Consolidated Growers & Processors Inc – ‘10SB12G’ on 10/4/99

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Registration of Securities of a Small-Business Issuer   —   Form 10-SB
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10SB12G     Registration of Securities of a Small-Business        32±   130K 
                          Issuer                                                 
 2: EX-27       Financial Data Schedule (Pre-XBRL)                     1      5K 

10SB12G   —   Registration of Securities of a Small-Business Issuer
Document Table of Contents

[NAME]     CONSOLIDATED GROWERS AND PROCESSORS, INCORPORATED                    
[STATE-OF-INCORPORATION]     DE                                                 
[IRS-NUMBER]      77-0462311                                                    
[NEW-BUSINESS-ADDRESS]                                                          
[STREET1]     6350 LAUREL CANYON BLVD.                                          
[STREET2]     SUITE 406                                                         
[CITY]        NORTH HOLLYWOOD                                                   
[STATE]       CALIFORNIA                                                        
[ZIP]         91606                                                             
[PHONE]       818-752-9990                                                      

Securities to be registered pursuant to Section 12(g) of the Act:               

Common Stock                                                                    

CONSOLIDATED GROWERS AND PROCESSORS, INCORPORATED     

FORM 10SB REGISTRATION STATEMENT      

DESCRIPTION OF BUSINESS                                                         

REG. 228.101 (ITEM 101)                                                         

Consolidated Growers and Processors, Incorporated (hereinafter "CGP" or "the    
Company"), OTC BB: CGPR, was formed and incorporated in Delaware on June 10,    
1997 for the principal purpose of engaging in the large scale                   
commercialization of alternative industrial crop products, primarily            
industrial hemp, through the development and / or acquisition of new and        
advanced technologies.  The Company was funded through a Reg 504D offering      
and listed on the OTC market as of Oct. 27, 1997.  In Oct. 1997, the Company    
acquired a minority interest in a German company, Badische                      
Naturfaseraufbereitung ("BaFa").  In 1998, the Company furthered its            
international operations through the formation of its wholly-owned Canadian     
subsidiary, Consolidated Growers and Processors (CGP) Canada Limited            
("CGP Canada"), NAWARO GmbH ("NAWARO") and CGP Europe AG ("CGP Europe").  In    
June 1998, the Company also acquired a 100% interest in a Swiss corporation,    
Werner Zoellig AG & Glulam Lumber Mfg. ("Zoellig").  The Company has            
subsequently restructured its European holdings: it has increased its           
investment in BaFa and has sold Zoellig to focus on its core business,          
the agriculture and processing of industrial hemp.   At present, the Company    
employs nine people.                                                            

CGP has created an integrated, global strategy to become the lowest cost        
producer and preeminent supplier of industrial hemp raw material products in    
key market segments such as: nutraceuticals and pharmaceuticals from hemp       
plant compounds through biotechnological development; nutraceutical and         
generic food products with nutritional advantages; fine fiber for               
biocomposites and substitution of toxic petrochemical and                       
synthetic products; other eco-friendly products.                                

Until recently, industrial hemp played a vital role in world commerce for       
over 2,000 years, during which it had been relied upon to supply humanity       
with a wide range of essential commodities.  However, after World War II,       
since petroleum was in abundant supply and inexpensive, petroleum               
technologies advanced with new age synthesis facilitating the replacement of    
natural, industrial crop products in Western developed countries.  Sixty        
years later, the industrialized world is living with the two major              
consequences of pollution and economic dependence on unreliable external        
parties.  Furthermore, the world is now also facing a major fiber crisis in     
the coming decade.  There is an ever-increasing need for fiber in paper and     
building materials.  In the USA alone, the demand for fiber could be as great   
as the combined demand for steel and plastic products.  For these reasons and   
consequences, people and governments of major developed countries are           
returning to industrial hemp.                                                   

