AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 5, 1996
REGISTRATION NO. 33- D.C.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
NatureNu Corporation
Nevada 1446 88-0362458
------ ---- ----------
(State of (Primary standard industrial (I.R.S. employer
Incorporation) classification code number) identification number)
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
NatureNu Corporation
Stephen L. Vonderheide, Chairman
806 Packer Way
Sparks, Nevada 89431
(702) 331-6661
with a copy to:
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Malcolm D. Crawford, Esq.
3631 E. 7th Ave. Pkwy.
Denver, Colorado 80206
(303) 388-7752
Approximate date of commencement of proposed sale to the public:
As soon as possible after the Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1993, check the following box [x]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------------------
Title of Each Class Amount of
Securities to be Shares to be Valuation Aggregate Registration
Registered Registered Per Unit Valuation (1) Fee
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<S> <C> <C> <C> <C>
Common Stock 3,430,000 $3.00 $10,290,000 $3,396.00
- ----------------------------------------------------------------------------------------------------------------------------
Total Registration Fee $3,396.00
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</TABLE>
(1) Estimated solely for purposes of determining the registration fee.
------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE>
NatureNu Corporation
Cross Reference Sheet
(Showing location in the Prospectus of Information
Required by Items 1 through 23, Part I, of Form SB-2)
<TABLE>
<CAPTION>
Item and Caption in Form SB-2 Location in Prospectus
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<S> <C> <C>
1. Front of Registration Statement and Outside Front
Cover page of Prospectus............................. Outside Front Cover
2. Inside Front and Outside Back Cover Page of
Prospectus .......................................... Inside Front and Outside Cover Pages
3. Summary Information and Risk Factors................. Prospectus Summary; Risk Factors
4. Use of Proceeds...................................... Use of Proceeds
5. Determination of Offering Price...................... Outside Front Cover Page; Risk Factors; Underwriting
6. Dilution............................................. Risk Factors; Dilution
7. Selling Security Holders............................. Cover Page - Capitalization
8. Plan of Distribution................................. Outside Front Cover Page; Underwriting
9. Legal Proceedings.................................... Business - Legal Proceedings
10. Directors, Executive Officers, Promoters and Control
Persons.............................................. Management
11. Security Ownership of Certain Beneficial Owners and
Management........................................... Principal Stockholders
12. Description of Securities............................ Description of Common Stock; Underwriting
13. Interest of Named Experts and Counsel................ Experts; Legal Matters
14. Disclosure of Commission Position on Indemnification
for Securities Act Liabilities....................... Inside Front Cover Page of Prospectus; Underwriting
15. Organization Within Last 5 Years..................... Prospectus Summary; The Company; Business;
Certain Transactions
16. Description of Business.............................. Business; Risk Factors
17. Management's Discussion and Analysis of
Plan of Operation ................................... Management's Discussion and Analysis of Plan of Operations
18. Description of Property.............................. Business - Properties
19. Certain Relationships and Related Transactions ...... Certain Transactions
20. Market For Common Equity and
Related Stockholder Matters ......................... Cover Page - Plan of Distribution
21. Executive Compensation............................... Management - Compensation
22. Financial Statements................................. Financial Statements - Experts
23. Changes In and Disagreements With Accountants on
Accounting and Financial Disclosure.................. N.A.
</TABLE>
<PAGE>
Subject to Completion Dated December 5, 1996
PRELIMINARY PROSPECTUS
$1,800,000
NATURENU (TM) CORPORATION
Common Stock
NatureNu Corporation (the "Company") is offering 600,000 shares of Common
Stock at $3.00 per share for an aggregate of $1,800,000. The Company has also
registered 2,830,000 shares for three Shareholders (the "Selling Shareholders").
The Company will not receive any of the proceeds from the common stock sold by
these Shareholders. See MANAGEMENT - Transactions With Management and Others and
TERMS OF THE OFFERING.
Prior to this offering, there has been no public market for the Common
Stock of the Company. For the method of determining the initial public offering
price of the Common Stock, see RISK FACTORS - Arbitrary Offering Price.
Application has been made for the Common Stock to be quoted on the NASDAQ
Bulletin Board Market System under the symbol _______.
These Securities Offered Hereby Involve a High Degree of Risk.
See RISK FACTORS Beginning at page 2.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION, NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
This Table reflects only the shares being offered by the Company.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Underwriting Discounts
Price to public and Commissions(1) Proceeds to Company(2)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share $3.00 $.30 $2.70
- ----------------------------------------------------------------------------------------
Total $1,800,000 $180,000 $1,620,000
- ----------------------------------------------------------------------------------------
</TABLE>
1) See TERMS OF THE OFFERING for a discussion of the terms of the offering on
a "best-efforts" basis. The shares will be offered by officers and
directors of the Company for which they will not receive any compensation,
and may be offered by members of the National Association of Securities
Dealers, Inc. for which they will receive a 10% Commission.
2) Before deducting expenses payable by the Company estimated at $54,000
3) All subscribed funds will be deposited in the Company's operating account
with Sun State Bank, Reno, Nevada. There is no minimum required.
Stephen L. Vonderheide, Chairman
NatureNu Corporation
806 Packer Way
Sparks, Nevada 89431
Phone (702) 331-6661
Fax (702) 331-7760
<PAGE>
RED INK
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor offers
to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of any offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE>
REPORTS TO SHAREHOLDERS
Upon completion of this offering, the company will be subject to the
informational requirements of the Securities Exchange Act of 1934, and in
accordance therewith, will be required to file reports and other information
with the Securities and Exchange Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and copies of such material can be obtained from the
public reference section of the Commission, Washington, D.C. 20549, at
prescribed rates.
(Upper Left and Lower Left Package Label
Pictures Omitted)
<PAGE>
SUMMARY OF THE PROSPECTUS
The Offering I. Common Stock Outstanding: 9,375,000*
Common Stock being Offered by the Company: 600,000
Total shares outstanding after
the Offering 9,975,000
II. Net Proceeds to the Company: $1,620,000*
---------
* Assumes 100% of stock sales are made by NASD Brokers.
See MANAGEMENT - Principal Shareholders.
Company Background Harry J. Vonderheide and his son, Steve, are the founders
of Devil's Gate Mining, Inc. of Reno, Nevada, dba National
Nutrients, Inc., "Better Living through Earth-Friendly
Products," the holder of the trademarks "NatureNu" and
"SeaSoil," an environmental natural soil builder and odor
dispenser (among other "trace minerals/micronutrients"
properties) found in the Devil's Gate nine placer mining
claims, comprising approximately 680 acres in the Oneota
Mining District, Esmeralda County, Nevada, approximately
55 miles east of Tonopah, Nevada, adjoining U.S. Highway
95, 250 miles south of Reno, Nevada. The claims have been
filed with the Esmeralda County Recorder and the U.S.
Department of the Interior - Bureau of Land Management.
Notice of Intent to conduct mining operations in
accordance with federal regulations (Part 43 CFR 3809) has
been submitted to, and approved by, the BLM (and
regulations of the National Environmental Policy Act).
Only one of the placer claims has been mined to date
inasmuch as Devil's Gate Mining, Inc. has mined only
enough product for the laboratory testing and analysis
conducted during the years to determine the best economic
utilization of the rare micronutrients found in this
sea-bed that is millions of years old. The mining is by
simple bulldozer and front-end loader by a local mining
contractor on an as needed basis.
Upon being advised that laboratory tests showed "trace
materials" used in their natural form as an agricultural
soil supplement and as an odor neutralizer, in 1991
National Nutrients, Inc. received two trademarks from the
United States Patent and Trademark Office - one for
"NATURENU" - A Soil Conditioner for Agricultural Use; and
"SEASOIL" - for 100% Natural Trace Element/ Micronutrient
Used for Plant Nutrition and Soil Building. National
Nutrients, Inc. remains as an independent research and
development affiliate engaged in mining reclamation and
dust control.
SeaSoil(TM) has several additional commercial uses beyond
odor control and as a soil amendment; being (i) a seed
starter nutrient; and (ii) a key ingredient in many
formulated products (e.g, SpotCheck). See HISTORY AND
BUSINESS - Planned Commercial Products (page 10).
<PAGE>
Recent Marketing/ During August and September 1996, the Company entered into
Manufacturing agreements which Management believes to be significant for
Agreements the management and marketing of the Company's products,
namely:
(i) A Management and Distribution Agreement with Damon
Industries of Sparks, Nevada, a 47 year old company,
reported to be one of the 3 largest companies in the
world in the packaging and distribution of "shelf
stable" fruit juice products that are distributed by
Damon to over 6,000 bars, restaurants, nursing homes,
hospitals and other institutions in the U.S., Canada
and the Caribbean.
(ii) Central Garden of Lafayette, California, a nationwide
distributor of lawn, garden and pet products in such
retail chains as Wal-Mart, Price/Cosco, Target and Home
Depot, has agreed to market the Company's products on a
best-efforts basis.
(iii)SpotCheck is currently marketed in the PetsMart
stores.
(iv) Foster Farms Organic Division of Foster Farms of
Livingston, California, one of the largest chicken
farms in America, is blending SeaSoil into pellets with
the urea from chicken manure to enhance the nitrogen
content for lawns, golf courses, and agricultural
farms. The pellets, bonded with grass or flower seeds,
are being used for mine reclamation and highway
landscaping. See MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS at
page 4.
Risk Factors The Common Stock offered hereby involves a high degree of
risk. See RISK FACTORS, page 2.
Use of Proceeds To mine, produce, package and market the Company's 680
acre, approximately 5,000,000 ton reserves of the
micronutrient/trace minerals from the Company's Devil's
Gate Mining deposits. See HISTORY AND BUSINESS, USE OF
PROCEEDS.
<PAGE>
RISK FACTORS
The purchase of Shares offered hereby involves a high degree of risk. These
securities should only be purchased by persons who can afford the risk of loss
of their entire investment. Prior to the purchasing of shares, prospective
investors should carefully consider the following risk factors which are not
listed in any priority as some may be material, and there can be no quantifying
which will cause more adverse consequences than others; and some may not
materialize.
Development Stage Company. As a Development Stage company with limited
capital and only a few full time employees, operating primarily in research and
development since inception, focusing on marketing only since 1995, there can be
no assurance that the Company's products will be accepted in the marketplace in
commercial quantities that will result in a profit to the Company, and its
operations will be subject to all of the risks inherent in the establishment of
a new business enterprise. Although the management has extensive general
business experience, the success of the Company will depend on the economies of
mining, processing and marketing. A variety of risks, including the absence of a
Company operating history, limited capital, delays in the implementation of the
Company's business plan, competition, and uncertainties in the markets would
adversely affect the Company. Since the Company was recently organized, it
cannot provide historical information and financial data upon which a
prospective investor can make an informed judgment as to the future prospects of
the Company. See MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS and HISTORY AND BUSINESS.
Possible delays in the development and implementation of the company's
business plan. Development and implementation of the Company's business plan
involves the handling and processing of large numbers of orders, establishment
of offices and operating departments and the coordination of a number of various
contractors. Although some of the Company's management has extensive experience
in these areas, any or all of these activities are subject to possible
unforeseen delays and consequential risks.
Dependence Upon Management. The Company is largely dependent upon the
efforts and abilities of its management, which consists only of a few key
executives, none of whom have operated before in a professional corporate
atmosphere; and experienced subordinates must still be employed. The loss of
such personnel could have a serious adverse effect on the Company and its
business operations. To the extent practicable, the Company intends to carry
key-man insurance on the lives of personnel whose services are critical to the
Company's success, but there is no assurance competent, experienced replacement
executives can be hired in a timely manner.
Insurance. The Company has investigated the cost of insurance against
liabilities arising out of the negligence of its officers and directors and/or
deficiencies in any of its products. The Company has determined that the cost
thereof is excessive. Accordingly, the Company would have to satisfy any such
liabilities out of its assets. Any such liabilities which might arise could be
substantial and may exceed the assets of the Company.
