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BEACON EQUITY RESEARCH

Analyst: Victor Sula, PhD


Initial Report
August 7th, 2008

FRHV daily 8/06/08


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Fresh Harvest™ Products, Inc. 0.05

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280 Madison Avenue, Ste 1005
volume
New York, New York 10016 USA 400

Tel : (212) 889 - 5904 300

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Fax : (212) 889 - 5731 200

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info@freshharvestproducts.com
www.freshharvestproducts.com Jun Jul Agu
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Market Data

Symbol / Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .OTC BB: FRHV


Current Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$0.23
Price Targe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $0.59 .
Rating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Speculative
. . . . . . . . . . . . Buy
Outstanding Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41.57M
Market Cap. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.56M
Average 3M Volume. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,194

Company Introduction
Fresh Harvest Products Inc. (FRHV) markets and distributes natural and organic
food products and beverages under the Wings of NatureTM brand name. FRHV’s
organic snack products include health bars, coffee bars, tortilla chips and salsa. In ad-
dition, the Company offers several varieties of whole bean and ground coffee, salsas,
olive oils and beverages. FRHV markets its products through specialty and natural
food distributors and stores, specialty supermarkets and mass-market retailers.

FRHV entered the organic food market in 2006 and has made significant progress
in launching and expanding its product lines, as well as building a distribution net-
work. During the first six months of FY 2008, FRHV’s revenue increased 52% year-
over-year as a result of expanded market penetration, improved brand visibility, and
increased marketing efforts. The Company expects to achieve profitability in FY 2010
and plans to continue to grow by acquiring organic food brands, companies and
manufacturers to leverage it to become a vertically integrated food company reach-
ing consumers through retail food outlets.
Analyst: Victor Sula, PhD
Initial Report
August 7th, 2008

Investment Highlights

Business model capitalizing on organic food industry growth

FRHV is a wholesaler of organic food products under the “Wings of Nature™” brand. The Company attracts
consumers by offering high-quality organic foods at competitive prices. The Company’s business strategy is
three-fold: (1) build the Wings of Nature™ brand through new products and expanded distribution channels,
(2) exclusively represent, market, and sell companies and brands under its management team and supply chain
operation, and (3) acquire food manufacturers who complement its existing business.

Award-winning product offerings

FRHV is introducing healthy, great tasting, organic foods to the mass market. The Company’s products include
premium organic olive oil from Spain and Italy, organic coffee from around the world, (including South Ameri-
ca, the United States and Africa), organic salsas, and various organic health bars containing no refined sugar, and
are cholesterol, trans fat and gluten free.

Wings of Nature™ Fruit & Nut and Coffee Bars were recognized with the 2007 Editor’s Pick Award for the Best
New Product “Ahead of What’s Next” Award by Progressive Grocer, a prominent industry publication. Wings
of Nature™ Coffee Bars also received the 2006 Trailblazer of the Year Award, presented by Grocery Headquar-
ters magazine to companies and products expected to become leaders in their field. Wings of Nature™ coffees
were featured in Orca Communications’ Summer 2007 edition of the Best Natural and Organic Products Media
Guide.

Extensive distribution channels


FRHV is building an extensive retail distribution network. At present, the
Company sells its products in approximately 600+ stores, including but
not limited to: ShopRite Supermarkets (Wakefern Foods), Price Chopper
and numerous independent supermarkets. FRHV’s distributors include
the No. 1 gourmet food distributor in the United States and the second-
largest natural and organic food distributor in the United States with an-
nual revenues exceeding $750 million. At present, these distributors offer
FRHV products on a regional basis, but nationwide rollouts are planned
during 2008 and 2009. In addition, the Company is involved in discus-
sions with other national and regional distributors and retailers that
could bring FRHV products to thousands of additional retail outlets.

FRHV is also aggressively marketing its branded organic food offerings


to retailers who are now expanding shelf space for organic foods and
beverages. The Company’s Wings of Nature™ brand will be supported
by advertising and public relations campaigns utilizing new media, as
well as proven traditional platforms and guerilla strategies.

Fresh Harvest Products, Inc. (OTC BB: FRHV) 2


Analyst: Victor Sula, PhD
Initial Report
August 7th, 2008

Enormous market opportunity

Consumer trends favoring organic and natural foods are fueling demand for FRHV products. According to the
Organic Trade Association (OTA), the organic food market will produce consistent double-digit growth over the
next decade. While traditional food producers are reporting modest 2-3% annual growth, organic food compa-
nies are experiencing 20%+ annual growth. Even with this rapid growth, organic food’s penetration is still mod-
est at approximately 3.5% of total food sales.

Annual organic food sales have risen more than $13 billion since 2000 and now represent a $20 billion U.S. mar-
ket. The organic dairy segment generates approximately $3 billion in annual revenues. According to The Nutri-
tion Business Journal, sales of organic dairy products are likely to grow 15% annually through 2010, outpacing
growth in the overall organic food market.

