SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act
February 4, 2000
Date of Report
(Date of Earliest Event Reported)
FOODVISION.COM, INC.
(Exact Name of Registrant as Specified in its Charter)
2152 NW Parkway, Suite K
Marietta, Georgia 30067
(Address of principal executive offices)
770/937-0960
Registrant's telephone number
ECHELON ACQUISITION CORPORATION
1504 R Street, N.W.
Washington, D.C. 20009
Former name and former address
Delaware 0-28521 58-2466626
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
(a) Pursuant to an Agreement and Plan of Reorganization
(the "Acquisition Agreement") Foodvision.com,
Inc. ("Foodvision" or the "Company"), a Delaware corporation,
has acquired all the outstanding shares of common stock of Echelon
Acquisition Corporation ("Echelon"), a Delaware corporation, from
the shareholders thereof in an exchange for an aggregate of
1,000,000 shares of common stock of Foodvision (the "Acquisition").
As a result, Echelon has become a wholly-owned subsidiary of Foodvision.
The Acquisition was approved by the unanimous consent of the
Board of Directors of Foodvision on February 4, 2000. The
Acquisition was effective February 4, 2000. The Acquisition is
intended to qualify as a reorganization within the meaning of
Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended.
Foodvision had 13,109,984 shares of common stock issued and
outstanding prior to the Acquisition and 14,109,984 shares issued
and outstanding following the Acquisition.
Upon effectiveness of the Acquisition, pursuant to Rule
12g-3(a) of the General Rules and Regulations of the Securities and
Exchange Commission, Foodvision elected to become the successor
issuer to Echelon for reporting purposes under the Securities
Exchange Act of 1934 and elects to report under the Act effective
February 4, 2000.
A copy of the Acquisition Agreement is filed as an exhibit
to this Form 8-K and is incorporated in its entirety herein. The
foregoing description is modified by such reference.
(b) The following table contains information regarding the
shareholdings of Foodvision's current directors and executive
officers and those persons or entities who beneficially own more
than 5% of its common stock (giving effect to the exercise of the
warrants held by each such person or entity):
Number of shares of Percent of
Common Stock Beneficially Common Stock
Name Owned (1) Beneficially Owned (2)
Paul R. Smith 9,491,050 (3) 46.3%
Chairman, President and
Chief Executive Officer
2152 NW Parkway, Suite K
Marietta, Georgia 30067
Raj Kalra 9,491,050 (4) 46.3%
Director, Chief Operating
Officer, Chief Information Officer
2152 NW Parkway, Suite K
Marietta, GA 30067
Dr. Charles Sheehan 125,000 (5) *
Director
2152 NW Parkway, Suite K
Marietta, GA 30067
All executive officers and 19,107,100 (6) 71%
directors of the company
as a group (3 persons)
* Less than 1%
1. Includes options and warrants which are exercisable within
60 days of the date hereof.
2. Based upon 14,109,984 shares outstanding following the
Acquisition.
3. Mr. Smith's ownership includes 91,050 shares of common stock
which he acquired pursuant to the Company's acquisition of
Investco on July 14, 1998, and 3,000,000 shares of common
stock which were issued to him in January 1999 pursuant to
an agreement which provides that such shares are forfeitable
in the event Mr. Smith voluntarily terminates his employment
with the Company or is terminated for cause within two years
of the date of the agreement. In addition, Mr. Smith's
beneficial ownership includes 6,400,000 shares of common
stock which Mr. Smith presently has the right to acquire
pursuant to incentive warrants issued to him in fiscal 1999.
4. Mr. Kalra's ownership includes 91,050 shares of common stock
which he acquired pursuant to the Company's acquisition of
Investco on July 14, 1998, and 3,000,000 shares of common
stock which were issued to him in January 1999 pursuant to
an agreement which provides that such shares are forfeitable
in the event Mr. Kalra voluntarily terminates his employment
with the Company or is terminated for cause within two years
of the date of the agreement. In addition, Mr. Kalra's
beneficial ownership includes 6,400,000 shares of common
stock which Mr. Kalra presently has the right to acquire
pursuant to incentive warrants issued to him in fiscal 1999.
5. Dr. Sheehan's beneficial ownership includes 125,000 shares
of common stock which Mr. Sheehan presently has the right to
acquire pursuant to a warrant that has not been exercised.
6. Includes the 12,800,000 shares of common stock underlying
warrants currently exercisable owned by Messrs. Smith and
Kalra discussed in footnotes 3 and 4 above.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
(a) The consideration exchanged pursuant to the Acquisition
Agreement was negotiated between Echelon and Foodvision. In
evaluating the Acquisition, Echelon used criteria such as the value
of assets of Foodvision, Foodvision's ability to manage and expand
its restaurant business, its arrangements and agreements for
interlinking of Internet information and Web sites, Foodvision's
ability to compete in the market place, Foodvision's current and
anticipated business operations, and Foodvision management's
experience and business plan. In evaluating Echelon, Foodvision
placed a primary emphasis on Echelon's status as a reporting company
under Section 12(g) of the Securities Exchange Act of 1934, as
amended, and Echelon's facilitation of Foodvision's becoming a
reporting company under the Act.
(b) The Company intends to continue to operate its existing
restaurants, to sell its restaurant division, to concentrate on
development of its Internet division and to operate and further
develop its e-commerce Web site, www.foodvision.com.
BUSINESS
COMPANY
The Company was formed on April 4, 1989 under the laws of
the State of Delaware as Heavenly Slender Sweets, Inc. for the
primary purpose of distributing a low calorie, low fat, salt free,
soft ice cream substitute frozen dessert product line in the United
States and Canada. No revenues were earned from the very limited
operations and the Company accumulated a net loss of $90,148 for
fiscal year 1992. On March 2, 1994, the Company changed its name to
Heavenly Slender Foods, Inc. On June 14, 1994 the Company changed
its name to Pacific Pharmaceuticals, Inc. On June 23, 1994 the
Company changed its name to Sunmark Industries I, Inc. On May 12,
1998 the Company changed its name to Mark I Industries, Inc.
On July 14, 1998, the Company acquired all of the issued and
outstanding common stock of Investco Corporation ("Investco"), a
Georgia corporation, in a reverse acquisition for 182,100 shares of
Common Stock (all share totals are after giving effect to a 1 for
100 reverse stock split in January 1999). In June 1999, the Company
changed its name to Foodvision.com, Inc.
At the time the Company acquired Investco, Investco's
operations consisted of
(i) three Kenny Rogers Roasters ("Roasters") franchised
restaurants in the Atlanta metropolitan area which Investco had
acquired on December 7, 1997 by a foreclosure of security interests
on the assets of the restaurants;
(ii) a restaurant in Renfrew, Ontario, Canada, known as the
Hillbilly Shack Saloon;
(iii) ownership of all of the issued and outstanding common
stock of Grandma Lee's USA Northpoint, Inc. ("GLUN") which operates
a franchised Grandma Lee's restaurant at the AT&T Headquarters
Building in Alpharetta, Georgia and is the franchisor of a Grandma
Lee's restaurant near downtown Atlanta, Georgia; and
(iv) ownership of the exclusive franchise rights for Grandma
Lee's restaurants in the Atlanta metro area and Eastern Ontario and
Quebec, Canada.
Subsequent to the acquisition of Investco, the Company began
developing a proprietary restaurant concept known as the Dirty Bird
Cafe. The company opened its first Dirty Bird Cafe in Powder
Springs, Georgia in June 1999, and its second Dirty Bird Cafe in
Marietta, Georgia in September 1999. In addition, the Company is
planning to convert the three former Roasters restaurants to the
Dirty Bird Cafe format.
The Company has three wholly-owned subsidiaries--Investco
Corporation, Foodvision, Inc. and Dirty Bird Cafe, Inc. each of
which subsidiaries, in turn, has several wholly-owned subsidiaries.
The Company has organized itself into two divisions -- an
Internet division and a food division. The Internet division
operates an e-commerce Web site known as www.foodvision.com through
Foodvision, Inc. The restaurant/food division operates through Dirty
Bird Cafe, Inc. Dirty Bird Cafe, Inc. owns GLUN and separate
subsidiaries which own and operate the two existing Dirty Bird
Cafes, the Hillbilly Shack Saloon, and the three former Kenny Rogers
Roasters restaurants. The Company intends to devote its capital to
the continued development of the Dirty Bird Cafe format and the
continued development of its Internet division. Investco does not
currently have any operations.