Economy. The Company is in the business of mining its "trace" minerals used
for odor control, soil building, and as a key ingredient in several Company
products. In addition it is involved in shipping, manufacturing, packaging and
merchandising of consumer products. A downturn in the national economy,
increased unemployment, or an increase in interest rates, or many other adverse
economic factors, can be expected to adversely affect the Company's operations
and the Company's potential revenues as compared with companies in other, well
established competitive industries.
Interstate Marketing. The Company will be marketing products and
merchandise in many states. Although the Company has retained legal counsel,
generally considered expert in the area, there can be no assurance that the
Company will not be subject to state laws and regulations that hinder and/or
delay its plans and projections.
Dependence upon this Offering. With the proceeds of this offering the
Company anticipates it will have sufficient capital and be able to operate for
the next year, during which it anticipates a positive cash flow from operations.
There can be no assurance the Company will receive from this offering net
proceeds which Management believes will be sufficient to implement the Company's
plan of operation, thereby increasing the risk to the subscribers to this
offering.
2
<PAGE>
Dividends. The Company has had only minimal revenues from product sales and
has never paid any dividends. It is the Company's present policy to retain all
earnings, if any, for use in the development and expansion of the Company's
business.
Arbitrary Determination of Offering Price. The offering price has been
determined arbitrarily by the Company and does not bear any relationship to the
Company's assets, book value, net worth or any other recognized criteria of
value.
Sales Pursuant to Rule 144. The Shares of the Company's Common Stock
currently outstanding and held by the present shareholders of the Company prior
to this Offering have not been registered under the Securities Act of 1933, as
amended (the "Act"), and are restricted securities under Rule 144 of the Act.
Generally, under Rule 144, a person holding restricted securities for a period
of two years may, every three months, sell in ordinary brokerage transactions or
in transactions with a market maker an amount equal to the greater of one
percent of the Company's then outstanding Stock or the average trading volume in
the Stock during the four calendar weeks preceding the sale. Persons who are not
affiliated with the Company may sell their restricted Shares without regard to
the volume limitations of Rule 144 under certain circumstances after they have
owned their restricted Shares for at least three years. SEE MANAGEMENT Principal
Shareholders and Transactions With Management and Others.
Intense Competition. The market for all the Company's products is highly
competitive. Many providers offer products and services that are directly
competitive with those offered by the Company. The Company also experiences
competition from established odor control manufacturing and marketing systems.
Many of the Company's competitors have significantly greater financial,
marketing, technical, and other competitive resources than the Company. Current
and potential competitors may be anticipated to have developed relationships
with one another or with third parties or consolidate to compete more
effectively against the Company. It is also possible that new competitors may
emerge and acquire market share. Any of these events could have a material
adverse effect on the financial condition and results of operations of the
Company.
Management of Growth. The Company is expanding into new products, services,
and markets, which will place unforeseen demands on its managerial and
operational resources. The inability to manage growth could have a material
adverse effect on the financial condition and results of operations of the
Company.
Attraction and Retention of Key Personnel. The company's future success
depends in large part on the continued service of its key management, sales,
product development, operational personnel, and supervision of the Company's
non-affiliated third-party management and marketing partners. The Company is
particularly dependent on the executive officers named in MANAGEMENT. The
Company believes that its future success also depends on its ability to attract
and retain highly skilled technical, managerial, and marketing personnel,
including, in particular, additional personnel in the areas of research and
development and technical support. Competition for qualified personnel is
intense. The Company may not be successful in attracting and retaining the
personnel it requires, which could have a material adverse effect on the
financial condition and results of operations of the Company.
Control by Existing Stockholders. The Company's Executive Officers and
affiliated persons will, in the aggregate, beneficially own more than 65% of the
outstanding Common Stock as of the date of this Prospectus. As a result, these
stockholders, if acting together, would be able to control most matters
requiring approval by the company's stockholders, including the election of
directors. The effect of this stock ownership may be to limit the price that
investors might be willing to pay in the future for shares of the Common Stock
or prohibit or delay a merger, takeover, or other change in control of the
Company and thus discourage attempts to acquire the Company. See MANAGEMENT
Principal Shareholders.
DILUTION
The pro forma net tangible book value of the Company at November 20, 1996
was $18,099 or $.002 per share. Pro forma net tangible book value per share
represents the amount of total tangible assets less total liabilities, divided
by the 9,375,000 of Common Stock outstanding.
3
<PAGE>
After giving effect to the sale by the Company of 600,000 shares of Common
Stock and the application of the $1,620,000 estimated net proceeds (assuming all
shares are sold by NASD member firms), the pro forma net tangible book value of
the Company at November 20, 1996 would have been $1,638,099 million, or $.16 per
share. THIS represents an immediate increase in pro forma net tangible book
value of $.16 per share to existing stockholders and an immediate dilution in
net tangible book value of $2.82 per share to purchasers of Common Stock in this
offering. The following table illustrates the dilution in net tangible book
value per share to new investors:
Initial public offering price per share .......................... $3.00
Pro forma net tangible book value per share
at November 20, 1996 ...................................... $ -0-
Increase per share attributable to new investors ............ $ .16
Pro forma net tangible book value per share after offering .. $ .16
Dilution per share to new investors .............................. $2.84
The following table sets forth as of November 20, 1996, the number of
shares of Common Stock issued and outstanding, the total cash paid to the
Company and the average price paid per share by existing stockholders and by the
purchasers of shares offered by the Company hereby:
<TABLE>
<CAPTION>
Shares Total Consideration
-------------------- --------------------------
Average
Number Percent Amount Percent Per Share
------ ------- ------ ------- ---------
<S> <C> <C> <C> <C> <C>
Existing Stockholders 9,375,000 94% $ -0- 0% -0-
New Investors 600,000 6% 1,800,000 100% $3.00
---------- ----- ----------- -----
Total 9,975,000 100% $1,800,000 100%
========= ==== ========== ====
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Devil's Gate Mining, Inc. was incorporated in 1985 by the son and father
team of Steve and Harry Vonderheide to evaluate the commercial feasibility of
mining their placer mining claims on 680 acres adjacent to U.S. Highway 95 in
Esmeralda County, Nevada (the "Devil's Gate Mine") in public lands administered
by the U.S. Department of the Interior, Bureau of Land Management.
Until 1990 the Vonderheides were primarily engaged in their respective
business professions and the primary business for the Devil's Gate Mine was
testing the unique micronutrients in various laboratories throughout the United
States and in Japan to determine the economic viability of the Devil's Gate
mineral. Only minimal wholesale sales were made as a result of advertisements in
various home and garden magazines, and recently in trade magazines for the pet
industry. In September 1996, the Company entered into an agreement with the
"Foster Farms Organic Division of Foster Farms, of Livingston, California, one
of the largest chicken farms in America, to blend the Company's SeaSoil into
pellets with the urea from chicken manure to enhance the nitrogen content. The
resulting product is being tested on lawns, golf courses and agricultural farms.
Initial testing indicates a product that appears to be superior to even the most
costly well-known soil enhancers currently being sold in both the wholesale and
retail markets. However, no representation can be made as to the market
acceptance of these products.
In August 1996, the Company entered into a six month "Distribution
Agreement" with Damon Industries of Sparks, Nevada, for Damon to become the sole
distributor of the Company's proprietary product ODOR CHECK(TM) pursuant to
which the Company will deliver the SeaSoil raw nutrient from the Devil's Gate
mined deposit for an agreed upon price per ton, with Damon to use its best
efforts (with no assurances given as to the sales volume) to purchase $100,000
of ODOR CHECK(TM) per month by April 1998. In addition, in consideration of
Damon Industries assuming all of the Manufacturing, Processing, Packaging,
Marketing, and Administration/Accounting activities, the Company has obligated
itself to loan Damon $60,000 (if required to capitalize the purchase of
manufacturing equipment). However, the Company is negotiating with several
packing companies to manufacture, process and package on a per piece basis. If
the comparative economics are as favorable as indicated, the $60,000 loan will
be unnecessary. If the $60,000 is expended, Damon is obligated to repay the loan
by a specified dollar amount credit on Damon product sales. In addition, the
4
<PAGE>
Company will pay Damon a non-recoverable $7,000 monthly for six months, all to
be used for the agreed upon "Use of Proceeds" for Damon to set up a production
facility to blend and package for retail distribution under the tradename
"OdorCheck" to Damon's extensive institutional food and beverage markets
throughout the United States, Canada, and the Caribbean, to eliminate
(neutralize) odors in the over 6,000 restaurants and bars, nursing homes and
other venues, traditionally serviced by Damon's fifty regional distributors. At
the end of the six month initial period, the Company has the option to terminate
the agreements, take possession of all the production, manufacturing and
marketing equipment, supplies and software systems, or to continue the joint
venture by paying another schedule of payments, commencing with $6,300 the first
month, and monthly reductions thereafter to zero after fifteen months.
Damon also plans to expand the ODOR CHECK(TM) marketing beyond Damon's
traditional food institution customer base, to include institutional users such
as municipal server systems, Sysco and Rykoff-Sexton wholesale food
distributors, homes through infomercials, multi-level marketing groups, bulk
retail stores and supermarkets.
Damon Industries is a 47 year old veteran of the manufacturing and
marketing of "shelf-stable" fruit juice products (a $3 billion annual market in
which Damon is viewed as a segment leader, in the top three packer/wholesaler
distributors for these specialty products in the world). Dun & Bradstreet
Information Services report of June 11, 1996 showed 1995 sales of $6,005,078 and
net profit of $524,386. Douglas Damon, President of Damon Industries, is past
president of International Beverage Dispensing Equipment Association and
co-founder of a trade association.
In mid-September 1996, the Company negotiated to have Central Garden Sales
of Lafayette, California, a nationwide distributor of lawn, garden and pet
products in all 50 states and Canada offer the Company's products into Central
Garden's distribution venue, including such stores as WalMart and Target,
Price/Cosco, and the Home Depot nationwide chain. The SpotCheck is already
offered in the nationwide PetsMart stores.
HISTORY AND BUSINESS
Formation
National Nutrients, Inc., the management, marketing and research company
for the Devil's Gate mining claims, was started in October 1981 by Harry J.
Vonderheide and Steve L. Vonderheide, from Reno, Nevada. The purpose behind the
corporate formation was to take advantage of what early tests indicated to be a
unique supply of micronutrients located in their natural state, which could be
mined at a minimal cost. After years of testing on the material, it was
determined that there was a viable use and commercially attractive potential for
odor control (in all industrial, agricultural, farming/ranching and household
venues); as well as in the lawn and garden, industrial, agricultural, cosmetic,
medical, and household areas. The Company has recently reorganized in several
key divisions: (i) production, (ii) administrative, (iii) marketing, and (iv)
research and development.
INDEPENDENT APPRAISAL OF THE DEVIL'S GATE MINING CLAIMS
In August 1996, National Nutrients, Inc. commissioned Edward R. Evatz, a
nationally recognized natural resources consultant, to perform an analysis of
the Company's mineral deposits. Since receiving his Bachelor of Science Degree
in Forestry from Utah State University in 1954, Mr. Evatz has had a 45 year
career in the Reno geographical area in natural resource development and
environmental matters relating to the utilization of the natural resources of
that area. Following his Honorable Discharge from the U.S. Army in 1953, Mr.
Evatz spent 31 years with the United States Department of the Interior - Bureau
of Land Management, both in Nevada and Washington, D.C., including managing a
complement of 38 technical/professional staff at the BLM District Offices in
Nevada for public land programs (1954-1985), followed by three years as a
Natural Resource Consultant for federal and state "Environmental Assessment"
permitting and Environmental Impact Reports.
COMPANY CAVEAT: All projections of the financial results of natural
resource mining are and commercialization are unreliable as to mathematical
accuracy inasmuch as projections are based on a myriad of assumptions, including
volume of minable product; costs of extraction; costs of processing and
marketing; consumer demand and competition; general national and local economic
conditions; and present and unanticipated future costs relating to compliance
with federal and state environmental and mining laws and regulations; as well as
compliance with product composition regulations in connection with retail
marketing.
