UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDED 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 August 31, 1999, 80,365,000 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 is a majority-owned subsidiary of Emerald Industries Corp.
Emerald Industries Corp. is owned by Richard J. Cashman II the Company's
Chairman of the Board, and Daniel K. Cashman, the Company's President. Richard
J. Cashman II and Daniel K. Cashman also are directors of the Company. Emerald
Industries Corp.'s only asset is its shares of the Company's common stock.
Emerald Industries Corp. is a small business as defined in Item 10(a)(1)(iv) of
Regulation S-B promulgated under the Exchange Act of 1934, as amended.
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The Company maintains offices at 210 Water Street, Baltimore, Ohio
43105. The Company owns substantially all of its equipment.
(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.
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(1) Principal Products
As stated above, 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'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.
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(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
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,
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economical and convenient to the consumer will make the Company a viable
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.
These agreements generally require the Company licenser to pay a royalty based
on product sales.
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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
and 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.
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The handling, transportation and disposal of potato wastes expose the
Company to certain risks under applicable environmental laws and regulations.
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. Actual research and development costs in 1997 were $21,700.
The Company had no such costs in 1998, though significant work was done on the
development of exactly how product is processed in the Company's facilities.
Cumulative research and development costs during the Company's development
stage, as reflected in the Company's financial statements, total $297,100, as of
December 31, 1998.
(9) Employees
As of the date of the filing of this Amended Form 10-SB, 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
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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
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 operations during the two
year period immediately preceding the filing of this Amended Form 10-SB.
Plan of Operation
During 1999, the Company plans to focus on its efforts to open its
potato processing operations. The Company's product research and development
process has been completed. At the time the Company filed its Form 10-SB in
March of 1999, it was management's belief that the physical facilities were
completed and ready to operate.
During the second quarter of 1999, management met with a number of
prospective purchasers of the Company's potato products. Such prospective
purchasers toured the Company's facility. Based upon recommendations made by
such prospective purchasers, management has chosen to take steps to assure that
its quality control procedures have been perfected. Accordingly, management has
spent time during the second quarter, and anticipates spending additional time
during the third quarter, reviewing and testing its quality control procedures.
Management anticipates that such quality control procedures will assure the
production of products which consistently meet specifications of potential
purchasers. Management anticipates that its review in this regard will be
complete by the end of the third quarter of 1999.
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Also, management's decision to delay complete production is based upon
the availability of fresh product. Management intends to primarily use russet
Burbank potatoes in its processing facilities. The current crop of available
Russet Burbank potatoes is approximately eleven months old. Management
anticipates that a new crop of such potatoes will be available in mid-September
of 1999. Given the importance of the initial quality of the product produced by
the Company once production begins, management believes it is important to wait
for the availability of the new crop of potatoes.
During the end of the third quarter and the beginning of the fourth
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 to man the Company's processing
and 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
third and fourth quarters 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.
Once production begins, 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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The Company incorporates by this reference the text of Item 3 of the
Company's Form 10-SB filed on March 29, 1999.
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ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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(2)
(1) Name and Address (3) (4)
Title of Beneficial Amount and Nature of Percent of
of Class Owner Beneficial Ownership Class
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Common Emerald Industries Corporation(1) 38,459,980 48%
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
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Common Richard J. Cashman 38,459,9802 48%
210 Water Street
Baltimore, Ohio 43105
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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 38,459,980 shares.
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Common Daniel K. Cashman 38,459,980 3 48%
210 Water Street
Baltimore, Ohio 43105
Mitch Adams 70,000 Less than 1%
5607 Tara Hill Drive
Dublin, OH 43017
Lawrence Green 488,000 Less than 1%
120 Tuttle Rd.
Springfield, OH 45503
Tom Heilman 50,000 Less than 1%
130 So. Columbia
Columbus, OH 43209
Doug Katterhenry 130,000 Less than 1%
6464 Old Church Way
Reynoldsburg, OH 43068
Pat Maguire 65,000 Less than 1%
6043 Wilton House Ct.
New Albany, OH 43054
Kip Merriam 242,000 Less than 1%
556 Oakwood Drive
Pickering, Ontario CANADA L1X 2M7
Frank Moauro 650,000 Less than 1%
377 Talbot Street
W. Leamington, Ontario CANADA N8H 4H3
Tom Rainier 175,000 Less than 1%
223 Via Napoli
Naples, FL 34105
Dr. Harold Rinehart 200,000 Less than 1%
1143 County Road 2256
Perrysville, OH 44875
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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 38,459,980 shares.
