UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g)
of the Securities Exchange Act of 1934
NATIONAL FRUIT AND VEGETABLE TECHNOLOGY CORPORATION
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(Name of Small Business Issuer in its Charter)
Nevada 31-1194531
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(State of other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
210 Water Street, Baltimore, Ohio 43105
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(Address of principal executive offices) (Zip Code)
Issuer's Telephone number: (740) 862-6300
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Securities to be registered pursuant to Section 12(b) of the Act: None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $0.001 Per Share
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(Title of Class)
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ITEM 1. DESCRIPTION OF BUSINESS
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(a) Business Development
National Fruit and Vegetable Technology Corporation (the "Company" or
the "Registrant" ) is a Nevada corporation which was originally incorporated on
December 19, 1986. The Company was authorized to issue an aggregate of
500,000,000 shares of capital stock with a par value of $0.001 per share.
The Company is the successor to National Veg-Tec Corporation, a Nevada
corporation, incorporated in September of 1983. Extensive research and
development prior to the time National Veg-Tec Corporation was organized was
carried on by an unincorporated joint venture consisting primarily of National
Veg-Tech Corporation's original and majority shareholders. At the time National
Veg-Tec Corporation was formed, it exchanged 6,941,398 shares of its $0.01 par
value common stock valued at $3.00 per share for certain property, equipment and
related technology owned by the unincorporated joint venture.
During 1986, National Veg-Tec Corporation acquired all of the assets of
Veg-Tec Corporation, an Ohio corporation incorporated in March of 1985, which
was an affiliated entity under common control and similar ownership, by
exchanging 3,506,384 shares of its $0.001 par value common stock for all of the
issued and outstanding $0.01 par value common stock of Veg-Tec Corporation.
On March 2, 1987, the Company acquired National Veg-Tec Corporation, by
exchanging all of the outstanding shares of National Veg-Tec Corporation's
common stock on a one-for-one basis for 49,346,828 shares of National Fruit and
Vegetable Technology Corporation. As part of this transaction the company
increased the number of authorized shares to 10,000,000,000.
As of March 1, 1999, 128,362,789 shares of the Company's authorized
shares of common stock were issued and outstanding.
To management's knowledge, the Company has not been subject to
bankruptcy, receivership or any similar proceedings.
The Company maintains offices at 210 Water Street, Baltimore, Ohio
43105. The Company substantially owns all of its equipment.
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(b) Business of the Issuer
During the last three years, and since its inception, the Company has
operated in a development stage. The Company was established to market a variety
of vegetables and fruits processed with a proprietary, state-of-the-art
industrial microwave oven system which the Company has developed. The Company's
operations to date have focused on the development of this oven and the food
processing facilities which accompany the oven. The Company currently uses a 684
foot oven system which represents the culmination of 22 years of research,
design and development efforts. This system is designed to operate continuously,
365 days a year, and has the capacity to process a wide variety of fruit and
vegetables into convenient, nutritional and economical products without the use
of any additives.
The Company's oven is used to heat and cook fruits and vegetables. The
oven uses microwave energy, a component of the electromagnetic spectrum which
includes gamma and x-rays, as well as ultraviolet, visible light, infrared and
sound wages. Microwaves are very short sound waves measuring from one to 100
centimeters. Radio waves, by contrast, are measured in lengths from three feet
to many miles. The oven uses a device known as a magnetron to create microwave
energy by transforming electrical energy into electromagnetic energy. This
microwave energy broadcast into a microwave oven is absorbed readily by the
water molecules in the food passing though the oven, causing the molecules to
vibrate rapidly. This rapid vibration generates friction which in turn generates
heat and cooks the food.
The Company's processing technology is intended to match the ever
increasing consumer demand for fresh, highly nutritious, healthful foods, free
of artificial additives and preservatives. The Company has undertaken numerous
taste tests of a variety of fruit and vegetable products processed in its oven
system for comparison with traditional processed food products, with favorable
results.
Initially, the Company will market potato products to restaurants,
fast-food restaurant chains, public school systems, hotels, colleges and
universities, airlines, the military and correctional institutions. The Company
intends to distribute its products through food distributors that supply
restaurants and small supermarkets, and directly to large supermarket chains as
well.
To date, the Company has spent all of its efforts on the research and
development of its processing systems. The Company has not operated as a
commercial producer of food products as of the date of this filing.
(1) Principal Products
As stated above, the Company will market potato products to
restaurants, fast-food restaurant chains, public school systems, hotels,
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colleges and universities, airlines, the military and correctional institutions.
The Company's principal products will be:
(a) Baked potatoes in two varieties--peeled and unpeeled;
(b) Mashed potatoes in three (3) varieties--with skins,
without skins and lumpy;
(c) French fries made from potatoes in two (2)
varieties--with skins and without skins;
(d) Baked sweet potatoes; and
(e) Sweet potato fries.
Potatoes will be purchased directly from potato growers. Semi-trailer
truckloads will be delivered to the Company's processing plant where the raw
material will be weighed and then dumped into a large vat of agitating water to
remove sand, soil and stones, which generally accounts for 3% to 4% of each load
of raw product delivered. The Company recovers the sand, soil and stones and
reuses those items rather than treating them as waste. Sand and soil is bagged
and will be sold to garden shops. The Company has sold such bagged sand and soil
generated during the testing of its processing facilities and will continue that
practice in the future during production. The Company uses the reclaimed stones
as gravel for the roads on the Company's property and will continue to do so.
Once the potatoes are initially washed, they are inspected for damage
and then washed again to remove any remaining dirt. Potatoes then are
roller-sized and inspected for damage, blemishes and irregular shape. Damaged
and blemished potatoes will be used for cattle feed. Misshapen potatoes will be
processed as mashed potatoes, small "B"-sized potatoes will be processed as
sliced potatoes, and jumbo-size potatoes will be analyzed electronically to
determine exact weight and size, and scanned internally for hollow-heart
defects. These potatoes will then be processed with the microwave oven system
into baked potatoes, or fresh packed in 5 or 10-pound consumer packs, or
50-pound cartons for the food service industry. Upon exiting the oven, products
will be refrigerated or frozen, bagged, boxed and placed on pallets for
shipment.
Appropriately sized potatoes will be made into french fries. The
Company has equipment in place which will produce french fries of relatively
uniform sizes as desired by buyers of the Company's products.
(2) Distribution Methods
The Company initially intends to develop a major presence in the local
food industry market by offering convenient, high-quality, nutritious and
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flavorful products at competitive prices. The Company intends that its sales
force, which is not yet in place, will initially target restaurants, fast-food
chains, hotels, public school systems, institutions of higher education,
airlines, the military and correctional institutions. Products will be shipped
in semi-truckload quantities. Also, the Company intends to use a brand name in
the marketing of its products. In this regard, products produced by the Company
in its testing operations have received favorable reviews from the American
Heart Association. The Company has received permission to use the American Heart
Association's logo on the packaging for the Company's potato products.
The Company has no experience in sales, marketing or distribution. The
Company intends to market and sell certain products directly in the United
States and Canada. To do so, the Company must develop a substantial sales force
with technical expertise. The Company has not yet developed a marketing
organization capable of attaining significant sales. Whether it can do so in the
future will depend upon the Company's ability to hire and retain skilled direct
sales personnel who have experience in the fruit and vegetable processing
industry.
(3) Status of Publicly Announced New Products or Services
To date, the Company has not announced the availability of its services
or products.
(4) Competition
The Company faces well-established and well-funded competition. The
food industry is highly competitive and is characterized by the frequent
introduction of new products accompanied by substantial promotional campaigns.
Among the Company's competitors are established, conventional fruit and
vegetable processors with extensive product development capacity, marketing
staffs and organizations, and financial resources greatly in excess of that
available to the Company. Conventional fruit and vegetable processors dominate
the market. Management is confident that the Company will be able to compete
effectively on the basis of superior product quality and relatively low
production costs attributable to the Company's highly efficient microwave oven
system. Competitors generally use traditional methods of heating fruits and
vegetables such as boiling the product in water, steaming the product, heating
it in convection ovens as in hot oil.
Management has visited and studied the major growing regions in the
United States and considers the grower-packer their largest competitor.
Grower-packers are the main distributors and shippers of fresh produce in the
United States. Large grower-packers ship up to 5,000 truckloads of produce a
year, while smaller grower- packers ship between 100 to 500 truckloads per year.
The Company will compete directly with the grower-packers and add value for the
consumer by greatly reducing the preparation time associated with most fruit and
vegetable products.
Management believes that the Company's unique capability to offer large
volumes of prepared fruit and vegetable products that are fresh, nutritious,
economical and convenient to the consumer will make the Company a viable
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competitor in the food processing industry. Company products will be
differentiated from those of the competition on the basis of taste, appearance
and quality at competitive price points.
(5) Sources of Raw Materials and Suppliers and Dependence on Major
Customers
The Company will specialize in the processing of fresh fruits and
vegetables. Therefore, the Company will be dependent upon a ready supply of
fruits and vegetables. Should the Company have any difficulty in obtaining fresh
fruits and vegetables as required in their operations, the Company could be
materially and adversely affected. While management believes that there are
numerous alternative suppliers (farmers) for the fruits and vegetables purchased
by the Company, the loss of a supplier could disrupt the Company's operations.
The Company will purchase a significant number of items from single
suppliers--for example, packaging supplies. While the Company believes that
alternatives to these suppliers and manufacturers are readily available, the
time to effect a change could adversely impact the Company's business in the
short term should a change become necessary.
The Company will use in-house produce buyers to purchase potatoes
directly from growers at open-market prices, which historically range between
$4.00 to $8.00 per hundred weight. The size, weight, shape, quality and
appearance of raw materials will be determined upon delivery to the plant for
final determination of the purchase price.
Factors which determine the availability and price of potatoes, and
most agricultural products, include weather conditions, acreage under
cultivation, crop failures, plant diseases, floods, freezing and overall
agricultural conditions.
Potatoes are readily available year round due to large modern potato
storage facilities, of which there is an abundance within close proximity to the
Company's plant. This will obviate the necessity of the Company building storage
facilities and will minimize raw material inventory needs.
(6) Patents, Trademarks, Licenses, etc.
The Company intends to apply for numerous United States and
International patents, trademarks and copyrights in connection with certain of
its products and technology. The Company currently has no patents, trademarks or
copyrights. Although these types of intellectual property protection may have
value, the Company believes that other factors, such as product innovations, are
of more significance in the Company's industry. The Company attempts to avoid
infringing patents of others by monitoring on a regular basis patents issued
with respect to food processing equipment. The Company intends to license rights
in connection with the development and marketing of certain of its products.
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These agreements generally require the Company licenser to pay a royalty based
on product sales.
The Company believes that its proprietary products provide it with a
key competitive advantage, but patent protection generally cannot be obtained
for most of its products. The Company attempts to minimize unauthorized copying
of these products by a variety of methods, however, there can be no assurance
that unauthorized copying will not occur. The Company attempts, and will
continue to attempt, to protect its proprietary materials and processes by
relying on trade secret laws and non-disclosure and confidentiality agreements
with its employees and certain other persons who have access to its proprietary
materials and processes, or who have licensing or research agreements with the
Company.
The Company has not applied for any patents on its industrial microwave
technology to date. However, the Company has developed certain technologies
which it believes to be proprietary. Were feasible, management intends to make a
number of patent applications for protection on certain of the Company's rights
relating to its automated fruit and vegetable processing plant and to its
industrial microwave oven technology. The Company also intends to consider
application for additional patents relating to other food processing equipment.
The Company intends to continue to seek patent protection with respect to those
advances to its process resulting from its research and development efforts.
The Company intends to rely on a combination of trade secrets, patents,
trademark laws, license agreements and technical measures to protect its rights
with respect to its industrial microwave oven technology. No assurance can be
given that these measure will protect the Company's rights.
(7) Governmental Approval, Effect of Governmental Regulation and Costs
and Effects of Compliance with Environmental Laws
The Company is subject to regulation by federal, state and local
governmental authorities. These include: the EPA for environmental impact and,
in particular, sanitary discharge; OSHA for equipment and work area safety; FDA
for labeling, sanitary conditions and product contamination; USDA for grading a
food inspection; state government for building codes; and local government for
building codes and property zoning. The Company's operations are subject to a
variety of other federal, state and local laws, such as labor, insurance,
transportation and wage regulations. Compliance with all such regulations may be
time-consuming and expensive and may cause delays in the ability of the Company
to commence operation of the Company's fruit and vegetable processing plant.
The Company has been approved with all the necessary permits, including
all city, county, state and federal approval processes necessary to operate a
food facility in the State of Ohio.
The handling, transportation and disposal of potato wastes expose the
Company to certain risks under applicable environmental laws and regulations.
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Although management of the Company believes its operations will be conducted in
substantial compliance with, and intends to minimize its liability risk under,
such laws and regulations, there can be no assurance that liability will not
attach in the future due to stricter laws and regulations, stricter enforcement
thereof or other currently unforeseen or unknown events. In addition, there can
be no assurance that substantial costs for compliance with such laws and
regulations will not be incurred in the future. Nonetheless, the Company has
made every effort to reduce wastes from its processing facilities. Sand, soil
and stones washed from raw product is collected and either sold or used at the
Company's facilities. Potato starch produced during processing is collected and
sold as well. Potato peelings and waste potatoes are disposed of as cattle feed
and/or as fertilizer.
