1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Quarter Ended MARCH 31, 1999
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from _____ to _____
Commission File Number: 0-28444
EPL TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Colorado 84-0990658
(State of incorporation) (I.R.S. Employer Identification Number)
2 INTERNATIONAL PLAZA, SUITE 245
PHILADELPHIA, PA 19113-1507
(Address of principal executive offices) (Zip Code)
(610) 521-4400
(Telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
[X] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
11,903,009 shares of $0.001 par value common stock
outstanding as of April 30, 1999.
2
EPL TECHNOLOGIES, INC.
INDEX
Page
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
A. CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 1999 AND DECEMBER 31, 1998 1
B. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998 2
C. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998 3
D. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 9
CONDITION AND RESULTS OF OPERATIONS.
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION 16
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. 16
SIGNATURES. 17
3
EPL TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, DECEMBER 31,
1999 1998
------------- -------------
(UNAUDITED) *
ASSETS
CURRENT ASSETS
Cash and cash equivalents $1,490,881 $1,831,139
Accounts receivable, net 5,847,698 6,419,712
Inventories 4,007,442 4,275,490
Prepaid expenses and other current assets 1,728,301 1,462,663
------------- ------------
Total Current Assets 13,074,322 13,989,004
------------- ------------
PROPERTY AND EQUIPMENT, Net 11,394,938 11,724,648
------------- ------------
OTHER ASSETS
Patent, net 876,280 901,285
Goodwill 2,819,116 2,921,061
Other intangibles, net 172,835 181,964
Other noncurrent assets 59,821 53,546
------------- ------------
Total Other Assets 3,928,052 4,057,856
------------- ------------
TOTAL ASSETS $28,397,312 $29,771,508
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $6,849,786 $6,469,055
Accrued expenses 1,813,818 1,210,129
Other liabilities 1,212,321 705,029
Notes payable 975,000
Current portion of long-term debt 328,558 474,098
------------- ------------
Total Current Liabilities 11,179,483 8,858,311
LONG TERM DEBT 3,415,882 3,683,604
DEFERRED INCOME TAXES 75,301 77,964
------------- ------------
Total Liabilities 14,670,666 12,619,879
------------- ------------
CONVERTIBLE SERIES D PREFERRED STOCK 11,491,813 12,846,586
NON-REDEEMABLE PREFERRED STOCK, COMMON STOCK
AND OTHER SHAREHOLDERS' EQUITY
Convertible Series A Preferred Stock 60,000 60,000
Common Stock 11,903 11,511
Additional paid-in capital 39,982,926 38,442,213
Accumulated deficit (37,808,059) (34,651,720)
Accumulated other comprehensive (loss)/income (11,937) 443,039
------------- ------------
Total Shareholders' Equity 2,234,833 4,305,043
------------- ------------
TOTAL LIABILITY AND SHAREHOLDERS' EQUITY $28,397,312 $29,771,508
============= ============
* Condensed from audited financial statements
The accompanying notes are an integral part of these condensed financial
statements.
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EPL TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
March 31,
------------------------------
1999 1998
----------- -----------
Sales $ 7,757,530 $ 7,235,020
Cost of sales 7,713,818 6,075,427
----------- -----------
Gross profit 43,712 1,159,593
Selling, general and administrative expenses 1,922,620 1,882,968
Research and development costs 582,357 420,451
Depreciation and amortization 525,492 390,310
----------- -----------
Loss from operations (2,986,757) (1,534,136)
Interest expense, net 49,562 21,796
Net income from unconsolidated affiliates (3,813)
----------- -----------
Net loss $(3,032,506) $(1,555,932)
Accretion, discount and dividends on preferred stock 123,833 1,350,972
----------- -----------
Net loss applicable to common shareholders $(3,156,339) $(2,906,904)
=========== ===========
Basic loss per common share $ (0.27) $ (0.32)
=========== ===========
The accompanying notes are an integral part of these condensed financial
statements.
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EPL TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31,
-------------------------------
1999 1998
----------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($3,032,506) ($1,555,932)
Adjustments to reconcile net loss to net cash
used in operating activities 525,492 386,205
Loss on foreign currency translation (454,976) (96,582)
Minority interest 3,813
Changes in assets and liabilities 2,128,743 487,279
----------- -----------
Net cash used in operating activities (829,434) (779,030)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets (447,559) (521,543)
Proceeds from sale of fixed assets 2,405
----------- -----------
Net cash used in investing activities (447,559) (519,138)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from exercise of options/warrants 62,500 30,663
Proceeds from short term debt 975,000
Proceeds from long term debt 38,384
Repayment of long term debt (100,765) (112,012)
----------- -----------
Net cash provided by/(used in) financing activities 936,735 (42,965)
----------- -----------
DECREASE IN CASH AND CASH EQUIVALENTS (340,258) (1,341,133)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 1,831,139 3,756,956
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,490,881 $ 2,415,823
=========== ===========
SUPPLEMENTAL DISCLOSURES OF NON-CASH
FINANCING ACTIVITIES:
Accretion of warrants, discount, increased value and
issuance costs related to preferred stock $ 123,833 $ 1,287,000
The accompanying notes are an integral part of these condensed financial
statements.
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EPL TECHNOLOGIES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The financial information of EPL Technologies, Inc. and Subsidiaries
(the "Company") included herein is unaudited; however, such information reflects
all adjustments (consisting solely of normal recurring adjustments) which are,
in the opinion of management, necessary for a fair statement of results for the
interim period.
The financial information has been prepared in accordance with generally
accepted accounting principles for interim financial information, the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly it does
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. Moreover, the results
of operations for the three months ended March 31, 1999 are not necessarily
indicative of the results to be expected for the full year. At this stage of the
Company's development, month to month and quarter to quarter anomalies in
operating results should be expected. This information must also be read in
connection with the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998.