5
<PAGE>
Mr. Evatz' report titled: "AN ANALYSIS AND OPINION ON DEVIL'S GATE MINING,
INC.", concluding that his analysis "reflects a minimum of 5 million tons of
readily accessible exposed deposits," stated in part:
Introduction and Purpose - Devil's Gate Mining, Inc. (Devil's Gate) is a
privately owned mining company that holds placer mining claims on public lands
administered by the U.S. Department of the Interior, Bureau of Land Management.
The claims, comprising approximately 680 acres, are located just west of U.S.
Highway 95 in Esmeralda County, about 56 miles from Tonopah, Nevada. The project
area appears to contain rich deposits of natural trace minerals. This deposit is
mined and utilized singly or in combination with other materials for uses such
as odor control, fertilizer, soil binder and soil supplements associated with
agricultural uses. Presently, the material is mined in bulk with standard dozers
and loading equipment. No processing is required other than sizing and bagging
for specific requisitions. Most of the product is shipped in bulk by transport
trucks. Access to the site is on an all-weather road 18 miles west of U.S.
Highway 95. Devil's Gate has exclusive access to this minable resource in the
area by controlling mining claims encompassing the known reserves. There are no
other competing operations. The Company has been mining its product since 1985.
The purpose of this report is to examine the legitimacy of Devil's Gate,
the reasonable extent of minable reserves, product applications, the history and
present status of product sales, and resource value. This will result in an
opinion on whether or not Devil's Gate produces a commodity of economic value
and if so, to what extent the company is capable of producing that product in
quantities sufficient to meet existing and potential demand.
Disclaimer - During the preparation of this report, voluminous records of
Devil's Gate and its management company, dating back to 1981, were reviewed.
Discussions were held with Steve and Harry Vonderheide, principals of the
company. Also reviewed were applicable federal regulations on location,
discovery and marketability of mineral resources; and decisions of
administrative hearings rendered by the U.S. Department of the Interior, as well
as specific references of case history pertaining to regulatory interpretation.
Discussions were also held with BLM minerals staff personnel in the Nevada State
Office in Reno. The contents of this report represent the findings of the author
based on the information presented and reviewed. The author cannot attest to the
accuracy of that information. Further, the opinion of the author is not intended
to be and does not constitute a recommendation to any prospective buyer of
Devil's Gate, in whole, or in any portion thereof.
The Company - Devil's Gate was incorporated following location of seven (7)
placer claims in the Oneota Mining District of Esmeralda County, Nevada. The
addition of two claims brought the total to nine (9) mining claims, all of which
have been duly recorded with the County Recorder and with the U.S. Department of
the Interior, Bureau of Land Management (BLM). Requirements to hold the claims
in good standing have been met on an annual basis.
The necessary Notice of Intent (NOI) to conduct mining operations in
accordance with federal regulations (Part 43 CFR, 3809), was submitted to, and
approved by the Tonopah office of the BLM. This approval authorizes Devil's Gate
to disturb up to five (5) acres of surface area in the process of mining.
Disturbance of more than five acres would require approval of a more detailed
Plan of Operations and preparation of an Environmental Assessment to analyze
potential impacts of the mining operation. This constitutes a standard procedure
required by the mining regulations and the National Environmental Policy Act
(NEPA).
At the present time, only one of the nine placer claims has been mined. The
abundance of minable resource, together with ready access and simple but
effective mining procedures, has easily met the demand to date. The material is
mined by the use of a bulldozer and "front-end" loader. No drilling and blasting
is required. The mine does not operate on a regular schedule and does not have
any employees at the present time. Material is contract mined as needed to meet
product demand. Bulk shipments of the resource are trucked to Bishop,
California, or similar locations, where it is stockpiled prior to sizing,
bagging and shipping.
Extent of Minable Reserves - The mineral deposits in the project area are
extensive, covering hundreds of acres of exposed minable reserves and additional
acreages of shallow overburden reserves. Exposed deposits range in depth from a
few feet to in excess of 30 feet; and lie in strips of approximately one mile in
length and one-quarter mile wide. Shallow overburden covers intervals of
unexposed reserves over many portions of the project area. Review of aerial
photography indicates that deeper overburden covers several of the placer
claims. Determination of the volume of deposits above and below the surface of
the project area would require detailed measurements. Both the exposed and
unexposed deposits would require an extensive drilling program to determine the
extent of the minable reserves. It is assumed that the depth of the deposit is
significant. Analysis of claim block overlays on topographic maps, and of
photographs (aerial and ground level), reflects a minimum of 5 million tons of
readily accessible exposed deposits, based on a factor of 2.0 tons per cubic
yard. Once the exposed reserves have been mined, increased costs of mining
operations would be directly related to removal of overburden and compliance
with state laws, particularly dealing with dust abatement to comply with air
quality standards.
6
<PAGE>
Product Applications - The trade name of SeaSoil has been used for the
product mined at Devil's Gate. Based on review of marketing and sales data, it
has applications as both an agricultural and industrial mineral. The product
does not have to be processed other than basic "sizing" to meet user
requirements. A brief discussion follows.
1. As an agricultural product, SeaSoil is certified for unrestricted use as
an agricultural mineral by the California Certified Organic Farmers (CCOF). For
use as a soilbuilder, it provides a natural, non-polluting supplement of
micronutrients to soils that are deficient in trace elements. It is not a
fertilizer, but when added to the primary fertilizer nutrients of nitrogen,
phosphorus and potassium in proper balance, its use is intended to enhance the
fertilizer in terms of meeting overall plant nutritional requirements. Other
uses related to establishment and maintenance of lawns are Spot Check and Lawn
Check. These products are a combination of SeaSoil, lawn seed and a moisture
retaining binder that are formulated to repair yellow spots caused by dogs, and
to repair hard to grow or damaged areas. Also, development of an innovative seed
pellet consisting of SeaSoil, a water retention clay material, green waste
material and a prescribed seed mix, shows promise for mined land reclamation,
wildfire revegetation, and other disturbed land rehabilitation. The product was
introduced in mid 1995.
2. Industrial uses have mainly focused to date on utilizing the product to
eliminate unpleasant odors. The product has been successfully marketed for odor
control in outdoor toilets at recreation areas. Applied in small amounts,
SeaSoil neutralizes odors by encapsulating the odor causing bacteria. Two
additional potentially significant markets for SeaSoil in odor control show much
promise, and if proven successful, would dramatically expand the production and
beneficial uses of SeaSoil. The first would be directed at the food service and
beverage industry. The odor removing qualities of the product could have
unlimited application in restaurants, bars, supermarkets, hospitals and other
facilities where odor problems are a constant source of concern to personnel and
health administrators. The Environmental Protection Agency (EPA), the federal
environmental "watchdog," has set standards for sewage sludge which the agency
anticipates will result in increased application of sludge as a fertilizer.
Reluctance of the public to accept sewage sludge as a practical and economic
fertilizer has centered in large part to the odor problems inherent in the
sludge. The opportunity to remedy the odor control problem associated with the
sludge by treatment of SeaSoil has been successfully tested. The potential for
broad application of this product with sewage sludge for use as a fertilizer
(agriculture, golf courses, landscaping, land reclamation, etc.) is being
pursued.
Summary of Appraisal - Devil's Gate Mining, Inc. is a bona fide mining
company operating as a corporation under Nevada state regulations. The
unpatented placer mining claims owned by the company are presently in good
standing with the federal government, Bureau of Land Management (BLM). Minable
reserves of SeaSoil, the product trademark, are visibly abundant and appear to
extend for a great distance laterally within the 680 acre claim block. Depth and
quality of the reserves, along with quantifiable estimate of volume, can only be
determined by an extensive drilling program. In the event anticipated
acceleration of mining expands to more than five (5) acres of surface
disturbance, or at the discretion of the BLM and the Nevada Bureau of Mining
Regulation and Reclamation, a detailed mining Plan of Operation will be
required. An environmental assessment of potential impacts will be required
prior to BLM's decision on the proposed operating plan. Appropriate mitigation
measures must be included in plan development.
Management's discussions with BLM's personnel has led to the conclusion
that surface stockpiles on the five acre permitted area will provide adequate
SeaSoil product reserves for approximately five years, to accommodate the
current projected needs. See Proforma Financial Statements at page 18. The
remote location of the mine and the absence of known environmental conflicts,
should allow an expanded mine permitting process to move forward in a reasonable
timeframe.
Product Sales
The early marketing of SeaSoil dating back to incorporation of Devil's
Gate, focused on use of the product as a soilbuilder and as a feed supplement
for livestock and poultry. Even though marketing was limited, National
Nutrients' owners (the Vonderheides) managed to attract interest in their
product, even at the international level. During this period the company
expended considerable time and money obtaining chemical analysis of the product
by agricultural, chemical and mineral school departments of several
universities.
Several small contracts were negotiated with agricultural growers in Japan
who maintained productivity records, albeit inconclusive as to specific benefits
of the SeaSoil when mixed with standard fertilizers. Other contracts were
negotiated with domestic growers. Unfortunately, the lack of capital to solidify
marketing opportunities, too often resulted in the necessary follow-through to
obtain potential contracts. For a number of years following incorporation of
Devil's Gate, the Vonderheides were necessarily employed full time in other
business and career pursuits. Consequently, marketing and sales of SeaSoil were
marginal.
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In 1989, the company entered into an agreement to provide approximately
200,000 tons of product a year for use as an organic fertilizer amendment. This
agreement, which had prospects of developing into a long term arrangement,
included a sales price of $40 per ton for mine run material. SeaSoil was to be
marketed through a broker, to Puregro Company, a subsidiary of Union Oil Company
of California (UNOCAL). Failure of the broker to provide an exclusive contract
to Puregro, followed shortly thereafter by UNOCAL's selloff of the Puregro
subsidiary to other major market players, terminated this business venture.
During this period National Nutrients was forced to file litigation in the
Second Judicial District Court of Nevada against the broker, following 27 months
of failure to honor the executed agreement. National Nutrients prevailed in the
litigation and agreed to an out-of-court monetary settlement. The downside was
loss of the considerable amount of time spent negotiating the agreement through
a third party broker, and the subsequent loss of the marketing agreement with
one of the major oil companies in America.
National Nutrients continued to pursue markets for SeaSoil and reached a
milestone with "Certification" of SeaSoil by the California Certified Organic
Farmers (CCOF) in 1992. The certification is particularly important because it
allows the marketing designation of SeaSoil as an agricultural mineral, without
restriction; clearly recognizing the nutrient composition of the product as an
organic fertilizer amendment. Management believes this Certification is
responsible for the beginning of the product name recognition, and sales of
SeaSoil for use as a fertilizer supplement, particularly as Spot Check and Lawn
Check.
Marketing of SeaSoil seed pellets in combination with other components
(green waste, a moisture retaining clay, seed and specific additional
nutrients), was launched in mid 1995. Revegetation success of disturbed land is
enhanced by pellet seeding because the pellet is wind resistant, not an
identifiable food source for birds or rodents, and possesses water holding
capacities that facilitates seed germination and establishment. Two major mining
companies tested this product in 1995 for reclamation and restoration, with
commercial sales currently being made (particularly with the Foster Farms
chicken urea process developed in September 1996).
Sales of SpotCheck and LawnCheck have been minimal to date (approximately
$65,000 in 1995 and $100,000 for the first ten months of 1996). The September
1996 Marketing and Distribution Agreement with Damon Industries is the Company's
first focus on national penetration of this market (although no assurance can be
given of the financial results). Product sales for use at toilet facilities in
recreation areas could increase as marketing expands based on customer
satisfaction.
THE COMPANY'S PRODUCTS
SeaSoil
The SeaSoil product produced by the Company are deposits of 100% natural,
inorganic minerals which are used as a soilbuilder for all plant life. This
material is a soil supplement for plant nourishment in that it contains trace
minerals "essential" to all plant life. SeaSoil is not manufactured; it comes in
a natural state from the Devil's Gate natural deposits, a mix of trace minerals
that has become more popular in the field of horticulture and agriculture in the
popular quest for organically grown food products. The Company is a member in
good standing with the California Certified Organic Farmers (CCOF) and the
Oregon Certified Organic Farmers (OCOF). This means that SeaSoil can be applied
to "certified" organic lands without restrictions.
