UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended April 30, 2003
Commission file number 333-68008
EFOODSAFETY.COM, INC.
(Exact name of small business issuer as specified in its charter)
NEVADA 62-1772151
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
2302 SHOREHAM COURT, SUITE E, BEL AIR, MD 21015
(Address of principal executive offices)
(443) 512-0585 (Issuer's
telephone number)
Securities registered Under 12(g) of the Exchange Act
COMMON STOCK, $0.0005 PAR VALUE
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. 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 this Form 10-KSB. [X ]
Issuer's revenues for its most recent fiscal year: NONE
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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:
12,540,000 common shares @ $0.0005(1) = 6,270.
(1) Our shares are not currently traded. Therefore this value has
been estimated based on the par value of our common stock.
As of May 19, 2003, the Company had 29,335,000 common shares issued and
outstanding
Documents Incorporated By Reference: NONE
Transitional Small Business Disclosure Format: Yes [ ] No [X]
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PART I
ITEM 1. DESCRIPTION OF BUSINESS.
This annual report contains forward-looking statements as that term is defined
in the Private Securities Litigation Reform Act of 1995. These statements relate
to future events or our future financial performance. In some cases, you can
identify forward-looking statements by terminology such as "may", "will",
"should", "expects", "plans", "anticipates", "believes", "estimates",
"predicts", "potential" or "continue" or the negative of these terms or other
comparable terminology. These statements are only predictions and involve known
and unknown risks, uncertainties and other factors, including the risks in the
section entitled "Risk Factors", that may cause our or our industry's actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements. Although
we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. Except as required by applicable law, including the securities
laws of the United States, we do not intend to update any of the forward-looking
statements to conform these statements to actual results.
As used in this annual report, the terms "we", "us", "our", and "eFood" mean
eFoodSafety.com, Inc., unless otherwise indicated.
DESCRIPTION OF BUSINESS
eFoodSafety.com, Inc. was incorporated in Nevada on October 28, 1996 as DJH
International, Inc. to market products through the Internet. The founder,
Michael J. Daniels, saw a need for good products and services to be marketed
traditionally and via the World Wide Web and sought opportunities through
companies that had the ability to sell and deliver in a timely fashion.
On October 16, 2000, we entered into an agreement and plan of reorganization
with Global Procurement Systems, Inc. whereby we acquired Global. As a result of
the acquisition, we issued 12,540,000 and changed our name to eFoodSafety.com,
Inc. Upon the merger, Ms. Patricia Ross assumed the official duties as president
and brought us to our present path toward development of sanitation services and
products in the fruit and vegetable market worldwide.
We have undergone no bankruptcy, receivership or similar proceedings.
We were organized for the purpose of creating a corporate vehicle to seek,
investigate and, if such investigation warrants, acquire an interest in one or
more business opportunities presented to it. At this time, we have completed a
merger as per above, and have identified a specific business that we have
targeted for operations. This plan of operation assumes that we will be able to
raise the necessary funds, through equity and/or debt financing, to finance our
food safety products and services business.
We presently have no cash on hand and management serves without compensation.
The company is still considered to be a development stage company. The company
has no revenue and is dependent upon the raising of capital through placement of
its common stock. There can be no assurance that we will be
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successful in raising the capital required through the sale of our common stock.
The U.S. Department of Agriculture has estimated that less than 2% of all fruits
and vegetable are pathogen, or "germ free", at the initial packing point, and
less still are provided with a way to continue to eliminate the growth of
pathogens during the distribution cycle. Our research, covering the past two
years and, along with our process development has demonstrated that our Food
Safe Program, utilizing chlorine in conjunction with Food Safe 1600, ozone, or
electronic pasteurization virtually eliminated all pesticides and pathogens,
including E. Coli, Salmonella, and Listeria, at the packing house or
distribution center. Pesticides are chemical sprays used on a product while it
is growing in the field. The residue is left on the product under the normal
packing process. Pathogens are bacteria typically classified as Salmonella,
Listeria, and eColiH157. Please note that the Food Safe Process effectively
removes both pesticides and pathogens. The Food Safety Program is intended to be
a complete process that incorporates an application and monitoring system
utilizing either existing or custom designed spray applications of Food Safe
materials to fresh fruit and vegetables after the initial chlorine bath. A
monitoring device will continuously monitor water quality, Oxidation Reduction
Potential (ORP), ph, chlorine concentration, and maintains continuous records
that satisfy Hazard Analysis Critical Control Point (HACCP) requirements. The
data supplied by the monitoring device is sent to the USDA to insure compliance
with HACCP standards.
A "run-through" will be completed after the company has acquired a facility, set
up production lines, tested equipment, and insured that all FDA standards have
been met or exceeded. From the time the company is in receipt of the initial
(pre-opening) funding and it takes possession of the facility, the first test
run will be in thirty (30) days of that point. The company will be fully
operational, including equipment, labor, sales, and product testing,
approximately two (2) days after the test run. eFood's marketing plans will be
initiated immediately and those clients currently awaiting commencement will be
serviced.
Patent protection will be sought immediately after operations commence. The
management has decided to wait until after the Food Safety Program has had a
thorough run-through in an eFood-approved facility. If any improprieties in
their process are detected, although they believe this to be highly unlikely,
certain changes will be made with a patent application to follow. The company
has started the preliminary paperwork required for the patent application
submission.
The program will be marketed locally prior to receiving patent protection. In
order to set up a potential customer base, the company will introduce its
program to various parties in the fruit and vegetable industry, as well as
various government officials. The company sales staff will carry out its
marketing plan in the areas of produce sales, equipment sales, food safe audits,
and distribution center access. The local marketing areas are the states of
Arizona, California, Maryland, Nevada, Oregon and Washington.
The products and services provided by eFoodSafety are available in an array of
formats. Our customers would not have to seek a membership to join the food safe
program. We intend to supply machinery and materials to those patrons who will
be leasing/purchasing the equipment and performing the process at their own (the
vendor) facility. Please note that the equipment will be custom fabricated by
eFoodSafety.com, thus causing the company to require a portion of the desired
funding amount in order to outlay any initial manufacturing costs. By performing
the process in the vendor's facility, it will give an extended shelf life to the
produce, including a reduction in pathogens, and an impression of sanitization
to the end-customer, but the product will not meet any certification for
Government standards due to cross contamination in packing, shipping, delivery,
etc.
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For the entire sanitization program to be deemed efficient, the process must be
completed at the company facility. The results of such process shall exceed any
FDA/USDA standards. As stated above, the company offers a variety of services
implemental in a multitude of environments.