NOTE 2 - OPERATIONS
EPL Technologies, Inc. develops, manufactures and markets complementary
proprietary technologies designed to maintain the quality and integrity of
fresh-cut produce. The Company's primary products are processing aids and
packaging materials, together with a range of scientific and technical services
that the Company believes support and complement its product offerings. The
Company's continued ability to operate is dependent upon its ability to maintain
adequate financing and to achieve levels of revenues necessary to support its
cost structure, of which there can be no assurance. The process by which the
Company develops and sells its integrated systems solutions for certain kinds
and varieties of fresh-cut produce is both expensive and time-consuming. After
preliminary discussions with a potential customer, the Company performs a
comprehensive review of the potential customer's methods and facilities and
initiates a series of tests in an effort to tailor the application of the
Company's proprietary and other technologies to the kind or variety of produce
to be processed. The Company also works closely with the potential customer to
develop a detailed protocol to be followed in processing such produce. Once the
development of this integrated systems solution is substantially complete, the
Company conducts increasingly sophisticated tests in an effort to refine the
prescribed solution before the customer makes any purchase decision. Although
the Company believes it has improved its sales efforts significantly, the
Company's product development and sales process continues to be lengthy and
resource-intensive and could limit the Company's growth. Additionally, limited
awareness of the Company and its products in the marketplace and the highly
fragmented nature of the fresh-cut produce industry may extend the Company's
product development and sales process. The Company does not believe that this
process is likely to shorten significantly. Management believes that success in
this sales process with large processors is the primary basis for developing
sustainable growth in revenues, which will enable the Company to achieve
profitable operations in this area of the business, although there can be no
assurance such will be the case. The nature of the packaging materials business
is such that the sales process is shorter than that for processing aids, but
there is still an approval process to be completed with new customers prior to
sale.
The Company's management believes that cash flows from consolidated
operations, existing resources, borrowing opportunities and financing received
to date in 1999, should be sufficient to meet the Company's operating needs for
the next 12 months. There could be no assurance, however, that the Company's
borrowing opportunities will result in a debt financing and, in any event, the
Company may be required to seek additional debt or equity financing to meet its
operating needs and to implement its growth strategy. See also Note 7 and
"Management's Discussion and Analysis of Financial Condition and Results of
Operation" below.
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NOTE 3 - INVENTORIES
Inventories consisted of the following:
March 31, 1999 December 31, 1998
-------------- -----------------
Raw Materials and Supplies $ 1,984,601 $ 2,594,370
Finished Goods 2,022,841 1,681,120
------------ ------------
Total Inventories $ 4,007,442 $ 4,275,490
=========== ===========
NOTE 4 - INTANGIBLE ASSETS - PATENTS AND GOODWILL
Patents are amortized over the shorter of their estimated useful
lives or the life of the patent. The net book value of acquired and developed
patents totaled $876,280 as of March 31, 1999. Amortization expense related to
patents totaled $25,005 for the three months ended March 31, 1999. Goodwill
related to the acquisition of certain subsidiaries is being amortized on a
straight line basis over ten years. Amortization expense related to goodwill and
other intangible assets totaled $113,328 for the three months ended March 31,
1999.
NOTE 5 NOTES PAYABLE
In March 1999, the Company obtained short-term revolving credit
facilities in an aggregate amount of $1,000,000 from the Company's Chairman and
Chief Executive Officer ($500,000) and other private investors ($500,000). The
Company's obligations under the facilities are unsecured and amounts outstanding
there under bear interest at a rate of nine percent (9%) per annum and are due
on the earlier to occur of (a) demand for payment and (b) June 30, 1999. As of
March 31, 1999, the Company has drawn $975,000 under these facilities.
On March 30, 1999 the Company entered into a $3.0 million credit
facility with a UK asset management and investment advisory firm, for a term of
18 months until September 30, 2000. The Company will be able to make draws
against the facility when it requires funds for working capital and other
purposes. The interest rate applicable to the facility balances will be 2.25%
over the US Prime Rate with a minimum rate of 9.0% accruing daily on the
outstanding balance on the loan. The Company may repay any amounts drawn under
the facility at any time. There were no amounts drawn under the facility as of
March 31, 1999.
NOTE 6 - CONVERTIBLE PREFERRED STOCK
The Company's 10% Series A Convertible Preferred Stock (the "Series
A Stock"), which has been issued up to its authorized limit of 3,250,000, was
issued at a price of $1.00 per share, with each share of Series A Stock carrying
the option to convert into common shares at a rate of $1.50 per share. The
Series A Stock carries equal voting rights to the common shares, based on the
underlying number of common shares after conversion. The Series A Stock carries
a dividend rate of 10% per annum, payable in cash and/or common shares ($1.50
per share) at the Company's option (dividends in arrears at March 31, 1999
totaled $1,416,192).
During the three months ended March 31, 1999, no shareholder holding
shares of Series A Stock elected to exercise their right of conversion, leaving
60,000 shares of Series A Stock outstanding at March 31, 1999. In addition, 20%
of the common stock into which the Series A Stock may be converted carried
detachable warrants at an exercise price of $2.00 per warrant. All of these
warrants have now been exercised or have expired.
At the Annual Meeting of the Company's shareholders held on July 22,
1996, the shareholders of the Company authorized the issuance of up to 2,000,000
shares of preferred stock (the "Board Designated Preferred Stock") with such
designations and preferences as the Company's Board of Directors may determine
from time to time. On July 23, 1996, the Company issued 531,915 of these shares
- - - designated 10% Series B Convertible Preferred Stock - at an aggregate
consideration of $2,500,000 to two existing investors in the Company (the
"Series B Stock"). During 1997, the shareholders of the Series B Stock elected
to fully exercise their right of conversion into common stock and thus there
were no shares of Series B Stock outstanding at March 31, 1999. The Series B
Stock carried a dividend of 10% per annum, payable in cash and/or shares ($9.40
per share) at the Company's option. The outstanding dividends on the Series B
Stock at March 31, 1999 totaled $270,092.
