UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES ACT OF 1934
For the period ended December 31, 1999
Commission file number 0-25665
NATIONAL FRUIT AND VEGETABLE TECHNOLOGY CORPORATION
--------------------------------------------------------
(Name of Small Business Issuer in its Charter)
Nevada 31-1194531
- --------------------------- -------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
210 Water Street, Baltimore, Ohio 43105
- ----------------------------------- -----------
(Address of principal executive offices) (Zip Code)
Issuer's Telephone number: (740) 862-6300
---------------
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock N/A
------------ -----------------------------------------
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $0.001 Per Share
----------------------------------------
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filings requirements for the past 90 days. Yes [X] No [ ]
<PAGE>
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-
KSB or any amendment to the Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year: $ 0.00
State the aggregate market value of the voting and non-voting common
equity held by non- affiliates computed by reference to the price at which the
common equity was sold, or the average bid and asked price of such common
equity, as of a specified date within the past 60 days.
PART I
- --------------------------------------------------------------------------------
ITEM 1. DESCRIPTION OF BUSINESS
- --------------------------------------------------------------------------------
(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.
-2-
<PAGE>
As of December 31, 1999, 83,452,400 shares of the Company's authorized
shares of common stock were issued and outstanding.
To management's knowledge, the Company has not been subject to
bankruptcy, receivership or any similar proceedings.
The Company maintains offices at 210 Water Street, Baltimore, Ohio
43105. The Company substantially owns all of its equipment.
(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.
-3-
<PAGE>
(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.
-4-
<PAGE>
(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
-5-
<PAGE>
United States. Large grower-packers ship up to 5,000 truckloads of produce a
year, while smaller grower- packers ship between 100 to 500 truckloads per year.
The Company will compete directly with the grower-packers and add value for the
consumer by greatly reducing the preparation time associated with most fruit and
vegetable products.
Management believes that the Company's unique capability to offer large
volumes of prepared fruit and vegetable products that are fresh, nutritious,
economical and convenient to the consumer will make the Company a viable
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
-6-
<PAGE>
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.
The Company believes that its proprietary products provide it with a
key competitive advantage, but patent protection generally cannot be obtained
for most of its products. The Company attempts to minimize unauthorized copying
of these products by a variety of methods, however, there can be no assurance
that unauthorized copying will not occur. The Company attempts, and will
continue to attempt, to protect its proprietary materials and processes by
relying on trade secret laws and non-disclosure and confidentiality agreements
with its employees and certain other persons who have access to its proprietary
materials and processes, or who have licensing or research agreements with the
Company.
The Company has not applied for any patents on its industrial microwave
technology to date. However, the Company has developed certain technologies
which it believes to be proprietary. Were feasible, management intends to make a
number of patent applications for protection on certain of the Company's rights
relating to its automated fruit and vegetable processing plant and to its
industrial microwave oven technology. The Company also intends to consider
application for additional patents relating to other food processing equipment.
The Company intends to continue to seek patent protection with respect
to those advances to its process resulting from its research and development
efforts.
The Company intends to rely on a combination of trade secrets, patents,
trademark laws, license agreements and technical measures to protect its rights
with respect to its industrial microwave oven technology. No assurance can be
given that these measure will protect the Company's rights.
(7) Governmental Approval, Effect of Governmental Regulation and Costs and
Effects of Compliance with Environmental Laws
The Company is subject to regulation by federal, state and local
governmental authorities. These include: the EPA for environmental impact and,
in particular, sanitary discharge; OSHA for equipment and work area safety; FDA
for labeling, sanitary conditions and product contamination; USDA for grading a
food inspection; state government for building codes; and local government for
building codes and property zoning. The Company's operations are subject to a
variety of other federal, state and local laws, such as labor, insurance,
transportation and wage regulations. Compliance with all such regulations may be
time-consuming and expensive and may cause delays in the ability of the Company
to commence operation of the Company's fruit and vegetable processing plant.
-7-
<PAGE>
The Company has been approved with all the necessary permits, including
all city, county, state and federal approval processes necessary to operate a
food facility in the State of Ohio.
The handling, transportation and disposal of potato wastes expose the
Company to certain risks under applicable environmental laws and regulations.
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
-8-
<PAGE>
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.
(8) Research and Development in the Last Two Years
Management of the Company has spent all of its time and efforts during
the last two (2) years, and for all of its existence, on the research and
development of its food processing systems and acquisition of facilities and
equipment. Such research and development has focused upon the development of the
Company's microwave oven, but also has included the development of conveyor
systems and automation which rapidly processes raw products with a minimum of
damage and loss of the products. Although research and development will be an
ongoing process, management believes that the Company's research and development
since the Company's inception has produced an effective fruit and vegetable
processing system. Management also believes that the efforts in acquiring
facilities and equipment have been successful and that the Company is ready to
begin production.
(9) Employees
As of December 31, 1999, the Company had eleven (11) full-time
employees, one (1) part- time employee and nine (9) contract consultants. None
of the Company's employees or independent contractors is subject to a collective
bargaining agreement and the Company believes its relations with its employees
and independent contractors are good.