CURRENT OPERATIONS
RESTAURANT DIVISION
The Company currently operates two Dirty Bird Cafes, one
Grandma Lee's restaurant, one Hillbilly Shack Saloon, and two former
Roasters. In addition, the Company has terminated operations at one
former Roasters while it is being converted to the Dirty Bird Cafe
concept. The Company is the franchisor of one Grandma Lee's
restaurant. All of the Company's restaurant operations are located
in the Atlanta metro area, except for the Hillbilly Shack Saloon,
which is located in Renfrew, Ontario, Canada.
Dirty Bird Cafe
In late 1998, the Company began developing a proprietary
restaurant concept to replace its existing Roasters restaurants and
to use as a basis for additional restaurants and ultimately for
franchising to third parties. The Company's efforts resulted in the
development of the Dirty Bird Cafe, a casual sit-down restaurant and
bar. The phrase "Dirty Bird" is an unofficial name for Atlanta's
National Football League franchise, the Atlanta Falcons. The name
was selected because the phrase carries instant name recognition in
the Atlanta metropolitan area. In addition, a preliminary search of
trademark registrations indicated that no other person had obtained
trademark protection for use of the "Dirty Bird" name in an area
which would conflict with the Company's use of the name for a casual
dining restaurant.
The Company opened its first Dirty Bird Cafe in the June
1999 at 1750 Powder Springs Rd., Powder Springs, Georgia, and its
second location in September 1999 at 736 Johnson Ferry Road,
Marietta, Georgia. Dirty Bird Cafes are designed to be installed in
preexisting restaurant space so that the cost to open a Dirty Bird
Cafe is less than the cost to open other restaurant formats. During
1999, the Company has opened two Dirty Bird Cafes, and is in the
process of converting one of its former Roasters restaurants into a
Dirty Bird Cafe. Based on the Company experience to date, the
average cost of opening a Dirty Bird Cafe is approximately $100,000
to $300,000 per location.
Grandma Lee's
The Company owns and operates one Grandma Lee's restaurant
as a franchisee in the AT&T Headquarters Building, 400 North Point
Parkway, Building 300, Alpharetta, Georgia. In addition, the Company
also is the franchisor of a second Grandma Lee's Restaurant located
at 1350 Peachtree Street, Midtown Plaza, Atlanta, Georgia.
The Company owns the area franchise rights for the Grandma
Lee's concept in the areas of Metropolitan Atlanta, Eastern Ontario,
Canada, and Quebec, Canada. In the case of the franchise rights in
Metropolitan Atlanta, the Company owns such rights in perpetuity,
and is not obligated to pay any franchise fees for new locations, or
any royalty or franchise fees from ongoing operations. The Company
is not obligated to open any new restaurants within the designated
territory in order to retain such rights.
The Company is the subfranchisor of a
Grandma Lee's restaurant in Atlanta, Georgia. Under the franchise
agreement, the subfranchisee pays the Company a franchise fee of 4%
of gross sales, none of which is shared with the franchisor. The
subfranchise agreement carries a term of 10 years, which term
expires December 31, 2005. While the Grandma Lee's restaurant
operated by the Company and the Grandma Lee's restaurant operated by
a franchisee of the Company are both profitable, the Company has no
current plans to open any additional Grandma Lee's restaurants. In
addition, because the Grandma Lee's restaurant operated by the
Company is currently profitable, the Company has no plans to convert
the existing Grandma Lee's locations to the Dirty Bird Cafe format.
Kenny Rogers Roasters
At the time Investco acquired the Roasters restaurants in
1997, the restaurants were in financial distress, partly as a result
of financial problems of the Roasters franchisor and partly due to
management neglect of the prior owner of the restaurants. In 1998,
the franchisor for the Roasters filed a voluntary petition under
Chapter 11 of the Bankruptcy Code, and in 1999 its assets, including
all rights to the Roasters name and concept, were sold to another
company. Because of the lack of support from the franchisor and
costs that would have been required to continue as a Roasters
franchisor, the Company elected not to continue as a Roasters
franchisor with the new owner of the franchise rights. Because the
Company did not elect to remain a Roasters franchisee, the Company
has been required to remove any signage from the former Roasters
locations that identify the restaurants as a Kenny Rogers Roasters
restaurant.
The Company currently operates two former Roasters
restaurants, one of which is located at 1325 Powers Ferry Road,
Marietta, Georgia, and the other of which is located at 1100
Northpoint Circle, Alpharetta, Georgia. The Company has closed its
former Roasters location at 2916 N. Druid Hills Road, Atlanta,
Georgia, and is in the process of converting that location to the
Dirty Bird Cafe concept. The Company expects to convert the two
remaining former Roasters restaurants by September 2000, at a total
cost of about $300,000.
Hillbilly Shack Saloon
The Hillbilly Shack was opened in Renfrew, Ontario, Canada
in 1997. The restaurant features traditional fare served in a
distinctive, sports-oriented atmosphere reminiscent of a sports
arena/stadium. Full bar service is also provided and alcoholic
beverage sales accounted for approximately 50% of sales in 1998.
The restaurant has 20 television sets placed through out the
restaurant with a big screen TV in the common bar and restaurant
area.
GOVERNMENTAL REGULATION
Each restaurant is subject to
licensing and regulation by a number of governmental authorities,
which include alcoholic beverage control and health, safety and fire
agencies in the state, county and municipality in which the
restaurant is located. Difficulties or failures in obtaining the
required licenses or approvals could delay or prevent the opening of
a new restaurant in a particular area. Alcoholic beverage control
regulations require restaurants to apply to a state authority and,
in certain locations, county or municipal authorities for a license
or permit to sell alcoholic beverages on the premises and to provide
service for extended hours and on Sundays. Some counties prohibit
the sale of alcoholic beverages on Sundays. Typically, licenses or
permits must be renewed annually and may be revoked or suspended for
cause at any time. Alcoholic beverage control regulations relate to
numerous aspects of a restaurant's operations, including minimum age
of patrons and employees, hours of operation, advertising, wholesale
purchasing, inventory control and handling, storage and dispensing
of alcoholic beverages.
The Company may be subject to "dram-shop" statutes that
generally provide a person injured by an intoxicated patron the
right to recover damages from an establishment that wrongfully
served alcoholic beverages to the intoxicated person. The Company
carries liquor liability coverage as part of its existing
comprehensive general liability insurance.
INTERNET DIVISION
In April 1999, the Company entered the Internet business by
initiating the development of a dedicated vertical food portal
devoted to the food and beverage industry. The food portal became
operational on November 1, 1999. The Web site is divided into three
sections: Business-to-Consumer, Business-to-Business, and
Agri-Business.
BUSINESS MODEL
The Company aims to create a comprehensive "portal" for
food-related Internet information and commerce. The Company believes
that it can economically create a Web site containing current and
relevant content on all food-related issues through co-branding
arrangements. The Web site will attempt to derive revenue from advertisements,
sponsorships, and e-commerce generated through the Web site.
BUSINESS TO CONSUMERS
For consumers, the Web site offers current news on food and
beverage issues, featured daily recipes that include important
health and nutrition information, wine recommendations, and a recipe
calculator to adjust recipe ingredients for fewer or more servings.
Consumers are also able to conduct a recipe search from thousands of
recipes, specifying a specific ingredient, a specific category
(American, Chinese, Italian, etc.) or by health restriction such as
vegetarian or low cholesterol.
The Web site also features two online help sections. For
questions concerning food and cooking, the Web site offers "Ask the
Chef". This service allows consumers to submit a question and
receive an e-mail response within 48 hours from Chef Mark Coulton
Pierce. For a question concerning the proper wine to serve with
specific food, consumers can submit questions to Sommelier Phillip
Silverstone of Restaurant Report.com in the "Ask a Wine Expert"
section and receive an email response within 48 hours.
On August 25, 1999, the Company entered into a three-year
non-exclusive license agreement with Culinary Cafe, whereby the
Company could display and use Culinary Cafe's proprietary database
of financial, pictorial, and textural information pertinent to the
food business. The Company will pay Culinary Cafe a monthly fee of
$2,000 during the term of the agreement. The Company and Culinary
Cafe will equally divide the net advertising revenue generated.