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Philip Risinger 100,200 Less than 1%
Rt. 9, Box 406
Paris, TX 75462
All Directors and 40,630,180 51%
Officers as a Group
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ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
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The Company incorporates by this reference the text of Item 5 of the
Company's Form 10-SB filed on March 29, 1999. The information in Item 5 is
current as of the filing of this Amended Form 10-SB.
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ITEM 6. EXECUTIVE COMPENSATION
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The Company incorporates by this reference the text of Item 6 of the
Company's Form 10-SB filed on March 29, 1999. The information in Item 5 is
current as of the filing of this Amended Form 10-SB.
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ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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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
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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. No arrangement for
the payment the unpaid has been made. The Cashmans have deferred such payment
pending profitable operations of the Company's facilities. There is no written
lease agreement regarding the rental of the storage facility.
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.
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.
14
<PAGE>
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.
As discussed in the notes to the Company's financial statements, the
promissory notes with the shareholders listed above are all unsecured and bear
interest at the rate of 11%. The $50,000 note due May, 1999 is personally
guaranteed by the officers of the Company. Interest on these notes totaled
$27,200 in 1998. Interest is to be paid to the shareholders with common stock of
the Company at the rate of $0.50 per share. Under the terms of each note, the
shareholders may choose to take principal payments in cash or 50% in cash and
50% in the Company's common stock. Assuming the stock payment was chosen for the
entire amount payable, the shareholders in question would receive payments of
$200,000 and 400,000 shares of common stock.
- --------------------------------------------------------------------------------
ITEM 8. LEGAL PROCEEDINGS
- --------------------------------------------------------------------------------
The Company incorporates by this reference the text of Item 8 of the
Company's Form 10-SB filed on March 29, 1999. The information in Item 8 is
current as of the filing of this Amended Form 10-SB.
15
<PAGE>
- --------------------------------------------------------------------------------
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
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 August 25, 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.
16
<PAGE>
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.
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.
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 Greens 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 form registration under Section
4(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.
17
<PAGE>
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 upon 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 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.
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 shares 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 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.
On February 28, 1999, the Company implemented a plan to issue a total
of 49,108,289 shares to the Company's shareholders. Under that plan, each
shareholder would receive 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 would have been issued. The Company intended to issue 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. All
of the Company's approximately 1,254 shareholders would have received such
shares. Upon further review of the potential tax implications to the
shareholders and questions regarding the available exemption for this
transaction, management has rescinded this issuance. Management has decided to
allow the shareholders to vote on the matter at the next annual meeting of the
shareholders. If the shareholders approve the issuance, the shares will be
issued in accordance with an applicable exemption from registration. If no such
exemption is available, the shares shall be registered.
PARAGRAPHS ON ISSUANCE OF SHARES:
During the second quarter of 1999, the Company issued a total of
393,000 shares of its common stock to seventeen (17) shareholders in
consideration for cash which the Company used for its operations. In this
regard, the Company received a total of $196,500 in return for the issuance of
these shares. Accordingly, the shares were valued at $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. Such shares were issued to the
following individuals in the following amounts:
Registered Owner No. Shares
------------------------------- ----------
John S. McGranahan 10,000
Daniel Muzic, Werner Thiemans &
Heinze Thiemens 15,000
Andrew G. Hyde, G. Andrew Platt &
Edwin T. Hyde 15,000
James G. Townsend 20,000
Anita Anna Lessard 10,000
Joel E. Kaye, M.D. 50,000
Sandra West 30,000
Margaret Pillen 10,000
Alan Ogilvie 60,000
Harvey Moscoe 15,000
Lee Veenendaal 30,000
Paul & Sandra Marchese 10,000
David L. Malone 20,000
Jim Lassiter 20,000
Randal Rink 50,000
George Ashe 8,000
Nathan E. Badertscher 20,000
18
<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 August 31,
1999, there were 80,365,000 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 ll 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.
