10-K 1 completenationalfruitveg.txt ANNUAL REPORT 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, 2000 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 [ ] 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: ___ $0.00 (No market for the shares of Company's Common Stock) 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. -2- 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. The majority of the Company's issued and outstanding shares of common stock is owned by Emerald Industries Corp. Emerald Industries Corp. is owned by Richard J. Cashman II the Company's Chairman of the Board, and Daniel K. Cashman, the Company's President. Richard J. Cashman II and Daniel K. Cashman also are directors of the Company. Emerald Industries Corp.'s only assets are its shares of the Company's common stock. Emerald Industries Corp. is a small business as defined in Item 10(a)(1)(iv) of Regulation S-B promulgated under the Exchange Act of 1934, as amended. As of December 31, 2000, 86,557,200 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 1,000 foot oven system which represents the culmination of 15 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. -3- 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 spent all of its efforts on the research and development of its processing systems, the design and installation of equipment for the treatment of the water the Company uses in its operations, and the development of marketing materials for Company's products. The Company has not operated as a commercial producer of food products as of the date of this filing. (1) Principal Products As stated above, the Company will market potato products to restaurants, fast- food restaurant chains, public school systems, hotels, colleges and universities, airlines, the military and correctional institutions. The Company's principal products will be: (a) Diced potatoes either with or without skins; (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) Sliced potatoes; and (e) Baked potatoes. 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. -4- Once the potatoes are initially washed, they are inspected for damage and then washed again to remove any remaining dirt. Potatoes then are roller-sized and inspected for damage, blemishes and irregular shape. Damaged and blemished potatoes will be used for cattle feed. Misshapen potatoes will be processed as mashed potatoes, small "B"-sized potatoes will be processed as sliced potatoes, and jumbo-size potatoes will be analyzed electronically to determine exact weight and size, and scanned internally for hollow-heart defects. These potatoes will then be processed with the microwave oven system into baked potatoes, or fresh packed in 5 or 10-pound consumer packs, or 50- pound cartons for the food service industry. Upon exiting the oven, products will be refrigerated or frozen, bagged, boxed and placed on pallets for shipment. Appropriately sized potatoes will be made into french fries. The Company has equipment in place which will produce french fries of relatively uniform sizes as desired by buyers of the Company's products. (2) Distribution Methods The Company initially intends to develop a major presence in the local food industry market by offering convenient, high-quality, nutritious and 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. 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. -5- 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. The Company's systems for processing fruits and vegetables differs from methods generally employed by competitors in that the Company's process does not utilize transfer agents such as hot water, steam, hot oil or hot air to cook processed product. 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 and in hot oil. The Company's oven uses microwave technology to heat the product. The Company's process allows the product to maintain almost all of its natural moisture and solid content. Accordingly, the product keeps its taste, texture, color and nutritional value, much of which is lost in conventional processing methods. While the Company believes it has developed an efficient and unique systems for cleaning, preparing and moving product through its processing facilities, it is the Company's microwave oven which sets the end product processed by the Company aside from the products of competitors. Management has visited and studied the major growing regions in the United States and considers the grower-packer their largest competitor. Grower-packers are the main distributors and shippers of fresh produce in the United States. Large grower- packers ship up to 5,000 truckloads of produce a year, while smaller grower- packers ship between 100 to 500 truckloads per year. The Company will compete directly with the grower-packers and add value for the consumer by greatly reducing the preparation time associated with most fruit and vegetable products. Management believes that the Company's unique capability to offer large volumes of prepared fruit and vegetable products that are fresh, nutritious, economical and convenient to the consumer will make the Company a viable 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 -6- time to effect a change could adversely impact the Company's business in the short term should a change become necessary. The Company will use in-house produce buyers to purchase potatoes directly from growers at open-market prices, which historically range between $4.00 to $8.00 per hundred weight. The size, weight, shape, quality and appearance of raw materials will be determined upon delivery to the plant for final determination of the purchase price. Factors which determine the availability and price of potatoes, and most agricultural products, include weather conditions, acreage under cultivation, crop failures, plant diseases, floods, freezing and overall agricultural conditions. Potatoes are readily available year round due to large modern potato storage facilities, of which there is an abundance within close proximity to the Company's plant. This will obviate the necessity of the Company building storage facilities and will minimize raw material inventory needs. (6) Patents, Trademarks, Licenses, etc. The Company intends to apply for numerous United States and International patents, trademarks and copyrights in connection with certain of its products and technology. The Company currently has no patents, trademarks or copyrights. Although these types of intellectual property protection may have value, the Company believes that other factors, such as product innovations, are of more significance in the Company's industry. The Company attempts to avoid infringing patents of others by monitoring on a regular basis patents issued with respect to food processing equipment. The Company intends to license rights in connection with the development and marketing of certain of its products. These agreements generally require the Company licensor to pay a royalty based on product sales. The Company believes that its proprietary information provide it with a key competitive advantage, but patent protection generally cannot be obtained for most of its processes. The Company attempts to minimize unauthorized copying of these processes 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. -7- The Company intends to continue to seek patent protection with respect to those advances to its process resulting from its research and development efforts. The Company intends to rely on a combination of trade secrets, patents, trademark laws, license agreements and technical measures to protect its rights with respect to its industrial microwave oven technology. No assurance can be given that these measure will protect the Company's rights. (7) Governmental Approval, Effect of Governmental Regulation and Costs and Effects of Compliance with Environmental Laws The Company is subject to regulation by federal, state and local governmental authorities. These include: the EPA for environmental impact and, in particular, sanitary discharge; OSHA for equipment and work area safety; FDA for labeling, sanitary conditions and product contamination; USDA for grading a food inspection; state government for building codes; and local government for building codes and property zoning. The Company's operations are subject to a variety of other federal, state and local laws, such as labor, insurance, transportation and wage regulations. Compliance with all such regulations may be time-consuming and expensive and may cause delays in the ability of the Company to commence operation of the Company's fruit and vegetable processing plant. The Company has been approved with all the necessary permits, including all city, county, state and federal approval processes necessary to operate a food facility in the State of Ohio. The handling, transportation and disposal of potato wastes expose the Company to certain risks under applicable environmental laws and regulations. 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 -8- 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. Management believes that it has taken into consideration all of the regulatory requirements of the Health and Safety Act of 1968. However, there is no assurance that in the future the plant may be shut down by various government regulatory agencies due to the Company's inability to comply in a timely manner to existing regulations. In one area, governmental regulation may have a positive impact on the Company's business. The Ohio Legislature enacted the "Buy Ohio Program", which requires all 185 state agencies to give preferential treatment to manufacturers of food products based in Ohio when making purchases. The State of Ohio annually awards contracts for the purchase of food products totaling $400 million. There are at present no potato processing plants located in Ohio. Educational and correctional institutions, as well as the military will, therefore, constitute a highly attractive initial client base. (8) Research and Development in the Last Two Years Management of the Company has spent the vast majority of its time and efforts during the last two (2) years 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 are part of an ongoing process, management believes that the Company's research and development since the Company's inception has produced an effective fruit and vegetable processing system. Management also believes that the efforts in acquiring facilities and equipment have been successful and that the Company is ready to begin production. Actual research and development costs in 1997 were $21,700. The Company had no such costs in 1998, 1999 or 2000, though significant work was done on the development of exactly how product is processed in the Company's facilities and on installing waste water treatment equipment. ___ Cumulative research and development costs during the Company's development stage, as reflected in the Company's financial statements, total $287,000, as of December 31, 2000. -9- (9) Employees As of December 31, 2000, the Company had eleven (17) 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 had not been required to deliver annual reports. To the extent that the Company is required to deliver annual reports to security holders through its status as a 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 had not filed reports with the Securities and Exchange Commission. Now that the Company has become a reporting company, management anticipates that Forms 10K-SB, 10Q-SB and 8-K along with appropriate proxy materials will have to be filed as they come due. If the Company issues additional shares, the Company may file additional registration statements for