On September 1, 1999, the Company entered into a three-year
license and co-branding agreement with CNN to establish a co-branded
Web site accessible via hyperlinks from the Foodvision portal. The
Company will be the exclusive recipe and special events provider for
CNN Food Central and in return CNN provides the Foodvision portal
with food related news. The contract requires the Company to pay a
total of $3,600,000 over three years.
As of November 1999, the Company has paid a total of $
225,000, with the next payment of $225,000 due February 2000. In
addition, the Company will receive 500,000 banner impressions per month
and rate discounts on CNN interactive advertising.
On October 29, 1999 the Company entered into an agreement
with Dinecore, Inc. to develop and license an Affiliate Restaurant
Guide. The Company and Dinecore, Inc. will equally divide net
advertising revenue generated by the guide during the agreement's 12
month term.
BUSINESS TO BUSINESS
For food industry professionals, the Web site currently
offers several services designed to keep the professional updated
and current on food industry trends and business opportunities. The
Web site contains a "Chef's Corner" that allows members to find out
what other chefs are doing and to keep up with the latest industry
trends and information.
On October 5, 1999, the Company entered into a license and
co-branding agreement with The Restaurant Report, Inc., whereby the
parties will establish a co-branded Web site accessible via
hyperlink from the Foodvision portal. The Company agreed to pay The
Restaurant Report $3,000 per month during the first year, $4,000 per
month during the second year, and $5,000 per month during the third
year. In addition The Restaurant Report is entitled to receive
30,000 shares of restricted common stock of the Company. The Company
will retain 100% of the advertising revenue generated by the
co-branded Web site.
The Company intends to develop a Design-A-Restaurant concept
with features that allow members to virtually "build" their own
restaurant from the ground up. The program allows members to choose
from a variety of restaurant furniture and fixtures to decorate
their own virtual restaurant. When completed, members will be able
to click on a select item and purchase the exact item from
pre-selected vendors. The Company anticipates that it will receive a
percentage of the furniture and fixture sales generated from the
Design-A-Restaurant feature.
AGRI-BUSINESS
A section of the Internet portal is dedicated to the
agricultural side of the food business. Producers will be able to
use the Web site to access important information for their business
such as current news, important innovations and upcoming events.
They will also be able to purchase a wide range of machinery, seed
and products to fulfill their specific agri-business needs.
The Company entered into a non-exclusive license and
co-branding agreement with eHarvest.com, Inc. whereby the parties
will establish a co-branded Web site accessible via hyperlink from
the Foodvision portal. The contract calls for the Company to provide
eHarvest.com, Inc. with 30,000 shares of restricted common stock of
the Company. The Company will retain 100% of the advertising revenue
generated by the co-branded Web site.
BUSINESS PLAN
The Company's business strategy incorporates the following
key elements:
* Build Company brand awareness and network traffic by using
cross-media exposure--television, radio and print
media--through relationships with established food
professionals, and through television, radio and newspaper
advertising;
* Cultivate multiple revenue streams of sponsorship and
advertising fees and e-commerce revenues from its Internet
Web site;
* Attract a growing base of customers to its Internet Web site
and provide a superior shopping experience by offering
quality lines of grocery items and food industry products
and useful links to informative food-related content on
affiliates' Web sites;
* Increase users' return visits to its network through
interactive features;
* Expand international presence in order to establish its
Internet Web site as a global brand;
* Provide quality customer service and rapid product delivery
through fulfillment facilities; and
* Pursue additional complementary relationships.
The Company plans to continue to employ a virtual warehouse
model based on strategic relationships with high quality product
suppliers. Through these relationships, the Company intends to
obtain exclusive online access to high quality products. In return,
the Company intends to provide suppliers with a branding opportunity
and increased sales through an expanded customer base. The Company
believes that these relationships will help ensure product supply,
minimize out of stock issues, and reduce the likelihood that
suppliers will switch to other online providers.
No assurance can be given that the Company will be able to
effect any aspects of its business plan or to maintain the
operations that it has currently established. The Company is
currently operating at a loss and will need additional
capital--either through raising capital or through operations--to
meet its business goals. There is no assurance that the Company can
reverse its operating losses or that it can raise additional capital
that will allow it to expand its planned Internet operations.
MARKETING AND DISTRIBUTION
The Company's partnership program with other Web sites plays
a key role in driving traffic to its Foodvision.com Web site. The
Company has established key partnerships that it divides into four
categories as follows:
1. Large Content or Shopping Web Sites. The Company intends to
create partnerships with content and commerce companies.
2. Co-Branded E-Commerce. The Company has four co-branded
e-commerce agreements to date. The Company estimates that this
number will grow in the year 2000 as a result of the Company's
marketing programs on the Web and the identification and attainment
of new co-branded e-commerce Web sites.
3. Miscellaneous Partners. The Company intends to establish other
partnerships that help drive traffic and sales with various on-line
businesses.
4. Print Media Partnerships. The Company intends to establish
co-promotional relationships with off-line media partners. This will
represent an immediate marketing opportunity for Foodvision.com
because these publications can provide Foodvision.com with
significant additional advertising exposure in exchange for the
Company listing them on the Foodvision.com Web site.
EMPLOYEES
As of November 22, 1999, the Company employed four people
full time in the Internet division. As of December 6, 1999, the
Company's food division employed approximately 100 persons. Of those
employees, approximately 15 held managerial positions, and the
remainder were engaged in the operation of the restaurants.
TRADEMARKS AND LICENSES
The Company has registered the name "Dirty Bird Cafe" with
the United States Patent and Trademark Office. The Company believes
that its right to the name "Dirty Bird Cafe" is an integral and
important factor in establishing the identity of the Dirty Bird
concept. The Company applied for trademark protection for
"Foodvision.com" which registration is pending. In addition, the
Company intends to take steps to ensure that applicable copyright
laws protect its Web pages and software, but to date has not filed
for copyright protection for any of its Web pages or software.
PROPERTY
The Company owns one building located at 1100 NorthPoint
Drive, Alpharetta, Georgia. There is no mortgage on the building;
however, the building is subject to a long-term land lease which
expires in the year 2008. This building is the location of a former
Roasters that the Company intends to convert to a Dirty Bird Cafe by
September 2000. In addition to the above, the Company leases eight
pieces of property for restaurant use.
LEGAL PROCEEDINGS
Royal Food Services, Inc., vs. Restaurant North Atlanta,
Inc., Superior Court of DeKalb County Georgia. The plaintiff sued
the Restaurant North Atlanta, Inc., a second tier subsidiary of the
Company, to recover amounts due for produce supplied on open account
from June 10, 1998 to October 9, 1998. The parties resolved this
dispute by entering into a settlement agreement dated July 14, 1999.
In 1999, the Company ceased operations at its Memorial Drive
location due to continued operational losses at that location. The
landlord for the location holds a judgment against the subsidiary
that occupied the premises, but the subsidiary does not have any
material assets. Investco is the original lessee under the lease,
and therefore is liable for any deficiency thereunder. However, the
landlord has not sued Investco. The Company is not able to estimate
the amount of any potential liability of Investco.
The Company has operated certain restaurants using the
"Kenny Rogers Roasters" name and related trade dress. The Company
did not have an agreement to use the mark and did not pay royalties
for its use. The Company may be liable for using the mark. The
Company received a final demand letter dated October 14, 1999,
threatening legal action if the Company did not immediately
de-identify its restaurants and discontinue use of any marks, system
or trade dress belonging to NF Roasters Corporation.
DESCRIPTION OF SECURITIES
The authorized capital stock of the Company consists of
50,000,000 shares of Common Stock, $0.001 par value, of which
14,109,984 shares are currently issued and outstanding. In
addition, the Company is authorized to issue 1,000,000 shares of
nonvoting Preferred Stock, par value $0.10 per share, of which none
are outstanding.
MARKET FOR THE COMPANY'S SECURITIES
The common stock of Foodvision is traded in the
over-the-counter or OTC market and quoted through the OTC Bulletin
Board under the symbol "FVSN." The market for the common stock is
characterized generally by low volume and broad price and volume
volatility. Foodvision cannot give any assurance that a stable
trading market will develop for its stock or that an active trading
market will be sustained. Moreover, the trading price of
Foodvision's common stock could be subject to wide fluctuations due
to such factors as quarterly variations in operating results,
competition, announcements of new products by Foodvision or its
competitors, product enhancements by Foodvision or its competitors,
regulatory changes, differences in actual results from those
expected by investors and analysts, changes in financial estimates
by securities analysts, and other events or factors.
