sale of Top Source
Automotive, Inc.)

The accompanying  Consolidated  Financial Statements include the accounts of Top
Source Technologies,  Inc. and its subsidiaries ("the Company"). All significant
inter-company  accounts  and  transactions  have  been  eliminated.  In order to
maintain consistency and comparability between periods presented certain amounts
have been reclassified from previously reported financial statements in order to
conform  to the  financial  statement  presentation  of  the  current  year.  On
September 30, 1999 the Company sold  substantially  all of the assets of its 85%
owned subsidiary,  TSA and other assets used in TSA's business to Onkyo America,
Inc.  ("Onkyo").  Accordingly,  the operations and financial activity associated
with this business have been reclassified as discontinued  operations.  With the
disposition of this operation,  the Company's core business,  became the leasing
and selling of its second generation on-site used oil analyzer  ("OSA-II").  The
OSA-II is a proprietary oil analysis  instrument that combines two spectrometers
in order to  analyze  used oil in  approximately  five  minutes  and  generate a
computerized  diagnostic  statement  about  the  engine  from  which the oil was
extracted.

CASH EQUIVALENTS - The Company considers all highly liquid investments purchased
with an original maturity of three months or less to be cash equivalents.

PRINCIPLES OF CONSOLIDATION - The consolidated  financial statements include the
accounts of the  Company and its  subsidiaries.  All  significant  inter-company
accounts and transactions have been eliminated.

REVENUE  RECOGNITION - The Company  recognizes  revenue from sales and leases of
OSA units at the time the products are shipped. Revenue from leased OSA units is
recognized  ratably  over the lease term,  which range from 3 to 48 months.  All
existing leases are classified as operating leases.

INVENTORIES  -  Inventories  are  stated at the lower of cost or market  and are
valued by the first-in, first-out (FIFO) method.

FAIR  VALUE OF  FINANCIAL  INSTRUMENTS  - The  carrying  amount of cash and cash
equivalents, accounts receivable, accounts payable, accrued liabilities and debt
approximates fair value.

PROPERTY AND EQUIPMENT - Property and equipment are stated at cost.  Repairs and
maintenance  costs  are  charged  to  expense  as  incurred.   Depreciation  and
amortization  are computed  using the  straight-line  method over the  estimated
useful  lives  of the  assets,  or the  lease  term if  shorter  in the  case of
leasehold  improvements,  ranging  from two to seven  years.  When  property  or
equipment is retired or otherwise disposed of, the cost less related accumulated
depreciation  is removed from the accounts and the resulting gains or losses are
included in other expense in the accompanying statements of operations.


<PAGE>
                           Global Technovations, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

CAPITALIZED DATABASE - The capitalized database relates to a portion of the cost
in excess of the fair value related to the TSOA acquisition,  which was retained
by TSI to  support  their OSA  technology.  The  capitalized  database  is being
amortized over 15 years using the straight-line  method (see Note 8. Capitalized
Database).

LONG-LIVED  ASSETS - The  Company  continually  evaluates  factors,  events  and
circumstances,  which  include,  but are not  limited  to,  the  historical  and
projected operating  performance,  specific industry trends and general economic
conditions  to  assess  whether  the  remaining  estimated  useful  life  of the
Company's  long-lived  assets may warrant revision or that the assets may not be
recoverable.  When such  factors,  events  or  circumstances  indicate  that the
long-lived assets should be evaluated for possible impairment,  the Company uses
an estimate of undiscounted  cash flow generated from the long-lived assets over
the remaining lives of those assets in measuring its recoverability.

RESEARCH AND DEVELOPMENT - The costs associated with research and development of
products and technologies are expensed as incurred.

USE OF ESTIMATES - The preparation of the consolidated  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  assets  and  liabilities  at the  date  of the
consolidating  financial  statements,  and the reported  amounts of revenues and
expenses  during the reporting  period.  Actual  results could differ from those
estimates.

COMPREHENSIVE  INCOME - For the years ended  September 30, 1999,  1998 and 1997,
there were no differences between net income and comprehensive income.

NEW  ACCOUNTING  STANDARDS - In June 1997,  the Financial  Accounting  Standards
Board ("FASB") issued Statement of Financial  Accounting  Standards ("SFAS") No.
131,  "Disclosures  about  Segments of an Enterprise  and Related  Information",
which is required to be adopted in fiscal  years  beginning  after  December 15,
1997.  This  statement   establishes  standards  for  the  way  public  business
enterprises  report information about products,  services,  geographic areas and
major  customers.  The  Company  adopted  SFAS No.  131 for fiscal  year  ending
September 30, 1999. The adoption of SFAS No. 131 did not have a material  impact
on its financial  position or results of operations  because its  operations are
concentrated  in one segment  following the sale of TSA (see Note 3. Sale of Top
Source Automotive, Inc.)

QUARTERLY INFORMATION - The Company recorded an additional valuation allowance
to reduce the deferred tax asset in the amount of $249,000, during the fourth
quarter of the fiscal year ended September 30, 1997. (See Note 12. Income Taxes)

STOCK-BASED  COMPENSATION - Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation," ("SFAS No. 123") encourages, but does
not  require  companies  to record  compensation  plans using a fair value based
method.   The  Company  has  chosen  to  continue  to  account  for  stock-based
compensation  using the  intrinsic  value based method  prescribed in Accounting
Principles  Board Opinion No. 25,  "Accounting  for Stock Issued to  Employees."
Accordingly,  compensation  cost for stock options is measured as the excess, if
any, of the quoted  market price of the  corporation's  stock at the date of the
grant over the amount an employee must pay to acquire the stock.


<PAGE>

                         Global Technovations, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
2.  OIL ANALYSIS SERVICE

During  fiscal 1998,  and as a result of the  introduction  of the OSA-IIs,  the
original  OSA-I units and  related  inventory  were  deemed to be  impaired  and
written off. An impairment  loss,  in the amounts of $880,911 and $413,134,  was
charged to operations  and is included in "Write down of fixed assets" and "Cost
of Sales and Service", respectively, in the accompanying Consolidated Statements
of Operations for the Year Ended September 30, 1998.

The Company  believes that its marketing  efforts relating to the OSA-II will be
successful.  However,  if the  Company  is unable  to meet  goals or to have the
necessary resources to sustain its marketing activities it could have a material
adverse  effect on the Company's  financial  condition and the carrying value of
its  assets.  The  Company  will  continue  to  evaluate  the success of the new
marketing efforts as well as the carrying value of the related assets.

3.  SALE OF TOP SOURCE AUTOMOTIVE, INC.

On September 30, 1999, the Company sold  substantially  all of the assets of its
85% owned  subsidiary,  TSA,  and certain  intellectual  property  assets of the
Company relating to TSA's Overhead Speaker Systems ("OHSS")  business,  to Onkyo
America,  Inc.  ("Onkyo") for total  consideration of $10,000,000  consisting of
$2,500,000 cash, a $6,500,000 30-day note payable to TSA and a $1,000,000 30-day
note  payable to the Company in either cash or  convertible  preferred  stock of
Onkyo.  The $6,500,000 note and accrued  interest of $46,479 was paid on October
29, 1999,  and the  $1,000,000  note was paid through  issuance of $1,000,000 of
Onkyo 5%  Series A  Convertible  Preferred  Stock  ("Onkyo  Preferred").  Of the
$9,000,000 in cash received by the Company, $500,000 is being held in escrow for
a  12-month  period  until  October  2000  in the  event  that  undisclosed  TSA
liabilities in excess of $50,000 arise.  Upon conclusion of the one-year period,
the  funds  plus  interest  will be  paid to TSA  less  any  excess  undisclosed
liabilities,  if any, in excess of $50,000.  No accrual  has been  recorded  for
claims against the escrowed funds as none are anticipated at this time.

