SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) of the
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SECURITIES ACT OF 1934
For the Quarterly period ended September 30, 1999
Commission File Number
NATIONAL FRUIT AND VEGETABLE TECHNOLOGY CORPORATION
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(Exact Name of Registrant as Specified in Its Charter)
Nevada 88-0222729
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(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
210 Water Street, Baltimore, Ohio 43105
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (740) 862-6300
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 filing requirements for the past 90 days.
[X] Yes [ ] No
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.
84,124,800
NUMBER OF COMMON STOCK SHARES OUTSTANDING
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On March 31, 2000
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Traditional Small Business Disclosure Format (Check One):
[X] Yes [ ] No
1
<PAGE>
ITEM 1. Financial Statements
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Balance Sheet
As of September 30, 1999
Unaudited
Assets
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Current assets
Cash $ 175,600
Prepaid expenses 3,800
-----------
179,400
-----------
Property & equipment 13,969,300
Accumulated depreciation -785,600
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13,183,700
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Total assets $13,363,100
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Liabilities & Shareholders' Equity
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Current liabilities
Current portion of long-term debt $ 49,000
Current portion of notes payable to shareholder 250,000
Accounts payable 499,100
Accrued expenses 175,700
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973,800
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Long-term obligations
Long-term debt 3,000
Capital leases 12,800
Notes payable to shareholder 150,000
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165,800
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Shareholders' equity
Common stock 81,400
Additional paid-in capital 19,451,200
Deficit accumulated during the development stage -7,309,100
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12,223,500
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Total liabilities & shareholders' equity $13,363,100
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The accompanying footnote is an integral part of these financial statements.
<PAGE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Statements of Loss and Accumulated Deficit
For the periods ended September 30, 1999
Unaudited
<TABLE>
<CAPTION>
Cumulative
Three Months Nine Months During
Ended Ended Development
30-Sep-99 30-Sep-99 Stage
---------- ---------- ----------
<S> <C> <C> <C>
Costs and expenses
General and administrative $ 33,300 $ 410,100 $4,772,800
Depreciation and amortization 29,900 89,800 1,301,400
Research and development -- -- 297,100
Loss on property disposal -- -- 717,800
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Loss from operations 63,200 499,900 7,089,100
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Other income (expense)
Interest income -- -- 83,900
Interest expense -36,000 -61,200 -297,900
Gain (loss) on sale of assets -- -- -6,000
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Net loss 99,200 561,100 7,309,100
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Accumulated deficit -- Beginning of period 7,209,900 6,748,000 --
---------- ---------- ----------
Accumulated deficit -- End of period $7,309,100 $7,309,100 $7,309,100
========== ========== ==========
Loss per common share
(Basic and Diluted) $ 0.001 $ 0.007 $ 0.166
========== ========== ==========
</TABLE>
The accompanying footnote is an integral part of these financial statements.
<PAGE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Statement of Shareholders' Equity (Unaudited)
For the periods ended September 30, 1999
Unaudited
<TABLE>
<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 at $ .50 per share (net of
redemptions) 734,500 700 366,600 -- 367,300
Net loss for the three months 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 at $ .50 per share (net of
redemptions) 415,000 400 207,100 -- 207,500
Net loss for the three months 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
----------- ----------- ----------- ----------- -----------
Stock issued at $ .50 per share (net of
redemptions) 1,015,500 1,100 506,600 -- 507,700
Net loss for the three months ended September 30, 1999 -99,200 -99,200
----------- ----------- ----------- ----------- -----------
Balance September 30, 1999 81,380,500 $ 81,400 $19,451,200 $-7,309,100 $12,223,500
=========== =========== =========== =========== ===========
</TABLE>
The accompanying footnote is an integral part of these financial statements.
<PAGE>
National Fruit and Vegetable Technology Corporation
(A Development Stage Corporation)
Statement of Cash Flows
For the periods ended September 30, 1999
Unaudited
<TABLE>
<CAPTION>
Cumulative
Three Months Nine Months During
Ended Ended Development
30-Sep-99 30-Sep-99 Stage
---------- ----------- ------------
<S> <C> <C> <C>
Cash flows from operating activities
Net loss $ -99,200 -561,100 $ -7,309,100
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Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 30,000 89,800 1,301,400
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 -- -- 51,800
Deposits -- -- -3,800
Accounts payable -264,900 35,800 499,000
Accrued expenses 11,200 43,200 177,200
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Net cash used in operating activities -322,900 -392,300 -4,273,600
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Cash flows from investing activities
Purchases of property and equipment -189,800 -798,700 -11,846,700
Sale of property and equipment -- -- 219,200
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Net cash used in investing activities -189,800 -798,700 -11,627,500
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Cash flows from financing activities
Proceeds from issuance of long-term debt -- -- 1,112,100
Principal payments on long-term debt -- -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 -- -56,700 -198,800
Increases in advances payable -- -- 229,300
Proceeds from issuance of common stock 507,700 1,092,500 15,389,800
Redemption of common stock -- -10,000 -256,500
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Net cash provided by
financing activities 507,700 1,016,900 16,076,700
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Increase (decrease) in cash -5,000 -174,100 175,600
Cash -- Beginning of period 180,600 349,700 --
---------- ----------- ------------
Cash -- End of period $ 175,600 175,600 $ 175,600
========== =========== ============
</TABLE>
The accompanying footnote is an integral part of these financial statements.
<PAGE>
ITEM 2: 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, the Company's 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 Amended Form 10-SB.
Plan of Operation
During the past year, the Company has focused on creating its potato
processing facility. During the last quarter of 1999, the Company concentrated
on enhancing the facility's automated weighing, bagging and packaging line. By
the end of December 1999, the Company's entire facility ran smoothly and was
able to process raw potatoes into cooked and packaged potato products.