The Company has been a non-reporting publicly traded company
with certain of its securities exempt from registration under the
Securities Act of 1933 pursuant to Rule 504 of Regulation D of the
General Rules and Regulations of the Securities and Exchange
Commission. The Nasdaq Stock Market has
implemented a change in its rules requiring all companies trading
securities on the NASD OTC Bulletin Board to become reporting
companies under the Securities Exchange Act of 1934. Foodvision
acquired all the outstanding shares of Echelon to
become successor issuer to it pursuant to Rule 12g-3 in order to
comply with the Eligibility Rule for the OTC Bulletin Board.
The following table represents the recent trading history of the
Company common stock:
High Low Volume
July 9, 1999 0.687 0.437 53,600
August 27, 1999 0.450 0.375 128,700
October 1, 1999 0.562 0.375 200,600
November 26, 1999 0.687 0.531 596,200
December 31, 1999 0.593 0.468 635,200
February 3, 2000 0.625 0.375 561,100
MANAGEMENT
Name Age Position
Paul R. Smith 52 Chairman, President,
Chief Executive Officer
Raj Kalra 36 Director, Chief Operating
Officer, Chief Internet
Officer
Dr. Charles Sheehan 50 Director
George J. Smith 52 Financial Controller, Secretary
All directors hold office until the next annual meeting of
shareholders or until their successors are duly elected and
qualified. Officers serve at the pleasure of the board of
directors. Set forth below is a summary description of the
business experience of each director and officer of the Company.
PAUL R. SMITH serves as a director of the Company and is its
President and Chief Executive Officer. Mr. Smith has a business
degree from the Richard Ivey School of Business Administration, a
Harvard affiliate. Mr. Smith has extensive corporate business
experience in the hotel and resort industry. From 1988 to present,
Mr. Smith has been the Owner/President PRS Hospitality, Inc., a
management firm which specializes in tourism and hospitality
consulting. PRS Hospitality provided the services of Mr. Smith to
Grandma Lee's USA, Inc. from November 1993 to September 1995. During
this period, Mr. Smith developed and implemented a strategic plan
for Grandma Lee's International, a 100-unit bakery/restaurant chain
in Canada, to finance and franchise its 20-year-old concept into the
US market. PRS Hospitality, Inc., also provided development and
marketing services to international clients in Japan, Taiwan, South
Korea, Singapore, Thailand, Malaysia, Australia, New Zealand, Great
Britain, Germany, France, Canada and the United States. From 1980 to
1987, Mr. Smith served as President and Chief Operating Officer of
York Hannover Amusements, Ltd. Mr. Smith also acted as Co-Chairman
of York Hannover Hotels, Ltd., a chain of 12 hotel properties
consisting of Skyline and Sheraton brands. Mr. Smith is not related
to George Smith, the Company's Financial Controller.
RAJ KALRA, serves as a director of the Company and is its
Chief Operating Officer/Chief Internet Officer. Mr. Kalra has a
degree in Hotel and Restaurant Management from Hotel Consult,
Switzerland. Mr. Kalra has also received certificates in accounting
and retail operations with post degree courses in business
management, finance and computer science. Mr. Kalra is the company's
expert in restaurant design and management. Mr. Kalra has designed,
built, and managed a virtual shopping mall Web site called
ShoppersCity.com. As President of Westcliff Corporation from 1990 to
1994, Mr. Kalra managed eleven food service operations. From 1987 to
1990, Mr. Kalra was President of Eastern Canada for Grandma Lee's
International. During his service with Grandma Lee's International,
Mr. Kalra managed the company's corporate restaurants and negotiated
property leases. Mr. Kalra received his food and beverage training
with Intercontinental Hotels.
DR. CHARLES H. SHEEHAN, III. serves as a director of the
Company. Dr. Sheehan attended Douwid University from 1964-1965 and
1971- 1972 and received his Bachelor of Science degree in Biology.
He went on to Douwid Medical School to receive his medical degree in
1976. From 1996 to present, Dr. Sheehan was the CEO of Clinical
Healthcare, Inc., a medical management company. In that position,
Dr. Sheehan managed two clinics in the Atlanta area. Prior to that,
Dr. Sheehan was a partner at Capital Billing, a medical billing
company, from 1995 to 1999. He consulted with physicians with
management issues and solutions. During 1994 to 1996, Dr. Sheehan
was the Director of Development at American Health Choice, a small
medical company in Irving, Texas. As director, he assisted with the
acquisition of various medical clinics in the Atlanta area.
GEORGE J. SMITH, serves as Controller and Secretary of the
Company. Mr. Smith is a graduate in Business Administration from
Columbus College, Columbus, Georgia. Mr. Smith was Controller for
Medical Packaging Technologies located in Georgia. From 1992 to
1995, Mr. Smith was the Controller for Earth Group, Inc. a
manufacturing company located in Marietta, Georgia. From 1980 to
1992, Mr. Smith was the Branch Controller for Fruehauf Corporation.
Mr. Smith is not related to Paul R. Smith, the Company's Chairman
and Chief Executive Officer.
The Company has no audit, compensation or executive
committees. There is no key man life insurance on any director,
officer, or control person.
RELATED TRANSACTIONS
On December 7, 1997, Investco foreclosed its liens on four
restaurants owned by Atlanta Foodquest, LLC. Investco had acquired
the notes and liens in two separate transactions on November 24,
1997 and December 5, 1997. At the time of the foreclosure, Messrs.
Smith and Kalra controlled both Investco and Atlanta Foodquest, LLC,
the later through their ownership of Atlanta Roasters, Inc.
On April 16, 1998, Investco International Management, Inc
("IMM") purchased from Mr. Kalra the area franchise rights for
Grandma Lee's for the Quebec and Ottawa areas by assuming notes of
$34,100 and $22,700, respectively. On June 1, 1998, IMM purchased
from Mr. Kalra all the outstanding stock of Hillbilly Shack, Inc. by
issuing a note for $22,114 and by assuming $9,032 in liabilities.
The note carries an interest rate of 8% per annum and monthly
payments of $2,000 began on November 15, 1999 and continue through
April 15, 2001. As of December 31, 1998, the Company was indebted to
Mr. Kalra for $42,566.
On April 24, 1998, Messrs. Smith and Kalra, two directors of
the Company, personally guaranteed a real estate lease for a
restaurant location in Powder Springs, Georgia. The personal
guarantee was limited to a term of 12 months and a maximum liability
of $15,000.
On July 14, 1998, the Company acquired all of the common
stock of Investco in consideration for the issuance of 182,100
shares of common stock. Messrs. Smith and Kalra each owned 50% of
the outstanding common stock of Investco prior to its acquisition by
the Company, and therefore each acquired 91,050 shares of Common
Stock of the Company in connection with the transaction. At the time
the Company acquired Investco, Messrs. Smith and Kalra did not have
any affiliation with the Company, and therefore the Company's
purchase of Investco was an arms-length transaction. In connection
with the acquisition of Investco, the Company's board of directors
and all but one director resigned and Messrs. Smith and Kalra were
appointed to fill the vacant positions.
On July 15, 1998, the Company agreed to pay a note owed by
Mr. Kalra by issuance of 30,400 shares of common stock valued at
$15,200.
On July 28, 1998, Messrs. Smith and Kalra personally
guaranteed a promissory note to Charter Bank & Trust Co. in the
original amount of $12,500. This note has since been paid in full.
On August 31, 1999, the Company granted stock warrants to a
managerial employee of the Company to purchase 200,000 shares of
common stock of the Company with an exercise price of $0.375 per
share, which is equal to the closing bid price for the Company's
common stock on that date. The employee is the son of Paul R. Smith,
the Company's chairman and chief executive officer.
EXECUTIVE COMPENSATION
No officers of the Company earned more than $100,000 a year
during any of the last three fiscal years.
RISK FACTORS
FOODVISION IS CURRENTLY OPERATING AT A LOSS. Foodvision
incurred net losses for the years ended December 31, 1998 and 1997
of ($645,424) and ($114,526) respectively and during the nine months
ended September 30, 1999, the Company reported a net loss of
($918,971). The Company's increased net loss was the result the
continued deterioration of operations at its former Roasters
restaurants, startup costs associated with two new Dirty Bird Cafe
restaurants which the Company opened in July 1999 and October 1999,
and costs associated with the formation of the Company's Internet
division. If losses continue, the Company may need to raise
additional capital through the placement of its securities or from
debt or equity financing. If the Company is not able to raise such
financing or obtain alternative sources of funding, management will
be required to curtail operations.