Therefore, billing for the company's products and services must be determined on
a case-by-case basis further described below:
Outline of the sanitization process listed by service and cost if the
client brings the produce to the company-owned facility for processing.
This process exceeds any FDA, USDA Standards:
1. Inspection of Product Cost per unit $ 0.10
2. Handling Product before Processing Cost per unit $ 0.15
3. Food Safety Process/Packaging Cost per unit $ 2.50
4. Chemical Inspection Cost per unit $ 0.25
5. Sanitizing the Truck Cost per unit $ 0.15
6. Cost of Delivery of Product Cost per unit $ 1.75
-----------------
Total Cost per unit $ 4.90
=================
Please note that all prices are subject to change.
Outline of a la carte services available at the company-owned facility
without utilizing the sanitization process:
1. Load Consolidation Cost per unit $ 1.00
2. Store Drop Delivery Cost per unit $ 1.50
3. Repacking Cost per unit $ 2.25
4. Storage Cost per unit $ 0.50
5. Sales/Marketing Cost per unit $ 1.00
6. Transportation Cost per load $ 250.00
Please note that all prices are subject to change.
Outline of services available at the customer's facility, not including
the cost for leasing/purchasing eFood approved equipment:
1. Process Cost per unit $ 0.30
Please note that a unit could be defined as follows:
a) trays (berries); b) cartons (oranges, peppers,
bananas); c) lugs (grapes, tomatoes); d) sacks
(potatoes, cucumbers), etc.
The program will use common materials, as will the manufacture of equipment, so
that we will have a multitude of vending sources from which to choose. In
addition, we plan to market our products and services so as not to become
dependent on any one customer.
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We plan to market all services, products and produce from our off-line
supply/distribution facilities through outside sales persons and through a web
site, http://www.e-foods-safety.com, which is currently under construction.
RISK FACTORS
An investment in our Common Stock offered hereby is speculative in nature and
involves a high degree of risk. In addition to the other information contained
in this filing, the following factors should be considered carefully before
making any investment decisions with respect to purchasing our Common Stock.
This filing contains, in addition to the lack of historical information,
forward-looking statements that involve risks and uncertainties. Our actual
results may differ materially from the results discussed in the forward-looking
statements. This Risk Factors section includes all risks that we consider to be
material.
(1) WE ARE A DEVELOPMENT STAGE COMPANY, WITH NO OPERATING HISTORY, AND YOU COULD
LOSE YOUR ENTIRE INVESTMENT.
Our business has not shown a profit. Since we commenced operations, we have
accumulated a negligible net loss through the present. Although we expect to be
profitable for the year ending April 30, 2004, we cannot assure that a year-end
profit will be realized or that profitability will continue in the future. In
addition we are in poor financial condition from lack of capital.
(2) RISK OF ENTERING INTO TRANSACTIONS WITH PARTIES RELATED TO THE COMPANY
Our company intends to enter into an agreement with Clarence W. Karney, who is
our CEO and a Director of the Company, for the right to use the Global
Inspection Service (GIS) that is a concept created by Mr. Karney. The company
plans to negotiate an agreement whereby GIS can be implemented and offered as a
standard service. No contract has been entered into to date although a letter of
intent to contract has been signed. Failure to reach a definitive agreement with
Mr. Karney for the right to offer GIS could adversely affect the company's
ability to continue in business. Furthermore, no assurances can be given that a
contract entered into would be the product of arms length negotiations and
result in terms favorable to the Company.
Additionally, Mr. Karney has personally made offers to purchase property in both
Fresno County, California and Nogales, Arizona that are intended to be used by
the company for cold storage and processing. Mr. Karney has also agreed to make
earnest money deposits should any be required before a final agreement of sale
can be reached. Failure to reach an agreement of sale for these facilities, or
similar facilities, could adversely affect the company's ability to conduct
business. Furthermore, if the properties were to come under Mr. Karney's
ownership or control, no assurances can be given that a final sales contract
with the company would be the result of arms length negotiations with terms
favorable to the Company.
(3) FINANCIAL RISK OF DEPENDENCE ON KEY PERSONNEL.
The success of the company will depend to a great extent on Patricia Ross and
her management team. These individuals may not remain with the company due to
the lack of employment contracts. If we lose our key personnel, our business may
suffer. We depend substantially on the continued services and performance of our
senior management and, in particular, their contracts and relationships,
especially within the fresh fruit and vegetable industry.
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(4) RISK OF LOSS OF INVESTMENT DUE TO HIGHLY COMPETITIVE NATURE OF OUR INDUSTRY.
The market for sanitation products for fruits and vegetables is intensely
competitive. We have no operating history or any revenues from operations. We
have no assets or financial resources. We have operated at a loss and will
continue to do so for some time. We are smaller than our national competitors,
and consequently lack the financial resources to enter new markets or increase
existing market share. In fact, we compete with several companies that
specialize in the $5 billion dollar fruit and vegetable sanitation market. Most
of these companies have longer histories, greater name recognition and more
financial resources than we do.
(5) THE MARKET FOR SANITATION PRODUCTS FOR FRUITS AND VEGETABLES IS INTENSELY
COMPETITIVE, AND THE SPECIFIC NICHE THE COMPANY IS ENTERING ALSO CARRIES WITH IT
A HIGH DEGREE OF RISK.
While the market for sanitation products for fruits and vegetables is intensely
competitive, the specific niche the company is entering also carries with it a
high degree of risk. We have no operating history or any revenues from
operations. We have no significant assets or financial resources. We have
operated at a loss and will continue to do so for some time or at least until
the company has obtained financing and can fully execute its business plan. The
success of the company will depend to a great extent on Patricia Ross and her
select management team. There is no assurance that these individuals will remain
with the company due to the lack of employment contracts.
(6) RISK OF INCURRING HIGH LEGAL COST DUE TO LITIGATION.
While the company is not currently involved in any litigation, that is no
indication that the company will be precluded from being sued in the future. In
the past, especially during periods of market volatility, securities class
action litigation has often been instituted against companies similar to ours.
Such litigation, if instituted, could result in substantial costs and diversions
of management's attention and resources, which could have a material adverse
effect on our business, results of operations and financial condition.