(c) Reports to Security Holders
Prior to filing its 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 its Form 10-SB, the Company has not filed
reports with the Securities and Exchange Commission. Now that the Company has
become 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
-9-
<PAGE>
information on the operation of the Public Reference Room by call the Commission
at 1-800-SEC-0330. The Commission maintains an Internet site that contains
reports, proxy and information statements, and other information regarding
issuers that file electronically with the Commission. The Internet address of
the Commission's site is (http://www.sec.gov).
- --------------------------------------------------------------------------------
ITEM 3. DESCRIPTION OF PROPERTY
- --------------------------------------------------------------------------------
(a) Principal Plants and Property and Description of Real Estate and
Operating Data.
The Company owns its 150,000 square foot plant situated on 13 acres of
land in Baltimore, Ohio. The Company owns the land in fee simple title. The
property is paid in full with no mortgages or liens The one-level, open-floor
system results in energy savings and reduced product damage and is easy to
expand, maintain and fireproof. The ceiling, floors and walls are being brought
to USDA and FDA standards for the processing of fruit and vegetables. The plant
will accommodate four complete microwave oven systems, has 15 loading docks, a
water system capable of delivering 2,000 gallons of water per minute, and an
8,000 square foot office space. The renovations and adaptations required to
bring the Company's plant into compliance with all necessary regulations and to
prepare it for production have been substantially completed.
The Company's plant is located approximately 19 miles southeast of
Columbus in Baltimore, Ohio within an 8-hour drive of a market that consumes
over 26 million pounds of produce per day. The facility is just 6 miles south of
a major interstate highway, affording easy access for delivery and shipment of
raw materials and finished product by truck. The plant is also centrally located
to a large supply of raw fruit and vegetables and management has close contacts
with a significant number of growers in the region.
In addition to the Company's 150,000 square foot plant, it has a
150,000 cubic foot freezer. The processing plant is electrically new throughout
with an additional 2,000 AMP service, new plumbing, air, steam well water and
city water line, all new drains and new floors. The entire facility has met all
USDA, FDA, EPA, FDD and Board of Health regulations with full approval for
operation. The plant is fully automated with the newest Allan Bradley
Technology.
The 8,000 square foot office space has been remodeled with a conference
room, marketing and sales rooms, employees training room, new men's and women's
bathrooms, kitchen, break room and 12 offices.
It is management's opinion that the Company's property is adequately
covered by insurance.
-10-
<PAGE>
(b) Investment Policies
The Company's plan of operations is focused on the continued
development of the food processing systems described in Item 1 of this Part.
Accordingly, the Company has no particular policy regarding each of the
following types of investments:
1. Investments in real estate or interest in real estate;
2. Investments in real estate mortgages; or,
3. Securities of or interests in persons primarily engaged in
real estate activities.
- --------------------------------------------------------------------------------
ITEM 3. LEGAL PROCEEDINGS
- --------------------------------------------------------------------------------
The Company is not party to, and none of the Company's property is
subject to, any pending or threatened legal, governmental, administrative or
judicial proceedings that will have a materially adverse effect upon the
Company's financial condition or operation.
- --------------------------------------------------------------------------------
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- --------------------------------------------------------------------------------
The company did not submit any matter to its shareholders during the
last quarter of 1999.
PART II
- --------------------------------------------------------------------------------
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
- --------------------------------------------------------------------------------
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 December 31, 1999.
-11-
<PAGE>
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 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
- --------------------------------------------------------------------------------
Statements contained herein that are not historical facts are
forward-looking statements as that term is defined by the Private Securities
Litigation Reform Act of 1995. Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable, the
forward-looking statements are subject to risks and uncertainties that could
cause actual results to differ from those projected. The Company cautions
investors that any forward-looking statements made by the Company are not
guarantees of future performance and that actual results may differ materially
from those in the forward-looking statements. Such risks and uncertainties
include, without limitation: well established competitors who have substantially
greater financial resources and longer operating histories, regulatory delays or
denials, ability to compete as a start-up company in a highly competitive
market, and access to sources of capital.
The Company has not received revenues from operation during the
two-year period immediately preceding the filing of this Form 10-KSB.
Plan of Operation
During 2000, the Company plans to continue to focus on efforts opening
its potato processing operations. The Company's product research and development
programs have been completed for purposes of the next twelve months of
operations. Management believes that its physical facilities are complete and
ready to operate.
During the end of the first quarter and the beginning of the second
quarter of 2000, management of the Company intends to expand 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
-12-
<PAGE>
sales staff. Management has completed a test product program and expect to
deliver and invoice product to restaurant customers during the second quarter of
2000.
At the same time, management of the Company anticipates expanding
processing operations. Such operations will require additional personnel to work
in the Company's product control laboratory and 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
second quarter of 2000 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 full
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.