Certain of the Company's operations are subject to federal, state and
local environmental laws and regulations which impose limitations on the
discharge of pollutants into the air and water and establish standards for the
treatment, storage and disposal of solid wastes. The Company cannot predict with
any certainty its future capital expenditure requirements for environmental
compliance because of constantly changing standards and technology. In addition,
the Company may incur liabilities in the future to regulatory agencies or
private individuals for alleged environmental damage associated with waste
disposal or waste material handling practices in operation of the Company's
business. The Company does not currently have any insurance coverage for
environmental liabilities and does not anticipate obtaining such coverage in the
future.
The Company's microwave oven system has been designed and constructed
to ensure the safety of those working with and around equipment. Devices
continuously monitor the system, and immediately shut it down and alert the
operator in the unlikely event of a system malfunction. Management is confident
that its plant and technology will comply with all applicable OSHA and FCC
regulations. The Company's food products will comply with all relevant USDA and
FDA regulations. The entire plant facility has met all USDA, FDA, EPA, FDD and
Board of Health regulations with full approval for operation.
Management believes that it has taken into consideration all of the
regulatory requirements of the Health and Safety Act of 1968. However, there is
no assurance that in the future the plant may be shut down by various government
regulatory agencies due to the Company's inability to comply in a timely manner
to existing regulations.
In one area, governmental regulation may have a positive impact on the
Company's business. The Ohio Legislature enacted the "Buy Ohio Program", which
requires all 185 state agencies to give preferential treatment to manufacturers
of food products based in Ohio when making purchases. The State of Ohio annually
awards contracts for the purchase of food products totaling $400 million. There
are at present no potato processing plants located in Ohio. Educational and
correctional institutions, as well as the military will, therefore, constitute a
highly attractive initial client base. The state typically pays for food
products upon delivery or within 10 days.
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(8) Research and Development in the Last Two Years
Management of the Company has spent all of its time and efforts during
the last two (2) years, and for all of its existence, on the research and
development of its food processing systems and acquisition of facilities and
equipment. Such research and development has focused upon the development of the
Company's microwave oven, but also has included the development of conveyor
systems and automation which rapidly processes raw products with a minimum of
damage and loss of the products. Although research and development will be an
ongoing process, management believes that the Company's research and development
since the Company's inception has produced an effective fruit and vegetable
processing system. Management also believes that the efforts in acquiring
facilities and equipment have been successful and that the Company is ready to
begin production.
(9) Employees
As of March 1, 1999, the Company had eleven (11) full-time employees,
one (1) part-time employee and nine (9) contract consultants. None of the
Company's employees or independent contractors is subject to a collective
bargaining agreement and the Company believes its relations with its employees
and independent contractors are good.
(c) Reports to Security Holders
Prior to filing this Form 10-SB, the Company has not been required to
deliver annual reports. To the extent that the Company is required to deliver
annual report to security holders thought its status as reporting company, the
Company shall deliver annual reports. Also, to the extent the Company is
required to deliver annual reports by the rules or regulations of any exchange
upon which the Company's shares are traded, the Company shall deliver annual
reports. If the Company is not required to deliver annual reports, the Company
will not go the expense of producing and delivering such reports. If the Company
is required to deliver annual reports, they will contain audited financial
statements as required.
Prior to the filing of this Form 10-SB, the Company has not filed
reports with the Securities and Exchange Commission. Once the Company becomes a
reporting company, management anticipates that Forms 3, 4, 5, 10K-SB, 10Q-SB,
8-K and Schedules 13D along with appropriate proxy materials will have to be
filed as they come due. If the Company issues additional shares, the Company may
file additional registration statements for those shares.
The public may read and copy any materials the Company files with the
Securities and Exchange Commission at the Commission's Public Reference Room at
450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain
information on the operation of the Public Reference Room by call the Commission
at 1-800-SEC- 0330. The Commission maintains an Internet site that contains
reports, proxy and information statements, and other information regarding
issuers that file electronically with the Commission. The Internet address of
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the Commission's site is (http://www.sec.gov).
(d) Year 2000 Disclosure
The Company does not anticipate any problem in dealing with computer
entries in the year 2000 or thereafter, with any computers currently used at any
of their facilities. All of the Company's computer systems are new and have been
year 2000 compliant from their acquisition. The Company keeps current with all
updates and revisions with all software the Company currently use. It is
anticipated that the software updates reflect required revisions to accommodate
transactions in the year 2000 and thereafter. Though it is not anticipated that
the Company will have a problem at the turn of the century, the Company intends
to coordinate the resolution of any year 2000 problems with the vendors of the
software the Company utilizes.
Also, the Company has tested all the computerized systems in its food
processing facility for problems associated with the Year 2000 problem. The
Company's computerized systems will function at the turn of century without
disruptions to the Company's operations.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION OR PLAN OF OPERATION
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The Company has not received revenues from operation during the
two-year period immediately preceding the filing of this Form 10-SB.
Plan of Operation
During 1999, the Company plans to focus on efforts opening its potato
processing operations. The Company's product research and development programs
have been completed for purposes of the first twelve months of operations.
Management believes that its physical facilities are complete and ready to
operate.
During the end of the first quarter and the beginning of the second
quarter of 1999, management of the Company intends to develop its sales
procedures and hire a sales staff. In this regard, management of the Company
anticipates that the computer equipment which it has recently purchased will be
used to track purchasers of raw products and sales of processed products.
Management of the Company anticipates hiring approximately 32 individuals to
serve as clerical and operations staff and eight (8) individuals to work as
sales staff.
At the same time, management of the Company anticipates beginning
processing operations. Such operations will require additional personnel to work
in the Company's product control laboratory and man the Company's processing and
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storage facilities. Management of the Company anticipates operating its
facilities with a total of approximately 40 people, which includes sales,
production and administrative personnel.
Management of the Company intends to fund initial operations in the
second quarter of 1999 with cash on hand. If additional cash is required, the
Company will obtain such cash either through conventional financing and/or a
private offering of the Company's securities. Given the fact that the Company's
facilities and equipment are unencumbered, management believes that traditional
financing will be available. Also, management believes that it has had strong
shareholder support for its operations and that any additional cash necessary to
commence operations will be available through a private offering of the
Company's securities. Once operations are under way, management of the Company
intends to add staff, equipment and continued research and development with
revenues generated from sales. Once the Company's facilities are in commercial
production, management believes that it can satisfy the Company's cash
requirements for the next 12 months without additional funds based upon its
revenues from sales.
During the second quarter of 1999, management of the Company
anticipates that initial processing will be conducted three (3) days a week.
Management anticipates that this limited production time will be necessary in
order to resolve any unforeseen problems with the Company's processing
facilities. As the Company gains commercial experience with its operations,
management anticipates that production will increase to the point where the
Company is processing approximately three (3) trailer truckloads of potatoes per
day. Management believes that its operations will be profitable at that point.
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ITEM 3. DESCRIPTION OF PROPERTY
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(a) Principal Plants and Property and Description of Real Estate and
Operating Data.
The Company owns its 150,000 square foot plant situated on 13 acres of
land in Baltimore, Ohio. The Company owns the land in fee simple title. The
property is paid in full with no mortgages or liens The one-level, open-floor
system results in energy savings and reduced product damage and is easy to
expand, maintain and fireproof. The ceiling, floors and walls are being brought
to USDA and FDA standards for the processing of fruit and vegetables. The plant
will accommodate four complete microwave oven systems, has 15 loading docks, a
water system capable of delivering 2,000 gallons of water per minute, and an
8,000 square foot office space. The renovations and adaptations required to
bring the Company's plant into compliance with all necessary regulations and to
prepare it for production have been substantially completed.
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The Company's plant is located approximately 19 miles southeast of
Columbus in Baltimore, Ohio within an 8-hour drive of a market that consumes
over 26 million pounds of produce per day. The facility is just 6 miles south of
a major interstate highway, affording easy access for delivery and shipment of
raw materials and finished product by truck. The plant is also centrally located
to a large supply of raw fruit and vegetables and management has close contacts
with a significant number of growers in the region.
In addition to the Company's 150,000 square foot plant, it has a
150,000 cubic foot freezer. The processing plant is electrically new throughout
with an additional 2,000 AMP service, new plumbing, air, steam well water and
city water line, all new drains and new floors. The entire facility has met all
USDA, FDA, EPA, FDD and Board of Health regulations with full approval for
operation. The plant is fully automated with the newest Allan Bradley
Technology.
The 8,000 square foot office space has been remodeled with a conference
room, marketing and sales rooms, employees training room, new men's and women's
bathrooms, kitchen, break room and 12 offices.
It is management's opinion that the Company's property is adequately
covered by insurance.
(b) Investment Policies
The Company's plan of operations is focused on the continued
development of the food processing systems described in Item 1 of this Part.
Accordingly, the Company has no particular policy regarding each of the
following types of investments:
1. Investments in real estate or interest in real estate;
2. Investments in real estate mortgages; or,
3. Securities of or interests in persons primarily engaged in
real estate activities.
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ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
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(a) Security Ownership of Certain beneficial Owners:
The following information sets forth certain information as of March 1,
1999 about each person who is known to the Company to be the beneficial owner of
more than five percent (5%) of the Company's Common Stock:
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<TABLE>
<CAPTION>
(2)
(1) Name and Address (3) (4)
Title of Beneficial Amount and Nature of Percent of
of Class Owner Beneficial Ownership Class
- -------- -------------------------------- ---------------------------- --------------
<S> <C> <C> <C>
Common Emerald Industries Corporation(1) 74,970,619 58%
210 Water Street
Baltimore, Ohio 43105
(b) Security Ownership of Management:
(2)
(1) Name and Address (3) (4)
Title of Beneficial Amount and Nature of Percent of
of Class Owner Beneficial Ownership Class
- -------- -------------------------------- ---------------------------- --------------
Common Richard J. Cashman 74,970,619 2 58%
210 Water Street
Baltimore, Ohio 43105
Common Daniel K. Cashman 74,970,619 3 58%
210 Water Street
Baltimore, Ohio 43105
Mitch Adams 108,658 Less than 1%
5607 Tara Hill Drive
Dublin, OH 43017
Lawrence Green 459,189 Less than 1%
120 Tuttle Rd.
Springfield, OH 45503
</TABLE>
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1 Richard J. Cashman II, Chairman of the Board and a Director; and
Daniel K. Cashman, President and a Director are the owners of the majority of
shares of Emerald Industries Corporation.
2 Such shares are beneficially owned by Richard J. Cashman II through
his ownership and control of Emerald Industries Corporation. Emerald Industries
Corporation is the owner of record of all 74,970,619 shares.
3 Such shares are beneficially owned by Daniel K. Cashman through his
ownership and control of Emerald Industries Corporation. Emerald Industries
Corporation is the owner of record of all 74,970,619 shares.
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<TABLE>
<CAPTION>
<S> <C> <C> <C>
Tom Heilman 459,189 Less than 1%
130 So. Columbia
Columbus, OH 43209
Doug Katterhenry 149,674 Less than 1%
6464 Old Church Way
Reynoldsburg, OH 43068
Pat Maguire 84,416 Less than 1%
6043 Wilton House Ct.
New Alblany, OH 43054
Kip Merriam 116,599 Less than 1%
556 Oakwood Drive
Pickering, Ontario CANADA L1X 2M7
Frank Moauro 680,000 Less than 1%
377 Talbot Street
W. Leamington, Ontario CANADA N8H 4H3
Tom Rainier 315,036 Less than 1%
223 Via Napoli
Naples, FL 34105
Dr. Harold Rinehart 359,532 Less than 1%
1143 County Road 2256
Perrysville, OH 44875
Philip Risinger 144,675 Less than 1%
Rt. 9, Box 406
Paris, TX 75462
All Directors and 79,448,253 62%
Officers as a Group
</TABLE>
(c) Changes in Control:
There is no arrangement which may result in a change in control.
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ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
CONTROL PERSONS
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(a) Directors and Executive Officers
As of February 22, 1999, the directors and executive officers of the
Company, their ages, positions in the Company, the dates of their initial
election or appointment as director or executive officer, and the expiration of
the terms as directors are as follows:
<TABLE>
<CAPTION>
Period Served As
Name Age Position Officer/Director*
- ---- --- -------- -----------------
<S> <C> <C> <C>
Richard J. Cashman II 48 Chairman of 9-15-83 to present
The Board
Daniel K. Cashman 38 President and 9-15-83 to present
Director
Mitch Adams 40 Vice President 9-20-96 to present
Of Engineering
and Director
Tom Ranier 44 Secretary, 12-19-86 to present
Treasurer and
Director
Tom Heilman 44 Director 9-20-96 to present
Doug Katterhenry 56 Director 9-20-96 to present
Patrick D. Maguire 47 Director 1992 to present
Clifton K. Merriam 54 Director 1992 to present
Frank Moauro 75 Director 1986 to present
Dr. Harold Rinehart 58 Director 1986 to present
Philip Risinger 62 Director 9-20-96 to present
Lawrence Green 70 Director 9-20-96(?) to present
</TABLE>
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Richard J. Cashman II, Chairman of the Board, is the brother of Daniel
K. Cashman, President and Director.
*The Company's directors are elected at the annual meeting of stockholders and
hold office until their successors are elected and qualified. The Company's
officers are appointed annually by the Board of Directors and serve at the
pleasure of the Board.