those shares. The public may read and copy any materials the Company files with the Securities and Exchange Commission at the Commission's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by call the Commission at 1-800-SEC-0330. The Commission maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Commission. The Internet address of 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. -10- In addition to the Company's 150,000 square foot plant, it has a 2.7 million pound capacity freezer. The processing plant has new electrical work installed throughout with an additional 3,000 AMP service, new plumbing, air, steam well water and city water line, all new drains and new floors. The plant is fully automated with the newest Allan Bradley Technology. The 8,000 square foot office space has been remodeled with a conference room, marketing and sales rooms, employees training room, new men's and women's bathrooms, kitchen, break room and 12 offices. It is management's opinion that the Company's property is adequately covered by insurance. (b) Investment Policies The Company's plan of operations is focused on marketing the Company's products 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 2000. -11- PART II -------------------------------------------------------------------------------- ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS -------------------------------------------------------------------------------- Market Information: The Company's common stock currently is not traded on any exchange. Management anticipates that once the Company has cleared all comments the Securities and Exchange Commission's staff has on the Company's Form10-SB registration statement, and the amendments to that registration statement, that the Company will ask a market maker member of the NASD to apply for quotation privileges for the Company's shares on the OTC Bulletin Board system. It is the Company's understanding that all such comments must be cleared and that the Company must be current on its filings with the Commission prior to applying for an OTCBB trading symbol. To date, the Company has not entered into any negotiations or arrangements to make a market for its common stock. 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 1514 holders of record of the Company's common stock as of December 31, 2000. Dividends: The Company never has 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. Options and Warrants. There are no outstanding options or warrants to purchase additional stock of the Company. "Penny Stock" The Company's common stock is a "penny stock" as defined by the rules and regulations promulgated by the Securities and Exchange Commission. Pursuant to Section 3(a)(51)(A) of the Exchange Act of 1934, as amended, any equity security is considered to be a "penny stock" unless that security is: -12- - Registered and traded on a national securities exchange meeting specified SEC criteria; - authorized for quotation on NASDAQ; - issued by a registered investment company; - excluded, on the basis of price of the issuer's net tangible assets, from the definition of the term by SEC rule; or - exempted from the definition by the SEC. Currently, the Company's common stock does not fall within any of these non- penny stock categories. The Commission's rules and regulations imposed disclosure, reporting and other requirements on brokers-dealers in penny stock transactions. In summary, these requirements are as follows: Brokers and dealers, prior to effecting any penny stock transactions, must provide customers with a document that discloses the risks of investing in the penny stock market. Section 15(g)(2) requires such risk disclosure documents to: - contain a description of the nature and level of risk involved in the penny stock market; - fully describe the duties of the broker-dealer to the customer, and the rights and remedies available; - explain the nature of "bid" and "ask" prices in the penny stock market; - supply a toll-free telephone number to provide information on disciplinary histories; - describe all significant terms used in the risk disclosure document. Also, prior to the transaction the broker-dealer must obtain from the customer a manually signed and dated written acknowledgment of receipt of the disclosure document. The broker-dealer is required to preserve a copy of the acknowledgment as part of its records. Brokers and dealers must disclose the bid and ask prices for penny stocks, the number of shares to which the prices apply, and the amount and description of any compensation received by the broker or dealer. Also, brokers and dealers are to provide each customer whose account contains penny stocks with a monthly statement indicating the market value of those stocks. -13- Recent Sales of Unregistered Securities On or about March 2, 1998, the Company issued 4,000 shares of its capital stock to Richard Osler in exchange for machine shop services performed by Bill Gregory. These shares were issued to Mr. Osler upon Mr. Gregory's instruction. Such services were valued at $2,000 and shares were issued at the rate of $0.50 per share. Such shares were issued pursuant to the exemption from registration under Section 4(2) of the Securities Act of 1933, as amended. This shareholder had toured the Company's facilities and had available information regarding the company's operations and financial status. He also had reviewed and signed a questionnaire regarding the issuance of these shares. The questionnaire indicated that the Corporation had not registered these shares, that there is not a public market for the shares and that shares cannot be sold unless there is adequate evidence that such sale will not violate federal securities laws. On or about March 2, 1998, the Company issued 17,141 shares of its capital stock to William Gregory in exchange for services he rendered in the Company's machine shop. Such services were valued at $8,574 and the shares were issued at the rate of $0.50 per share. Such shares were issued pursuant to the exemption from registration under Section 4(2) of the Securities Act of 1933, as amended. This shareholder had toured the Company's facilities and had available information regarding the company's operations and financial status. He also had reviewed and signed a questionnaire regarding the issuance of these shares. The questionnaire indicated that the Corporation had not registered these shares, that there is not a public market for the shares and that shares cannot be sold unless there is adequate evidence that such sale will not violate federal securities laws. On or about September 25, 1998, the Company issued 11,147 shares of its capital stock to William Gregory in exchange for services he rendered at the Company's machine shop. Such services were valued at $5,573.50 and shares were issued at the rate of $0.50 per share. Such shares were issued pursuant to the exemption from registration under Section 4(2) of the Securities Act of 1933, as amended. This shareholder had toured the Company's facilities and had available information regarding the company's operations and financial status. He also had reviewed and signed a questionnaire regarding the issuance of these shares. The questionnaire indicated that the Corporation had not registered these shares, that there is not a public market for the shares and that shares cannot be sold unless there is adequate evidence that such sale will not violate federal securities laws. On or about February 9, 1999, the Company issued 40,000 shares of its common stock to Lawrence R. and Arretta M. Green in exchange for sewer installation, catch basin, cement work, and well house services at the Company's operating facility. Such services were valued at $19,511 and the shares were issued at the rate of $0.50 per share. In this regard, the Green also gave the gave the Company $489.00 as additional consideration for the issuance of these shares. Such shares were issued pursuant to the exemption from registration under Section 4(2) of the Securities Act of 1933, as amended. These shareholders had toured the Company's facilities and had available information regarding the company's operations and financial status. They also had reviewed and signed a questionnaire regarding the issuance of these shares. The questionnaire indicated that the Corporation had not registered these shares, that there is not a public market for the shares and that shares cannot be sold unless there is adequate evidence that such sale will not violate federal securities laws. -14- On February 9, 1999, the Company issued shares of its common stock in exchange for cash the company had previously received. Such shares were issued at the rate of $0.50 per share. Such shares were issued pursuant to the exemption from registration under Section 4(2) of the Securities Act of 1933, as amended and/or Rule 506 of Regulation D. Listed below are the names of the shareholders and the number of shares each shareholder received in connection with the cash they gave the Company. Each of these shareholders was a shareholder of the Company prior to the issuance of these shares and each had toured the Company's facilities and had available information regarding the company's operations and financial condition. Each also had reviewed and signed a questionnaire regarding the issuance of these shares. The questionnaire indicated that the Corporation had not registered these shares, that there is not a public market for the shares and that shares cannot be sold unless there is adequate evidence that such sale will not violate federal securities laws. Name Shares Consideration -------- --------- ------------------ Norma Jean Crew 2,000 $ 1,000 Jack and Eleanor Crew 2,000 $ 1,000 Curtis and Linda Crew 4,000 $ 2,000 Tim Ashton 40,000 $20,000 Gerogia A. Fagan and Leonard L. Fagan 4,000 $ 2,000 Agnes & Alfred Heydinger 23,600 $11,800 Gregory S. Freeman 2,000 $ 1,000 Marie T. Kebe 10,000 $ 5,000 Randall D. Powers 2,000 $ 1,000 Michael S. Powers 2,000 $ 1,000 James S. Pritt & Kellie a. Pritt 2,000 $ 1,000 Paul & Eria Burkholder 7,000 $ 3,500 Merle L. Reich 5,000 $ 2,500 Roger A. Wolf 5,000 $ 2,500 On or about February 9, 1999, the Company issued 10,000 shares of its common stock to Henry J. Sapiano, a resident of Morriston, Ontario, Canada, in exchange for $5,000 in cash. Such shares were issued at the rate of $0.50 per share. Such shares were issued pursuant to the exemption from registration under Regulation S promulgated under the Securities Act of 1933, as amended. This shareholder had available to him information regarding the company's operations and financial condition and reviewed and signed a questionnaire regarding the issuance of these shares. The questionnaire indicated that the Corporation had not registered these shares, that there is not a public market for the shares and that shares cannot be sold unless there is adequate evidence that such sale will not violate federal securities laws. -15- On February 9, 1999, the Company issued shares of its common stock in exchange for cash the company had previously received. Such shares were issued at the rate of $0.50 per share. Such shares were issued pursuant to the exemption from registration under Section 4(2) of the Securities Act of 1933, as amended and/or Rule 506 of Regulation D. Listed below are the names of the shareholders and the number of shares each shareholder received in connection with the cash they gave the Company. Each of these shareholders had toured the Company's facilities and had available information regarding the company's operations and financial condition. Each also had reviewed and signed a questionnaire regarding the issuance