-13-
<PAGE>
- --------------------------------------------------------------------------------
ITEM 7. FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
[ICKERT & COMPANY LLC LETTERHEAD]
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, 1999 and 1998, 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, 1999. 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, 1999 and 1998, and the results of its
operations and its cash flows for the periods then ended in conformity with
generally accepted accounting principles.
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.
March 21, 2000
Columbus, Ohio. /s/Ickert & Company LLC
-----------------------
Ickert & Company LLC
<TABLE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Balance Sheets
As of December 31, 1999 and 1998
<CAPTION>
1999 1998
- ----------------------------------------------------------------------------------------------------------------
Assets
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current assets
Cash $ 717,900 $ 349,700
Prepaid expenses 3,800 3,800
- ----------------------------------------------------------------------------------------------------------------
721,700 353,500
- ----------------------------------------------------------------------------------------------------------------
Property & equipment 14,181,500 13,170,600
Accumulated depreciation -809,900 -695,800
- ----------------------------------------------------------------------------------------------------------------
13,371,600 12,474,800
- ----------------------------------------------------------------------------------------------------------------
Total assets $ 14,093,300 $ 12,828,300
================================================================================================================
- ----------------------------------------------------------------------------------------------------------------
Liabilities & Shareholders' Equity
- ----------------------------------------------------------------------------------------------------------------
Current liabilities
Current portion of long-term debt $ 26,900 $ 57,900
Current portion of notes payable to shareholder 400,000 250,000
Accounts payable 99,900 130,700
Accounts payable - related party 488,000 332,500
Accrued expenses 256,400 134,200
- ----------------------------------------------------------------------------------------------------------------
1,271,200 905,300
- ----------------------------------------------------------------------------------------------------------------
Long-term obligations
Long-term debt 0 3,000
Capital leases 35,100 67,900
Notes payable to shareholder 0 150,000
- ----------------------------------------------------------------------------------------------------------------
35,100 220,900
- ----------------------------------------------------------------------------------------------------------------
Shareholders' equity
Common stock 83,500 79,200
Additional paid-in capital 20,485,100 18,370,900
Deficit accumulated during the development stage -7,781,600 -6,748,000
- ----------------------------------------------------------------------------------------------------------------
12,787,000 11,702,100
- ----------------------------------------------------------------------------------------------------------------
Total liabilities & shareholders' equity $ 14,093,300 $ 12,828,300
================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
<TABLE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Statements of Loss and Accumulated Deficit
For the periods ended December 31, 1999 and 1998
<CAPTION>
Cumulative
During
Development
1999 1998 Stage
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Costs and expenses
General and administrative $ 847,100 $ 509,300 $5,209,800
Depreciation and amortization 114,100 132,900 1,325,700
Research and development -- -- 297,100
Loss on property disposal -- -- 717,800
- -----------------------------------------------------------------------------------------------
Loss from operations 961,200 642,200 7,550,400
- -----------------------------------------------------------------------------------------------
Other income (expense)
Interest income -- -- 83,900
Interest expense -72,400 -33,600 -309,100
Gain (loss) on sale of assets -- -13,400 -6,000
- -----------------------------------------------------------------------------------------------
Net loss 1,033,600 689,200 7,781,600
- -----------------------------------------------------------------------------------------------
Accumulated deficit -- Beginning of period 6,748,000 6,058,800 --
- -----------------------------------------------------------------------------------------------
Accumulated deficit -- End of period $7,781,600 $6,748,000 $7,781,600
===============================================================================================
Loss per common share
(Basic and fully diluted) $ 0.013 $ 0.009 $ 0.17
======= ======= ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
<TABLE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Statements of Shareholders' Equity
For the periods ended December 31, 1999 and 1998
<CAPTION>
Common Stock
(par value $ .001 per share) Additional Accumulated
Shares Amount Paid-in Capital Deficit Total
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Stock issued at inception (September 14, 1983) 6,941,400 $ 69,400 $ 847,200 $ 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 82,600 -382,600 -- 0
Adjustment to reflect change in par value
to $ .001 per share -- 13,200 413,200 -- 0
Stock issued to acquire assets of
Veg-Tec Corporation during 1986 3,506,400 3,500 499,700 503,200
Stockissued in exchange for cash,
other assets or expenses from November
18, 1986 through December 31,
1997 at $ .50 per share
(net of redemptions) 26,588,400 26,600 13,267,000 -- 13,293,600
Net loss through December 31, 1997 -- -- -- -6,058,800 -6,058,800
- -----------------------------------------------------------------------------------------------------------------------------------
Balance December 31, 1996 76,001,600 76,000 16,767,200 -6,058,800 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, 1997 -- -- -- -689,200 -689,200
- -----------------------------------------------------------------------------------------------------------------------------------
Balance December 31, 1997 79,215,500 79,200 18,370,900 -6,748,000 11,702,100