(b) Business Experience:
Richard J. Cashman II, age 48, is the Chairman of the Board and a
Director of National Fruit and Vegetable Technology Corporation. Mr. Cashman
attended Ohio State University in English, accounting and food science
engineering. Mr. Cashman has been involved for the past 18 years in the research
and development of the Company's food processing plant. He is the C.E.O. of
Platinum Industries, Ltd., an industrial real estate holding company. He was a
certified professional plant manager in 1996. He is the former President of
Steel Parts Manufacturing, Inc., a manufacturer of U.S. Military parts from 1980
through 1985. He has developed a solid foundation of knowledge and expertise in
plant operation and pioneered various new inventions for the newly emerging
fresh potato processing industry.
Daniel K. Cashman, age 38, is the President and a Director of National
Fruit and Vegetable Technology Corporation. He attended Florida State University
in Biological Science, University of Florida in Organic Chemistry, Ohio State in
Biochemistry and University of California in Electro Magnetic Engineering. Mr.
Cashman has been involved for the past ten (10) years in the research and
development in high powered microwave energy to develop a new cooking system,
using 915 MHz frequency, with the goal of producing fruits and vegetables of
superior taste, texture, color and higher in nutritional value. He has been
instrumental in the engineering, designing and building of the Company's food
processing plant with freezer and a 684 foot long microwave oven system. The
plant is fully automated with state-of-the-art food processing equipment. Mr.
Cashman is also the President and Director of Platinum Industries, Ltd., a real
estate holding company, manages 23 full-time employees and sub-contractors,
reviews all corporate and executive decisions made by the Company, including
those for construction, equipment, personnel and technology. His goal for the
Company is to dominate North America's fresh food market with the Company's new
potato products.
Tom Ranier, age 45, is the Secretary, Treasurer and a Director of
National Fruit and Vegetable Technology Corporation. Mr. Ranier earned a B.A. in
Business Administration, Industrial Management and Management Science from
Franklin University in 1981. He is employed at Watkins Printing of Columbus,
Ohio. From 1985 to the present, he was the co-owner and President of Vision
Printing, Inc. and Franklin Printing, Inc. also of Columbus, Ohio. Mr. Rainier
is also the President and owner of Unique Industries, Inc., a sales consulting
firm. From 1981 to 1984, he was a Key Accounts Representative and Sales and
Marketing Director for Copco Papers, Inc. Of Columbus, Ohio.
15
<PAGE>
Mitch Adams, age 40, is Vice President of Engineering and a Director of
National Fruit and Vegetable Technology Corporation. Mr. Adams attend O.I.T. in
electronics and Bliss College in business finance. In 1985 he was involved in
the process control for Pepsi and in 1998 he was involved in the process control
for Anheuser-Busch. He is the C.E.O. and C.F.O. of Adams & Lorimer dba World Gym
Health & Fitness, C.E.O. and C.F.O. for Adams & Ellison in the business of
industrial controls. He manages employees and sub-contractors and reviews
executive decisions, including equipment layout and process control for the
Company.
Lawrence Green, age 70, is a Director of National Fruit and Vegetable
Technology Corporation. Mr. Green has been in the development of land for
residential lots and is the owner of commercial buildings which he maintains.
Mr. Green is also a builder and maintained the storm sewer and drainage lines
for the Company. He is now retired except for his own maintenance work on his
buildings. Served on National Missionary Board of Church of God with offices in
Anderson, Indiana.
Tom Heilman, age 44, is a Director of National Fruit and Vegetable
Technology Corporation. Mr. Heilman is currently President of Continental
Equities, Inc. He is a licensed broker/dealer. He owns and manages commercial
and residential properties through Columbus and Central Ohio. He also raises
equity for private placements, consulting, mergers and acquisitions.
Doug Katterhenry, age 52, is a Director of National Fruit and Vegetable
Technology Corporation. Mr. Katterhenry has a background in new production
introduction and was a product engineer for Lucent Technologies.
Patrick D. Maguire, age 47, is a Director of National Fruit and
Vegetable Technology Corporation. Mr. Maguire has a B.A. from Wittenberg
University in 1973 and a J.D. from Ohio Northern University in 1976. Mr. Maguire
serves as a managing partner with the law firm of Maguire & Schneider in
Columbus, Ohio. Previously he worked as Assistant County Prosecutor of Franklin
County and with a number of Columbus law firms over the past 20 years.
Clifton K. Merriam, age 54, is a Director of National Fruit and
Vegetable Technology Corporation. Mr. Merriam has been involved with marketing
and sales during the past 26 years. He currently serves with Family Trust Real
Estate in Ontario, Canada.
Frank Moauro, age 75, is a Director of National Fruit and Vegetable
Technology Corporation. From 1970 to the present he has been co-owner of Moauro
Farms Limited of Leamington, Ontario, a fruit and vegetable farming enterprise.
He is also in the Standardbred horse business. From 1980 to the present, Mr.
Moauro has been President of Glenriver Investments, a vegetable greenhouse
plant. He has over 36 years experience in fruit and vegetable farming,
management and sales.
16
<PAGE>
Dr, Harold Rinehart, age 59, is a Director of National Fruit and
Vegetable Technology Corporation. Dr. Rinehart graduated from the National
College of Chiropractic on 1963. From 1963 to the present, Dr. Rinehart has been
a practicing chiropractor in Loudonville, Ohio. He is also the former President
and owner of the Weight Loss and Control Center in Loudonville and the former
owner and President of the H.G. Rinehart Company, a Columbus, Ohio brokerage
firm.
Philip Risinger, age 62, is a Director of National Fruit and Vegetable
Technology Corporation. Mr. Risinger is a Plant Manager for Oliver Rubber
Company's Paris, Texas plant.
(c) Directors of Other Reporting Companies:
None of the directors are directors of other reporting companies.
(d) Employees:
The officers and directors who are identified above are the significant
employees of the Company.
(e) Family Relationships:
Richard J. Cashman II, Chairman of the Board, is the brother of Daniel
K. Cashman, President and Director.
(f) Involvement in Certain Legal Proceedings:
None of the officers and directors of the Company have been involved in
the past five (5) years in any of the following:
(1) Bankruptcy proceedings;
(2) Subject to criminal proceedings or convicted of a criminal act;
(3) Subject to any order, judgment or decree entered by any Court
for violating any laws relating to business, securities or
banking activities; or
(4) Subject to any order for violation of federal or state
securities laws or commodities laws.
17
<PAGE>
- --------------------------------------------------------------------------------
ITEM 6. EXECUTIVE COMPENSATION
- --------------------------------------------------------------------------------
The following table sets forth information about compensation paid or
accrued by the Company during the years ended December 31, 1998, 1997 and 1996
to the Company's officers and directors. None of the Executive Officers of the
Company earned more than $100,000 during the years ended December 31, 1998, 1997
and 1996.
<TABLE>
Summary Compensation Table
<CAPTION>
Long Term Compensation
----------------------------------------
Annual Compensation Awards Payouts
------------------- ------ -------
(e) (g)
Other (f) Securities (i)
(a) Annual Restricted Under- (h) Other
Name and (c) (d) Compen- Stock Lying LTIP Compen-
Principal (b) Salary Bonus sation Awards Options/ Payouts sation
Position Year $ ($) ($) ($) SARs(#) ($) ($)
- -------- ------ ------- ------ ------- -------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Richard J. Cashman II
Chairman of 1998 $ None $ None $ None $ None None None None
the Board 1997 $ None $ None $ None $ None None None None
1996 $ None $ None $ None $ None None None None
Daniel K. Cashman
President and 1998 $20,500 $ None $ None $ None None None None
Director 1997 $20,000 $ None $ None $ none None None None
1996 $26,300 $ None $ None $ None None None None
Tom Ranier
Secretary, 1998 $ 4,470 $ None $ None $ None None None None
Assistant 1997 $ 8,231 $ None $ None $ none None None None
Treasurer,Dir. 1996 $ 3,000 $ None $ None $ None None None None
Mitch Adams
Vice President 1998 $24,645 $ None $ None $ None None None None
Engineering 1997 $18,245 $ None $ None $ none None None None
and Director 1996 $ None $ None $ None $ None None None None
Lawrence Green
Director 1998 $ None $ None $ None $ None None None None
1997 $ None $ None $ None $ none None None None
1996 $ None $ None $ None $ None None None None
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Tom Heilman
Director 1998 $ None $ None $ None $ None None None None
1997 $ None $ None $ None $ none None None None
1996 $ None $ None $ None $ None None None None
Doug Katterhenry
Director 1998 $ None $ None $ None $ None None None None
1997 $ None $ None $ None $ none None None None
1996 $ None $ None $ None $ None None None None
Pat Maguire
Director 1998 $ None $ None $ None $ None None None None
1997 $ None $ None $ None $ none None None None
1996 $ None $ None $ None $ None None None None
Clifton K. Merriam
Director 1998 $ None $ None $ None $ None None None None
1997 $ None $ None $ None $ none None None None
1996 $ None $ None $ None $ None None None None
Frank Moauro
Director 1998 $ None $ None $ None $ None None None None
1997 $ None $ None $ None $ none None None None
1996 $ None $ None $ None $ None None None None
Dr. Harold Rinehart
Director 1998 $ None $ None $ None $ None None None None
1997 $ None $ None $ None $ none None None None
1996 $ None $ None $ None $ None None None None
Philip Risinger
Director 1998 $ None $ None $ None $ None None None None
1997 $ None $ None $ None $ none None None None
1996 $ None $ None $ None $ None None None None
</TABLE>
19
<PAGE>
- --------------------------------------------------------------------------------
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------------------------------
During the past two (2) years, the Company has not entered into a
transaction with a value in excess of $60,000 with a director, officer or
beneficial owner of 5% or more of the Company's capital stock, except as
follows:
The Company purchased food processing equipment salvaged from property
owned by a corporation owned by the officers and principal shareholders of the
Company, Richard J. Cashman II and Daniel K. Cashman. There were no purchases in
1998. Purchases were $122,500 in 1997. Management and the Company's Board of
Directors have determined that the equipment was sold to the Company at a price
that does not exceed fair market value.
The Company rents a storage facility owned by the officers and
principal shareholders of the Company, Richard J. Cashman II and Daniel K.
Cashman. The lease arrangement is renewable on an annual basis. Rent expense for
the facility was $200,000 in both 1998 and 1997. Of the total $400,000, only
$67,519 has been paid leaving a balance of $332,481 unpaid.
On May 26, 1995, Lawrence R. Green and Arretta M. Green loaned the
Company $50,000. Lawrence R. Green and Arretta M. Green are shareholders of the
Company. In exchange for the loan, the Company executed a Promissory Note in the
amount of $50,000 with an interest rate of 11% per annum, compounded
semi-annually. Initially the Note was for a period of 18 months, however,
payment of the Note has been extended to May of 1999. In addition, Lawrence R.
Green and Arretta M. Green have the option of accepting $25,000 plus 50,000
shares of the Company's capital stock as payment of the Note. Richard J. Cashman
II and Daniel K. Cashman, officers and directors of the Company, personally
guaranteed the May 26, 1995 loan.
On October 14, 1997, Lawrence R. Green and Arretta M. Green loaned the
Company $50,000. Lawrence R. Green and Arretta M. Green are shareholders of the
Company. In exchange for the loan, the Company executed a Promissory Note in the
amount of $50,000 with an interest rate of 11% per annum, compounded
semi-annually. Initially the Note was for a period of 12 months, however,
payment of the Note has been extended to October of 1999. In addition, Lawrence
R. Green and Arretta M. Green have the option of accepting $25,000 plus 50,000
shares of the Company's capital stock as payment of the Note.
On November 12, 1997, Lawrence R. Green and Arretta M. Green loaned the
Company $100,000. Lawrence R. Green and Arretta M. Green are shareholders of the
Company. In exchange for the loan, the Company executed a Promissory Note in the
amount of $100,000 with an interest rate of 11% per annum, compounded
semi-annually. Initially the Note was for a period of 6 months, however, payment
of the Note has been extended to May of 1999. In addition, Lawrence R. Green and
Arretta M. Green have the option of accepting $50,000 plus 100,000 shares of the
Company's capital stock as payment of the Note.
20
<PAGE>
On August 15, 1998, Lawrence R. Green and Arretta M. Green loaned the
Company $50,000. Lawrence R. Green and Arretta M. Green are shareholders of the
Company. In exchange for the loan, the Company executed a Promissory Note in the
amount of $50,000 with an interest rate of 11% per annum, compounded
semi-annually. The Note is due on February 15, 2000. In addition, Lawrence R.
Green and Arretta M. Green have the option of accepting $25,000 plus 50,000
shares of the Company's capital stock as payment of the Note.
On October 9, 1998, Lawrence R. Green and Arretta M. Green loaned the
Company $50,000. Lawrence R. Green and Arretta M. Green are shareholders of the
Company. In exchange for the loan, the Company executed a Promissory Note in the
amount of $50,000 with an interest rate of 11% per annum, compounded
semi-annually. The Note is for a period of 12 months and is payable on October
9, 1999. In addition, Lawrence R. Green and Arretta M. Green have the option of
accepting $25,000 plus 50,000 shares of the Company's capital stock as payment
of the Note.