of these shares. The questionnaire indicated that the Corporation had not registered these shares, that there is not a public market for the shares and that shares cannot be sold unless there is adequate evidence that such sale will not violate federal securities laws. Name Shares Consideration ---- ------ ------------- Robert E. Rausch 20,000 $10,000 Michael C. Miller 5,000 $ 2,500 Orla Fent 10,000 $ 5,000 Tracy & Suzanne Green 10,000 $ 5,000 Stephen W. Morris 11,000 $ 5,500 Hiram M. Thurmond 40,000 $20,000 Bryon & Betsy Townsend 20,000 $10,000 Paul B. Clark 10,000 $ 5,000 Lonnie & Natalie Wellmaker 15,000 $ 7,500 Thomas G. Wagner 20,000 $10,000 Carl & Jane Powers 10,000 $ 5,000 Dorothy Cotman 10,000 $ 5,000 David L. Malone 10,000 $ 5,000 Cynthia M. Ryan 10,000 $ 5,000 Roosevelt Bouie, Jr. 40,000 $20,000 James R. Baise 10,000 $ 5,000 Harold W. Driscoll 20,000 $10,000 Brertt D. Stewart & Carolyn Jo Stewart 40,000 $20,000 Steven D. Lentz & Christine E. Lentz 15,000 $ 7,500 Boyce Eugene & Florence Wellmaker 10,000 $ 5,000 Brooker Family Trust 10,000 $ 5,000 David P. Hilgefort 10,000 $ 5,000 Kyle Barrett & Amy M. McKinnon 10,000 $ 5,000 William E. Headings 10,000 $ 5,000 Charles Brumsted, Jr. 20,000 $10,000 Delbert Edward Legg II 10,000 $ 5,000 Wayne & Judith Morgan 10,000 $ 5,000 -16- On or about March 26, 1999, the Company issued 8,000 shares of its common stock to Davis J. Buffenbarger in exchange for $4,000 in cash. Such shares were issued at the rate of $0.50 per share. Such shares were issued pursuant to the exemption from registration under Section 4(2) of the Securities Act of 1933, as amended and/or Rule 506 of Regulation D. This shareholder already was a shareholders at the time these shares were issued. He had available to him information regarding the company's operations and financial status and reviewed and signed a questionnaire regarding the issuance of these shares. The questionnaire indicated that the Corporation had not registered these shares, that there is not a public market for the shares and that shares cannot be sold unless there is adequate evidence that such sale will not violate federal securities laws. On March 26, 1999, the Company issued shares of its common stock in exchange for cash the company had previously received. Such shares were issued at the rate of $0.50 per share. Such shares were issued pursuant to the exemption from registration under Section 4(2) of the Securities Act of 1933, as amended and/or Rule 506 of Regulation D. Listed below are the names of the shareholders and the number of shares each shareholder received in connection with the cash they gave the Company. Each of these shareholders had toured the Company's facilities and had available information regarding the company's operations and financial status. Each also had reviewed and signed a questionnaire regarding the issuance of these shares. The questionnaire indicated that the Corporation had not registered these shares, that there is not a public market for the shares and that shares cannot be sold unless there is adequate evidence that such sale will not violate federal securities laws. Name Shares Consideration -------- --------- ------------------- Terry Ziesmer 10,000 $ 5,000 Donald & Shirley Dietschler 10,000 $ 5,000 Christoper G. O'Leary 14,000 $ 7,000 Howard H. Saupp 10,000 $ 5,000 Jane M. Ulrich 10,000 $ 5,000 Bruce H. Waring 10,000 $ 5,000 Richard & Nancy Smothers 10,000 $ 5,000 Charles H. & Kaye H. Stengel 10,000 $ 5,000 William F. Kraft & Jane M. Kraft 25,000 $12,500 Krista & Mario Valdes Zamora 10,000 $ 5,000 John S. McGranahan 10,000 $ 5,000 Heinz Thiemens, Werner Thiemens & Daniel Muzic 15,000 $ 7,500 Andrew G. Hyde, G Andrew Platt & Edwin T. Hyde 15,000 $ 7,500 Anita Anne Lessard 10,000 $ 5,000 Joel E. Kaye, M.D. 50,000 $25,000 Sharon L. Buehrer 100,000 $50,000 -17- On August 24, 1999, the Company issued shares of its common stock in exchange for cash the company had previously received. Such shares were issued at the rate of $0.50 per share. Such shares were issued pursuant to the exemption from registration under Section 4(2) of the Securities Act of 1933, as amended and/or Rule 506 of Regulation D. Listed below are the names of the shareholders and the number of shares each shareholder received in connection with the cash they gave the Company. Each of these shareholders was a shareholder of the Company prior to the issuance of these shares and each had toured the Company's facilities and had available information regarding the company's operations and financial status. Each also had reviewed and signed a questionnaire regarding the issuance of these shares. The questionnaire indicated that the Corporation had not registered these shares, that there is not a public market for the shares and that shares cannot be sold unless there is adequate evidence that such sale will not violate federal securities laws. Name Shares Consideration -------- --------- ------------------- George Ashe 8,000 $ 4,000 Robert P. & Mary G. Martino 20,000 $10,000 Curtis Lowden 10,000 $ 5,000 Brooker Family Trust 10,000 $ 5,000 Richard A. Fraser 10,000 $ 5,000 Ryan & Ashley Lassiter 6,500 $ 3,250 Jim & Sandra Lassiter 20,000 $10,000 Stephen & Mendy Bush 2,500 $ 1,250 Steiner Hostetler 10,000 $ 5,000 Anita F. DeWeese 10,000 $ 5,000 Mark K. and & Bridgot K. Sandvik 80,000 $40,000 Frank J. & Bonnie Nelson 20,000 $10,000 Frank Nelson, Jr. & Helene Nelson 10,000 $ 5,000 Ronald D. Snow 10,000 $ 5,000 Scott P. Held 5,000 $ 2,500 Stephen A. Held, Jr. 5,000 $ 2,500 Carla D. Rice & John S. Kiminki 10,000 $ 5,000 Roman Y. Yoder 13,000 $ 6,500 Dennis Allossery 10,000 $ 5,000 Frederic B. Allyn 10,000 $ 5,000 Paul & Gerd Christiansen 10,000 $ 5,000 Dennis W. Headings 10,000 $ 5,000 William J. Mitchell 10,000 $ 5,000 William E. Headings 10,000 $ 5,000 -18- W. Frederic Yoder 10,000 $ 5,000 Larry R. Youdelman 10,000 $ 5,000 Justin Drummond 10,000 $ 5,000 James W. Mitchell 10,000 $ 5,000 William C. & Linda Immerman Stoffers 10,000 $ 5,000 Richard E. & Bette A. Barkdull 10,000 $ 5,000 Francis C. and Ida M. Green 2,000 $ 1,000 Susan G. Drummond 50,000 $25,000 Linda A. Seeright 25,000 $12,500 Kristen D. Bake 2,000 $ 1,000 Robert Davis 2,000 $ 1,000 Paul & Eria Burkholder 12,700 $ 6,350 Daniel F. & Kathleen Heagey 4,000 $ 2,000 Gregory S. Davis 20,000 $10,000 Robert S. & Marcia C. Davis 34,000 $17,000 Roger E. Neff 10,000 $ 5,000 Orla E. Fent 10,000 $ 5,000 James L. Deagle 20,000 $10,000 LaVonne L. Deagle 20,000 $10,000 Christopher A. Tenaglia 5,000 $ 2,500 John Tipton 10,000 $ 5,000 Darrin D. Spitzer 10,000 $ 5,000 James E. Mears 10,000 $ 5,000 Carole A. Kerl 9,000 $ 4,500 On August 24, 1999, the Company issued 200,000 shares of its common stock to Stephen L. Kebe. Mr. Kebe had previously loaned the Company $100,000. Pursuant to the Company's promissory note to Mr. Kebe in this regard, Mr. Kebe had the option to accept payment under the note in shares of the Company issued at $0.50 per share. Mr. Kebe chose to accept these shares as payment of the Company's obligation to him. Such shares were issued pursuant to the exemption from registration under Section 4(2) of the Securities Act of 1933, as amended and/or Rule 506 of Regulation D. Mr. Kebe had toured the Company's facilities and had available information regarding the company's operations and financial status prior to the issuance of these shares. He had reviewed and signed a questionnaire regarding the issuance of these shares. The questionnaire indicated that the Corporation had not registered these shares, that there is not a public market for the shares and that shares cannot be sold unless there is adequate evidence that such sale will not violate federal securities laws. On August 24, 1999, the Company issued shares of its common stock in exchange for cash the company had previously received. Such shares were issued at the rate of $0.50 per share. Such shares were issued pursuant to the exemption from registration under Section 4(2) of the Securities Act of 1933, as -19- amended and/or Rule 506 of Regulation D.. Listed below are the names of the shareholders and the number of shares each shareholder received in connection with the cash they gave the Company. Each of these shareholders had toured the Company's facilities and had available information regarding the company's operations and financial status. Each also had reviewed and signed a questionnaire regarding the issuance of these shares. The questionnaire indicated that the Corporation had not registered these shares, that there is not a public market for the shares and that shares cannot be sold unless there is adequate evidence that such sale will not violate federal securities laws. Name Shares Consideration -------- --------- ------------------- James G. Townsend 20,000 $10,000 Sandra West 30,000 $15,000 Raymond M. Rick Family Trust 80,000 $40,000 Alan Oglvie 60,000 $30,000 Marion L. & Joannie Veenendaal 30,000 $15,000 Paul Marchese &Sandra Marchese 10,000 $ 5,000 David L. Malone 20,000 $10,000 Nathan E. Baderscher 20,000 $10,000 Robert P. Bedard & Lori L. Bedard 10,000 $ 5,000 Brian R. and Suzanne E. Tedeschi 10,000 $ 5,000 R. Charles Lowden & Barbara J. Lowden 50,000 $25,000 Gerd & Paul Christiansen 10,000 $ 5,000 Mark K. And Bridgot K. Sandvik 60,000 $30,000 Rachel K. Van Slooten 10,000 $ 5,000 James E. Drake III & Carla E. Drake 20,000 $10,000 Joan F.B. Goras Living Trust 10,000 $ 5,000 Thomas James Parry 10,000 $ 5,000 Brian D. Blakely & Elizabeth A. Blakely 10,000 $ 5,000 Thomas M. Blum 30,000 $15,000 Curtis E. King & Helen H. King 60,000 $30,000 Milton L. Little 25,000 $12,500 Peggy A. & R. Kent Rutherford 10,000 $ 5,000 Howard Brensilver 10,000 $ 5,000 -20- Jim Bob Pickrell & Pamela G. Pickrell 12,000 $ 6,000 John R. & Sarah E. Smith 10,000 $ 5,000 Norman E. Slabaugh 40,000 $20,000 James Gordon & Janie L. Haas 20,000 $10,000 Gary E. & Carolyn Sue Brown 20,000 $10,000 Margaret S. Fulmer 20,000 $10,000 Nancy Featherstone Buchanan 20,000 $10,000 John S. McGranahan 20,000 $10,000 Ron & Gail Gordon Ober 10,000 $ 5,000 Harold J. Ober & D'vorre Ober Living Trust 20,000 $10,000 Philip L. & Josann Linhoss 13,000 $ 6,500 Donald E. & Louise Uhler 10,000 $ 5,000 Steven D. & Christine E. Lentz 10,000 $ 5,000 Max C. Bashore 20,000 $10,000 A. Dean & Betty L. Stewart 10,000 $ 5,000 Carl & Amy Langorst 20,000 $10,000 Charles M. Seeright 25,000 $12,500 Gary L. & Sandy L. Swearingen 10,000 $ 5,000 Charles H. & Kaye F. Stengel 10,000 $ 5,000 Roger G. & Janet J. Ward 10,000 $ 5,000 David J. & Lisa M. Cecere 10,000 $ 5,000 Richard C. Sanzo 10,000 $ 5,000 Timothy & Myrna Shock 10,000 $ 5,000 George Conboy 10,000 $ 5,000 Joe Ryan 10,000 $ 5,000 William A. & Martha E. Lacy 20,000 $10,000 Howard Brensilver 5,000 $ 2,500 Carl Fields 10,000 $ 5,000 Shirley M. McAuley 10,000 $ 5,000 Michael T. McAuley 10,000 $ 5,000 Elias N. Chotas 10,000 $ 5,000 Margaret S. Fulmer 20,000 $10,000 Charles R. Brumsted 30,000 $15,000 Melvin Fields 20,000 $10,000 Russell & Mark Williams 10,000 $ 5,000 Dennis W. Postel 10,000 $ 5,000 Salvatore & Theresa Tinnirello 40,000 $20,000 Franklin S. Haney 10,000 $ 5,000 Carleton G. Castle 10,000 $ 5,000 John E. Crawford 20,000 $10,000 Rachel Van Slooten & Brent Van Slooten 10,000 $ 5,000 Joe R. Charlton 12,000 $ 6,000 -21- On August 24, 1999, the Company issued shares of its common stock in exchange for cash the company had previously received. Such shares were issued at the rate of $0.50 per share and were issued to individuals who are not United States citizens and do not reside in the United States. Such shares were issued pursuant to the exemption from registration under Regulation S promulgated under the Securities Act of 1933, as