(7) RISK OF EXTERNAL INFLUENCES
The price or our stock could be affected by external influences, which are
beyond our control. Examples of these influences are:
o An abrupt economic change resulting in an unexpected downturn in
demand; o Governmental restrictions or excessive taxes on imports; o
Over-abundance of products and services related to the sanitation
industry;
(8) RISKS OF REDUCED LIQUIDITY OF "PENNY STOCKS"
The Securities and Exchange Commission has adopted regulations that generally
define a "penny stock" as any equity security that has a market price of less
than $5.00 per share and that is not traded on a national stock exchange, NASDAQ
or the NASDAQ National Market System. Now, or sometime in the future, penny
stocks could be removed from NASDAQ or the NASDAQ National Market System or the
securities
7
may become subject to rules of the Commission that imposes additional sales
practice requirements on broker-dealers effecting transactions in penny stocks.
In most instances, unless the purchaser a penny stock is (i) an institutional
accredited investor, (ii) the issuer, (iii) a director, officer, general partner
or beneficial owner of more than five per cent (5%) of any class of equity
security of the issuer of the stock that is the subject of the transaction or
(iv) an established customer of the broker-dealer, the broker-dealer must make a
special suitability determination for the purchase of such securities and have
received the purchaser's prior written consent to the transaction. Additionally,
on any transaction involving the rules of the Commission require, among other
things, the delivery, prior to the transaction, of a disclosure schedule
prepared by the Commission relating to the penny stock market and the risks
associated with investing in penny stocks. The broker dealer also must disclose
the commissions payable to both the broker-dealer and registered representative
and current quotations for the securities. Finally, among other requirements,
monthly statements must be sent to the purchaser of the penny stock disclosing
recent price information for the penny stock held in the purchaser's account and
information on the limited market in penny stocks. Consequently, the penny stock
rules may restrict the ability of broker-dealers to sell the securities and may
affect the ability of purchasers to sell the securities in the secondary market.
(9) RISK DUE TO MINORITY STATUS OF NEW INVESTORS
Our directors and executive officers beneficially own approximately 16,795,000
common shares; approximately 57.25% of the outstanding common stock if all the
shares offered are sold. As a result, these stockholders, if they act as a
group, will have a significant influence on all matters requiring stockholder
approval, including the election of directors and approval of significant
corporate transactions. Such control may have the effect of delaying or
preventing a change in control of the Company.
(10) RISK DUE TO LACK OF FUNDS
The company presently lacks sufficient funds to begin operations. No products or
services are presently being offered.
(11) RISKS DUE TO RESALE RESTRICTIONS IMPOSED BY STATE "BLUE SKY LAWS"
There are state regulations, which might affect the transferability of our
shares. We have not registered its shares for resale under the securities or
"blue sky" laws of any state and we have no plans to register or qualify its
shares in any state. Current shareholders, and persons who desire to purchase
the shares in any trading market that may develop in the future, should be aware
that there may be significant state restrictions upon the ability of new
investors to purchase the securities.
SEC and "blue sky" laws, regulations, orders, or interpretations place
limitations on offerings or sales of securities by development stage companies,
or if such securities represent "cheap stock" previously issued to promoters or
others. These limitations typically provide, in the form of one or more of the
following limitations, that such securities are:
o not eligible for sale under exemption provisions permitting
sales without registration to accredited investors or
qualified purchasers;
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o not eligible for the transactional exemption from registration
for non-issuer transactions by a registered broker-dealer;
o not eligible for registration under the simplified small
corporate offering registration (SCOR) form available in many
states;
o required to be placed in escrow and the proceeds received held
in escrow subject to various limitations; or
o not permitted to be registered or exempted from registration,
and thus not permitted to be sold in the state under any
circumstances.
Virtually all 50 states have adopted one or more of these limitations, or other
limitations or restrictions affecting the sale or resale of stock of development
stage companies, or "cheap stock" issued to promoters or others.
Specific limitations on offerings by development stage companies have been
adopted in:
Alaska Maryland Rhode Island
Arkansas Nebraska South Carolina
California New Mexico South Dakota
Delaware Ohio Tennessee
Florida Oklahoma Utah
Georgia Oregon Vermont
Idaho Pennsylvania Washington
Indiana
Any secondary trading market, which may develop, may only be conducted in those
jurisdictions where an applicable exemption is available or where the shares
have been registered.
ITEM 2. DESCRIPTION OF PROPERTY.
The Issuer has office and equipment that are provided at no charge until the
corporation is able to raise its first round of financing. Karney and Associates
provides the space at Bel Air, Maryland, formally Visalia, California. The
company has located two supply point / distribution sites, Houston, Texas and
Mesa, Arizona that will be secured on a lease basis upon funding. Mr. Karney has
selected and made an offer of $1.7 million for a 50,000 square foot
packaging/cold storage facility for sale in Fresno County, CA. Mr. Karney has
agreed to make an earnest money payment of $25,000 personally should such a
payment be required prior to the time the company becomes operational. Mr.
Karney has also negotiated a lease for a 31,000 square foot facility in Nogales,
Arizona. As with the Fresno facility, Nogales is ready in its current condition
to function in accordance with the company's Food Safe Process guidelines, which
includes the availability of gas, refrigeration, and processing rooms, office
space and equipment, truck bays and open acreage for truck parking. Along with
the 31,000 sq. ft. Nogales facility, eFood acquired a 5-year packing line lease
automatically securing revenue for the company upon taking over the facility.
Mr. Karney has agreed to make earnest money deposits should any be required
before final agreements of sale can be reached. Failure to reach an agreement of
sale for these facilities, or similar facilities, could adversely affect
9
the company's ability to conduct business. Furthermore, if the properties were
to come under Mr. Karney's ownership or control, no assurances can be given that
a final sales contract with the company would be the result of arms length
negotiations with terms favorable to the Company.
ITEM 3. LEGAL PROCEEDINGS.
We know of no material, active or pending legal proceedings against our company,
nor are we involved as a plaintiff in any material proceeding or pending
litigation. There are no proceedings in which any of our directors, officers or
affiliates, or any registered or beneficial shareholder, is an adverse party or
has a material interest adverse to our interest.
ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS.
None.
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PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
There has been no public trading of our stock.
As of May 19, 2003, there were 29,335,000 shares of common stock issued and
outstanding that were held of record by approximately 33 shareholders. We have
12,540,000 outstanding common shares registered for resale by the selling
shareholders in accordance with the Securities Act of 1933 and we are in the
process of applying with the OTC Bulletin Board.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common stock is Signature Stock
Transfer, Inc., One Preston Park, 2301 Ohio Drive, Suite #100, Plano, Texas
75093; telephone (972) 612-4120.
DIVIDEND POLICY
We don't plan to pay dividends at this time. We don't expect to pay dividends on
common stock anytime soon. Our board will decide on any future payment of
dividends, depending on our results of operations, financial condition, capital
requirements, and any other relevant factors.