On November 3, 1998, Lawrence R. Green and Arretta M. Green loaned the
Company $100,000. Lawrence R. Green and Arretta M. Green are shareholders of the
Company. In exchange for the loan, the Company executed a Promissory Note in the
amount of $100,000 with an interest rate of 11% per annum, compounded
semi-annually. The Note was for a period of 24 months and is payable on November
3, 2000. In addition, Lawrence R. Green and Arretta M. Green have the option of
accepting $50,000 plus 100,000 shares of the Company's capital stock as payment
of the Note.
- --------------------------------------------------------------------------------
ITEM 8. LEGAL PROCEEDINGS
- --------------------------------------------------------------------------------
The Company is not party to, and none of the Company's property is
subject to, any pending or threatened legal, governmental, administrative or
judicial proceedings that will have a materially adverse effect upon the
Company's financial condition or operation.
- --------------------------------------------------------------------------------
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON REGISTRANT'S
COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
- --------------------------------------------------------------------------------
Market Information:
The common stock of the Company currently is not trading on any
21
<PAGE>
exchange. Management anticipates that the Company's shares will be qualified on
the system of the National Association of Securities Dealers, Inc. ("NASD")
known as the Bulletin Board.
There has been no market for the Company's stock in the last two years.
Accordingly, the Company has no range of high and low bid prices for the
Company's common stock to report.
Holders:
There were approximately 1,254 holders of record of the Company's
common stock as of March 1, 1999.
Dividends:
The Company has never paid cash dividends on its stock and does not
intend to do so in the foreseeable future. The Company currently intends to
retain its earnings for the operation and expansion of its business. The
Company's continued need to retain earnings for operations and expansion are
likely to limit the Company's ability to pay dividends in the future.
- --------------------------------------------------------------------------------
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
- --------------------------------------------------------------------------------
On or about March 22, 1996, the Company issued 5,000 shares of its
capital stock to Patrick D. and Kathy L. Maguire in exchange for legal services.
Such services were valued at $2,500 and shares were issued at the rate of $0.50
per share. Such shares were issued pursuant to the exemption from registration
under Section 4(2) of the Securities Act of 1933, as amended.
On or about March 22, 1996, the Company issued 5,000 shares of its
capital stock to Karl H. and Jennifer Schneider in exchange for legal services.
Such services were valued at $2,500 and shares were issued at the rate of $0.50
per share. Such shares were issued pursuant to the exemption from registration
under Section 4(2) of the Securities Act of 1933, as amended.
On or about April 30, 1996, the Company issued 20,000 shares of its
capital stock to Lawrence R. and Arretta M. Green in exchange for construction
services. Such services were valued at $10,000 and shares were issued at the
rate of $0.50 per share. Such shares were issued pursuant to the exemption from
registration under Section 4(2) of the Securities Act of 1933, as amended.
22
<PAGE>
On or about December 5, 1996, the Company issued 13,260 shares of its
capital stock to William David Farley in exchange for services incidental to the
Company's operations such as loading trucks and hauling dirt. Such services were
valued at $6,630 and shares were issued at the rate of $0.50 per share. Such
shares were issued pursuant to the exemption from registration under Section
4(2) of the Securities Act of 1933, as amended.
On or about March 8, 1997, the Company issued 52,000 shares of its
capital stock to William and/or Nancy Jane Gregory in exchange for services they
rendered in the Company's machine shop. Such services were valued at $26,000 and
shares were issued at the rate of $0.50 per share. Such shares were issued
pursuant to the exemption from registration under Section 4(2) of the Securities
Act of 1933, as amended.
In July of 1997, the Company issued 40,000 shares of its capital stock
to Tom Rainier in exchange for marketing services he rendered for the Company.
Such services were valued at $20,000 and the shares were issued at the rate of
$0.50 per share. Such shares were issued pursuant to the exemption from
registration under Section 4(2) of the Securities Act of 1933, as amended.
In July of 1997, the Company issued 3,900 shares of its capital stock
to Jodell Thomas in exchange for general labor at the Company's facilities. Such
services were valued at $1,950 and the shares were issued at the rate of $0.50
per share. Such shares were issued pursuant to the exemption from registration
under Section 4(2) of the Securities Act of 1933, as amended.
23
<PAGE>
On or about November 18, 1997, the Company issued 48,417 shares of its
capital stock to Lawrence R. and Arretta M. Green in exchange for $24,209 of
accrued interest on promissory notes payable to the Greens. The Company also
issued 16,544 shares to the Green in exchange for plumbing services performed
for the Company. Such services were valued at $8,272. All the shares issued to
the Greens on November 18, 1997 were issued at the rate of $0.50 per share. Such
shares were issued pursuant to the exemption from registration under Section
04(2) of the Securities Act of 1933, as amended.
On or about December 3, 1997, the Company issued 48,295 shares of its
capital stock to Industrial Commercial Equipment Company in exchange for
services on the Company's refrigeration system. Such services were valued at
$24,147.50 and shares were issued at the rate of $0.50 per share. Such shares
were issued pursuant to the exemption from registration under Section 4(2) of
the Securities Act of 1933, as amended.
On or about March 2, 1998, the Company issued 4,000 shares of its
capital stock to Richard Osler in exchange for machine shop services performed
by Bill Gregory. These shares were issued to Mr. Osler and Mr. Gregory's
instruction. Such services were valued at $2,000 and shares were issued at the
rate of $0.50 per share. Such shares were issued pursuant to the exemption from
registration under Section 4(2) of the Securities Act of 1933, as amended.
On or about March 2, 1998, the Company issued 17,141 shares of its
capital stock to William Gregory in exchange for services he rendered in the
Company's machine shop. Such services were valued at $8,574 and shares were
issued at the rate of $0.50 per share. Such shares were issued pursuant to the
exemption from registration under Section 4(2) of the Securities Act of 1933, as
amended.
On or about September 25, 1998, the Company issued 11,147 shares of its
capital stock to William Gregory in exchange for services he rendered at the
Company's machine shop. Such services were valued at $5,573.50 and shares were
issued at the rate of $0.50 per share. Such shares were issued pursuant to the
exemption from registration under Section 4(2) of the Securities Act of 1933, as
amended.
On or about February 9, 1999, the Company issued 40,000 of its capital
stock to Lawrence R. and Arretta M. Green in exchange for sewer installation,
catch basin, cement work, and well house services at the Company's operating
facility. Such services were valued at $19,511 and shares were issued at the
rate of $0.50 per share. The Greens also paid the Company $489 as consideration
for these shares. Such shares were issued pursuant to the exemption from
registration under Section 4(2) of the Securities Act of 1933, as amended.
On February 28, 1999, the Company issued a total of 49,108,289 shares.
Such shares were issued to the Company's shareholders. Each shareholder received
a number of shares equal to 6% of the number of shares the shareholder owned
annually. For example, if a shareholder owned 100 shares beginning in 1997, that
shareholder would have received 12 shares of stock. No fractional shares were
issued. The Company issued such shares based upon past representations made by
management of the Company to shareholders that such shares would be issued at
some point in the future.
24
<PAGE>
- --------------------------------------------------------------------------------
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE
REGISTERED
- --------------------------------------------------------------------------------
The Company is registering all of its issued and outstanding shares of
its capital stock with a par value of One Mill ($0.001) per share. On March 1,
1999, there were 128,362,789 shares of stock issued and outstanding.
Capital Stock
Each of the holders of record of stock is entitled to one (1) vote per
share thereof at all shareholder meetings for all purposes, including the
election of the Company's directors and all other matters submitted to such
holders for a vote of stockholders; to share ratably in all dividends, when, as,
and if declared by the Company's Board of Directors from funds legally available
therefor; and to share ratably in all assets available for distribution to
holders of record of capital stock upon liquidation or dissolution after the
payment of all debts and other liabilities. Shares of common stock are not
redeemable and the holders have no conversion rights, pre-emptive or other
rights to subscribe to or purchase additional shares in the event of a
subsequent offering. The common stock does not carry cumulative voting rights.
All issued and outstanding shares of common stock are fully-paid and
non-assessable.
There are no limitations or restrictions upon the rights of the Board
of Directors to declare dividends out of any funds legally available therefor.
The Company has not paid dividends to date and it is not anticipated that any
dividends will be paid in the foreseeable future. The Board of Directors
initially may follow a policy of retaining earnings, if any, to finance the
future growth of the Company. Accordingly, future dividends, if any, will depend
upon, among other considerations, the Company's need for working capital and its
financial condition at the time.
The Company may, if approved at the general meeting of shareholders,
resolve to authorize the Board of Directors to declare and pay dividends to the
Company's shareholders in the form of bonus shares. The shareholders would
receive bonus shares in lieu of cash dividends, if any, declared and paid by the
Company.
"Anti-Takeover" Provisions. Although the Board of Directors is not
presently aware of any takeover attempts, the Company's Certificate of
Incorporation and By-laws contain certain provisions which may be deemed to be
"anti-takeover" in nature in that such provisions may deter, discourage, or make
more difficult the assumption of control of the Company by another corporation
or person through a tender offer, merger, proxy contest or similar transaction
or series of transactions. These provisions were adopted unanimously by the
Board of Directors and approved by the stockholders of the Company.
25
<PAGE>
Authorized but Unissued Shares. The Company has authorized
10,000,000,000 shares of common stock. These shares were authorized for the
purpose of providing the Board of Directors of the Company with as much
flexibility as possible to issue additional shares for proper corporate purposes
including equity financing, acquisitions, mergers, stock dividends, stock
splits, stock options and other purposes. The Company has no agreements,
commitments or plans at this time for the sale or use of its shares of common
stock except as described herein. Through March 1, 1999, the Company had issued
128,362,789 shares of stock.
No Cumulative Voting. The Company's Certificate of Incorporation and
By-laws do not contain any provisions for cumulative voting. Cumulative voting
entitles stockholders to as many votes as equal the number of shares owned by
such holder multiplied by the number of directors to be elected. A stockholder
may cast all these votes for one candidate or distribute them among any two or
more candidates. Thus, cumulative voting for the election of directors allows a
stockholder or group of stockholders who hold less than fifty percent (50%) of
the outstanding shares voting to elect one or more members of a Board of
Directors. Without cumulative voting for the election of directors, the vote of
holders of a plurality of the shares voting is required to elect any member of a
Board of Directors and would be sufficient to elect all the members of the Board
of Directors being elected.
General Effect of Anti-Takeover Provisions. The overall effect of these
provisions may be to deter a future tender offer or other takeover attempt that
some stockholders might view to be in their best interest as the offer might
include a premium over the market price of the Company's capital stock at that
time. In addition, these provisions may have the effect of assisting the
Company's current management in retaining its position and place it in a better
position to resist changes which some stockholders may want to make if
dissatisfied with the conduct of the Company's business.
Voting Rights. Except as set forth below, every holder of shares
present in person or by proxy or by representative, attorney or proxy appointed
under the Company's By-laws at a meeting of shareholders has one vote on a vote
taken by a show of hands, and on a poll every holder of shares who is present in
person or by proxy or representative has one vote for every fully paid share
held by him, registered in each shareholder's name on the Company's stockholder
list. Unless a poll is demanded, every question submitted to a meeting of
holders of shares shall be decided by a show of hands of the shareholders
present and entitled to vote. In the case of an equality of votes, in either a
poll or a show of hands, the chairman shall have a second or casting vote.
Notwithstanding the above, restrictions are imposed on voting rights in the
following circumstances: (a) if two or more persons are registered as the holder
of the share, the only one of the holders entitled to vote is the senior who
26
<PAGE>
tenders a vote, seniority being determined by the order of names in the
company's list of stockholders; (b) if the terms upon which the shares was
issued restrict the voting rights attaching to that share, the holder is
entitled to vote only in accordance with the terms upon which that share was
issued (neither any shares currently outstanding nor the common shares have
restricted voting rights).
Article II Section 5 of the Company's By-laws allows that the holders
of a majority of the issued and outstanding shares of the common stock of the
Company entitled to vote thereat, present in person or represented by proxy,
shall constitute a quorum for the transaction of business at all meetings of the
stockholders. All resolutions (e.g. resolutions for the election of directors,
the approval of increase in authorized capital, approval of financial
statements, amending the Articles of Incorporation and By-laws; authorizing
liquidation or a going private transaction) require the affirmative vote of the
holders of a majority of the issued and outstanding shares of the common stock
of the Company entitled to vote.
Not less than ten days' notice of any general shareholders meeting,
specifying the place, day and hour of the meeting, specifying the general nature
of the business, shall be given to the shareholders.
Article III Section 4 of the Company's By-laws allows that any director
or the entire Board of Directors may be removed, at any time, with or without
cause, by the holders of a majority of the shares then entitled to vote with or
without a stockholders meeting.
Certain Voting Requirements. The affirmative vote of the holders of a
majority of the shares present at a shareholders meeting and entitled to vote
generally constitutes shareholder approval or authorization of matters for which
such approval or authorization is required. A sale or transfer of substantially
all of the Company's assets, liquidation, merger, consolidation, reorganization
or similar extraordinary corporate action generally requires the affirmative
vote of a majority of the shares outstanding and entitled to vote thereon.