During 1997, the Company received gross proceeds of $1.0 million
from an existing institutional stockholder in connection with a private offering
of common and Board Designated Preferred Stock. This resulted in the issuance of
43,750 shares of common stock, together with 144,444 shares of Board Designated
Preferred Stock --designated Series C Convertible Preferred Stock (the "Series C
Stock"). Such issuance was made under Regulation D under the Securities Act of
1933, as amended, as a transaction not involving a public offering. The Series C
Stock carries the option to convert into such number of shares of common stock
as is determined by dividing $4.50 by the conversion price (as defined in the
documentation for the Series C Stock) in effect at the time of conversion for
each share of Series C Stock and votes as a class, except as otherwise provided
by law, with the Series A Stock, the Series B Stock and the common stock, based
on the underlying number of shares of common stock after conversion. The extent
of the beneficial conversion feature, representing the difference between the
$9.00 conversion price and the prevailing
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market price of the common stock at the date of issuance, a total of $72,222,
was accreted immediately upon issuance. The Series C Stock carried a dividend
rate of 10% per annum, payable in cash and/or shares at the Company's option.
During 1998, the stockholder elected to fully exercise their right of conversion
into 72,222 shares of common stock and thus there were no shares of Series C
Stock outstanding at March 31, 1999. Dividends in arrears on the Series C Stock
at March 31, 1999 totaled $49,239. In connection with the issuance of the Series
C Stock, the Company issued warrants to purchase 30,993 shares of the Company's
common stock at an exercise price of $10.00 per share. The value of these
warrants will be accreted over the estimated lives of these warrants (5 years).
At the Annual Meeting of the Company held on July 21, 1997, the
shareholders of the Company approved an increase in the number of shares of
Board Designated Preferred Stock reserved for issuance from 2,000,000 to
4,000,000. During 1997, the Company issued a further 12,500 shares of Board
Designated Preferred Stock designated Series D Convertible Preferred Stock - at
an aggregate consideration, before associated costs and expenses, of
$12,500,000, to three new institutional investors (the "Series D Stock"). Such
issuance was made under Regulation D under the Securities Act of 1933, as
amended, in a transaction not involving a public offering. The Series D Stock
certificate of designation contains provisions which, in certain circumstances
outside of the Company's control, could provide the holders of Series D Stock
with the ability to redeem their shares. The amount to be paid by the Company in
the event of a redemption would be calculated as the greater of (a) 115% of the
stated value of the Series D stock plus 4% appreciation accrued from the
issuance date to the redemption date of (b) the "parity value" of the shares to
be redeemed, which is calculated as the number of shares issuable upon
conversion multiplied by the closing price on the redemption date.
The Series D Stock carries the option to convert into shares of
common stock at a variable rate, based on the stated value ($1,000) divided by
94% of the prevailing market price at the time of conversion, as calculated
based on the lowest five-day average closing bid price per share of Common Stock
during a specified period of time, and subject to certain limitations. The
extent of the beneficial ownership feature, representing the 6% discount from
the market price at the conversion date, a total of $800,000, was accreted over
the earliest period after which all such shares were convertible, or nine months
(the "Conversion Period"). In addition the Series D Stock agreement contains a
provision whereby the stated value of the Series D Stock is to increase by 4%
per annum, accruing from the date of issuance until conversion. In connection
with the issuance of the Series D Stock, the Company issued 201,614 warrants to
purchase the Company's common stock at an exercise price of 130% of the closing
price on the issuance date (i.e. $20.16 per share). The fair value of these
warrants ($1,200,000) was accreted over the Conversion Period of the Series D
Stock. Holders of the Series D Stock have limited voting rights and are not
entitled to any dividends. During the three months ended March 31, 1999, the
holders of 1,400 of these shares elected to exercise their right of conversion
into shares of common stock, leaving 10,900 shares of Series D Stock outstanding
at March 31, 1999.
NOTE 7 - ISSUANCE OF COMMON STOCK AND EXERCISE OF OPTIONS
A total of 392,405 shares of common stock were issued, in
transactions not involving a public offering under the Securities Act of 1933,
as amended, during the three months ended March 31, 1999: 367,045 upon the
conversion shares of the Series D stock and 25,000 on the exercise of previously
issued stock options. The exercise of options resulted in net proceeds of
$62,500.
NOTE 8 - NET LOSS PER COMMON SHARE
Net loss per common share is computed by dividing the loss
applicable to common shareholders by the weighted average number of common
shares and common shares outstanding during the period. For the periods ended
March 31, 1999 and 1998, the potential common shares have an antidilutive effect
on the net loss per common share for common shareholders. Accordingly, diluted
net loss per common share for common shareholders has not been presented.
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NOTE 9 - COMPREHENSIVE LOSS
The total comprehensive loss for the three months ended March 31,
1999 and 1998 was $3,487,482 and $1,648,375 respectively. The adjustment to
arrive at the total comprehensive loss for each period consists of foreign
currency translation.
NOTE 10 - INDUSTRY AND GEOGRAPHIC AREA SEGMENT INFORMATION
The Company is a leading developer and marketer of integrated
produce systems solutions specifically designed to address the needs of the
rapidly growing market for fresh-cut produce. These products fall into two major
classifications; processing technologies and related activities and packaging
materials. Processing technologies are designed to inhibit the enzymatic
degradation that causes fruits and vegetables to begin to deteriorate
immediately after processing and are sold primarily in the United States with
smaller amounts also sold in Canada. This category also includes activities of
the Company's fresh-cut corn and potato products, as well as provision of
scientific and technical services in the United States. The Company's produce
packaging business involves perforating, converting and printing of flexible
packaging, including technologies and processes that are proprietary to the
Company, which are marketed in North and South America, the United Kingdom and
Continental Europe.
The following table summarizes the Company's financial information
by industry segment.