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
19
<PAGE>
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 August 31, 1999, the Company had
issued 80,365,000 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
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).
20
<PAGE>
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.
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.
21
<PAGE>
- --------------------------------------------------------------------------------
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
- --------------------------------------------------------------------------------
The Company incorporates by this reference the text of Item 12 of the
Company's Form 10-SB filed on March 29, 1999.
- --------------------------------------------------------------------------------
ITEM 13. Financial Statements
- --------------------------------------------------------------------------------
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.
In our report dated January 25, 1999, we expressed a qualified opinion that the
1998 and 1997 financial statements did not conform with generally accepted
accounting principles because the Company carried certain assets at appraised
values rather than cost. As described in Note 4 to the financial statements, the
Company changed its method of accounting for those assets and restated deferred
organization costs. With these changes the Company's financial statements are
restated to conform with generally accepted accounting principles. Accordingly,
our present opinion on the 1998 and 1997 financial statements, as presented
herein, is different from that expressed in our previous report.
22
<PAGE>
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 11 to the
financial statements, 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 obtain adequate funding and commence
operations on a profitable basis. These uncertainties raise substantial doubt
about the Company's ability to continue as a going concern. Management's plans
in regard to these matters are also described in Note 11. To date, the Company
has been able to raise equity capital to continue construction. The financial
statements do not include any adjustments that might result from the outcome of
these uncertainties.
July 16, 1999 Ickert & Company, LLC
Columbus, Ohio.
<TABLE>
NationaFruit and VegetablTechnology Corporation
(A Development Stage Corporation)
Balance Sheets
As of December 31, 1998 and 1997
<CAPTION>
Restated Restated
1998 1997
- --------------------------------------------------------------------------------------
Assets
- --------------------------------------------------------------------------------------
<S> <C> <C>
Current assets
Cash $ 349,700 $ 633,300
Prepaid expenses 3,800 13,300
- --------------------------------------------------------------------------------------
353,500 646,600
- --------------------------------------------------------------------------------------
Property & equipment 13,170,600 11,702,500
Accumulated depreciation -695,800 -647,600
- --------------------------------------------------------------------------------------
12,474,800 11,054,900
- --------------------------------------------------------------------------------------
Total assets $12,828,300 $11,701,500
======================================================================================
- --------------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------------
Shareholders' equity
Common stock 79,200 76,000
Additional paid-in capital 18,370,900 16,767,200
Deficit accumulated during the development stage -6,748,000 -6,058,800
- --------------------------------------------------------------------------------------
11,702,100 10,784,400
- --------------------------------------------------------------------------------------
Total liabilities & shareholders' equity $12,828,300 $11,701,500
======================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
23
<PAGE>
<TABLE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Statements of Cash Flows
For the periods ended December 31, 1998 and 1997
<CAPTION>
Restated
Cumulative
During
Restated Restated Development
1998 1997 Stage
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities
Net loss $ (689,200) $ (705,100) $ (6,748,000)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 132,900 112,600 1,211,600
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
Sources (uses) of cash from change in:
Notes and accounts receivable -- 84,900 (100)
Inventory -- -- 51,800
Deposits 9,500 (7,400) (3,800)
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) (3,881,300)
- ---------------------------------------------------------------------------------------------------------------------
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 14,297,300
Redemption of common stock (14,500) (43,000) (246,500)
- ---------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 1,594,400 2,591,000 15,059,800
- ---------------------------------------------------------------------------------------------------------------------
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.