The Company has also been active in promoting SeaSoil for export. The
Company recently exported SeaSoil to Japan where a large farming concern that
specializes in potatoes and asparagus is currently testing SeaSoil on farmland
with "tired" soils and an overabundance of chemicals. Taiwan is testing SeaSoil
in the State laboratories with the intended use being for golf courses and
parks. The Company has cleared customs for future export, with no restriction to
Japan, Taiwan and the Philippines.
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The Company's Spot Check
Spot Check is a derivative product generated as a direct result for the
need in the lawn and garden and pet industries of a product to eradicate the
high ammonia content of soils impacted with pet urine to the extent that the
vegetation has been eliminated. By utilizing Spot Check, a blend of
micronutrients (SeaSoil), mulched green waste, and grass seed, the affected area
is replanted, nourished, and mulched at the same time, generating a new and
healthy lawn.
Spot Check is currently being produced in 1 pound cans and 5 pound pails,
and is being distributed by a nationwide pet food and supply network. Although
no assurances can be made, Management's analysis of the market is that this new
distribution system can increase the current users from a few major accounts to
over 600 major accounts. by mid-1997; and expand this one product incrementally
in the future.
The Company's OdorCheck
The Company's OdorCheck is in completion of its research and development
with production, packaging, and distribution just beginning. Labels, containers,
and shipping materials have been ordered and material production under way. This
100% natural material (SeaSoil) will be targeted toward three markets: I. The
pet industry; dog runs, kennels, and other pet odor areas that create unhealthy
and annoying home problems; II. The same product with a different label that
will target home odor problems such as garbage cans, garage spoil areas, or
basement odors; III. Pursuant to the recent agreement with Damon Industries, to
introduce Odor Check into the bar, restaurant and healthcare institutional
industries.
The Company's SeaSoil Industrial
The "industrial" applications for SeaSoil will be the mixture of the
Company's material with industrial sludges. This combination of the Company's
100% natural occurring minerals not only "eliminates" the sludge odor, but in
most cases produces a commercially viable land application type soil supplement.
Other application for the industrial odor problems would be the use of
SeaSoil in portable (and non-flush) toilets in campgrounds, construction sites,
inter-city buses and trains, and recreational vehicles (RVs and boats). The use
of SeaSoil will not only eliminate the need for expensive and often toxic
chemicals, but will eliminate the associated odors.
SUMMARY
Since its founding in 1981, and with the acquisition of the Devil's Gate
mining properties, the Company has been involved in research, development,
product analysis and testing, during a period when Harry Vonderheide and his son
Steve have been primarily involved with their respective business. military and
commercial aviation careers. See MANAGEMENT.
As the various SeaSoil products were tested and analyzed by various
national and international independent laboratories, National Nutrients have
enjoyed an increasing marketing support for their packaged products, through
mail order catalogue sales, regional distributors and test marketing sales
(increasing from 1991 $60,000 gross to $100,000 in 1995, with a 65% gross
margin). During this period the Company advertised in national magazines such as
Better Homes and Gardens, Field and Stream, and Sunset, as well as developed a
market niche with pet stores, and more recent market in the agricultural and
grocery markets (both in the U.S. and Japan), and for odor control in hog and
chicken farms where odor is an acute problem. The Cradle Food Farms in Japan
have ordered several tons of unprocessed mined product since 1992 and are
currently concluding their testing and analysis.
PLANNED COMMERCIAL PRODUCTS
Because of the increased interest in environmental problems, the Company
has developed the following products:
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SeaSoil: 100% natural micronutrient/trace mineral, licensed
agricultural mineral, and allowed soil supplement for
California Certified Organic Farmers (CCOF).
OdorCheck: SeaSoil used as an odor control for industrial, home and
environmental problems.
Out-of-odor: SeaSoil used as a pet product to eliminate pet odors for
kennels, dog runs and pet sleeping areas.
SpotCheck: A 100% natural blend using SeaSoil that repairs yellow dog
spots on lawns.
LawnCheck: A blend, same as above, that is utilized for hard-to-grow
lawn areas and damaged lawns.
Kitty litter: (no name yet) WaterBank used as a natural clay-type kitty
litter that never has to be changed and doesn't track or
leave an odor. Litter deposits need only be removed and new
material added.
WaterBank A moisture retainer for golf courses, landscaping, potting
plants, flower transportation and many other moisture
concerns, with ability to absorb 6 to 8 times its weight in
water.
WaterBank A pond sealer that can seal an existing pond by just
sprinkling the material over the surface of the water. When
creating a new pond, the material is blended with the dirt
that forms the bottom of the pond.
WaterBank
coated with
SeaSoil: (no name yet) Combining both basic materials will result in
a highly absorbent moisture retainer coated with a valuable
soil builder. Hence, only one application step
(broadcasting) is required, e.g., golf course fairways and
farm applications.
The pellet
planting
system: a combination of the above products where site specific seed
is attached to the pellet, enabling exact seed application.
The pellet is composed of needed organic, inorganic, and
water retaining materials that give the seed the
"jump-start" it needs to germinate when moisture is
available. At the same time, the seed is protected from
wind, bird and rodent consumption, and sun damage.
Wildflower
pellets: By utilizing The Pellet Planting System, the very difficult
process of distributing wildflower seed is simplified. The
extremely fine seed (dust) is attached to the pellet which
allows the seed to be distributed evenly with essential
nutrients and moisture retainers necessary for germination
for forest fire restoration and highway landscaping.
MICRONUTRIENTS/TRACE MINERALS
BACKGROUND
There are approximately 90 natural elements known on earth. Early in this
century only a handful of these were thought to be essential to life -- these
being the major structural components of the substrates of animals and plants --
the proteins, carbohydrates, and fats. These initial elements were carbon,
hydrogen, nitrogen, sulfur, calcium, phosphorus, potassium, sodium, and
chlorine. To these 10 elements were added iron, and later, to many scientists'
surprise, magnesium.
As technology grows, so does the list. As of today, more elements have been
added as essential to animal life: zinc, copper, manganese, nickel, cobalt,
molybdenum, selenium, chromium, iodine, fluorine, tin, silicon, vanadium, and
arsenic. Boron is essential to plants and awaits inclusion on the list for
animals, pending new research.
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<PAGE>
As more elements have been added to the list, research has involved
concerning deficiency syndromes for each. This type of research is arduous and
painstaking, and has revealed that human deficiencies exist, but our knowledge
is rudimentary. Only in the last decade-plus were tin, silicon, fluorine,
nickel, vanadium, and arsenic added to the list of essential dietary elements.
Cadmium appears to be the next candidate.
Briefly, over one-quarter of 90+ natural elements have been found to be
fundamental -- the future should add to this list -- but how much is anybody's
guess. Human deficiency syndromes of such elements as calcium, iron, fluorine,
and iodine are common knowledge.
Recent research in deficiencies of magnesium, zinc, selenium, and chromium
points out major problems with respect to cancer, heart disease, diabetes, and
other illnesses.
Our current food supply has developed over the years with only faint
knowledge of these micronutrients. Our techniques in agriculture and food
refining have ignored the fact that plants cannot possibly provide these
elements if they are not purposely given as supplements.
The commercial agriculture industry replaces the three primary nutrients;
nitrogen, phosphorus, and potassium, almost as a matter of course. It has only
been recently discovered, however, that plants extract whatever elements they
need from soils until depletion exists. Agricultural scientists have recommended
adding calcium, magnesium, and zinc to soil as supplements, but, of course, the
obvious conclusion is to add as many known essential elements that are feasible
at one time.
Source of micronutrients/trace minerals
Micronutrients are found throughout the world in soils and bodies of water,
especially the sea. The problem is a shortage of balanced micronutrient
deposits. For example, most soils are deficient in some of the required trace
elements, while the sea produces a dangerous excess of sodium. Micronutrients
are now being extracted synthetically from sewer plants, but in most cases, this
has been proven too costly, and dangerous levels of heavy metals are not always
extracted. The Devil's Gate mining claims are deposits formed millions of years
ago when most of the present land was under the sea. As the micro-organisms and
sea-life died, the elements from these living organisms fell to the bottom of
the ocean, forming limestone type deposits. The sea then receded and the North
American land mass rose through volcanic action. As the earth buckled, it pushed
these particular deposits to the surface, exposing the ancient seabeds. For
millions of years, the salt has been leached out by the rains. It is further
concluded that the heavy metals harmful to growth either did not exist in
concentrated dangerous levels or migrated down through the deposits by the
gravitational pull of the earth.
Micronutrients, such as NatureNu's SeaSoil deposits, are not new to the
world. For years, vintners in France have used them as a soil supplement for
their premium fine grapes. It is well known that the use of trace minerals
produces stronger, healthier, larger, and better-tasting fruits and vegetables.
The Devil's Gate Mineral Characteristics
The Company's deposits are a 100% natural, inorganic material which is used
as a Soilbuilder for all plant life. This material is a soil supplement for
plant nourishment in that it contains trace minerals essential to all plant
life, indoor and outdoor. It is not manufactured; it comes in a natural state
from natural deposits. This mix of trace minerals is becoming more popular in
the field of horticulture and agriculture. It is expected the demand for trace
minerals/micronutrients will increase dramatically in the very near future.
SeaSoil can be shipped throughout the world. The material is non-toxic to
plants, which implies the elements do not exceed known tolerance levels and
safety indexes by scientific research for applications to plants. The
synergistic (working together) mineral relation and interrelations among trace
elements along with other nutrients are helping to develop new concepts of the
function -- the vital importance -- of trace elements which were regarded as
contaminants at one time. Recent studies and tests show micronutrients aid
plants to better utilize the major nutrients: nitrogen, phosphorus, and
potassium.
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<PAGE>
The Devil's Gate deposits are not a fertilizer, but an agricultural
mineral. Overuse, to a reasonable degree, will not affect plants. Plants will
only absorb what they require, and the excess will stay in reserve in the soil.
The micronutrient will not burn the plant or grass because it is a mineral and
does not contain manmade (synthetic) chemicals. Where there are less
deficiencies in growing soils, fruits and vegetables will be more nutritious,
tastier, stronger, healthier, and more lush. As a supplement for livestock and
poultry, the Devil's Gate micronutrients have been demonstrated to enhance
growth and increase production. However, no laboratory tests have been conducted
as to the degree of enhanced growth for animals or poultry.
Relationship of the Devil's Gate deposits of micronutrients/trace minerals to
commercial fertilizers
It is known there are eighteen elements that all plant life must absorb in
order to complete their life-cycle. These elements are:
1. Major or macro nutrients - nitrogen, phosphorus, and potassium;
2. Secondary or micro nutrients - calcium, magnesium, sulfur, boron,
chlorine, cobalt, copper, iron, manganese, molybdenum, sodium,
and zinc;
3. Other elements - carbon, hydrogen, and oxygen.
The last three are obtained from our air and water; the first fifteen must
be supplied by the soil system.
The 'major' elements are needed in relatively large amounts and are most
often lacking in soils.
The 'secondary' elements are so named because for years it was felt they
were second in need to the major elements. Lately, the thinking on this has
changed. Many experts now feel the so-called 'secondary' elements might be as
important as the 'majors' and, in some cases, even more so.
The micronutrients are required by plant life in extremely small amounts. A
noted exception to this would be iron, where, in recent years, we have seen the
need for higher rates in turf. Many of the micronutrients are important
components of enzyme systems and serve to catalyze a variety of biological
reactions.
