<PAGE>   1
                                                                   EXHIBIT 10.86

                            UNITED STATES OF AMERICA
                                   Before the
                       SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 37719 / September 24, 1996

ACCOUNTING AND AUDITING ENFORCEMENT
Release No. 821 / September 24, 1996

ADMINISTRATIVE PROCEEDING
File No. 3-9095


In the Matter of                     ORDER INSTITUTING PROCEEDINGS
                                     PURSUANT TO SECTION 21C OF THE
Wilshire Technologies, Inc.          SECURITIES EXCHANGE ACT OF 1934,
                                     MAKING FINDINGS AND IMPOSING A
                Respondent.          CEASE-AND-DESIST ORDER

                                       I.

         The Securities and Exchange Commission (the "Commission") deems it
appropriate that public administrative proceedings be instituted pursuant to
Section 21C of the Securities Exchange Act of 1934 ("Exchange Act") against
Wilshire Technologies, Inc. ("Wilshire"). Accordingly, IT IS HEREBY ORDERED that
said proceedings be, and hereby are, instituted.

         In anticipation of the institution of these administrative proceedings
Wilshire has submitted an Offer of Settlement, which the Commission has
determined to accept. Solely for the purposes of these proceedings and any other
proceedings brought by or on behalf of the Commission or in which the Commission
is a party, and without admitting or denying the findings herein, except that
Wilshire admits the jurisdiction of the Commission over it and over the subject
matter of these proceedings, Wilshire consents to the entry of this Order
Instituting Proceedings Pursuant to Section 21C of the Securities Exchange Act
of 1934, Making Findings and Imposing a Cease-and-Desist Order ("Order") and to
the entry of the findings and imposition of the sanctions as set forth below.
<PAGE>   2
                                  III. FINDINGS

         On the basis of this Order and of the Offer of Settlement of Wilshire,
the Commission makes the following findings:(1)

A. The Respondent

         Wilshire Technologies, Inc. ("Wilshire"), incorporated in California in
1990, has its principal place of business in Carlsbad, California. Wilshire's
common stock is registered with the Commission pursuant to Section 12(g) of the
Exchange Act and is traded on the American Stock Exchange.

B. The Facts

   1. Background

         During fiscal years 1993 and 1994, Wilshire developed, manufactured and
marketed medical, clean room and transdermal (through the skin) drug delivery
products. During fiscal 1993, Wilshire introduced two new products, a
transdermal appetite suppressant called "Trimpatch" that had not completed
testing and a clean room product known as the pipe plug. Wilshire intended to
sell the TrimPatch product in foreign countries and knew in early 1993 that it
needed to obtain foreign government approvals before it could do so. Wilshire
never obtained such approvals.

         As stated below, from at least the second quarter of fiscal year 1993
through January 1994, Wilshire materially overstated its earnings in press
releases and periodic financial reports filed with the Commission. Wilshire
overstated its financial statements primarily by improperly recognizing
approximately $2.7 million of revenue from conditional sales of its TrimPatch
and pipe plug products.(2) In addition, Wilshire materially

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

(1)      The findings herein are made pursuant to the Respondent's Offer of
         Settlement and are not binding on any other person or entity named as a
         respondent in this or any other proceeding.

(2)      Generally Accepted Accounting Principles ("GAAP") require that revenue
         be recognized when merchandise is exchanged for cash or claims to cash
         and when goods are delivered. Financial Accounting Standards Board
         Statement of Concepts No. 5 Paragraph 83 a & b. GAAP also requires that
         revenue should not be recognized when the buyer's obligation to the
         seller is contingent on resale of the product. Financial Accounting
         Standards Board Statement No. 48. In this case, Wilshire's sales were
         conditional, and Wilshire, therefore, had no claim to cash, had not
         delivered the goods and should not have recognized revenue from such
         sales.

                                        2
<PAGE>   3
overstated its earnings by improperly recognizing a $1.7 million gain from a
related party asset sale and a $1 million vendor claim. Wilshire also issued
false press releases concerning its earnings, business prospects and ability to
meet analysts' expectations.