Three Months Ended March 31,
1999 1998
Sales:
Processing technologies and
related activities $ 1,809,326 $ 980,470
Packaging materials 5,948,204 6,254,550
----------- -----------
Total sales $ 7,757,530 $ 7,235,020
=========== ===========
Net (Loss) Income from Operations:
Processing technologies and
related activities $(3,078,061) $(1,659,257)
Packaging materials 91,304 125,121
----------- -----------
Total net (loss) income from operations $(2,986,757) $(1,534,136)
=========== ===========
NOTE 11 - NEW ACCOUNTING PRONOUNCEMENTS
In April 1998, the Accounting Standards Executive Committee of the
AICPA issued Statement of Position ("SOP") 98-5, Reporting on the Costs of
Start-up Activities. This SOP provides guidance on the financial reporting of
start-up costs and organizational costs. It requires costs of start-up
activities and organization costs to be expensed as incurred. This SOP is
effective for fiscal years beginning after December 15, 1998 and, as such, the
Company has adopted it as of January 1, 1999. Adoption of this SOP did not have
a material impact on its consolidated financial position or results of
operations.
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In June 1998, the FASB issued SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities. This statement establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts collectively referred to as
derivatives, and for hedging activities. It requires that an entity recognize
all derivatives as either assets or liabilities in the consolidated balance
sheet and measure those statements at fair value. This statement is effective
for fiscal years beginning after June 15, 1999, although early adoption is
encouraged. The Company has not yet determined the impact SFAS No. 133 will have
on its consolidated financial position or results of operations.
- 8 -
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
OVERVIEW
The Company is a leading developer and marketer of integrated
produce systems solutions specifically designed to address the needs of the
rapidly growing market for fresh-cut produce. In this regard, the Company
develops, manufactures and markets proprietary produce processing technologies,
packaging technologies, and scientific and technical services, which are
specifically designed to maintain the quality and integrity of fresh-cut
produce. The foundation of the Company's integrated systems solutions is its
proprietary produce processing aid technology, which inhibits the natural
enzymatic degradation of fruits and vegetables after they have been processed.
Fresh-cut fruits and vegetables that are treated with the Company's proprietary
processing aids better maintain their natural characteristics such as color,
texture, taste and smell. The use of the Company's processing aids allows for
increased availability of certain fresh-cut produce products, such as sliced
apples, potatoes and corn. The Company has concluded that the use of the
Company's processing aids, in accordance with the Company's recommended
protocols, is "generally recognized as safe" ("GRAS") under FDA regulations. The
Company also uses a variety of film technologies to create packaging
specifically designed to complement and enhance the effectiveness of the
Company's processing aids by allowing fruits and vegetables to "breathe" after
they have been cut and packaged. The Company markets these packaging products to
produce growers and processors. In addition, the Company's scientific and
technical services, which include food safety and microbiological testing,
provide fresh produce processors with expertise in food safety, post-harvest
horticulture and processing techniques, and support the cross-marketing efforts
for the Company's other products. The Company believes its processing aids are
safe and environmentally "friendly" and, together with its packaging and
scientific and technical services, add significant value to the businesses of
its customers. In addition to its integrated systems solutions for fresh-cut
produce, the Company also markets flexible packaging for uses in the snack food,
bakery and confectionery industries and for other uses.
THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31, 1998
Sales. Sales increased from $7,235,000 in the three months ended
March 31, 1998 to $7,758,000 in the three months ended March 31, 1999, an
increase of $523,000 or 7%. Sales of processing technologies and related
activities increased from $981,000 in the three months ended March 31,1998 to
$1,809,000 in the three months ended March 31, 1999, an increase of $828,000 or
85%. Sales of US packaging materials fell from $824,000 in the three months
ended March 31, 1998 to $680,000 in the three months ended March 31,1999, a
decrease of $144,000 or 18%. Sales of UK packaging materials fell from
$3,178,000 in the three months ended March 31, 1998 to $2,716,000 in the three
months ended March 31, 1999, a decrease of $462,000 or 15%. Sales of European
packaging materials rose from $2,252,000 in the three months ended March 31,
1998 to $2,553,000 in the three months ended March 31, 1999, an increase of
$301,000 or 13%.
The increase in sales of processing technologies and related
activities was mainly due to the significant growth in the volume of fresh-cut
corn sold through the Company's majority-owned affiliate, NewCornCo LLC
("Newcorn"). In an effort to secure a consistently available supply of raw
material, the Company in 1998 entered into supply agreements with a number of
corn growers located in various regions throughout the US and Mexico. Building
on this, further development has occurred in 1999. In light of increasing sales
volume and capacity constraints and in an effort to provide capacity for future
growth, Newcorn relocated its West Coast operations into a newly leased
facility in Camarillo, CA ("Camarillo Facility") in the third quarter of 1998.
In addition to significantly increasing Newcorn's processing capacity,
management expects that the Camarillo Facility will enhance operating
efficiencies. Newcorn has also constructed a new 35,000 square foot facility
located in Darien, Wisconsin (the "Darien Facility") to further increase
processing capacity, which was completed shortly after the end of the 1999 first
quarter. Management expects that this new facility will enable Newcorn to extend
the geographic reach of its food products, with shipments from this new facility
targeted principally at the Midwest and East Coast markets of the US.
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12
In October 1998, Newcorn received formal approval from The Sholl
Group II, the exclusive licensee of the "Green Giant(R) Fresh" brand from the
Pillsbury Company, to sell fresh-cut corn processed at the Camarillo Facility
under the "Green Giant(R) Fresh" brand name. Sales under the "Green Giant(R)
Fresh" brand began in late October 1998. Following the recent approval of the
Darien Facility, shipments are expected to begin from there shortly, but will
not make a meaningful contribution to group revenue until the second half of
1999. Management expects that sales of fresh-cut corn under the "Green Giant(R)
Fresh" brand will supplement sales of fresh-cut corn made under Newcorn's "Somis
Creek(R)" and "Fresh Traditions(TM)" brands. Management believes that the
capacity constraints and disruption caused by the work on the Darien Facility
inhibited sales growth in 1999, but it is unable to quantify the extent to which
sales were affected.