Already generating revenues

FRHV entered the organic food market in 2006, and has made significant progress in launching its product
lines and building a distribution network. The Company increased revenues 52% year-over-year in the first six
months of 2008 to $135,828, reflecting expanded market penetration, greater brand visibility and increased mar-
keting efforts.

Favorable growth outlook

FRHV continues to build its distribution network. The Company is currently working with two of the largest
specialty food distributors in the United States, which will begin distributing FRHV products nationally in 2008.
FRHV is also working with several large regional distributors to introduce its products in new markets and in-
crease the visibility of its brand name.

We expect new distribution agreements and purchase orders to begin impacting revenues in the fourth quarter
of 2008, enabling the Company to record FY 2009 revenues in a $3.0 million range. FRHV anticipates triple-digit
revenue growth though FY 2011 and expects to achieve operating breakeven in FY 2010.

Proven management team

The Company has attracted a seasoned management team and plans to capitalize on its collective industry
knowledge and relationships.

Michael J. Friedman, CEO, chairman and the founder of Fresh Harvest, is an attorney and investment banker
who has consulted in the food industry with many rapidly growing companies. He has worked with companies
ranging in size from start-ups to $6 million in revenues, focusing on expanding their product lines, franchising
and developing new products.

Managing director Arthur Anderson has more than 30 years of food industry experience, most recently as presi-
dent of a major branded sales and marketing company selling premium, upscale, imported brands through re-
tail grocery, food service, health/natural foods, gift packers, convenience stores and mass merchandiser outlets.

COO Dominick Cingari has more than 10 years of food industry experience, most recently as head of sales for
an importer and distributor of gourmet/ethnic food products selling to supermarket chains across the United

Fresh Harvest Products, Inc. (OTC BB: FRHV) 3


Analyst: Victor Sula, PhD
Initial Report
August 7th, 2008

States. He has consulted with various food companies on product development, brand development, marketing
and advertising.

Vice president of sales Michael Scagliarini spent more than 24 years working for Coca-Cola, both with Coca-Cola
Bottling Company of New York Inc. and Coca-Cola Enterprises Inc.

Creative director Roman Mayer has more than 40 years experience in branding, brand positioning, packaging,
corporate identity, advertising and marketing across all media, with a focus on food and beverage manufactur-
ers and retailers.

Company Overview
Business model

FRHV is a provider and marketer of natural and organic food and beverage products. The Company offers
healthy, great-tasting, organic food at affordable prices. FRHV product lines include organic olive oils from
Spain and Italy; organic coffee from around the world, including South America, the United States and Africa;
and organic salsas; and organic health and coffee bars containing no refined sugar, cholesterol, trans fat or glu-
ten.

The Company retails its products under the Wings of Nature™ brand name and has been selling products since
July 2006. Wings of Nature™ Fruit & Nut and Coffee Bars earned the 2007 Editor’s Pick Award for the Best New
Product “Ahead of What’s Next” Award from Progressive Grocer magazine. In addition, Wings of Nature™
Coffee Bars received the prestigious Trailblazer of the Year Award in 2006 from Grocery Headquarters magazine.
This award is given to companies and products expected to become leaders in their fields. FRHV won in the
health & wellness category. Wings of Nature™ Coffees was listed in Orca Communications’ summer 2007 edi-
tion of Best Natural and Organic Products Media Guide. Orca Communications searches through thousands of
new organic and natural products each year to choose the best dozen products.

FRHV has already built a distribution network that extends to approximately 600+ stores and includes ShopRite
Supermarkets (Wakefern Foods), Price Chopper Supermarkets and many independent retailers and market-
ers. FRHV distributors include the No. 1 gourmet food distributor in the United States and the secpnd-largest
natural and organic food distributor. These distributors have approved FRHV products for a nationwide rollout
during 2008 and 2009. The Company also distributes through regional distributors serving New England, the
Mid-Atlantic & Southeast, Puerto Rico, and the Mid-West & the Northeast. Sales are driven by repeat orders and
distributors servicing contract retail outlets.

FRHV intends to continue building on the initial success its Wings of Nature™ brand by extending its distribu-
tion channels, introducing new products, and acquiring organic food companies that are synergistic with its
existing business.

Fresh Harvest Products, Inc. (OTC BB: FRHV) 4


Analyst: Victor Sula, PhD
Initial Report
August 7th, 2008

Products

Fresh Harvest’s current product offerings include the following:

Fresh Harvest Health Bars – USDA Certified Organic

FRHV’s Wings of Nature™ Organic Fruit & Nut and Coffee Bars are manufactured using a cold process that al-
lows them to maintain their natural flavor and texture. Cold processing also preserves all the nutritional proper-
ties of the fruits, nuts and grains inside each bar.