amended. Listed below are the names of the shareholders and the number of shares each shareholder received in connection with the cash they gave the Company. Each of these shareholders had toured the Company's facilities and had available information regarding the company's operations and financial status. Each also had reviewed and signed a questionnaire regarding the issuance of these shares. The questionnaire indicated that the Corporation had not registered these shares, that there is not a public market for the shares and that shares cannot be sold unless there is adequate evidence that such sale will not violate federal securities laws. Name Shares Consideration -------- ---------- ------------------- C. K. Merriam 40,000 $ 20,000 Eileen Dinning 10,000 $ 5,000 Harvey Moscoe 15,000 $ 7,500 Helge K. Sandvik & Carol K. Sandvik 80,000 $ 40,000 Roy Kumbe Sadler & Ann Wagner Sadler 50,000 $ 25,000 William & Noreen Botham 100,000 $ 50,000 Chuck & Mary J. Goddard 10,000 $ 5,000 Robert Boake 45,000 $ 22,500 Malcolm J. Poole 20,000 $ 10,000 Kristopher D. Horvath & Bronwyn L. Davis 100,000 $ 50,000 Mark & Larisa Finkelstein 200,000 $100,000 Bruce E. Howie 16,000 $ 8,000 Murray Stroud 14,000 $ 7,000 Ron Bacchus 12,000 $ 6,000 Iraklis & Persefoni Hostelidis 24,000 $ 12,000 Glen A. Reid 10,000 $ 5,000 George Adlam 10,000 $ 5,000 Gerald D. Cole 10,000 $ 5,000 Allan Teng 10,000 $ 5,000 Kevin Green 7,000 $ 3,500 Jeffery Wright 10,000 $ 5,000 -22- Zoltan T. Szinessy 10,000 $ 5,000 Nili & Sara Stolarsky 10,000 $ 5,000 Fanny Shluper 11,600 $ 5,800 Aleksandr Kogan 10,000 $ 5,000 Diana Bykhovsky 20,000 $ 10,000 Evgeny Kostovetsky 10,000 $ 5,000 Krikor Artinian 10,000 $ 5,000 Alexander G. MacKay 22,000 $ 11,000 Paul E. Sedstrem 15,000 $ 7,500 Linda Caruso 10,000 $ 5,000 Gordon E. Honsey 5,000 $ 2,500 Gerardo DiMario 5,000 $ 2,500 Demetrios Koumarelas 10,000 $ 5,000 Spiro & Fonda Mikrogianakis 10,000 $ 5,000 Mun Yong Goh 10,000 $ 5,000 Shimkovich Mira & M.S. Elmaleh Shulamit 10,000 $ 5,000 Realest Marketing Corp. 10,000 $ 5,000 Joseph Tamburro 10,000 $ 5,000 George Koutrobis 10,000 $ 5,000 Nancy Jones 10,000 $ 5,000 William Sit 10,000 $ 5,000 Gabriel Fotiou 10,000 $ 5,000 Miryam & Alex Homutezki 12,000 $ 6,000 Peter Valjas 40,000 $ 20,00 Moon Gil Choi 10,000 $ 5,000 Douglas Clark 25,000 $ 12,500 Naman A. & Deborah Salibi Family Trust 10,000 $ 5,000 Ernest & Janice Greenwood 30,000 $ 15,000 Jerry G. James 40,000 $ 20,000 On January 13, 2000, the Company issued 20,000 shares of its common stock to Robert H. Perrigo and issued 10,000 shares of its common stock to Wendy P. Perrigo in exchange for a total of $15,000. Such shares were issued at the rate of $0.50 per share. Such shares were issued pursuant to the exemption from registration under Section 4(2) of the Securities Act of 1933, as amended and/or Rule 506 of Regulation D. Each of these shareholders had toured the Company's facilities and had available information regarding the company's operations and financial condition. Each also had reviewed and signed a questionnaire regarding the issuance of these shares. The questionnaire indicated that the Corporation had not registered these shares, that there is not a public market for the shares and that shares cannot be sold unless there is adequate evidence that such sale will not violate federal securities laws. On January 14, 2000, the Company issued shares of its common stock in exchange for cash the company had previously received. Such shares were issued at the rate of $0.50 per share. Such shares were issued pursuant to the exemption from registration under Section 4(2) of the Securities Act of 1933, as -23- amended and/or Rule 506 of Regulation D. Listed below are the names of the shareholders and the number of shares each shareholder received in connection with the cash they gave the Company. Each of these shareholders had toured the Company's facilities and had available information regarding the company's operations and financial condition. Each also had reviewed and signed a questionnaire regarding the issuance of these shares. The questionnaire indicated that the Corporation had not registered these shares, that there is not a public market for the shares and that shares cannot be sold unless there is adequate evidence that such sale will not violate federal securities laws. Name Shares Consideration -------- --------- ---------------- Margaret S. Fulmer 20,000 $10,000 Elias N. Chotas 10,000 $ 5,000 Lonnie & Cassandra Fulmer 3,000 $ 1,500 Cesar A. Gutierrez 10,000 $ 5,000 Kenneth M. & Pricilla Coley 10,000 $ 5,000 On January 18, 2000, the Company issued 15,000 shares of its common stock to Robert S. and Marcia C. Davis in exchange for $7,500. Such shares were issued at the rate of $0.50 per share. Such shares were issued pursuant to the exemption from registration under Section 4(2) of the Securities Act of 1933, as amended and/or Rule 506 of Regulation D. Each of these shareholders was a previous shareholder of the Company. Each of these shareholders had toured the Company's facilities and had available information regarding the company's operations and financial condition. Each also had reviewed and signed a questionnaire regarding the issuance of these shares. The questionnaire indicated that the Corporation had not registered these shares, that there is not a public market for the shares and that shares cannot be sold unless there is adequate evidence that such sale will not violate federal securities laws. On January 28, 2000, the Company issued 20,000 shares of its common stock to Alan Ogilvie in exchange for $10,000. Such shares were issued at the rate of $0.50 per share. Such shares were issued pursuant to the exemption from registration under Section 4(2) of the Securities Act of 1933, as amended and/or Rule 506 of Regulation D. Mr. Ogilvie was a previous shareholder of the Company. Each of these shareholders had toured the Company's facilities and had available information regarding the company's operations and financial condition. Each also had reviewed and signed a questionnaire regarding the issuance of these shares. The questionnaire indicated that the Corporation had not registered these shares, that there is not a public market for the shares and that shares cannot be sold unless there is adequate evidence that such sale will not violate federal securities laws. On January 31, 2000, the Company issued shares of its common stock in exchange for cash the company had previously received. Such shares were issued at the rate of $0.50 per share and were issued to individuals who are not United States citizens and do not reside in the United States. Such shares were issued -24- pursuant to the exemption from registration under Regulation S promulgated under the Securities Act of 1933, as amended. Listed below are the names of the shareholders and the number of shares each shareholder received in connection with the cash they gave the Company. Each of these shareholders had toured the Company's facilities and had available information regarding the company's operations and financial status. Each also had reviewed and signed a questionnaire regarding the issuance of these shares. The questionnaire indicated that the Corporation had not registered these shares, that there is not a public market for the shares and that shares cannot be sold unless there is adequate evidence that such sale will not violate federal securities laws. Name Shares Consideration -------- ---------- ---------------- Artan M & Valbona Bramo 10,000 $ 5,000 Leviathon International Corp. 12,000 $ 6,000 Zvika Shluper (previous shareholder) 20,400 $10,200 George Adlam (previous shareholder) 10,000 $ 5,000 Nili & Sara Stolarsky (Previous shareholders) 10,000 $ 5,000 Paul Kondakos 10,000 $ 5,000 Tolga & Gokhan Pakdil 10,000 $ 5,000 Jean-Pierre Verbunt 10,000 $ 5,000 C.K. Merriam 110,000 $55,000 On or about February 4, 2000, the Company issued 10,000 shares of its common stock to Terry C. & Pamela M. Elkin in exchange for $5,000. Such shares were issued at the rate of $0.50 per share. Such shares were issued pursuant to the exemption from registration under Section 4(2) of the Securities Act of 1933, as amended and/or Rule 506 of Regulation D. Each of these shareholders had toured the Company's facilities and had available information regarding the company's operations and financial condition. Each also had reviewed and signed a questionnaire regarding the issuance of these shares. The questionnaire indicated that the Corporation had not registered these shares, that there is not a public market for the shares and that shares cannot be sold unless there is adequate evidence that such sale will not violate federal securities laws. On or about February 5, 2000, the Company issued 10,000 shares of its common stock to Dov Hellenbrand in exchange for $5,000. These shares were issued at the rate of $0.50 per share. Such shares were issued in reliance on the exemption from registration contained in Regulation S as Mr. Hellenbrand is a citizen of Canada and resides outside of the United States. Mr. Hellenbrand was a previous shareholder and had toured the Company's facilities and had available information regarding the company's operations and financial status. He also had reviewed and signed a questionnaire regarding the issuance of these shares. The questionnaire indicated that the Corporation had not registered these shares, that there is not a public market for the shares and that shares cannot be sold unless there is adequate evidence that such sale will not violate federal securities laws. On or about February 11, 2000, the Company issued 70,000 shares of its common stock to John L. Maki in exchange for $35,000 and 10,000 shares of its -25- common stock to Tony C. & Donell C. Bendixen in exchange of $5,000. Such shares were issued at the rate of $0.50 per share. Such shares were issued pursuant to the exemption from registration under Section 4(2) of the Securities Act of 1933, as amended and/or Rule 506 of Regulation D. Each of these shareholders had toured the Company's facilities and had available information regarding the company's operations and financial condition. Each also had reviewed and signed a questionnaire regarding the issuance of these shares. The questionnaire indicated that the Corporation had not registered these shares, that there is not a public market for the shares and that shares cannot be sold unless there is adequate evidence that such sale will not violate federal securities laws. On or about February 18, 2000, the Company issued 10,000 shares of its common stock to Robert S. Davis, a previous shareholder, in exchange for $5,000. Such shares were issued at the rate of $0.50 per share. Such shares were issued pursuant to the exemption from registration under Section 4(2) of the Securities Act of 1933, as amended and/or Rule 506 of Regulation D. Mr. Davis had toured the Company's facilities and had available information regarding the company's operations and financial condition. He also had reviewed and signed a questionnaire regarding the issuance of these shares. The questionnaire indicated that the Corporation had not registered these shares, that there is not a public market for the shares and that shares cannot be sold unless there is adequate evidence that such sale will not violate federal securities laws. On or about February 29, 2000, the Company issued 30,000 shares of its common stock to John L. Maki, a previous shareholder, in exchange for $15,000. Such shares were issued at the rate of $0.50 per share. Such shares were issued pursuant to the exemption from registration under Section 4(2) of the Securities Act of 1933, as amended and/or