The Company also experienced significant growth in the volume of
fresh-cut potato products sold by its EPL Food Products, Inc. subsidiary under
the "Green Giant(R) Fresh" brand name.
The Company is continuing to focus on the sale and development of
its processing technologies, particularly with respect to corn, potatoes and
apples. In addition, the Company has obtained (i) US patent protection for a
processing-aid based technology designed to eliminate the use of ice in shipping
boxes of processed broccoli, (ii) an exclusive license for patented technology
developed in collaboration with Penn State University for use on freshly
harvested mushrooms and (iii) US patent protection for a processing-aid based
technology designed to better maintain the quality and thus enhance the economic
value of whole peeled potatoes. Product testing continues on a number of other
vegetables, and in some cases has been expanded or accelerated, and significant
costs have been incurred to date which have yet to yield material revenues. In
addition, the Company continues to grow its capability in scientific and
technical services, and is seeing an increasing demand for food safety and
hygiene in the produce industry. The Company believes it is well-positioned to
add further value to the operations of fresh-cut processors.
The reduction in U.S. packaging material sales was principally
attributable to timing differences in shipments to large customers in the first
quarter of 1999 versus the same period of 1998. Much of this volume shortfall
should be recovered in the second and third quarter of 1999. Additionally,
certain sales, which were previously reported by the Company, are now assigned
to the Company's unconsolidated joint venture with American National Can
Company, ANC-Respire, LLC and, therefore, are no longer reported as sales in the
Company's Statement Of Operations. During 1998 the Company improved the
operational efficiency of its U.S.-based perforating equipment, leveraging the
knowledge base of the U.K. operations, and identified a number of markets and
applications to target for sales and product development. As a result, the
Company is in the process of increasing the capacity of both its proprietary gas
flame perforating and proprietary microperforating capabilities to take
advantage of market opportunities, which include applications in the produce,
horticultural, bakery and pharmaceutical industries.
Sales of U.K. packaging materials decreased from $3,178,000 in the
three months ended March 31, 1998 to $2,716,000 in the three months ended March
31, 1999, a fall of $462,000 or 15%. This was principally attributable to a
reduced level of sales to Pepsico, as well as an adverse impact of pricing
pressures in the UK, together with a reduction in sales of film to the bakery
industry. This impact, however, was offset by increased sales in other areas, as
the Company continued the execution of its strategic objective to reduce its
dependence on Pepsico and the bakery industry, both of which are lower margin
areas of activity, and focus more on utilizing its proprietary perforating
technology to move into new, higher value-added areas. The Company believes that
its efforts to change product mix is providing a more stable foundation for
sustainable and more profitable growth, although there can be no assurance that
the Company will be successful in this effort. During 1998 the Company's
Respire(R) brand of breathable packaging for fresh produce was launched in the
UK and has been successful in gaining new business. In addition, the Company's
proprietary micro-perforating technology has enabled the Company to win new
business in the area of cooked meat pastry products, although the volume of this
business has not been significant to date. Other applications are currently
under development.
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13
Sales of European packaging materials increased from $2,252,000 in
the three months ended March 31, 1998 to $2,553,000 in the three months ended
March 31, 1999, an increase of $301,000 or 13%. The Company, though its
subsidiary in Spain, Fabbri Artes Graficas Valencia, S.A. ("Fabbri") is
targeting further expansion not only in Spain but in other European countries
and this is beginning to show results. In addition, Fabbri is reducing its
dependency on the citrus crop by increasing its sale of packaging materials used
in fresh produce and other areas. The diversification is planned to continue,
and the Company is working on the launch of the Company's Respire(R) brand of
breathable packaging for fresh produce into Europe. In addition, Fabbri is
seeking to expand its limited revenue derived from South American countries
through existing and new contacts.
Gross Profit. Gross profit fell from $1,160,000 in the three months
ended March 31, 1998 to $44,000 in the three months ended March 31, 1999, a
decrease of $1,116,000 or, as a percentage of sales, from 16% to 0.6%. This
decrease was principally due to the adverse impact of the cost of market
development and sales support within the corn business, as well as in the potato
business. In addition, Newcorn at times was unable to process and sell on a
profitable basis bulk corn which it had committed to purchase, which adversely
impacted gross profit. The impact of these items should be reduced by the
second quarter of 1999 now that the Darien Facility has been completed and
associated start costs expensed. Management believes that this facility will
make meaningful contributions to gross profit by the second half of 1999. Market
development and sales support costs are expected to continue to be incurred in
the future, although their adverse impact on gross profit is expected to
diminish as sales volumes and operating efficiencies improve. The Company also
expects that the relocation of Newcorn's West Coast operations and the Company's
fresh-cut potato processing activities into the Camarillo Facility in late 1998,
together with the recent completion of the Darien Facility, will all
significantly increase processing capacity and help enhance operating
efficiencies in the future.
Gross profit from period to period may also be impacted by pricing
pressures on Newcorn's corn business primarily attributable to the extent to
which bulk corn is available in regions where Newcorn's fresh-cut corn products
are sold, which is largely a function of the timing of and variations in
regional harvest yields. Newcorn enters into fixed price contracts for the
supply of a portion of its bulk corn requirements, the aim of which is to
ensure, where possible, adequate supplies of bulk corn of consistent quality at
a known, fixed price. If market prices for bulk corn are constant or rise,
Newcorn will benefit from such arrangement. However, if market prices fall,
Newcorn may not be able to fully pass on all of its costs if it is unable to
renegotiate contract prices. Management believes changes in prices of raw
materials for its products have not had a material effect on the Company's
results of operations to date; however, as the Company's business becomes more
reliant upon sales of its processing aids and related activities, results of
operations may be more susceptible to the effects of changing prices due to the
pricing of certain kinds of produce, as well as ingredients used in the
Company's processing technologies.