The  $1,000,000  Onkyo  Preferred  received  by the  Company  has the  following
attributes:

a. CONVERSION.  In the event that Onkyo prior to redemption completes an initial
public offering for a minimum of $10,000,000  net of underwriting  discounts and
commissions and the equity  valuation of Onkyo is in excess of $25 million,  the
Onkyo  Preferred  automatically  converts  into  Onkyo  Common  Stock,  equal to
approximately  2.5%  of  the  number  of  common  shares  outstanding  prior  to
completion of the offering.

b. REDEMPTION. After October 1, 2002, either the Company or Onkyo may redeem the
Series A  Preferred  Stock  based  upon a formula  equal to (i) the  product  of
multiplying 4.3 times Onkyo's  average,  annualized net income before  interest,
taxes,  depreciation,  and amortization for the period beginning on September 1,
1999 (including TSA's operations for the period beginning on September 1, 1999);
times (ii) the fully-diluted  percentage of Common Stock into which the Series A
Preferred  Stock  is  convertible.  The term  "fully-diluted"  gives  effect  to
exercise  of  all  outstanding  options  and  warrants  and  conversion  of  all
outstanding convertible securities;

c. DIVIDENDS.  The Series A Preferred Stock has a cumulative dividend preference
of 5% per annum payable at the end of each year.

d. LIQUIDATION PREFERENCE. Upon liquidation of Onkyo or sale of all or
substantially all of the assets of Onkyo or similar event, the Series A
Preferred Stock is entitled to a $1,000,000 liquidation preference in addition
to all cumulative and unpaid dividends; and

e.  NON-VOTING.  The Series A Preferred  Stock has no voting rights except those
required by law.


<PAGE>

                       Global Technovations, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
3.  SALE OF TOP SOURCE AUTOMOTIVE, INC., (CONTINUED)

Previously,  the Company and TSA had entered into a TSA Asset Purchase agreement
with NCT Audio  Products,  Inc.  ("NCT")  on August  14,  1998 for a minimum  of
$10,000,000 in cash and up to $6,000,000 in a potential  earn-out based upon the
future operating results of the TSA business being sold. TSA received $1,450,000
in June  1998  and an  additional  $2,050,000  on  December  15,  1998  when the
Company's  stockholders approved the sale to NCT. As a result of the approval by
the Company's  stockholders on December 15, 1998, NCT became the owner of 20% of
TSA's Common Stock in exchange for the  $3,500,000 it paid.  During fiscal 1999,
the  Company  and TSA  granted  NCT  two  additional  extensions  to  close  the
transaction with a final deadline of July 15, 1999. As part of the consideration
for these  extensions,  the  Company  received  back 5% of TSA's  Common  Stock,
thereby  reducing  NCT's  ownership of TSA to 15%. NCT's parent company issued a
press  release  on July 16,  1999  stating  that it was  unable  to  obtain  the
necessary  financing  to complete the  transaction  and  acknowledging  that NCT
thereby let its rights under the asset purchase agreement to lapse. As a result,
the Company and TSA proceeded to negotiate a definitive agreement and ultimately
close on the sale of the assets to Onkyo on  September  30,  1999.  In September
1999, NCT commenced an arbitration  proceeding alleging that the Company and TSA
breached the Asset  Purchase  Agreement and sought to obtain  injunctive  relief
from  the  Delaware  Court  of  Chancery  preventing  the  Company  and TSA from
consummating the Onkyo transaction.  The Court declined to rule on NCT's request
for a temporary  restraining  order and NCT's request for injunctive  relief was
rendered moot when the Onkyo transaction  closed. The arbitration  proceeding in
which NCT claims damages,  beyond their 15% equity ownership of TSA, is pending.
The  Company  believes  that NCT's  claims for damages  beyond  their 15% equity
ownership of TSA less certain  adjustments  and offsets,  are without merit.  In
December  1999,  the  Company and TSA  answered  the demand for  arbitration  by
denying  all  material  allegations  and filed a  counterclaim  against  NCT for
substantial damages. The Company has recorded the amounts due to NCT as "Payable
to former  buyer of  automotive  subsidiary"  in the  accompanying  consolidated
balance sheet.

4.  STATEMENTS OF CASH FLOWS

In connection with the  restructuring  of  substantially  all of the outstanding
Senior Subordinated Convertible Notes (see Note 9. Debt), the Company recorded a
non-cash gain on extinguishment of debt of $248,383 for the year ended September
30, 1999.

There were no  significant  non-cash  investing or financing  activities for the
years ended  September  30, 1998 and 1997.  Cash paid for interest for the years
ended  September 30, 1999,  1998, and 1997 was $397,639,  $564,930 and $325,782,
respectively.

5. INVENTORIES

Inventories consisted of the following at September 30, 1999 and 1998:

------------------------------- ----------------------- ---------------------
                                                  1999                  1998
------------------------------- ----------------------- ---------------------
Raw materials                                 $984,082            $1,140,520
------------------------------- ----------------------- ---------------------
Finished goods                                 951,750                   -0-
                                               -------                   ---
------------------------------- ----------------------- ---------------------
                                            $1,935,832            $1,140,520
                                             =========             =========
------------------------------- ----------------------- ---------------------


<PAGE>

                         Global Technovations, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
6.  PROPERTY AND EQUIPMENT

Property  and  equipment  consisted of the  following at September  30, 1999 and
1998:

--------------------------------- ------------- ---------------- ---------------
                                    USEFUL
                                     LIFE
                                    (YEARS)                1999            1998
--------------------------------- ------------- ---------------- ---------------
Computer equipment                    3-4              $967,753      $1,026,411
--------------------------------- ------------- ---------------- ---------------
On-Site Analyzers                     4-5             1,482,829         316,214
--------------------------------- ------------- ---------------- ---------------
Tools                                  2                 24,253          11,862
--------------------------------- ------------- ---------------- ---------------
Furniture and fixtures                3-5               190,452         188,285
--------------------------------- ------------- ---------------- ---------------
Leasehold improvements                2-5                26,555          25,665
                                                         ------          ------
--------------------------------- ------------- ---------------- ---------------
                                                      2,691,842       1,568,437
                                                      ---------       ---------
--------------------------------- ------------- ---------------- ---------------
Less: accumulated depreciation                      (1,158,725)     (1,016,959)
--------------------------------- ------------- ---------------- ---------------
                                                     $1,533,117        $551,478
                                                      =========         =======
--------------------------------- ------------- ---------------- ---------------

Depreciation  of leased  OSA-II  machines in the amount of $160,029 and $119,424
for the  years  ended  September  30,  1999  and  1998,  respectively,  has been
allocated to cost of sales as it directly relates to cost of services.

During fiscal 1998 and as a result of the introduction of the OSA-IIs, the
OSA-Is property and equipment were written down. (See Note 2. Oil Analysis
Service).

7. PATENTS

Patents consisted of the following at September 30, 1999 and 1998:

------------------------------------ ------------ -------------- ---------------
                                        USEFUL
                                         LIFE
                                        (YEARS)        1999            1998
------------------------------------ ------------ -------------- ---------------

------------------------------------ ------------ -------------- ---------------
Patents                                   10           $241,830        $199,982
------------------------------------ ------------ -------------- ---------------
   Less: accumulated amortization                       (97,949)        (76,356)
                                                        --------        --------
------------------------------------ ------------ -------------- ---------------
                                                       $143,881        $123,626
                                                       ========        ========
------------------------------------ ------------ -------------- ---------------

OSA  (ON-SITE ANALYZER)
TSI  has  been  granted  five  patents  on  unique  technology  critical  to the
operations  of its  On-Site  Analyzer.  The  value  of  these  patents  is being
amortized  over ten years and have a  remaining  net book  value of  $96,313  at
September 30, 1999.

ARCS (ACCELERATION RESTRAINT CURVE SAFETY SEAT)
Over the past  eight  years the  Company  worked  on  developing  a  proprietary
technology  involving  controlled  seat  motion  that occurs at the instant of a
frontal  crash to help  restrain  vehicle  occupants  and assist  automakers  in
meeting  Federal  passive  restraint  laws.  The Company is unaware of any other
moving seat technology that has been  successfully  tested by a major automobile
manufacturer. In December 1996, the U.S. Patent Office granted patent protection
for ARCS  technology.  The value of the patents  related to the ARCS Seat Safety
Device is being  amortized over ten years and have a remaining net book value of
$47,568 at September 30, 1999.