Fresh Harvest Health Bars contain no refined sugar and are cholesterol-free, trans-fat free, low in sodium and
gluten-free. FRHV uses USDA-approved organic sweeteners such as Agave syrup and brown rice syrup in its
health bars. These natural sweeteners are sweeter than sugar but lower in calories and carbohydrates. The health
benefits of a low-calorie sweetener are obvious since the current focus of healthy eating is on lowering the gly-
cemic index, which relates to control of diabetes, heart disease and weight control.

Fruit & nut bars are available in apple cinnamon, almond raisin, cranberry crunch, and nutty & sweet mixed nut
flavors. Coffee bars are available in café mocha, cappuccino, espresso and raspberry decaffeinated flavors.

Wings of Nature™ Coffee

Wings of Nature™ organic, shade-grown coffees are made from high quality, Grade A Arabica beans; custom-
blended and freshly roasted by master coffee roasters. The Company has more than 40 blends and varieties to
choose from:

Fresh Harvest Products, Inc. (OTC BB: FRHV) 5


Analyst: Victor Sula, PhD
Initial Report
August 7th, 2008

Organic Blends Organic Varieties / Organic Flavors /


Regular & Decaf Regular & Decaf

French Roast Sumatran, Nicaraguan Ethiopian, Colombian French Vanilla


Guatemalan;
Kenyan Irish Cream
Espresso Blend French Roast plus Brazilian
Santos (available in decaf);
Guatemalan Hazelnut
Signature Blend French Roast plus Colombian,
Brazilian Santos (available in decaf); Ethiopian Highlander
Grogg
African Blend Kenyan, Zimbabwean, Rwandan; Brazilian

Vienna Blend French Roast plus Colombian; and Sumatran


Latin Blend Mexican, Guatemalan, Peruvian.

5-foot bulk coffee section

Wings of Nature™ coffee is also offered in bulk coffee displays at several ShopRite supermarkets in Connecticut
and Pennsylvania and a natural and organic food store in Westchester, New York.

The Company is involved in discussions with several supermarket chains regarding a large-scale bulk program
rollout for its coffees.

Wings of Nature™ Chunky Salsa

Tortilla Chips

The Company’s tortilla chips have an authentic taste that comes


from cooking organically grown corn in lime juice and pure water,
steeping the mixture for just the right amount of time, then stone-
grinding it. Chips are then oven-baked and fried in pure organic
soybean and canola oils.

Wings of Nature™ tortilla chips are available in the following fla-


vors:
• Organic Yellow Corn;
• Organic White Corn; and
• Organic Blue Corn.

Fresh Harvest Products, Inc. (OTC BB: FRHV) 6


Analyst: Victor Sula, PhD
Initial Report
August 7th, 2008

FRHV salsa is made from 100% organic ingredients, grown and harvest-
ed under the strictest organic standards. The Company combines choice
vegetables, spices and herbs to create a rich, authentic-tasting salsa.

The Company’s salsa is available in the following flavors:

• Organic Medium Rich & Spicy – Classic Mexican blend with a rich,
organic flavor and a touch of spice;

• Organic Mild Basil & Oregano – A combination of classic Mexican and


Italian flavors with unique organic taste;

• Organic Mild Roasted Garlic – Rich roasted garlic flavor blended with
Mexican salsa; and

• Organic Mild Garden Vegetable – Garden-fresh flavor that highlights


the organic tomatoes and bell peppers.

Wings of Nature™ Cold Processed Extra Virgin Olive Oil

FRHV olive oil comes from olives grown on the slopes of the Sierrao Moreno Mountains in Spain. Olive groves
on the mountain side form a spectacular landscape that produces a unique taste. The olives are harvested by
shaking the branches so that olives fall into nets where they are hand-selected. Human participation is indis-
pensable.

By hand-picking olives at the moment of ripeness and cold-pressing within 24 hours of picking, FRHV is able
to produce a premium quality olive oil. Rigorous quality controls and employing the latest technologies and in-
plant packaging provide a far superior extra virgin olive oil product.

New product initiatives

The Company is committed to ongoing research and development, and introducing new high-quality organic
products. FRHV works with a team of research professionals, which includes microbiologists, nutritionists, food
scientists, chefs and chemists. Their mission is to develop new organic products that are healthy, taste good and
that meet consumers’ changing tastes.

In addition to developing new products, FRHV routinely reformulates existing products to improve them and
extends its existing product lines. Current prototypes products include: Cookies, Crackers, Energy Drinks ,
Beverages , Tortilla Chips.

Fresh Harvest Products, Inc. (OTC BB: FRHV) 7


Analyst: Victor Sula, PhD
Initial Report
August 7th, 2008

Distribution

FRHV distributes its products through specialty and natural food distributors to stores, specialty supermar-
kets and retailers. FRHV is expanding its customer base to include, mass-market retailers, supermarkets, drug
store chains, club stores and grocery wholesalers. While natural food distribution channels continue to expand,
growth in the grocery channel has begun to accelerate because of increased mass market acceptance and de-
mand for natural and organic foods.