In addition, the Company continues to accelerate the development of
certain applications for its proprietary micro-perforating technology. These
costs are mainly expensed as incurred, although the benefits of this expense in
terms of incremental sales and gross profit, is not expected to commence until
the second half of 1999 and beyond.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased marginally from $1,883,000 in the three months
ended March 31, 1998 to $1,923,000 in the three months ended March 31, 1999, an
increase of $40,000 or 2%. This small increase was due primarily to (i) the
continuing and accelerating development of the Company's sales and marketing
efforts, particularly in the area of sales of processing technologies and
related activities for potatoes, corn and apples, together with packaging
development, and (ii) other costs, including the hiring of additional personnel.
The Company's sales and marketing efforts with respect to processing
technologies and related activities are primarily focused on fresh-cut potatoes,
corn and apples and, to a lesser extent, other produce categories, together with
packaging applications.
Research and Development Costs. Research and development costs
increased from $420,000 in the three months ended March 31, 1998 to $582,000 in
the three months ended March 31, 1999, an increase of $162,000 or 39%. This
reflects the increasing costs of internal scientific activities related to sales
efforts for large potential
- 11 -
14
customers, principally related to mushrooms, potatoes and broccoli, together
with perforated films, as well as external costs from the collaborative work
undertaken with outside institutions. The Company continues to expense all
development costs, whether product, market or sales related, in the year
incurred, and thus costs are incurred prior to the benefits, if any, that may be
expected to be realized from such expense. The Company expects that research and
development costs will continue at no less than recent levels and may increase.
Depreciation and Amortization. Depreciation and amortization
increased from $390,000 in the three months ended March 31, 1998 to $526,000 in
the three months ended March 31, 1999, an increase of $136,000 or 35%. This is
mainly due to the increased depreciation on the increased fixed asset base,
following the capital expenditure in 1998, including work on the Camarillo
Facility and Darien Facility amongst other projects.
Loss from Operations. Loss from operations increased from $1,534,000
in the three months ended March 31, 1998 to $2,987,000 in the three months ended
March 31, 1999, an increase of $1,453,000 or 95%. The increase was primarily due
to an increase in costs, many of which were one time costs as detailed above,
especially the development costs of potatoes and corn, the latter including the
expensing of the start-up costs of the Darien Facility which has recently been
approved for shipment of fresh produce. However, total operating expenses,
excluding depreciation and amortization, only increased by $202,000 or 9%, and
were broadly constant as reflected in total operating expenses as a percentage
of sales. This reflects the continuing leveraging of the Company's
infrastructure through the expansion of the Company's business, and management
believes this leverage should increase further as sales continue to develop.
Management believes that considerable commercial progress continues to be made
and that the foundation for future sustainable growth has been considerably
strengthened. However, because all development costs are expensed as they are
incurred, together with the fact that such expense is necessarily incurred
before the benefits of increased sales and improved margins can be seen, the
Company's financial results do not yet reflect this activity.
Accretion, Discount and Dividends on Preferred Stock. The accretion,
discount and dividends on preferred stock decreased from $1,351,000 for the
three months ended March 31, 1998 to $124,000 in the three months ended March
31, 1999, a decrease of $1,227,000. The decrease was due to completion during
1998 of the amortization of the beneficial conversion feature of the Series D
Stock and accretion of the fair value of warrants issued in connection with the
issuance of the Series D Stock. The 1999 charge primarily represents a 4% per
annum appreciation provision on the outstanding stated value of the Series D
Stock.
YEAR 2000 COMPLIANCE DISCLOSURE
The term "year 2000 issue" is a general term used to describe the
various problems that may result from the improper processing of dates and the
performance of date-sensitive calculations by computers and other equipment as
the year 2000 is approached and reached.
The Company has adopted a written plan (the "EPL Y2K Plan") which
outlines the actions the Company plans to take to identify and address year 2000
issues. The EPL Y2K Plan requires each of the Company's business units to
prepare a compliance plan (a "Unit Plan") which (i) summarizes efforts taken to
identify, prioritize and address year 2000 issues facing such business unit,
(ii) estimates the extent to which these year 2000 issues have been addressed,
and (iii) flags foreseeable problems. The EPL Y2K Plan calls for each Unit Plan
to identify, prioritize and address both "internal" year 2000 issues (those
arising from such unit's computer hardware and software, embedded chips and unit
practices with respect to date entry) and "external" year 2000 issues (those
arising by virtue of material relationships with customers and suppliers which
have year 2000 issues).
The Company has received and reviewed Unit Plans from each of its
business units and has completed its identification of year 2000 issues
reasonably expected to have a material impact on the Company's operations. The
Company currently expects to complete development of its remediation plans for
such material issues by the end of May 1999 and perform any required remediation
prior to September 30, 1999. Although the Company is using its best efforts to
ensure that these dates will be achieved in a timely manner, no assurance can be
given that the Company will not experience delays in executing the EPL Y2K Plan.
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15
The Company is in the process of completing its identification,
prioritizing and communicating with critical suppliers, distributors and
customers to determine the extent to which the Company may be vulnerable to
external year 2000 issues. Detailed evaluations of the most critical third
parties have been initiated through questionnaires, interviews and other means.
The Company believes that each business unit has successfully identified
critical third parties with year 2000 issues. The Company intends to monitor the
progress made by those parties and formulate appropriate contingency plans to
address any year 2000 issues of critical third parties which remain unresolved.
The Company requires each business unit to monitor and report on a
monthly basis the progress made on identifying and addressing such unit's year
2000 issues. Unit plans include any incremental out-of-pocket expenses incurred
by such unit to assess exposure, prepare and implement a remediation plan, test
internal systems, upgrade or replace non-compliant computer hardware and
software and embedded technology and contact critical suppliers and customers.
The Company does not require such units to monitor the cost of using internal
resources (such as salary and related benefit costs) in implementing the EPL Y2K
Plan.