<PAGE>

                        Global Technovations, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
8.  CAPITALIZED DATABASE

Capitalized database consisted of the following at September 30, 1999 and 1998:

------------------------------------ -------------- -------------- -------------
                                         USEFUL
                                      LIFE (YEARS)       1999            1998
------------------------------------ -------------- -------------- -------------

------------------------------------ -------------- -------------- -------------
Capitalized database                       15       $3,162,500     $3,162,500
------------------------------------ -------------- -------------- -------------
Less:  accumulated amortization                     (1,300,139)    (1,089,306)
                                                    -----------    -----------
------------------------------------ -------------- -------------- -------------
                                                    $1,862,361     $2,073,194
                                                    ==========     ==========
------------------------------------ -------------- -------------- -------------

The capitalized  database contains an active library of engine and machine tests
that  have a  diagnosed  history.  The  value of the  capitalized  database  was
determined  based on an  assessment  of the  number of samples  included  in the
database and a per unit cost to develop/buy  the data. The 15-year  amortization
period is supported by an independent  study of the expected life in use of each
engine type in the database. The database will remain for use by TSI and will be
an integral part of TSI by developing specialized markets.

9.  DEBT

Notes payable at September 30, 1999 and 1998 are as follows:

<TABLE>
<CAPTION>
                                                                          1999                       1998
                                                                          ----                       ----
<S>                                                                     <C>                       <C>
Senior Subordinated convertible notes, due June 2000,
bearing interest at 5%                                                  $707,000                  $3,020,000
                                                                         =======                  ==========
</TABLE>

On June 9, 1995, the Company entered into an agreement with advisory  clients of
Ganz Capital Management,  Inc., now Mellon Private Asset Management  ("Mellon"),
whereby  the  holders  would  purchase   $3,020,000  nine  percent  (9%)  Senior
Subordinated  convertible  notes (the "Notes") from the Company maturing in June
2000.  After June 9, 1996,  the Notes  could be prepaid by the  Company  without
penalty and could be converted by the holders  into fully  registered  shares of
the Company's  Common Stock at a conversion price of $10.00 per share. The Notes
are subject to an Indebtedness to Equity ratio that cannot exceed 1.5 to 1.0. As
of  September  30,  1998,  the  Company  was not in  compliance  with the ratio.
Subsequent to September 30, 1998, the Company restructured  substantially all of
the $3,020,000 Notes,  which included a waiver of the debt to equity ratio until
September 30,1999.  As of September 30, 1999, the Company was in compliance with
this ratio.

During  December  1998,  the  Company  restructured  substantially  all  of  the
outstanding  $3,020,000 of Senior Subordinated  Convertible Notes (the "Notes").
The  Company  prepaid an  aggregate  of $745,000  principal  amount of Notes for
$496,617  resulting in a savings of $248,383 in principal  amount (not including
future debt service  costs.) In connection  with the discounting of these Notes,
the Company  issued to the  Noteholders  warrants to  purchase an  aggregate  of
248,383 shares of the Company's Common Stock exercisable over a five-year period
at $1.78 per share.  The Company is currently in the process of registering  the
shares of Common Stock issuable upon exercise of the warrants.  In addition,  on
December 15, 1998  concurrent with the approval of the sale of TSA Assets by the
Company's  stockholders,  Noteholders  representing  $2,240,000 of the remaining
$2,275,000 in Notes  outstanding  agreed to be prepaid  $1,568,000 of the Notes,
leaving $707,000 of principal outstanding due on June 2000.

In  connection  with this  redemption,  the  Noteholders  agreed  to reduce  the
interest rate from 9% to 5% and reduce the conversion price on the remaining 30%
Note balance from $10.00 per share to $2.00 per share.  In  connection  with the
repayment of the Notes, a waiver of certain  restrictive  provisions of the Note
Purchase Agreement, including the requirement that the Company maintain a 1.5 to
1 debt to equity ratio, was received (through and including September 30, 1999).


<PAGE>

                         Global Technovations, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
9.  DEBT, (CONTINUED)

On July 1, 1997, the Company  entered into a three-year  $5,000,000  asset-based
financing   agreement   ("Credit   Facility")  with  Nations  Credit  Commercial
Corporation ("Nations"). The Credit Facility, which was secured by substantially
all of the assets of the Company  enabled the Company to borrow up to $5,000,000
based upon certain  percentages of accounts  receivable and inventory  balances.
The interest rate on this Credit Facility was 1-1/2% over the prime rate and was
payable  monthly with a required  minimum  borrowing level of $2,500,000 for fee
calculation  purposes.  The Company's  effective  interest rate at September 30,
1999 factoring the interest  earned on unused drawn funds was 17.4%. As a result
of the sale of TSA assets, the Note balance of approximately  $1,914,000,  which
included a  redemption  fee of  $100,000,  was paid in full.  Additionally,  the
Credit  Facility  was  cancelled  and liens on all  assets of the  Company  were
released on October 1, 1999.

On August 13,  1999,  a trust in which Mr. G. Jeff  Mennen,  a  director  of the
Company,  is one of the trustees (the "Trust")  provided the Company a six-month
short-term  unsecured  loan of $500,000 at a 10% interest  rate. The loan can be
prepaid without penalty at anytime during the first six months. In the event the
Company does not repay the loan before  February  13, 2000,  the Company will be
required to file a registration statement by February 13, 2000. The registration
statement will allow the Trust to convert the loan to Common Stock at 90% of the
market price. As consideration, the Trust received 50,000 warrants at the market
price of $.875 exercisable immediately,  and 50,000 warrants at the market price
of $.875  exercisable  in one year.  The value of these  warrants  utilizing the
Black- Scholes Option Pricing Model in accordance with SFAS No. 123 was $76,344.
This amount was deducted as interest expense in the fourth quarter of the fiscal
year 1999.  Total interest  accrued on this loan for the period ended  September
30, 1999 amounted to $6,712.

10. COMMITMENTS AND CONTINGENCIES

The Company leases office space under  non-cancelable  operating leases.  Future
minimum rental commitments under these leases are as follows:

         Fiscal Year Ending September 30:

         2000               $199,899
         2001                202,149
         2002                 42,209

Total rental expense for continuing  operations amounted to $188,538,  $174,386,
and  $299,525  for  the  years  ended  September  30,  1999,   1998,  and  1997,
respectively.

The Company has commitments  under certain  employment  agreements  entered into
with  individuals in management  positions.  The base salary  payments due under
these agreements aggregate $467,560 and are payable during fiscal 2000.

The Company  established a Retirement  Salary Savings Plan (401(k)) (the "Plan")
effective  October  1,  1993.  All  employees  employed  on October 1, 1993 were
eligible to join the Plan.  Otherwise,  they will be eligible to  participate in
the Plan if they have  completed  three months of service and have  attained the
age of 21. The  enrollment  dates are the first day of each  month.  The Company
will match 25% of each  dollar  contributed  by an  employee  to the Plan on the
first 6% of the salary  deferral,  not to exceed 1 1/2% of the employee's  total
salary  eligible  under the Plan.  The cost the Company  incurred  for  matching
employee  contributions  and  administrative  costs during fiscal 1999, 1998 and
1997 was $17,980, $19,160, and $30,943, respectively.



<PAGE>

                         GLOBAL Technovations, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
10. COMMITMENTS AND CONTINGENCIES, (CONTINUED)

The Company has from time to time incurred  expenses  associated with litigation
defense  and  payment  of  settlements  or  judgments  in  connection  with  its
businesses.  The Company  believes that such  litigation and other legal matters
should not have a significant adverse effect on the Company's financial position
or results of operations.

11. LOSS PER SHARE

The Company adopted SFAS No. 128,  "Earnings Per Share" during fiscal 1998. SFAS
No. 128  establishes  standards for computing and  presenting  basic and diluted
earnings per share.  Basic earnings per share are calculated by dividing  income
(loss) available to Common Stockholders by the weighted average number of shares
of common stock  outstanding  during each period.  Diluted earnings per share is
calculated by dividing income  available to common  stockholders by the weighted
average number of shares of common stock and dilutive  common stock  equivalents
outstanding.

For the years ended  September 30, 1999,  1998 and 1997, the dilutive  effect of
convertible   securities  and  common  stock  equivalent  shares  of  4,039,032,
1,274,896, and 554,802, respectively,  were not included in the dilutive average
common shares outstanding, as the effect would have been antidilutive.

12. INCOME TAXES

The income tax expense for the years ended  September 30, 1999, 1998 and 1997 of
$0, $0, and $249,000  consists of the reversal of previously  recorded  deferred
tax assets in 1997.