In the United States, FRHV products are marketed through a specialty food distribution network of sales profes-
sionals, supported, where necessary, by third-party food brokers; and a direct sales force, which is supported
by third-party food brokers to minimize costs and maximize efficiencies. The majority of FRHV products are
sold through independent food distributors. To target specific consumer groups through retail outlets, FRHV
utilizes specialty food distributors; the Company is in the process of closing several important new distribution
relationships.

Distributor A – Setting up distribution of complete FRHV product line in 1,400 stores. Plans include the agree-
ment of phased timing for expansion into 3,600 key retailers throughout the USA. Distribution would include
the following retailers: Food Emporium, Wegmans, Waldbaums, Super Fresh, Fresh Markets, Clemens, U-Krops
and several major upscale independents.

Distributor B – Presented complete line. Bars and salsas are being presented to 26 branded stores and 120 inde-
pendent stores in the North East.

Distributor C – Presented complete product line to 60 branded stores and 165 independent stores on the West
Coast.

Distributor D – Presented complete line for inclusion into 246 branded stores and major upscale independents
in the North East and Midwest.

Distibutor/Grocer E – Currently selling to four regional divisions and in direct discussions regarding national
rollout.

Grocer F – Presented national launch plan to corporate office. FRHV has been given authorization to present its
product line to each of the regional divisions. Sent samples to key division contacts with contact follow-up cur-
rently underway. Strong interest and purchase intent expressed by all divisions contacted. A California division
has already committed to placement of fruit & nut and coffee bars.

Distributor G – Direct discussions with director of natural/organic products group, for placement of all products.
This would include distribution through 424 stores in the Midwest. Meijers (75 stores), Schnucks (55 stores), HEB
(126 stores), Dierberg’s (23 stores), Bruno’s (32 stores), Byerly’s (15 stores), and key independents (98 stores).

Distributor H – Direct discussion on adding complete line into system. Key placement targets include 559 stores
on the West Coast and in the Midwest. Raley’s (125 stores), Save Mart (134 stores), and more than 300 key natural
food retailers such as Andronicos, Mollie Stones, Dreagers and PW Markets.

Distributor I – Working directly on setting up Wings of Nature™ products as key organic line for chain of Long’s
(330 stores on the West Coast).

Fresh Harvest Products, Inc. (OTC BB: FRHV) 8


Analyst: Victor Sula, PhD
Initial Report
August 7th, 2008

Marketing

The Company plans to take advantage of a variety of media channels and is putting together a highly targeted
marketing communications, sales promotion and media plan focusing on the following:

• Traditional media: television and newspaper advertising will target specific local buyers;

• Targeted consumer event sponsorships will create awareness and firsthand product experience;

• In-store specialty displays will promote seasonal and regional programs to drive retail sales;

• Product demonstration in participating grocery locations will address a highly focused segment of the con-
sumer audience; and

• Online retail networking with other new media consumer food product properties will provide a source of
pre-screened customer prospects.

An advantage FRHV gains by having numerous product lines united under its Wings of Nature™ brand is the
ability to spread advertising dollars over several product categories. This advantage also applies to shipping,
product demonstrations, promotional programs, commercials and print ads, making for more efficient use of the
Company’s financial resources.

The Company intends to increase its investment in advertising, marketing and promotion to consumer spending
to enhance brand equity while closely monitoring trade spending. Consumer spending categories include televi-
sion, radio and print advertising, coupons, direct mail programs and other forms of promotions.

In addition, FRHV has begun working with online marketing companies to expand the reach of its Web store.
The Company currently maintains two Web sites for its product offerings: www.wings-of-nature.com and www.
freshharvestproducts.com. Both sites have eCommerce capabilities. FRHV intends to expand online marketing
efforts through the use of superior search engine placement, banner advertisements, cross-marketing among
affiliated Web sites, affiliate marketing programs, and placement of the Web site URL’s on product information,
marketing materials, advertisements and corporate literature.

Fresh Harvest Products, Inc. (OTC BB: FRHV) 9


Analyst: Victor Sula, PhD
Initial Report
August 7th, 2008

Industry Outlook

Aging Baby Boomers, the rise in self-care, better understanding of the correlation between diet and health, fa-
vorable regulations, and increased consumer understanding of the negative effects of pesticides and food addi-
tives are some of the reasons the natural and organic food market is experiencing explosive growth. Aggressive
targeted marketing and promotion by the retail sector, and the fact that the country’s major food manufacturers
are taking an increasing interest in organic product lines, signal the advance of organic food from niche to main-
stream product.

Organic food

Organic food is produced by farmers committed to the use of renewable resources and the conservation of soil
and water, enhancing the quality of the environment for future generations. Organic meat, poultry, eggs and
dairy products come from animals that are given no antibiotics or growth hormones.