Management focused on processing potatoes into french fries and has been able to
run the Company's facility all day long and process, cook, bag and store in
french fry product.
During the first quarter of 2000, the Company's operations focused on
refining the packaging process. Hundreds of thousands of pounds of potatoes were
processed in order to refine the packaging process. The Company was able to test
different plastic bagging materials and selected the materials deemed most
compatible the Company's machinery.
During this same time, Management was able to test packaging materials
with a view to increasing the "shelf life" of the processed product. The Company
believes that most of its customers (restaurant chains) will desire a shelf life
of 30 days. Though its testing program, the Company has been able to extend the
shelf life of its products from 2 days to approximately 35 days. Optimally, the
Company would like to see a shelf life of 45 days for its products. Such a goal
may be limited, however, by limitations of available bagging materials. The
Company is attempting to reach its shelf life goal without the use of
preservatives or other chemicals which would complicate the Company's processing
line.
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<PAGE>
The Company also has been able to test boxing materials for the storage
and delivery of its bagged potato products. Once suitable boxing materials were
found, management designed artwork for its boxes and bags.
First quarter efforts also were focused on reducing the number of
defective fries created while processing potatoes. Management believes that by
the end of March 2000 the Company was able to process potatoes in fries with a
ratio of 10,000 usable fries to every 1 unusable fry. The Company hopes to
improve this ratio to 100,000 to 1. Management believes that such a ratio in
necessary to successfully market the Company's products.
One of byproducts of the Company's potato processing is starch in the
waste water created. The Company has created a de-starching equipment which has
been added to the Company's facilities. The Company recovers the starch from the
waste water and intends to sell that starch. The treated water is then reused in
the processing facility. This recycling process, along with attention to
recycling other wastes created, earned the Company certification by the Ohio EPA
as an environmentally friendly company.
The move to full production in 2000 has been hampered by problems with
the Company's well water system. In December 1999, management noticed that a
large amount of sand was coming from one of its high-volume industrial well
water systems. The Company hired a professional well-testing company which
determined that the sell had developed major holes in its casing and that part
of the well had collapsed. The Company contracted with a well-drilling company
to replace the casing and install a new deep-well filter and a new industrial
high-volume pumping system. Work on this problem was not completed until May of
2000.
During the first quarter of 2000, the Company's sales staff gave
numerous tours to prospective customers. Some restaurant chains have expressed
interest in test marketing the Company's products. During the second and third
quarters of 2000, the Company's sales staff will attempt to enter into test
marketing agreements and complete such test marketing.
When the Company is in full operations, including a complete sales
staff, management anticipates that the Company will employ approximately 32
individuals to serve as clerical and operations staff and eight (8) individuals
to work as sales staff. Management expects to deliver and invoice product to
restaurant customers during the third quarter of 2000.
At the same time, management anticipates expanding processing
operations. Such operations will require additional personnel to work in the
Company's product control laboratory and operate the Company's processing and
storage facilities. Management anticipates operating its facilities with a total
of approximately 40 people, which includes sales, production and administrative
personnel.
3
<PAGE>
Management intends to fund operations in the third and fourth quarters
of 2000 with cash on hand. If additional cash is required, the Company will
obtain such cash either through conventional financing or loans from existing
shareholders. Management intends to limit further private offerings of the
Company's securities. Given the fact that the Company's facilities and equipment
are unencumbered, management believes that continued financing will be
available. Indeed, on June 21, 2000, management obtained a line of credit in the
amount of $500,000 at the Fifth Third Bank in Columbus, Ohio. This line of
credit is secured by the Company's accounts receivable and its inventory of
processed goods. Management has the ability to draw down on this line of credit
as it deems necessary. 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. With this line of credit and shareholder
support, management believes that it has the ability to fund operations during
the next twelve months.
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 with its revenues from sales.
Nonetheless, the Company's cash flow could be negatively impacted by
unforeseen events, such as the collapse of the chasing on one of Company's water
wells as described above. Such events may create cash needs beyond the Company's
current ability to meet such needs. In addition, the Company's ability to
generate sales could be impacted upon by such factors as availability of raw
potatoes and other supplies provided by third parties over which the Company has
no control. Delays or failures on the part of such third-party suppliers to meet
their obligations to the Company could cause the Company to fall behind in
meeting any obligations it may have to its customers. Given the fact that the
Company has not operated in full production with on going sales, it is difficult
for management to predict with any certainty the degree to which such problems
could exist and the magnitude of the impact of such problems upon the Company's
ability to operate.
4
<PAGE>
PART II
Other Information
ITEM 1: Legal Proceedings
The Company is not a party to, and none of the Company's property is
subject to, any pending or threatened legal, governmental, administrative or
judicial proceedings.
ITEM 2: Changes in Securities and Use of Proceeds
None.
ITEM 3: Defaults Upon Senior Securities
None.
ITEM 4: Submission of Matters to a Vote of Security Holders
No matters have been submitted to a vote of the security holders during
the period covered by this report through the solicitation of proxies or
otherwise.
ITEM 5: Other Information
None.
ITEM 6: Exhibits and Reports on Form 8-K
A. Exhibits
(2) Plan of acquisition, reorganization, liquidation or succession:
NONE.
(3) (i) Articles of Incorporation *
(ii) By-laws *
(27) Financial Data Schedule.
* Incorporated by reference from the Registrant's Form 10-SB.
B. Reports on Form 8-K.
The Registrant did not file reports on Form 8-K during the quarter
covered by this report.
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<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: June 26, 2000.
NATIONAL FRUIT AND VEGATABLE
TECHNOLOGY CORPORATION
By /s/ Daniel K. Cashman
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Daniel K. Cashman
President