Offerings of Shares. On February 15, 1992, the Company offered for sale
25,000 shares (minimum) and 2,500,000 shares (maximum) at $2.00 per share in
accordance with Rule 506 of the Securities Act of 1933, as amended. Prior to
this offering, there was no other offering of the Company's stock and there was
no public market for the stock of the Company. The price to the public for the
stock was determined after careful analysis by management of the Company and was
based on, among other things, the Company's financial condition, its future
prospects and the prospects for its industry in general, the management of the
Company and the market prices of securities for companies in businesses similar
to that of the Company. The offering was unsuccessful and all funds collected
were returned to the prospective purchasers and no shares were issued.
Restricted Shares. Restricted shares may not be sold unless they are
registered or are sold pursuant to an applicable exemption from registration,
including pursuant to Rule 144.
27
<PAGE>
Reports to Shareholders. The Company intends to furnish its
shareholders with annual reports containing financial statements for each fiscal
year containing unaudited summary financial information and such other periodic
reports as it may deem appropriate or as required by law.
- --------------------------------------------------------------------------------
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
- --------------------------------------------------------------------------------
Section 78.751 of the Nevada General Corporation Law allows the Company
to indemnify any person who was or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding by reason of the
fact that he or she is or was a director, officer, employee or agent of the
Company or is or was serving at the request of the Company as a director,
officer, employee or agent of any corporation, partnership, joint venture, trust
or other enterprise. The Company may advance expenses in connection with
defending any such proceeding, provided the indemnitee undertakes to pay any
such amounts if it is later determined that such person was not entitled to be
indemnified by the Company.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
- --------------------------------------------------------------------------------
ITEM 13. Financial Statements
- --------------------------------------------------------------------------------
National Fruit and Vegetable
Technology Corporation
(A Development Stage Corporation)
Financial Statements
For the periods ended December 31, 1998 and 1997
Together with Report of Independent Public Accountants
<PAGE>
ICKERT & COMPANY, LLC
---------------------
CERTIFIED PUBLIC ACCOUNTANTS
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To the Board of Directors
National Fruit and Vegetable Technology Corporation:
We have audited the accompanying balance sheets of National Fruit and Vegetable
Technology Corporation (a Nevada Development Stage Corporation) as of December
31, 1998 and 1997, and the related statements of loss and accumulated deficit,
shareholders' equity, and cash flows for the years then ended and for the period
from September 14, 1983 (date of inception) through December 31, 1998. 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 audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of National Fruit and Vegetable
Technology Corporation as of December 31, 1998 and 1997, and the results of its
operations and its cash flows for the periods then ended in conformity with
generally accepted accounting principles.
As discussed more fully in the Notes to Financial Statements, certain assets
(primarily a microwave oven system and the related technology, amounting to
$22,620,000 or 65% of total assets) have been valued at amounts representing
management's determination of fair value. The determination of fair value
involves subjective judgment which is not always susceptible to substantiation
by auditing procedures.
<PAGE>
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1, the Company
has been in the development stage since its inception on September 14, 1983.
Realization of a major portion of the assets is dependent on the Company's
ability to meet its financial requirements and place the microwave oven system
into operation on a profitable basis, the outcome of which cannot be determined
at this time. The financial statements do not include any adjustments that might
result from the outcome of these uncertainties.
January 25, 1999 Ickert & Company, LLC
Columbus, Ohio.
<PAGE>
<TABLE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Balance Sheets
As of December 31,
<CAPTION>
1998 1997
- --------------------------------------------------------------------------------------------------------------------
Assets
- --------------------------------------------------------------------------------------------------------------------
Current assets
<S> <C> <C>
Cash $ 349,700 $ 633,300
Prepaid expenses 3,800 13,300
- --------------------------------------------------------------------------------------------------------------------
353,500 646,600
- --------------------------------------------------------------------------------------------------------------------
Property & equipment 33,828,200 32,360,100
Accumulated depreciation (695,800) (647,600)
- --------------------------------------------------------------------------------------------------------------------
33,132,400 31,712,500
- --------------------------------------------------------------------------------------------------------------------
Deferred organization costs 1,058,600 1,058,600
- --------------------------------------------------------------------------------------------------------------------
Total assets $ 34,544,500 $ 33,417,700
====================================================================================================================
- --------------------------------------------------------------------------------------------------------------------
Liabilities & Shareholders' Equity
- --------------------------------------------------------------------------------------------------------------------
Current liabilities
Current portion of long-term debt $ 57,900 $ 161,700
Current portion of notes payable to shareholder 250,000 200,000
Accounts payable 463,300 327,700
Accrued expenses 134,100 135,500
- --------------------------------------------------------------------------------------------------------------------
905,300 824,900
- --------------------------------------------------------------------------------------------------------------------
Long-term obligations
Long-term debt 3,000 16,000
Capital leases 67,900 76,200
Notes payable to shareholder 150,000 --
- --------------------------------------------------------------------------------------------------------------------
220,900 92,200
- --------------------------------------------------------------------------------------------------------------------
Deferred income taxes 4,724,000 4,999,000
Shareholders' equity
Common stock 79,200 76,000
Additional paid-in capital 31,381,500 29,777,800
Deficit accumulated during the development stage (2,766,400) (2,352,200)
- --------------------------------------------------------------------------------------------------------------------
28,694,300 27,501,600
- --------------------------------------------------------------------------------------------------------------------
Total liabilities & shareholders' equity $ 34,544,500 $ 33,417,700
====================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Statements of Loss and Accumulated Deficit
For the periods ended December 31,
<CAPTION>
Cumulative
During
Development
1998 1997 Stage
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Costs and expenses
General and administrative $ 509,300 $ 562,500 $ 3,804,100
Depreciation and amortization 132,900 112,600 1,211,600
Research and development -- 21,700 297,100
Loss on property disposal -- -- 717,800
- ----------------------------------------------------------------------------------------
Loss from operations 642,200 696,800 6,030,600
- ----------------------------------------------------------------------------------------
Other income (expense)
Interest income -- 18,500 83,900
Interest expense (33,600) (26,800) (236,700)
Gain (loss) on sale of assets (13,400) -- (6,000)
- ----------------------------------------------------------------------------------------
Loss before income tax 689,200 705,100 6,189,400
- ----------------------------------------------------------------------------------------
Income tax expense (benefit) (275,000) (281,000) (3,423,000)
- ----------------------------------------------------------------------------------------
Net loss 414,200 424,100 2,766,400
- ----------------------------------------------------------------------------------------
Accumulated deficit -- Beginning of period 2,352,200 1,928,100 --
- ----------------------------------------------------------------------------------------
Accumulated deficit -- End of period $ 2,766,400 $ 2,352,200 $ 2,766,400
========================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Statements of Shareholders' Equity
For the periods ended December 31,
<CAPTION>
Common Stock
(par value $ .001 per share) Additional
Shares Amount Paid-in Capital
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Stock issued at inception (September 14, 1983) 6,941,400 $ 69,400 $ 12,607,800
Stock issued in exchange for cash, other assets
or expenses through November 17, 1986
at $3.00 per share 709,900 7,100 2,122,700
Stock issued November 17, 1986
six-for-one split to adjust share price
to $ .50 per share 38,255,500 382,600 (382,600)
Adjustment to reflect change in par value
to $ .001 per share -- (413,200) 413,200
Stock issued to acquire assets of
Veg-Tec Corporation during 1986
at $ .50 per share 3,506,400 3,500 1,749,700
Stock issued in exchange for cash, other assets
or expenses from November 18, 1986
through December 31, 1996 at $ .50 per share
(net of redemptions) 21,055,800 21,100 10,506,300
Net loss through December 31, 1996 -- -- --
- ----------------------------------------------------------------------------------------------
Balance December 31, 1996 70,469,000 70,500 27,017,100
- ----------------------------------------------------------------------------------------------
Stock issued in exchange for cash, other assets
or expenses during 1997
at $ .50 per share (net of redemptions) 5,532,600 5,500 2,760,700
Net loss for the year ended December 31, 1997 -- -- --
- ----------------------------------------------------------------------------------------------
Balance December 31, 1997 76,001,600 76,000 29,777,800
- ----------------------------------------------------------------------------------------------
Stock issued in exchange for cash, other assets
or expenses during 1998
at $ .50 per share (net of redemptions) 3,213,900 3,200 1,603,700
Net loss for the year ended December 31, 1998 -- -- --
- ----------------------------------------------------------------------------------------------
Balance December 31, 1998 79,215,500 $ 79,200 $ 31,381,500
- ----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Statements of Shareholders' Equity
For the periods ended December 31,
(Table continued from previous page)
<CAPTION>
Stock
Accumulated Subscriptions
Deficit Receivable Total
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Stock issued at inception (September 14, 1983) $ 0 $ 0 $ 12,677,200
Stock issued in exchange for cash, other assets
or expenses through November 17, 1986
at $3.00 per share -- -- 2,129,800
Stock issued November 17, 1986
six-for-one split to adjust share price
to $ .50 per share -- -- 0
Adjustment to reflect change in par value
to $ .001 per share -- -- 0
Stock issued to acquire assets of
Veg-Tec Corporation during 1986
at $ .50 per share -- -- 1,753,200
Stock issued in exchange for cash, other assets
or expenses from November 18, 1986
through December 31, 1996 at $ .50 per share
(net of redemptions) -- (508,000) 10,019,400
Net loss through December 31, 1996 (1,928,100) -- (1,928,100)
- ----------------------------------------------------------------------------------------------
Balance December 31, 1996 (1,928,100) (508,000) 24,651,500
- ----------------------------------------------------------------------------------------------
Stock issued in exchange for cash, other assets
or expenses during 1997
at $ .50 per share (net of redemptions) -- 508,000 3,274,200
Net loss for the year ended December 31, 1997 (424,100) -- (424,100)
- ----------------------------------------------------------------------------------------------
Balance December 31, 1997 (2,352,200) 0 27,501,600
- ----------------------------------------------------------------------------------------------
Stock issued in exchange for cash, other assets
or expenses during 1998
at $ .50 per share (net of redemptions) -- -- 1,606,900
Net loss for the year ended December 31, 1998 (414,200) -- (414,200)
- ----------------------------------------------------------------------------------------------
Balance December 31, 1998 $ (2,766,400) $ 0 $ 28,694,300
==============================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Statements of Cash Flows
For the periods ended December 31,
<CAPTION>
Cumulative
During
Development
1998 1997 Stage
- -------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities
<S> <C> <C> <C>
Net loss $ (414,200) $ (424,100) $ (2,766,400)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 132,900 112,600 1,211,600
(Gain) loss on sale of equipment 13,400 -- 6,000
Loss on property disposal -- -- 717,800
Common stock issued for operating expenses 2,000 44,100 286,100
Deferred income taxes (275,000) (281,000) (3,423,000)
Sources (uses) of cash from change in:
Notes and accounts receivable -- 84,900 (100)
Inventory -- -- 51,800
Deposits 9,500 (7,400) (3,800)
Deferred organization costs -- -- (451,600)
Accounts payable 135,600 280,800 463,300
Accrued expenses (1,400) (15,200) 134,000
- -------------------------------------------------------------------------------------------------------------------
Net cash used in operating activities (397,200) (205,300) (3,774,300)
- -------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities
Purchases of property and equipment (1,480,800) (2,367,700) (11,048,000)
Sale of property and equipment -- -- 219,200
- -------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (1,480,800) (2,367,700) (10,828,800)
- -------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities
Proceeds from issuance of long-term debt -- -- 1,112,100
Principal payments on long-term debt (131,000) (104,600) (681,000)
Proceeds from notes payable to shareholder 200,000 150,000 525,000
Principal payments on notes payable to shareholder -- -- (125,000)
Proceeds from capital leases -- -- 90,700
Principal payments on capital leases (67,000) (28,100) (142,100)
Increases in advances payable -- -- 229,300
Proceeds from issuance of common stock 1,606,900 2,616,700 14,190,300
Redemption of common stock (14,500) (43,000) (246,500)
- -------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 1,594,400 2,591,000 14,952,800
- -------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash (283,600) 18,000 349,700
Cash -- Beginning of period 633,300 615,300 --
- -------------------------------------------------------------------------------------------------------------------
Cash -- End of period $ 349,700 $ 633,300 $ 349,700
===================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Notes to Financial Statements
As of December 31, 1998 and 1997
Note 1. Business Organization and Asset Valuation
National Fruit and Vegetable Technology Corporation (the Company) was
incorporated in Nevada in December, 1986. The Company was formed to develop a
high-speed, high-powered microwave oven capable of processing fruits and
vegetables. The Company's products will be sold to customers in both wholesale
food processing and the food service industries. Initially, the Company intends
to process baked and french fried potatoes. As the business develops, it intends
to branch out into other fruits and vegetables using the microwave technology
developed in processing potatoes. The Company has not begun food processing
operations as of the date of these financial statements and has not generated
any revenues from food processing operations.
The Company acquired National Veg-Tec Corporation (Veg-Tec) on March 2, 1987, by
exchanging 49,346,800 shares of the Company's stock on a one-for-one basis for
Veg-Tec's stock. As a result of the exchange, the financial statements are
presented as if National Fruit and Vegetable Technology Corporation had been in
existence since the inception of Veg-Tec, its predecessor. Veg-Tec was
incorporated in September, 1983.