The market for organic food has been growing at double-digit rates for nearly a decade. The Organic Monitor
estimated the 2006 global market for organic foods at $36.7 billion, up 13.6% from 2005. By 2011, the market is
forecast to reach $67.1 billion, an 83% increase since 2006. This is in marked contrast to the overall food market,
which has been growing approximately 2% per year.

$80
$67.1
$70
$59.5
$60
$52.7
$46.7
$50
$41.4
$36.7
$40
$32.3
$30

$20

$10

$-
2005 2006 2007 2008 2009 2010 2011

Source: http://www.redorbit.com/news/business/1031837/the_global_organic_food_market_grew_by_136_
in_2006/index.html

Annual sales of organic foods in the United States have increased more than $13 billion since 2000 and currently
represent a $20 billion market. Despite this, organic still represents a tiny fraction of the overall food market. Ac-
cording to the Organic Trade Association, organic food’s share of total retail food and beverage sales was about
3% in 2006 and was estimated at around 3.4% in 2007.

Fresh Harvest Products, Inc. (OTC BB: FRHV) 10


Analyst: Victor Sula, PhD
Initial Report
August 7th, 2008

U.S. organic food market


Organic Food Organic Food Organic
Revenue, $ Bn Growth Penetration

2000 $6.1 21.0% 1.2%

2001 $7.4 20.7% 1.4%

2002 $8.6 17.3% 1.6%

2003 $10.4 20.2% 1.9%

2004 $11.9 14.6% 2.2%

2005 $13.8 16.2% 2.5%

2006 $16.9 22.0% 3.0%

2007 $19.8 17.4% 3.4%

Source: http://www.ota.com/pics/documents/short%20
overview%20MMS.pdf

The Nutrition Business Journal is forecasting 11% annual growth for the U.S. organic food market through 2010.
Many analysts consider this estimate quite conservative given organic foods’ low penetration and increasing
demand.

Approximately half of all U.S. shoppers (51%) buy organic foods, according to the Shopping for Health 2006
report. The breakdown by food category was as follows:

• Fruit or vegetables — 44%;

• Milk, yogurt or other dairy products — 30%;

• Cereals, breads, pastas — 29%;

• Packaged foods such as snacks, beverages and frozen foods — 25%;

• Eggs — 21%;

• Meats and poultry — 24%; and

• Soups or sauces — 15%.

Fresh Harvest Products, Inc. (OTC BB: FRHV) 11


Analyst: Victor Sula, PhD
Initial Report
August 7th, 2008

Availability of natural and organic foods today

Today, organic food is available in more than 72% of retail stores. The USDA Economic Research Service (ERS)
recently reported that organic food products are available in nearly 20,000 natural foods stores across the United
States. The mainstreaming of organic food has drawn major manufacturers into the market.

A typical grocery store or supermarket remains the most common outlet, where 53% of people buy most of their
organic foods, according to the Shopping for Health 2006 report. Smaller percentages of the population purchase
organic foods at natural and organic markets (19%), supercenters and combination stores (13%), warehouse club
outlets (7%), and farmers’ markets (2%).

Today’s organic food business startups tend to be more sophisticated than their predecessors. Many are ad-
dressing business challenges by hiring seasoned industry executives, using standard distribution contracts and
crafting strategic business plans that incorporate organic and natural foods. In addition, farmers are devoting
more acreage to organic products. Organic cropland and pasture increased from 2.35 million acres in 2001 to 2.80
million acres in 2003, according to the most current USDA data. Studies show that organic farming can be more
profitable than chemical-intensive crops as a result of increased yields in drier areas or times, lower production
costs and higher selling prices.

Financial Analysis

The Company is still in an early development stage and has so far generated only nominal revenues from its
organic food operations. FRHV produced revenues of $296,005 in FY 2007. During the first six months of FY
2008, the Company’s revenues increased to $135,828 from $88,948 in the same period of 2007. The revenue gain
is mainly due to expanded distribution channels.

Increased spending on advertising, marketing and promotion has caused the Company to report higher losses.
During the first six months of FY2008, FRHV’s net loss increased to $689,983 from $360,682 in the first six months
of FY 2007.
Income statement, $
H1 FY 2007 H1 FY 2008 % Chg FY 2006 FY 2007 % Chg

Revenue 88,948 135,828 52.7% 177,567 296,005 66.7%


Cost of Goods Sold 81,934 114,050 39.2% 118,999 261,058 119.4%
Gross Profit 7,014 21,778 210.5% 58,568 34,947 -40.3%

Operating Expenses, including 367,616 711,671 93.6% 1,087,370 1,091,712 0.4%


Depreciation & Amortization 3,044 5,740 88.6% 2,050 6,822 232.8%
Merger Costs - - 400,000 -
General & Administrative 364,572 705,931 93.6% 685,320 1,084,890 58.3%

Net Loss -360,602 -689,983 n/m -1,028,802 -1,056,765 n/m


Diluted EPS -0.023 -0.025 n/m -0.064 -0.059 n/m

Source: SEC filings, fiscal year ending October 31.

