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U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-SB/A
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
UNDER SECTION 12(B) OR (G) OF THE SECURITIES EXCHANGE ACT OF 1934
CVF CORP.
- - --------------------------------------------------------------------------------
(Name of Small Business Issuer in its charter)
<TABLE>
<S> <C>
NEVADA 87-0429335
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
300 INTERNATIONAL DRIVE, SUITE 100
WILLIAMSVILLE, NEW YORK 14221
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(Address of principal executive offices) (Zip Code)
</TABLE>
(716) 626-3044
----------------------------------
(Issuer's telephone number)
Securities to be registered under Section 12(b) of the Act:
<TABLE>
<S> <C>
Title of each class Name of each exchange on which
to be so registered each class is to be registered
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</TABLE>
Securities to be registered under Section 12(g) of the Act:
Common Shares, par value $0.001 per share
---------------------------------------------------
(Title of class)
---------------------------------------------------
(Title of class)
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TABLE OF CONTENTS
This Form 10-SB has been prepared pursuant to Alternative 2 as set forth in
Form 10-SB.
Page
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<S> <C> <C>
PART I .............................................................. 1
ITEM 6. DESCRIPTION OF BUSINESS ................................. 1
Background ............................................ 1
History and Business Plan of CVFLP .................... 1
The Corporations ...................................... 2
Personnel ............................................. 2
Financial Considerations .............................. 6
ITEM 7. DESCRIPTION OF PROPERTY ................................. 6
ITEM 8. DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES . 6
ITEM 9. REMUNERATION OF DIRECTORS AND OFFICERS .................. 7
Voting Securities and Principal Holders ............... 8
Options, Warrants and Rights .......................... 8
ITME 10. SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN
SECURITY HOLDERS ...................................... 9
ITEM 11. INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS 10
ITEM 12. SECURITIES BEING OFFERED ................................ 11
Common Shares ......................................... 11
Preferred Stock ....................................... 11
Warrants .............................................. 12
PART II .............................................................. 12
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON
EQUITY AND OTHER SHAREHOLDER MATTERS ................... 12
Market Information ..................................... 12
Dividends .............................................. 12
ITEM 2. LEGAL PROCEEDINGS ........................................ 13
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE .................... 13
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES .................. 13
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS ................ 14
PART F/S ............................................................. 14
PART III ............................................................. 15
ITEM 1. INDEX OF EXHIBITS ........................................ 15
ITEM 2. DESCRIPTION OF EXHIBITS .................................. 15
INDEX TO FINANCIAL STATEMENTS ........................................ F-1
SIGNATURES
INDEX TO EXHIBITS
</TABLE>
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SPECIAL NOTE REGARDING FORWARD - LOOKING STATEMENTS
Certain statements in this Registration Statement, under the captions "The
Corporations," "Financial Considerations" and elsewhere, constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 (the "Reform Act"). Such forward-looking
statements involve unknown and uncertain risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the Company,
or industry results, to be materially different from any future results,
performance, or achievements expressed or implied by such forward-looking
statements. See "Financial Considerations." Given these uncertainties,
prospective investors are cautioned not to place undue reliance on such
forward-looking statements.
<PAGE> 4
PART I
ITEM 6. DESCRIPTION OF BUSINESS
Background
CVF Corp. (the "Company") was incorporated on January 10, 1986, under the laws
of the State of Utah under the name of Sierra Growth Corporation. On December
30, 1993, the Company changed its name to Western Growth Corporation and its
domicile to the State of Nevada in connection with a reincorporation merger.
The Company was organized in order to acquire or enter into a business or
business opportunity. In connection with its organization, the Company issued
an aggregate of 4,000,000 Common Shares to its original directors and officers.
In 1987, the Company completed a public offering under Regulation A of the 1933
Act of 8,280,000 Common Shares at an offering price of $0.01 per share from
which the Company received net proceeds of approximately $67,850. Immediately
following the closing of the offering, there were 12,280,000 Common Shares
issued and outstanding. During 1988 and 1989, the Company acquired a majority
ownership interest in a corporation for $62,500, which the Company planned to
transfer to its stockholders in a "spin-off" transaction. The Company
subsequently determined that the spin-off was not feasible, however, and in
1991 the subsidiary corporation was liquidated.
At a Special Stockholders' Meeting held December 3, 1993, the Company's
stockholders approved proposals to: (i) effect a 1-for-10 reverse stock split
in the issued and outstanding Common Shares thereby reducing the number of
outstanding shares from 12,280,000 to 1,228,000; (ii) change the state of
incorporation of the Company from Utah to Nevada; (iii) change the name of the
Company from Sierra Growth Corporation to Western Growth Corporation; (iv)
authorize 500,000 shares of Preferred Stock; and (v) elect L. Dee Hall as the
sole director of the Company. All of such proposals were implemented during
December 1993.
On August 20, 1995, the Company entered into an asset purchase agreement (the
"Asset Purchase Agreement") with CVFLP, under which the Company agreed to
purchase all of the assets and assume all of the liabilities of CVFLP.
Pursuant to the terms of the Asset Purchase Agreement, the Company issued to
CVFLP 4,763,918 Common Shares, 25,000 shares of its Series "A" Preferred Stock
(the "Preferred Shares") and warrants (the "Warrants") entitling CVFLP to
purchase approximately 952,784 additional Common Shares. At a Special
Stockholders' Meeting held September 12, 1995, the Company's stockholders
approved proposals to: (i) approve the Asset Purchase Agreement and the
issuance of the securities of the Company to CVFLP; (ii) change the name of the
Company from Western Growth Corporation to CVF Corp.; (iii) effect a 1-for-2
reverse split of the Common Shares; and (iv) elect Jeffrey Dreben, Malcolm
Gissing, Robert Nally and P. Anthony Bordes, Jr. as the directors of the
Company.
In October 1996, the Company instituted a stock repurchase program pursuant to
which it commenced the repurchase in the marketplace or otherwise, in
accordance with all applicable securities laws, up to 300,000 Common Shares.
To date, the Company has repurchased 10,000 Common Shares.
<PAGE> 5
History and Business Plan of CVFLP
CVFLP was formed under the laws of Ontario, Canada in 1989, to engage in the
business of developing and managing early stage and start-up companies engaged
in the information and environmental technologies areas. In August 1989, CVFLP
completed a private securities offering in which approximately $14,600,000 was
raised from a number of pension funds, insurance companies and corporate
groups. Since 1989, CVFLP has acquired ownership interests in each of the
following privately held Canadian corporations: Biorem Technologies Inc.,
Canadian Venture Founders Leasing Corporation, Certicom Corp., Dantec Systems
Corporation, Ecoval Inc., Omphalos Recovery Systems Inc., Solaria Research
Enterprises Ltd., and Turbotak Technologies, Inc. (the "Corporations"). CVFLP
worked to start, build and grow the Corporations. Certicom completed in
December 1995 a public offering of its common shares in the Provinces of
Ontario and Alberta. The Company's mandate is to acquire significant holdings
in new and emerging companies primarily in the technology area and to assist in
the management of the Corporations. Each of the Corporations generally
requires additional capital to meet its business plans beyond the Company's
initial involvement. The Company intends to actively assist in the management
of the Corporations in obtaining additional capital either from its own
resources or other participants. There can be no assurance that the
Corporations will raise sufficient amounts to remain in business and/or to meet
their respective business plans.
The Company plans to generate revenue and profit through the consolidation of
revenues and profits from the Corporations and also through the sale of its
holdings. The Company's success is solely dependent upon the success of the
Corporations. The Company plans to conduct its business operations so as not
to be deemed to be an investment company and thereby be subject to the
Investment Company Act of 1940, which would require it to register as an
investment company under such Act.
The Company believes that its holdings have the potential to develop meaningful
growth over the next three to five years. However, additional capital
contributions in the Corporations by the Company and others will be required to
facilitate such growth.
As of the date hereof, the Company has positions in the following companies.
<TABLE>
<CAPTION>
PERCENTAGE OWNERSHIP
CORPORATION OF VOTING SECURITIES
- - ----------- --------------------
<S> <C>
Biorem Technologies Inc. 54%
Canadian Venture Founders 100%
Leasing Corporation
Certicom Corp. 9%
Dantec Systems Corporation 34%
Ecoval Inc. 29%
Omphalos Recovery Systems, Inc. 56%
Solaria Research Enterprises Ltd. 51%
Turbotak Technologies, Inc. Convertible Debentures
</TABLE>
Personnel
As of February 7, 1997, the Company had three full-time and two part-time
employees.
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The Corporations
The following paragraphs provide a brief description of the Corporations. Each
Corporation has its own business plan, history and financial statements. Each
Corporation has completed the development of products, established markets and
distribution channels, has sold products and has put management teams in place
or is currently working to improve its management teams. Each Corporation is
working to improve its production capability to handle future growth in sales.
The additional capital required by each of the Corporations is primarily for
expansion of sales and production capability to enable the Corporations to
realize their commercial potential over the next three to five years. As is
common with early stage technology companies, each of the Corporations has
historically operated at a loss or at break-even and many will continue to
operate at a loss for at least the foreseeable future.