Veg-Tec was formed by exchanging stock for property, equipment and technology
owned by an unincorporated joint venture. The joint venture carried on extensive
research and development in microwave technology and was operated by the
Company's majority shareholders. The assets originally transferred to Veg-Tec
consisted of:
Microwave oven & related technology $ 19,153,200
Food processing equipment 632,400
Machinery & equipment 431,500
Trucks & automobiles 468,000
Other assets 139,100
--------------
$ 20,824,200
==============
<PAGE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Notes to Financial Statements
These assets were contributed to Veg-Tec at fair value, as determined by
management. The valuation is based on management's appraisal of the market
potential for products processed by the Company's microwave oven system and by
individuals familiar with the process, the food processing industry, and its
markets. The valuation process is subjective in nature and is not an attempt to
represent the actual costs incurred to build the oven and develop the
technology. Because the oven and its technology are new, the recoverability of
its recorded value is dependent on the Company's ability to obtain the financing
needed to place the oven into operation on a profitable basis, the outcome of
which cannot be determined at this time.
In 1986, the Company acquired Veg-Tec Corporation, an Ohio corporation, by
exchanging 3,506,400 shares of common stock for all the issued and outstanding
stock of Veg-Tec Corporation. The shares exchanged were valued at $.50 per share
representing a purchase price of $1,753,200 which was recorded on the books of
Veg-Tec Corporation as follows:
Note receivable $ 503,200
Food processing equipment 750,000
Patent 500,000
-----------
$ 1,753,200
===========
The acquisition was accounted for as a purchase. Veg-Tec Corporation's principal
purpose was to develop markets for and place into profitable operation its two
primary assets which consisted of a browning oven and related technology and a
harness racing sulky patent developed by its principal shareholders. These
shareholders are also the principal shareholders of the Company. Veg-Tec
Corporation had not commenced operations as of the date of the sale and had not
generated any revenues or expenses.
The two primary assets acquired by the Company, a browning oven and related
technology ($750,000) and the patent for a harness racing sulky ($500,000) were
contributed at fair value as determined by management of the Company. The
valuations are based on an appraisal of the market potential of the assets and
is subjective in nature and does not represent actual costs incurred. Management
intends to integrate the browning oven into the food processing operation. The
unamortized balance of the sulky patent was written off as management
concentrated the Company's energy and resources on the development of food
processing operations.
Page 2
<PAGE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Notes to Financial Statements
The recoverability of the recorded value of the browning oven and related
technology is dependent upon the establishment of profitable food processing
operations the outcome of which cannot be determined at this time.
Note 2. Summary of Significant Accounting Policies
Deferred Organization Costs -- The Company has not started regular operations
and has no product sales to date. Deferred Organization Costs relate primarily
to the development of a detailed business plan and financing sources. These
costs will be amortized over a period of 60 months when food processing
operations begin. All noncapitalizable expenses have been charged to operations
in the period they were incurred.
Employee Benefits -- The Company has elected to treat all compensation paid to
officers and shareholders as being paid to independent contractors.
Consequently, no provision has been made for payroll taxes on payments to
officers and shareholders. The Company has no employee benefits or pension
plans. No provision is required for accrued vacation pay.
Research and Development -- Research and development costs are primarily related
to oven testing and integration of related equipment. These costs are charged to
operations in the period incurred. Research and development costs have totaled
$297,100 since inception of the Company.
Cash Equivalents -- For purposes of the statement of cash flows, the Company
considers all highly liquid instruments purchased with an original maturity of
three months or less to be cash equivalents.
Income Taxes -- Income taxes have been provided using the liability method.
Deferred tax assets and liabilities are determined based on differences between
financial reporting and tax basis of assets and liabilities. Deferred income
taxes resulting from such differences are recorded based on the enacted tax
rates that are currently expected to be in effect when the differences are
expected to reverse.
Concentration of Credit Risk -- The Company maintains bank accounts at local
banks. In some instances, the balances exceed the federally insured limit for an
individual account.
Page 3
<PAGE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Notes to Financial Statements
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 amount of assets, liabilities, revenues
and expenses and disclosure of contingent assets and liabilities. Actual results
could differ form the estimates and assumptions used.
Supplemental cash flow disclosures -- The Company paid $34,800 and $14,000 for
interest in 1998 and 1997, respectively.
The Company acquired $10,600 of property and equipment in 1998 and $148,000 in
1997 in exchange for stock.
The Company financed $72,900 of vehicles and equipment through capital leases in
1998, and $97,800 of vehicles and equipment through capital leases in 1997.
Note 3. Property and Equipment
<TABLE>
<CAPTION>
As of December 31, 1998 and 1997, property and equipment can be summarized as:
In Service In Progress Total Total
at 12/31/98 at 12/31/98 at 12/31/98 at 12/31/97
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Land $ 191,300 $ -- $ 191,300 $ 191,300
Buildings 125,000 2,417,600 2,542,600 2,455,000
Microwave oven -- 20,827,100 20,827,100 20,383,300
Processing equipment -- 7,442,000 7,442,000 6,524,400
Machinery 882,800 1,015,800 1,898,600 1,800,200
Vehicles 157,400 769,200 926,600 1,005,900
----------- ----------- ----------- -----------
1,356,500 32,471,700 33,828,200 32,360,100
----------- ----------- ----------- -----------
Depreciation (695,800) -- (695,800) (647,600)
----------- ----------- ----------- -----------
$ 660,700 $ 32,471,700 $ 33,132,400 $ 31,712,500
=========== =========== =========== ===========
</TABLE>
Page 4
<PAGE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Notes to Financial Statements
Most of the Company's assets were acquired in exchange for common shares when
the Company was founded. Later asset additions were purchased from outside
suppliers for cash or stock, or built by the Company. The following table
summarizes how assets have been acquired:
Acquired Total
for Stock Purchased at 12/31/98
-------------- -------------- ---------------
Property and equipment $ 22,586,500 $ 11,241,700 $ 33,828,200
============== ============== ===============
As discussed in Note 1, assets acquired for stock when National Veg-Tec was
formed were recorded on the books at fair value. As of December 31, 1998,
approximately $20,000,000 of contributed assets have no basis for tax purposes
and, consequently, no depreciation will be allowed on the Company's tax return
for those assets. In accordance with Financial Accounting Standards No. 109,
deferred taxes have been provided in the amount of $7,948,000 for the difference
between the book and tax basis for the contributed assets. Deferred taxes were
recorded by reducing additional paid-in capital when the shares were exchanged
for the assets.
For financial reporting purposed, depreciation is computed using the
straight-line method over the useful lives of the assets. Useful lives generally
range from three to ten years. For income tax purposes, depreciation is provided
using MACRS and straight-line methods.
Note 4. Long-term Debt
Long-term debt consists of the following as of December 31, 1998:
Unsecured debt $ 15,000
Less: amounts due within one year (12,000)
-----------
Net long-term debt $ 3,000
==========
The unsecured debt is due in April, 2000. Payments are due monthly, with no
stated interest rate. Aggregate maturities of outstanding long-term debt are as
follows:
1999 $ 12,000
2000 3,000
----------
Total $ 15,000
==========
Page 5
<PAGE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Notes to Financial Statements
Note 5. Notes Payable to Shareholder
The Company had the following notes payable to a shareholder at December 31,
1998:
Note payable due May, 1999. This note is personally
guaranteed by the officers of the Company. $ 50,000
Note payable due May, 1999. 100,000
Note payable due October, 1999. 50,000
Note payable due October, 1999. 50,000
Note payable due February, 2000. 50,000
Note payable due November, 2000. 100,000
-----------
Total notes payable to shareholder 400,000
Amounts due within one year (250,000)
-----------
Net long-term notes payable to shareholder $ 150,000
===========
The notes are all unsecured, and bear interest at the rate of 11%. Interest
expense on these notes totaled $27,200 in 1998. Interest is to be paid to the
shareholder with common stock of the Company at the rate of $.50 per share.
Under the terms of each note, the shareholder may choose to take principal
payments in cash, or payments of 50% in cash and 50% in the Company's common
stock. Assuming the stock payment was chosen for the entire amount payable, the
shareholder would receive payments of $200,000 and 400,000 shares of common
stock.
Note 6. Capital Leases
The Company leases equipment under lease agreements expiring on various dates
through 2002. The leases are capital leases with the Company owning the assets
outright at the end of the lease terms.
Page 6
<PAGE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Notes to Financial Statements
At December 31, 1998, future minimum lease payments for all leases,
and the minimum payments for those leases were as follows:
1999 $ 54,400
2000 36,900
2001 21,400
2002 14,100
2003 2,100
----------
Total minimum lease payments 128,900
Less: interest portion (15,100)
----------
Present value of net minimum lease payments 113,800
Less: current portion (45,900)
----------
Net long-term lease liability $ 67,900
==========
At December 31, 1998, assets under capital leases were as follows:
Food processing equipment $ 54,400
Machinery and equipment 83,000
Vehicles 68,100
Less: Accumulated depreciation (36,300)
----------
Net assets under capital lease $ 169,200
==========
Note 7. Income Taxes
Effective in 1992, the Company adopted the provisions of Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes." This statement
requires that deferred income taxes reflect the tax consequences on future years
of differences between the tax and financial statement basis of assets and
liabilities. The adoption of this standard required the establishment of a
deferred tax liability that will result from the financial reporting basis of
the contributed assets substantially exceeding their tax basis.
Page 7
<PAGE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Notes to Financial Statements
Components of income taxes are as follows:
Year ended Year ended
12/31/98 12/31/97
Deferred tax credit:
Federal $ (213,000) $ (218,400)
State and local (62,000) (62,600)
------------- -------------
$ (275,000) $ (281,000)
============= =============
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for tax purposes. The effects of the timing
differences are as follows:
As of As of
12/31/98 12/31/97
---------- ----------
Basis difference of contributed assets $7,948,000 $7,948,000
---------- ----------
Total deferred tax liabilities 7,948,000 7,948,000
---------- ----------
Net operating loss carryforwards 3,224,000 2,949,000
---------- ----------
Total deferred tax assets 3,224,000 2,949,000
---------- ----------
Net deferred tax liability $4,724,000 $4,999,000
========== ==========
The effective tax rate in the financial statements ( 40%) represents the Federal
income tax rate of 34% after providing for state and local taxes and the
appropriate State (8.9%) and Local (1%) tax rates.
As the Company has not commenced planned food processing operations, no federal
or local income tax or county property tax have been filed.
Page 8
<PAGE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Notes to Financial Statements
Note 8. Related Party Transactions
The Company purchased food processing equipment salvaged from property owned by
a corporation owned by the officers and principal shareholders of the
Corporation. There were no purchases in 1998, purchases were $122,500 in 1997.
Management and the Company's Board of Directors have determined that the
equipment was sold to the Company at a price that does not exceed fair market
value.
The Company rents a storage facility owned by the officers and principal
shareholders of the Corporation. The lease arrangement is renewable on an annual
basis. Rent expense for the facility was $200,000 in both 1998 and 1997.
Note 9. Operating Lease
The Company leases equipment under a non-cancelable operating lease that expires
in August, 2000. Rent expense under the agreement was $8,700 for 1998 and $2,200
for 1997. Payments under the lease are guaranteed personally by an officer of
the Corporation.
Future minimum rental payments on the operating lease are as follows:
1999 $ 8,700
2000 5,100
------------
$ 13,800
============
Page 9
<PAGE>
- --------------------------------------------------------------------------------
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
- --------------------------------------------------------------------------------
There have been no disagreements with the Company's independent
accountants over any item involving the Company's financial statements. The
Company's independent accountants are Ickert & Company LLC., Certified Public
Accountants, 42 East Gay Street, Suite 1515, Columbus, Ohio 43215.
- --------------------------------------------------------------------------------
ITEM 15. Financial Statements and Exhibits
- --------------------------------------------------------------------------------
The following exhibits are filed with this Form 10-SB:
Assigned Number Description
(2) Plan of acquisition, reorganization, arrangement,
liquid, or succession: None
(3)(ii) By-laws of the Company: Included
(4) Instruments defining the rights of holders including
indentures: None
(9) Voting Trust Agreement: None
(10) Material Contracts: None
(11) Statement regarding computation of per share
earnings: Computations can be determined from
financial statements.
(16) Letter on change in certifying accountant: None
(21) Subsidiaries of the registrant: None
(24) Power of Attorney: None
(27) Financial Data Schedule: Included
(99) Additional Exhibits: None
35
<PAGE>
- --------------------------------------------------------------------------------
SIGNATURES
- --------------------------------------------------------------------------------
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
Dated: ___________, 1999.
NATIONAL FRUIT AND VEGETABLE
TECHNOLOGY CORPORATION
By:
--------------------------------------
Daniel K. Cashman
President
By:
--------------------------------------
Tom Ranier
Secretary
36
BYLAWS
------
OF
--
NATIONAL FRUIT AND VEGETABLE TECHNOLOGY CORPORATION
---------------------------------------------------
ARTICLE I
OFFICES
The Corporation shall maintain a registered office and registered agent in
the State of Nevada as required by law. The Corporation may also have offices in
such other places either within or without the State of Nevada as the Board of
Directors may from time to time designate or as the business of the Corporation
may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. Place . Meetings of the stockholders shall be held at such place
either within or without the State of Nevada as may from time to time be
designated by the Board of Directors and stated in the notice of meeting. If no
such place is designated by the Board of Directors, meetings of the stockholders
shall be held at the principal business office of the Corporation in Columbus,
Ohio.