         2.       Wilshire Materially Overstated its Second Quarter 1993
                  Revenues and Earnings

         On May 28, 1993, the last business day of Wilshire's second quarter,
Wilshire improperly recognized $216,000 of revenue from a conditional sale of
TrimPatch. In a July 2, 1993 press release and in a Form 10-QSB filed with the
Commission on July 15, 1993, Wilshire reported second quarter revenue of over
$2.5 million and pre-tax earnings of $413,000. As a result of improperly
recognizing revenue on this conditional sale of TrimPatch, Wilshire overstated
its second quarter revenue by $216,000, or 9%, and pre-tax income by
approximately $131,000, or 47%.

         3.       Wilshire Materially Overstated Its Third Quarter 1993 Revenues
                  and Earnings and Issued False Press Releases

         In a press release dated September 10, 1993, and in its third quarter
1993 Form 10-QSB filed with the Commission on September 27, 1993, Wilshire
reported quarterly pre-tax earnings of $468,000 and revenues of almost $3.1
million. As a result of improperly recognizing a combined $1.34 million in
revenue from conditional sales of TrimPatch and pipe plugs, Wilshire overstated
its reported third quarter revenue by over 77%. Without recognition of revenue
from these purported sales, Wilshire would have incurred a pre-tax loss for its
third quarter of about $373,000, approximately $840,000 less than the reported
pre-tax income of $468,000.

         Wilshire also misrepresented in its September 10, 1993 press release
that: Wilshire had "shipped" 2.7 million units of TrimPatch to a distributor in
Mexico; Wilshire had a "contractual backlog" of 23 million TrimPatch units to be
shipped over the following 12 months; and Wilshire expected "additional
approvals for the TrimPatch in the next 30 days. Each of these representations
was false. In fact, Wilshire had not "shipped" 2.7 million units of TrimPatch to
a distributor but had received only a conditional order for 2.7 million
TrimPatch units. Wilshire also had only a sales forecast, but no signed
contracts, for 23 million TrimPatch units and, therefore, did not have a
"contractual backlog." Finally, no country had approved the TrimPatch for sale,
let alone the "additional" countries referred to in the release.

         4.       Wilshire Materially Overstated Its Fourth Quarter 1993 and
                  Fiscal 1993 Revenues and Earnings and Issued False Press
                  Releases

                                        3
<PAGE>   4
         On November 12, 1993, just 18 days before the fiscal year end, Wilshire
issued a press release stating that "We [Wilshire] believe that the analysts'
estimate of $.55 and $1.80 [earnings per share] for fiscal [years] 1993 and 1994
are still reasonable." This statement was false and misleading. This statement
of earnings per share was based, in part, on the earnings for the second and
third fiscal quarters of 1993, which Wilshire had materially overstated. At the
time Wilshire issued this statement, Wilshire's second and third quarter
reported earnings were overstated because it had improperly included the
conditional TrimPatch and pipe plug sales described above.

         Then on December 22, 1993, Wilshire issued another press release that
contained the following false material statements: Wilshire had received
approval from the government of Mexico to sell the TrimPatch freely throughout
Latin America; and Wilshire had received approval and registered to sell the
TrimPatch in Hong Kong and Taiwan. In fact, Wilshire had not received any
approvals to sell the TrimPatch and had not registered to sell the TrimPatch in
Hong Kong and Taiwan.

         Finally, on January 21, 1994, Wilshire issued a press release that
reported fourth quarter fiscal 1993 pre-tax earnings of almost $1.1 million and
pre-tax earnings for fiscal 1993 of over $2.1 million on revenues of $11
million. Wilshire fraudulently overstated its fourth quarter 1993 pre-tax
earnings in this release by over $6 million; Wilshire had, in fact, incurred a
fourth quarter pre-tax loss of over $4.9 million. Similarly, Wilshire overstated
its fiscal 1993 pre-tax earnings by $6.6 million, as Wilshire had, in fact,
incurred a pre-tax loss of $4.5 million for fiscal 1993. Wilshire falsely
inflated its earnings in this release by, among other things, improperly
recording in the last week of Wilshire's fiscal 1993 four transactions: a $1.7
million gain from Wilshire's sale of an operating unit to a party related to
Wilshire, reported over the objections of its auditors; $604,800 in revenue from
another conditional sale of TrimPatch; $1 million from a claim against a
supplier, which claim was disputed by the supplier and, in any event, was
uncollectible; and $1 million in revenue from another conditional sale of pipe
plugs.