Fresh Harvest Products, Inc. (OTC BB: FRHV) 12


Analyst: Victor Sula, PhD
Initial Report
August 7th, 2008

The Company has an accumulated deficit of $3.0 million and has been dependent on external equity and debt
financing. FRHV’s management team estimates that existing cash will be sufficient to meet the Company’s needs
over the next four months. If the Company is unable to raise additional financing, however, implementation of
its longer-term business plan could be delayed.

Balance sheet, $
31-Oct-07 30-Apr-08

Cash and equivalents 8,383 4,349


Total Current Assets 342,154 189,518
Fixed Assets, net 35,592 42,105
Total Assets 377,746 231,623

LIABILITIES & STOCKHOLDERS' DEFICIT


Current Liabilities
Accounts Payable $52,255 $72,158
Accrued Expenses Payable 314,563
  Payroll and Related Taxes Payable 165,084
Loans Payable, current portion 97,500
Loans Payable to Related Parties 538,211
Total Current Liabilities 1,678,387 1,187,516
Long-Term Liabilities
Loans Payable 243,000 263,000
Total Liabilities, including 1,921,387 1,450,516
Debt 243,000 898,711
Total Stockholders' Deficit, including -1,543,641 -1,218,893
Accumulated Deficit -2,330,640 -3,020,533

Source: SEC filings

Valuation
Organic food companies are benefiting from rising demand and increased consumer acceptance of their prod-
ucts. Market experts forecast double-digit annual sales growth for the organic food market over the next decade.
While traditional food producers are reporting modest 2-3% annual growth, organic food companies are expe-
riencing annual growth exceeding 20%.

FRHV entered the organic food market in the second half of 2006 and has made significant progress rolling out
its product lines and building a distribution network. During the first six months of FY 2008, FRHV’s revenue
increased 52% year-over-year as a result of increased market penetration, heightened brand visibility and ex-
panded marketing efforts.

Fresh Harvest Products, Inc. (OTC BB: FRHV) 13


Analyst: Victor Sula, PhD
Initial Report
August 7th, 2008

The Company plans to continue expanding its distribution network and working directly with some retailers.
FRHV is already working with two of the largest specialty distributors in the United States, both of which have
approved the Company’s products for their national networks. FRHV is also working with several regional dis-
tributors to introduce its products and build brand visibility.

We anticipate that recently signed distribution agreements and new purchase orders will begin impacting rev-
enues in the fourth quarter of FY 2008 and estimate an increase in FY 2009 revenues to a $3.0 million range.

Based on management’s guidance and our understanding of FRHV’s business model, we estimate future rev-
enues and earnings as follows:

Earnings projections $

Source: Analyst estimates

Peer comparisons

We based our peer comparison analysis on companies involved in the broad natural and organic food sector. The
peer companies trade at 23 times forward P/E multiples and 1.1 times forward P/S multiples. We think FRHV
warrants a premium relative to the peer group due to its rapidly expanding distribution channels, effective
branding strategy and strong revenue growth prospects.
Comparative analysis

Source: Yahoo Finance

Fresh Harvest Products, Inc. (OTC BB: FRHV) 14


Analyst: Victor Sula, PhD
Initial Report
August 7th, 2008

We value FRHV at a 25 times forward P/E multiple. By applying our 25 times forward P/E multiple to our FY
2011 EPS estimate of $0.023, we derive a $0.59 price target for FRHV shares.

Rising demand for organic foods, superior quality products and national distribution capabilities should enable
the Company to quickly gain meaningful market share. As a result, we are initiating coverage of Fresh Harvest
Products Inc. with a Speculative Buy rating and a $0.59 price target.

Investment Risks
Optimistic growth forecasts

FRHV’s success will depend on its ability to build brand awareness and customer sales. Despite an optimistic
industry outlook, and the advantages of the Company’s products and distribution channels, no assurance can be
given that FRHV will be able to generate long-term growth consistent with management’s outlook.

Additional financing required

The Company will require additional external financing to implement its business plan. If FRHV can’t raise suf-
ficient funds, the implementation of its business plan could suffer, affecting our valuation model.

Competitive organic food market

Strong growth within the organic food market will likely attract significant competition. A number of large
American food companies are developing organic food offerings. Some of these established competitors include:
Dean Foods Company, General Mills Inc., Nestle S.A., Kraft Foods Inc., Groupe Danone, Kellogg Company, Pep-
siCo. Inc. and Sara Lee Corporation. All of these companies have greater financial, marketing and distribution
resources than FRHV.

Early-stage status and going concern risk

FRHV is in an early development stage. The Company’s business plan is dependent on continued financial sup-
port from shareholders and debt holders. FRHV has a working capital deficit and accumulated losses. These
factors raise questions about the Company’s financial strength and viability as a going concern.