Biorem Technologies, Inc. Biorem, a spin-off company from the University of
Waterloo, is an industrial biotech company that is engaged in the business of
applying bioconversion and biotransformation technology to a variety of
industrial applications such as the treatment or clean-up of organic toxic
chemicals in soil or groundwater, the treatment of industrial waste streams for
liquids or air and for use in the food processing, agriculture and
pharmaceutical manufacturing industries. Biorem has certain proprietary
industrial fermentation techniques which enabled it to produce new biological
materials for use in the bioremediation, industrial waste stream treatment,
food processing, agriculture and pharmaceutical industries and markets. Biorem
provides on-site turn key remediation capability. Biorem has developed
technology for economical and effective cleaning of contaminated soils.
Biorem's customers include several major North American corporations.
Biorem plans to raise an additional $2,000,000 during the next year in order to
fulfill its current business plan. It will attempt to raise such additional
capital through private placements. The Company may participate in such
securities offerings subject to the financial requirements of its other
holdings.
Canadian Venture Founders Leasing Corporation ("CVFLC"). CVFLC was founded in
order to offer equipment leases to the Corporations as well as to offer
short-term funding to the Corporations for such items as inventory and
receivables. CVFLC is a wholly owned subsidiary of the Company and is managed
by the management team of the Company.
Certicom Corp. Certicom Corp. is a developer, manufacturer and vendor of
digital information security products, technologies and services. Digital
information security comprises a variety of technologies designed to prevent
the unauthorized disclosure, alteration or removal of information, to control
access to networks and to verify validity of electronic files and the identity
of users. These technologies include encryption, digital signatures and
authentication. Encryption is the translation of data by cryptographic
algorithms into a form that can be used by only the intended recipient.
Digital signatures are products of cryptographic techniques that can be used
to detect changes to digital information. Authentication is a procedure used
to verify user identity using digital signatures. Certicom believes that the
demand for the solutions provided by digital information security technologies
that can protect privacy and combat fraud in computer networks, wireless
communications, financial transaction systems and a host of other data
communications products will increase with the transition from paper based to
electronic commerce, the increase in the extent of computer networking, the
use of the Internet and the growth of digital communications systems.
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Certicom markets information security technologies that incorporate a
technology known as public key cryptography. While offering numerous benefits
to information security systems, public key cryptography is difficult to
implement in an efficient manner due to its complex mathematical basis.
Certicom has developed technologies that alleviate this problem resulting in
more efficient information security products. Certicom is currently focused on
three distinct market segments: Original Equipment Manufacturer ("OEM")
information security technologies, facsimile encryption and computer network
security. In the OEM information security technologies segment, Certicom
markets proprietary algorithms and licensees cryptographic technologies and
integrated circuits to manufacturers of equipment and software that provide
information security features. The most important technology in this segment
relates to implementations of a cryptosystem known as the Elliptic Curve
Cryptosystem ("ECC") around which Certicom holds one patent and has numerous
patents pending. Certicom believes that the ECC technology as modified and
improved by Certicom competes favorably in many respects including speed,
cryptographic strength and power efficiency with that of its most significant
competitor, the RSA public key cryptosystem, and has advantages in wireless
transmission, Smart Card implementations and controlled access systems for
broadcast.
Certicom completed a public offering of its common shares in December 1995.
The common shares are quoted on the Canadian dealer network, an
over-the-counter trading network, under the symbol "CERT". The closing price
of the common shares on February 7, 1997, was Cdn$35.00. The Company currently
owns 750,000 common shares of Certicom.
Dantec Systems Corporation. Dantec, an industrial automation company, using
unique process control algorithms developed at the University of Waterloo, is
in the business of developing, manufacturing and marketing a range of automated
precision moisture detection measurement and manufacturing control systems for
the food processing, wood processing, pharmaceutical, polymer and various other
material processing markets and industries. Dantec has sold its systems to
various major North American corporations in the above mentioned industries and
has a strategic marketing partnership with Honeywell to sell computerized
moisture control systems into the North American baked goods industry. During
the fiscal year ended February 28, 1995, Dantec made a strategic decision to
invest mainly in introducing its progress control systems into a series of new
markets including the pharmaceuticals, wood processing and food industries.
Sales remained flat during the 1996 fiscal year compared to the previous year.
However, several important contracts have been signed in 1997 which are
expected to substantially increase revenues.
Dantec plans to raise an additional $1,000,000 during the next year in order to
fulfill its current business plan. It will attempt to raise such additional
capital through private placements of its securities. The Company may
participate in such securities offerings subject to the financial requirement
of its other holdings.
Ecoval, Inc. Ecoval is a Montreal, Quebec-based company formed to manufacture
and market a range of 100% natural fertilizers, environmentally friendly
organic herbicides and tree recovery systems. Ecoval has received U.S. patents
for its herbicide and its 4-4-8 tree recovery fertilizer. Research results
show the herbicide to be non-toxic and bio-degradable and more effective than
chemical products. Ecoval's herbicide is currently going through the
registration and approval process with Agriculture Canada and the Environmental
Protection Agency in the U.S. and Ecoval is expecting to launch its herbicide
in 1997. The company also has proprietary binder technology to enable the
granulation of gypsum, bloodmeal, bonemeal and feathermeal and other 100%
natural ingredients. The
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company has shipped its product to customers in
Florida, California and Texas and throughout Canada. Approximately forty
municipalities in Ontario have purchased and re-ordered the product, along with
many professional lawn care and landscaping contractors. In Quebec, retail
distribution has been established along with sales to over twenty golf courses.
In the U.S., eight golf courses are currently using the product, primarily in
Florida. A new plant with 25,000 ton per year capability was recently
constructed in Montreal in order to meet the growing demand for its product.
Ecoval receives an average price of approximately $600 per ton for its
products. In October 1994, Ecoval obtained approximately $6,750,000 to fund
the new plant, as well as to provide working capital for operations and market
expansion. Approximately 50% of the funding was raised on a private placement
basis from outside investors and the remainder in the form of long-term debt
from the Canadian Federal and Quebec provincial governments. It is anticipated
that Ecoval will operate at a loss in its current fiscal year.
Ecoval plans to raise an additional $6,000,000 during the current year in order
to fulfill its current business plan. It will attempt to raise such additional
capital through private placements. The Company may participate in such
securities offerings subject to the financial requirements of its other
holdings.
Omphalos Recovery Systems, Inc. (GemprintTM). GemprintTM is in the business of
providing products and services to the insurance industry, as well as the
consumer and wholesale jewelry markets to enable diamonds and other precious
gems to be uniquely identified non-invasively (fingerprinted) using a patented
low power laser imaging system. The results are stored in a data base for
later verification and recovery of lost or stolen gems. GemprintTM currently
sells its RSi 2000 laser GemprintTM machine to jewelers for $15,000.
Currently, each consumer who gets his or her gem "Gemprinted"TM by the
jeweler's RSi 2000 machine pays the jeweler $35 of which $15 goes to GemprintTM
pursuant to licensing agreements. GemprintTM owns and operates the GemprintTM
data base. Law enforcement agencies, such as the Federal Bureau of
Investigation and many insurance companies support the GemprintTM system
(approximately 25 major insurance companies offer a 10% discount on diamond
insurance policies if a gem is GemprintedTM). Currently 110 jewelers own
GemprintTM machines throughout North America and actively use the system.
GemprintTM also recently received a letter of intent for the purchase
of 300 GemprintTM machines for $7,500 each from a group in the United Kingdom.
GemprintTM has recently developed a next generation machine with built-in
appraisal software. The additional expense of developing this machine is
expected to result in operating losses at least until the fiscal year ending
March 31, 1997.
GemprintTM plans to raise an additional $1,500,000 during the next year in
order to fulfill its current business plan. It will attempt to raise such
additional capital through private placements. The Company may participate in
such securities offerings subject to the financial requirements of its other
holdings.
Solaria Research Enterprises, Ltd. Solaria is the business of developing,
manufacturing and marketing a family of low cost, high efficiency programmable
electronic motor speed control products for battery-powered vehicles such as
material handling equipment (fork lift trucks, etc.). Solaria supplies both
original equipment manufacturers ("OEM") and the aftermarket with products.
Solaria has shipped over 500 units to date to large North American customers.
A North American distribution network of 28 distributors having 113 branches
has been set up over the past three years. Solaria is now marketing the latest
version of its product. Solaria has entered into a major strategic OEM joint
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venture with a leading North American manufacturer of fork lift trucks to
develop and manufacture a range of electronic controllers for their D.C.
engines.
Solaria plans to raise an additional $1,500,000 during the next year in order
to fulfill its current business plan. It will attempt to raise such additional
capital through private placements. The Company may participate in such
securities offerings subject to the financial requirements of its other
holdings.
Turbotak Technologies, Inc. Turbotak is a spin-off from the University of
Waterloo and is engaged in the business of researching, developing and
marketing a range of air pollution control products and systems for a variety
of industries worldwide. Recently it has developed a volatile organic compound
("VOC") removal and recovery technology for the printing, automobile, wood,
bakery and numerous other industries which produce VOC's. This technology is
cost effective in that the solvents are re-covered for resale or reuse.