A valuation  allowance is provided to reduce the deferred tax assets to a level,
which, more likely than not, will be realized. The Company has determined, it is
not more likely than not that the net deferred tax assets at September  30, 1999
will be realized  before the  expiration of the  underlying  net operating  loss
carryforwards which will begin expiring in 2002.  Accordingly,  a full valuation
allowance  has been recorded on the  potential  tax benefit  generated  from the
operating loss carryforwards.

At September  30, 1999,  the Company has net tax basis  Federal  operating  loss
carryforwards of approximately  $31,000,000,  which may be used to offset future
taxable income,  if any. The Company's net operating loss  carryforwards  expire
between 2002 and 2018.

13.  RELATED PARTY TRANSACTIONS

In order to assure the Company would not violate a covenant under the Notes,  in
January  1998,  G. Jeff  Mennen,  a director  of the  Company,  agreed to infuse
sufficient capital into the Company to maintain compliance of this ratio through
October 1, 1998 or refinance the Notes (see Note 9. Debt). In consideration  for
this  guarantee,  the  Company  issued to Mr.  Mennen  50,000  10-year  warrants
exercisable at $2.00 per share and agreed to register the  underlying  shares of
Common  Stock at its  sole  expense.  These  warrants  were  valued  at  $31,854
utilizing the Black Scholes Option Pricing Model in accordance with SFAS No. 123
and has been deducted as an expense for the period ended September 30, 1998.


<PAGE>

                         Global Technovations, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
13.  RELATED PARTY TRANSACTIONS, (CONTINUED)

On November 17, 1998,  the Company sold  $3,500,000  of its Series B Convertible
Preferred  Stock  ("Series  B  Preferred")  to two  trusts  in which Mr. G. Jeff
Mennen,  a director of the Company,  is one of the co-trustees and sole trustee,
respectively, and the beneficiaries are members of Mr. Mennen's immediate family
(the "Mennen  Trusts").  The Series B Preferred is convertible  into a number of
shares of Common Stock computed by dividing the stated value of $1,000 per share
(the "Stated  Value") by 85% of the closing bid price of the Common Stock on the
previous  trading day (the  "Conversion  Price").  The Company has the option to
redeem the Series B Preferred  at a price of 115% of Stated  Value plus  accrued
dividends,  which option expires on January 1, 2001. The Series B Preferred pays
a dividend of 9% per annum in cash or, if the Company is unable to pay cash,  in
shares of Common  Stock.  The  number of shares of Common  Stock to be issued in
such event shall equal to the sum of: (A) the amount of the dividend  divided by
the  Conversion  Price plus (B) 25% of the amount  obtained  in clause  (A).  As
additional  consideration,  the  Company  issued to the  Mennen  Trusts  350,000
warrants to purchase  the  Company's  Common  Stock  exercisable  over a 10-year
period at a price of $1.94 per share  (which was  equivalent  to $1.00 above the
closing  price  on the  day of  consummation  of the  Series  B  Preferred  sale
transaction). These warrants were valued at $177,251 utilizing the Black Scholes
Option Pricing Model in accordance  with SFAS No. 123 and has been deducted from
amounts available to Common  Stockholders for the purpose of calculating  income
per share for the period  ended  September  30,  1999.  Additionally,  since the
Series B Preferred was not redeemed or converted  into Common Stock on or before
May 1, 1999 (which  conversion  required  the  Company's  consent),  the Company
issued to the Mennen Trusts an additional 50,000 10-year warrants exercisable at
a price of $1.75,  $0.50 per share  above  the  closing  price of the  Company's
Common Stock on April 30, 1999. These warrants were valued at $27,048  utilizing
the  Black-Scholes  Option Pricing Model in accordance with SFAS No. 123 and has
been deducted from amounts  available to Common  Stockholders for the purpose of
calculating income per share for the period ended September 30, 1999.

Under the original terms of the series B Preferred  Stock, the Company agreed to
file a  registration  statement by November 30, 1999 to cover the public sale of
the shares of Common  Stock  issuable  on  conversion  of the Series B Preferred
Stock and  exercise of the  warrants.  The  company did not file a  registration
statement (see Note 18. Subsequent Events).

On August 13,  1999,  a trust in which Mr. G. Jeff  Mennen,  a  director  of the
Company,  is one of the trustees (the "Trust")  provided the Company a six-month
short-term  unsecured  loan of $500,000 at a 10% interest  rate. The loan can be
prepaid without penalty at anytime during the first six months. In the event the
Company does not repay the loan before  February  13, 2000,  the Company will be
required to file a registration statement by February 13, 2000. The registration
statement will allow the Trust to convert the loan to Common Stock at 90% of the
market price. As consideration, the Trust received 50,000 warrants at the market
price of $.875 exercisable immediately,  and 50,000 warrants at the market price
of $.875  exercisable  in one year.  The value of these  warrants  of $76,344 of
utilizing the Black-Scholes Option Pricing Model in accordance with SFAS No. 123
has been deducted as interest expense in the fourth quarter of fiscal year 1999.

In fiscal 1993,  Stuart Landow,  the former  Chairman of the Board of Directors,
President and Chief Executive  Officer of the Company entered into an employment
agreement ("Employment  Agreement") which provided a base salary of $200,000 per
year.  Additionally,  the Employment Agreement called for incentive compensation
payments.  The incentive cash  compensation  expense for fiscal 1999,  1998, and
1997 was $0, and $92,760, and $178,406, respectively.


<PAGE>

                         Global Technovations, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
13. RELATED PARTY TRANSACTIONS, (CONTINUED)

As a result of the hiring of a new CEO, who  replaced  Mr.  Landow as CEO in May
1997, a breach in the terms of the original Employment Agreement occurred, thus,
Mr. Landow could have requested that the "Good Reason" clause of his contract be
triggered  effective  July 1, 1997.  Mr.  Landow  waived  this  clause  with the
approval of the Board of  Directors.  This waiver was  effective  until June 30,
1998 or  earlier,  if  elected  by Mr.  Landow  at which  time the  terms of the
original  Employment  Agreement  remained in effect,  with the  exception of the
incentive payments which would be calculated based on the previous sales for the
period from July 1, 1996 through June 30, 1997.

In June  1998,  Mr.  Landow  and the  Company's  Board of  Directors  reached an
agreement  to modify his  Employment  Agreement,  which  resulted in Mr.  Landow
triggering  the Good Reason clause of his contract and resigning as Chairman and
as a director of the Company, effective June 30, 1998.

Mr. Landow and the Company  agreed to a reduction of  approximately  $195,000 of
the total  compensation Mr. Landow was entitled to receive during the three-year
period ending June 30, 2001 by reducing the 36-month term of the severance to 30
months.  Mr. Landow agreed to raise the exercise price on 200,000 of his 600,000
Options  (all of which remain  vested) from $2.06 to $3.56.  In return for these
modifications  to the  Employment  Agreement,  the Company  agreed to extend the
exercise period for all of Mr. Landow's 600,000 vested Options from the original
expiration date of July 1, 1999 to the new date of July 1, 2001.

Additionally,  the modified Employment  Agreement provides that Mr. Landow would
repay the Company approximately  $105,000 he previously borrowed,  together with
9% per annum  interest  over the 30-month  term.  The Company is  deducting  the
monthly installments from Mr. Landow's monthly severance compensation payments.

As a result  of the  triggering  of the Good  Reason  clause  of the  Employment
Agreement and the modifications,  the Company recorded a one-time charge against
earnings  of  $1,085,587,  which  is  included  in  "Severance  expense"  in the
accompanying  Consolidated  Statement of Operations for the Year Ended September
30, 1998.  This one-time  charge was  comprised of $918,507 in future  severance
payments  and a non-cash  charge of $167,080  which the Company was  required to
record due to the change in the stock option measurement date under SFAS No. 123
and the Black-Scholes Option Pricing Model.

As of September  30, 1999,  the Company owes Mr. Landow  additional  payments of
$429,524, which is included in accrued liabilities in the accompanying financial
statements.