24
<PAGE>
<TABLE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Statements of Loss and Accumulated Deficit
For the periods ended December 31, 1998 and 1997
<CAPTION>
Restated
Cumulative
During
Restated Restated Development
1998 1997 Stage
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Costs and expenses
General and administrative $ 509,300 $ 562,500 $4,362,700
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 6,589,200
- ---------------------------------------------------------------------------------------
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
- ---------------------------------------------------------------------------------------
Net loss 689,200 705,100 6,748,000
- ---------------------------------------------------------------------------------------
Accumulated deficit -- Beginning of period 6,058,800 5,353,700 --
- ---------------------------------------------------------------------------------------
Accumulated deficit -- End of period $6,748,000 $6,058,800 $6,748,000
=======================================================================================
Loss per common share
(Basic and Diluted) $ 0.009 $ 0.009 $ 0.157
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
25
<PAGE>
<TABLE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Statements of Shareholders' Equity
For the periods ended December 31, 1998 and 1997
<CAPTION>
Common Stock Stock
(par value $ .001 per share) Additional Accumulated Subscriptions
Shares Amount Paid-in Capital Deficit Receivable Total
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Stock issued at inception (September 14, 1983) 6,941,400 $ 69,400 $ 847,200 $ 0 $ 0 $ 916,600
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 2,129,800
Stock issued November 17, 1986
six-for-one split to adjust share price
to $ .50 per share 38,255,500 382,600 (382,600) 0
Adjustment to reflect change in par value
to $ .001 per share (413,200) 413,200 0
Stock issued to acquire assets of
Veg-Tec Corporation during 1986 3,506,400 3,500 499,700 503,200
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) 21,055,800 21,100 10,506,300 (508,000) 10,019,400
Net loss through December 31, 1996 (5,353,700) (5,353,700)
- ------------------------------------------------------------------------------------------------------------------------------
Balance December 31, 1996 - Restated 70,469,000 70,500 14,006,500 (5,353,700) (508,000) 8,215,300
- ------------------------------------------------------------------------------------------------------------------------------
Stock issued in exchange for cash, other assets
or expenses during 1997
at $ .50 per share (net of redemptions) 5,532,600 5,500 2,760,700 508,000 3,274,200
Net loss for the year ended December 31, 1997 (705,100) (705,100)
- ------------------------------------------------------------------------------------------------------------------------------
Balance December 31, 1997 - Restated 76,001,600 76,000 16,767,200 (6,058,800) 0 10,784,400
- ------------------------------------------------------------------------------------------------------------------------------
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 1,606,900
Net loss for the year ended December 31, 1998 (689,200) (689,200)
- ------------------------------------------------------------------------------------------------------------------------------
Balance December 31, 1998 - Restated 79,215,500 $ 79,200 $18,370,900 $(6,748,000) $ 0 $11,702,100
==============================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
26
<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
National Fruit and Vegetable Technology Corporation (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.
National Fruit and Vegetable Technology Corporation is the successor to National
Veg-Tec Corporation (Veg-Tec). National Veg-Tec Corporation was incorporated in
1983. On March 2, 1987, National Fruit and Vegetable Technology Corporation
acquired National Veg-Tec Corporation by exchanging all of the common shares of
National Fruit and Vegetable Technology Corporation's stock (49,346,800 shares)
on a one-for-one basis for National Veg-Tec Corporation'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 technology and
related food processing equipment $ 297,000
Machinery & equipment 246,200
Vehicles 256,800
Other assets 116,600
----------
$ 916,600
==========
27
<PAGE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Notes to Financial Statements
Note 2. Acquisition
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 purchase price was $503,200 for a note
receivable and technology related to a browning oven. The shareholders of
Veg-Tec Corporation are also the principal shareholders of the Company. The
acquisition was accounted for as a purchase.
Note 3. Summary of Significant Accounting Policies
Development Stage Corporation -- The Company has not started regular operations
and has no product sales to date. All noncapitalizable expenses have been
charged to operations in the period they were incurred.
Employee Benefits -- The Company has no employee benefit or pension plans.
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 -- Because the Company has not commenced planned food processing
operations, no federal or local income tax or county property tax returns have
been filed.
Concentration of Credit Risk -- The Company maintains bank accounts at local
banks. In some instances, the balances may exceed the federally insured limit
for an individual account.
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 from the estimates and assumptions used.
28
<PAGE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Notes to Financial Statements
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 4. Changes in Accounting Methods
When the Company was organized in 1983, the founders of the Company contributed
prior research and development in microwave oven technology in exchange for
their common stock. The microwave oven technology was valued at fair value as
determined by the original investors and individuals familiar with the process.