The total estimated cost of the Company's year 2000 project,
excluding the cost of using internal resources, is estimated at approximately
$100,000 and is currently being funded through operating cash flows. Of this
total estimated cost, the Company estimates that approximately $30,000 will be
attributable to the purchase of new hardware and software and will be
capitalized in accordance with the Company's current policies, with the
remaining $70,000 to be expensed as incurred. As of March 31, 1999, the Company
had incurred approximately $25,000 in costs related to its year 2000 project,
all of which had been expensed. The remaining costs are expected to be incurred
over the balance of 1999. This total estimated cost is based on numerous
assumptions, including the continued availability of current employees
responsible for implementing the Company's year 2000 plan, the Company's ability
to identify and remediate its year 2000 issues in a timely manner and the
severity of any year 2000 issues identified. There can be no assurance, however,
that actual costs will not differ materially from this estimate. Factors that
may cause actual costs to vary materially from those currently anticipated
include, but are not limited to, the availability and cost of personnel capable
of implementing the Company's year 2000 plan, the ability to locate and repair
or replace all non-compliant hardware, software and embedded technology in a
timely manner, the ability of critical suppliers and customers to address their
own year 2000 issues adequately.
In addition, year 2000 issues may lead to third party claims, the
impact of which cannot yet be estimated. The Company has product and general
liability insurance policies which provide coverage in the event of certain
product failures. The Company has not purchased insurance specifically designed
to cover year 2000 issues because, in management's view, the cost is
prohibitive. No assurance can be given that the aggregate cost of defending or
resolving such claims, if any, would not have a material adverse effect on the
Company.
The Company believes that the EPL Y2K Plan will allow the Company to
anticipate and resolve any year 2000 issues in a timely manner. In the event,
however, that the Company does not properly identify and resolve year 2000
issues in a timely manner, there can be no assurance that year 2000 issues will
not materially and adversely effect the Company. In addition, disruptions in the
economy generally resulting from year 2000 issues could also materially and
adversely effect the Company. The Company currently believes that the most
reasonably likely worst case scenario is either (i) the failure of a supplier to
resolve in a timely manner its year 2000 issues, which could result in the
temporary slowdown or interruption in the Company's ability to manufacture
products and/or to provide services and increased expenses of automated
functions which must be performed manually, or (ii) the failure of a customer to
resolve in a timely manner its year 2000 issues, which could result in lost
revenues if such customer is unable to continue to purchase products and/or
services from the Company. The amount of potential liability, lost revenue and
incremental expense that would be reasonably likely to result from the failure
by the Company and critical third parties to resolve year 2000 issues in a
timely manner cannot be reasonably estimated at this time.
The Company is using its best efforts to ensure that the impact of
year 2000 issues on its critical systems will not affect its ability to provide
products and services to its customers. The Company has not yet completed its
analysis of the most reasonably likely worst case scenario it is likely to face.
The Company expects to complete its worst case analysis by the end of May 1999,
contingency planning for the worst case scenario by the end of June 1999 and
have its contingency plan in place by the end of the third quarter of 1999. The
Company expects that its contingency plan may include stockpiling raw materials,
increasing inventory levels, securing alternate sources of supply and other
measures.
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16
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1999, the Company had $1,490,881 in cash and short term
investments, compared with $1,831,139 at December 31, 1998, a decrease of
$340,258. During the three months ended March 31, 1999, $829,434 was used in
operating activities. In addition, $447,559 was used in investing activities to
purchase fixed assets. The increase in cash used in operating activities of
$50,404 in the three months ended March 31, 1999 compared to the same period in
1998 reflects the increased net loss, offset by increased non cash adjustments
and more favorable improvements in working capital for the three months ended
March 31, 1999 .
Total financing activities during the three months ended March 31,
1999 generated $936,735, compared with $42,965 used in the same period in
1998. This was primarily from the proceeds of short term debt and the increased
net proceeds from the exercise of previously issued stock options.
As of March 31, 1999, the Company had drawn $645,720 under an
existing line of credit with the Bank of Scotland, entered into by its
subsidiary EPL Technologies (Europe) Limited, for up to $645,720, which bears
interest of 2% over bank base rate (5.5% as of March 31, 1999). The Company also
has a short-term line of credit with the Bank of Scotland for up to
approximately $404,000 which also bears interest of 2% over bank base rate. At
March 31, 1999, approximately $388,000 had been drawn under this facility.
Subsequent to the end of the quarter, the Company negotiated a temporary
increase in this latter facility of an additional $323,000. This increase will
be reviewed again in July 1999. The lines of credit are collateralized by the
assets of EPL Technologies (Europe) Limited and its subsidiaries. The debt
agreements with the Bank of Scotland contain certain covenants applicable to the
results of operations of these businesses which provide for maintenance of
minimum asset levels and minimum earnings before interest and tax to external
interest ratios.
In addition, in July 1998 the Company, through its Spanish
subsidiary Fabbri, finalized with BankInter an unsecured line of credit for
PTS 275,000,000 ($1,786,875 at $1.00:PTS 153.9). This facility was drawn in full
as of March 31, 1999. The facility carries interest of 0.3% over BankInter base
rate (3.0% as of March 31, 1999). There are no covenants applicable to the
facility.
At the end of the third quarter of 1998, Newcorn entered into two
equipment financing loans with General Electric Capital Corporation ("GECC") and
Santa Barbara Bank & Trust ("SBBT") secured by specifically identified capital
assets. The GECC loan is for approximately $549,000 for a term of 48 months
bearing interest at 10.25% per annum. The SBBT loan is for approximately
$466,000 for a term of 48 months payable in equal monthly installments bearing
interest at 10.5% per annum. At March 31, 1999, approximately $492,000 and
$410,000 were outstanding under the GECC and SBBT loans, respectively.
In March 1999, Paul L. Devine, the Company's Chairman and Chief
Executive Officer, agreed to extend to the Company on a short term basis a
revolving credit facility in an amount of up to $500,000, of which $475,000 was
outstanding as of March 31, 1999. The Company's obligations under this facility
are unsecured, and amounts outstanding thereunder bear interest at a rate of
nine percent (9%) per annum and are due on the earlier to occur of (a) demand
for payment and (b) June 30, 1999. The Company has agreed to pay all reasonable
out-of-pocket expenses incurred by Mr. Devine in connection with advancing funds
to the Company under this facility.