SECTION 2. Time of Annual Meeting of Stockholders. The annual meeting of
the stockholders for the election of directors and the transaction of other
business shall be held no earlier than sixty (60) days but no later than two
hundred seventy (270) days subsequent to the Corporation's year end. The
specific meeting date within such time period shall be determined by the Board
of Directors in its sole and absolute authority. If this date shall fall upon a
legal holiday, the meeting shall be held on the next succeeding business day. At
each annual meeting, the stockholders entitled to vote shall, by plurality vote,
elect a Board of Directors, and they may transact such other corporate business
as shall be stated in the Notice of the Meeting.
SECTION 3. Special Meetings. Special meetings of the stockholders for any
purpose or purposes may be called on the order of the Chief Executive Officer,
the President or of a majority of the Board of Directors.
SECTION 4. Notice of Stockholders Meetings. Written or printed notice,
stating the place and time of the meeting, and the general nature of the
business to be considered, shall be given by the Secretary to each stockholder
entitled to vote thereat at his last known post office address, at least ten
(10) days prior but no more than sixty (60) days prior to any stockholders'
meeting.
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When a meeting is adjourned to another time or place, notice need not be
given of the adjourned meeting if the time and place thereof are announced at
the meeting at which the adjournment is taken. If the adjournment is for more
than thirty (30) days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
SECTION 5. Quorum. The holders of a majority of the issued and outstanding
shares of the capital stock of the Corporation entitled to vote thereat, present
in person or represented by proxy, shall constitute a quorum for the transaction
of business at all meetings of the stockholders except as may otherwise be
provided by the General Corporation Law of Nevada, by the Certificate of
Incorporation or by these By-Laws; but if there be less than a quorum, the
holders of a majority of th stock so present or represented may adjourn the
meeting from time to time.
SECTION 6. Determining Stockholders of Record. The Board of Directors may
fix a time in the future as a record date for the determination of the
stockholders entitled to notice of and to vote at any meeting of the
stockholders. The record date so fixed shall not be more than (60) days prior to
the date of the meeting. When a record date is so fixed, only stockholders of
record on that date are entitled to notice of and to vote at the meeting,
notwithstanding any transfer of any shares on the books of the Corporation after
the record date. If the Board of Directors does not fix such a record date, only
persons in whose names shares entitled to vote stand on the stock records of the
Corporation at the close of business on the day next preceding the day on which
notice is given or, if notice is waived, at the close of business on the day
next preceding the day on which the meeting is held, are entitled to vote at the
meeting.
SECTION 7. List of Stockholders. The officer who has charge of the stock
ledger of the Corporation shall prepare and make, at least ten (10) days before
every meeting of stockholders, a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical order, and showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of ordinary business
hours, for a period of at least ten (10) days prior to the meeting, either at a
place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at the
time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
SECTION 8. Voting. At all meetings of the stockholders, every registered
owner of shared entitled to vote may vote in person or by proxy and shall have
one vote for each such share standing in his name on the books of the
Corporation. The vote at any meeting of the stockholders on any question need
not be by ballot, unless so directed by the Chairman of the meeting or required
by the Certificate of Incorporation. On a vote by ballot each ballot shall be
signed by the stockholder voting, or by his proxy if there be such proxy, and it
shall state the number of shares voted.
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SECTION 9. Inspectors. The Board of Directors, in advance of any meeting of
the stockholders, may appoint one or more inspectors to act at the meeting. If
inspectors are not so appointed, the Chairman presiding at the meeting may
appoint one or more inspectors. If any person so appointed fails to appear or
act, the vacancy may be filled by appointment made by the Board of Directors in
advance of the meeting or at the meeting by the Chairman presiding thereat. Each
inspector, before entering upon the discharge of his duties, shall take and sign
an oath faithfully to execute the duties of inspector at the meeting with strict
impartiality and according to the best of his ability. The inspectors so
appointed shall determine the number of shares outstanding, the shares
represented the meeting, the existence of a quorum and the authenticity,
validity and effect of proxies and shall receive votes, ballots, waivers,
releases or consents, hear and determine all challenges and questions arising in
connection with the right to vote, count and tabulate all votes, ballots,
waivers, releases or consents, determine and announce the results and do such
acts as are proper to conduct the election or vote with fairness to all
stockholders. On request of the Chairman presiding at the meeting, the
inspectors shall make a report in writing of any challenge, question or matter
determined by them and execute a certificate of any fact found by them. Any
report or certificate made by the shall be prima facie evidence of the facts
stated and of the vote as certified by them.
SECTION 10. Chairman of Meeting. The President or, in his absence, the
Executive Vice President shall preside at all meetings of the stockholders; and,
in the absence of the President and Executive Vice President, the Board of
Directors may appoint any stockholder to act as Chairman of the meeting.
SECTION 11. Secretary of Meeting. The Secretary of the Corporation shall
act as Secretary of all meetings of the stockholders; and, in his absence, the
Chairman may appoint any person to act as Secretary of the Meeting.
ARTICLE III
DIRECTORS
SECTION 1. Management of Corporation. The property, business, and affairs
of the Corporation shall be managed and controlled by its Board of Directors.
SECTION 2. Number, Election and Terms. The first Board of Directors shall
consist of three (3) directors. At and after such time as the Corporation has
stockholders holding in the aggregate more than 1,000 shares of its Common
Stock, the Board of Directors shall consist of not less than three (3) nor more
than two hundred (200) members. Within the limits specified above, the number of
directors shall be determined by resolutions of the Board of Directors or by the
stockholders at the annual meeting. The directors shall be elected at the annual
meeting of stockholders, except as provided in Section 3 below, and each
director shall hold office until his successor is duly elected and qualified.
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SECTION 3. Newly Created Directorships and Vacancies. Newly created
directorships resulting from any increase in the number of directors and any
vacancies on the Board of Directors resulting from death, resignation,
disqualification, removal or other cause shall be filled by the affirmative vote
of a majority of the remaining directors then in office, even though the number
of then serving directors is less than a quorum of the Board of Directors. Any
director elected in accordance with the preceding sentence shall hold office for
the remainder of the full term in which the new directorship was created or the
vacancy occurred and until such director's successor shall have been elected and
qualified. No decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director.
SECTION 4. Removal. Any director or the entire Board of Directors may be
removed, at any time, with or without cause, by the holders of a majority of the
shares then entitled to vote with or without a stockholders meeting.
SECTION 5. Nominations. Nominations for the election of directors may be
made by the Board of Directors or a committee appointed by the Board of
Directors or by any stockholder entitled to vote in the election of directors
generally. However, any stockholders entitled to vote in the election of
directors generally may nominate one or more persons for election as directors
at a meeting only if written notice of such stockholder's intent to make such
nomination or nominations has been given, either by personal delivery or by
United States Mail, postage prepaid, to the Secretary of the Corporation not
later than (i) with respect to an election to be held at an annual meeting of
stockholders, ninety (90) days in advance of such meeting, and (ii) with respect
to an election to be held at a special meeting of stock seventh day following
the date on which notice of such meeting is first given to stockholders. Each
such notice shall set forth: (a) the name and address of the stockholder wh
intends to make the nomination and of the person or persons to be nominated; (b)
a representation that the stockholder is a holder of record of stock of the
Corporation entitled to vote at such meeting and intends to appear in person or
by proxy at the meeting to nominate the person or persons specified in the
notice; (c) a description of all arrangements or understandings between the
stockholder and each nominee and any other person or persons (naming such person
or persons) pursuant to which the nomination or nominations are to be made by
the stockholder; (d) such other information regarding each nominee proposed by
such stockholder as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange Commission, had the
nominee been nominated, or intended to be nominated, by the Board of Directors;
and (e) the consent of each nominee to serve as a director of the Corporation if
so elected. The Chairman of the meeting may refuse to acknowledge the nomination
of any person not made in compliance with the foregoing procedure.
SECTION 6. Maintenance of Books Outside of State. The Board of Directors
may hold meetings and keep the books of the Corporation outside the State of
Nevada.
SECTION 7. Quorum. A majority of the directors shall constitute a quorum
for the transaction of business. If at any meeting of the Board there shall be
less than a quorum present, a majority of those present may adjourn the meeting
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from time to time until a quorum is obtained, and no further notice thereof need
be given other than by announcement at said meeting which shall be so adjourned.
SECTION 8. Annual Meeting. The newly elected directors may, without notice,
hold their first meeting for the purpose of organization and the transaction of
business, if a quorum be present, immediately after the annual meeting of the
stockholders; or the time and place of such meeting may be fixed by consent in
writing of a majority of the directors.
SECTION 9. Election of Officers. At the annual meeting or at any subsequent
meeting called for electing officers of the Corporation, the directors shall
elect a Chief Executive Officer, a President, an Executive Vice President, one
or more other Vice Presidents, a Treasurer, A Secretary and such other officers
as may be deemed necessary, who need not be directors. Such officers shall hold
office until the next annual election of officers and until their successors are
elected and qualified.
SECTION 10. Regular Meetings. Regular meetings of the directors may be held
without notice at such places and times as shall be determined from time to time
by resolution of the Board of Directors.
SECTION 11. Special Meetings. Special meetings of the Board of Directors
may be called by the President or by the Secretary of by any two (2) Directors
then being in office. The Secretary shall give notice of the time, place, and
purpose or purposes of each special meeting in a writing mailed to each Director
at least three (3) days before the meeting or by telephoning or telegraphing
each Director at least one day before the meeting.
SECTION 12. Place of Meeting. The Directors may hold their meetings and
have one or more offices outside the State of Nevada, at any office or offices
of the Corporation or at any other place as they may from time to time by
resolution determine.
SECTION 13. Compensation of Directors. Directors shall be entitled to
receive as compensation for services rendered and expenses incurred as
Directors, such amounts as the Board of Directors may determine.
SECTION 14. Indemnification. Directors and officers of the Corporation
shall be indemnified as of right to the fullest extent now or hereafter
permitted by the General Corporation Law of Nevada as the same now exists or may
hereafter be amended, in connection with any actual or threatened civil,
criminal, administrative or investigative action, suit or proceeding (whether
brought by or in the name of the Corporation or otherwise) arising out of their
service to the Corporation or t another organization at the request of the
Corporation. Expenses incurred by an officer or Director in defending a civil or
criminal action, suit or proceeding shall be paid by the Corporation in advance
of the final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Director or officer to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the Corporation as authorized in this Section. The Corporation may purchase and
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maintain insurance to protect itself and any such Director or officer against
any liability asserted against him and incurred by him in respect of such
service whether or not the Corporation would have the power to indemnify him
against such liability by law or under the provisions of this Section and the
proper officers of the Corporation, without further authorization by the Board
of Directors, may in their discretion purchase and maintain insurance on behalf
of any person who is or was a Director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
Director, officer, employee or agent for another corporation, partnership, joint
venture, trust or other enterprise, against any liability. The provisions of
this Section shall be applicable to actions, suits or proceedings commenced
after the adoption hereof, and to the Directors or officers who have ceased to
render such service, and shall insure to the benefit of the heirs, executors and
administrators of the Directors and officers referred to in this Section. Each
person (including a director or officer of any other corporation) who at the
request of the Corporation, acts as a director or officer of any other
corporation in which the Corporation owns shares or of which it is a creditor,
may by action of the Board of Directors, be indemnified by the Corporation to
the same extent that Directors and officers of the Corporation are indemnified
by this Section.
SECTION 15. Conflicts of Interest. A Director or officer of the Corporation
shall not be disqualified by his office from dealing or contracting with the
Corporation as a vendor, purchaser, employee, agent or otherwise. No
transaction, contract or other act of the Corporation shall be void of voidable
or in any way affected or invalidated by reason of the fact that any Director or
officer, or any firm, corporation or trust in which such Director or officer is
a member or is a beneficiary, stockholder, director, officer or trustee, is in
any way interested in such transaction, contract or other act, provided that the
conditions of the General Corporation Law of Nevada, as the same now exists or
may hereafter be amended, are satisfied. No Director or officer shall be
accountable or responsible to the Corporation for or in respect of any such
transaction, contract or other act of the Corporation or for any gains or
profits realized by him by reason of the fact that he or any fir of which he is
a member or any corporation or trust of which he is a beneficiary, stockholder,
director, officer or trustee is interested in such transaction, contract or
other act.
ARTICLE IV
COMMITTEES
SECTION 1. Executive Committee. The Board of Directors shall, by resolution
or resolutions passed by a majority of the Board, designate two (2) or more of
their number, which shall include the Chief Executive Officer and the Executive
Vice President, to constitute an Executive Committee to serve during the
pleasure of the Board of Directors. The Chief Executive Officer shall be the
Chairman of the Executive Committee. The Board of Directors is authorized to
remove at any time, without notice, any member of the Executive Committee,
except the Chief Executive Officer and the Executive Vice President, and elect
another member in his place.
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The Board of Directors may appoint one (1) or more Directors as
alternate members of the Executive Committee who may take the place of any
absent member or members at any meeting of the Executive Committee.
Except as otherwise provided herein, in the Certificate of
Incorporation, in the resolution creating an Executive Committee or by law, such
Committee shall during the interval between meetings of the Board of Directors,
possess and may exercise all of the powers of the Board of Directors in the
management of the business and affairs of the Corporation.
The Executive Committee shall keep full and fair records and accounts of
its proceedings and transactions. All action by the Executive Committee shall be
reported to the Board of Directors at its meeting next succeeding such action
and shall be subject to control, revision and alteration by the Board of
Directors; provided that no rights of third persons shall be prejudicially
affected thereby.