The valuation was based on an appraisal of the market potential of the assets
and originally recorded at a value of approximately $20,000,000. In 1998, the
Company changed its accounting method to value contributed assets at cost
instead of fair value. The new method was adopted to conform to generally
accepted accounting principals. The financial statements for prior years have
been restated to apply the new method retroactively.
The Company changed its method of accounting for organization costs in 1998 to
expense these costs in the period incurred. The financial statements have been
restated to apply this new method retroactively.
Development
Effect of changes on net loss: 1998 1997 Stage
---------- ---------- ----------
Net loss before change $ 414,200 $ 424,100 $2,766,400
Change in accounting for
contributed assets 275,000 281,000 2,923,000
Change in accounting for
organization costs -- -- 1,058,600
---------- ---------- ----------
Net loss as restated $ 689,200 $ 705,100 $6,748,000
========== ========== ==========
29
<PAGE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Notes to Financial Statements
Note 5. Property and Equipment
As of December 31, 1998 and 1997, property and equipment can be summarized as
follows on a restated basis:
<TABLE>
<CAPTION>
Construction
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 2,395,100 2,520,100 2,432,400
Microwave oven -- 924,000 924,000 480,200
Processing equipment -- 7,106,500 7,106,500 6,189,000
Machinery 882,800 830,500 1,713,300 1,614,900
Vehicles 157,400 558,000 715,400 794,700
------------- ------------- ------------- -------------
1,356,500 11,814,100 13,170,600 11,702,500
------------- ------------- ------------- -------------
Depreciation (695,800) -- (695,800) (647,600)
------------- ------------- ------------- -------------
$ 660,700 $ 11,814,100 $ 12,474,800 $ 11,054,900
============= ============= ============= =============
</TABLE>
Amounts shown as construction in progress represent the Company's food
processing plant and the related food processing equipment. The plant is located
in Baltimore, Ohio, and is under construction at December 31, 1998. For
financial reporting purposes 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 will be provided using
MACRS and straight-line methods.
Note 6. 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.
30
<PAGE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Notes to Financial Statements
Note 7. Notes Payable to Shareholder
The Company had the following notes payable to a shareholder at December 31,
1998:
Note payable due May, 1999 $ 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 shareholder notes are all unsecured and bear interest at the rate of 11%.
The $50,000 note due May, 1999 is personally guaranteed by the officers of the
Company. 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 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.
31
<PAGE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Notes to Financial Statements
Note 8. 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.
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
==========
32
<PAGE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Notes to Financial Statements
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
==========
Note 10. 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. No equipment was purchased in 1998. Equipment at a cost of $122,500
was purchased 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 its 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.
Management has determined that the rental rates charged do not exceed fair
market rates for this geographic area.
Note 11. Going Concern
The Company has been in the development stage since its inception on September
14, 1983. To date, the Company has not begun food processing operations and has
not generated revenues. The accompanying financial statements have been prepared
assuming the Company will be able to operate profitably. Realization of a major
portion of the assets is dependent on the Company's ability to place the
microwave oven system into operation on a profitable basis, the outcome of which
cannot be determined at this time. At December 31, 1998, the Company needed to
33
<PAGE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Notes to Financial Statements
raise additional funding to complete the construction of its Baltimore plant and
provide working capital to initiate operations. To date the Company has been
able to raise equity capital for construction. Management's plans include an
equity offering to raise additional capital. Management is of the opinion that
adequate equity funding can be obtained to begin operations. The financial
statements do not include any adjustments that might result from the outcome of
these uncertainties.