Turbotak has sold its products in the pulp and paper industry and also in a
variety of other markets.
Turbotak recently executed a letter of intent pursuant to which Sonic
Environmental Systems, Inc. ("Sonic"), a publicly-traded, New Jersey based, air
pollution control products company shall acquire Turbotak in exchange for
common stock of Sonic. As a result of the transaction, Turbotak shareholders
will own approximately 75% of the outstanding common stock of Sonic. Upon
consummation of the transaction, the Company's convertible debenture in
Turbotak will be convertible into approximately 10% of the common stock of
Sonic.
Financial Considerations
Early Stage Development Companies. Each of the Corporations (other than
Canadian Venture Founders Leasing Corporation) is an early stage development
Company with a limited relevant operating history upon which an evaluation of
its prospects can be made. As such, there can be no assurance of the future
success of any of the Corporations.
Quarterly Fluctuations. The Company's operation results have historically
been, and will continue to be, subject to quarterly and annual fluctuations due
to a variety of factors. Any shortfall in revenues in a given quarter may
impact the Company's results of operations due to an inability to adjust
expenses during the quarter to match the level of revenues for the quarter.
There can be no assurance that the Company will be able to grow in future
periods or that it will be able to sustain its level of total revenues or its
revenue growth on a quarterly or annual basis.
Rapid Technological Change. The markets for the Corporations' products are
generally characterized by rapidly changing technology, evolving industry
standards, changes in customer needs and frequent new product introductions.
The Corporations' future success will depend on their ability to enhance
current products, develop new products on a timely and cost-effective basis
that meet changing customer needs and to respond to emerging industry standards
and other technological changes. There can be no assurance that the
Corporations will be successful in developing new products or enhancing their
existing products on a timely basis, or that such new products or product
enhancements will achieve market acceptance.
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ITEM 7. DESCRIPTION OF PROPERTY
The Company currently leases space for its principal executive offices which
are located at 300 International Drive, Suite 100, Williamsville, New York
14221.
ITEM 8. DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- - ---- --- --------
<S> <C> <C>
Jeffrey Dreben 50 Director; Chief Executive Officer; and President
Robert Nally 48 Director; Secretary; and Treasurer
Malcolm Gissing 65 Director; and Consultant
</TABLE>
Mr. Jeffrey Dreben has founded three companies including CVFLP and the general
partner of CVFLP. Mr. Dreben has worked in the investment industry since 1979
beginning his investment career with Merrill Lynch and subsequently founded his
own investment advisory firm. Mr. Dreben has been working in the venture
capital industry in the United States and Canada since 1985. Mr. Dreben earned
an Honors Bachelor of Arts Degree from Loyola College of the University of
Montreal.
Mr. Robert Nally is a director, secretary and treasurer of CVF Corp. From
1985 to 1990, Mr. Nally provided commercial development consulting services to
the University of Waterloo as Technology Transfer and Commercial Development
Officer. Prior to joining the University of Waterloo, he worked for NCR
Canada, Ltd. for 10 years as Manager of Strategic Planning and New Business
Opportunities, and Manager of Advanced Development and Director of
Engineering. He earned a Bachelor of Science degree in electrical engineering
and a Master of Science degree form the University of Waterloo.
Mr. Malcolm Gissing is a director of and consultant to CVF Corp. From 1963 to
1989, he was employed by Hewlett Packard where he rose to the position of
President of Hewlett-Packard Canada. Mr Gissing earned his Electronics Degree
from Kingston College of Advanced Technology in England and is a graduate of
Stanford University's Graduate Business School Executive Program.
ITEM 9. REMUNERATION OF DIRECTORS AND OFFICERS
Prior to September 20, 1995, the Company's sole director and officer was L.Dee
Hall. Mr. Hall did not receive or accrue any compensation for his services as
a director or officer of the Company. The following is a summary of the
renumeration paid to the three highest paid persons who were officers or
directors during fiscal year 1995.
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<TABLE>
<CAPTION>
NAME OF INDIVIDUAL CAPACITIES IN WHICH AGGREGATE
OF IDENTITY OF GROUP RENUMERATION WAS RECEIVED RENUMERATIONS
-------------------- --------------------------------- -------------
<S> <C> <C>
Jeffrey Dreben Director, Chief Executive Officer
and President CDN $36,000
Robert Nally Director, Consultant CDN $36,000
Malcolm Gissing Director, Secretary, Treasurer CDN $21,000
</TABLE>
On February 5, 1997, the Company granted to each of the above individuals
options to purchase 200,644 Common Shares. The options have an exercise price
of $.05 per Common Share, are immediately exercisable, and expire in 10 years.
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ITEM 10. SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITY HOLDERS
Voting Securities and Principal Holders
The following table sets forth, as of February 7, 1997, the approximate number
of Common Shares of the Company owned of record or beneficially by each person
who owned of record, or was known by the Company to own beneficially, more than
10% of the Company's Common Shares, and the name and shareholdings of each
officer and director, and all officers and directors as a group.
<TABLE>
<CAPTION>
AMOUNTS OF AMOUNTS OF PERCENTAGE OF
NAME AND ADDRESS COMMON SHARES OWNED COMMON SHARES OWNED
--------------------------- ------------------- -------------------------
<S> <C> <C>
Jeffrey Dreben (1) 424,424 7.32%
300 International Drive
Suite 100
Williamsville, NY 14221
Malcolm Gissing (1) 424,424 7.32%
300 International Drive
Suite 100
Williamsville, NY 14221
Robert Nally (1) 424,424 7.32%
300 International Drive
Suite 100
Williamsville, NY 14221
Prudential Insurance Co. 610,750 11.33%
200 Consilium Place
Scarborough, Ontario
M1H 3E6
Bansco Group 694,081 12.88%
c/o The Bank of Nova Scotia
Securities Department
Lower Concourse
Scotia Plaza
44 King Street West
Toronto, Ontario M5H 1H1
Directors and Officers as
Group (3 persons) (1) 1,273,272 21.96%
</TABLE>
- - ------------
(1) Each of Messrs. Dreben, Gissing and Nally beneficially own 200,644 Common
Shares pursuant to options exercisable within 60 days, and 207,880 Common
Shares underlying a warrant (the "Warrant") exercisable by Canadian
Venture Founders Management Limited, of which Messrs. Dreben, Gissing and
Nally each own 21.8%. Mr. Dreben's wife is the registered holder of Mr.
Dreben's interest in Canadian Founders Management Limited. Accordingly,
Mr. Dreben expressly disclaims beneficial ownership of the 207,880 Common
Shares underlying the Warrant.
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OPTIONS, WARRANTS AND RIGHTS
The following table sets forth, as of February 7, 1997 the outstanding options
and warrants issued by the Company:
<TABLE>
<CAPTION>
NAME OF TITLE AND EXERCISE DATE OF
HOLDER AMOUNT OF SECURITIES PRICE EXERCISE
- - -------------------- -------------------- -------- --------------------
<S> <C> <C> <C>
Exercisable upon
the occurrence of
Canadian Venture Warrant to acquire $3.05 certain conditions
Founders Management 952,784 Common until September 20,
Limited(1) Shares 2000
Jeffrey Dreben options to purchase $0.05 Exercisable from
200,644 Common time of grant until
Shares February 5, 2007
Malcolm Gissing options to purchase $0.05 Exercisable from
200,644 Common time of grant until
Shares February 5, 2007
Robert Nally options to purchase $0.05 Exercisable from
200,644 Common time of grant until
Shares February 5, 2007
</TABLE>
- - ---------
(1) CVFLP's general partner
ITEM 11. INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN
TRANSACTIONS
Effective June 30, 1995, the Company issued 601,932 Common Shares to CVF, Inc.,
a Delaware corporation, as payment in full for services rendered to the Company
in connection with the Company's proposal to acquire the assets of CVFLP. The
shareholders of CVF, Inc. included Jeffrey Dreben, Malcolm Gissing and Robert
Nally, all of whom are directors of the Company. The Company and CVF, Inc.
agreed that the value of the services rendered to the Company and the 601,932
Common Shares issued was $55,000. Pursuant to a stock purchase agreement,
dated February 5, 1997, the Company repurchased the 601,932 Common Shares from
CVF Inc., for an aggregate purchase price of $10.00.
The Company has also entered into a Service Agreement with D and N Consulting
Corporation ("D and N"), pursuant to which D and N provides a variety of
administrative, managerial and clerical services to the Company. Messrs.
Dreben and Nally are officers of D and N.
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ITEM 12. SECURITIES BEING OFFERED
The Company's authorized capital consists of 50,000,000 Common Shares, $0.001
par value, and 500,000 Preferred Shares, $0.001 par value. As of the date
hereof, 5,390,417 Common Shares and 25,000 Preferred Shares are currently
issued and outstanding.