LIMITED HISTORY OF OPERATIONS. Foodvision has only a
limited history of operations in its Internet operations. Its
Internet operations are subject to the risks and competition
inherent in the establishment of a relatively new business
enterprise in a highly competitive field. There can be no assurance
that future operations will be profitable. Revenues and profits, if
any, will depend upon various factors. There is no assurance that
the Company will achieve its expansion goals and the failure to
achieve such goals would have an adverse impact on it.
FOODVISION MAY NEED ADDITIONAL FINANCING. Future events,
including the problems, delays, expenses and difficulties frequently
encountered by companies may lead to cost increases that could make
the Company's source of funds insufficient to fund the Company's
proposed operations. The Company may seek additional sources of
capital, including an additional offering of its equity securities,
an offering of debt securities or obtaining financing through a bank
or other entity. The Company has not established a limit as to the
amount of debt it may incur nor has it adopted a ratio of its equity
to a debt allowance. If the Company needs to obtain additional
financing, there is no assurance that financing will be available,
from any source, or that it will be available on terms acceptable to
the Company, or that any future offering of securities will be
successful. The Company could suffer adverse consequences if it is
unable to obtain additional capital when needed.
THE COMPANY HAS ENTERED INTO CERTAIN AGREEMENT WHICH HAVE
PAYMENT OBLIGATION. Foodvision has entered into an agreement with
CNN to establish a co-branded Web site. Pursuant to this agreement,
Foodvision is required to pay a total of $3,600,000 over the next
three years with $225,000 due in February, 2000. If Foodvision is
not able to make this payment or to negotiate an extension thereof,
then its anticipated Internet development will be delayed. The
Company has entered into other agreements which also require
payments in the near future. Any failure of the Company to make
such payments or to obtain extensions thereof, could severally
impede the Company's development of its Internet activities.
FOODVISION IS SUBJECT TO RISKS IN OPERATION OF ITS
RESTAURANTS. Each restaurant is subject to licensing and regulation
by a number of governmental authorities, which include alcoholic
beverage control and health, safety and fire agencies in the state,
county and municipality in which the restaurant is located.
Difficulties or failures in obtaining the required licenses or
approvals could delay or prevent the opening of a new restaurant in
a particular area. The Company may be subject to "dram-shop"
statutes that generally provide a person injured by an intoxicated
patron the right to recover damages from an establishment that
wrongfully served alcoholic beverages to the intoxicated person. The
Company carries liquor liability coverage as part of its existing
comprehensive general liability insurance. In addition, the Company
would be subject to liability for any unforeseen consequences
involved in selling food to the public, including possible claims of
spoiled or bad food, unsafe or sanitary food preparation or service
or other possible claims. The Company does not have any such claims
pending and takes all reasonable steps to ensure no such actions
will occur but there can be no guarantee that such an event may occur.
LACK OF CONTINUED DEVELOPMENT OF E-COMMERCE MARKET. The use
of the Internet and the World Wide Web for commercial purposes is
expanding dramatically. There is no assurance, however, that as
increased commerce takes place on the Internet that unforeseen
overloads, lack of sufficient hardware, telephone availability or
other problems may develop. In addition, consumer use of the
Internet for purchases, banking, and other commercial uses may
decline for any number of reasons such as security problems,
overload difficulties, shopping trends, or slow Internet access.
These difficulties may undermine Company's expansion and promotional
efforts. There is no assurance that the Company will be able to
successfully overcome these difficulties and maintain its
competitive pricing and services.
FAILURE TO ATTRACT QUALIFIED PERSONNEL. A change in labor
market conditions that either further reduces the availability of
employees or increases significantly the cost of labor could have a
material adverse effect on the Company's business, financial
condition and results of operations. Foodvision's business is
dependent upon its ability to attract and retain highly
sophisticated research and development personnel, business
administrators and corporate management. There is no assurance that
it will be able to employ a sufficient number of such personnel in
order to accomplish its growth objectives.
ISSUANCE OF FUTURE SHARES MAY DILUTE INVESTORS SHARE VALUE.
The Certificate of Incorporation of the Company authorizes the
issuance of 50,000,000 shares of common stock and 1,000,000 shares
of preferred stock. The future issuance of all or part of the
remaining authorized common or preferred stock may result in
substantial dilution in the percentage of the Company's common stock
held by the its then existing shareholders. Moreover, any common
stock issued in the future may be valued on an arbitrary basis by
the Company. The issuance of the Company's shares for future
services or acquisitions or other corporate actions may have the
effect of diluting the value of the shares held by investors, and
might have an adverse effect on any trading market, should a trading
market for the Company's common stock develop.
SHARES AVAILABLE FOR FUTURE SALE. The market price of
Foodvision common stock could drop if substantial amounts of shares
are sold in the public market or if the market perceives that such
sales could occur. A drop in the market price could adversely affect
holders of the stock and could also harm Foodvision's ability to
raise additional capital by selling equity securities. Foodvision
has outstanding options and warrants, including convertible
redeemable debentures exercisable at a price below that of the
market price. The exercise of these warrants and options or
conversion of such debentures at a price less than the market price
would dilute the value of outstanding shares and depressive the
market price. In addition, the perception that these instruments
may be exercised for or converted into common stock that could be
sold into the public market could adversely affect the market price
of Foodvision's common stock. In addition, shares issued by
Foodvision in private transactions over the past two years will
become eligible for sale into the public market under SEC Rule 144.
PENNY STOCK REGULATION. Penny stocks generally are equity
securities with a price of less than $5.00 per share other than
securities registered on certain national securities exchanges or
quoted on the Nasdaq Stock Market, provided that current price and
volume information with respect to transactions in such securities
is provided by the exchange or system. The Company's securities may
be subject to "penny stock rules" that impose additional sales
practice requirements on broker-dealers who sell such securities to
persons other than established customers and accredited investors
(generally those with assets in excess of $1,000,000 or annual
income exceeding $200,000 or $300,000 together with their spouse).
For transactions covered by these rules, the broker-dealer must make
a special suitability determination for the purchase of such
securities and have received the purchaser's written consent to the
transaction prior to the purchase. Additionally, for any
transaction involving a penny stock, unless exempt, the "penny stock
rules" require the delivery, prior to the transaction, of a
disclosure schedule prescribed by the Commission relating to the
penny stock market. The broker-dealer also must disclose the
commissions payable to both the broker-dealer and the registered
representative and current quotations for the securities. Finally,
monthly statements must be sent disclosing recent price information
on the limited market in penny stocks. Consequently, the "penny
stock rules" may restrict the ability of broker-dealers to sell the
Company's securities. The foregoing required penny stock
restrictions will not apply to the Company's securities if such
securities maintain a market price of $5.00 or greater. There can be
no assurance that the price of the Company's securities will reach
or maintain such a level.
FOODVISION MAY NOT BE ABLE TO PROTECT ITS TRADE OR SERVICE
MARKS. Management cannot be certain that it will be able to prevent
the misappropriation of Foodvision's trade or service marks.
COMPUTER SYSTEMS REDESIGNED FOR YEAR 2000. Many existing
computer programs use only two digits to identify a year in such
program's date field. These programs were designed and developed
without consideration of the impact of the change in the century for
which four digits will be required to accurately report the date.
If not corrected, many computer applications could fail or create
erroneous results in or following the year 2000 (the "Year 2000
problem"). Many of the computer programs containing such date
language problems have been corrected by the companies or
governments operating such programs. The Company's operations are
dependent upon the properly functioning computer equipment which may
fail because of such Year 2000 problems. The Company does not know
what steps, if any, have been taken by any of its business partners
in regard to the Year 2000 problems. The Company's operations will
be severally curtailed if one or more of its business partners were
to suffer Year 2000 problems. Furthermore, it is impossible to
predict if the basic utilities serving the Company will continue
uninterrupted.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 5. OTHER EVENTS
Successor Issuer Election.
Pursuant to Rule 12g-3(a) of the General Rules and
Regulations of the Securities and Exchange Commission, the Company
elected to become the successor issuer to Echelon for reporting
purposes under the Securities Exchange Act of 1934 and elects to
report under the Act effective February 4, 2000.