34
<PAGE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Balance Sheet
As of March 31, 1999
Unaudited
- --------------------------------------------------------------------------------
Assets
- --------------------------------------------------------------------------------
Current assets
Cash $ 325,400
Prepaid expenses 3,800
- --------------------------------------------------------------------------------
329,200
- --------------------------------------------------------------------------------
Property & equipment 13,403,300
Accumulated depreciation (725,700)
- --------------------------------------------------------------------------------
12,677,600
- --------------------------------------------------------------------------------
Total assets $ 13,006,800
================================================================================
- --------------------------------------------------------------------------------
Liabilities & Shareholders' Equity
- --------------------------------------------------------------------------------
Current liabilities
Current portion of long-term debt $ 52,000
Current portion of notes payable to shareholder 250,000
Accounts payable 579,900
Accrued expenses 142,400
- --------------------------------------------------------------------------------
1,024,300
- --------------------------------------------------------------------------------
Long-term obligations
Long-term debt 3,000
Capital leases 28,400
Notes payable to shareholder 150,000
- --------------------------------------------------------------------------------
181,400
- --------------------------------------------------------------------------------
Shareholders' equity
Common stock 79,900
Additional paid-in capital 18,737,500
Deficit accumulated during the development stage (7,016,300)
- --------------------------------------------------------------------------------
11,801,100
- --------------------------------------------------------------------------------
Total liabilities & shareholders' equity $ 13,006,800
================================================================================
The accompanying footnote is an integral part of these financial statements.
35
<PAGE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Statements of Loss and Accumulated Deficit
For the periods ended March 31, 1999
Unaudited
Cumulative
Three Months During
Ended Development
3/31/99 Stage
- --------------------------------------------------------------------------------
Costs and expenses
General and administrative $ 225,000 $ 4,587,700
Depreciation and amortization 29,900 1,241,500
Research and development -- 297,100
Loss on property disposal -- 717,800
- --------------------------------------------------------------------------------
Loss from operations 254,900 6,844,100
- --------------------------------------------------------------------------------
Other income (expense)
Interest income -- 83,900
Interest expense (13,400) (250,100)
Gain (loss) on sale of assets -- (6,000)
- --------------------------------------------------------------------------------
Net loss 268,300 7,016,300
- --------------------------------------------------------------------------------
Accumulated deficit -- Beginning of period 6,748,000 --
- --------------------------------------------------------------------------------
Accumulated deficit -- End of period $ 7,016,300 $ 7,016,300
================================================================================
Loss per common share
(Basic and Diluted) $ 0.003 $ 0.161
================================================================================
The accompanying footnote is an integral part of these financial statements.
36
<PAGE>
<TABLE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Statement of Shareholders' Equity
For the period ended March 31, 1999
Unaudited
<CAPTION>
Common Stock
(par value $ .001 per share) Additional Accumulated
Shares Amount Paid-in Capital Deficit Total
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance December 31, 1998 79,215,500 $ 79,200 $18,370,900 $(6,748,000) $11,702,100
- ---------------------------------------------------------------------------------------------------------------------------------
Stock issued in exchange for cash at $ .50 per
share (net of redemptions) 734,500 700 366,600 367,300
Net loss for the period ended March 31, 1999 (268,300) (268,300)
- ---------------------------------------------------------------------------------------------------------------------------------
Balance March 31, 1999 79,950,000 $ 79,900 $18,737,500 $(7,016,300) $11,801,100
=================================================================================================================================
</TABLE>
The accompanying fotenote is an integral part of these financial statements.
37
<PAGE>
<TABLE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Statement of Cash Flows
For the periods ended March 31, 1999
Unaudited
<CAPTION>
Cumulative
Three Months During
Ended Development
3/31/99 Stage
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities
Net loss $ (268,300) $ (7,016,300)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 29,900 1,241,500
Loss on sale of equipment -- 6,000
Loss on property disposal -- 717,800
Common stock issued for operating expenses -- 286,100
Sources (uses) of cash from change in:
Inventory -- 51,700
Deposits -- (3,800)
Accounts payable 116,600 579,900
Accrued expenses 8,300 142,300
- -----------------------------------------------------------------------------------------------------
Net cash used in operating activities (113,500) (3,994,800)
- -----------------------------------------------------------------------------------------------------
Cash flows from investing activities
Purchases of property and equipment (232,700) (11,280,700)
Sale of property and equipment -- 219,200
- -----------------------------------------------------------------------------------------------------
Net cash used in investing activities (232,700) (11,061,500)
- -----------------------------------------------------------------------------------------------------
Cash flows from financing activities
Proceeds from issuance of long-term debt -- 1,112,100
Principal payments on long-term debt (5,900) (686,900)
Proceeds from notes payable to shareholder -- 525,000
Principal payments on notes payable to shareholder -- (125,000)
Proceeds from capital leases -- 90,700
Principal payments on capital leases (39,500) (181,600)
Increases in advances payable -- 229,300
Proceeds from issuance of common stock 377,300 14,674,600
Redemption of common stock (10,000) (256,500)
- -----------------------------------------------------------------------------------------------------
Net cash provided by financing activities 321,900 15,381,700
- -----------------------------------------------------------------------------------------------------
Increase (decrease) in cash (24,300) 325,400
Cash -- Beginning of period 349,700 --
- -----------------------------------------------------------------------------------------------------
Cash -- End of period $ 325,400 $ 325,400
=====================================================================================================
</TABLE>
The accompanying footnote is an integral part of these financial statements.