Litigation Settled with company FRHV purchased as “blank check shell”

On May 15, 2008, Fresh Harvest settled a lawsuit with a principal Shareholder of Fresh Harvest and all claims
and counterclaims were dismissed. On June 7, 2007, a complaint was filed in the Superior Court of New Jersey
by Illuminati Inc., a lender to, and principal shareholder of FRHV. The complaint alleges breach of the merger
agreement and seeks recovery of shares alleged to have been improperly issued to FRHV officers Messrs. Fried-
man and Cingari. The complaint seeks damages of at least $1.0 million. FRHV’s management has denied the al-
legations and plans to contest the lawsuit. The Company acknowledges it owes shares to Illuminate Inc. and has
made good faith efforts to reach a mutual agreement regarding the number of shares owed. Management plans
to move to dismiss the lawsuit after a period of discovery.

Fresh Harvest Products, Inc. (OTC BB: FRHV) 15


Analyst: Victor Sula, PhD
Initial Report
August 7th, 2008

Management

Michael Jordan Friedman, Chief Executive Officer, President and Chairman of the Board

Mr. Friedman is also the founder of Fresh Harvest. He earned a Master of Law in taxation in 2005 and gradu-
ated from the New York Law School in 2003. Mr. Friedman earned a securities brokerage license at the age of
19, and worked in corporate finance and then investment banking. He has consulted in the food industry with
rapidly growing companies, helping shape their expansion into new markets. He has worked with companies
ranging in size from start-ups to $6 million in revenues, focusing on expanding their product lines, franchising
and developing new products. He is an advisor and serves on the board of directors of Talk Entertainment Inc.,
a privately held multi-media company. He has been involved in the startup of several environmentally-friendly
companies involved in green technologies and green building. Mr. Friedman has devoted time to lobbying New
York City Representatives on the benefits of e-WASTE programs and encouraging socially responsible action
regarding the environment.

Arthur E. Anderson III, Managing Director

Mr. Anderson has more than 30 years of food industry experience, most recently as president of a major branded
sales and marketing company selling premium, upscale, imported brands to retail grocery, food service, health/
natural foods, gift packers, convenience stores and mass merchandiser outlets. Mr. Anderson took over the com-
pany in 1996 with the sale of Shaffer Clarke, and began refining the brand portfolio and product mix, re-building
the organization, re-vamping MIS support and creating profitable sales and double-digit volume growth while
upgrading 65% of its brands to “All Natural” positioning. Previously, Mr. Anderson served as national sales
director for Shaffer Clarke, a wholly owned subsidiary of United Biscuits (UK). Mr. Anderson was directly
responsible for major growth of Carr’s Crackers, the leading cracker in the specialty food distribution channel,
and other major brands such as Bonne Maman preserves and KAME Asian foods. Mr. Anderson joined Shaffer
Clarke in 1990. He began his career in sales with Unilever. After several promotions, he was hired by the Foods
Division of Coca-Cola as its broker sales manager in the Southeastern United States. He rose to the position of
corporate staff manager for sales force development, and was soon promoted to Mid-West regional manager.
Upon leaving Coca-Cola Foods, he went to BSN, starting as NY branch manager for Dannon Yogurt, progressing
to area manager for central U.S. markets, then national sales director responsible for the U.S. launch and devel-
opment of the Evian Water brand.

Dominick M. Cingari, Chief Operating Officer and Director

Mr. Cingari grew up in the family retail food business (which is now a part of ShopRite Supermarkets). From an
early age he worked in the family stores, learning all aspects of the business. While studying food marketing at
St. Joseph’s University in Philadelphia, Mr. Cingari managed several General Nutrition Center (GNC) stores in
the Philadelphia area. He then worked for an importer and distributor of gourmet/ethnic food products selling
to supermarket chains across the United States. Mr. Cingari then started his own import, sales and distribution
company, offering products from around the world. He placed products in many regional and national super-
market chains. He has helped grow several companies from inception to businesses with revenues in excess of
$5 million. Mr. Cingari has consulted with various food companies on product development, brand extensions,
brand development, marketing, advertising, promotion and business development.

Fresh Harvest Products, Inc. (OTC BB: FRHV) 16


Analyst: Victor Sula, PhD
Initial Report
August 7th, 2008

Michael J. Scagliarini, Vice President of Sales

Mr. Scagliarini spent more than 24 years in the beverage world working for the Coca-Cola Bottling Company
of New York Inc. and Coca-Cola Enterprises Inc. He began his career with Coca-Cola Bottling and later moved
to Coca-Cola Enterprises. Mr. Scagliarini has held various leadership positions in sales, marketing and opera-
tions. He managed 50+ employees in sales operations servicing customers across all business channels and was
responsible for key accounts for major supermarkets in Connecticut and Massachusetts representing more than
$65 million in annual sales. He increased market share 17% in three years. In addition, Mr. Scagliarini is a cer-
tified instructor for management essentials training programs and has taught managerial and selling skills to
hundreds of managers. Mr. Scagliarini is an active member of the Connecticut Food Association.