ITEM 6. RESIGNATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
The sole officer and director of Echelon resigned effective
upon completion of the Acquisition.
ITEM 7. FINANCIAL STATEMENTS
No financials are filed herewith. The Registrant is required
to file financial statements by amendment hereto no later than 60
days after the date that this Current Report on Form 8-K must be
filed.
ITEM 8. CHANGE IN FISCAL YEAR
Not applicable.
EXHIBITS
2.1. Agreement and Plan of Reorganization between Foodvision.com,
Inc. and Echelon Acquisition Corporation.
*27.1. Financial Data schedule.
_______
*To be filed by amendment
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this Current Report on Form
8-K to be signed on its behalf by the undersigned hereunto duly
authorized.
FOODVISION.COM, INC.
/s/ Paul R. Smith
President
Date: February 4, 2000
AGREEMENT AND PLAN OF REORGANIZATION among FOODVISION.COM,
INC., a Delaware corporation ("Foodvision"), ECHELON ACQUISITION
CORPORATION, a Delaware corporation ("Echelon") and the persons
listed in Exhibit A hereof (collectively the "Shareholders"), being
the owners of record of all of the issued and outstanding stock of
Echelon.
Whereas, Foodvision wishes to acquire and the Shareholders
wish to transfer all of the issued and outstanding securities of
Echelon in a transaction intended to qualify as a reorganization
within the meaning of '368(a)(1)(B) of the Internal Revenue Code of
1986, as amended.
Now, therefore, Foodvision, Echelon, and the Shareholders
adopt this plan of reorganization and agree as follows:
1. EXCHANGE OF STOCK
1.1. NUMBER OF SHARES. The Shareholders agree to transfer to
Foodvision at the Closing (defined below) the number of shares of
common stock of Echelon, $0.0001 par value per share, shown opposite
their names in Exhibit A, in exchange for an aggregate of 1,000,000
shares of voting common stock of Foodvision, $.001 par value per share.
1.2. EXCHANGE OF CERTIFICATES. Each holder of an outstanding
certificate or certificates theretofore representing shares of
Echelon common stock shall surrender such certificate(s) for
cancellation to Foodvision, and shall receive in exchange a
certificate or certificates representing the number of full shares
of Foodvision common stock into which the shares of Echelon common
stock represented by the certificate or certificates so surrendered
shall have been converted. The transfer of Echelon shares by the
Shareholders shall be effected by the delivery to Foodvision at the
Closing of certificates representing the transferred shares endorsed
in blank or accompanied by stock powers executed in blank.
1.3. FRACTIONAL SHARES. Fractional shares of Foodvision
common stock shall not be issued, but in lieu thereof Foodvision
shall round up fractional shares to the next highest whole number.
1.4. FURTHER ASSURANCES. At the Closing and from time to time
thereafter, the Shareholders shall execute such additional
instruments and take such other action as Foodvision may request in
order more effectively to sell, transfer, and assign the transferred
stock to Foodvision and to confirm Foodvision's title thereto.
2. CLOSING.
2.1. DATE AND PLACE. The Closing contemplated herein shall
be held on February 4, 2000 at the offices of the Exchange Agent
provided for herein unless another place or time is agreed upon in
writing by the parties without requiring the meeting of the parties
hereof. All proceedings to be taken and all documents to be
executed at the Closing shall be deemed to have been taken,
delivered and executed simultaneously, and no proceeding shall be
deemed taken nor documents deemed executed or delivered until all
have been taken, delivered and executed. The date of Closing may be
accelerated or extended by agreement of the parties.
2.2. EXECUTION OF DOCUMENTS. Any copy, facsimile
telecommunication or other reliable reproduction of the writing or
transmission required by this Agreement or any signature required
thereon may be used in lieu of an original writing or transmission
or signature for any and all purposes for which the original could
be used, provided that such copy, facsimile telecommunication or
other reproduction shall be a complete reproduction of the entire
original writing or transmission or original signature.
3. UNEXCHANGED CERTIFICATES. Until surrendered, each
outstanding certificate that prior to the Closing represented
Echelon common stock shall be deemed for all purposes, other than
the payment of dividends or other distributions, to evidence
ownership of the number of shares of Foodvision common stock into
which it was converted. No dividend or other distribution shall be
paid to the holders of certificates of Echelon common stock until
presented for exchange at which time any outstanding dividends or
other distributions shall be paid.
4. REPRESENTATIONS AND WARRANTIES OF ECHELON
Echelon represents and warrants as follows:
4.1. CORPORATE ORGANIZATION AND GOOD STANDING. Echelon is a
corporation duly organized, validly existing, and in good standing
under the laws of the State of Delaware, and is qualified to do
business as a foreign corporation in each jurisdiction, if any, in
which its property or business requires such qualification.
4.2. REPORTING COMPANY STATUS. Echelon has filed with the
Securities and Exchange Commission a registration statement on Form
10-SB which became effective pursuant to the Securities Exchange Act
of 1934 and is a reporting company pursuant to '12(g) thereunder.
4.3. REPORTING COMPANY FILINGS. Echelon has timely filed and
is current on all reports required to be filed by it pursuant to '13
of the Securities Exchange Act of 1934.
4.4. CAPITALIZATION. Echelon=s authorized capital stock
consists of 120,000,000 shares of Common Stock, $.0001 par value, of
which 5,000,000 shares are issued and outstanding, and 20,000,000
shares of non-designated preferred stock of which no shares are
designated or issued.
4.5. ISSUED STOCK. All the outstanding shares of its Common
Stock are duly authorized and validly issued, fully paid and
non-assessable.
4.6. STOCK RIGHTS. Except as set out by attached schedule,
there are no stock grants, options, rights, warrants or other rights
to purchase or obtain Echelon Common or Preferred Stock issued or
committed to be issued.
4.7. CORPORATE AUTHORITY. Echelon has all requisite
corporate power and authority to own, operate and lease its
properties, to carry on its business as it is now being conducted
and to execute, deliver, perform and conclude the transactions
contemplated by this agreement and all other agreements and
instruments related to this agreement.
4.8. AUTHORIZATION. Execution of this agreement has been
duly authorized and approved by Echelon=s board of directors.
4.9. SUBSIDIARIES. Except as set out by attached schedule,
Echelon has no subsidiaries.
4.10. FINANCIAL STATEMENTS. Echelon=s financial statements
dated October 31, 1999, copies of which will have been delivered by
Echelon to Foodvision prior to the Merger Date (the "Echelon
Financial Statements"), fairly present the financial condition of
Echelon as of the date therein and the results of its operations for
the periods then ended in conformity with generally accepted
accounting principles consistently applied.
4.11. ABSENCE OF UNDISCLOSED LIABILITIES. Except to the
extent reflected or reserved against in the Echelon Financial
Statements, Echelon did not have at that date any liabilities or
obligations (secured, unsecured, contingent, or otherwise) of a
nature customarily reflected in a corporate balance sheet prepared
in accordance with generally accepted accounting principles.
4.12. NO MATERIAL CHANGES. Except as set out by attached
schedule, there has been no material adverse change in the business,
properties, or financial condition of Echelon since the date of the
Echelon Financial Statements.
4.13. LITIGATION. Except as set out by attached schedule,
there is not, to the knowledge of Echelon, any pending, threatened,
or existing litigation, bankruptcy, criminal, civil, or regulatory
proceeding or investigation, threatened or contemplated against
Echelon or against any of its officers.
4.14. CONTRACTS. Except as set out by attached schedule,
Echelon is not a party to any material contract not in the ordinary
course of business that is to be performed in whole or in part at or
after the date of this agreement.
4.15. TITLE. Except as set out by attached schedule, Echelon
has good and marketable title to all the real property and good and
valid title to all other property included in the Echelon Financial
Statements. Except as set out in the balance sheet thereof, the
properties of Echelon are not subject to any mortgage, encumbrance,
or lien of any kind except minor encumbrances that do not materially
interfere with the use of the property in the conduct of the
business of Echelon.