38
<PAGE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Note to Financial Statements
As of March 31, 1999
Note 1. Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and the instructions to Form 10-QSB. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of only normal recurring accruals) considered necessary for a fair
presentation of the Company's financial position at March 31, 1999, the results
of operations, shareholders' equity, and cash flows for the three month period
ended March 31, 1999 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1999.
39
<PAGE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Balance Sheet
As of June 30, 1999
Unaudited
- --------------------------------------------------------------------------------
Assets
- --------------------------------------------------------------------------------
Current assets
Cash $ 180,600
Prepaid expenses 3,800
- --------------------------------------------------------------------------------
184,400
- --------------------------------------------------------------------------------
Property & equipment 13,779,500
Accumulated depreciation (755,600)
- --------------------------------------------------------------------------------
13,023,900
- --------------------------------------------------------------------------------
Total assets $ 13,208,300
================================================================================
- --------------------------------------------------------------------------------
Liabilities & Shareholders' Equity
- --------------------------------------------------------------------------------
Current liabilities
Current portion of long-term debt $ 49,000
Current portion of notes payable to shareholder 250,000
Accounts payable 764,000
Accrued expenses 166,100
- --------------------------------------------------------------------------------
1,229,100
- --------------------------------------------------------------------------------
Long-term obligations
Long-term debt 3,000
Capital leases 11,200
Notes payable to shareholder 150,000
- --------------------------------------------------------------------------------
164,200
- --------------------------------------------------------------------------------
Shareholders' equity
Common stock 80,300
Additional paid-in capital 18,944,600
Deficit accumulated during the development stage (7,209,900)
- --------------------------------------------------------------------------------
11,815,000
- --------------------------------------------------------------------------------
Total liabilities & shareholders' equity $ 13,208,300
================================================================================
The accompanying footnote is an integral part of these financial statements.
40
<PAGE>
<TABLE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Statements of Loss and Accumulated Deficit
For the periods ended June 30, 1999
Unaudited
<CAPTION>
Cumulative
Three Months Six Months During
Ended Ended Development
06/30/99 06/30/99 Stage
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Costs and expenses
General and administrative $ 151,800 $ 376,800 $ 4,739,500
Depreciation and amortization 30,000 59,900 1,271,500
Research and development -- -- 297,100
Loss on property disposal -- -- 717,800
- --------------------------------------------------------------------------------------------------
Loss from operations 181,800 436,700 7,025,900
- --------------------------------------------------------------------------------------------------
Other income (expense)
Interest income -- -- 83,900
Interest expense (11,800) (25,200) (261,900)
Gain (loss) on sale of assets -- -- (6,000)
- --------------------------------------------------------------------------------------------------
Net loss 193,600 461,900 7,209,900
- --------------------------------------------------------------------------------------------------
Accumulated deficit -- Beginning of period 7,016,300 6,748,000 --
- --------------------------------------------------------------------------------------------------
Accumulated deficit -- End of period $ 7,209,900 $ 7,209,900 $ 7,209,900
==================================================================================================
Loss per common share
(Basic and Diluted) $ 0.002 $ 0.006 $ 0.165
=========== =========== ===========
</TABLE>
The accompanying footnote is an integral part of these financial statements.