Rule 506 of Regulation D. Mr. Maki had toured the Company's facilities and had available information regarding the company's operations and financial condition. He also had reviewed and signed a questionnaire regarding the issuance of these shares. The questionnaire indicated that the Corporation had not registered these shares, that there is not a public market for the shares and that shares cannot be sold unless there is adequate evidence that such sale will not violate federal securities laws. On or about March 9, 2000, the Company issued 10,000 shares of its common stock to Gary R. Snyder in exchange for $5,000. Such shares were issued at the rate of $0.50 per share. Such shares were issued pursuant to the exemption from registration under Section 4(2) of the Securities Act of 1933, as amended and/or Rule 506 of Regulation D. Mr. Snyder had toured the Company's facilities and had available information regarding the company's operations and financial condition. He also had reviewed and signed a questionnaire regarding the issuance of these shares. The questionnaire indicated that the Corporation had not registered these shares, that there is not a public market for the shares and that shares cannot be sold unless there is adequate evidence that such sale will not violate federal securities laws. -26- On or about March 9, 2000, the Company issued 10,000 shares of its common stock to Elaine Gensorek in exchange for $5,000. These shares were issued at the rate of $0.50 per share. Such shares were issued in reliance on the exemption from registration contained in Regulation S as Ms. Gensorek is a citizens of Canada and resides outside of the United States. Ms. Gensorek had toured the Company's facilities and had available information regarding the company's operations and financial status. She also had reviewed and signed a questionnaire regarding the issuance of these shares. The questionnaire indicated that the Corporation had not registered these shares, that there is not a public market for the shares and that shares cannot be sold unless there is adequate evidence that such sale will not violate federal securities laws. On or about March 17, 2000, the Company issued 10,000 shares of its common stock to Paul A. Tracy in exchange for $5,000. Such shares were issued at the rate of $0.50 per share. Such shares were issued pursuant to the exemption from registration under Section 4(2) of the Securities Act of 1933, as amended and/or Rule 506 of Regulation D. Mr. Tracy had toured the Company's facilities and had available information regarding the company's operations and financial condition. He also had reviewed and signed a questionnaire regarding the issuance of these shares. The questionnaire indicated that the Corporation had not registered these shares, that there is not a public market for the shares and that shares cannot be sold unless there is adequate evidence that such sale will not violate federal securities laws. On or about March 17, 2000, the Company issued 8,000 shares of its common stock to the Jack Crew SDIRA, a previous shareholder, in exchange for $4,000. Such shares were issued at the rate of $0.50 per share. Such shares were issued pursuant to the exemption from registration under Section 4(2) of the Securities Act of 1933, as amended and/or Rule 506 of Regulation D. Mr. Snyder had toured the Company's facilities and had available information regarding the company's operations and financial condition. He also had reviewed and signed a questionnaire regarding the issuance of these shares. The questionnaire indicated that the Corporation had not registered these shares, that there is not a public market for the shares and that shares cannot be sold unless there is adequate evidence that such sale will not violate federal securities laws. On or about May 1, 2000, the Company issued 10,000 shares of its common stock to Louie & Tino Solarino in exchange for $5,000 and 10,000 shares of its common stock to Robert Boake, a previous shareholder, in exchange for $5,000. These shares were issued at the rate of $0.50 per share. Such shares were issued in reliance on the exemption from registration contained in Regulation S as each of the following individuals are citizens of countries other than the United States and reside outside of the United States. Each of these shareholders had toured the Company's facilities and had available information regarding the company's operations and financial status. Each also had reviewed and signed a questionnaire regarding the issuance of these shares. The questionnaire indicated that the Corporation had not registered these shares, that there is not a public market for the shares and that shares cannot be sold unless there is adequate evidence that such sale will not violate federal securities laws. On or about May 31, 2000, the Company issued the following shares of its common stock to the following individuals in exchange for cash previously received. These shares were issued at the rate of $0.50 per share. Such shares were issued in reliance on the exemption from registration contained in Regulation S as each of the following individuals are citizens of countries other than the United States and reside outside of the United States. Each of these shareholders had toured the Company's facilities and had available information regarding the company's operations and financial status. Each also had reviewed and signed a questionnaire regarding the issuance of these shares. The questionnaire indicated that the Corporation had not registered these shares, that there is not a public market for the shares and that shares cannot be sold unless there is adequate evidence that such sale will not violate federal securities laws. -27- Name Shares Consideration -------- -------- ----------------- Domenic DiMenna 10,000 $ 5,000 Jerome W. & Vicky Brannon 14,000 $ 7,000 Lorenzo Merchant & Frederick Dryden 18,000 $ 9,000 Vladimir and Raya Zehtser 10,000 $ 5,000 Malcolm John Poole 20,000 $10,000 Lawrence Patrick and Marilyn Achay Kirsch 20,000 $10,000 R. W. & Darice Tiffany 30,000 $15,000 Norman W. & Patricia B. Smith 54,000 $27,000 Billy Mark and Gay Lynn Cowan 10,000 $ 5,000 John David Featherstone 10,000 $ 5,000 Paul W. Galipeau 50,000 $25,000 Walter E. and Becky M. Chidsey 50,000 $25,000 On or about May 31, 2000, the Company issued 400,000 shares of its common stock to James L. Deagle in exchange for $200,000 in cash. Such shares were issued pursuant to the exemption from registration under Section 4(2) of the Securities Act of 1933, as amended and/or Rule 506 of Regulation D. This shareholder had toured the Company's facilities and had available information regarding the company's operations and financial status. He also had reviewed and signed a questionnaire regarding the issuance of these shares. The questionnaire indicated that the Corporation had not registered these shares, that there is not a public market for the shares and that shares cannot be sold unless there is adequate evidence that such sale will not violate federal securities laws. On or about May 31, 2000, the Company issued 200,000 shares of its common stock to R. Charles Lowden in exchange for $100,000 in cash. Such shares were issued pursuant to the exemption from registration under Section 4(2) of the Securities Act of 1933, as amended and/or Rule 506 of Regulation D. This shareholder had toured the Company's facilities and had available information regarding the company's operations and financial status. He also had reviewed and signed a questionnaire regarding the issuance of these shares. The questionnaire indicated that the Corporation had not registered these shares, that there is not a public market for the shares and that shares cannot be sold unless there is adequate evidence that such sale will not violate federal securities laws. -28- On or about May 31, 2000, the Company issued 12,600 shares of its capital stock to Dov Hellenbrand in exchange for engineering design consulting services at the Company's operating facility. Such services were valued at $6,300 and shares were issued at the rate of $0.50 per share. Such shares were issued pursuant to the exemption from registration under Section 4(2) of the Securities Act of 1933, as amended. This shareholder had toured the Company's facilities and had available information regarding the company's operations and financial status. He also had reviewed and signed a questionnaire regarding the issuance of these shares. The questionnaire indicated that the Corporation had not registered these shares, that there is not a public market for the shares and that shares cannot be sold unless there is adequate evidence that such sale will not violate federal securities laws. On or about May 31, 2000, the Company issued 12,600 shares of its capital stock to Frank Occhipinti in exchange for engineering design consulting services at the Company's operating facility. Such services were valued at $6,300 and shares were issued at the rate of $0.50 per share. Such shares were issued pursuant to the exemption from registration under Section 4(2) of the Securities Act of 1933, as amended. This shareholder had toured the Company's facilities and had available information regarding the company's operations and financial status. He also had reviewed and signed a questionnaire regarding the issuance of these shares. The questionnaire indicated that the Corporation had not registered these shares, that there is not a public market for the shares and that shares cannot be sold unless there is adequate evidence that such sale will not violate federal securities laws. On or about June 16, 2000, the Company issued 30,000 shares of its common stock to Orthowaz, a previous shareholder, in exchange for $15,000. Such shares were issued pursuant to the exemption from registration under Section 4(2) of the Securities Act of 1933, as amended and/or Rule 506 of Regulation D. This shareholder had toured the Company's facilities and had available information regarding the company's operations and financial status. He also had reviewed and signed a questionnaire regarding the issuance of these shares. The questionnaire indicated that the Corporation had not registered these shares, that there is not a public market for the shares and that shares cannot be sold unless there is adequate evidence that such sale will not violate federal securities laws. On or about October 16, 2000, the Company issued 130,000 shares of its common stock to Curtis C. Lowden, a previous shareholder, in exchange for $65,000. Such shares were issued pursuant to the exemption from registration under Section 4(2) of the Securities Act of 1933, as amended and/or Rule 506 of Regulation D. This shareholder had toured the Company's facilities and had available information regarding the company's operations and financial status. He also had reviewed and signed a questionnaire regarding the issuance of these shares. The questionnaire indicated that the Corporation had not registered these shares, that there is not a public market for the shares and that shares cannot be sold unless there is adequate evidence that such sale will not violate federal securities laws. -29- On or about October 16, 2000, the Company issued the following shares of its common stock to the following individuals in exchange for cash previously received. These shares were issued at the rate of $0.50 per share. Such shares were issued in reliance on the exemption from registration contained in Regulation S as each of the following individuals are citizens of countries other than the United States and reside outside of the United States. Each of these shareholders had toured