C.       Wilshire Violated the Federal Securities Laws

         1.       Violations of the Antifraud Provisions: Section 10(b) of the
                  Exchange Act and Rule 10b-5 Thereunder

         Wilshire violated Section 10(b) of the Exchange Act and Rule 10b-5
thereunder by preparing, publicly disseminating and filing with the Commission
materially false and misleading financial statements and preparing and publicly
issuing materially false and misleading press releases regarding Wilshire's
business and

                                        4
<PAGE>   5
earnings prospects. Section 10(b) of the Exchange Act and Rule 10b-5 thereunder
make it unlawful for any person, directly or indirectly, in connection with the
purchase or sale of a security, to make an untrue statement of material fact,
omit to state a material fact, use any device, scheme or artifice to defraud, or
engage in any act, practice or course of business which operates or would
operate as a fraud or deceit upon any person. The "in connection with"
requirement may be satisfied with a showing that the respondent's acts resulted
in the issuer making a public announcement or filing a report with the
Commission that could reasonably be expected to have caused investors to trade
in the issuer's securities. See SEC v. Savoy Indus., Inc., 587 F.2d 1149, 1171
(D.C. Cir. 1978), cert. denied, 440 U.S. 913 (1979). The respondent must also
have acted with scienter, which includes recklessness. Ernst & Ernst v.
Hochfelder, 425 U.S. 185, 194 (1976); Hollinger v. Titan Capital Corp., 914 F.2d
1564, 1569 (9th Cir. 1990) (en banc), cert. denied, 499 U.S. 976 (1991).
Misrepresentations or omissions will be deemed material if there is a
substantial likelihood that a reasonable investor would consider the information
important in making an investment decision. See Basic Inc. v. Levinson, 485 U.S.
224, 231 32 (1988); TSC Indus., Inc. V. Northway, Inc., 426 U.S. 438, 449
(1976).

         As discussed, Wilshire disseminated financial statements that
overstated its fiscal 1993 second quarter, third quarter, fourth quarter and
year-end revenue and pre-tax income by improperly recognizing revenue on
conditional sales of TrimPatch and pipe plugs. In its announced fourth quarter
and year-end financial statements that were attached to its January 21, 1994
press release, Wilshire also overstated its pre-tax income by improperly
recognizing the sale of an operating unit and a claim against a supplier.
Wilshire also issued press releases that misrepresented the approval status of
its TrimPatch product and misrepresented its ability to meet earnings
expectations for fiscal 1993.

         Wilshire's misrepresentations were material. Wilshire overstated its
second quarter 1993 pre-tax income by about 47% and reported substantial pre-tax
income for its third and fourth quarters of 1993 and its fiscal 1993 when it had
actually incurred substantial pre-tax losses in those periods. Wilshire also
acted with scienter.(3) Through its officers and a director, Wilshire improperly
recorded revenue and earnings, in some instances reporting such revenue and
income against the specific warnings of its auditor.

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

(3)      The scienter of Wilshire's officers is imputed to Wilshire. SEC v.
         Manor Nursing Centers, Inc., 458 F.2d 1082, 1089 n.3 (2d Cir. 1972).

                                       5
<PAGE>   6
         2.       Violations of the Reporting Provisions: Section 13(a) of the
                  Exchange Act and Rules 12b-20 and 13a-13 Thereunder

         Section 13(a) of the Exchange Act and Rule 13a-13 thereunder require
issuers with securities registered pursuant to Section 12 of the Exchange Act,
such as Wilshire, to file with the Commission quarterly reports on Form 10-QSB.
Inherent in these provisions is the requirement that such filings be accurate;
therefore, an issuer violates these provisions when it files a Form 10-QSB that
contains materially false or misleading information. SEC v. Falstaff Brewing
Corp., 629 F.2d 62, 72 (D.C. Cir. 1980); Savoy Indus., Inc., 587 F-2d at 1165.
Rule 12b-20 under the Exchange Act similarly requires that these reports contain
any material information necessary to make the required statements made in the
reports not misleading.