41
<PAGE>
<TABLE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Statement of Shareholders' Equity (Unaudited)
For the periods ended June 30, 1999
Unaudited
<CAPTION>
Common Stock
(par value $ .001 per share) Additional Accumulated
Shares Amount Paid-in Capital Deficit Total
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance December 31, 1998 79,215,500 $ 79,200 $18,370,900 $(6,748,000) $11,702,100
- ---------------------------------------------------------------------------------------------------------------------------------
Stock issued in exchange for cash at $ .50 per
share (net of redemptions) 734,500 700 366,600 367,300
Net loss for the period ended March 31, 1999 (268,300) (268,300)
- ---------------------------------------------------------------------------------------------------------------------------------
Balance March 31, 1999 79,950,000 79,900 18,737,500 (7,016,300) 11,801,100
- ---------------------------------------------------------------------------------------------------------------------------------
Stock issued in exchange for cash at $ .50 per
share 415,000 400 207,100 207,500
Net loss for the period ended June 30, 1999 (193,600) (193,600)
- ---------------------------------------------------------------------------------------------------------------------------------
Balance June 30, 1999 80,365,000 $ 80,300 $18,944,600 $(7,209,900) $11,815,000
=================================================================================================================================
</TABLE>
The accompanying footnote is an integral part of these financial statements.
42
<PAGE>
<TABLE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Statement of Cash Flows
For the periods ended June 30, 1999
Unaudited
<CAPTION>
Cumulative
Three Months Six Months During
Ended Ended Development
06/30/99 06/30/99 Stage
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities
Net loss $ (193,600) $ (461,900) $ (7,209,900)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 30,000 59,900 1,271,500
Loss on sale of equipment -- -- 6,000
Loss on property disposal -- -- 717,800
Common stock issued for operating expenses -- -- 286,100
Sources (uses) of cash from change in:
Inventory -- -- 51,700
Deposits -- -- (3,800)
Accounts payable 184,100 300,700 764,000
Accrued expenses 23,800 32,000 166,100
- -------------------------------------------------------------------------------------------------------------------
Net cash used in operating activities 44,300 (69,300) (3,950,500)
- -------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities
Purchases of property and equipment (376,400) (609,000) (11,657,100)
Sale of property and equipment -- -- 219,200
- -------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (376,400) (609,000) (11,437,900)
- -------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities
Proceeds from issuance of long-term debt -- -- 1,112,100
Principal payments on long-term debt (3,000) (8,900) (689,900)
Proceeds from notes payable to shareholder -- -- 525,000
Principal payments on notes payable to shareholder -- -- (125,000)
Proceeds from capital leases -- -- 90,700
Principal payments on capital leases (17,200) (56,700) (198,800)
Increases in advances payable -- -- 229,300
Proceeds from issuance of common stock 207,500 584,800 14,882,100
Redemption of common stock -- (10,000) (256,500)
- -------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 187,300 509,200 15,569,000
- -------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash (144,800) (169,100) 180,600
Cash -- Beginning of period 325,400 349,700 --
- -------------------------------------------------------------------------------------------------------------------
Cash -- End of period $ 180,600 $ 180,600 $ 180,600
===================================================================================================================
</TABLE>
The accompanying footnote is an integral part of these financial statements.
43
<PAGE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Note to Financial Statements
As of June 30, 1999
Note 1. Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and the instuctions to Form 10-QSB. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of only normal recurring accruals) considered necessary for a fair
presentation of the Company's financial position at June 30, 1999, the results
of operations, shareholders' equity, and cash flows for three and six months
ended June 30, 1999 are included. Operating results for the three and six month
periods ended June 30, 1999 are not necessarily indicative of the results that
may be expected for the year ended December 31, 1999.
44
<PAGE>
- --------------------------------------------------------------------------------
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
- --------------------------------------------------------------------------------
The Company incorporates by this reference the text of Item 14 of the
Company's Form 10-SB filed on March 29, 1999.
- --------------------------------------------------------------------------------
ITEM 15. Financial Statements and Exhibits
- --------------------------------------------------------------------------------
The Company incorporates by this reference the text of Item 15 of the
Company's Form 10-SB filed on March 29, 1999, and the exhibits filed with that
Form 10-SB.
- --------------------------------------------------------------------------------
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: August 25, 1999.
NATIONAL FRUIT AND VEGETABLE
TECHNOLOGY CORPORATION
By:
Daniel K. Cashman
President
45