the Company's facilities and had available information regarding the company's operations and financial status. Each also had reviewed and signed a questionnaire regarding the issuance of these shares. The questionnaire indicated that the Corporation had not registered these shares, that there is not a public market for the shares and that shares cannot be sold unless there is adequate evidence that such sale will not violate federal securities laws. Name Shares Consideration -------- --------- ----------------- Kristopher Horvath 40,000 $20,000 R.W. & Darice Tiffany 20,000 $10,000 Lawrence P. & Marilyn A. Kirsch 40,000 $20,000 Paul K. Urban 10,000 $ 5,000 Helge K. & Carol K. Sandvik 54,000 $27,000 Sandvik Landscapes 26,000 $13,000 Lawrence P. Kirsch 73,000 $36,500 On or about November 2, 2000, the Company issued 50,000 shares of its common stock to K. James Schumacher, Sr. in exchange for $25,000. Such shares were issued pursuant to the exemption from registration under Section 4(2) of the Securities Act of 1933, as amended and/or Rule 506 of Regulation D. This shareholder had toured the Company's facilities and had available information regarding the company's operations and financial status. He also had reviewed and signed a questionnaire regarding the issuance of these shares. The questionnaire indicated that the Corporation had not registered these shares, that there is not a public market for the shares and that shares cannot be sold unless there is adequate evidence that such sale will not violate federal securities laws. On or about November 10, 2000, the Company issued 100,000 shares of its common stock to John L. Maki, a previous shareholder, in exchange for $50,000. Such shares were issued pursuant to the exemption from registration under Section 4(2) of the Securities Act of 1933, as amended and/or Rule 506 of Regulation D. This shareholder had toured the Company's facilities and had available information regarding the company's operations and financial status. He also had reviewed and signed a questionnaire regarding the issuance of these shares. The questionnaire indicated that the Corporation had not registered these shares, that there is not a public market for the shares and that shares cannot be sold unless there is adequate evidence that such sale will not violate federal securities laws. On or about November 20, 2000, the Company issued 60,000 shares of its common stock to Dennis H. and Ellyn P. Lyons, previous shareholders, in exchange for $30,000, 100,000 shares of its common stock to Frederick S. Scharar, a previous shareholder, in exchange for $50,000 and 50,000 shares of its common stock to Randy E. and Tina M. Griffin in exchange for $25,000. Such shares were issued pursuant to the exemption from registration under Section 4(2) of the Securities Act of 1933, as amended and/or Rule 506 of Regulation D. These shareholders had toured the Company's facilities and had available information regarding the company's operations and financial status. He also had reviewed and signed a questionnaire regarding the issuance of these shares. The questionnaire indicated that the Corporation had not registered these shares, that there is not a public market for the shares and that shares cannot be sold unless there is adequate evidence that such sale will not violate federal securities laws. -30- On or about November 20, 2000, the Company issued the following shares of its common stock to the following individuals in exchange for cash previously received. These shares were issued at the rate of $0.50 per share. Such shares were issued in reliance on the exemption from registration contained in Regulation S as each of the following individuals are citizens of countries other than the United States and reside outside of the United States. Each of these shareholders had toured the Company's facilities and had available information regarding the company's operations and financial status. Each also had reviewed and signed a questionnaire regarding the issuance of these shares. The questionnaire indicated that the Corporation had not registered these shares, that there is not a public market for the shares and that shares cannot be sold unless there is adequate evidence that such sale will not violate federal securities laws. Name Shares Consideration -------- --------- ---------------- Bradley C. & Georgia A. Stockwell 15,000 $ 7,500 Robert H. & Brenda J. Fritz 50,000 $25,000 George V. & Michele H. Conger 30,000 $15,000 Russell K. & Alice P. Tanita 10,000 $ 5,000 On or about November 21, 2000, the Company issued 50,000 shares of its common stock to Clark K. Smith in exchange for $25,000. Such shares were issued pursuant to the exemption from registration under Section 4(2) of the Securities Act of 1933, as amended and/or Rule 506 of Regulation D. This shareholder had toured the Company's facilities and had available information regarding the company's operations and financial status. He also had reviewed and signed a questionnaire regarding the issuance of these shares. The questionnaire indicated that the Corporation had not registered these shares, that there is not a public market for the shares and that shares cannot be sold unless there is adequate evidence that such sale will not violate federal securities laws. On or about December 4, 2000, the Company issued 40,000 shares of its common stock to Munir Uddin Sheikh in exchange for $20,000. These shares were issued at the rate of $0.50 per share. Such shares were issued in reliance on the exemption from registration contained in Regulation S as this shareholder is a citizens of Saudi Arabia and resides outside of the United States. This shareholder had toured the Company's facilities and had available information regarding the company's operations and financial status. He also had reviewed and signed a questionnaire regarding the issuance of these shares. The questionnaire indicated that the Corporation had not registered these shares, that there is not a public market for the shares and that shares cannot be sold unless there is adequate evidence that such sale will not violate federal securities laws. -31- On or about December 5, 2000, the Company issued 20,000 shares of its common stock to Malcolm J. Poole in exchange for $10,000. These shares were issued at the rate of $0.50 per share. Such shares were issued in reliance on the exemption from registration contained in Regulation S as this shareholder is a citizens of Saudi Arabia and resides outside of the United States. This shareholder had toured the Company's facilities and had available information regarding the company's operations and financial status. He also had reviewed and signed a questionnaire regarding the issuance of these shares. The questionnaire indicated that the Corporation had not registered these shares, that there is not a public market for the shares and that shares cannot be sold unless there is adequate evidence that such sale will not violate federal securities laws. -------------------------------------------------------------------------------- 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. Operations in 2000 The Company experienced a major setback in its plan of operation during 2000 when it learned that the Environmental Protection Agency had expressed concerns with the waste water treatment capabilities of the facilities operated by the Village of Baltimore, Ohio. In 1997 the Company had entered into an agreement with the Village whereby the Village agreed to receive and treat 100,000 gallons of the Company's processing water per day. Indeed, the Company paid the Village an initial fee of $8,000 in this regard and agreed to pay additional fees as such water was discharged into the City's system. In March of 2000, the Environmental Protection Agency for the state of Ohio (the "OEPA") visited the Village and found that the Village had not met the OEPA's requirements to handle the volume of waste water generated in area surrounding the Village. The OEPA informed the Company that the Company could send only about 10% of the previously agreed upon volume of its processing waste water into the Village's treatment system. The OEPA indicated that the Company would have treat any remaining waste water itself and any treatment of such waste water would need to comply with OEPA requirements. The OEPA's decision in this regard created a situation were the Company either had to close or it had to develop adequate waste water treatment equipment for its operations. -32- Accordingly, the Company's operations in the remainder of 2000 were focused on developing and constructing adequate waste water treatment processes. It took Management just under one year to complete this process at a cost of less than one million dollars. The Company's waste water treatment processes treat all the water the Company uses in the Company's systems for processing food products. Plan of Operation in 2001 The Company has not received revenues from operation during the two-year period immediately preceding the filing of this Form 10-KSB. During 2001, 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. The Company's physical facilities are complete and operational and at the end of March 2001 the Company will obtained the last permit necessary to full commence operations. The Company's current permits allow operations on a limited basis. The Company's assets are paid for in full and the Company requires no further major capital expenditures for equipment in its processing facility. 1. Test Market Agreement In March 2001, the Company entered into a 30 day test market agreement with Golden Corral restaurant chain. The test market agreement commences April 2001. Under the terms of this agreement, the Company will produce and deliver fresh refrigerated 3/8 inch skin-on french fries for ten (10) Golden Corral restaurants. The Company estimates that it will process approximately 30,000 pounds of potatoes to meet the demands of the test market agreement. The Company estimates its costs during the term to be approximately $50,000. Such costs will include labor, utilities, insurance, raw materials, shipping, packaging materials and taxes. The Company will be able to pay for such costs with cash on hand, which currently amounts to approximately $80,000, and if necessary with draws from the Company's $500,000 line of credit. Revenue generated from sales pursuant this agreement will be used to help fund future operations. In this regard, the Company's invoices for good delivered call for payment within 30 days of receipt. 