- -----------------------------------------------------------------------------------------------------------------------------------
Stock issued in exchange for cash, other assets
or expenses during 1999
at $ .50 per share (net of redemptions) 4,236,900 4,300 2,114,200 -- 2,118,500
Net loss for the year ended December 31, 1999 -- -- -- -1,033,600 -1,033,600
Balance December 31, 1998 83,452,400 $ 83,500 $20,485,100 $ -7,781,600 $12,787,000
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
<TABLE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Statements of Cash Flows
For the periods ended December 31, 1999 and 1998
<CAPTION>
Cumulative
During
Development
1999 1998 Stage
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities
Net loss $ -1,033,600 $ -689,200 $ -7,781,600
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 114,100 132,900 1,325,700
Loss on sale of equipment - 13,400 6,000
Loss on property disposal - - 717,800
Common stock issued for operating expenses 25,000 2,000 311,100
Sources (uses) of cash from change in:
Deposits - 9,500 -3,800
Accounts payable -30,800 2,700 99,900
Accounts payable - related party 155,500 132,900 488,000
Accrued expenses 53,200 -1,400 187,200
Other 1,700 - 53,500
------------------------------------------------------------------------------------------------------------------
Net cash used in operating activities -714,900 -397,200 -4,596,200
------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities
Purchases of property and equipment -979,400 -1,480,800 -12,027,400
Sale of property and equipment - - 219,200
------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities -979,400 -1,480,800 -11,808,200
------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities
Proceeds from issuance of long-term debt - - 1,112,100
Principal payments on long-term debt -9,000 -131,000 -690,000
Proceeds from notes payable to shareholder 125,000 200,000 650,000
Principal payments on notes payable to shareholder -50,000 - -175,000
Proceeds from capital leases - - 90,700
Principal payments on capital leases -22,000 -67,000 -164,100
Proceeds from issuance of common stock 2,058,500 1,606,900 16,585,100
Redemption of common stock -40,000 -14,500 -286,500
------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 2,062,500 1,594,400 17,122,300
------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash 368,200 -283,600 717,900
Cash -- Beginning of period 349,700 633,300 -
------------------------------------------------------------------------------------------------------------------
Cash -- End of period $ 717,900 $ 349,700 $ 717,900
==================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Notes to Financial Statements
As of December 31, 1999 and 1998
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
transferred to Veg-Tec were valued at the original shareholders'
historical cost, and 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
===============
F-6
<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 assets acquired were valued at the
shareholders' historical cost. The transaction was accounted for as a
combination of entities under common control.
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
F-7
<PAGE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Notes to Financial Statements
amount of assets, liabilities, revenues and expenses and disclosure of
contingent assets and liabilities. Actual results could differ from the
estimates and assumptions used.
Supplemental cash flow disclosures -- The Company paid $47,400 and
$33,600 for interest in 1999 and 1998, respectively.
The Company acquired $31,500 of property and equipment in 1999 and
$40,600 in 1998 in exchange for stock.
During 1999, the Company issued 50,000 common shares in payment of
interest on a loan from a shareholder. During 1998, 3,900 shares were
issued in lieu of cash in payment for certain administrative expenses.
The Company financed $72,900 of vehicles and equipment through capital
leases in 1998. No new lease transactions were entered into during
1999.
Note 4. Property and Equipment
As of December 31, 1999 and 1998, property and equipment can be
summarized as follows on a restated basis:
<TABLE>
<CAPTION>
Construction
In Service in Progress Total Total
at 12/31/99 at 12/31/99 at 12/31/99 at 12/31/98
---------------- ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Land $ 222,800 $ -- $ 222,800 $ 191,300
Buildings 125,000 2,715,100 2,840,100 2,520,100
Microwave oven -- 1,020,900 1,020,900 924,000
Processing equipment -- 7,377,500 7,377,500 7,106,500
Machinery 882,800 1,126,300 2,009,100 1,713,300
Vehicles 157,400 553,700 711,100 715,400
---------------- ------------------ ------------------ ------------------
1,388,000 12,793,500 14,181,500 13,170,600
---------------- ------------------ ------------------ ------------------
Depreciation (809,900) -- (809,900) (695,800)
---------------- ------------------ ------------------ ------------------
$ 578,100 $ 12,793,500 $ 13,371,600 $ 12,474,800
================ ================== ================== ==================
</TABLE>
F-8
<PAGE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Notes to Financial Statements
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, 1999. 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 5. Long-term Debt
Long-term debt consists of the following as of December 31, 1999:
Unsecured debt $ 3,000
Less: amounts due within one year (3,000)
--------------
Net long-term debt $ 0
==============
The unsecured debt is due in April, 2000. Payments are due monthly,
with no stated interest rate.
Note 6. Notes Payable to Shareholder
The Company had the following notes payable to a shareholder at
December 31, 1999:
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
==============
F-9
<PAGE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Notes to Financial Statements
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 related to these notes
totaled $44,000 in 1999. Interest is to be paid to the shareholder with
common stock of the Company at the rate of $.50 per share. As of
December 31, 1999, interest expense has been accrued but the shares
have yet to be issued.
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. If the stock payment option were chosen for the entire
amount payable, the shareholder would receive $200,000 and 400,000
shares of common stock.