Common Shares
Holders of the Common Shares are entitled to one vote per share on each matter
submitted to vote at any meeting of shareholders. Common Shares do not carry
cumulative voting rights and, therefore, holders of a majority of the
outstanding shares of Common Shares will be able to elect the entire Board of
Directors, and, if they do so, minority shareholders would not be able to elect
any members to the Board of Directors. The Company's Board of Directors has
authority, without the action by the Company's shareholders, to issue all or
any portion of the authorized but unissued Common Shares, which would reduce
the percentage ownership of the Company of its shareholders and which may
dilute the book value of the Common Shares.
The Company's by-laws provide that a majority of the voting power of all
outstanding securities entitled to vote on a matter shall constitute a quorum
for shareholders' meetings, except with respect to matters for which a greater
quorum is required by law.
Shareholders of the Company have no pre-emptive rights to acquire additional
Common Shares. The Common Shares are not subject to redemption and carry no
subscription or conversion rights. In the event of liquidation of the Company,
the Common Shares are entitled to share equally in corporate assets after
satisfaction of all liabilities. All of the Common Shares currently issued and
outstanding are fully paid and non-assessable.
Holders of Common Shares are entitled to receive such dividends as the Board of
Directors may from time to time declare out of funds legally available for the
payment of dividends. The Company has not paid dividends on its Common Shares
and there can be no assurance that it will pay dividends in the foreseeable
future.
Preferred Stock
Preferred Shares may be issued from time to time in one or more series as may
from time to time be determined by the board of directors. Each series shall
be distinctly designated. All shares of any one series shall be alike in every
particular, except that there may be different dates from which dividends
thereon, if any, shall be cumulative, if made cumulative. The powers,
preferences, participating, optional, and other rights of each of such series
and the qualifications, limitations, or restrictions thereof, if any, may
differ from those of any and all other series at any time outstanding. Except
as provided in the Company's Certificate of Incorporation, the board of
directors of the Company is hereby expressly granted authority to fix by
resolution or resolutions adopted prior to the issuance of each particular
series of Preferred Shares the designation, powers, preferences, and relative
participating, optional, and other rights and the qualifications, limitations,
and restrictions thereof, if any, of such series.
11
<PAGE> 15
The Company currently has outstanding a series of Preferred Stock designated as
Series "A" Preferred Stock. The following discussion of the general terms of
the Series "A" Preferred Stock is set forth solely to provide a basic
understanding of the preferences and characteristics of the Series "A"
Preferred Stock as set forth in the Certificate of Designation of Voting
Powers, Preferences, Rights and Limitations of Series "A" Preferred Stock (the
"Certificate") which was filed with the Secretary of State of Nevada on
September 12, 1995. Each share of Series "A" Preferred Stock has a stated
value (the "Stated Value") of the U.S. dollar equivalent of Cdn$25.00
determined at the date of issuance by reference to the noon spot rate for
conversion of Canadian dollars into U.S. dollars as published by the National
Bank of Canada on the business day immediately preceding the date of issuance.
The holders of Series "A" Preferred Stock will be entitled to cumulative
dividends at the rate of 5% of the Stated Value plus accrued but unpaid
dividends. The dividends will have priority over any payments of dividends on
the Common Shares and on all other shares of preferred stock ranking junior to
the Series "A" Preferred Stock. Except as otherwise required by Nevada law,
the holders of Series "A" Preferred Stock shall not have any voting rights.
The Series "A" Preferred Stock is not convertible into Common Shares or into
any other security of the Company. The Company may, at its option, redeem all
or part of the Series "A" Preferred Stock from the holders thereof.
Additionally, at any time after five years from the date of issuance, a holder
of Series "A" Preferred Stock may require the Company to redeem any or all of
the Series "A" Preferred Stock held by such holder. The redemption price shall
be the Stated Value plus all accrued but unpaid dividends.
Warrants
Pursuant to the terms of the Asset Purchase Agreement, the Company issued to
CVFLP Warrants entitling it to purchase approximately 952,784 additional shares
of the Company's Common Shares. Each Warrant entitles the holder to purchase
one Common Share at a price of $3.05 per share. CVFLP has distributed the
Warrants to Canadian Venture Founders Management Limited, its general partner.
Until September 20, 2000, the Warrants may only be exercised if a former
limited partner of CVFLP sells any Common Shares which were issued to such
limited partner in connection with the Transaction. In such event, the Warrant
holders may purchase one Common Share for each five Common Shares sold by such
limited partner. Any Warrants not exercised before September 20, 2000, may be
exercised by the holder during the six month period immediately following the
end of such five year period. All shares issuable upon exercise of the
Warrants will be restricted securities as that term is defined in Rule 144
under the 1933 Act.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS
Market Information
12
<PAGE> 16
The Common Shares are traded in the over-the-counter market and quoted on the
NASD OTC Bulletin Board, a regulated quotation service that captures and
displays real-time quotes and indications of interest in securities not listed
on The Nasdaq Stock Market or any U.S. exchange. The following table sets
forth the high and low bid price quotations for the Common Shares in the
over-the-counter market as provided by the National Quotation Bureau, Inc.
during the periods indicated. The quotations reflect inder-dealer prices,
without retail markup mark-down on commission and may not represent actual
transactions. All prices are shown in U.S. dollars.
<TABLE>
<CAPTION>
LOW HIGH
-------- --------
<S> <C> <C> <C>
1995 - 1st Quarter unpriced unpriced
2nd Quarter unpriced unpriced
3rd Quarter unpriced unpriced
4th Quarter 1.50 3.25
1996 - 1st Quarter
(excluding January 8) 2.75 3.25
2nd Quarter 2.75 3.625
3rd Quarter 3.50 5.375
4th Quarter 5.00 6.875
1997 - 1st Quarter
(through February 7, 1997) 6.50 6.875
</TABLE>
As of February 7, 1997, there were 5,390,417 outstanding shares of Common
Stock, held by 280 holders of record.
Dividends
The Company has never paid a dividend on the Common Shares. The payment of any
future dividends will be at the sole discretion of the Company's Board of
Directors. The Company intends to retain earnings to finance the expansion of
its business and does not anticipate paying dividends on the Common Shares in
the foreseeable future.
ITEM 2. LEGAL PROCEEDINGS
The Company is not a party to any material pending legal proceedings,
and, to the best of its knowledge, no such action by or against the
Company has been threatened.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable
ITEM 4 RECENT SALES OF UNREGISTERED SECURITIES
13
<PAGE> 17
The following is a summary of all securities, as of February 7, 1996, of the
Company sold within the past three years which were not registered under the
Securities Act of 1933, as amended (the "Act"). All of the sales listed below
were exempt from registration under the Act in that they did not involve a
public offering within the meaning of section 4(2) of the Act and Regulation D,
promulgated thereunder. All such sales were to "accredited investors",
officers or employees of the Company, or other persons who had a close ongoing
relationship with the Company.
<TABLE>
<CAPTION>
NAME DATE AMOUNT OF SECURITIES
- - ---------------------- --------------- --------------------
<S> <C> <C>
Canadian Venture
Founders I,
Limited Partnership August 20, 1995 4,763,91
CVF, Inc. June 30, 1995 601,932
Noland Schneider August 20, 1995 20,000
Alpine Securities Core August 20, 1995 5,000
</TABLE>
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 78.751 of the Nevada General Corporation Law permits a corporation to
indemnify any person who was, or is, or is threatened to be made a party in a
completed, pending or threatened proceeding, whether civil criminal,
administrative or investigative (except an action by or in the right of the
corporation), by reason of being or having been an officer, director, employee
or agent of the corporation or serving in certain capacities a the request of
the corporation. Indemnification may include attorneys' fees, judgments, fines
and amounts paid in settlement. The person to be indemnified must have acted
in good faith and in a manner he or she reasonable believed to be in or not
opposed to the bet interests of the corporation and, with respect to any
criminal action, such person must have had no reasonable cause to believe his
conduct was unlawful. With respect to actions by or in the right of the
corporation, indemnification may not be made for any claim, issue or matter as
to which such a person has been finally adjudged by a court of competent
jurisdiction to be liable to the corporation or for amounts paid in settlement
to the corporation, unless and only to the extent that the court in which the
action was brought or other court of competent jurisdiction determines upon
application that in view of all circumstances the person is fairly and
reasonably entitled to indemnity for such expenses as the court deems proper.
Article VIII of the Company's By-Laws provides that the Company 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, by reason of the fact that he is
or was a director, officer, employee, or agent of the corporation, oris 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 attorneys' fees, judgements, fines, and
amounts paid in settlement actually and reasonably incurred by him in
connection with the action, suit, or proceeding, if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
PART F/S
14
<PAGE> 18
Please refer to the Consolidated Financial Statements and the index thereto
which appear on page F-1 to F-19 hereof.
PART III
ITEM 1. INDEX OF EXHIBITS
See the "Index to Exhibits" which appears after page F-19.