2. Continued Marketing and Expanded Production During the second quarter of 2001, management of the Company intends to expand its sales procedures and hire a sales staff. Management anticipates hiring approximately 32 individuals to serve as clerical and operations staff and eight (8) individuals to work as sales staff. -33- 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 man 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. The Company has set production targets for processed potatoes for each month after April and estimates its costs for each of those months as follows: Month Production Target Estimated Costs ----- ----------------- --------------- May 10,000 pounds $52,500 June 20,000 pounds $55,000 July 30,000 pounds $57,500 August 40,000 pounds $60,000 September 50,000 pounds $62,500 October 60,000 pounds $65,000 November 70,000 pounds $67,500 December 80,000 pounds $70,000 Of course, these are merely targets and estimates. Actual results likely will differ and will be influenced by the ability of the Company to effectively market its products and the acceptance of such products by purchasers in the market for these products. The Company estimates that it total operating costs for 2001 will be approximately $540,000. The Company will pay for such costs with cash on hand and from revenues generated from sales. To the extent it is necessary, the Company also will draw from its line of credit. Two of the Company's shareholders also have expressed a willingness to loan the Company additional funds for purposes of operations. The Company estimates such sources of financing as follows: Cash on Hand $ 80,000 Line of Credit $500,000 Available Loans $150,000 Potential Revenues $144,000 Total $874,000 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. General Corporate Operations 1. Annual Meeting of Shareholders The Company intend to hold a shareholders meeting in late April or early May of 2001. In addition to the election directors and approval the -34- selection of the Company's independent auditors, management will seek shareholder approval for a new corporate name. For marketing purposes, management intend to change the Company's name from National Fruit and Vegetable Technology, Inc. to Fresh Vegetable Technology, Inc. The Company has secured that name and actually has used that name as part of it current marketing efforts. The Company anticipates filing proxy materials with the Securities and Exchange Commission prior to the next annual meeting. 2. Appointment of Transfer Agent Given the Company's shareholder base, management believes that the Company's interest will be better served if the Company's shareholders records are maintained by a transfer agent and registrar. In this regard, the Company has engage the services of Nevada Agency and Trust Company. Nevada Agency and Trust Company is located in Reno, Nevada and already serves as the Company's resident agent in that state. 3. Audit Committee In an effort to provide increased review of the Company's operation from the perspective of reviewing the Company's financial statement, the Company's board of directors intends to organize an audit committee comprised of board members who are not also officers or employees of the Company. The audit committee will act as a liaison between the board and the independent auditors and will annually recommend to the board the appointment of the independent auditors. The audit committee will review with the independent auditors' planning and scope of the audits of the Company's financial statements, the results of those audits and the adequacy of the Company's internal accounting controls. 4. Finance Committee The Company also intends to form a finance subcommittee of the board of directors. The finance committee will make recommendations to the full board as to compensation of senior management and will determine the executives who are to receive options and the number of shares subject to each option. The Finance Committee will meet not less than once every calendar year. The finance committee also will review any proposal for the issuance of the Company's shares of common stock. In this regard, the finance committee will not approve further issuances of the Company's shares without seeking the review of any such issuance by securities counsel for compliance with federal and state securities laws. -35- -------------------------------------------------------------------------------- ITEM 7. FINANCIAL STATEMENTS -------------------------------------------------------------------------------- REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ---------------------------------------- To the Board of Directors National Fruit and Vegetable Technology Corporation: We have audited the accompanying balance sheets of National Fruit and Vegetable Technology Corporation (a Nevada Development Stage Corporation) as of December 31, 2000 and 1999, 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, 2000. 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. For the period ended December 31, 1989 and prior periods, the Company's financial statements were audited by other auditors whose last report dated June 15, 1990, was qualified as to the Company's ability to continue as a going concern and fully realize the value of assets carried on the financial statements. 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, 2000 and 1999, and the results of its operations and its cash flows for the periods then ended in conformity with generally accepted accounting principles. F-1 The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 12 to the financial statements, the Company has been in the development stage since its inception and requires additional funding to complete construction of its plant and to begin and sustain operations. This uncertainty raises substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to this matter is also described in Note 12. The financial statements do not include any adjustments that might result from the outcome of these uncertainty. March 14, 2001 /s/Ickert & Company, LLC Columbus, Ohio. ---------------------- Ickert & Company, LLC F-2 National Fruit and Vegetable Technology Corporation (A Development Stage Corporation) Balance Sheets As of December 31, 2000 and 1999 2000 1999 ---- ---- Assets ------ Current assets Cash $ 44,200 $ 717,900 Prepaid expenses -- 3,800 44,200 721,700 Property & equipment 15,662,200 14,181,500 Accumulated depreciation -903,500 -809,900 14,758,700 13,371,600 Total assets $14,802,900 $14,093,300 Liabilities & Shareholders' Equity ---------------------------------- Current liabilities Current portion of long-term debt $ 21,200 $ 26,900 Notes payable to shareholder 400,000 400,000 Accounts payable 297,600 99,900 Accounts payable - related party 547,800 488,000 Accrued expenses 258,200 256,400 1,524,800 1,271,200 Long-term obligations Capital leases 15,900 35,100 15,900 35,100 Shareholders' equity Common stock 86,600 83,500 Additional paid-in capital 22,034,400 20,485,100 Deficit accumulated during the development stage -8,858,800 -7,781,600 13,262,200 12,787,000 Total liabilities & shareholders' equity $14,802,900 $14,093,300 The accompanying notes are an integral part of these financial statements. F-3

The accompanying notes are an integral part of these financial statements. F-4

The accompanying notes are an integral part of these financial statements. F-5

The accompanying notes are an integral part of these financial statements. F-6 National Fruit and Vegetable Technology Corporation (A Development Stage Corporation) Notes to Financial Statements As of December 31, 2000 and 1999 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 diced and french fried 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-7 National Fruit and Vegetable Technology Corporation (A Development Stage Corporation) Notes to Financial Statements As of December 31, 2000 and 1999 The Company has as the heart of its plant, an industrial microwave oven system that is the culmination of fifteen years of research and development. This oven technology has been integrated into an automated food processing system with mass production capabilities, and it represents a major technological innovation in the food processing industry. It is this new technology, which the Company believes will allow food products to retain their original nutritional values, along with their natural taste, texture and color. This new process is expected to be highly cost effective while improving the quality of processed food products. From January, 1999 until March, 2000, the Company has made great progress towards the successful initiation of operations. The Company has been testing and refining the production process and product flow to ensure all equipment is properly synchronized. The nearly completed system has been modernized and automated in every aspect of its operation. 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. F-8 National Fruit and Vegetable Technology Corporation (A Development Stage Corporation) Notes to Financial Statements As of December 31, 2000 and 1999 Research and Development -- Research and development costs are primarily related to oven testing and integration of related equipment. These costs are charged to operations in the period incurred. Research and development costs have totaled $297,100 since inception of the Company. Cash Equivalents -- For purposes of the statement of cash flows, the Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. Income Taxes -- Because the Company has not commenced planned food processing operations, no federal or local income tax or county property tax returns have been filed. Concentration of Credit Risk -- The Company maintains bank accounts at local banks. In some instances, the balances may exceed the federally insured limit for an individual account. Use of Estimates -- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenues and expenses and disclosure of contingent assets and liabilities. Actual results could differ from the estimates and assumptions used. Supplemental cash flow disclosures -- The Company paid $4,400 and $47,400 for interest in 2000 and 1999, respectively. The Company acquired $227,200 of property and equipment in 2000 and $31,500 in 1999 in exchange for stock. The assets were acquired at normal fair market values with shares exchanged at the rate of $0.50 per share. During 1999, the Company issued 50,000 common shares in payment of interest on a loan from a shareholder. F-9 National Fruit and Vegetable Technology Corporation (A Development Stage Corporation) Notes to Financial Statements As of December 31, 2000 and 1999 Note 4. Property and Equipment As of December 31, 2000 and 1999, property and equipment can be summarized as follows on a restated basis:

The plant is located in Baltimore, Ohio, and is under construction at December 31, 2000. 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. The plant and assets to be utilized in food processing are considered to be construction in progress as enhancements continue to be made to prepare the plant and equipment for its intended purpose. The plant and equipment are expected to be completed at the end of the first quarter in 2001, with production beginning in the second quarter of 2001. Upon the initiation of food processing operations, the plant and equipment will be considered to be in service and will be depreciated over the expected useful lives. During 2000, $194,200 of food processing equipment and $33,000 of land improvements were acquired in exchange for common shares of the Company issued at the rate of $0.50 per share. In 1999, 63,022 shares were issued in exchange for land improvements made valued at $31,500. All other assets additions and enhancements in 2000 and 1999 reflect cash transactions. F-10 National Fruit and Vegetable Technology Corporation (A Development Stage Corporation) Notes to Financial Statements As of December 31, 2000 and 1999 Note 5. Line of credit The Company has a $500,000 revolving credit facility with Fifth Third Bank. Principal is due and payable on June 21, 2001. Interest is due and payable monthly at prime rate plus 1%. The note is collateralized by all inventories and accounts receivables. At December 31, 2000, no balance was outstanding under the credit facility. Note 6. Long-term debt Long-term debt consisted of a note due April, 2000. As of December 31, 2000, a balance of $2,000 remained on this note which is classified as current and treated as a demand note. The note had no stated interest rate. Note 7. Notes Payable to Shareholders The Company had a series of notes payable to a shareholder that matured from May 1999, through November 2000 that totaled $400,000. The shareholder notes are all unsecured and bear interest at the rate of 11%. A $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 2000 and 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, 2000, 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 in cash and 400,000 shares of common stock. F-11 National Fruit and Vegetable Technology Corporation (A Development Stage Corporation) Notes to Financial Statements As of December 31, 2000 and 1999 Note 8. Accounting for Income Taxes The Company has incurred tax net operating losses during its development period of approximately $8,900,000. 