Note 7. Accounting for Income Taxes
The Company has incurred tax net operating losses during its
development period of approximately $7,800,000. No tax benefit for
those losses has been recorded in the accompanying financial
statements, as the Company's history of operating losses make it
uncertain that the benefit will ultimately be recognized. This method
of accounting for income taxes is in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes."
As the Company has not commenced planned food processing operations, no
federal or local income tax returns or county property tax returns have
been filed.ational Fruit and Vegetable Technology Corporation
Note 8. 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 1999 and 1998. Payments under the lease are guaranteed
personally by an officer of the Corporation.
Future minimum rental payments on the operating lease are as follows:
2000 $ 5,100
================
F-10
<PAGE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Notes to Financial Statements
Note 9. 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, 1999, future minimum lease payments for all leases, and
the minimum payments for those leases were as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
2000 $ 27,700
2001 21,300
2002 12,100
2003 2,600
thereafter -
--------------
Total minimum lease payments 63,700
Less: interest portion (4,700)
--------------
Present value of net minimum lease payments 59,000
Less: current portion (23,900)
--------------
Net long-term lease liability $ 35,100
==============
At December 31, 1999, assets under capital leases were as follows:
Food processing equipment $ 54,400
Machinery and equipment 74,000
-------------
Less: Accumulated depreciation (47,600)
-------------
Net assets under capital lease $ 80,800
=============
</TABLE>
F-11
<PAGE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Notes to Financial Statements
Note 10. Related Party Transactions
The Company rents a storage facility owned by an entitiy controlled 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 1999 and 1998. Management has determined that
the rental rates charged do not exceed fair market rates for this
geographic area. As of December 31, 1999 and 1998, this related entity
has a balance due from the Company of $488,000 and $332,500,
respectively.
From time to time, the Company has borrowed funds from various
shareholders. At December 31, 1999 and 1998, a total of $403,000 and
$415,000 was due to various shareholders. Interest expense incurred on
this indebtedness amounted to $44,000 and $27,200 respectively in 1999
and 1998.
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. As of December 31, 1999, the Company needed to
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.
Note 12. Reclassifications
Certain prior year amounts have been reclassified to conform with
current year presentation.
F-12
<PAGE>
- --------------------------------------------------------------------------------
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
- --------------------------------------------------------------------------------
There have been no disagreements with the Company's independent
accountants over any item involving the Company's financial statements. The
Company's independent accountants are Ickert & Company LLC., Certified Public
Accountants, 42 East Gay Street, Suite 1515, Columbus, Ohio 43215.
PART III
- --------------------------------------------------------------------------------
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
- --------------------------------------------------------------------------------
(a) Directors and Executive Officers
As of February 22, 1999, the directors and executive officers of the
Company, their ages, positions in the Company, the dates of their initial
election or appointment as director or executive officer, and the expiration of
the terms as directors are as follows:
Period Served As
Name Age Position Officer/Director*
- -------- --- -------------- ------------------
Richard J. Cashman II 48 Chairman of the 9-15-83 to present
Board
Daniel K. Cashman 38 President and 9-15-83 to present
Director
Mitch Adams 40 Vice President 9-20-96 to present
Of Engineering
and Director
Tom Ranier 44 Secretary, 12-19-86 to present
Treasurer and
Director
-14-
<PAGE>
Tom Heilman 44 Director 9-20-96 to present
Doug Katterhenry 56 Director 9-20-96 to present
Patrick D. Maguire 47 Director 1992 to present
Clifton K. Merriam 54 Director 1992 to present
Frank Moauro 75 Director 1986 to present
Dr. Harold Rinehart 58 Director 1986 to present
Philip Risinger 62 Director 9-20-96 to present
Lawrence Green 70 Director 9-20-96 to present
*The Company's directors are elected at the annual meeting of stockholders and
hold office until their successors are elected and qualified. The Company's
officers are appointed annually by the Board of Directors and serve at the
pleasure of the Board.
(b) Business Experience:
Richard J. Cashman II, age 48, is the Chairman of the Board and a
Director of National Fruit and Vegetable Technology Corporation. Mr. Cashman
attended Ohio State University in English, accounting and food science
engineering. Mr. Cashman has been involved for the past 18 years in the research
and development of the Company's food processing plant. He is the C.E.O. of
Platinum Industries, Ltd., an industrial real estate holding company. He was a
certified professional plant manager in 1996. He is the former President of
Steel Parts Manufacturing, Inc., a manufacturer of U.S. Military parts from 1980
through 1985. He has developed a solid foundation of knowledge and expertise in
plant operation and pioneered various new inventions for the newly emerging
fresh potato processing industry.
Daniel K. Cashman, age 38, is the President and a Director of National
Fruit and Vegetable Technology Corporation. He attended Florida State University
in Biological Science, University of Florida in Organic Chemistry, Ohio State in
Biochemistry and University of California in Electro Magnetic Engineering. Mr.