RECENT SALES OF UNREGISTERED SECURITIES
On February 9, 1998, the Company issued approximately 16,795,000 (post
reorganization equivalent) shares of common stock pursuant to the exemption from
registration contained within Section 4(2) of the Securities Act of 1933 to its
officers and directors for payments made on the Company's behalf during its
formation in the amount of approximately $3,910.
On October 16, 2000, the Company entered into an agreement and plan of
reorganization with Global Procurement Systems, Inc. ("GPS") whereby the Company
acquired GPS. This business combination was accounted for as a reverse merger
with GPS being the surviving entity for financial reporting purposes. As a
result of the acquisition, the Company issued 12,540,000 shares of common stock
in exchange for the outstanding shares of GPS and changed its name to
eFoodSafety.com, Inc.
The merger was recorded as a recapitalization. In connection with this
recapitalization, the number of shares outstanding prior to the merger have been
restated to their post merger equivalents (increased from 360 shares to
16,795,000) and the par value of the Common Stock changed from no par value to
$.0005. All references in the accompanying financial statements to the number of
Common shares and per-share amounts since inception have been restated to
reflect the equivalent number of post merger shares.
In reference to Item 701(b) of Regulation S-B, eFood has not publicly offered
any securities to date.
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ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
We plan to market all services, products and produce from our off-line
supply/distribution facilities through outside sales persons and through a web
site, http://www.e-foods-safety.com, which is currently under construction.
The commencement of operations is contingent upon receipt of funding. The
company requires approximately $1.8 million prior to the commencement of
operations.
These funds will enable our company to be fully operational and generate
revenues in forty-five days from the date of funding. However a specific plan of
operations for the next twelve (12) months has been outlined as follows:
First 45 Days (Pre-Opening)
* Set Up West Coast Facility
* Set Up all administrative operations for the west coast
facility including job descriptions, & hiring for positions
* Set Up Safe Processing Room
* Start Food Safe Audit Program
* Start Quality Condition Inspection Program
* Write Contracts for all services
* Run Through of Food Safe Process
* Begin Patent Process for Food Safe Process
* Start equipment manufacturing of truck washers
* Start writing the specifications for all government agencies
of Food Safe produce, eggs, poultry and meat
Month One
* Food Safe Produce
* Process west coast facility in full operation
* All services in operation at west coast facility
* Set contracts for all food safe products
* Start selling Food Safe Produce to government agencies
* Start retail, food service sales of Food Safe Produce
* Open negotiations for Mexico border facility
* Open truck washing facilities
* Open negotiations for New York/ New Jersey facility
Month Two
* Increase equipment sales
* Open three truck-washing facilities
* Open first Mexico border facility Increase food safe audit
program
* Increase our brand name Food Safe produce sales operations
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Month Three
* Open first facility in New York/ New Jersey
* Increase government contracts
* Expand quality inspection program Increase first operation on
the Mexico border
* Open three more truck washing facilities
* Increase equipment sales
Month Four
* Increase volume of Food Safe produce sales of east and west
facilities
* Introduce seminars reference word food safety
* Increase government services for food safety
* Open two truck-washing facilities
Month Five
* Start the process to open first port facility
* Open next facility on the Mexico border
* Increase Food Safe audit program
* Open five truck-washing facilities
Month Six
* Increase contract client base
* Expand sales for the New York/New Jersey facility
* Open four truck-washing facilities
Month Seven
* Open first port facility on the east coast
* Expand Food Safe audit program to Mexico and Canada
* Expand the government sales program
Month Eight
* Open a concentrated advertising program for our food safe
* Increase client base for inspection, chemical inspection
* Open five truck-washing facilities
Month Nine
* Increase sales at all facilities
* Look for join venture partners
* Open three truck-washing facilities
Month Ten
* Survey international market place
* Start international sale of Food Safe Produce
* Open additional Mexico border facility
* Open four truck-washing facilities
* Start first operation in New Zealand
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Month Eleven
* Increase Sales at all facilities
* Open the Health Food Produce Program
* Open discussion with the Food Drug Administration, Customs and
United States Department of Agriculture for Food Safe Audit
Programs
* Open seven truck-washing facilities
Month Twelve
* Evaluate opening three facilities for the south, central and
northwest United States
* Move into the South American markets
* Increase international Food Safe Audit program
* Expand into the organic produce market
* Open twelve truck-washing facilities
COMPETITION
The on-line food-safe products and services marketplace is in its infancy, with
no dominant business-to- business leader.
The fresh fruits, vegetables and produce industries are extremely competitive
and have become highly fragmented over the years. Operators have been attempting
to hold or increase market share through the development and operating of
traditional sales and distribution outlets. We believe that on-line marketing
will be effective and that others will emulate our business model.
There are presently, to the best of our knowledge, no companies that provide
complete inspection services, processes and equipment. There are, however,
competitors that do provide partial food-safe programs.
We will compete with many different companies regarding certain commodities in
the market place including, but not limited to:
* Dole, Castle & Cook, Del Monte, Baskovitch, Redi Pack,
Grimmway Farms, Tony Vitrano, Fresh Express, T& A, Fresh
America, Sysco, Wal-Mart, K Mart, Costco, Cub Stores, Super
Value, Fresh Point, AmeriServ, Kraft, and Monarch Foods;
* Safeway, Albertons's, Winn Dixie, Publix, Kroger, Food Lion,
Stop & Shop, Wegman's, Giant Foods, Path Mart, Cash & Carry
and Raley's;
* Burger King, Wendy's, McDonald's, In and Out Burger, Chili's
Subway, Hardee's, Jack-in-the Box, White House, What-a-Burger,
PepsiCo, Hyatt Hotels, Marriott Hotels and Hilton Hotels
* Private inspection services such as McDonalds's Inspections
and FBI Inspections.
The only license required will be a PACA (Perishable Agricultural Commodities
Act) License and a State's License issued by the State Department in each state
the company is conducting its business. The Company has not applied for any
licenses to date. The company intends to apply for its PACA license. No other
steps are necessary and the application process will take approximately 30 days
before receipt of the license.
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The management team will eventually consist of approximately ten officers and/or
directors. Six supervisors will oversee the operations divisions at each
distribution center. The employees at each facility will be contracted through
local vendors. The company currently has no paid employees. The company has no
payroll. Mr. Karney, his colleagues, and associates plan to devote one hundred
percent of their professional time to the success of the business upon the
receipt of funding for the proposed plan of operations.