ITEM 2. DESCRIPTION OF EXHIBITS
<TABLE>
<S> <C>
2.1 Articles of Incorporation of CVF Corp.
2.2 By-Laws of CVF Corp.
3.1 Form of Common Stock Certificate
3.2 Form of Series A Preferred Stock Certificate
3.3 Form of Warrant Certificate
6.1 Asset Purchase Agreement dated as of August 20, 1995
6.2 Stock Pledge Agreement dated as of September 20, 1995
6.3 Service Agreement dated as of February 10, 1997
10 Consent of Feldman Radin & Co., P.C.
27 Financial Data Schedule
</TABLE>
15
<PAGE> 19
CVF CORP. AND SUBSIDIARIES
(FORMERLY WESTERN GROWTH CORPORATION)
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
NUMBER
-------
<S> <C>
INDEPENDENT AUDITORS' REPORT F-2
CONSOLIDATED BALANCE SHEET F-3
CONSOLIDATED STATEMENT OF OPERATIONS F-4
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY F-5
CONSOLIDATED STATEMENT OF CASH FLOWS F-6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-7
</TABLE>
F-1
<PAGE> 20
INDEPENDENT AUDITORS' REPORT
To The Stockholders and
Board of Directors of
CVF Corp.
We have audited the accompanying consolidated balance sheet of CVF Corp.
and Subsidiaries (formerly Wesstern Growth Corporation) as of December 31,
1995, and the related statements of operations, stockholders' equity and cash
flows for years ended December 31, 1995 and 1994. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of CVF Corp.
and Subsidiaries (formerly Western Growth Corporation) as of December 31, 1995,
and the results of its operations and cash flows for each of the years ended
December 31, 1995 and 1994, in conformity with generally accepted accounting
principles.
/s/ Feldman Radin & Co., P.C.
------------------------------
Certified Public Accountants
New York, New York
December 11, 1996
F-2
<PAGE> 21
CVF CORP. AND SUBSIDIARIES
---------------------------
(FORMERLY WESTERN GROWTH CORPORATION)
-------------------------------------
CONSOLIDATED BALANCE SHEET
---------------------------
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996 DECEMBER 31, 1995
------------------ -----------------
(UNAUDITED)
<S> <C> <C>
ASSETS
-------
CURRENT ASSETS:
Cash and cash equivalents $ 2,797,851 $ 445,515
Accounts receivable 303,466 337,852
Inventory 123,855 221,592
Prepaid expenses and other 99,947 87,120
------------------ ------------------
TOTAL CURRENT ASSETS 3,325,119 1,092,079
PROPERTY AND EQUIPMENT, net of accumulated depreciation 185,401 171,488
HOLDINGS 1,404,139 3,178,540
SECURITIES available for sale, at market value 21,483,000 -
GOODWILL, net of accumulated amortization 1,671,609 1,772,005
OTHER ASSETS 109,674 68,588
------------------ ------------------
$ 28,178,942 $ 6,282,700
================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
-------------------------------------
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 1,364,226 $ 1,174,313
Due to related parties 142,592 133,561
Other current liabilities 231,294 80,922
Accrued income taxes 950,000 -
Current portion of long term debt 134,528 163,728
------------------ ------------------
TOTAL CURRENT LIABILITIES 2,822,640 1,552,524
------------------ ------------------
LONG TERM DEBT, net of current portion 392,709 151,406
DEFERRED INCOME TAXES 7,165,000 -
MINORITY INTEREST 292,000 292,000
REDEEMABLE PREFERRED STOCK 456,250 456,250
STOCKHOLDERS' EQUITY:
Common stock, $0.001 par value, authorized 50,000,000 shares,
issued and outstanding 5,992,349 shares 5,992 5,992
Additional paid in capital 12,930,787 12,930,787
Net unrealized gain on securities available for sale, net of taxes 13,307,000 -
Translation adjustment (277,414) (277,252)
Retained earnings (accumulated deficit) (8,916,022) (8,829,007)
------------------ ------------------
TOTAL STOCKHOLDERS' EQUITY 17,050,343 3,830,520
------------------ ------------------
$ 28,178,942 $ 6,282,700
================== ==================
</TABLE>
See notes to consolidated financial statements
F-3
<PAGE> 22
CVF CORP. AND SUBSIDIARIES
---------------------------
(FORMERLY WESTERN GROWTH CORPORATION)
-------------------------------------
CONSOLIDATED STATEMENT OF OPERATIONS
------------------------------------
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------------------------ -----------------------------------
1996 1995 1995 1994
-------------- -------------- -------------- --------------
(UNAUDITED)
<S> <C> <C> <C> <C>
SALES $ 1,182,341 $ 388,513 $ 763,009 $ 259,647
COST OF SALES 810,177 246,264 530,540 107,896
-------------- -------------- -------------- --------------
GROSS PROFIT 372,164 142,249 232,469 151,751
-------------- -------------- -------------- --------------
EXPENSES:
Selling, general and administrative 1,762,400 1,737,654 2,354,488 1,555,348
Research and development 204,469 197,706 215,003 201,626
-------------- -------------- -------------- --------------
TOTAL EXPENSES 1,966,869 1,935,360 2,569,491 1,756,974
-------------- -------------- -------------- --------------
INCOME (LOSS) FROM OPERATIONS (1,594,705) (1,793,111) (2,337,022) (1,605,223)
-------------- -------------- -------------- --------------
OTHER INCOME AND (EXPENSES):
Interest income (expense), net (68,078) (23,793) (24,923) 47,339
Other income (expense), net 40,578 6,096 246,533 35,588
Income (loss) from equity affiliates (712,149) (838,555) 881,091 (1,981,812)
Gain (loss) on sale of holdings 3,197,339 - - -
Minority interest - 176,907 169,515 212,692
-------------- -------------- -------------- --------------
TOTAL OTHER INCOME AND (EXPENSES) 2,457,690 (679,345) 1,272,216 (1,686,193)
-------------- -------------- -------------- --------------
INCOME (LOSS) BEFORE PROVISION
FOR INCOME TAXES 862,985 (2,472,456) (1,064,806) (3,291,416)
Provision for income taxes (950,000) - - -
-------------- -------------- -------------- --------------
NET INCOME (LOSS) $ (87,015) $ (2,472,456) $ (1,064,806) $ (3,291,416)
============== ============== ============== ==============
NET INCOME (LOSS) PER SHARE $ (.02) $ (0.51) $ (0.22) $ (0.75)
============== ============== ============== ==============
WEIGHTED SHARES USED IN COMPUTATION 5,992,349 4,807,499 4,978,115 4,399,247
============== ============== ============== ==============
</TABLE>
See notes to consolidated financial statements.
F - 4
<PAGE> 23
CVF CORP. AND SUBSIDIARIES
--------------------------
(FORMERLY WESTERN GROWTH CORPORATION)
-------------------------------------
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
----------------------------------------------
<TABLE>
<CAPTION>
RETAINED
ADDITIONAL EARNINGS TOTAL
COMMON STOCK PAID-IN (ACCUMULATED TRANSLATION STOCKHOLDERS'
SHARES AMOUNT CAPITAL DEFICIT) OTHER ADJUSTMENT EQUITY
--------- -------- ------------- ------------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE - January 1, 1994 4,220,398 $ 4,220 $ 11,674,441 $ (4,472,785) $ - $ - $ 7,205,876
Sale of shares 357,698 358 962,514 - - - 962,872
Net (loss) - - - (3,291,416) - - (3,291,416)
Translation adjustment - - - - - (407,719) (407,719)
--------- -------- ------------- ------------- ---------- ------------ ------------
BALANCE - December 31, 1994 4,578,096 4,578 12,636,955 (7,764,201) - (407,719) 4,469,613
Sale of shares 185,821 186 486,017 - - - 486,203
Shares issued in connection
with reverse acquisition 1,228,432 1,228 (192,185) - - - (190,957)
Net (loss) - - - (1,064,806) - - (1,064,806)
Translation adjustment - - - - - 130,467 130,467
--------- -------- ------------- ------------- ---------- ------------ -------------
BALANCE - December 31, 1995 5,992,349 5,992 12,930,787 (8,829,007) - (277,252) 3,830,520
Sale of shares - - - - - - -
Net (loss) (Unaudited) - - - (87,015) - - (87,015)
Net unrealized gain on
securities available for
sale, net of taxes - - - - 13,307,000 - 13,307,000
Translation adjustment - - - - - (162) (162)
--------- -------- ------------- ------------- ----------- ------------ -------------
BALANCE - September 30, 1996
(Unaudited) 5,992,349 $ 5,992 $ 12,930,787 $ (8,916,022) $13,307,000 $ (277,414) $ 17,050,343
========= ========= ============= ============= =========== ============= =============
</TABLE>
See notes to consolidated financial statements.