Also in March 1999, private investors agreed to extend to the
Company on a short term basis a revolving credit facility in an amount of up to
$500,000, of which $500,000 was outstanding as of March 31, 1999. The Company's
obligations under this facility are unsecured, and amounts outstanding
thereunder bear interest at a rate of 9% per annum and are due on the earlier to
occur of (a) demand for payment and (b) June 30, 1999. The Company has agreed
not to permit any encumbrance on the assets of its Spanish subsidiary Fabbri
without the prior written consent of the lenders under such facility for so long
as any amounts remain outstanding thereunder. The Company has agreed to pay all
reasonable out-of-pocket expenses incurred by such lenders in connection with
advancing funds to the Company under such facility.
On March 30, 1999, Value Management & Research (UK) Limited ("VMR")
and the Company entered into a revolving credit facility in an amount of up to
$3,000,000 (the "VMR Facility"). The VMR Facility expires on September 30, 2000,
and is used for working capital purposes. The Company's obligations under the
VMR Facility are unsecured and bear interest at a rate per annum equal to the US
prime rate plus 2.25%, provided that the applicable interest rate shall be no
less than 9%. The VMR Facility prohibits the Company from (a) encumbering any
assets which are located in Spain and owned by the Company or any of its
subsidiaries or affiliates ( "Spanish Assets")
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17
without the prior written consent of VMR, (b) paying any dividend on shares of
Common Stock so long as any amounts are outstanding under the VMR Facility and
(c) paying any dividend on any preferred stock of the Company without the prior
written consent of VMR. If the Company obtains financing secured by some or all
of the Spanish Assets, then the proceeds of such financing are to be applied to
repay any amounts outstanding under the VMR Facility unless VMR otherwise agree.
The Company has agreed to pay to VMR an arrangement fee equal to 1.5% of the
total amount available under the VMR Facility. No amounts were drawn under this
facility as at March 31, 1999.
At March 31, 1999, the Company had warrants outstanding and
exercisable to purchase 263,857 shares of common stock at a weighted average
price of $17.76 per share, which, if exercised, would provide the Company with
gross proceeds of approximately $4,687,000. In addition, at March 31, 1999, the
Company had 2,038,000 options outstanding and exercisable to purchase shares of
common stock at a weighted average price of $9.01 per share, which, if
exercised, would provide the Company with gross proceeds of up to approximately
$18,364,000. At March 31, 1999, there were no material commitments for capital
expenditures.
Historically, the Company's revenues have not been sufficient to
fund the development of the Company's business, and thus it has had to finance
its operating losses externally principally through equity financing. The
Company's management believes that anticipated cash flows from consolidated
operations, existing resources and financing received, will be sufficient to
meet the Company's operating needs and growth strategy for the next twelve
months. The Company may, however, be required to seek additional debt or equity
financing in the event the Company's actual operating needs exceed those
currently anticipated by management, or the Company's actual cash flows are less
than those currently anticipated by management, or to implement the Company's
growth strategy. No assurances can be given that the Company will be successful
in raising additional capital and failure to raise such capital, if needed,
could have a material adverse effect on the Company's business, financial
condition and results of operations.
FORWARD LOOKING STATEMENTS
Statements in the foregoing discussion that are not statements of
historical fact and reflect the intent, belief or expectations of the Company
and its management regarding the anticipated impact of events, circumstances and
trends should be considered forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements are not guarantees of future performance, and actual results may vary
materially from those projected in the forward-looking statements. Meaningful
factors that might affect such results include, but are not limited to: a) the
Company's needs for capital, including for acquisitions, which needs have been
and are expected to continue to be substantial, and its potential inability to
obtain additional financing on satisfactory terms, b) the Company's product
development and sales process, which is lengthy and resource intensive, c) the
uncertainty of demand for, or the market acceptance of, the Company's products
and services, d) the Company's limited resources and experience in marketing and
selling its products and services, e) personnel resources and production
requirements and potential difficulties in cross-marketing and managing multiple
product lines, f) the Company's potential inability to identify and acquire
acceptable acquisition targets, to the extent necessary to fulfill its expansion
plans, and its potential inability to successfully integrate any such
acquisitions into its operations, g) potential product obsolescence and short
product life cycles, h) potential competition, particularly in the market for
produce packaging, from companies with greater financial, management and other
resources, i) the unpredictability and volatility of the market for agricultural
products, j) changes in U.S. and foreign regulation, k) difficulty with research
and development and sales and marketing activities regarding new and existing
products, including extension of necessary time periods or increase in expense
for product introduction and market penetration, l) potential difficulties in
obtaining or protecting intellectual property rights or the infringement of
proprietary or other rights of the Company by third parties, m) raw material
availability and pricing, n) loss of services of key employees of the Company
and o) delays in the Company's ability to bring into production Newcorn's new
processing facilities, as well as other information contained in the Company's
other filings with the Securities and Exchange Commission.
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18
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
ITEM 5. OTHER INFORMATION.
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a) Exhibits
Exhibit 11.0 Computation of Loss per share
b) Reports on Form 8-K
On February 22, 1999 the Company filed a report on Form 8-K,
under item 5 thereof, incorporating a press release dated
January 22, 1999. This release announced that the U.S. patent
office had granted a new U.S. patent to the Company, the
claims of which are based on fresh-cut potato processing aid
technologies designed to better maintain the quality, and
thus enhance the economic value, of whole peeled potatoes as
they are brought to the consumer.
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19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EPL TECHNOLOGIES, INC.
Date: May 14, 1999 /s/ Paul L. Devine
-----------------------------------------------
Paul L. Devine
Chairman and President
(Principal Executive Officer)
Date: May 14, 1999 /s/ Bruce M. Crowell
----------------------------------------------
Bruce M. Crowell
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
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