EMPLOYEES
We currently have no paid full time employees.
CRITICAL ACCOUNTING POLICIES
Our critical accounting policies are those which we believe require significant
judgements, often as a result of the need to make estimates about the effect of
matters that are inherently uncertain. A discussion of our critical accounting
policies is set forth in the Notes to our Financial Statements included as part
of this Report.
RECENTLY ENACTED AND PROPOSED REGULATORY CHANGES
From time to time, the Financial Accounting Standards Board ("FASB") issues
pronouncements regarding financial accounting standards, including standards
regarding accounting and reporting standards for business combinations and other
matters. For more information regarding the significant accounting policies and
standards applicable to our operations, see the Notes to the Financial
Statements.
ITEM 7. FINANCIAL STATEMENTS.
The financial statements of the Company and supplementary data are included
beginning immediately following the signature page to this report.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
There are not and have not been any disagreements between the Company and its
accountants on any matter of accounting principles, practices or financial
statements disclosure.
15
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
The management team consisting of the following individuals is conducting the
business of the company:
NAME POSITION AGE
PATRICIA ROSS PRESIDENT/TREASURER/DIRECTOR 60
CLARENCE W. KARNEY CEO/SECRETARY/DIRECTOR 59
LINDSEY LEE CFO 41
SCOTT MCFEE VP OPERATIONS/DIRECTOR 43
RAYMOND KLOCKE DIRECTOR 57
THOMAS GUNN DIRECTOR 62
BUSINESS EXPERIENCE OF DIRECTORS
PATRICIA ROSS is the President/Treasurer and a Director and has served in those
capacities since the merger of DJH International, Inc. and Global Procurement
Systems now renamed eFoodSafety.com, Inc. Ms. Ross has been selected as one of
the ten most influential women in the transportation and travel industry and
honored as one of the 100 most influential women in Arizona. Ms. Ross was with
Prime World Travel, Inc. and succeeded in the turnaround of this net-deficit
organization by achieving a 375% turnaround in annual sales. Ms. Ross was
elected the first woman President of the Chamber of Commerce in Arizona,
selected to represent Arizona at the White House Conference for Small Business
and is currently President of the Board of Directors for the Arizona Small
Business Association.
WILLIAM KARNEY, Chairman and CEO, has over nineteen years experience with the
Federal Government Department of Defense and the USDA. He founded Karney &
Associates and spent fifteen years building the company as a leader in the
operations and inspections of fresh fruit and vegetables from Central America.
Mr. Karney is a member of the United Fresh Fruit and Vegetable Association,
Western Growers Association, Institute of Food Technologists, International Food
Processors, Fresh Cut Produce Association, and the Produce Marketing
Association.
LINDSEY LEE, CFO is a licensed Attorney, CPA and Chartered Financial Analyst.
Mr. Lee was a founding partner in Bond, Taylor and Lee, LLP. Mr. Lee held
positions with Arthur Andersen and Kenneth Leventhal & Company.
SCOTT MCFEE, Director, has over ten years experience in various operational,
distribution and production capacities with Del Monte Fresh Produce. In his most
recent position he was General Manager for Production and Distribution for Del
Monte in Sanger, California, a 250,000 square foot packing and cooling facility.
As G.M., Mr. McFee was responsible for a budget of approximately $14 million per
year and 230 employees. Prior to Del Monte, Mr. McFee was employed at Sea-Land
Service for seven years in various supervisory and advisory positions.
16
RAYMOND KLOCKE, Director, is a former Vice-President of Sales, Marketing and
Business Development for Chiquita Tropical Products. Prior to this position, Mr.
Klocke was Vice-President of Merchandising and Procurement for the Kroger
Company in Cincinnati, Ohio. During his twenty-six years at Kroger, he was held
accountable for the procurement of over two billion pounds of fresh produce and
sales of $85 million while providing leadership to fourteen divisions within the
company. Preceding this position, Mr. Klocke was a Vice-President at Safeway,
one of the world's largest retailers. Mr. Klocke has held posts as Chairman of
the United Way and President of the Produce Marketing Association.
THOMAS GUNN, Director, is a former Chairman and Chief Executive Officer of
Adidas Southwest and a former President of Strohs Beer of Dallas. He is
currently an Advisory Board member for the Republic Bank of Dallas and a board
member of Neuhoff Packing Company. Mr. Gunn is the Executive Director of the
Arizona Small Business Association and is a founder of the Arizona Forum.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires that
our executive officers and directors and persons who own more than 10% of a
registered class of our equity securities file with the Securities and Exchange
Commission initial statements of beneficial ownership, reports of changes in
ownership and annual reports concerning their ownership of our common stock and
other equity securities, on Forms 3, 4 and 5 respectively. Executive officers,
directors and greater than 10% shareholders are required by the Securities and
Exchange Commission regulations to furnish us with copies of all Section 16(a)
reports they file.
To the best of our knowledge, during the fiscal year ended April 30, 2003, all
executive officers, directors and greater than 10% shareholders filed the
required reports in a timely manner.
ITEM 10. EXECUTIVE COMPENSATION.
No compensation is currently being paid by the company to any of the executives.
It is possible that upon completion of an equity financing a compensation
package will be developed, however there is no time frame for the foreseeable
future. The Board of Directors will determine compensation of executives and
shareholders of the company will not have the opportunity to vote on or approve
such compensation. The Board of Directors will be developing a compensation
package that will be within industry standards for executives similarly situated
with other companies in the same industry.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth, as at May 19, 2003, certain information with
respect to the beneficial ownership of our common stock by each shareholder
known by us to be the beneficial owner of more than five percent (5%) of our
common stock, and by each of our current directors and executive officers, and
all executive officers and directors as a group. Each person has sole voting and
investment power with respect to the shares of common stock, except as otherwise
indicated. Beneficial ownership consists of a direct interest in the shares of
common stock, except as otherwise indicated.
17
Name and Shares Percentage of
Address of Beneficially Common
Beneficial Owner Owned (1) Stock
- -------------------------------------------------------------------------------------------------------------------
Joseph Fiore (2)
670 White Plains Rd. Suite 120
Scarsdale, NY 10583 2,802,500 9.55
Ron Sparkman (3)
10616 Brown Fox Trail
Littleton, CO 80125 4,080,000 13.91
Clarence W. Karney
3244 Oakview Drive
Visalia, CA 93277 8,397,500 28.63
Patricia Ross
350 West Caldwell Ave.
Visalia, CA 9327 8,397,500 28.63
All Officers and Directors as a group (4 in number) 16,795,000 57.25
(1) The information contained in this table with respect to beneficial
ownership reflects "beneficial ownership" as defined in Rule 13d-3
under the Exchange Act. All information with respect to the beneficial
ownership of any shareholder has been furnished by such shareholder
and, except as otherwise indicated or pursuant to community property
laws, each shareholder has sole voting and investment power with
respect to shares listed as beneficially owned by such shareholder.