F - 5
<PAGE> 24
CVF CORP. AND SUBSIDIARIES
--------------------------
(FORMERLY WESTERN GROWTH CORPORATION)
-------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
------------------------------------
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------------------- ------------------------------
1996 1995 1995 1994
----------- ------------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income (loss) $ (87,015) $ (2,472,456) $ (1,064,806) $ (3,291,416)
----------- ------------- ------------- -------------
Adjustments to reconcile net income (loss) to net
cash from operating activities:
Depreciation and amortization 155,821 113,967 176,006 96,395
(Income) loss from equity affiliates 712,149 838,555 (881,091) 1,981,812
Gain on sale of investments (3,197,339) - - -
Minority interest in earnings (losses) of subsidiaries - (176,907) (169,515) (212,692)
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable 34,386 (855) (201,536) (32,490)
(Increase) decrease in inventory 97,737 48,372 (170,543) 72,490
(Increase) decrease in prepaid expenses and other (12,827) 53,603 59,346 205,700
(Increase) decrease in other assets (41,086) 3,979 (64,609) (5,632)
Increase (decrease) in accounts payable and accrued expenses 189,913 176,825 785,059 225,307
Increase (decrease) in income taxes payable 950,000 - - -
Increase (decrease) in other current liabilities 150,372 77,135 1,026 (24,479)
------------ ------------- ------------- -------------
(960,874) 1,134,674 (465,857) 2,306,411
------------ ------------- ------------- -------------
CASH PROVIDED (USED) IN OPERATING ACTIVITIES (1,047,889) (1,337,782) (1,530,663) (985,005)
------------ ------------- ------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (69,338) (43,039) (50,998) (34,718)
Investments and advances to equity affiliates, net (462,316) (29,575) (317,304) 98,390
Proceeds from sale of holdings 3,710,745 - - -
Acquisitions, net of cash acquired - (190,957) (190,957) -
------------ ------------- ------------- -------------
CASH PROVIDED (USED) IN INVESTING ACTIVITIES 3,179,091 (263,571) (559,259) 63,672
------------ ------------- ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings (payments) of debt 212,103 (55,317) 62,319 233,830
Borrowings (payments) of debt to related parties 9,031 105,097 1,026 60,148
Issuance of equity securities - 504,000 504,000 997,129
Minority investments in subsidiaries - 292,000 292,000 14,207
------------ ------------- ------------- -------------
CASH PROVIDED (USED) IN FINANCING ACTIVITIES 221,134 845,780 859,345 1,305,314
------------ ------------- ------------- -------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS - (51,293) (33,667) 63,132
------------ ------------- ------------- -------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,352,336 (806,866) (1,264,244) 447,113
CASH AND CASH EQUIVALENTS - beginning of period 445,515 1,709,759 1,709,759 1,262,646
------------ ------------- ------------- -------------
CASH AND CASH EQUIVALENTS - end of period $ 2,797,851 $ 902,893 $ 445,515 $ 1,709,759
============ ============= ============= =============
CASH PAID DURING THE PERIOD FOR:
Interest $ 82,001 $ 66,363 $ 33,390 $ 39,183
============ ============= ============= =============
</TABLE>
See notes to consolidated financial statements
F - 6
<PAGE> 25
CVF CORP.AND SUBSIDIARIES
-------------------------
(FORMERLY WESTERN GROWTH CORPORATION)
-------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
The consolidated balance sheet at September 30, 1996 and the consolidated
statements of operations and the consolidated statements of cash flows for the
nine-month periods ended September 30, 1996 and 1995 are unaudited but include
all adjustments, consisting only of normal, recurring adjustments, which, in
the opinion of management, are necessary to a fair presentation of the
financial position, results of operations and cash flows for the periods then
ended. The results of operations for any interim period are not necessarily
indicative of the results of operations for a full fiscal year.
1. ORGANIZATION AND BUSINESS DESCRIPTION
The Company was incorporated on January 10, 1986, under the laws of
the State of Utah under the name of Sierra Growth Corporation. On December
30, 1993, the Company changed its name to Western Growth Corporation and
its domicile to the State of Nevada.
In September 1995, the Company acquired all of the assets and assumed
all of the liabilities of Canadian Venture Founders Limited Partnership
("CVFLP") in exchange for the issuance of its equity securities to the
partners of CVFLP.
CVFLP was formed under the laws of Ontario, Canada in 1989, to engage
in the business of developing and managing early stage and start-up
companies engaged in the information and environmental technologies areas.
In August 1989, CVFLP completed a private securities offering in which
approximately $14,600,000 was committed from a number of pension funds,
insurance companies and corporate groups. Since 1989, CVFLP has acquired
ownership interests in several privately held Canadian corporations.
In connection with the acquisition of CVFLP the Company changed its
name to CVF Corp.
The Company holds majority ownership positions in the following
companies:
BIOREM TECHNOLOGIES, INC. ("BIOREM") Biorem, a spin-off company from
the University of Waterloo, is an industrial biotech company that is
engaged in the business of applying bioconversion and biotransformation
technology to a variety of industrial applications such as the treatment or
clean-up of organic toxic chemicals in soil or groundwater, the treatment
of industrial waste streams for liquids or air and for use in the food
processing, agriculture and pharmaceutical manufacturing industries. At
December
F - 7
<PAGE> 26
31, 1995, the Company had a 69% ownership interest in Biorem.
OMPHALOS RECOVERY SYSTEMS, INC. ("GEMPRINT") Gemprint is in the
business of providing products and services to the insurance industry, as
well as the consumer and wholesale jewelry markets to enable diamonds and
other precious gems to be uniquely identified non-invasively using a low
power laser imaging system unique to Gemprint. The results are stored in a
data base for later verification and recovery of lost or stolen gems. At
December 31, 1995, the Company had a 70% ownership interest in Gemprint.
SOLARIA RESEARCH ENTERPRISES, LTD. ("SOLARIA") Solaria is the
business of developing, manufacturing and marketing a family of low cost,
high efficiency programmable electronic motor speed control products for
battery-powered vehicles such as material handling equipment (fork lift
trucks, etc.). Solaria supplies both original equipment manufacturers and
the aftermarket with products. At December 31, 1995, the Company had a 51%
ownership interest in Solaria.
CANADIAN VENTURE FOUNDERS LEASING CORPORATION ("LEASING") Leasing
provides funding to various investees of the Company.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Principles of Consolidation - The financial statements include the
accounts of the Company and its majority-owned subsidiaries. All material
intercompany accounts and transactions have been eliminated.
The fiscal year ends of the subsidiaries vary, in most cases from
those of the Company. The consolidated financial statements combine
periods which are within three months of the Company's reporting period for
all the companies, in accordance with Securities and Exchange Commission
rules. Material differences resulting from the combination of different
periods are reconciled and accounted for.
In September 1995, immediately prior to the Asset Purchase Agreement
with the Company, CVFLP transferred substantially all of its debt
investments in subsidiaries and investee companies to Leasing in exchange
for 100% of the common stock of Leasing. The acquisition is accounted for
as a combination of companies under common control, and Leasing is
consolidated with the Company for all periods presented.
The subsidiary companies have various debt and equity securities
outstanding which are convertible into common stock. Any such conversions
would not materially decrease the Company's interest in the net assets of
any subsidiary.
Gemprint has outstanding 4,678,953 Class B voting shares with a stated
value of Cdn $1,250,000 issued to third parties, and 1,871,581 Class C
voting shares with a stated
F - 8
<PAGE> 27
value of Cdn $2,396,913 issued to the Company. Each Class B and C share
is convertible into one share of common stock, and features cumulative
dividends of 10%. All such shares are retractable at the option of the
holders between the period October 23, 1997 and November 1, 1997. Such
shares are included in the determination of the Company's proportionate
ownership interest.
b. STATEMENT OF CASH FLOWS - The Company considers all highly liquid
temporary cash investments, with an original maturity of three months or
less when purchased to be cash equivalents. The effect of exchange rate
changes on cash balances resulting from the translation process is
presented as a separate component of the statement of cash flows.
c. ACCOUNTS RECEIVABLE - Accounts receivable are presented net of
allowance for doubtful accounts. The allowance was $3,650 at December 31,
1995. Amounts charged to expense were immaterial during the years ended
December 31, 1995 and 1994.
d. INVENTORIES - Inventories are stated at the lower of cost or
market using first-in, first-out costing.
e. PROPERTY AND EQUIPMENT - Property and equipment are stated at
cost. Depreciation is calculated using the straight-line and accelerated
methods over the estimated useful lives of the assets, which range from 5
to 10 years.
f. GOODWILL - Goodwill is recorded in connection with the acquisition
of subsidiaries. Goodwill is also imputed in connection with the
acquisition of equity basis investments. All goodwill is being amortized
over a period of 15 years. Amounts amortized in connection with
subsidiaries are charged to amortization expense. Amounts amortized in
connection with equity basis investees are expensed as a reduction in the
carrying value of the investments.
The Company assesses the recoverability of goodwill by determining
whether the amortization of goodwill balance over its remaining life can be
recovered through projected, undiscounted, future cash flows of the related
companies.
g. LOSS PER SHARE - Loss per share is based on the weighted average
number of common shares and dilutive securities outstanding during the
periods, after giving effect to cumulative preferred stock dividends.
h. SECURITIES ISSUED FOR SERVICES - The Company accounts for stock
and options issued for services by reference to the fair market value of
the Company's stock on the date of stock issuance or option grant.
Compensation expense is recorded for the fair market value of the stock
issued, or in the case of options, for the difference between the stock's
fair market value on the date of grant and the option exercise price.