Vacancies on the Executive Committee shall be filled by the Board of
Directors.
SECTION 2. Compensation Committee. The Board of Directors shall appoint the
Compensation Committee which shall consist of not less than one (1) Director.
The Board shall designate one (1) of the members as Chairman of the Committee.
The Compensation Committee shall review and report to the Board of Directors on
company compensation programs and policies to assure that they are competitive
and provide for internal equity; review and advise the Chief Executive Officer
on specific compensation matters for officers and top executives; and perform
such other duties as the Board of Directors may require.
SECTION 3. Audit Committee. The Board of Directors shall appoint the Audit
Committee which shall consist of not less than one (1) Director. The Board shall
designate (1) of the members as Chairman of the Committee. The Audit Committee
shall review and report to the Board of Directors on the Corporation's audit
procedures and policies, make recommendations concerning such policies and
procedures, and perform such other duties as the Board of Directors may require.
SECTION 4. General. The Board of Directors may by Resolution provide for
such other standing committees or special committees as it deems desirable, and
discontinue the same at its pleasure. Each such committee shall have such powers
and perform such duties, not inconsistent with law, as may be delegated to it by
the Board of Directors. The Board of Directors shall appoint the members of any
and all such committees and shall designate the Chairman of each such committee.
Subject to the provisions of these Bylaws, committees formed by the Board of
Directors shall fix their own rules of procedure and shall meet as provided by
such rules or by resolutions of the Board of Directors, and they shall also meet
at the call of the Chief Executive Officer and Executive Vice President of the
Corporation, or, if there is not Chief Executive Officer and Executive Vice
President, of any two members of the committee, or of a majority of those then
surviving in office if that number be less than tw (2). A majority of the
members of a committee shall be necessary to constitute a quorum. Any
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committee, including the Executive Committee, may act in writing, or by cable or
telegraph or by telephone with written confirmation, without a meeting; but no
such action of a committee shall be effective unless concurred in by all members
of the committee.
ARTICLE V
OFFICERS
SECTION 1. Designation of Officers. The officers of the Corporation, shall
be a Chief Executive Officer, a President, an Executive Vice President, one or
more Vice Presidents, a Secretary, a Treasurer and such other officers as may
from time to time be elected or appointed by the Board of Directors. Any person
may hold two or more offices, except that one person may not simultaneously hold
the offices of President and Secretary.
SECTION 2. Removal. Any officer of the Corporation may be removed, either
with or without cause, at any time, by resolution adopted by the Board of
Directors at any meeting, the notice (or waivers of notice) of which shall have
specified that such removal action was to be considered. Any officer appointed
not by the Board of Directors but by an officer or committee to which the Board
of Directors shall have delegated the power of appointment may be removed, with
or without cause, by the committee or superior officer (including successors)
who made the appointment, or by any committee or officer upon whom such power of
removal may be conferred by the Board of Directors.
SECTION 3. Resignations. Any officer may resign at any time by giving
written notice to the Board of Directors, or to the Chief Executive Officer, the
President, the Executive Vice President or the Secretary of the Corporation. Any
such resignation shall take effect at the time specified therein, and unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
SECTION 4. Chief Executive Officer. The Chief Executive Officer shall have
general control and management of the business affairs and policies of the
Corporation. He shall be generally responsible for the proper conduct of the
business of the Corporation. Except where by law the signature of the President
is required, the Chief Executive Officer shall possess the same power as the
President to sign all certificates, contracts, and other instruments of the
Corporation. During the absence or disability of the President, he shall
exercise all the powers and discharge all the duties of the President. He shall
preside at all meetings of the stockholders and of the Board of Directors at
which he is present. He shall have such other powers and perform such other
duties as from time to time may be conferred upon him by the Board of Directors.
SECTION 5. The President. The President of the Corporation shall be the
principal operating and administrative officer of the Corporation. If there is
no Chief Executive Officer or during the absence or disability of the Chief
Executive Officer, he shall exercise all of the powers and discharge all of the
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duties of the Chief Executive Officer. He shall possess power to sign all
certificates, contracts and other instruments of the Corporation. He shall in
the absence of the Chief Executive Officer, preside at all meetings of the
stockholders and of the Board of Directors. He shall perform all such other
duties as are incident to his office or are properly required of him by the
Board of Directors.
SECTION 6. Executive Vice President. The Executive Vice President shall
possess the power and may perform the duties of the President in his absence or
disability and shall perform such other duties as may be prescribed from time to
time by the Board of Directors or the President. Except where by law the
signature of the President is required, the Executive Vice President shall
possess the same power as the President to sign all certificates, contracts and
other instruments of th Corporation.
SECTION 7. Vice Presidents. The Vice Presidents shall have such powers and
perform such duties as may be assigned to them by the Board of Directors or the
President. A Vice President may sign and execute contracts and other obligations
pertaining to the regular course of his duties.
SECTION 8. Secretary. The Secretary shall give, or cause to be given,
notice of all meetings of stockholders and directors and all other notices
required by law or by these Bylaws, and, in case of his absence or refusal or
neglect to do so for a period of fifteen (15) days, any such notice may be given
by a person thereunto directed by the President, or by the directors, or
stockholders, upon whose requisition the meeting is called as provided in these
Bylaws. He shall record all the proceedings of the meetings of the Corporation
and of the directors in a book to be kept for that purpose and shall perform
such other duties as may be assigned to him by the Board of Directors or the
President. He shall have the custody of the seal of the Corporation, if any, and
shall affix the same to all instruments requiring it, when authorized by the
directors or the President, and attest the same.
SECTION 9. Treasurer. The Treasurer shall have the custody of all funds,
securities, evidence of indebtedness and other valuable documents of the
Corporation; he shall receive and give or cause to be given receipts and
acquittances for monies paid in on account of the Corporation and shall pay out
of the funds on hand all just debts of the Corporation of whatever nature upon
maturity of the same; he shall enter or cause to be entered in books of the
Corporation to be kept for such purpose full and accurate accounts of all monies
received and paid out on account of the Corporation, and, whenever required by
the President or the directors, he shall keep or cause to be kept such other
books as will show a true record of the expenses, losses, gains, assets and
liabilities of the Corporation; he shall, unless otherwise determined by the
Board of Directors, have charge of the original stock books, transfer books, and
stock ledgers and act as transfer agent in respect to the stock and securities
of the Corporation; and he shall perform all of the other duties incident to the
office of Treasurer.
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ARTICLE VI e
CAPITAL STOCK e
SECTION 1. Certificate of Stock. Certificates of stock, numbered and with
the seal, if any, of the Corporation affixed, signed by the President, and the
Treasurer or Secretary, shall be issued to each stockholder certifying the
number of shares owned by him in the Corporation. When such certificates are
signed by a transfer agent, or an assistant transfer agent, or by a transfer
clerk acting on behalf of the Corporation and a registrar, the signatures of
such officers may be facsimiles.
SECTION 2. Lost Certificates. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or to give the Corporation a bond in such sum as it may
direct or other indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been lost, stolen or
destroyed. The Board of Directors may, however, in its discretion, refuse to
issu any such new certificate except pursuant to legal proceedings, under the
laws of the State of Nevada in such case made and provided.
SECTION 3. Transfer of Shares. Subject to the restrictions contained in
Section 6 of this Article, transfers of shares in the Corporation shall be made
only on the books of the Corporation by the registered holder thereof, his legal
guardian, executor or administrator, or by his attorney thereunto authorized by
power of attorney duly executed and filed with the Secretary of the Corporation
or with a transfer agent appointed by the Board of Directors, and on surrender
of the certificate or certificates for such shares properly endorsed or
accompanied by properly executed stock powers and evidence of the payment of all
taxes imposed upon such transfer. The person in whose name shares stand on the
books of the Corporation shall, to the full extent permitted by law, be deemed
the owner thereof for all purposes as regards the Corporation.
SECTION 4. Closing of Transfer Books. The Board of Directors shall have
power to close the stock transfer books of the Corporation for a period not
exceeding sixty (60) days preceding the date of any meeting of stockholders or
the date of the payment of any dividend or the date for the allotment of rights
or the date when any change or conversion or exchange of capital stock shall go
into effect, provided, however, that in lieu of closing the stock transfer books
as aforesaid, the Board of Directors may fix in advance a date not exceeding
sixty (60) days preceding the date of any meeting of stockholders or the date
for the payment of any dividend, or the date for the allotment of rights, or to
exercise the rights in respect of any change, conversion or exchange of capital
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stock, and in such cases such stockholders only as shall be stockholders of
record on the date so fixed shall be entitled to such notice of, and to vote at,
such meeting, or to receive payment of such dividends, or to receive such
allotment of rights, or to exercise the rights in respect of such change,
conversion or exchange of capital stock on the books of the Corporation after
any such record date fixed as aforesaid.
SECTION 5. Dividends. Subject to law and the provisions of the Certificate
of Incorporation, if any, the directors may declare dividends upon the capital
stock of the Corporation as and when they deem expedient. Before declaring any
dividend there may be set apart out of any funds of the Corporation available
for dividends such sum or sums as the directors from time to time in their
discretion think proper for working capital or as a reserve fund to meet
contingencies or fo equalizing dividends or for such other purposes as the
directors shall think conducive to the interest of the Corporation.
SECTION 6. Restrictions on Transfer. A restriction on the hypothecation,
transfer or registration of transfer of shares of the Corporation may be imposed
either by the Certificate of Incorporation or by these Bylaws or by an agreement
among any number of stockholders or among such holders and the Corporation or by
resolution of the Board of Directors determining that restriction is reasonably
necessary for compliance with the Securities Act of 1933, as amended. No
restriction so imposed shall be binding with respect to the securities issued
prior to the adoption of the restriction unless the holders of such securities
are parties to an agreement or voted in favor of the restriction. Unless noted
conspicuously on the share certificate, a restriction, even though permitted by
this Section, is ineffective except against a person with actual knowledge of
the restriction.
ARTICLE VII
AMENDMENTS
Subject to the provisions of the Certificate of Incorporation, these Bylaws
may be altered, amended, or repealed at any regular meeting of the stockholders
(or at any special meeting thereof duly called for that purpose) by a majority
vote of the shares represented and entitled to vote at such meeting; provided
that in the notice of such special meeting, notice of such purpose shall be
given. Subject to the laws of the State of Nevada, the Certificate of
Incorporation, and these Bylaws, the Board of Directors may, by majority vote of
those present at any meeting at which a quorum is present, alter, amend or
repeal these Bylaws, or enact such other bylaws as in their judgment may be
advisable for the regulation of the conduct of the affairs of the Corporation.
ARTICLE VIII
MISCELLANEOUS
SECTION 1. Corporate Seal. If the directors shall adopt a corporate seal,
it shall be circular in form and shall contain the name of the Corporation, the
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year of its creation and the words "Corporate Seal, Nevada." Said seal may be
used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
SECTION 2. Checks, Drafts, Notes. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the Corporation shall be signed by such officer or officers, agent or
agents, of the Corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors.
SECTION 3. Notice. Whenever any notice is required by these Bylaws to be
given, personal notice is not meant unless expressly so stated, and any notice
so required shall be deemed to be sufficient if given by depositing the same in
a post office box in a sealed postpaid wrapper addressed to the person entitled
thereto at his last known post office address, and such notice shall be deemed
to have been given on the day of such mailing. Stockholders not entitled to vote
shall not be entitled to receive notice of any meeting except as otherwise
provided by statute.
SECTION 4. Action at Meeting Not Regularly Called and Wavier of Notice.
Whenever all parties entitled to vote at any meeting, whether of directors or
stockholders, consent, either by writing on the records of the meeting or filed
with the Secretary or by presence at such meeting and oral consent entered on
the minutes or by taking part in the deliberations at such meeting without
objection, the doing of such meeting shall be as valid as if a meeting had been
regularly called and noticed, and at such meeting any business may be transacted
which is not excepted from the written consent or to the consideration of which
no objection for want of notice is made at the time, and if any meeting be
irregular for want of notice or of such consent, provided a quorum was present
at such meeting, the proceedings of said meeting may be ratified and approved
and rendered likewise valid and the irregularity or defect therein waived by a
writing signed by all parties having the right to vote at such meeting; and such
consent or approval of stockholders or directors may be by proxy or attorney,
but all such proxies and powers of attorney must be in writing.
Whenever any notice is required to be given under the provisions of these
Bylaws, a waiver thereof in writing, signed by the person or persons entitled to
said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
SECTION 5. Social Justice Provision. The Board of Directors of the
Corporation, when evaluating any offer of another party to (i) purchase or
otherwise acquire all or substantially all of the properties or assets of the
Corporation. (ii) merge or consolidate the Corporation with or into another
company or another person, or (iii) make a tender or exchange offer for any
equity security of the Corporation, may in connection with the exercise of its
judgment in determining what is in the best interests of the Corporation and its
stockholders, give due consideration to all relevant factors, including without
limitation (a) the social and economic effects of the proposed transaction on
the employees, shareholders and other constituents of the Corporation and its
subsidiaries and on the communities in which the Corporation and its
subsidiaries operate or are located, (b) the fairness of the price or financial
terms of the proposal and (c) the relationship of the proposal to the value of
the Corporation in a transaction of a similar type resulting from arm's length
negotiations.
- 12 -
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