Pursuant to the rules of the Commission, in calculating percentage
ownership, each person is deemed to beneficially own shares subject to
options or warrants exercisable within 60 days of the date of this
Filing, but shares subject to options or warrants owned by others (even
if exercisable within 60 days) are deemed not to be outstanding.
(2) Includes 2,802,500 shares owned by Berkshire Capital Management Co.,
Inc. The company is located at the above address and is under the
control of Mr. Fiore.
(3) Includes 2,040,000 shares owned by Stone Castle Keep Inc., a company
under the control of Mr. Sparkman. The address of Stone Castle Keep,
Inc. is 10616 Brown Fox Trail, Littleton, Colorado, 80125.
CHANGES IN CONTROL
We are unaware of any contract or other arrangement, the operation of which may,
at a subsequent date, result in a change in control of our company.
Presently in the by-laws there are no provisions that could delay a change in
control of the company.
18
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
To the best of the company's knowledge there are no transactions involving any
Director, Executive Officer, any nominee for election as a Director or Officer
or any security holder who is a beneficial owner or any member of the immediate
family of the same. The Global Inspection Service (GIS) concept was created by
Mr. Karney in l997 to provide time-sensitive information on the availability,
grade, and location of fresh fruit and vegetables in the worldwide market place.
This information is designed to be provided to companies, organizations and
individuals involved in sales, purchase, transportation or distribution segments
of the industry. GIS is a sole proprietorship owned by Mr. Karney, however no
definitive agreement has been reached to date regarding the purchase of the GIS
rights by eFoodSafety.com, Inc. The company plans to negotiate an agreement
whereby GIS can be implemented and made a standard service offered by
eFoodSafety.com, Inc. This concept would provide the company the ability to
offer key data to growers, buyers, and sellers in a cost effective manner giving
a uniformity of grading for all markets. Failure to reach a definitive agreement
with Mr. Karney for the right to offer GIS could adversely affect the company's
ability to continue in business. Furthermore, no assurances can be given that a
contract entered into would be the product of arms length negotiations and
result in terms favorable to the Company. International Fumigators, Inc. is a
fumigation company based in Houston, Texas. There is no definitive agreement
between eFood and International Fumigators, however a letter of intent does
exist whereby the companies intend to contract for services including; a.)
Fumigation services at company plant facilities; b.) Distribution of food safe
produce processed at company facilities for distribution to customers in Texas
and Mexico; c.) Export and import fumigation on all eFood produce; and d.)
Purchase of three truck washers for use in a joint operation in the Houston,
Texas area.
19
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
Reports on Form 8-K
None
Exhibits
Exhibits Required by Item 601 of Regulation S-B
(3) ARTICLES OF INCORPORATION AND BY-LAWS
3.1 Articles of Incorporation (incorporated by reference from our
Registration Statement on Form SB-2 as amended on February 4, 2003)
3.2 Corporate Bylaws (incorporated by reference from our Registration
Statement on Form SB-2 as amended on February 4, 2003)
99-1 CEO Certification
99-2 CFO Certification
ITEM 14. CONTROLS AND PROCEDURES
The Company's Chief Executive Officer and Chief Financial Officer have
concluded, based on an evaluation conducted within 90 days prior to the filing
date of this annual report on Form 10-KSB, that the Company's disclosure
controls and procedures have functioned effectively so as to provide those
officers the information necessary whether:
(i) this annual report on Form 10-KSB contains any untrue
statement of a material fact or omits to state a material fact
necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this annual
report on Form 10-KSB, and
(ii) the financial statements, and other financial information
included in this annual report on Form 10-KSB, fairly present
in all material respects the financial condition, results of
operations and cash flows of the Company as of, and for, the
periods presented in this annual report on Form 10-KSB.
There have been no significant changes in the Company's internal
controls or in other factors since the date of the Chief Executive Officer's and
Chief Financial Officer's evaluation that could significantly affect these
internal controls, including any corrective actions with regards to significant
deficiencies and material weaknesses.
20
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
EFOODSAFETY.COM, INC.
By: /s/ Clarence W. Karney
Clarence W. Karney, CEO, Secretary, Director
Date: May 23, 2003
By: /s/ Lindsey Lee
Lindsey Lee, Chief Financial Officer
Date: May 23, 2003
By: /s/ Patricia Ross
Patricia, Ross, President, Treasurer, Director
Date: May 23, 2003
By: /s/ Scott McFee
Scott McFee, VP Operations, Director
Date: May 23, 2003
By:
Raymond Klocke, Director
Date: May 23, 2003
By:
Thomas Gunn, Director
Date: May 23, 2003
21
I, Clarence W. Karney, certify that:
1. I have reviewed this annual report on form 10-KSB of EFoodSafety.com,
Inc.
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this annual report.
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this annual report.
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in exchange act rules 13a-14 and 15d-14) for the registrant and
have:
A) designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this annual report is being prepared;
B) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this annual report (the "evaluation date");
and
C) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the evaluation date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent functions):
A) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
B) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls.
6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: May 23, 2003
By: /s/ Clarence W. Karney
Clarence W. Karney, CEO, Secretary, Director
22
I, Lindsey Lee, certify that:
1. I have reviewed this annual report on form 10-KSB of EFoodSafety.com,
Inc.
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this annual report.
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this annual report.
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in exchange act rules 13a-14 and 15d-14) for the registrant and
have:
A) designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this annual report is being prepared;
B) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this annual report (the "evaluation date");
and
C) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the evaluation date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent functions):
A) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
B) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls.
6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: May 23, 2003
By: /s/ Lindsey Lee
Lindsey Lee, Chief Financial Officer
23
EFOODSAFETY.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
-:-
INDEPENDENT AUDITOR'S REPORT
APRIL 30, 2003 AND 2002
CONTENTS
Page
Independent Auditor's Report...............................................................................F - 1
Balance Sheets
April 30, 2003 and 2002,.................................................................................F - 2
Statements of Operations for the
Years Ended April 30, 2002 and 2001,.....................................................................F - 3
Statement of Stockholders' Equity
Since January 28, 1998 (Inception) to April 30, 2003.....................................................F - 4
Statements of Cash Flows for the
Years Ended April 30, 2003 and 2002......................................................................F - 5
Notes to Financial Statements..............................................................................F - 6
INDEPENDENT AUDITOR'S REPORT
eFoodSafety.com, Inc.