14. STOCK AND STOCK OPTION PLANS

The 1990 Stock Plan, as amended,  covers 3,300,000 shares of Common Stock and is
intended  to  provide:   (a)  officers  and  other   employees  of  the  Company
opportunities  to  purchase  stock in the Company  pursuant  to options  granted
hereunder which qualify as Incentive  Stock Options  ("ISOs") under the Internal
Revenue  Code of 1986,  as  amended;  (b)  directors,  officers,  employees  and
consultants  of the  Company  opportunities  to  purchase  stock in the  Company
pursuant  to  Options   granted   hereunder   which  do  not  qualify  as  ISO's
("Non-Qualified Options"); (c) directors, officers, employees and consultants of
the Company awards of stock in the Company ("Awards"); (d) directors,  officers,
employees and consultants of the Company  opportunities to make direct purchases
of stock in the Company ("Purchases");  and (e) directors of the Company who are
not employees of the Company with Non-Discretionary Options.


<PAGE>

                         Global Technovations, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
14. STOCK AND STOCK OPTION PLANS, (CONTINUED)

The  1990  Stock  Plan is  administered  by a  committee  of  four  non-employee
directors.  The  committee,  subject to certain  restrictions  in the 1990 Stock
Plan, has the authority to grant or issue,  as applicable,  ISOs,  Non-Qualified
Options,  Awards,  Purchases and  Non-Discretionary  Options. The committee also
establishes exercise or issue prices, vesting schedules and expiration dates.

The Company's 1993 Stock Option Plan (the "1993 Plan") covers  1,500,000  shares
of Common Stock. The 1993 Plan provides: (a) officers and other employees of the
Company  opportunities  to  purchase  stock in the  Company  pursuant to Options
granted hereunder which qualify as ISOs; and (b) directors,  officers, employees
and  consultants of the Company  opportunities  to purchase stock in the Company
pursuant to Non-Qualified Options.

A committee of non-employee  directors administers the 1993 Plan. The committee,
subject  to certain  restrictions  in the 1993 Plan,  has the  authority  to (i)
determine  the  employees  of the  Company  to whom  ISOs  may be  granted,  and
determine to whom Non-Qualified  Options may be granted; (ii) determine the time
or times at which Options may be granted;  (iii) determine the exercise price of
shares subject to Options;  (iv) determine whether Options granted shall be ISOs
or Non-Qualified Options; (v) determine the time or times when the Options shall
become  exercisable,  the duration of the  exercise  period and when the Options
shall vest; (vi) determine whether  restrictions such as repurchase  Options are
to be imposed on shares subject to Options and the nature of such  restrictions,
if any, and (vii)  interpret the 1993 Plan and  promulgate and rescind rules and
regulations relating to it.

The 1993 Plan also  provides  for the  automatic  grant of 30,000  Non-Qualified
Options to any  director who is not an employee of the  Company.  These  Options
vest in increments of 5,000 Options per director  every June 30 and December 31,
provided that they are still serving as a director at that time. However, in the
event any director  resigns  prior to full  vesting,  the Options will vest on a
pro-rata basis.


<PAGE>

                         Global Technovations, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
14.  STOCK AND STOCK OPTION PLANS  (CONTINUED)

The  Company  has  issued the  following  options  and  warrants  to  directors,
officers,  employees  and  consultants  during 1999,  1998 and 1997.  All of the
following Options and warrants issued to employees,  directors and officers were
issued at the fair market  value of the  underlying  stock at the date of grant;
therefore,  no  compensation  expense has been  recognized.  Options or warrants
issued  to   consultants   were  charged  to   operations,   determined  by  the
Black-Scholes Option Pricing Model in accordance with SFAS No. 123.

<TABLE>
<CAPTION>
                                                     1999                     1998                      1997
                                           ---------------------------------------------------------------------------
                                                          WEIGHTED                  WEIGHTED                  WEIGHTE
                                                          AVERAGE                   AVERAGE                      D
                                                          EXERCISE                  EXERCISE                  AVERAGE
                                            OPTIONS        PRICE      OPTIONS        PRICE      OPTIONS       EXERCISE
                                           ---------      --------   ---------      --------   ---------       PRICE
                                                                                                              --------
<S>                                        <C>            <C>        <C>            <C>        <C>            <C>
Outstanding,
beginning of year:                         3,265,872      $   2.34   3,160,580      $   2.66   2,681,314      $   3.57

Granted                                    1,219,748      $   1.53   1,683,727      $   1.79   1,148,257      $   2.12

Expiration Dates                           11/13/03-                 01/12/2002-               11/11/2006-
                                           9/22/2009                 09/01/2008                9/25/2007

Exercised                                    (50,550)     $    .53    (549,700)     $    .71     (15,000)     $   1.37

Expired or Canceled                         (474,609)     $   3.23  (1,028,735)     $   3.33    (653,991)     $   5.50
                                                                     ---------                   -------
Outstanding, end
of year:                                   3,960,461      $   1.94   3,265,872      $   2.34   3,160,580      $   2.66
                                           =========      ========   =========                 =========      ========
Exercisable, end
of year:                                   3,117,323      $   2.12   1,802,234      $   2.94   2,089,163      $   2.85
                                           =========      ========   =========                 =========      ========
Weighted-average
fair value of
options granted
during the year                            $     .60                $      .98                $     1.46
                                           =========                ==========                ==========
Available for
grant, end of year:                           42,613
                                           =========
</TABLE>

Included  in the above  table at  September  30,  1999 are  575,000  outstanding
options, which were granted outside of the Stock Option Plans during fiscal 1998
and 1997 with a weighted average price of $2.00, and $1.98, respectively.  Also,
included in the above table are 1,073,383  warrants,  which were granted  during
fiscal 1998 and 1999 at prices ranging from $.875 - $2.00.


<PAGE>

                         Global Technovations, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
14. STOCK AND STOCK OPTION PLANS  (CONTINUED)

Information  about stock  options in various  price ranges at September 30, 1999
follows:

<TABLE>
<CAPTION>
                     OPTIONS OUTSTANDING                                     OPTIONS EXERCISABLE
----------------------------------------------------------------------    -------------------------
                                         WEIGHTED-
                                          AVERAGE
                                         REMAINING        WEIGHTED-                       WEIGHTED-
                       OUTSTANDING      CONTRACTUAL       AVERAGE          EXERCISABLE    AVERAGE
      RANGE OF            AS OF            LIFE           EXERCISE            AS OF       EXERCISE
  EXERCISE PRICES       09/30/99         (YEARS)          PRICE             09/30/99        PRICE
------------------     -----------      -----------       ---------        -----------    ---------
<S>          <C>          <C>               <C>            <C>               <C>            <C>
$0.00  -     $1.00        687,416           8.3            $0.85             357,743        $0.83
$1.01  -     $2.00      2,262,739           8.5            $1.67           1,754,274        $1.72
$2.01  -     $3.00        574,820           4.6            $2.23             574,820        $2.23
$3.01  -     $5.00        295,000           7.0            $3.47             295,000        $3.47
$5.01  -     $8.00        110,486           5.5            $6.76             105,486        $6.77
$8.01  -    $10.00         30,000           4.5            $8.75              30,000        $2.12
                        ---------           ---            -----           ---------        -----
                        3,960,461           7.7            $1.94           3,117,323        $2.12
                        =========                                          =========
---------------------------------------------------------------------------------------------------
</TABLE>

The  Company  has  adopted  the  disclosure  only  provisions  of SFAS No.  123,
"Accounting for Stock-Based Compensation." Accordingly, no compensation cost has
been recognized for its Stock Option Plans.  Had  compensation for the Company's
stock-based  compensation  plans been  determined  pursuant to SFAS No. 123, the
Company's net loss and loss per share would have  increased  accordingly.  Using
the Black-Scholes  Option Pricing Model for all Options granted after October 1,
1995,  the Company's  pro forma net loss and pro forma net loss per share,  with
related assumptions, are as follows:

<TABLE>
<CAPTION>
                                                        1999               1998               1997
                                                     ----------        ------------       ------------
<S>                                                  <C>               <C>                <C>
Pro forma net income (loss)                          $3,445,032        $(6,577,819)       $(3,619,598)
Pro forma basic and diluted net income
  (loss) per share                                          .12               (.23)              (.13)
Expected life (years)                                         7                  7                  7
Risk-Free interest rate                                    6.14%              5.67%              6.51%
Expected volatility                                          69%                86%                81%
Quarterly dividend                                      None               None               None

</TABLE>

Because  SFAS No.  123  method of  accounting  has not been  applied  to Options
granted prior to October,  1995, the resulting pro forma  compensation  cost may
not be representative of that to be expected in future years.