Michael Ferro, Information Technology Manager

Mr. Ferro has more than 15 years experience in the Internet technology field. He set up, configured and admin-
isters the Company’s corporate (remote) server infrastructure, and also installed, configured and supports all
user applications. Mr. Ferro developed and maintains the Company’s recently launched online Web store and
all of its components (i.e. Paypal, online processes, etc). He has experience in several other industries, including
accounting, retail, food and restaurant. He is a graduate of George Washington University.

Roman Mayer, Creative Designer

Mr. Mayer has a successful, 40+ year history in branding, brand positioning, packaging, corporate identity, ad-
vertising and marketing across all media, with a focus on food and beverage manufacturers and retailers. Mr.
Mayer’s clients include The Great Atlantic & Pacific Tea Company (A&P); Price Chopper Supermarkets; and
Win-Dixie Stores Inc. He has produced programs for Shop-Rite Supermarkets, Pathmark Supermarkets, Pueblo
Supermarkets, Lender’s Bagels, Hillshire Farm Smoked Sausage, and Dewar’s White label Scotch Whiskey.

Jay Odintz, CPA, Director

Mr. Odintz is a licensed CPA and a CFP (Certified Financial Planner) and a partner in a CPA firm located in New
York. His specializations include: tax strategies for wealthy individuals and business entities, financial reporting,
real estate management and hedge fund and commodity partnership accounting. Mr. Odintz is a graduate of
Queens College in New York with a Bachelor of Art in accounting.

Richard J. Verdiramo, Director

Mr. Verdiramo has been actively involved with a number of public companies, one of which he founded, regard-
ing SEC compliance and related issues. He served as president of a company that provides Internet marketing
services to corporations on a national scale. Mr. Verdiramo has extensive experience in marketing consumer
products and brand development. He is a graduate of Providence College.

Fresh Harvest Products, Inc. (OTC BB: FRHV) 17


Analyst: Victor Sula, PhD
Initial Report
August 7th, 2008

Disclaimer
Beacon Equity Research (otherwise known as BER) is an independent research firm specializing in small and micro capitalization compa-
nies. BER has no investment banking or consultation conflicts thereby minimizing the inherent conflicts of interest between the research
analysts and the companies they cover. BER is not a registered investment advisor or broker dealer. No information in this report should
be construed as an endorsement to either buy or sell any securities mentioned in this report. The analyst(s) who prepared this report rely
on publicly avail¬able information which neither the analyst, nor BER, can guarantee to be error-free or factually accurate. All conclusions
in this report are deemed reasonable and appropriate by the author. The Private Securities Litigation Reform Act of 1995 provides inves-
tors a “safe harbor” in regard to forward-looking statements. To fully comply with the requirements of this law, BER cautions all investors
that such forward-looking statements in this report are not guarantees of future performance. Unknown risk, uncertainties, as well as
other uncontrollable or unknown factors may cause actual results to materially differ from the results, performance or expectations ex-
pressed or implied by such forward-look¬ing statements. Investors should exercise good judgment and perform adequate due-diligence
prior to making any investment. BER and its affiliates have been compensated a total of 225,000 free trading shares from a non-controlling
third party (Onyx Consulting Group) for enrollment of FRHV in its research program and other services. Ratings and price targets in this
report should not be construed as recommendations or stock price predictors. Readers of this report are urged to use due-diligence in
any purchase of security listed herein. Readers should consult the Company’s SEC filings as well as our initial report on the firm to bet-
ter understand the inherent risks associated with this security. There may be many uncontrollable or unknown factors which may cause
actual results to materially differ from the results, performance or expectations expressed or implied by such forward-looking statements.
Investors should exercise good judgment and perform adequate due-diligence prior to making any investment.

All decisions are made solely by the analyst and independent of outside parties or influence.

I, Victor Sula, Ph.D, the author of this report, certify that the material and views presented herein represent my personal opinion regard-
ing the content and securities included in this report. In no way has my opinion been influenced by outside parties, nor has my compen-
sation been either directly or indirectly tied to the performance of any security listed. I certify that I do not currently own, nor will own
and shares or securities in any of the companies featured in this report.

Victor Sula, Ph.D. - Senior Analyst

Victor Sula, Ph.D. has held the position of Senior Analyst with several independent investment research firms since 2004. Prior to 2004,
Mr. Sula held Senior Financial Consultant positions within the World Bank sponsored Agency for Restructuring and Enterprise Assis-
tance and TACIS sponsored Center for Productivity and Competitiveness of Moldova, where he was involved in corporate reorganization
and liquidation. He is also employed as Associate Professor at the Academy of Economic Studies of Moldova. Mr. Sula earned his Ph.D.
degree in 2001 and bachelor’s degree in Finance in 1997 from the Academy of Economic Studies of Moldova. Mr. Sula is currently a level
III candidate in the CFA program.

Fresh Harvest Products, Inc. (OTC BB: FRHV) 18