A.S. GOLDMEN & COMPANY
INVESTMENT BANKING
45 BROADWAY ATRIUM
NEW YORK, NEW YORK 10006-3007
(212) 742-8500
(800) 678-4550
FAIRNESS OPINION
May 21, 1996
Board of Directors
Water-Jel Technologies, Inc.
243 Veterans Boulevard
Carlstadt, New Jersey 07072
Dear Members of the Board of Directors:
We understand that Water-Jel Technologies, Inc. ("WJT") and
Journeycraft, Inc. ("JCI") have entered into a merger agreement (the "Merger")
pursuant to which JCI will be merged with subsidiaries of WJT. In connection
with the Merger, WJT will issue 3,500,000 shares of its common stock in exchange
for all of the outstanding common stock of JCI. For the purposes of this letter,
"JCI" also includes Theracom, Inc.
You have requested our opinion of the Merger with respect to fairness,
from a financial point of view, to WJT and WJT's shareholders. A.S. Goldman &
Co., Inc. is customarily engaged in the evaluation of business and their
securities in connection with mergers & acquisitions, private placements,
shareholder transactions, estate and gift taxes, litigation, and for other
purposes.
In connection with rendering our opinion we have, among other things:
(1) Reviewed the Agreement and Plan of Merger between WJT and JCI;
(2) Analyzed financial information with respect to WJT, including
audited financial statements as of and for the three years ended August 31,
1995, August 31, 1994 and August 31, 1993 contained in the Form 10-K, unaudited
financial statements contained in the Forms 10-Q for the periods ended November
30, 1995 and February 28, 1996;
(3) Analyzed financial information with respect to JCI, including but
not limited to unaudited financial statements as of and for the three years
ended March 31,1996, March 31, 1995 and March 31, 1994, unaudited financial
statements as of and for the six months ended September 30, 1995 and the nine
months ended December 31, 1995, and management forecasts for the four years
ending March 31, 1999;
(4) Held discussions with certain members of WJT, JCI, senior
management concerning the past, current, and planned operations, financial
condition, and business prospects of each company;
(5) Discussed with the legal advisors of WJT the results of
their due diligence investigations of JCI;
(6) Reviewed the historical market prices of WJT common stock;
(7) Reviewed the compostion of ownership of WJT and JCI common
stock;
(8) Reviewed the financial terms of the Merger;
(9) Considered financial data of WJT and JCI, and have compared that
data with similar data for other publicly held companies similar to WJT and JCI;
(10) Considered the financial terms of certain other business
combinations and other transactions that have recently been effectuated; and
(11) Considered such other information, financial studies, and analyses
as we deemed relevant, and performed such analyses, studies, and investigations
as we deemed appropriate.
A.S. Goldmen & Co., Inc. has assumed and relied upon, without
independent verification, the accurancy and completeness of the information
reviewed by us. With respect to any projections, we assumed that they have been
reasonably prepared on bases reflecting the best currently available estimates
and judgments of the future financial performance of JCI. We have also assumed
with our independent verification that JCI owns and has adequate legal
protection for all material tangible assets and intellectual property that it
purports to own, and that key agreement to which JCI purports to be a party are
valid and enforceable. We have also assumed that the Merger will be nontaxable
transaction. Accordingly, we do not make any warranties nor do we make any
representations with respect to the aforementioned items.
We have not performed an appraisal of the assets, liabilities, or
intellectual property of JCI, nor have we been furnished with any such
valuations or appraisals. We have assumed that the assessments of management
have been made in good faith and reflect the best currently available management
judgments as to matters covered. Our opinion is necessarily based upon economic,
market, and other conditions as in effect on, and the information made available
to us as of, the date of this letter. Our opinion is limited to the fairness of
the Merger as of the date hereof, from a financial point of view. We make no
representations with respect to the business decision to effect the Merger or
any other terms of the Merger. This opinion does not represent our opinion as to
what the value of JCI or WJT may be as of the date of this letter.
We understand that in considering the Merger, the Board of Directors of
WJT has considered a wide range of financial and nonfinancial factors, many of
which are beyond the scope of this letter. This letter is not intended to
substitute for the Board's exercise of its own business judgment in reviewing
the Merger.
Based upon and subject to the foregoing considerations, it is our
opinion as financial advisors to WJT that the Merger is fair from a financial
point of view to WJT and to WJT's shareholders.
The foregoing opinion is to be used for the information and assistance
of WJT. Accordingly, it is understood and agree that no person other than WJT
and its officers, directors and shareholders shall be allowed to use or rely
upon this opinion.
Very truly yours.
/s/ Stuart Winkler
A.S. GOLDMEN & CO., INC.
Stuart Winkler
Managing Director