On November  12,  1996,  the Company  announced  that it put into effect a stock
repurchase  plan to  repurchase up to 400,000  shares of its Common Stock.  From
November 12, 1996 through April 22, 1997, the Company repurchased 378,700 shares
at an average  purchase  price of $3.21 per share.  The Company  anticipates  no
further stock repurchases for the immediate future.


<PAGE>

                         Global Technovations, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
15. CONCENTRATION OF CREDIT RISK

In fiscal 1999, the Company  derived  approximately  50% of its revenue from the
outright sale of 10 OSA-II units to Flying J, Inc. Additionally, in fiscal 1999,
the Company  derived  approximately  14% of its revenue from  ongoing  long-term
leases  with  Speedco,   Inc.,  a  major  truck  stop  company  affiliated  with
Shell/Equilon.  Loss of Speedco,  Inc.  ongoing revenues during fiscal year 2000
would have a material adverse impact on the Company.

During fiscal 1998,  approximately  63% of the  Company's  revenues were derived
from four  customers,  all of which were different than the key customers  noted
above in fiscal 1999.

16.  DISCONTINUED OPERATIONS

On September 30, 1999, the Company sold  substantially all the assets of its 85%
owned  subsidiary,  TSA and its  intellectual  property assets relating to TSA's
OHSS business to Onkyo.

The  financial   activities   associated   with  TSA  have  been  classified  as
discontinued  operations in the accompanying  Consolidated Financial Statements.
The results of operations  attributable to TSA are included in the  accompanying
Consolidated  Statements  of  Operations  as  a  component  of  the  line  items
captioned,  "Income from discontinued operations, net of income taxes" and "Gain
on disposal of  discontinued  operations,  net of income  taxes".  The  combined
incomes from these activities were $9,263,283, $1,911,105 and $2,921,234 for the
years ended September 30, 1999, 1998 and 1997, respectively.

Revenues for TSA were  $8,863,814,  $10,815,205  and  $16,580,270  for the years
ended September 30, 1999,  1998, and 1997,  respectively.  Interest  expense was
$547,  $1,830 and $2,660 for the years ended  September  30, 1999,  1998,  1997,
respectively. Income tax expense was $53,000, $58,726 and $233,074 for the years
ended September 30, 1999, 1998 and 1997, respectively.

The  components  of the  net  liabilities  associated  with  TSA's  discontinued
operations  included  in  the  accompanying  Consolidated  Balance  Sheet  as of
September 30, 1998 consist of the following:

--------------------------------------------------------------- -------------
                                                                    1998
--------------------------------------------------------------- -------------

--------------------------------------------------------------- -------------
Accounts receivable, net                                          $1,599,456
--------------------------------------------------------------- -------------
Inventories                                                          349,320
--------------------------------------------------------------- -------------
Prepaid expenses                                                      79,186
--------------------------------------------------------------- -------------
Other assets                                                          21,988
--------------------------------------------------------------- -------------
Property and equipment, net                                          234,960
--------------------------------------------------------------- -------------
Manufacturing & distribution rights & patents, net                   147,876
--------------------------------------------------------------- -------------
Total assets                                                       2,432,786
--------------------------------------------------------------- -------------
Accounts payable                                                     245,596
--------------------------------------------------------------- -------------
Accrued liabilities                                                   42,043
--------------------------------------------------------------- -------------
Minority interest                                                    364,157
--------------------------------------------------------------- -------------
Total liabilities                                                    651,796
--------------------------------------------------------------- -------------
Net assets of discontinued operations                             $1,780,990
--------------------------------------------------------------- -------------


<PAGE>

                         Global Technovations, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
17.  PRIVATE PLACEMENT OF SERIES A AND B CONVERTIBLE PREFERRED STOCK

In May 1998, the Company completed the sale in a private offering to two foreign
investors of 1,000 shares of Series A  Convertible  Preferred  Stock  ("Series A
Preferred  ") with a  liquidation  value of $1,000  per share and a par value of
$.10 per share.  This funding was comprised of $1,000,000 in Series A Preferred,
less placement and legal fees, yielding $881,394 in net proceeds to the Company.
This Series A Preferred  paid an annual  dividend of 5% in cash or Common Stock.
The Company  issued an aggregate of 25,779 and 42,626 shares of Common Stock for
payment of the  dividend  due on the Series A Preferred  for the periods  ending
September 30, 1999, and 1998, respectively.

As part of the  transaction,  the  foreign  investors  and the  placement  agent
received a total of 250,000 three-year  warrants  exercisable at $1.10, of which
100,000  warrants  were fully  vested  upon  funding and the  remaining  150,000
warrants  vested upon the  redemption on November 13, 1998.  These warrants were
valued utilizing the Black-Scholes  Option Pricing Model in accordance with SFAS
No. 123. The value of these  warrants of $77,209 and $108,070 has been  deducted
from amounts  available to Common  Stockholders  for the purposes of calculating
loss per share for the periods ending September 30, 1999 and 1998, respectively.

Under  the terms of the  Preferred  Stock  agreement,  the  holders  of Series A
Preferred  had the right to  convert  each  share of Series A  Preferred  into a
number of shares of Common Stock in whole or in part  cumulatively.  The Company
had the right to redeem the Series A Preferred, at any time, in whole or in part
at 120% of the  purchase  price of the Series A  Preferred  plus all accrued and
unpaid  dividends.  The  intrinsic  value  of  the  above  described  beneficial
conversion  feature of  ($250,000)  was  recognized as an increase in additional
paid-in-capital and a decrease in Series A Preferred. This beneficial conversion
feature  was  amortized  as an  embedded  Series A  Preferred  dividend  through
November 8, 1998 (the date on which all the stock could have been converted into
Common Stock).  On November 8, 1998, the Company  redeemed  one-half or $500,000
Stated Value of the existing  Series A Preferred Stock ("Series A Preferred") by
paying the holders an aggregate  purchase  price of  $600,000.  The holders also
agreed not to convert  $350,000  Stated Value of Series A Preferred  until after
March 31, 1999 (and the Company  retained  the right to redeem  $350,000  Stated
Value of Series A Preferred  Stock at a 20% premium  above  Stated  Value at any
time before or after March 31,  1999).  The remaining  $150,000  Stated Value of
Series A Preferred was converted  into an aggregate of 387,554  shares of Common
Stock (including accrued dividends) in accordance with the terms of the Series A
Preferred. As consideration for the delay in converting $350,000 Stated Value of
the Series A Preferred, the Company issued to the two holders thereof, five-year
warrants to purchase an aggregate of 25,000  shares of Common Stock  exercisable
at $.8937 per share  commencing  in April 1999.  These  warrants  were valued at
$10,298 utilizing the Black-Scholes Option Pricing Model in accordance with SFAS
No. 123 and has been deducted from amounts available to Common  Stockholders for
the purpose of calculating  income per share for the period ended  September 30,
1999.

On November 17, 1998,  the Company sold  $3,500,000  of its Series B Convertible
Preferred Stock (see Note 13. Related Party Transactions).

On March 30, 1999, the Company and the holders of the Series A Preferred  agreed
to modify the conversion  terms of the remaining  $350,000 of Series A Preferred
resulting in the conversion of the Series A preferred into Common Stock at $1.00
per share, or into 350,000 shares.  The holder agreed to restrict public sale of
these 350,000 shares of Common Stock until October 1, 1999 and thereafter 70,000
shares,  on a  cumulative  basis,  may be sold each  month.  The $1.00 price was
substantially  higher than the price  permissible  and occurred as the result of
the Company agreeing not to redeem the $350,000 Series A Preferred.