The most common micronutrient deficiencies frequently observed
throughout the West are: iron (Fe), zinc (Zn); manganese (Mn), and, sometimes,
molybdenum (Mo). On occasion, there are others. As noted, iron and zinc are
found to be deficient in western soils. High levels of lime and high ph factor
are commonly associated with iron deficiencies. Excess manganese and zinc can
also induce iron deficiencies. Zinc deficiency has been shown to be severe in
citrus and vegetable crops in Southern California. Copper deficiencies that have
been shown to exist are associated with soils high in organic matter or highly
weathered sands. Further, recent investigation has reported the ratio of iron,
copper, manganese, and zinc (i.e., the ratio of one another) to be of greater
significance than absolute amounts of any given elements.
Micronutrients, although required in minute quantities, are as important to
healthy plant and animal growth as the macronutrients.
LABORATORY ANALYSIS
SeaSoil Analysis: Nature Nu's inorganic micronutrient/trace minerals were
tested by independent laboratories and are listed in accordance with the outline
required by the Association of American Plant Food Control Officials. These
micronutrients are those considered essential for plant development by the
AAPFCO, and represent only those which are considered for agricultural mineral
licensing in the United Sates, Canada, and Puerto Rico.
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<TABLE>
<CAPTION>
PRIMARY NUTRIENTS- - N-P-K (.07-.13-.88)
MIN.
LAB 1 LAB 1 LAB 1 AVER. REQ.
----- ----- ----- ----- ----
<S> <C> <C> <C> <C>
NITROGEN, (N) TOTAL 0.082 0.060 0.080 0.070 N/A
PHOSPHORUS, P2 05, AVAILABLE N/A 0.110 0.156 0.130 N/A
POTASSIUM, K2 0, SOLUBLE N/A 0.760 1.000 0.880 N/A
SECONDARY AND MICRO PLANT NUTRIENTS - TOTAL
CALCIUM, Ca 6.900 11.500 4.960 7.787 1.000
MAGNESIUM. Mg N/A 5.100 4.730 4.915 0.500
SULFUR, S 0.780 1.300 0.960 1.010 1.000
BORON, B 0.060 0.140 0.090 0.097 0.020
CHLORINE, Cl 0.840 N/A 1.869 1.355 1.000
COBALT, Co 0.001 0.004 0.001 0.002 .0005
COPPER, Cu 0.005 0.006 0.002 0.004* 0.050
IRON, Fe 1.580 1.600 1.500 1.560 0.100
MANGANESE Mn 0.064 0.076 0.076 0.072 0.050
MOLYBDENUM, Mo 0.003 0.010 0.005 0.006 .0005
SODIUM, Na 4.070 3.700 4.990 4.250 0.100
ZINC, Zn 0.006 0.006 0.005 0.006* 0.500
</TABLE>
*Indicates those micronutrients whose percentage of total quantity does not meet
the minimum requirement for license application.
HEAVY METALS - Elements that could be harmful to plants
ARSENIC, As 45 PPM Heavy metals contained and tested in those
CADMIUM, Cd NIL micronutrients are very low in count and reflect
CHROMIUM, Cr 40 PPM little threat to plant life.
LEAD, Pb 35 PPM
MERCURY, Hg 45 PPB
SELENIUM, Se NIL
pH FACTOR - 7.0+/-O.5: The measured balance between acidity and alkalinity -
7 being neutral.
USE OF PROCEEDS
The Company will utilize the proceeds of this Offering to expand the
operations of the Company in its mining, processing, packaging and marketing
activities, in cooperation with Damon Industries.
MANAGEMENT
The following lists the Company's Officers, Directors and Key Consultants,
together with their resumes.
Name Position
---- --------
Stephen L Vonderheide Chairman of the Board, President and CEO
Joseph G. Papez Director
John A. Molini Director
Leslie Farias Vonderheide Secretary and Director
James M. Wells Director
Harry J. Vonderheide* Technical Consultant
----------
* Father of the President and Father-in-Law of the Secretary
Stephen L. Vonderheide (49) serves as the Vice Wing Commander of the Nevada
Air National Guard, with rank of Colonel (1966-present); served in the United
States Desert Storm military operations against Iraq flying the RF-4C
"Eyes-in-the-Sky" Phantom aircraft. He holds the 15 kilometer world speed record
in this precision military aircraft. Together with his father he has been
involved in land development and construction; was a Project Superintendent for
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H.M. Byars Construction, a multi-state construction company (1973-1977); and
co-founder and President of the Company since inception in 1981. He holds a B.S.
Degree from the University of Nevada.
Joseph G. Papez (28) is employed by the national investment banking firm of
Smith Barney, Inc. in Las Vegas, Nevada as a Financial Consultant, specializing
in strategic asset analysis, allocation, consolidation and management of
financial assets (1991-present). He is a graduate of the University of Nevada.
John A. Molini (53) is a Major General (Retired in 1995) of the Nevada Air
National Guard ("NV ANG"). Since receiving his B.S. Degree in Accounting from
the University of Nevada in 1964, he has served the military as a U.S. Marine
Corps fighter pilot (over 100 combat missions in Vietnam, 1962-1967); employed
by NV ANG in command positions of increasing responsibility (1979-1985); and
Commander of the NV ANG Flying Group, in charge of 1,200 personnel and $35
million annual budget (1985-1990). General Molini served as General Officer
Member of Strategic Planning Steering Committee; chaired Western Region Long
Range Planning Committee consisting of senior officers from 17 western states;
chaired Western Region Airspace Planning Committee, a joint service 13 state
group. He has extensive formal training in personnel management, labor relations
and collective bargaining, and strategic planning at both state and national
level.
James M. Wells (49) has held a series of senior executive positions with
Wells Cargo, Inc., a transportation and construction company - Data Processing
Manager (1967-1974); Controller of Transportation Division (1974-1975);
Secretary-Treasurer (1975-present). He also served as Secretary-Treasurer and
Director (1979-present). He is owner/partner of Rainbow Springs Shopping Center
(1990-present); Director of Nevada Transportation Network Self Insured Group
(workers comp insurance) and member of the Finance & Underwriting Committee. He
was Past President of Nevada Motor Transport Association (1986-1987), Director
(1980-present), Vice President of Nevada Motor Transport Association
(1996-1997); American Trucking Association State Director (1982-1988); Nevada
Highway Users Conference Vice Chairman North (1987-1992); Western Highway
Institute Director from the State of Nevada (1984-1990); Member of Reno Host
Lions Club (1976-present). He holds a B.S. Degree in Accounting from the
University of Nevada.
Leslie Farias Vonderheide (45), wife of the President, is a nationally
recognized authority, speaker and educator in "Interpersonal Communications."
She holds a Master of Arts Degree in Speech Communications (with interpersonal
and organizational emphasis) from the University of Nevada-Reno. She is a
certified trainer in interpersonal communications for the Forte Interpersonal
Communication Institute; and the Founder and owner of Farias Interpersonal
Communications, 1988; is a nationally recognized professional educator in
judicial communication and education; consulting faculty member of the Texas
Center for the Judiciary; the Institute of Continuing Judicial Education of
Georgia, School of Law, the University of Georgia; the Florida College of
Advanced Judicial Studies; and the prestigious National Judicial College, an
affiliate of the American Bar Association.
Harry J. Vonderheide (77), attended Loyola University, Los Angeles,
California, in Business Administration, owned a Chrysler/Plymouth automobile
dealership, in Bishop, California, from 1941 to 1944. Honorable Discharge from
U.S. Naval Hospital in 1945. Self-employed in new and used construction
equipment from 1947 to 1956. Built and operated sports resort located between
Reno and Lake Tahoe from 1956 to 1960. General Manager then owner of several
businesses associated with concrete and concrete building blocks from 1960 to
1970. Co-inventor and manufacturer of several patented construction related
items most notably an all hydraulic 4x4 all terrain vehicle and a hydraulic
operated asphalt compaction roller (1968-1975). From 1975 to the present,
exclusively dedicated to mining properties, both in ownership and development,
which led to development of Devil's Gate Mining properties. Responsible for
development and production of several retail and industrial products derived
from these mineral deposits.
Legal/Financial Consultant
Malcolm D. Crawford, Esq. is a practicing attorney specializing in
Corporate Securities and Financial Law nationwide, with offices in Denver,
Colorado. He is a former member of the faculties of, Colorado University,
Albertus Magnus College, and Yale University (Economics); the Universities of
Denver and San Francisco (Law); He served as Financial Attache and Assistant to
the Ambassador at the United State Embassies in London, England and Paris,
France. He has degrees from: Colorado University (Cum Laude/Finance), the
Harvard-Tufts/Fletcher School of International Law and Diplomacy (M.A.), and
Yale Law School (J.D.).
14
<PAGE>
Compensation
Commencing in January 1997, Management's compensation will be established
by the Board of Directors (in conformity with industry standards).
Principal Shareholders
The following table reflects the stock ownership of Officers and Directors
individually and as a group, and the holders of more than 5% of the 9,975,000
outstanding securities:
<TABLE>
<CAPTION>
Common Shares % of
Name Owned Outstanding
---- ----- -----------
<S> <C> <C>
Stephen Vonderheide 3,272,500 33%
Harry Vonderheide 3,272,500 33%
--------- ------
All Officers and Directors as a Group (5 in number) 6,545,000 66%
Fusiones y Adquisiciones FYA de San Jose S.A. 2,421,566 24%
--------- ----
TOTAL 8,966,566 90%
========= ===
</TABLE>
Offices
The Company occupies 7,510 square feet in one of the two buildings in the
Damon office/warehouse complex, consisting of 2,400 sq. ft. of office space and
5,110 sq. ft. of warehouse/production space at 806 Packer Way, Sparks, Nevada
89431. Phone (702) 331-6661; Fax (702) 331-7760. Under the terms of the
Distribution Agreement with Damon, the first six months rent is free, and the
administration, accounting, production marketing and sales management are
furnished by Damon as part of their Agreement. After the initial six month
period, the Company will pay $1,200 monthly lease payments.
Transactions with Management and Others
I. On June 3, 1996 the Company entered into a three-year financial and
management consulting agreement with Fusiones y Adquisiciones FYA de San Jose,
S.A. ("FYA"), a Costa Rica corporation, through its U.S. consultant, pursuant to
which FYA received 2,421,566 shares of the Company's Common Stock as full
payment for its services, including formulating the Company's corporate
structure and assisting in initial financing of $62,000 through business
associates of the Company. FYA is involved in the United States, Mexico and
several Caribbean countries in real estate development and time sharing for
resort and vacation properties, during the past two years. On August 12, 1996
the Company acquired 100% of the Vonderheide family interest in the assets of
Devil's Gate Mining, Inc. in exchange for 6,545,000 shares of the Company's
Common Stock.
II. In September 1996, the Company entered into a License Agreement with
Ronald L. Tucker, Esq. of Laguna Nigel, California pursuant to which Mr.
Tucker's Company, TextBase Imaging Corp. granted the Company a license for the
use and enhancement of the "InFoCen DataBase Management System" acquired by
TextBase from 3CI Incorporated. Pursuant to the terms of the License Agreement,
the Company issued TextBase 408,434 shares of Common Stock and TextBase declared
a stock dividend of 108,459 of shares of these Company Shares to the 1,200 3CI
Shareholders of record on April 30, 1990, when Mr. Tucker served as 3CI's
Interim President and Director. Mr. Crawford, the Company's General Counsel, has
been a shareholder of TextBase since its formation.
III. In September 1996, National Nutrients, Inc. assigned the Company its
trademarks, service marks, software, copyrights, and packaging equipment and
supplies.
15
<PAGE>
TERMS OF THE OFFERING
SUMMARY
The Company may offer its 600,000 shares to the public through its
officers, directors, employees and consultants. No commissions or other
remuneration will be paid on such sales. However, with this Preliminary
Prospectus, Management will solicit the interest of selected broker dealers,
Members of the National Association of Securities Dealers, Inc. ("NASD") to make
the offering. Although no assurance can be made of the extent of participation
of NASD Member firms, if any, Management has held preliminary negotiations with
several such firms looking to a NASD firm to sponsor the Company as a market
maker for listing on the NASDAQ Bulletin Board Quotation System; following their
participation in the Offering.