Cashman has been involved for the past ten (10) years in the research and
development in high powered microwave energy to develop a new cooking system,
using 915 MHz frequency, with the goal of producing fruits and vegetables of
superior taste, texture, color and higher in nutritional value. He has been
instrumental in the engineering, designing and building of the Company's food
processing plant with freezer and a 684 foot long microwave oven system. The
plant is fully automated with state-of-the-art food processing equipment. Mr.
Cashman is also the President and Director of Platinum Industries, Ltd., a real
estate holding company, manages 23 full-time employees and sub-contractors,
-15-
<PAGE>
reviews all corporate and executive decisions made by the Company, including
those for construction, equipment, personnel and technology. His goal for the
Company is to dominate North America's fresh food market with the Company's new
potato products.
Tom Ranier, age 45, is the Secretary, Treasurer and a Director of
National Fruit and Vegetable Technology Corporation. Mr. Ranier earned a B.A. in
Business Administration, Industrial Management and Management Science from
Franklin University in 1981. He is employed at Watkins Printing of Columbus,
Ohio. From 1985 to the present, he was the co-owner and President of Vision
Printing, Inc. and Franklin Printing, Inc. also of Columbus, Ohio. Mr. Rainier
is also the President and owner of Unique Industries, Inc., a sales consulting
firm. From 1981 to 1984, he was a Key Accounts Representative and Sales and
Marketing Director for Copco Papers, Inc. Of Columbus, Ohio.
Mitch Adams, age 40, is Vice President of Engineering and a Director of
National Fruit and Vegetable Technology Corporation. Mr. Adams attend O.I.T. in
electronics and Bliss College in business finance. In 1985 he was involved in
the process control for Pepsi and in 1998 he was involved in the process control
for Anheuser-Busch. He is the C.E.O. and C.F.O. of Adams & Lorimer dba World Gym
Health & Fitness, C.E.O. and C.F.O. for Adams & Ellison in the business of
industrial controls. He manages employees and sub-contractors and reviews
executive decisions, including equipment layout and process control for the
Company.
Lawrence Green, age 70, is a Director of National Fruit and Vegetable
Technology Corporation. Mr. Green has been in the development of land for
residential lots and is the owner of commercial buildings which he maintains.
Mr. Green is also a builder and maintained the storm sewer and drainage lines
for the Company. He is now retired except for his own maintenance work on his
buildings. Served on National Missionary Board of Church of God with offices in
Anderson, Indiana.
Tom Heilman, age 44, is a Director of National Fruit and Vegetable
Technology Corporation. Mr. Heilman is currently President of Continental
Equities, Inc. He is a licensed broker/dealer. He owns and manages commercial
and residential properties through Columbus and Central Ohio. He also raises
equity for private placements, consulting, mergers and acquisitions.
Doug Katterhenry, age 52, is a Director of National Fruit and Vegetable
Technology Corporation. Mr. Katterhenry has a background in new production
introduction and was a product engineer for Lucent Technologies.
Patrick D. Maguire, age 47, is a Director of National Fruit and
Vegetable Technology Corporation. Mr. Maguire has a B.A. from Wittenberg
University in 1973 and a J.D. from Ohio Northern University in 1976. Mr. Maguire
serves as a managing partner with the law firm of Maguire & Schneider in
Columbus, Ohio. Previously he worked as Assistant County Prosecutor of Franklin
County and with a number of Columbus law firms over the past 20 years.
-16-
<PAGE>
Clifton K. Merriam, age 54, is a Director of National Fruit and
Vegetable Technology Corporation. Mr. Merriam has been involved with marketing
and sales during the past 26 years. He currently serves with Family Trust Real
Estate in Ontario, Canada.
Frank Moauro, age 75, is a Director of National Fruit and Vegetable
Technology Corporation. From 1970 to the present he has been co-owner of Moauro
Farms Limited of Leamington, Ontario, a fruit and vegetable farming enterprise.
He is also in the Standardbred horse business. From 1980 to the present, Mr.
Moauro has been President of Glenriver Investments, a vegetable greenhouse
plant. He has over 36 years experience in fruit and vegetable farming,
management and sales.
Dr, Harold Rinehart, age 59, is a Director of National Fruit and
Vegetable Technology Corporation. Dr. Rinehart graduated from the National
College of Chiropractic on 1963. From 1963 to the present, Dr. Rinehart has been
a practicing chiropractor in Loudonville, Ohio. He is also the former President
and owner of the Weight Loss and Control Center in Loudonville and the former
owner and President of the H.G. Rinehart Company, a Columbus, Ohio brokerage
firm.
Philip Risinger, age 62, is a Director of National Fruit and Vegetable
Technology Corporation. Mr. Risinger is a Plant Manager for Oliver Rubber
Company's Paris, Texas plant.
(c) Directors of Other Reporting Companies:
None of the directors are directors of other reporting companies.
(d) Employees:
The officers and directors who are identified above are the significant
employees of the Company.