(A Development Stage Company)
We have audited the accompanying balance sheets of eFoodSafety.com,
Inc. (a development stage company) as of April 30, 2003 and 2002, and the
related statements of operations and cash flows for the years ended April 30,
2003 and 2002, and the statement of stockholders' equity from January 28, 1998
(inception) to April 30, 2003. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit 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 eFoodSafety.com,
Inc. (a development stage company) as of April 30, 2003 and 2002, and the
results of its operations and its cash flows for the years ended April 30, 2003
and 2002 in conformity with accounting principles generally accepted in the
United States of America.
The accompanying consolidated financial statements have been prepared
assuming the Company will continue as a going concern. As discussed in Note 1 to
the consolidated financial statements, the Company has suffered recurring losses
from operations and has no established source of revenue. This raises
substantial doubt about its ability to continue as a going concern. Management's
plans in regard to these matters are described in Note 1. These consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Respectfully submitted
/S/ ROBISON, HILL & CO.
Certified Public Accountants
Salt Lake City, Utah
May 21, 2003
MEMBERS OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
MEMBERS OF THE SEC PRACTICE SECTION and THE PRIVATE COMPANIES PRACTICE SECTION
1366 East Murray-Holladay Road, Salt Lake City, Utah 84117-5050
Telephone 801/272-8045, Facsimile 801/277-9942
F - 1
EFOODSAFETY.COM, INC.
(A Development Stage Company)
BALANCE SHEETS
April 30
--------------------------------------
2003 2002
------------------ ------------------
Assets $ - $ -
================== ==================
Liabilities $ 2,525 $ 7,855
------------------ ------------------
Stockholders' Equity:
Common Stock, $.0005 Par Value
Authorized 50,000,000 shares, Issued
29,335,000 at April 30, 2003 and 2002 14,667 14,667
Paid-In Capital 628,458 590,999
Deficit Accumulated During the
Development Stage (645,650) (613,521)
------------------ ------------------
Total Stockholders' Equity (2,525) (7,855)
------------------ ------------------
Total Liabilities and
Stockholders' Equity $ - $ -
================== ==================
The accompanying notes are an integral part of these financial statements.
F - 2
EFOODSAFETY.COM, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
Cumulative
since
January 28,
1998
For the year inception
ended of
April 30, development
---------------------------------------
2003 2002 stage
------------------- ------------------ ------------------
Revenues: $ - $ - $ -
Expenses: 32,129 29,847 645,650
------------------- ------------------ ------------------
Net Loss $ (32,129) $ (29,847) $ (645,650)
------------------- ------------------ ------------------
Basic & Diluted loss per share $ - $ -
=================== ==================
Weighted Average Shares 29,335,000 29,335,000
=================== ==================
The accompanying notes are an integral part of these financial statements.
F - 3
EFOODSAFETY.COM, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
SINCE JANUARY 28, 1998 (INCEPTION) TO APRIL 30, 2003
Deficit
Accumulated
Since
January 28,
1998
Inception of
Common Stock Paid-In Development
Shares Par Value Capital Stage
----------------- ----------------- ------------------ ------------------
Balance at January 28, 1998 (inception) - $ - $ - $ -
February 9, 1998 Issuance of
Stock for cash 16,795,000 8,397 (4,487) -
Capital contributed by shareholder - - 44,154 -
Net Loss - - - (48,064)
----------------- ----------------- ------------------ ------------------
Balance at April 30, 1998 16,795,000 8,397 39,667 (48,064)
Capital contributed by shareholder - - 265,612 -
Net Loss - - - (265,612)
----------------- ----------------- ------------------ ------------------
Balance at April 30, 1999 16,795,000 8,397 305,279 (313,676)
Capital contributed by shareholder - - 246,897 -
Net Loss - - - (246,897)
----------------- ----------------- ------------------ ------------------
Balance at April 30, 2000 16,795,000 8,397 552,176 (560,573)
October 16, 2000 Shares issued for
Acquisition of GPS 12,540,000 6,270 (6,270) -
Capital contributed by shareholder - - 23,101 -
Net Loss - - - (23,101)
----------------- ----------------- ------------------ ------------------
Balance at April 30, 2001 29,335,000 14,667 569,007 (583,674)
Capital contributed by shareholder - - 21,992 -
Net Loss - - - (29,847)
----------------- ----------------- ------------------ ------------------
Balance at April 30, 2002 29,335,000 14,667 590,999 (613,521)
Capital contributed by shareholder - - 37,459 -
Net Loss - - - (32,129)
----------------- ----------------- ------------------ ------------------
Balance at April 30, 2003 29,335,000 $ 14,667 $ 628,458 $ (645,650)
================= ================= ================== ==================
The accompanying notes are an integral part of these financial statements.
F - 4
EFOODSAFETY.COM, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
Cumulative
Since
January 28,
For the year 1998
ended Inception of
April 30, Development
--------------------------------------
2003 2002 Stage
------------------ ------------------ -----------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Loss $ (32,129) $ (29,847) $ (645,650)
Increase (Decrease) in Accounts Payable (5,330) 7,855 2,525
------------------ ------------------ -----------------
Net Cash Used in operating activities (37,459) (21,992) (643,125)
------------------ ------------------ -----------------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Net cash provided by investing activities - - -
------------------ ------------------ -----------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from sale of stock - - 3,910
Capital contributed by shareholder 37,459 21,992 639,215
------------------ ------------------ -----------------
Net cash provided by Financing Activities 37,459 21,992 643,125
------------------ ------------------ -----------------
Net (Decrease) Increase in
Cash and Cash Equivalents - - -
Cash and Cash Equivalents
at Beginning of Period - - -
------------------ ------------------ -----------------
Cash and Cash Equivalents
at End of Period $ - $ - $ -
================== ================== =================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ - $ - $ -
Franchise and income taxes $ - $ - $ -
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
On October 16, 2000, the Company issued approximately 12,540,000 shares
of common stock, par value $.0005, to acquire Global Procurement Systems.
The accompanying notes are an integral part of these financial statements.
F - 5
EFOODSAFETY.COM, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED APRIL 30, 2003 AND 2002
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of accounting policies for eFoodSafety.com, Inc. (a
development stage company) is presented to assist in understanding the Company's
financial statements. The accounting policies conform to generally accepted
accounting principles and have been consistently applied in the preparation of
the financial statements.