The selling shareholders are:
(i) Fusiones y Adquisiciones FYA de San Jose, S.A., a Costa Rica
corporation with U.S. offices at 6655 W. Sahara, Suite 200-B,
Las Vegas, NV 89102. FYA is the record and beneficial owner of
2,421,566 shares of Common Stock, of which FYA advises the
Company their present intention is to sell approximately
250,000 shares through NASD Member firms. The balance of the
shares will be utilized as collateral for debt, and to enhance
the FYA Balance Sheet, as may be required from time to time.
(ii) TextBase Imaging Corp., a Colorado corporation with principal
offices at 76 Costa Brava, Laguna Nigel, California 92677, the
record and beneficial owner of 408,434 shares of Common Stock.
Approximately 108,459 shares will be distributed as a Stock
Dividend to approximately 1,200 shareholders of the 3CI
Corporation, and the balance will be retained by Text Base, to
be sold in NASD broker transactions.
TRANSFER AGENT
The Company's Transfer Agent is the Corporate Stock Transfer, Inc., 370
Seventeenth Street, Suite 2350, Denver, Colorado 80202, telephone (303)
595-3300, Fax (303) 592-8821.
LEGAL MATTERS
The Company will have received an opinion from Malcolm D. Crawford, Esq. of
Denver, Colorado as to the validity of the issuance of the Company's shares.
CAPITALIZATION
The Company's Articles of Incorporation authorize the issuance of
15,000,000 shares, $.001 per share par value Common Stock and 10,000,000 shares
of Preferred Stock, par value $.001 per share par value.
The Common Stock is voting, with one share equal to one vote of all
meetings of shareholders. Upon payment of the then designated price per share,
either in cash or for services rendered, as approved in a Resolution of the
Board of Directors, the Common Stock, when issued, is fully-paid and
non-assessable.
The Preferred Stock may be issued in Series, with each Series to have the
rights, privilege and attributes ascribed by the Board of Directors, and filed
with the Secretary of State.
As of the date of this Prospectus, there are 9,375,000 of Common Stock
shares issued and outstanding; and no shares of Preferred Stock have been
issued.
16
<PAGE>
FINANCIAL STATEMENTS
The Company's financial statements included herein have been audited by
M.S. Finkel & Co., independent public accountants, and their report is included
herein in reliance on said firm as experts in accounting matters.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission,
Washington, D.C. a Registration Statement on Form SB-2, relating to the Common
Stock offered hereby. This Prospectus does not contain all of the information
set forth in the Registration Statement including the exhibits and schedules
thereto. Statements contained in this Prospectus as to the contents of any
contract or other document referred to are not necessarily complete and in each
instance reference is made to the copy of such contract or other document filed
as an exhibit to the Registration Statement. For further information with
respect to the Company and the Common Stock, reference is made to such
Registration Statement, including the exhibits and schedules thereto. The
Registration Statement, including the exhibits and schedules thereto, may be
inspected without charge at the Commission's principal office at 450 Fifth
Street, Washington, D.C. Copies of all or any part of such material may be
obtained from the Commission upon payment of certain fees prescribed by the
commission.
IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON SHARES
OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
GLOSSARY
NatureNu Soilbuilder: A natural, nonpolluting blend of all secondary and
micronutrient agricultural minerals which revitalize soils deficient in trace
minerals.
Macro (major) nutrients: Nitrogen, phosphorus, potassium.
Micro (secondary) nutrients: Calcium, magnesium, sulfur, boron, chlorine,
cobalt, copper, iron, manganese, molybdenum, sodium, zinc.
Natural Nutrients: Derived from ancient seabeds and brought to the earth's
surface millions of years ago as a limestone type material. Source locations are
indigenous to certain parts of the world.
Specialty Fertilizer: A commercial fertilizer/nutrient mixture distributed
primarily for non-farm use, such as home gardens, lawns, shrubbery, flowers,
golf courses, municipal parks, cemeteries, greenhouses, nurseries, etc., and may
include fertilizers used for research or experimental purposes. (Excerpted from
government agency publications.)
Bulk Material: A commercial fertilizer, agricultural mineral, soil
amendment, auxiliary soil chemical, or plant growth substance distributed in
non-packaged form or in a container containing more than 540 kilograms or 110
pounds. (Excerpted from government agency publications.)
Soilbuilder Intermix: The accurate mechanized process of blending variable
ratio composites of nutrients/trace elements to customer specifications.
17
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA FINANCIAL PROJECTIONS
FOUR YEARS ENDED MARCH 31, 2000
(See following "Assumptions")
Notes 1997 1998 1999 2000
----- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Sales
OdorCheck: 2
Industrial/governmental 3 $140,000 $ 682,500 $1,050,000 $1,900,000
Institutional/commercial 4 95,000 450,000 900,000 2,000,000
Infomercial/direct 5 0 625,000 3,000,000 6,000,000
Multilevel marketing 6 37,500 362,500 1,000,000 2,500,000
Bulk retail 7 57,500 362,500 1,200,000 3,000,000
--------- ---------- ------------ ------------
Total OdorCheck sales 330,000 2,482,500 7,150,000 15,400,000
Pet industry products: 8 73,125 921,375 967,444 1,015,816
Lawn care products: 9 73,125 921,375 967,444 1,015,816
Interest income 10 15,000 60,000 60,000 60,000
Expenses:
Production expenses:
- OdorCheck 11 (131,333) (611,250) (960,000) (991,667)
- Pet and lawn products 11 (22,590) (271,080) (271,080) (271,080)
Outside marketing expenses 12 (42,000) (31,500) 0 0
Management salaries 13 (100,000) (210,000) (220,500) (231,525)
Sales salary 14 (18,000) (36,000) (36,000) (36,000)
Other salaries and wages 15 (12,000) (32,000) (35,200) (38,720)
Employee benefits (7,200) (14,400) (15,120) (15,876)
Payroll taxes (13,000) (22,120) (22,651) (23,294)
Office rent and utilities 16 (7,200) (14,400) (14,400) (14,400)
Telephone and related expenses (3,000) (6,000) (6,000) (6,000)
Travel and entertainment (12,000) (24,000) (25,200) (26,460)
Automobile (8,400) (16,800) (16,800) (16,800)
Insurance (2,400) (4,800) (4,800) (4,800)
Legal and accounting expenses 17 (3,000) (30,000) (30,000) (30,000)
Depletion 18 (463) (3,040) (6,739) (13,579)
Depreciation and amortization 19 (7,096) (13,936) (11,136) (5,341)
Other expenses 25 (10,000) (10,500) (11,025) (11,576)
------- ---------- ---------- ----------
Net Income (Loss) before taxes 91,567 3,033,424 7,458,237 15,754,515
Current federal income tax expense (28,594) (1,031,364) (2,535,800) (5,150,000)
------- ---------- ---------- ----------
Net Income (Loss) $62,973 2,002,060 4,922,436 10,604,515
======= ========= ========= ==========
</TABLE>
COMPANY CAVEAT: All projections of the financial results of natural
resource mining are and commercialization are unreliable as to mathematical
accuracy inasmuch as projections are based on a myriad of assumptions, including
volume of minable product; costs of extraction; costs of processing and
marketing; consumer demand and competition; general national and local economic
conditions; and present and unanticipated future costs relating to compliance
with federal and state environmental and mining laws and regulations; as well as
compliance with product composition regulations in connection with retail
marketing.
18
<PAGE>
ASSUMPTIONS TO PRO-FORMA FINANCIAL PROJECTIONS
(FOUR YEARS ENDED MARCH 31, 2000)
1. NatureNu, Inc. (the Company) was formed and incorporated in the middle of
1996. Accordingly the accounting period ended March 31, 1997 is not a full year.
The Company began active operations on about October 1, 1996.
2. The Company has entered into an agreement whereby Damon Industries (Damon) of
Sparks, Nevada has been appointed as the sole and exclusive distributor of its
OdorCheck product for a period of six months, with provisions for extension and
renewal, indefinitely. The financial projections regarding the different classes
of customers and distribution channels was provided to NatureNu by Damon.
3. It is believed that OdorCheck will be a key ingredient in the treatment of
sewer sludge produced by municipalities, particularly in special problem
situations. This sales projection reflects one city of 1,000,000 in population
creating and implementing an OdorCheck program effective April 1, 1998. Such a
city will produce 1,000 tons of sewer waste per day. It is assumed that only one
quarter of it will be treated and reclaimed. At a 4:1 waste to OdorCheck ratio,
that will amount to usage of 22,812 tons of OdorCheck during the year for one
system. When fully operational, that would amount to $2,281,200 in annual
revenues to the Company. The projections are less than that reflecting gradual
progression toward full operation.
4. The institutional/commercial sales projection anticipates sales through food
service companies and commercial distributors.
5. The infomercial/direct sales projection anticipates sales through the Home
Shopping Network and other electronic media suitable for direct mail order
sales.
6. The multilevel marketing sales projection anticipates sales that are achieved
through hierarchical individual networks which rely primarily on individual
contact and relationships.
7. The bulk retail sales projection anticipates sales through warehouse type
price clubs.
8. Sales of pet industry products, on a monthly basis, will be primarily the
Company's SpotCheck product and they are estimated at twelve and one half
pallets of the one pound can and twelve and one half pallets of the five pound
buckets, beginning with March 1997. Beginning in April 1997, the monthly sales
volumes are projected to double and to increase thereafter at the rate of five
percent per year.
9. Sales of the lawn care products, which are packaged the same as the pet
industry products, are estimated to be the same as the pet industry products.
Other lawn care products are being developed.
10. Interest income is estimated based on a yield of five percent on a more or
less constant $1,200,000 available for short term investment. Cash flow
generated from net income, if any, will be used to make capital improvements,
fund product development and pay dividends where appropriate.
11. The OdorCheck products will be packaged by, or contract packaged through,
Damon. The cost to deliver the raw material to Damon is estimated to be
$200/ton, $150/ton, $100/ton and $50 for the years 1997, 1998, 1999, and 2000,
respectively.
The pet and lawn products are somewhat more mature products and are being
packaged by the Company. The cost projections are based on the unit volumes
projected in Notes 8 and 9 above.
19
<PAGE>
12. The outside marketing expenses are declining fees paid to Damon relating to
the roll out of the OdorCheck products.
13. Management salaries are projected at $100,000/year for both Harry and Steve
Vonderheide beginning October 1, 1996. These salaries are projected to be
increased at the rate of five percent per year.
14. The salesperson salary is for one internal salesperson at the rate of
$36,000/year beginning on October 1, 1996 and increasing at the rate of ten
percent per year.
15. Other salaries includes an administrative assistant projected at
$24,000/year beginning October 1, 1996, and increasing at a rate of ten percent
per year. This category also includes part time clerical help at 1,000 hours per
year at $8 per hour.
16. Office rent is $.50 per square foot per month on 2,400 square feet at 806
Packer Way, Sparks, Nevada.
17. Accounting fees are estimated at $20,000 for the annual audit, tax return
and Securities and Exchange Commission filings. Legal fees are estimated at
$10,000 for the annual Securities and Exchange Commission filings.
18. Depletion is based on 15,000,000 tons of original deposits with an original
carrying value of $10,000,000.
19. Amortization is based on $10,000 of leasehold improvements with a
twenty-nine month life (through January 31, 1999). Depreciation is based on
rates prescribed by Internal Revenue Service on $40,000 of equipment (primarily
office equipment) with a seven year life.