4.16. TAX RETURNS. Except as set out by attached schedule,
all required tax returns for federal, state, county, municipal,
local, foreign and other taxes and assessments have been properly
prepared and filed by Echelon for all years for which such returns
are due unless an extension for filing any such return has been
filed. Any and all federal, state, county, municipal, local,
foreign and other taxes and assessments, including any and all
interest, penalties and additions imposed with respect to such
amounts have been paid or provided for. The provisions for federal
and state taxes reflected in the Echelon Financial Statements are
adequate to cover any such taxes that may be assessed against
Echelon in respect of its business and its operations during the
periods covered by the Echelon Financial Statements and all prior
periods.
4.17. NO VIOLATION. Consummation of the Merger will not
constitute or result in a breach or default under any provision of
any charter, bylaw, indenture, mortgage, lease, or agreement, or any
order, judgment, decree, law, or regulation to which any property of
Echelon is subject or by which Echelon is bound.
5. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
The Shareholders, individually and separately, represent and
warrant as follows:
5.1. TITLE TO SHARES. The Shareholders, and each of them, are
the owners, free and clear of any liens and encumbrances, of the
number of Echelon shares which are listed in the attached schedule
and which they have contracted to exchange.
5.2. LITIGATION. There is no litigation or proceeding
pending, or to each Shareholder=s knowledge threatened, against or
relating shares of Echelon held by the Shareholders.
6. REPRESENTATIONS AND WARRANTIES OF FOODVISION
The Foodvision represents and warrants as follows:
6.1. CORPORATE ORGANIZATION AND GOOD STANDING. Foodvision is
a corporation duly organized, validly existing, and in good standing
under the laws of the State of Delaware and is qualified to do
business as a foreign corporation in each jurisdiction, if any, in
which its property or business requires such qualification.
6.2. CAPITALIZATION. Foodvision's authorized capital stock
consists of 50,000,000 shares of Common Stock, $.001 par value, of
which 13,109,984 shares are issued and outstanding, and 1,000,000
shares of preferred stock, of which no shares are issued and
outstanding.
6.3. ISSUED STOCK. All the outstanding shares of its Common
Stock are duly authorized and validly issued, fully paid and
non-assessable.
6.4. STOCK RIGHTS. Except as set out by attached schedule,
there are no stock grants, options, rights, warrants or other rights
to purchase or obtain Foodvision Common or Preferred Stock issued or
committed to be issued.
6.5. CORPORATE AUTHORITY. Foodvision has all requisite
corporate power and authority to own, operate and lease its
properties, to carry on its business as it is now being conducted
and to execute, deliver, perform and conclude the transactions
contemplated by this Agreement and all other agreements and
instruments related to this agreement.
6.6. AUTHORIZATION. Execution of this Agreement has been
duly authorized and approved by Foodvision's board of directors.
6.7. SUBSIDIARIES. Except as set out by attached schedule,
Foodvision has no subsidiaries.
6.8. FINANCIAL STATEMENTS. Foodvision's financial statements
dated as of December 31, 1999, copies of which will have been
delivered by Foodvision to Echelon prior to the Merger Date (the
"Foodvision Financial Statements"), fairly present the financial
condition of Foodvision as of the date therein and the results of
its operations for the periods then ended in conformity with
generally accepted accounting principles consistently applied.
6.9. ABSENCE OF UNDISCLOSED LIABILITIES. Except to the
extent reflected or reserved against in the Foodvision Financial
Statements, Foodvision did not have at that date any liabilities or
obligations (secured, unsecured, contingent, or otherwise) of a
nature customarily reflected in a corporate balance sheet prepared
in accordance with generally accepted accounting principles.
6.10. NO MATERIAL CHANGES. Except as set out by attached
schedule, there has been no material adverse change in the business,
properties, or financial condition of Foodvision since the date of
the Foodvision Financial Statements.
6.11. LITIGATION. Except as set out by attached schedule,
there is not, to the knowledge of Foodvision, any pending,
threatened, or existing litigation, bankruptcy, criminal, civil, or
regulatory proceeding or investigation, threatened or contemplated
against Foodvision or against any of its officers.
6.12. CONTRACTS. Except as set out by attached schedule,
Foodvision is not a party to any material contract not in the
ordinary course of business that is to be performed in whole or in
part at or after the date of this agreement.
6.13. TITLE. Except as set out by attached schedule,
Foodvision has good and marketable title to all the real property
and good and valid title to all other property included in the
Foodvision Financial Statements. Except as set out in the balance
sheet thereof, the properties of Foodvision are not subject to any
mortgage, encumbrance, or lien of any kind except minor encumbrances
that do not materially interfere with the use of the property in the
conduct of the business of Foodvision.
6.14. TAX RETURNS. Except as set out by attached schedule,
all required tax returns for federal, state, county, municipal,
local, foreign and other taxes and assessments have been properly
prepared and filed by Foodvision for all years for which such
returns are due unless an extension for filing any such return has
been filed. Any and all federal, state, county, municipal, local,
foreign and other taxes and assessments, including any and all
interest, penalties and additions imposed with respect to such
amounts have been paid or provided for. The provisions for federal
and state taxes reflected in the Foodvision Financial Statements are
adequate to cover any such taxes that may be assessed against
Foodvision in respect of its business and its operations during the
periods covered by the Foodvision Financial Statements and all prior
periods
6.15. NO VIOLATION. Consummation of the Merger will not
constitute or result in a breach or default under any provision of
any charter, bylaw, indenture, mortgage, lease, or agreement, or any
order, judgment, decree, law, or regulation to which any property of
Foodvision is subject or by which Foodvision is bound.
7. CONDUCT OF ECHELON PENDING THE MERGER DATE. Echelon
covenants that between the date of this Agreement and the Merger Date:
7.1. No change will be made in Echelon's articles of
incorporation or bylaws.
7.2. Echelon will not make any change in its authorized or
issued capital stock, declare or pay any dividend or other
distribution or issue, encumber, purchase, or otherwise acquire any
of its capital stock other than as provided herein.
7.3. Echelon will use its best efforts to maintain and
preserve its business organization, employee relationships, and
goodwill intact, and will not enter into any material commitment
except in the ordinary course of business.
8. CONDUCT PENDING THE CLOSING
Foodvision, Echelon and the Shareholders covenant that between
the date of this Agreement and the Closing as to each of them:
8.1. No change will be made in the charter documents,
by-laws, or other corporate documents of Foodvision or Echelon.
8.2. Echelon and Foodvision will use their best efforts to
maintain and preserve its business organization, employee
relationships, and goodwill intact, and will not enter into any
material commitment except in the ordinary course of business.
8.3. None of the Shareholders will sell, transfer, assign,
hypothecate, lien, or otherwise dispose or encumber the Echelon
shares of common stock owned by them.
9. CONDITIONS PRECEDENT TO OBLIGATION OF ECHELON AND THE
SHAREHOLDERS
Echelon=s and the Shareholder=s obligation to consummate this
exchange shall be Subject to fulfillment on or before the Closing of
each of the following conditions, unless waived in writing by
Echelon or the Shareholders as appropriate:
9.1. FOODVISION'S REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Foodvision set forth herein shall
be true and correct at the Closing as though made at and as of that
date, except as affected by transactions contemplated hereby.
9.2. FOODVISION'S COVENANTS. Foodvision shall have performed
all covenants required by this Agreement to be performed by it on or
before the Closing.
9.3. BOARD OF DIRECTOR APPROVAL. This Agreement shall have
been approved by the Board of Directors of Foodvision.
9.4. SUPPORTING DOCUMENTS OF FOODVISION. Foodvision shall
have delivered to Echelon and the Shareholders supporting documents
in form and substance reasonably satisfactory to Echelon and the
Shareholders, to the effect that:
(a) Foodvision is a corporation duly organized, validly
existing, and in good standing;
(b) Foodvision's authorized capital stock is as set forth
herein;
(c) Certified copies of the resolutions of the board of
directors of Foodvision authorizing the execution of this Agreement
and the consummation hereof;
(d) Secretary's certificate of incumbency of the officers and
directors of Foodvision;
(e) Foodvision=s Financial Statements and unaudited financial
statement from the date of Foodvision's Financial Statements to
close of most recent fiscal quarter; and
(f) Any document as may be specified herein or required to
satisfy the conditions, representations and warranties enumerated
elsewhere herein.