<PAGE>

                       Global Technovations, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
18. SUBSEQUENT EVENTS

Under the original  terms of the Series B Preferred,  the Company was allowed to
redeem the Series B Preferred Stock at a 15% premium until October 27, 1999 (see
Note 13. Related Party  Transactions).  A redemption did not occur by that date,
so the  Company  was  required to file a  registration  statement  no later than
November 30, 1999.  However,  on October 21, 1999,  the Mennen  Trusts agreed to
allow the Company to delay filing a registration statement until January 1, 2001
to cover the potential  public sale of the shares of the Company's  Common Stock
issuable upon conversion of the Preferred Stock and warrants. Under the terms of
the agreement,  the Mennen Trusts received 250,000 warrants at a strike price of
$2.38.  In return,  the  Company  maintained  its 15%  redemption  right and was
allowed to extend the required registration or redemption until January 1, 2001.
These  warrants  were  valued at $252,180  utilizing  the Black  Scholes  Option
Pricing Model in accordance  with SFAS No. 123 and will be deducted from amounts
available to common stockholders for the purpose of calculating income per share
for the first quarter of fiscal year 2000.

MIGHTYCLEAN 2000(TM)

In  November   1999,   the  Company   entered  into  an  agreement  with  BioTek
Environmental  Services,  Inc. ("BioTek"),  which gave the Company the exclusive
world-wide rights to market and sell BioTek's  proprietary,  hydrocarbon  eating
microbes  in certain  defined  markets.  Under the terms of the  agreement,  the
Company has the exclusive  world-wide rights for 25 years to market and sell the
proprietary biotechnology under the trademark MightyClean 2000(TM) brand name in
the  automotive,  trucking and food  service  businesses.  Maintenance  of these
exclusive rights is expressly  contingent upon the Company attaining  $1,000,000
in sales of the product by May 31, 2000. This includes  manufacturers,  dealers,
and services of cars and trucks;  gas  stations,  quick lube  centers,  tire and
battery  stores;  operators of vehicle fleets  including  limousines,  taxis and
buses,  and overnight  delivery  services as well as municipal,  government  and
military fleets.  Within the food service  industry,  the Company may market and
sell  MightyClean  2000(TM) to  restaurants,  fast food stores,  wholesale  food
distributors  and  food  manufacturers   including  meat,  poultry  and  seafood
processors.

<PAGE>
ITEM 9.           CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
                  AND FINANCIAL DISCLOSURE

                    None
                                    PART III

ITEM 10.  DIRECTORS  AND  EXECUTIVE  OFFICERS  OF THE  COMPANY  Incorporated  by
reference from the Proxy Statement, for the Annual Meeting of Stockholders to be
held on April 3, 2000 section entitled "Election of Directors".

ITEM 11.          EXECUTIVE COMPENSATION

Incorporated  by reference from the Proxy  Statement,  for the Annual Meeting of
Stockholders to be held on April 3, 2000,  section entitled  "Executive  Officer
Compensation".

ITEM 12.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                  MANAGEMENT
Incorporated  by reference from the Proxy  Statement,  for the Annual Meeting of
Stockholders to be held on April 3, 2000,  section entitled  "Voting  Securities
and Principal Holders".

ITEM 13.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Incorporated  by reference from the Proxy  Statement,  for the Annual Meeting of
Stockholders  to be held on April  3,  2000,  section  entitled  "Related  Party
Transactions".

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
                                                                          Page

(a)      (1)  Financial Statements. (See Item 8. of Form 10-K)...........  16

(a)      (2)  Financial Statement Schedules required to be filed.
                  Schedule II - Valuation and Qualifying Accounts......    52

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




<PAGE>

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
                       (Continued)



(a)      (3)  Exhibits
              Footnote

<TABLE>

                                  EXHIBIT INDEX

<S>                            <C>

----------------------------- -------------------------------------------------------------------------------
           NUMBER                                                EXHIBIT                            FOOTNOTE
----------------------------- -------------------------------------------------------------------------------
----------------------------- -------------------------------------------------------------------------------
3.0                           Amended and Restated Certificate of Incorporation                          1
----------------------------- -------------------------------------------------------------------------------
----------------------------- -------------------------------------------------------------------------------
3.1                           Amendment to Certificate of Incorporation                                  8
----------------------------- -------------------------------------------------------------------------------
----------------------------- -------------------------------------------------------------------------------
3.2                           By-Laws                                                                    2
----------------------------- -------------------------------------------------------------------------------
----------------------------- -------------------------------------------------------------------------------
3.3                           Amendment to By-Laws                                                       8
----------------------------- -------------------------------------------------------------------------------
----------------------------- -------------------------------------------------------------------------------
3.4                           Amendment to the Amended and Restated Certificate of Incorporation         6
----------------------------- -------------------------------------------------------------------------------
----------------------------- -------------------------------------------------------------------------------
3.5                           Form of Third Certificate of Designation (Series B Preferred Stock)        21
----------------------------- -------------------------------------------------------------------------------
----------------------------- -------------------------------------------------------------------------------
4.0                           1990 Stock Plan                                                             3
----------------------------- -------------------------------------------------------------------------------
----------------------------- -------------------------------------------------------------------------------
4.1                           1993 Stock Option Plan                                                      6
----------------------------- -------------------------------------------------------------------------------
----------------------------- -------------------------------------------------------------------------------
10.1                          First Amendment to Lease of On-Site Analysis, Inc., Atlanta, GA             6
----------------------------- -------------------------------------------------------------------------------
----------------------------- -------------------------------------------------------------------------------
10.2                          Shareholder Rights Plan                                                     5
----------------------------- -------------------------------------------------------------------------------
----------------------------- -------------------------------------------------------------------------------
10.3                          Note Purchase Agreement dated as of June 9, 1995                            7
----------------------------- -------------------------------------------------------------------------------
----------------------------- -------------------------------------------------------------------------------
10.4                          First Amendment to Shareholder Rights Plan                                  8
----------------------------- -------------------------------------------------------------------------------
----------------------------- -------------------------------------------------------------------------------
10.5                          Second Amendment to Shareholder Rights Plan                                 9
----------------------------- -------------------------------------------------------------------------------
----------------------------- -------------------------------------------------------------------------------
10.6                          Employment Agreement of David Natan                                         11
----------------------------- -------------------------------------------------------------------------------
----------------------------- -------------------------------------------------------------------------------
10.8                          Lease of office space, Palm Beach Gardens, FL                               12
----------------------------- -------------------------------------------------------------------------------
----------------------------- -------------------------------------------------------------------------------
10.9                          Employment Agreement of William C. Willis, Jr.                              16
----------------------------- -------------------------------------------------------------------------------
----------------------------- -------------------------------------------------------------------------------
10.11                         Form of Class A Warrants                                                    22
----------------------------- -------------------------------------------------------------------------------
----------------------------- -------------------------------------------------------------------------------
10.12                         Form of Class B Warrants                                                    22
----------------------------- -------------------------------------------------------------------------------
----------------------------- -------------------------------------------------------------------------------
10.13                         Form of Class C Warrants                                                    22
----------------------------- -------------------------------------------------------------------------------
----------------------------- -------------------------------------------------------------------------------
10.14                         Form of Class D Warrants                                                    22
----------------------------- -------------------------------------------------------------------------------
----------------------------- -------------------------------------------------------------------------------
10.15                         Form of Class F Warrants                                                    22
----------------------------- -------------------------------------------------------------------------------
----------------------------- -------------------------------------------------------------------------------
10.16                         Form of Class G Warrants                                                    22
----------------------------- -------------------------------------------------------------------------------
----------------------------- -------------------------------------------------------------------------------
10.17                         Asset Purchase Agreement - NCT Audio Products, Inc.                         18
----------------------------- -------------------------------------------------------------------------------
----------------------------- -------------------------------------------------------------------------------
10.18                         Amendment to Asset Purchase Agreement - NCT Audio Products, Inc.            19
----------------------------- -------------------------------------------------------------------------------
----------------------------- -------------------------------------------------------------------------------
10.19                         Second Amendment to Asset Purchase Agreement - NCT Audio Products, Inc.     25
----------------------------- -------------------------------------------------------------------------------
----------------------------- -------------------------------------------------------------------------------
10.21                         Amendment to Note Purchase Agreement dated as of June 9, 1995               20
----------------------------- -------------------------------------------------------------------------------
----------------------------- -------------------------------------------------------------------------------
10.22                         Amended Stock Purchase Agreement - Series B Preferred Stock                 20
----------------------------- -------------------------------------------------------------------------------
----------------------------- -------------------------------------------------------------------------------
10.23                         Speedco,  Inc. Long-Term Lease [David Natan, are there others?]             23
----------------------------- -------------------------------------------------------------------------------
----------------------------- -------------------------------------------------------------------------------
10.24                         Flying J, Inc. Agreement                                                    23
----------------------------- -------------------------------------------------------------------------------
----------------------------- -------------------------------------------------------------------------------
10.25                         SPX Agreement                                                               23
----------------------------- -------------------------------------------------------------------------------
----------------------------- -------------------------------------------------------------------------------
10.26                         Staveley, Inc. PLC Agreement                                                23
----------------------------- -------------------------------------------------------------------------------
----------------------------- -------------------------------------------------------------------------------
10.27                         Onkyo America, Inc. Asset Purchase Agreement                                24
----------------------------- -------------------------------------------------------------------------------
----------------------------- -------------------------------------------------------------------------------
10.28                         Mennen Trust Convertible Note                                               23
----------------------------- -------------------------------------------------------------------------------
----------------------------- -------------------------------------------------------------------------------
10.29                         Agreement with Mennen Trusts                                                22
----------------------------- -------------------------------------------------------------------------------
----------------------------- -------------------------------------------------------------------------------
10.30                         BioTek Environmental, Inc. Agreement                                        22
----------------------------- -------------------------------------------------------------------------------
----------------------------- -------------------------------------------------------------------------------
27.0                          Financial Data Schedule                                                     22
----------------------------- -------------------------------------------------------------------------------
</TABLE>
     <PAGE>


ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
              (Continued)


(b)      Reports on Form 8-K
         Form 8-K for the quarter ended  September 30, 1999 was filed on October
         14, 1999, and amended on December 13, 1999.

         Exhibit Index
<TABLE>
     <S>     <C>


    -------- ---------------------------------------------------------------------------------------------------------------
       1       Contained in the Form 8-A dated July 10, 1993.
    -------- ---------------------------------------------------------------------------------------------------------------
    -------- ---------------------------------------------------------------------------------------------------------------
       2       Contained in the documents  previously  filed with the Securities
               and Exchange Commission in conjunction with
    -------- ---------------------------------------------------------------------------------------------------------------
    -------- ---------------------------------------------------------------------------------------------------------------
       3       Contained in the documents  previously  filed with the Securities
               and Exchange Commission in conjunction with
    -------- ---------------------------------------------------------------------------------------------------------------
    -------- ---------------------------------------------------------------------------------------------------------------
       4       Contained as an exhibit to the Proxy Statement dated January 11, 1994.
    -------- ---------------------------------------------------------------------------------------------------------------
    -------- ---------------------------------------------------------------------------------------------------------------
       5       Contained in Form 8-K dated January 5, 1995.
    -------- ---------------------------------------------------------------------------------------------------------------
    -------- ---------------------------------------------------------------------------------------------------------------
       6       Contained in the documents filed with the Securities and Exchange  Commission in conjunction  with the 9/30/94
    -------- ---------------------------------------------------------------------------------------------------------------
    -------- ---------------------------------------------------------------------------------------------------------------
       7       Contained in  documents  filed with the  Securities  and Exchange
               Commission in conjunction with
    -------- ---------------------------------------------------------------------------------------------------------------
    -------- ---------------------------------------------------------------------------------------------------------------
       8       Contained in the Form 8-K/A No. 1 dated July 17, 1995.
    -------- ---------------------------------------------------------------------------------------------------------------
    -------- ---------------------------------------------------------------------------------------------------------------
       9       Contained in the Form 8-K/A No. 2 dated December 5, 1995.
    -------- ---------------------------------------------------------------------------------------------------------------
    -------- ---------------------------------------------------------------------------------------------------------------
      10       Contained in Amendment No. 1 to the Registration Statement on Form S-3 filed May 4, 1995.
    -------- ---------------------------------------------------------------------------------------------------------------
    -------- ---------------------------------------------------------------------------------------------------------------
      11       Contained in Amendment No. 3 to the Registration Statement on Form S-3 filed September 27, 1995.
    -------- ---------------------------------------------------------------------------------------------------------------
    -------- ---------------------------------------------------------------------------------------------------------------
      12       Contained in  documents  filed with the  Securities  and Exchange
               Commission in conjunction with
    -------- ---------------------------------------------------------------------------------------------------------------
    -------- ---------------------------------------------------------------------------------------------------------------
      13       Contained in the Form 8-K dated November 12, 1996.
    -------- ---------------------------------------------------------------------------------------------------------------
    -------- ---------------------------------------------------------------------------------------------------------------
      14       Contained in  documents  filed with the  Securities  and Exchange
               Commission in conjunction with
    -------- ---------------------------------------------------------------------------------------------------------------
    -------- ---------------------------------------------------------------------------------------------------------------
      15       Contained in  documents  filed with the  Securities  and Exchange
               Commission in conjunction with the
    -------- ---------------------------------------------------------------------------------------------------------------
    -------- ---------------------------------------------------------------------------------------------------------------
      16       Contained in  documents  filed with the  Securities  and Exchange
               Commission in conjunction with
    -------- ---------------------------------------------------------------------------------------------------------------
    -------- ---------------------------------------------------------------------------------------------------------------
      17       Contained in  documents  filed with the  Securities  and Exchange
               Commission in conjunction with
    -------- ---------------------------------------------------------------------------------------------------------------
    -------- ---------------------------------------------------------------------------------------------------------------
      18       Contained in  documents  filed with the  Securities  and Exchange
               Commission in conjunction with
    -------- ---------------------------------------------------------------------------------------------------------------
    -------- ---------------------------------------------------------------------------------------------------------------
      19       Contained as an exhibit to the November 6, 1998 Proxy Statement.
    -------- ---------------------------------------------------------------------------------------------------------------
    -------- ---------------------------------------------------------------------------------------------------------------
      20       Contained in Form 10-K for the year ended September 30, 1998.
    -------- ---------------------------------------------------------------------------------------------------------------

    -------- ---------------------------------------------------------------------------------------------------------------
      21      Contained in Form 10-K/A No. 1 for the year ended September 30, 1998.
    -------- ---------------------------------------------------------------------------------------------------------------
      22      Contained in Form 10-K for the year ended September 30, 1999.
    -------- ---------------------------------------------------------------------------------------------------------------
      23      Contained in Amendment No. 6 to the Registration Statement Form S-3 filed September 3, 1999.
    -------- ---------------------------------------------------------------------------------------------------------------
      24      Contained in Form 8-K dated September 30, 1999.
    -------- ---------------------------------------------------------------------------------------------------------------
      25      Contained in Amendment No. 5 to the Registration Statement Form S-3 filed May 21, 1999.
    -------- ---------------------------------------------------------------------------------------------------------------


</TABLE>

<PAGE>


                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
              FOR THE YEARS ENDED SEPTEMBER 30, 1999, 1998 AND 1997


<TABLE>

================================= ----------------- ------------- ---------------------- ---------------- ===============
<S>                             <C>                <C>           <C>                      <C>             <C>

                                  Balance at        Charged to                                              Balance at
================================= ----------------- ------------- ---------------------- ---------------- ===============
================================= ----------------- ------------- ---------------------- ---------------- ===============
Deducted from Accounts Receivable
Allowance for Doubtful Accounts
================================= ----------------- ------------- ---------------------- ---------------- ===============
================================= ----------------- ------------- ---------------------- ---------------- ===============
Year Ended Sept. 30, 1999                 $ -           $ -                $ -                  $    -         $ -
================================= ----------------- ------------- ---------------------- ---------------- ===============
================================= ----------------- ------------- ---------------------- ---------------- ===============
Year Ended Sept. 30, 1998                $ -            $ -                $ -                 $ -             $ -
================================= ----------------- ------------- ---------------------- ---------------- ===============
--------------------------------- ----------------- ------------- ---------------------- ---------------- ===============
Year Ended Sept. 30, 1997             $ 83,650          $ -                $ -                                 $ -
--------------------------------- ----------------- ------------- ---------------------- ---------------- ===============
</TABLE>



                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the Registrant  has duly caused this  Registrant's  report on Form
10-K to be signed on its behalf by the undersigned, thereunto duly authorized.

                           GLOBAL TECHNOVATIONS, INC.

                          By: \s\William C. Willis, Jr.
                             William C. Willis, Jr.
                             Chairman, President and
                             Chief Executive Officer


Dated:   December 29, 1999