*****
20
<PAGE>
NATURENU CORPORATION
(a development stage company)
FINANCIAL STATEMENTS
NOVEMBER 20, 1996
<PAGE>
NATURENU CORPORATION
(a development stage company)
FINANCIAL STATEMENTS
NOVEMBER 20, 1996
Accountants' Report ............................................. 1
Financial Statements
Balance Sheet - Assets ...................................... 2
Balance Sheet - Liabilities and Stockholders' Equity ......... 3
Income Statement.............................................. 4
Statement of Stockholders' Equity............................. 5
Statement of Cash Flows .................................... 6
Notes to the Financial Statements ............................... 7
<PAGE>
MERLE S. FINKEL
CERTIFIED PUBLIC ACCOUNTANT
210 Grant Street (412) 393-0805
Suite 1 (310) 473-4700
Pittsburgh, PA 15219
ACCOUNTANT'S REPORT
To the Board of Directors and Stockholders of
NatureNu(TM) Corporation
Sparks, Nevada
I have audited the accompanying balance sheets of NatureNu(TM) Corporation at
November 20, 1996 and the related statement of income, stockholders' equity, and
cash flows for the period then ended. These financial statements are the
responsibility of the Company's management. My responsibility is to express an
opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of NatureNu(TM) Corporation at
November 20, 1996, and the results of its operations, cash flows and
stockholders' equity for the period then ended in conformity with generally
accepted accounting principles.
/s/ MERLE S. FINKEL
- ---------------------------
Merle S. Finkel
Pittsburgh, Pennsylvania
November 25, 1996
1
<PAGE>
NATURENU CORPORATION
(a development stage company)
BALANCE SHEET
NOVEMBER 20, 1996
ASSETS
Current Assets
- --------------
Cash $ 18,653
Accounts receivable 18,400
Inventory-Finished Goods 27,328
----------
Total Current Assets 64,381
Property and Equipment (Note 2)
- ----------------------
Furniture, fixtures and improvements 25,000
Plant equipment 15,000
----------
40,000
Less: Accumulated depreciation 2,667
----------
Net Property and Equipment 37,333
Mineral Rights (Notes 2, 3 and 4) 10,000,000
0ther Assets
- ------------
Organization costs (net of accumulated
amortization) (Note 1) 12,911
-----------
Total Assets $10,114,625
==========
The accompanying notes are an integral part of these financial statements
2
<PAGE>
<TABLE>
<CAPTION>
NATURENU CORPORATION
(a development stage company)
BALANCE SHEET
NOVEMBER 20, 1996
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities
- -------------------
Accounts payable $ 21,215
Loan payable 62,400
----------
Total Current Liabilities 83,615
Stockholders' Equity
Preferred stock- 10,000,000 shares authorized;
at $.001 par value, 0 issued and outstanding 0
Common stock- 15,000,000 shares at $.001 par value
authorized; issued and outstanding
9,375,000 shares 9,375
Additional paid in capital 10,047,557
Accumulated deficit (25,880)
-----------
Total Stockholders' Equity 10,031,010
-----------
Total Liabilities and Stockholders' Equity $10,114,625
==========
The accompanying notes are an integral part of these financial statements
3
</TABLE>
<PAGE>
NATURENU CORPORATION
(a development stage company)
STATEMENT OF INCOME
FOR THE PERIOD JULY 31, 1996 TO NOVEMBER 20, 1996
Net Sales $ 47,711
Cost of Goods Sold 6,270
-----------
Gross Profit 41,441
-----------
Operating expenses:
General and administrative expenses 42,398
Auto expense 4,089
Rent 785
Payroll/commission 13,670
Stock issued for software license 208
Stock issued to consultants 2,580
Depreciation 2,667
Amortization of organization costs 924
-----------
Total operating expenses 67,321
-----------
Net (loss) $ (25,880)
===========
Weighted average number of shares outstanding 9,375,000
=========
Net (loss) per share nil
===
The accompanying notes are an integral part of these financial statements
4
<PAGE>
<TABLE>
<CAPTION>
NATURENU CORPORATION
(a development stage company)
STATEMENT OF STOCKHOLDERS' EQUITY
FROM INCEPTION TO NOVEMBER 20, 1996
Common Stock Additional Stock-
------------------------ Paid-In Retained holders'
Shares Par Value Capital Earnings Equity
------ --------- ------- -------- ------
<S> <C> <C> <C> <C> <C>
Incorporation on July 31, 1996 0 $ 0 0 0 0
Issuance of common stock for
license agreement to use
the software on DEC VAX
computer system 208,434 208 0 0 208
Issuances of Stock to Founders:
Issuance of stock for rights
to mining claims and
net assets acquired 6,545,000 6,545 10,047,557 0 10,054,102
Issuance of stock to Consultants 2,421,566 2,422 0 0 2,380
Issuance of stock to Consultant 200,000 200 0 0 200
Loss-from inception to
Nov. 20, 1996 0 0 0 (25,880) (25,880)
----------- ----------- ----------- ----------- -----------
Balance November 20, 1996 9,375,000 $ 9,375 10,047,557 (25,880) 10,031,010
=========== =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements
5
</TABLE>
<PAGE>
NATURENU CORPORATION
(a development stage company)
STATEMENT OF CASH FLOWS
FOR THE PERIOD JULY 31, 1996 TO NOVEMBER 20, 1996
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $ (25,880)
ADJUSTMENTS TO RECONCILE NET INCOME TO CASH PROVIDED
BY OPERATING ACTIVITIES
Amortization and depreciation 3,591
(Increase) in accounts receivable (18,400)
(Increase) in inventory (27,328)
(Increase) in organization costs (13,835)
Increase in accounts payable 21,215
---------
NET CASH (USED) BY OPERATING ACTIVITIES (60,637)
---------
CASH FLOW FROM INVESTING ACTIVITIES
(Increase) in furniture, fixtures and equipment (40,000)
---------
NET CASH (USED) BY INVESTING ACTIVITIES (40,000)
---------
CASH FLOWS FROM FINANCING ACTIVITIES
Equipment and beginning cash balance ($8,804) for stock issued
in connection with asset and mining claims acquisition 54,102
Loan payable 62,400
Stock issued for consulting services 2,580
Stock issued for software license 208
---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 119,290
---------
NET INCREASE IN CASH 18,653
CASH BALANCE, BEGINNING 0
---------
CASH BALANCE, END OF PERIOD $ 18,653
=========
The accompanying notes are an integral part of these financial statements
6
<PAGE>
NATURENU CORPORATION
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 20, 1996
Note 1 Summary of Significant Accounting Policies:
-------------------------------------------
This summary of significant accounting policies of NATURENU
CORPORATION (a development stage Company) is presented to assist in
understanding the Company's financial statements. The financial
statements and notes are representations of the Company's management,
which is responsible for their integrity and objectivity. These
accounting policies conform to generally accepted accounting
principles and have been consistently applied in the preparation of
the financial statements.
(a) Organization and Business Activities:
The Company was incorporated July 31, 1996 under the laws of the
State of Nevada. The Company's main business activity is the
extraction of raw soil from the mining claims under jusisdiction
of the BLM. The soil is milled, packaged into container sizes per
customer specifications, and delivered.
(b) Depreciation:
Depreciation is provided by the straight-line method at rates
calculated to depreciate cost over the estimated useful lives of
respective assets. Upon sale or retirement of the respective
assets, the related cost and accumulated depreciation are
eliminated from the accounts, and gains or losses are reflected
in income. Repair and maintenance expenditures, not anticipated
to extend original asset lives, are charged to income as
incurred.
(c) Inventory
Inventory is stated at the lower of cost or market comprised as
follows:
Finished goods of Spot Check and Lawn Check $19,428
Packaged Seasoil(TM)for shipment to Damon 7,900
-------
Total Finished Inventory $26,428
=======
(d) Fiscal Year:
The Company operates on a June 30 fiscal year.
(e) Basis of Operation:
The Company prepares its financial statements and federal income
taxes on the accrual basis of accounting.
(f) Organization costs:
Organization costs are amortized over sixty months.
7
<PAGE>
NATURENU CORPORATION
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOVEMBER 20, 1996
Note 1 Summary of Significant Accounting Policies: (Continued)
-------------------------------------------
(g) Property and Equipment:
Amounts represent the net realizable value of equipment
transferred from Devil Gate's shareholders to NatureNu(TM) as
part of the asset acquisition.
Note 2 Acquisition of Tangible Assets and Mineral Claim Rights:
--------------------------------------------------------
The Company purchased the tangible assets and mining rights from the
two shareholders of Devil's Gate Mining, Inc., a Nevada Corporation
(incorporated on February 10, 1983) in exchange for 6,545,000 shares
of common stock of the Company. The mineral and mining rights is for
680 acres comprised of nine separate mining claims. The elements in
the mining claims contain rich deposits of natural trace minerals (the
trade name "Seasoil(TM)" is given to this product ) which are used in
conjunction with other materials for products which are sold to the
general public. These mining claims are located in the Oneota Mining
District of Esmeralda County, Nevada, west of highway 95 and about 56
miles from Tonopah, Nevada. The mineral and mining rights are recorded
in the County recorder's office and are also registered with the
Bureau of Land Management (BLM) and are renewed on an annual basis in
order to keep them in good standing. The Company projects that the
usable quantity of Seasoil(TM) to be obtained from these claims is a
minimum of 5,000,000 tons. Seasoil(TM) has been sold at prices ranging
from $850 to $1,000 per ton.
The rights to mine these claims for Seasoil(TM) has been valued at
$10,000,000 by the consultants. The shareholders of Devil's Gate
Mining have adopted that value as a fair representation of the mining
claims. The shareholders consider the valuation of the mining claims
to be conservative as the potential of Seasoil(TM) sales at the
current price will be in excess of a billion dollars.
The prior owners have established various products utilizing the
Seasoil(TM) that have been used and sold for which the Company will
continue to benefit. These products are as follows:
1. Seasoil(TM) is certified for unrestricted use as an
agricultural mineral by the California Certified Organic Farmers
(CCOF). For use as a soil builder, it provides a natural,
non-polluting supplement of micronutrients to soils that are deficient
in trace elements. Seasoil(TM) is the basic raw product from the
mining operations.
2. Spot Check and Lawn Check are products combining Seasoil(TM)
with other ingredients for the repair of yellow spots (in lawns) from
dog waste, and to repair hard to grow or damaged areas.
8
<PAGE>
NATURENU CORPORATION
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOVEMBER 20, 1996
Note 2 Acquisition of Tangible Assets and Mineral Claim Rights: (Continued)
--------------------------------------------------------
3. OdorCheck(TM) is the proprietary product name for packaging
the Seasoil(TM) as an odor control for industrial, home and
environmental problems and is a key ingredient in the treatment of
sewer sludge.
Seasoil(TM) has been sold to various customers for their use of
Seasoil(TM) in various products. For the OdorCheck(TM) product, the
Company is in the process of formalizing an exclusive marketing and
distribution agreement with Damon. A final Agreement is expected by
the end of November, 1996. Damon is a Sparks, Nevada Company which had
been purchasing Seasoil(TM) from the predecessor company to
NatureNu(TM). NatureNu(TM) is continuing to sell Seasoil(TM) to Damon
at $1,000 a ton.
Note 3 Related Party Transactions:
---------------------------
In accordance with the disclosure requirements of FAS 57, the
following summarizes the relationship of the parties.
The predecessor shareholders' of Devil's Gate Mining, Inc., consisted
of two individuals who now own 69.8% of the Company's stock, and the
consultants which received 2,621,566 shares now own 30.0% of the
Company's founders' stock.
Fusiones y Adquisiciones FYA de San Jose S.A. loaned the Company
$64,200 for working captial purposes. The loan is for a period of one
year and bears no interest.
Note 4 Impaired Future Right to Mine Claims:
-------------------------------------
The requirements of SFAS No. 121 requires disclosure of an impaired
asset.
The mining claims currently provide for the right to mine an area of
five (5) acres in order to obtain the Company's Seasoil(TM) product.
In order for the Company to obtain the right to mine beyond the five
(5) acres, a detailed Plan of Operations and the preparation of an
Environmental Assessment Report will be required to analyze the
potential impacts for the mining operation.
This approval process constitutes a standard procedure as required by
the mining regulations and the National Environmental Policy Act
(NEPA) and management believes that it should not have any problems in
obtaining the necessary permits to expand its operations beyond the
five (5) acre approved site currently be used.