F - 9
<PAGE> 28
In 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123 ("SFAS No. 123"), "Accounting for
Stock Based Compensation." SFAS No. 123 permits companies to choose to
follow the accounting prescribed by SFAS No. 123 for securities issued to
employees, or to continue to follow the accounting treatment prescribed by
Accounting Principles Board Opinion No. 25 ("APB No. 25") along with the
additional disclosure required under SFAS No. 123 if the Company elects to
continue to follow APB No. 25. The Company will adopt SFAS No. 123 for
fiscal 1996, however, the Company has not yet determined the manner in
which SFAS No. 123 will be adopted. As such the Company can not at this
time determine the impact on its financial statements.
i. USE OF ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
j. FAIR VALUE OF FINANCIAL INSTRUMENTS - For its fiscal year ended
December 31, 1996, the Company will adopt Statement of Financial Accounting
Standards No. 107, "Disclosures About Fair Value of Financial Instruments,"
which requires disclosure of fair value information about financial
instruments whether or not recognized in the balance sheet. The Company
does not believe that the adoption of this standard will have a material
impact on its financial statements.
k. INCOME TAXES - The Company accounts for income taxes under
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("SFAS 109"), which requires the use of the liability method.
Under the liability method, a deferred tax asset or liability is determined
based upon the tax effect of the differences between the financial
statement and tax basis of assets and liabilities as measured by the
enacted rates which will be in effect when these differences reverse.
Provision is made for all applicable U.S. and foreign income taxes pursuant
to this standard. Canadian tax credits attributable to research and
development expenditures, which are refundable regardless or whether there
is taxable income, are accounted for as a reduction in research and
development expense.
l. GAINS (LOSSES) ON SUBSIDIARY AND EQUITY METHOD INVESTEE EQUITY
TRANSACTIONS - The Company records as gains or losses the change in its
proportionate interest in the net book value of its holding resulting
from equity transactions by subsidiary companies and equity basis investees
in accordance with Securities and Exchange Commission Staff Accountants'
Bulletin #70.
m. REVERSE SPLIT - In September 1995, in connection with the
acquisition of
F - 10
<PAGE> 29
CVFLP, the Company effected a 1-for-2 reverse split of its common stock.
All share data in these financial statements is restated to reflect this
reverse split.
n. FOREIGN CURRENCY TRANSLATION - The Company's functional currency
is deemed to be the Canadian dollar. The translation adjustment resulting
from the translation of the Company's financial statement into U.S.
currency is recorded as an element of stockholders' equity.
o. MINORITY INTEREST - Minority common equity interests are charged
with their proportionate share of subsidiary losses to the extent of
positive equity-adjusted holdings. Excess losses are deferred, and will be
charged against these interests when applicable future income becomes
available. Outstanding subsidiary preferred securities are presented
together with the minority interest.
p. HOLDINGS - The Company adopted SFAS No. 115, "Accounting for
Certain Investments in Debt and Equity Securities." This SFAS requires,
among other things, that securities designated as available for sale be
revalued at each period end with the unrealized gain or loss, net of tax
effect, recorded as an element of stockholders' equity.
The held to maturity classification includes debt securities that the
Corporation has the positive intent and ability to hold to maturity which
are carried at amortized cost. The available for sale classification
includes debt and equity securities which are carried at fair value.
Unrealized gains or losses on securities available for sale are included as
a separate component of stockholders' equity, net of tax effect. Gains or
losses on sales of securities are recognized by the specific identification
method and are recorded in investment securities gains net.
3. ASSET PURCHASE AGREEMENT
On August 20, 1995, the Company entered into an asset purchase
agreement (the "Asset Purchase Agreement") with CVFLP, under which the
Company agreed to purchase all of the assets and assume all of the
liabilities of CVFLP. Pursuant to the terms of the Asset Purchase
Agreement, the Company issued to CVFLP 4,763,918 Common Shares, 25,000
shares of its Series "A" Preferred Stock (the "Preferred Shares") and
warrants (the "Warrants") entitling CVFLP to purchase approximately 952,784
additional Common Shares. At a Special Stockholders' Meeting held
September 12, 1995, the Company's stockholders approved proposals to: (i)
approve the Asset Purchase Agreement and the issuance of the securities of
the Company to CVFLP; (ii) change the name of the Company from Western
Growth Corporation to CVF Corp.; (iii) effect a 1-for-2 reverse split of
the Common Shares; and (iv) elect certain members as directors of the
Company.
The transaction has been accounted for as a reverse acquisition under
the purchase method for business combinations. Accordingly, the merger of
the two companies is recorded as a recapitalization of CVFLP, with CVFLP
being treated as the continuing entity. Prior to consummating the share
exchange, the Company did not have any significant operations.
The cost of the acquisition was recorded at the value of the Company's
(the acquired company) net tangible assets on the date of the exchange, in
accordance with Securities and Exchange Commission guidelines. On such
date, the Company had assets consisting of $43,651 in cash, offset by
$5,354 of accounts payable. Costs associated with the acquisition,
consisting of professional fees totaling $229,254, were charged against
additional paid in capital.
F - 11
<PAGE> 30
4. STOCKHOLDERS' EQUITY
The Company's authorized capital consists of 50,000,000 Common Shares,
$0.001 par value, and 500,000 Preferred Shares, $0.001 par value.
a. COMMON SHARES - Holders of the Common Shares are entitled to one
vote per share on each matter submitted to vote at any meeting of
shareholders. Common Shares do not carry cumulative voting rights and,
therefore, holders of a majority of the outstanding shares of Common Shares
will be able to elect the entire Board of Directors, and, if they do so,
minority shareholders would not be able to elect any members to the Board
of Directors. The Company's Board of Directors has authority, without the
action by the Company's shareholders, to issue all or any portion of the
authorized but unissued Common Shares, which would reduce the percentage
ownership of the Company of its shareholders and which may dilute the book
value of the Common Shares.
b. PREFERRED STOCK - Preferred Shares may be issued from time to time
in one or more series as may from time to time be determined by the board
of directors. Each series shall be distinctly designated.
The Company currently has outstanding a series of Preferred Stock
designated as Series "A" Preferred Stock. Each share of Series "A"
Preferred Stock has a stated value (the "Stated Value") of the U.S. dollar
equivalent of Cdn$25.00 determined at the date of issuance by reference to
the noon spot rate for conversion of Canadian dollars into U.S. dollars as
published by the National Bank of Canada on the business day immediately
preceding the date of issuance. The holders of Series "A" Preferred Stock
will be entitled to cumulative dividends at the rate of 5% of the Stated
Value plus accrued but unpaid dividends. The dividends will have priority
over any payments of dividends on Common Shared and on all other shares of
preferred stock ranking junior to the Series "A" Preferred Stock. Except
as otherwise required by Nevada law, the holders of Series "A" Preferred
Stock shall not have any voting rights.
The Series "A" Preferred Stock is not convertible into Common Shares
or into any other security of the Company. The Company may, at its option,
redeem all or part of the Series "A" Preferred Stock from the holders
thereof. Additionally, at any time after five years from the date of
issuance, a holder of Series "A" Preferred Stock may require the Company to
redeem any or all of the Series "A" Preferred Stock held by such holder.
The redemption price shall be the Stated Value plus all accrued but unpaid
dividends. In light of the future mandatory redemption feature, the
preferred stock is classified outside of permanent equity.
c. WARRANTS - Pursuant to the terms of the Asset Purchase Agreement,
the Company issued to CVFLP Warrants entitling it to purchase approximately
952,784 additional shares of the Company's Common Shares (approximately
15.9% of the total
F - 12
<PAGE> 31
issued and outstanding Common Shares). Each Warrant entitles the holder to
purchase one Common Share at a price of $3.05 per share. CVFLP has
distributed the Warrants to Canadian Venture Founders Management Limited,
its general partner. Until September 20, 2000, the Warrants may only be
exercised if a former limited partner of CVFLP sells any Common Shares
which were issued to such limited partner in connection with the Asset
Purchase Agreement. In such event, the Warrant holders may purchase one
Common Share for each five Common Shares sold by such limited partner. Any
Warrants not exercised before September 20, 2000, may be exercised by the
holder during the six month period immediately following the end of such
five year period. All shares issuable upon exercise of the Warrants will
be restricted securities as that term is defined in Rule 144 under the 1933
Act.
5. RELATED PARTY TRANSACTIONS
The General Partner of CVFLP had retained its affiliate, Canadian
Venture Founders Corporation ("CVF Corporation"), to provide administrative
and managerial services to CVFLP. CVF Corporation was paid an annual
management fee of 2.75% of the first $30 million of committed capital and
2.50% of original committed capital over $30 million. The management fee
was determined based on capital committed on formation of $20 million.
The amount of management fee included in the Company's statement of
operations was $490,564 for the year ended December 31, 1995 and $503,578
for the year ended December 31, 1994. This arrangement terminated with the
Asset Purchase Agreement in September 1995.
6. EXPORT SALES
F - 13
<PAGE> 32
The Company, to date, has conducted substantially all its business in
Canada and the U.S. Export sales, primarily to the U.S., amounted to
approximately $454,000 for the year ended December 31, 1995 and $191,000
for the year ended December 31, 1994.
7. INCOME TAXES
The Company accounts for income taxes under Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109").