         Wilshire violated these provisions when it reported materially false
earnings and pre-tax income in its Forms 10-QSB filed with the Commission for
its second and third quarters of fiscal 1993. Wilshire overstated its fiscal
1993 second and third quarter revenues reported in Forms 10-QSB by 9% and 77%,
respectively. Wilshire also overstated its reported fiscal 1993 second and third
quarter pre-tax income by approximately $131,000 and $840,000, respectively.

         3.       Violations of the Books and Records Provisions: Section
                  13(b)(2)(A) of the Exchange Act

         Section 13(b)(2)(A) of the Exchange Act requires every issuer that has
securities registered pursuant to Section 12 of the Exchange Act, such as
Wilshire, to "make and keep books, records, and accounts, which in reasonable
detail, accurately and fairly reflect the transactions and dispositions of the
assets of the issuer."

         Wilshire violated the books and records provisions of Section
13(b)(2)(A) of the Exchange Act. Wilshire maintained books and records
containing accounting entries and documents by which Wilshire fraudulently
supported its overstated revenue and earnings. Specifically, Wilshire recorded
accounting entries that fraudulently recorded conditional sales, the sale of a
division to a related party and an unsettled claim.

         4.       Internal Control Violations: Section 13(b)(2)(B) of the
                  Exchange Act

         The internal control provisions of Section 13(b)(2)(B) of the Exchange
Act require issuers with securities registered under Section 12 of the Exchange
Act, such as Wilshire, to devise and maintain a system of internal accounting
controls sufficient to reasonably assure, among other things, that transactions
are

                                        6
<PAGE>   7
recorded as necessary to permit preparation of financial statements in
conformity with GAAP.

         Wilshire's internal control system was materially inadequate to ensure
that Wilshire's transactions were recorded in its books and records and reported
in its financial statements in conformity with GAAP. Specifically, Wilshire had
inadequate internal controls to assure that Wilshire properly recorded
conditional sales, the sale of a division to a related party and an unsettled
claim.

D. CONCLUSION

         Based on the foregoing, the Commission finds that Wilshire violated
Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules
10b-5, 12b-20 and 13a-13 thereunder.

                                       IV.

         Based on the foregoing, the Commission deems it appropriate to accept
the Offer of Settlement of Wilshire and accordingly,

         IT IS HEREBY ORDERED, pursuant to Section 21C of the Exchange Act, that
Wilshire cease and desist from committing or causing any violations and any
future violations of Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the
Exchange Act and Rules 10b-5, 12b-20 and 13a-13 thereunder.

         By the Commission.

                                               Jonathan G. Katz
                                               Secretary

                                               /s/ Margaret H, McFarland
                                        By:    Margaret H, McFarland
                                               Deputy Secretary



                                        7
<PAGE>   8
                                  SERVICE LIST

         Rule 141 of the Commission's Rules of Practice provides that the
Secretary, or any other duly authorized officer of the Commission, shall serve a
copy of the Order Instituting Proceeding Pursuant to Section 21C of the
Securities Exchange Act of 1934, Making Finding and Imposing a Cease-and-Desist
Order on each person named as a party in the order and their legal agent.

         The attached Order Instituting Proceedings Pursuant to Section 21C of
the Securities Exchange Act of 1934, Making Findings and Imposing a
Cease-and-Desist Order, has been sent to the following parties and other persons
entitled to notice:

                         Securities and Exchange Commission
                         Division of Enforcement
                         Branch of Regional Office Assistance
                         Mail Stop 4-8B
                         Attn: Laurie Stewart
                         450 Fifth Street, N.W.
                         Washington, D.C. 20549

                         The Honorable Brenda P. Murray
                         Chief, Administrative Law Judge
                         Securities and Exchange Commission
                         Mail Stop 11-6
                         450 Fifth Street, N.W.
                         Washington, D.C. 20549

                         Kelly Bowers, Esq.
                         Roger D. Boudreau
                         Securities and Exchange Commission
                         5670 Wilshire Blvd., 11th Floor
                         Los Angeles, CA 90036

                         Wilshire Technologies, Inc.
                         5441 Avenida Encinatas, Suite A
                         Carlsbad, CA 92008

                         Robert S. Stern
                         Attorney at Law
                         Morrison & Foerster
                         555 West Fifth Street, Suite 3500
                         Los Angeles, CA 92101