Organization and Basis of Presentation
The Company was incorporated in Nevada on October 28, 1996 as DJH
International, Inc. to market products through the Internet. On October 16,
2000, the Company entered into an agreement and plan of reorganization with
Global Procurement Systems, Inc. ("GPS") whereby the Company acquired GPS. This
business combination was accounted for as a reverse merger with GPS being the
surviving entity for financial reporting purposes. As a result of the
acquisition, the Company issued 12,540,000 shares of common stock in exchange
for the outstanding shares of GPS and changed its name to eFoodSafety.com, Inc.
GPS was incorporated under the laws of the State of Nevada on January
28, 1998. Since January 28, 1998 the Company is in the development stage, and
has not commenced planned principal operations.
Nature of Business
The company has no products or services as of April 30, 2003. The
Company was organized as a vehicle to provide methods and products to ensure the
safety of fruits and vegetables being marketed worldwide.
Business Condition
These accompanying consolidated financial statements have been prepared
on a going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities and commitments in the normal course of business. As
of April 30, 2003, the Company has accumulated operating losses of $645,650
since its inception. The continuation of the Company is dependent upon the
continuing financial support of directors and stockholders. It is the intention
of the Company to raise new equity financing of approximately $1,800,000 within
the upcoming year. Amounts raised will be used to implement the company's plan
of operations. While the Company is expending its best efforts to achieve the
above plans, there is no assurance that any such activity will generate funds
that will be available for operations.
These conditions raise substantial doubt about the Company's ability to
continue as a going concern. These financial statements do not include any
adjustments that might arise from this uncertainty.
F - 6
EFOODSAFETY.COM, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED APRIL 30, 2003 AND 2002
(Continued)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents to the extent the funds are not being held for investment
purposes.
Pervasiveness of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles required management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Earnings (Loss) per Share
Basic loss per share has been computed by dividing the loss for the
year applicable to the common stockholders by the weighted average number of
common shares outstanding during the years. There were no common equivalent
shares outstanding at April 30, 2003 and 2002.
Concentration of Credit Risk
The Company has no significant off-balance-sheet concentrations of
credit risk such as foreign exchange contracts, options contracts or other
foreign hedging arrangements. The Company maintains the majority of its cash
balances with one financial institution, in the form of demand deposits.
NOTE 2 - INCOME TAXES
As of April 30, 2003, the Company had a net operating loss carryforward
for income tax reporting purposes of approximately $645,000 that may be offset
against future taxable income through 2023. Current tax laws limit the amount of
loss available to be offset against future taxable income when a substantial
change in ownership occurs. Therefore, the amount available to offset future
taxable income may be limited. No tax benefit has been reported in the financial
statements, because the Company believes there is a 50% or greater chance the
carryforwards will expire unused. Accordingly, the potential tax benefits of the
loss carryforwards are offset by a valuation allowance of the same amount.
F - 7
EFOODSAFETY.COM, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED APRIL 30, 2003 AND 2002
(Continued)
NOTE 3 - DEVELOPMENT STAGE COMPANY
The Company has not begun principal operations and as is common with a
development stage company, the Company has had recurring losses during its
development stage. The Company's financial statements are prepared using
generally accepted accounting principles applicable to a going concern which
contemplates the realization of assets and liquidation of liabilities in the
normal course of business. However, the Company does not have significant cash
or other material assets, nor does it have an established source of revenues
sufficient to cover its operating costs and to allow it to continue as a going
concern. In the interim, shareholders of the Company have committed to meeting
its minimal operating expenses.
NOTE 4 - COMMITMENTS
As of April 30, 2003 all activities of the Company have been conducted
by corporate officers from either their homes or business offices. Currently,
there are no outstanding debts owed by the company for the use of these
facilities and there are no commitments for future use of the facilities.
NOTE 5 - COMMON STOCK TRANSACTIONS
On February 9, 1998, the Company issued approximately 16,795,000 shares
(post reorganization equivalent) of common stock to its officers and directors
for payments made on the Company's behalf during its formation in the amount of
approximately $3,910.
On October 16, 2000, the Company entered into an agreement and plan of
reorganization with Global Procurement Systems, Inc. ("GPS") whereby the Company
acquired GPS. This business combination was accounted for as a reverse merger
with GPS being the surviving entity for financial reporting purposes. As a
result of the acquisition, the Company issued 12,540,000 shares of common stock
in exchange for the outstanding shares of GPS and changed its name to
eFoodSafety.com, Inc.
The merger was recorded as a recapitalization. In connection with this
recapitalization, the number of shares outstanding prior to the merger have been
restated to their post merger equivalents (increased from 360 shares to
16,795,000) and the par value of the Common Stock changed from no par value to
$.0005. All references in the accompanying financial statements to the number of
Common shares and per-share amounts since inception have been restated to
reflect the equivalent number of post merger shares.
F - 8
EFOODSAFETY.COM, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED APRIL 30, 2003 AND 2002
(Continued)
NOTE 6 - RELATED PARTY TRANSACTIONS
During the years ended April 30, 2003 and 2002, shareholders have paid
general and administrative expenses on behalf of the Company. These payments
have been recorded as expenses and as paid-in capital to the Company. The amount
of paid-in capital contributed by shareholders totaled $37,459 and $21,992 for
the years ended April 30, 2003 and 2002 respectively.
F - 9
EXHIBIT 99.1
CEO CERTIFICATION
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of EFoodSafety.com, Inc. on Form 10-KSB for
the period ending April 30, 2003, as filed with the Securities and Exchange
Commission on the date hereof (the "Report"), I, Clarence W. Karney, CEO,
Secretary, Director of the Company, certify, pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to
the best of my knowledge and belief:
(1) the Report fully complies with the requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in
all material respects, the financial condition and result of
operations of the Company.
By: /s/ Clarence W. Karney
Clarence W. Karney, CEO, Secretary, Director
Date: May 23, 2003
24
EXHIBIT 99.2
CFO CERTIFICATION
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of EFoodSafety.com, Inc. on Form 10-KSB for
the period ending April 30, 2003, as filed with the Securities and Exchange
Commission on the date hereof (the "Report"), I, Lindsey Lee, Chief Financial
Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of
my knowledge and belief:
(1) the Report fully complies with the requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in
all material respects, the financial condition and result of
operations of the Company.
/s/ Lindsey Lee
Lindsey Lee, Chief Financial Officer
Date: May 23, 2003
25