SFAS 109 requires the recognition of deferred tax assets and liabilities
for both the expected impact of differences between the financial statement
and tax basis of assets and
F - 14
<PAGE> 33
liabilities, and for the expected future tax benefit to be derived from tax
loss and tax credit carryforwards. SFAS 109 additionally requires the
establishment of a valuation allowance to reflect the likelihood of the
realization of deferred tax assets. As of December 31, 1995, the Company
had net deferred tax assets of approximately $36,000, primarily related to
net operating loss carryforwards. The Company has recorded a valuation
allowance for the full amount of such net deferred tax assets and, as a
result, the Company has not recorded any liability or asset for deferred
taxes as of December 31, 1995.
The net operating loss carryforward amounts to approximately $90,000,
and consists exclusively of losses incurred by CVF Corp. subsequent to the
combination with CVFLP in September 1995. Prior losses of CVFLP, losses
incurred by Canadian subsidiaries (which are not consolidated with the
Company for tax purposes) and losses attributable to equity basis
investments are permanent differences and are not available to offset
income of the Company. The net operating loss carryforward expires in the
year 2010.
The benefit for income taxes differs from the amount computed by
applying the statutory income tax rate to net loss before provision for
income taxes as follows:
<TABLE>
<CAPTION>
YEAR ENDED
---------------------------------------
DECEMBER 31, DECEMBER 31,
1995 1994
---------------------------------------
<S> <C> <C>
Income tax benefit computed at
statutory rate $ 373,000 $ 1,152,000
Effect of permanent differences (341,000) (1,152,000)
Tax benefit of net operating
loss not recognized (32,000) -
---------------------------------------
Provision for income taxes
reported $ - $ -
=======================================
</TABLE>
F - 15
<PAGE> 34
8. HOLDINGS
Holdings consisted of the following at December 31, 1995:
<TABLE>
<CAPTION>
NOTES
PERCENT EQUITY - AND
OWNERSHIP ADJUSTED COST ADVANCES(1) RESERVE TOTAL
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ecoval 33% $ (2,170,518) $ 2,602,773 $ (127,412) $ 304,840
Dantec 38% 310,819 136,474 - 447,293
Certicom 17% 1,236,308 967,562 (222,476) 1,981,394
Turbotak - - 730,000 (365,000) 365,000
Other - - 80,013 - 80,013
--------------------------------------------------------------------
Total $ (623,391) $ 4,516,822 $ (714,891) $ 3,178,540
====================================================================
</TABLE>
(1) Includes $682,799 of Certicom preferred stock.
Holdings in which the Company holds a 20-50% ownership position are
accounted for under the equity method of accounting as required by
Accounting Principles Board Opinion No. 18. Holdings of less than 20%
are accounted for at cost. The Company records losses to the extent of any
positive equity basis plus loans and advances.
The Company's holdings in investee debt are classified as
"held-to-maturity" securities (as defined in Statement of Financial
Accounting Standard No. 115), and as such are carried at amortized cost,
with provision made for what is deemed a permanent decline in value.
In December 1995, Certicom completed an initial public offering,
pursuant to which the Company's ownership percentage fell below 20%.
Accordingly, the Company discontinued the use of the equity method.
Prior to December 1994, the Company held positions in Ecoval
Technologies, Inc., and a related predecessor entity, Terra Care
Corporation (which was subsequently dissolved). In October 1994, Ecoval
Technologies was acquired by Ecoval , Inc. Upon the acquisition, the
Company received a 33% interest in Ecoval, Inc. and received a debenture
equal to all previous amounts invested in Ecoval Technologies and Terra
Care.
F - 16
<PAGE> 35
The aggregate cost of positions held in associated companies accounted for
under the equity method of accounting was $4,180,658 at December 31, 1995.
The following table gives certain summarized financial information related
to the Company's equity in investees:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
---------------------------------
1995 1994
---------------------------------
<S> <C> <C>
Net sales $ 1,090,773 $ 1,669,381
Gross profit on sales 237,524 855,191
Net loss (1,644,736) (1,250,356)
---------------------------------
CVF Corp.'s share of net loss $ (563,113) $ (562,242)
---------------------------------
Current assets $ 1,820,937 $ 1,461,522
Noncurrent assets 8,232,657 1,897,785
---------------------------------
Total assets $ 10,053,594 $ 3,359,307
=================================
Current liabilities $ 1,904,558 $ 1,428,236
Noncurrent liabilities 9,798,172 2,812,905
Equity (deficit) (1,649,136) (881,834)
---------------------------------
Total liabilities and equity $ 10,053,594 $ 3,359,307
=================================
CVF Corp.'s share of
accumulated deficit $ (1,030,388) $ (1,107,642)
=================================
</TABLE>
The investee companies have various debt and equity securities outstanding
which are convertible into common stock. Any such conversions would not
materially decrease the Company's interest in the net assets of any investee.
F-17
<PAGE> 36
9. GOODWILL
Goodwill consisted of the following at December 31, 1995:
<TABLE>
<CAPTION>
ACCUMULATED
ORIGINAL BASIS AMORTIZATION NET
----------------------------------------------------
<S> <C> <C> <C>
Biorem $ 188,751 $ (20,639) $ 168,112
Gemprint 1,458,993 (113,477) 1,345,516
Solaria 360,183 (101,806) 258,377
----------------------------------------------------
Total $ 2,007,927 $ (235,922) $ 1,772,005
====================================================
</TABLE>
Additionally, goodwill attributable to equity basis holdings which
is part of the carrying cost of such investments consisted of the
following:
<TABLE>
<CAPTION>
ACCUMULATED
ORIGINAL BASIS AMORTIZATION NET
----------------------------------------------------
<S> <C> <C> <C>
Ecoval $ 1,502,478 $ (100,166) $ 1,402,312
Dantec 639,898 (220,719) 419,179
----------------------------------------------------
Total $ 2,142,376 $ (320,885) $ 1,821,491
====================================================
</TABLE>
Amortization of goodwill in subsidiaries totaled $132,027 and $48,938
for the years ended December 31, 1995 and 1994. Amortization of goodwill
in equity basis investees totaled $151,174 and $127,502 for the years ended
December 31, 1995 and 1994.
F-18
<PAGE> 37
10. LONG-TERM DEBT
Long-term debt consisted of the following at December 31, 1995:
<TABLE>
<S> <C>
Bank line of credit, collateralized by a
second position general security
agreement, bearing interest at prime plus
three percent. $ 156,962
Non-convertible debenture bearing
interest at 13.5%, repayable in February
2000. 136,875
Other 21,297
----------
315,134
Less: Current portion 163,728
----------
$ 151,406
==========
</TABLE>
11. SUBSEQUENT EVENTS
During the period April through August 1996, the Company sold a total
of 316,667 shares of Certicom on the open market, realizing net proceeds of
$3,710,745.
F-19
<PAGE> 38
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant certifies that it meets all of the requirements for filing
on Form 10-SB and has duly caused this registration statement amendment to be
signed on its behalf by the undersigned, thereunto duly authorized.
CVF CORP.
By: /s/Jeffrey Dreben
----------------------------------
Name: Jeffrey Dreben
Title: President and Chief Executive Officer
Date: February 26, 1997
<PAGE> 39
Exhibit Index
<TABLE>
<S> <C>
Exhibit No.
----------- --------------------------------------------
2.1* Articles of Incorporation
2.2* By-Laws of CVF Corp.
3.1* Form of Common Stock Certificate
3.2* Form of series A Preferred Stock Certificate
3.3* Form of Warrant Certificate
6.1* Asset Purchase Agreement dated as of August 20, 1995
6.2* Stock Pledge Agreement dated as of September 20, 1995
6.3* Service Agreement dated as of February 10, 1997
10 Consent of Feldman Radin & Co., P.C.
27* Financial Data Schedule
</TABLE>
*Previously filed
<PAGE> 1
EXHIBIT 10
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form 10-SB/A
of our report dated December 11, 1996 related to the consolidated financial
statements of CVF Corp. and Subsidiaries (formerly Western Growth Corporation)
for the years ended December 31, 1995 and 1994.
/s/ Feldman Radin & Co., P.C.
-----------------------------
Feldman Radin & Co., P.C.
Certified Public Accountants
New York, New York
February 25, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 2,797,851
<SECURITIES> 0
<RECEIVABLES> 306,738
<ALLOWANCES> (3,272)
<INVENTORY> 123,855
<CURRENT-ASSETS> 3,325,119
<PP&E> 415,221
<DEPRECIATION> (229,820)
<TOTAL-ASSETS> 28,178,942
<CURRENT-LIABILITIES> 3,542,640
<BONDS> 392,709
<COMMON> 5,992
456,250
0
<OTHER-SE> 17,044,351
<TOTAL-LIABILITY-AND-EQUITY> 28,178,942
<SALES> 1,182,341
<TOTAL-REVENUES> 1,182,341
<CGS> 810,177
<TOTAL-COSTS> 810,177
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 68,078
<INCOME-PRETAX> 862,985
<INCOME-TAX> 950,000
<INCOME-CONTINUING> (87,015)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (87,015)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> 0
</TABLE>