Management represents that the five (5) acres currently being mined
will provide in excess of 100,000 tons of Seasoil(TM) which should
meet the production demands for the next three to five years. In the
event that the mining rights are never expanded beyond the five (5)
acre parcel, the sales from this site at the current price per ton
would exceed $100 million in sales. In management's opinion that alone
is sufficient to value the mining claims as stated in the financial
statements.
9
<PAGE>
NATURENU CORPORATION
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOVEMBER 20, 1996
Note 5 Options & Warrants:
-------------------
The Company has no outstanding options or warrants.
Note 6 Dividend Policy:
----------------
The Company has not adopted a policy regarding
dividends at this time.
Note 7 Litigation:
-----------
The Company's management and legal counsel indicate,
to the best of their knowledge and belief, there is
no litigation in process or pending.
10
<PAGE>
======================================== ===================================
No dealer, salesman or any other person
has been authorized to give any
information or to make any
representations not contained in this
Prospectus in connection with the offer
contained herein, and, if given or made,
such information or representation must $1,800,000
not be relied upon as having been
authorized by the Company or any
Underwriter. This Prospectus does not
constitute an offer to sell, or a
solicitation. The delivery of this
Prospectus, under any circumstances, at
any time, does not imply that the
information contained herein is correct
as of any time subsequent to its date.
NatureNu Corporation
TABLE OF CONTENTS
PROSPECTUS SUMMARY........................1
The Offering.............................1
Company Background.......................1
Recent Marketing/Manufacturing
Agreements.............................1
Risk Factors.............................1
Use of Proceeds..........................1
RISK FACTORS..............................2
DILUTION..................................3 COMMON STOCK
MANAGEMENT'S DISCUSSION AND ANALYSIS OF AT $3.00 PER SHARE
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS..............................4
HISTORY AND BUSINESS......................5
INDEPENDENT APPRAISAL OF THE DEVIL'S GATE
MINING CLAIMS.........................5
PRODUCT SALES.............................7
MACRONUTRIENTS/TRACE MINERALS BACKGROUND.10 --------------------
LABORATORY ANALYSIS......................12
USE OF PROCEEDS..........................13 PROSPECTUS
MANAGEMENT...............................13
Directors and Executive Officers .......13 --------------------
Biographies of Management...............13
Compensation............................15
Principal Shareholders..................15
Offices.................................15
Transactions with Management and Others.15
TERMS OF THE OFFERING....................16
TRANSFER AGENT...........................16
LEGAL MATTERS............................16
CAPITALIZATION...........................16
FINANCIAL STATEMENTS ....................16
ADDITIONAL INFORMATION...................16
GLOSSARY.................................17
PRO FORMA FINANCIAL PROJECTIONS..........18
ASSUMPTIONS..............................19
Until _________________ (25 days after
the commencement of the Offering),
dealers effecting transactions in the
registered securities, whether or not
participating in the distribution, may , 1996
be required to deliver a Prospectus. -----------
This is in addition to the obligation of
dealers to deliver a Prospectus when
acting as underwriters and with respect
to their unsold subscriptions.
=========================================== ================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
Expenses in connection with the issuance and distribution of the Common
Stock being registered hereunder other than underwriting commissions and
expenses, are estimated below.
Registration fee.............................................. $ 3,396
NASD fee...................................................... 1,000
Printing expenses............................................. 3,000
Accounting fees and expenses.................................. 5,000
Legal fees and expenses....................................... 35,000
State securities law fees and expenses........................ 5,000
Stock Transfer Escrow Agent Fees.............................. 1,500
Miscellaneous expenses........................................ 2,500
--------
Total $56,396
['
=======
Item 14. Indemnification of Directors and Officers
The Nevada Corporation Code Law grants to the Company the power to
indemnify the officers and directors of the Company, under certain circumstances
and subject to certain conditions and limitations as stated therein, against all
expenses and liabilities incurred by or imposed upon them as a result of suits
brought against them as such officers and directors if they act in good faith
and in a manner they reasonably believe to be in or not opposed to the best
interests of the Company and, with respect to any criminal action or proceeding,
have no reasonable cause to believe their conduct was unlawful.
The Company's Bylaws provide as follows:
The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, or investigative
(other than an action by or in the right of the corporation), by reason of the
fact that he is or was a director, officer, employee, fiduciary or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee, fiduciary or agent of another corporation,
partnership, joint venture, trust, or other enterprise, against expenses
(including attorney fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit, or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in the best interest of the corporation and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit, or proceeding by judgment, order,
settlement, or conviction or upon a plea of nolo contendere or its equivalent
shall not of itself create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be in the best interest of
the corporation and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee, or agent of
the corporation or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise against expenses (including attorney fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in the best interest of the corporation; but no
indemnification shall be made in respect of any claim, issue, or matter as to
which such person has been adjudged to be liable for negligence or misconduct in
the performance of his duty to the corporation unless and only to the extent
that the court in which such action or suit was brought determines upon
application that, despite the adjudication of liability, but in view of all
II-1
<PAGE>
circumstances of the case, such person is fairly and reasonably entitled to
indemnification for such expenses which such court deems proper.
To the extent that a director, officer, employee, fiduciary or agent of the
corporation has been successful on the merits in defense of any action, suit, or
proceeding referred to in the first two paragraphs of this Article VII or in
defense of any claim, issue, or matter therein, he shall be indemnified against
expenses (including attorney fees) actually and reasonably incurred by him in
connection therewith.
Any indemnification under the first two paragraphs of this Article VII
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee, fiduciary or agent is proper in the circumstances because he
has met the applicable standard of conduct set forth in said first two
paragraphs. Such determination shall be made by the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit, or proceeding, or, if such quorum is not obtainable or even if
obtainable a quorum of disinterested directors so directs, by independent legal
counsel in a written opinion or by the shareholders.
Expenses (including attorney fees) incurred in defending a civil or
criminal action, suit, or proceeding may be paid by the corporation in advance
of the final disposition of such action, suit, or proceeding as authorized in
this Article VII upon receipt of an undertaking by or on behalf of the director,
officer, employee, fiduciary or agent to repay such amount unless it is
ultimately determined that he is entitled to be indemnified by the corporation
as authorized in this Article VII.
The indemnification provided by this Article VII shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
the Articles of Incorporation, any bylaw, agreement, vote of shareholders or
disinterested directors, or otherwise, and any procedure provided for by any of
the foregoing, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee, fiduciary or agent and shall
inure to the benefit of heirs, executors, and administrators of such a person.
A corporation may purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee, fiduciary or agent of the
corporation or who is or was serving at the request of the corporation as a
director, officer, employee, fiduciary or agent of another corporation,
partnership, joint venture, trust, or other enterprise against any liability
asserted against him and incurred by him in any such capacity or arising out of
his status as such, whether or not the corporation would have the power to
indemnify him against such liability under the provisions of this Article VII.
Reference is made to the form of the Underwriting Agreement filed as
Exhibit 1.1 hereto which contains provisions for indemnification of the Company,
its directors, officers, and any controlling persons, by the Underwriters
against certain liabilities for information furnished by the Underwriters.
Item 15. Recent Sales of Unregistered Securities
During the period commencing in June, 1996, the Registrant has issued the
following unregistered securities: 2,421,566 shares of Common Stock were issued
to Fusiones y Adquisiciones FYA de San Jose, S.A., pursuant to a three-year
consulting agreement, including for arranging for the Company's corporate
structure, assisting in initial capitalization with eighteen business associates
of the Registrant for an aggregate of $62,000, and negotiating the terms of the
capitalization for this Offering. 408,434 shares of Common Stock were issued to
TextBase Imaging Corp. for the licensing of Infocen Database Management
Technology, of which 108,459 shares were declared as a stock dividend to the
former shareholders of the 3CI Corporation, of which Mr. Tucker was an interim
President while that company was being sold. These securities were issued
pursuant to the exemption from registration provided for in Sections 4(1), 4(2)
and Regulation D Rule 504 of the Securities Act of 1933, being issued to
officers, directors and affiliated business associates in connection with the
formation of the Registrant.
II-2
<PAGE>
Item 16. Exhibits
Exhibit No. Description
(3) (i) Articles of Incorporation *
(ii) Bylaws *
(5) Opinion re Legality
(23) Consent of Counsel and Experts
(24) Power of Attorney
(99) A. Devil's Gate Quit Claim Deeds to the Company *
(99) B. Edward R. Evatz Devil's Gate Appraisal *
* To be filed by Amendment
Item 17. Certain Undertakings
A. The Undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers are being made, a
post-effective amendment to this Registration Statement;
(i) to include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933, as amended (the "Act");
(ii) to reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement; and
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement.
(2) That, for the purpose of determining any liability under the Act,
each such post-effective amendment shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) To provide to the Underwriters at the closing specified in the
underwriting agreement certificates in such denominations and registered in such
names as required by the Underwriters to permit prompt delivery to each
purchaser.
(5) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of a
registration statement in reliance upon Rule 430A and contained in the form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of the registration
statement as of the time it was declared effective.
(6) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new, registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
B. Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers, and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
II-3
<PAGE>
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer, or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in Reno, Nevada on the 18th
day of November, 1996.
NatureNu Corporation
By /s/ STEPHEN L. VONDERHEIDE
---------------------------------------
Stephen L. Vonderheide
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated and each of the undersigned persons,
in any capacity, hereby severally constitutes a majority of the Board of
Directors and each of them singularly, his true and lawful attorney with full
power to and each of them to sign for him and in his name and in the capacity
indicated below this Registration Statement and any and all amendments thereto.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated, representing a majority of the Board of
Directors.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/S/ STEPHEN L. VONDERHEIDE Chairman, President, Chief November 18, 1996
- --------------------------------- Executive Officer, Chief Financial
Stephen L. Vonderheide* Officer and Director
/S/ LESLIE FARIAS VONDERHEIDE Secretary and Director November 18, 1996
- ---------------------------------
Leslie Farias Vonderheide*
/S/ JOHN A. MOLINI Director November 18, 1996
- ---------------------------------
John A. Molini
_____________________________________ Director November 18, 1996
Joseph G. Papez
_____________________________________ Director November 18, 1996
James M. Wells
- -------
*Wife of the President
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
(5) Opinion re Legality
(23) Consent of Counsel and Experts
(24) Power of Attorney
Malcolm D. Crawford
Attorney and Conselor at Law
3631 E. 7th Avenue Parkway
Denver, Colorado
Telephone (303) 388-7752 California Office
Facsimile (303) 388-7755 Ronald S. Tucker, Esq
76 Costa Brava
Res. (303) 321-3630 Laguna Nigel, CA 92677
November 26, 1996
Board of Directors
NatureNu Corporation
806 Packer Way
Sparks, NV 89431
Re: Legal Opinion and Consent for Form SB-2
Gentlemen:
This will confirm that I assisted in the preparation of the Form SB-2 to be
filed with the Securities and Exchange Commission on or about November 29, 1996,
and hereby consent to the reference to my engagement as set forth in the
Prospectus under the caption "LEGAL MATTERS."
Subject to subsequent clarification of matters contained in the
Registration Statement before it becomes effective, it is my opinion that the
shares to be offered and sold will be fully paid and non-assessable.
Respectfully submitted,
/s/ MALCOLM D. CRAWFORD
--------------------------------------------
Malcolm D. Crawford, Esq.
MDC:aut
MERLE S. FINKEL
CERTIFIED PUBLIC ACCOUNTANT
210 Grant Street (412) 393-0805
Suite 1 (310) 473-4700
Pittsburgh, PA 15219
To the Board of Directors and Stockholders of
NatureNu(TM) Corporation
Sparks, Nevada
RE: Consent to use November 20, 1996 audited financial statements.
Gentlemen,
Ihereby grant you permission to use the audit report I prepared for NatureNu(TM)
Corporation dated November 25, 1996 for the financial statements prepared as of
November 20, 1996 in your Company's filing of form SB-2 with the Securities
Exchange Commission.
If you have any question please feel free to contact me at your convenience.
/s/ MERLE S. FINKEL
- ---------------------------
Merle S. Finkel
Pittsburgh, Pennsylvania
December 2, 1996