(e) Family Relationships:
Richard J. Cashman II, Chairman of the Board, is the brother of Daniel
K. Cashman, President and Director.
(f) Involvement in Certain Legal Proceedings:
None of the officers and directors of the Company have been involved in
the past five (5) years in any of the following:
(1) Bankruptcy proceedings;
(2) Subject to criminal proceedings or convicted of a criminal
act;
-17-
<PAGE>
(3) Subject to any order, judgment or decree entered by any Court
for violating any laws relating to business, securities or
banking activities; or
(4) Subject to any order for violation of federal or state
securities laws or commodities laws.
(g) Section 16a Beneficial Ownership Compliance
To the Company's knowledge, the officers, directors and beneficial
owners of more than 5% of the Company's common stock have filed their initial
statements of ownership on Form 3. To management's knowledge, such filings are
the only filings made on Forms 3, 4 or 5 in connection with the Company's stock.
- --------------------------------------------------------------------------------
ITEM 10. EXECUTIVE COMPENSATION
- --------------------------------------------------------------------------------
The following table sets forth information about compensation paid or
accrued by the Company during the years ended December 31, 1999, 1998 and 1997to
the Company's officers and directors. None of the Executive Officers of the
Company earned more than $100,000 during the years ended December 31, 1999, 1998
and 1997.
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term Compensation
----------------------
Annual Compensation Awards Payouts
--------------------- ------------ ---------
(e) (g)
Other (f) Securities (i)
(a) Annual Restricted Under- (h) Other
Name and (c) (d) Compen- Stock Lying LTIP Compen-
Principal (b) Salary Bonus sation Awards Options/ Payouts sation
Position Year $ ($) ($) ($) SARs(#) ($) ($)
- -------- ------ ------ ----- ------ ----- -------- ------ ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Richard J. Cashman II
Chairman of 1999 $40,000 $ None $ None $ None None None None
the Board 1998 $ None $ None $ None $ None None None None
1997 $ None $ None $ None $ None None None None
</TABLE>
-18-
<PAGE>
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term Compensation
----------------------
Annual Compensation Awards Payouts
--------------------- ------------ ---------
(e) (g)
Other (f) Securities (i)
(a) Annual Restricted Under- (h) Other
Name and (c) (d) Compen- Stock Lying LTIP Compen-
Principal (b) Salary Bonus sation Awards Options/ Payouts sation
Position Year $ ($) ($) ($) SARs(#) ($) ($)
- -------- ------ ------ ----- ------ ----- -------- ------ ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Daniel K. Cashman
President and 1999 $24,000 $ None $ None $ None None None None
Director 1998 $20,500 $ None $ None $ None None None None
1997 $20,000 $ None $ None $ None None None None
Tom Ranier
Secretary,Asst. 1999 $None $ None $ None $ None None None None
Treasurer 1998 $ 4,470 $ None $ None $ None None None None
and Director 1997 $ 8,231 $ None $ None $ None None None None
Mitch Adams
Vice President 1999 $44,000 $ None $ None $ None None None None
Engineering 1998 $24,645 $ None $ None $ None None None None
and Director 1997 $18,245 $ None $ None $ None None None None
Lawrence Green
Director 1999 $ None $ None $ None $ None None None None
1998 $ None $ None $ None $ None None None None
1997 $ None $ None $ None $ None None None None
Tom Heilman
Director 1999 $ None $ None $ None $ None None None None
1998 $ None $ None $ None $ None None None None
1997 $ None $ None $ None $ None None None None
Doug Katterhenry
Director 1999 $ None $ None $ None $ None None None None
1998 $ None $ None $ None $ None None None None
1997 $ None $ None $ None $ None None None None
Pat Maguire
Director 1999 $ None $ None $ None $ None None None None
1998 $ None $ None $ None $ None None None None
1997 $ None $ None $ None $ None None None None
Clifton K. Merriam
Director 1999 $ None $ None $ None $ None None None None
1998 $ None $ None $ None $ None None None None
1997 $ None $ None $ None $ None None None None
Frank Moauro
Director 1999 $ None $ None $ None $ None None None None
1998 $ None $ None $ None $ None None None None
1997 $ None $ None $ None $ None None None None
Dr. Harold Rinehart
Director 1999 $ None $ None $ None $ None None None None
1998 $ None $ None $ None $ None None None None
1997 $ None $ None $ None $ None None None None
Philip Risinger
Director 1999 $ None $ None $ None $ None None None None
1998 $ None $ None $ None $ None None None None
1997 $ None $ None $ None $ None None None None
</TABLE>
-19-
<PAGE>
- --------------------------------------------------------------------------------
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
- --------------------------------------------------------------------------------
(a) Security Ownership of Certain beneficial Owners:
The following information sets forth certain information as of December
31, 1999 about each person who is known to the Company to be the beneficial
owner of more than five percent (5%) of the Company's Common Stock:
(2)
<TABLE>
<CAPTION>
(1) Name and Address (3) (4)
Title of Beneficial Amount and Nature of Percent of
of Class Owner Beneficial Ownership Class
- -------- -------------------------- -------------------- --------------
<S> <C> <C> <C>
Common Emerald Industries Corporation(1) 74,970,619 58%
210 Water Street
Baltimore, Ohio 43105
(b) Security Ownership of Management:
(2)
(1) Name and Address (3) (4)
Title of Beneficial Amount and Nature of Percent of
of Class Owner Beneficial Ownership Class
- -------- -------------------------- -------------------- --------------
Common Richard J. Cashman 74,970,619(2) 58%
210 Water Street
Baltimore, Ohio 43105
</TABLE>
- --------
1Richard 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.