10. CONDITIONS PRECEDENT TO OBLIGATION OF FOODVISION
Foodvision's obligation to consummate this merger shall be
Subject to fulfillment on or before the Closing of each of the
following conditions, unless waived in writing by Foodvision:
10.1. ECHELON'S AND THE SHAREHOLDER=S REPRESENTATIONS AND
WARRANTIES. The representations and warranties of Echelon and the
Shareholders set forth herein shall be true and correct at the
Closing as though made at and as of that date, except as affected by
transactions contemplated hereby.
10.2. ECHELON'S AND THE SHAREHOLDERS' COVENANTS. Echelon and
the Shareholders shall have performed all covenants required by this
Agreement to be performed by them on or before the Closing.
10.3. BOARD OF DIRECTOR APPROVAL. This Agreement shall
have been approved by the Board of Directors of Echelon.
10.4. SHAREHOLDER EXECUTION. This Agreement shall have been
executed by the required number of shareholders of Echelon.
10.5. SUPPORTING DOCUMENTS OF ECHELON. Echelon shall have
delivered to Foodvision supporting documents in form and Substance
reasonably satisfactory to Foodvision to the effect that:
(a) Echelon is a corporation duly organized, validly
existing, and in good standing;
(b) Echelon's capital stock is as set forth herein;
(c) Certified copies of the resolutions of the board of
directors of Echelon authorizing the execution of this Agreement and
the consummation hereof;
(d) Secretary's certificate of incumbency of the officers and
directors of Echelon;
(e) Echelon=s Financial Statements and unaudited financial
statements for the period from the date of the Echelon's Financial
Statements to the close of the most recent fiscal quarter; and
(f) Any document as may be specified herein or required to
satisfy the conditions, representations and warranties enumerated
elsewhere herein.
11. SHAREHOLDERS' REPRESENTATIVE. The Shareholders hereby
irrevocably designate and appoint Cassidy & Associates, Washington,
D.C. as their agent and attorney in fact ("Shareholders'
Representative") with full power and authority until the Closing to
execute, deliver, and receive on their behalf all notices, requests,
and other communications hereunder; to fix and alter on their behalf
the date, time, and place of the Closing; to waive, amend, or modify
any provisions of this Agreement, and to take such other action on
their behalf in connection with this Agreement, the Closing, and the
transactions contemplated hereby as such agent or agents deem
appropriate; provided, however, that no such waiver, amendment, or
modification may be made if it would decrease the number of shares
to be issued to the Shareholders hereunder or increase the extent of
their obligation to indemnify Foodvision hereunder.
12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties
of Echelon, the Shareholders and Foodvision set out herein shall
survive the Closing.
13. ARBITRATION
13.1. SCOPE. The parties hereby agree that any and all claims
(except only for requests for injunctive or other equitable relief)
whether existing now, in the past or in the future as to which the
parties or any affiliates may be adverse parties, and whether
arising out of this agreement or from any other cause, will be
resolved by arbitration before the American Arbitration Association
within the District of Columbia.
13.2. CONSENT TO JURISDICTION, SITUS AND JUDGEMENT. The
parties hereby irrevocably consent to the jurisdiction of the
American Arbitration Association and the situs of the arbitration
(and any requests for injunctive or other equitable relief) within
the District of Columbia. Any award in arbitration may be entered
in any domestic or foreign court having jurisdiction over the
enforcement of such awards.
13.3. APPLICABLE LAW. The law applicable to the arbitration
and this agreement shall be that of the State of Delaware,
determined without regard to its provisions which would otherwise
apply to a question of conflict of laws.
13.4. DISCLOSURE AND DISCOVERY. The arbitrator may, in its
discretion, allow the parties to make reasonable disclosure and
discovery in regard to any matters which are the subject of the
arbitration and to compel compliance with such disclosure and
discovery order. The arbitrator may order the parties to comply
with all or any of the disclosure and discovery provisions of the
Federal Rules of Civil Procedure, as they then exist, as may be
modified by the arbitrator consistent with the desire to simplify
the conduct and minimize the expense of the arbitration.
13.5. RULES OF LAW. Regardless of any practices of
arbitration to the contrary, the arbitrator will apply the rules of
contract and other law of the jurisdiction whose law applies to the
arbitration so that the decision of the arbitrator will be, as much
as possible, the same as if the dispute had been determined by a
court of competent jurisdiction.
13.6. FINALITY AND FEES. Any award or decision by the
American Arbitration Association shall be final, binding and
non-appealable except as to errors of law or the failure of the
arbitrator to adhere to the arbitration provisions contained in this
agreement. Each party to the arbitration shall pay its own costs
and counsel fees except as specifically provided otherwise in this
agreement.
13.7. MEASURE OF DAMAGES. In any adverse action, the parties
shall restrict themselves to claims for compensatory damages and\or
securities issued or to be issued and no claims shall be made by any
party or affiliate for lost profits, punitive or multiple damages.
13.8. COVENANT NOT TO SUE. The parties covenant that under no
conditions will any party or any affiliate file any action against
the other (except only requests for injunctive or other equitable
relief) in any forum other than before the American Arbitration
Association, and the parties agree that any such action, if filed,
shall be dismissed upon application and shall be referred for
arbitration hereunder with costs and attorney's fees to the
prevailing party.
13.9. INTENTION. It is the intention of the parties and their
affiliates that all disputes of any nature between them, whenever
arising, whether in regard to this agreement or any other matter,
from whatever cause, based on whatever law, rule or regulation,
whether statutory or common law, and however characterized, be
decided by arbitration as provided herein and that no party or
affiliate be required to litigate in any other forum any disputes or
other matters except for requests for injunctive or equitable
relief. This agreement shall be interpreted in conformance with
this stated intent of the parties and their affiliates.
13.10. SURVIVAL. The provisions for arbitration
contained herein shall survive
the termination of this agreement for any reason.
14. GENERAL PROVISIONS.
14.1. FURTHER ASSURANCES. From time to time, each party will
execute such additional instruments and take such actions as may be
reasonably required to carry out the intent and purposes of this
agreement.
14.2. WAIVER. Any failure on the part of either party hereto
to comply with any of its obligations, agreements, or conditions
hereunder may be waived in writing by the party to whom such
compliance is owed.
14.3. BROKERS. Each party agrees to indemnify and hold
harmless the other party against any fee, loss, or expense arising
out of claims by brokers or finders employed or alleged to have been
employed by the indemnifying party.
14.4. NOTICES. All notices and other communications hereunder
shall be in writing
and shall be deemed to have been given if delivered in person or
sent by prepaid first-class certified mail, return receipt
requested, or recognized commercial courier service, as follows:
If to Foodvision, to:
Foodvision.com, Inc.
2152 NW Parkway
Suite K
Marietta, Georgia 30067
If to Echelon, to:
1504 R Street, NW
Washington, D.C. 20009
If to the Shareholders, to:
Cassidy & Associates
1504 R Street Northwest
Washington, D.C. 20009
14.5. GOVERNING LAW. This agreement shall be governed by and
construed and enforced in accordance with the laws of the State of
Delaware.
14.6. ASSIGNMENT. This agreement shall inure to the benefit
of, and be binding upon, the parties hereto and their successors and
assigns; provided, however, that any assignment by either party of
its rights under this agreement without the written consent of the
other party shall be void.
14.7. COUNTERPARTS. This agreement may be executed
simultaneously in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one
and the same instrument. Signatures sent by facsimile transmission
shall be deemed to be evidence of the original execution thereof.
14.8. EXCHANGE AGENT AND CLOSING DATE. The Exchange Agent
shall be Cassidy & Associates, Washington, D.C. The Closing shall
take place upon the fulfillment by each party of all the conditions
of Closing required herein, but not later than 15 days following
execution of this agreement unless extended by mutual consent of the
parties.
14.9. REVIEW OF AGREEMENT. Each party acknowledges that it
has had time to review this agreement and, as desired, consult with
counsel. In the interpretation of this agreement, no adverse
presumption shall be made against any party on the basis that it has
prepared, or participated in the preparation of, this agreement.
14.10. SCHEDULES. All schedules attached hereto, if any,
shall be acknowledged by each party by signature or initials thereon.
14.11. EFFECTIVE DATE. This effective date of this
agreement shall be February 4, 2000.
SIGNATURE PAGE TO AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN FOODVISION CORPORATION AND
ECHELON ACQUISITION CORPORATION
IN WITNESS WHEREOF, the parties have executed this agreement.
FOODVISION.COM, INC.
/s/ __________________
ECHELON ACQUISITION CORPORATION
/s/ ____________________