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." Note 9. Capital Leases The Company leases equipment under lease agreements expiring on various dates through 2003. The leases are capital leases with the Company owning the assets outright at the end of the lease terms. At December 31, 2000, future minimum lease payments for all leases were as follows: 2001 $ 21,300 2002 14,100 2003 2,600 Thereafter - -------------- Total minimum lease payments 38,000 Less: interest portion (2,900) -------------- Present value of net minimum lease payments 35,100 Less: current portion (19,200) -------------- Net long-term lease liability $ 15,900 ============== At December 31, 2000, 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 ============== F-12 National Fruit and Vegetable Technology Corporation (A Development Stage Corporation) Notes to Financial Statements As of December 31, 2000 and 1999 Note 10. Related Party Transactions The Company rents a storage facility owned by an entity 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 $90,000 and $200,000, respectively in 2000 and 1999. Management has determined that the rental rates charged are below fair market rates for this geographic area. No amounts have been paid on this lease agreement and a balance of $547,800 and $488,000 was due to the related entity for December 31, 2000 and 1999, respectively. The related party has agreed to not seek payment for this liability until the Company has achieved profitable operations. From time to time, the Company has borrowed funds from various shareholders. At December 31, 2000 and 1999, a total of $402,000 and $403,000 was due to various shareholders. Interest expense incurred on this indebtedness amounted to $44,000 in 2000 and 1999. Note 11. Employee Benefit Plan During 2000, the Company set up a 401(k) salary reduction plan (the Plan) covering all qualified employees. The Plan allows the participants to contribute up to the maximum percentage of their gross earnings not to exceed the limits of the Code. The Plan also provides that the Company can match up to 6% of the participants compensation. The Company's contribution is determined at the discretion of the Company's Board of Directors. Note 12. 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 continue to operate as a going concern. As of December 31, 2000, 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 and debt capital for the construction and testing of the plant and food processing equipment. Management is of the opinion that adequate funding can and will be obtained to begin operations. There can be no assurance that sufficient funding will be obtained or that, if obtained, the plant will be able to achieve a profitable level of operations. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. F-13 National Fruit and Vegetable Technology Corporation (A Development Stage Corporation) Notes to Financial Statements As of December 31, 2000 and 1999 As indicated in Note 4, the expected completion of the plant is the end of the first quarter of 2001. A line of credit has been negotiated to provide the Company funding upon the initiation of operations which are anticipated to begin in the second quarter of 2001. Management believes sufficient sources of private and financial institution debt financing are available to facilitate the initiation of operations and support those operations until the Company is able to reach profitable production levels. Note 13. Reclassifications Certain prior year amounts have been reclassified to conform with current year presentation. F-14 -------------------------------------------------------------------------------- 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 March 28, 2001, 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 50 Chairman of the 9-10-86 to present Board Daniel K. Cashman 40 President and 9-10-86 to present Director Mitch Adams 42 Vice President 9-20-96 to present Of Engineering and Director Tom Ranier 46 Secretary, 12-19-86 to present Treasurer and Director Tom Heilman 46 Director 9-20-96 to present Doug Katterhenry 58 Director 9-20-96 to present -36- (Continued) Period Served As Name Age Position Officer/Director* -------- ----- -------------- --------------------- Patrick D. Maguire 49 Director 1992 to present Clifton K. Merriam 56 Director 1992 to present Frank Moauro 77 Director 1986 to present Dr. Harold Rinehart 60 Director 1986 to present Philip Risinger 64 Director 9-20-96 to present Lawrence Green 72 Director 9-20-96 to present James L. Deagle 65 Director February 2001 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 50, 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 40, 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 1,000 foot long microwave oven system. The plant is fully automated with state-of-the-art food processing equipment. Mr. Cashman is also the President and Director of Platinum Industries, Ltd., a real estate holding company, manages 23 full-time employees and sub-contractors, reviews all corporate and executive decisions made by the Company, including those for construction, equipment, personnel and technology. His goal for the Company is to dominate North America's fresh food market with the Company's new potato products. -37- Tom Ranier, age 46, 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 42, 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 72, is a Director of National Fruit and Vegetable Technology Corporation. Mr. Green has been involved 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 46, 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 58, 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 49, is a Director of National Fruit and Vegetable Technology Corporation. Mr. Maguire has a B.A. from Wittenberg University in 1973 and a J.D. from Ohio Northern University in 1976. Mr. Maguire serves as a managing partner with the law firm of Maguire & Schneider in Columbus, Ohio. Previously he worked as Assistant County Prosecutor of Franklin County and with a number of Columbus law firms over the past 20 years. Clifton K. Merriam, age 56, 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. -38- Frank Moauro, age 77, 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 60, 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 64, is a Director of National Fruit and Vegetable Technology Corporation. Mr. Risinger is a retired Plant Manager for Oliver Rubber Company's Paris, Texas plant. James L. Deagle, age 65, is Director of the Company. During the last five years, Mr. Deagle primarily has been involved in the business of purchasing and developing real estate. (c) Directors of Other Reporting Companies: None of the directors are directors of other reporting companies. (d) Employees: The officers and directors who are identified above are the significant employees of the Company. (e) Family Relationships: Richard J. Cashman II, Chairman of the Board, is the brother of Daniel K. Cashman, President and Director. (f) Involvement in Certain Legal Proceedings: None of the officers and directors of the Company have been involved in the past five (5) years in any of the following: (1) Bankruptcy proceedings; (2) Subject to criminal proceedings or convicted of a criminal act; (3) Subject to any order, judgment or decree entered by any Court for violating any laws relating to business, securities or banking activities; or -39- (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, 2000, 1999 and 1998 to the Company's officers and directors. None of the Executive Officers of the Company earned more than $100,000 during the years ended December 31, 2000, 1999, and 1998:

-40-

-41- -------------------------------------------------------------------------------- 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, 2000 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:

----------------------- 1 Richard J. Cashman II, Chairman of the Board and a Director, and Daniel K. Cashman, President and a Director are the owners of the majority of shares of Emerald Industries Corporation. 2 Such shares are beneficially owned by Richard J. Cashman II through his ownership and control of Emerald Industries Corporation. Emerald Industries Corporation is the owner of record of all 38,459,980 shares. -42- (Continued)

-------------------- 3 Such shares are beneficially owned by Daniel K. Cashman through his ownership and control of Emerald Industries Corporation. Emerald Industries Corporation is the owner of record of all 38,459,980 shares. These are the same shares beneficially owned by Richard J. Cashman through his ownership and control of Emerald Industries Corporation. -43- (Continued)

(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 2000. 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 $90,0000 in 2000 and $200,000 in 1999. Management has determined that these rental rates are below fair market rates for this geographic area. No amounts have been paid on this lease agreement and the due on the lease T the end of 2000 and 1999 was $547,800 and $488,000, respectively. 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. -44- 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. The balance of principal and interest due on the notes to the Green as of December 31, 20000 is summarized as follows: Principal Accrued Interest --------- ---------------- Note payable due May, 1999 $ 50,000 $ 30,815 Note payable due May, 1999 100,000 34,375 Note payable due October, 1999 50,000 17,645 Note payable due October, 1999 50,000 13,050 Note payable February, 2000 50,000 12,250 Note payable November, 2000 100,000 23,750 Totals $ 400,000 $ 131,885 On or about May 30, 2000, the board of directors approved a future issuance of approximately 12,756,900 shares of its common stock to Richard Cashman and Daniel Cashman, the Company's Chairman of the Board and President, respectively, for past services rendered to the Company and to secure their future services. Richard Cashman and Daniel Cashman abstained from the vote of the Board. Such shares have not yet been issued. The company is considering seeking shareholder approval of this issuance prior to completing the same. If such shares are issued they will be issued pursuant to the exemption from registration under Section 4(2) of the Securities Act of 1933, as amended. The certificates representing such shares will bear restrictive legends regarding any sale of such shares and as officers, directors these individuals are aware that any resale of such shares will be restricted and may occur only with compliance with applicable securities laws, including Rule 144. -45- -------------------------------------------------------------------------------- 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-SB 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 (99) Additional Exhibits: None -46- ------------------------------------------------------------------------------- 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: March 31, 2001. NATIONAL FRUIT AND VEGETABLE TECHNOLOGY, INC. By /s/ Daniel K. Cashman --------------------- Daniel K. Cashman President -47-

NATIONAL FRUIT AND VEGETABLE TECHNOLOGY CORP 10-K