2Such shares are beneficially owned by Richard J. Cashman II through
his ownership and control of Emerald Industries Corporation. Emerald Industries
Corporation is the owner of record of all 74,970,619 shares.
-20-
<PAGE>
Common Daniel K. Cashman 74,970,619(3) 58%
210 Water Street
Baltimore, Ohio 43105
Common Mitch Adams 108,658 Less than 1%
5607 Tara Hill Drive
Dublin, OH 43017
Common Lawrence Green 459,189 Less than 1%
120 Tuttle Rd.
Springfield, OH 45503
Common Tom Heilman 459,189 Less than 1%
130 So. Columbia
Columbus, OH 43209
Common Doug Katterhenry 149,674 Less than 1%
6464 Old Church Way
Reynoldsburg, OH 43068
Common Pat Maguire 84,416 Less than 1%
6043 Wilton House Ct.
New Alblany, OH 43054
Common Kip Merriam 116,599 Less than 1%
556 Oakwood Drive
Pickering, Ontario CANADA L1X 2M7
Common Frank Moauro 680,000 Less than 1%
377 Talbot Street
W. Leamington, Ontario CANADA N8H 4H3
Common Tom Rainier 315,036 Less than 1%
223 Via Napoli
Naples, FL 34105
- --------
3 Such shares are beneficially owned by Daniel K. Cashman through his
ownership and control of Emerald Industries Corporation. Emerald Industries
Corporation is the owner of record of all 74,970,619 shares.
-21-
<PAGE>
Common Dr. Harold Rinehart 359,532 Less than 1%
1143 County Road 2256
Perrysville, OH 44875
Common Philip Risinger 144,675 Less than 1%
Rt. 9, Box 406
Paris, TX 75462
All Directors and 79,448,253 62%
Officers as a Group
(c) Changes in Control:
There is no arrangement which may result in a change in control.
- --------------------------------------------------------------------------------
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------------------------------
During the past two (2) years, the Company has not entered into a
transaction with a value in excess of $60,000 with a director, officer or
beneficial owner of 5% or more of the Company's capital stock, except as
follows:
The Company purchased food processing equipment salvaged from property
owned by a corporation owned by the officers and principal shareholders of the
Company, Richard J. Cashman II and Daniel K. Cashman. There were no purchases in
1998. Purchases were $122,500 in 1997. Management and the Company's Board of
Directors have determined that the equipment was sold to the Company at a price
that does not exceed fair market value.
The Company rents a storage facility owned by the officers and
principal shareholders of the Company, Richard J Cashman II and Daniel K.
Cashman. The lease arrangement is renewable on an annual basis. Rent expense for
the facility was $200,000 in both 1998 and 1997. Of the total $400,000, only
$67,519 has been paid leaving a balance of $332,481 unpaid.
On May 26, 1995, Lawrence R. Green and Arretta M. Green loaned the
Company $50,000. Lawrence R. Green and Arretta M. Green are shareholders of the
Company. In exchange for the loan, the Company executed a Promissory Note in the
amount of $50,000 with an interest rate of 11% per annum, compounded
semi-annually. Initially the Note was for a period of 18 months, however,
payment of the Note has been extended to May of 1999. In addition, Lawrence R.
Green and Arretta M. Green have the option of accepting $25,000 plus 50,000
shares of the Company's capital stock as payment of the Note. Richard J. Cashman
II and Daniel K. Cashman, officers and directors of the Company, personally
guaranteed the May 26, 1995 loan.
-22-
<PAGE>
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.
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.
-23-
<PAGE>
- --------------------------------------------------------------------------------
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
- --------------------------------------------------------------------------------
The company did not filed any reports on Form 8-K during the last year.
Assigned Number Description
- --------------- -----------
(2) Plan of acquisition, reorganization, arrangement, liquid, or
succession: None
(3)(ii) By-laws of the Company: Filed with the Company's Form 10 on
March 29, 1999.
(4) Instruments defining the rights of holders including
indentures: None
(9) Voting Trust Agreement: None
(10) Material Contracts: None
(11) Statement regarding computation of per share earnings:
Computations can be determined from financial statements.
(16) Letter on change in certifying accountant: None
(21) Subsidiaries of the registrant: None
(24) Power of Attorney: None
(27) Financial Data Schedule:
(99) Additional Exhibits: None
-24-
<PAGE>
- --------------------------------------------------------------------------------
SIGNATURES
- --------------------------------------------------------------------------------
In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Dated: April 13, 2000.
NATIONAL FRUIT AND VEGETABLE
TECHNOLOGY, INC.
By /s/ Daniel K. Cashman
---------------------
Daniel K. Cashman
President
-25-