New crops will be vital to the sustainability and profitability of our          
natural resources.  The French began hemp development in 1969.  Since 1994,     
Germany, The Netherlands and Austria have taken the lead with France in         
starting the revitalization of industrial hemp.  Most manufacturers,            
particularly in the automotive and packaging sectors, have increased demand     
for natural fibers to enhance the recyclable content of their products.         
More recently, CGP has facilitated the process in Canada and Australia,         
including 18,200 acres growing under contract in Canada in 1999.  Total         
industrial hemp sales worldwide have increased exponentially from               
approximately $5 million USD in 1993 to a projected $500 million for 1999 and   
$750 million by 2001.  In Europe, the move toward recycling has created an      
urgent need to replace petrochemical products / materials with recyclable       
and / or biodegradable alternatives.  Notwithstanding the impressive growth     
trends, the industrial hemp industry in developed countries is fragmented and   
still in the early stages of development, whereas the Asian production is       
targeted primarily towards textiles.                                            

Technological development of equipment to maximize harvesting and               
processing capabilities has been adequately examined by CGP.  Our German        
subsidiary, BaFa, has made progress in these areas in                           
recent years, but total capacity levels remain too low to create large user     
demand.  The industry has begun to attract the interest of large                
multinational companies seeking alternative raw material sources.  Now,         
substantially higher planting acreage and more processing facilities are        
required to develop potential large markets for major customers                 
in certain industrial hemp products.                                            

UNIQUENESS OF BUSINESS / PRODUCTS                                               

Industrial hemp is an invaluable bioresource.  In 1938, Popular Mechanics       
magazine stated "Over 25,000 products can be manufactured from hemp.".          
Unique features of the industrial hemp crop, and of particular importance to    
the Company's strategy are as follows: excellent healing and nutritional        
properties; serves as an eco-friendly alternative to large use toxic            
materials and products; can remediate certain contaminants in soil and          
water; generates significant agronomic benefits, such as weed control, soil     
enhancement and crop rotation, increasing profitability to the farm economy;    
versatility - it is more versatile than the soybean, cotton plant and the       
Douglas fir combined; provides superior yield (e.g., yields 4X cotton) and      
valuable seed for oil production.                                               

CGP has acquired and / or developed advanced technologies to maximize these     
attributes.  The Company will build new processing facilities and has commenced 
its molecular biology research and development program.                         

OPPORTUNITY                                                                     

Industrial hemp is "The Earth's Premier Renewable Resource."   The unique       
attributes of industrial hemp provide the potential to move the global and USA  
economies toward a more sustainable direction - one that is more                
environmentally and socially responsible, as well as profitable.  The           
Company's management believes that natural, agricultural industrial crops,      
particularly industrial hemp and its derivative products, will once again       
become a principal source of wealth in the global economy.  Knowledge and use   
of industrial hemp and its products will spread to homes and businesses         
throughout the world.  Today the opportunity exists to virtually create the     
industry for the world's premiere bioresource.  The Company's global integrated 
strategy has brought together experienced and recognized industry leaders to    
our team to develop the markets for important, natural and technologically      
advanced industrial hemp products.  CGP is investing in the future of the world 
through profitable product development of nature's preeminent renewable         
resource, industrial hemp.                                                      

PRODUCTS                                                                        

All industrial hemp products originate from one of the four parts of the plant: 
(1) Seed (2) Grain (3) Stalk / Straw (4) Chaff and Leaf (previously             
considered harvest waste).  CGP intends to process all parts of the industrial  
hemp plant to produce and / or develop major raw material (and possibly         
certain end use) products as follows:                                           

Novel nutraceuticals and pharmaceuticals from phytochemical industrial hemp     
plant compounds;                                                                

Patents for new proprietary varieties, particularly for traits that will        
increase fiber content in crop biomass, increase oil yields and completely      
eliminate THC;                                                                  

High quality nutraceuticals and nutritional human foods such as: edible oils,   
nuts and protein powder;                                                        

Fine fibers for biocomposites; for example, in automotive parts, building       
insulation and matting materials;                                               

Fibers for pulp to make "tree-free," regular and specialty (e.g., security)     
paper products, building materials (e.g. particle board) and / or               
"eco-friendly plastics;"                                                        

Hurd for animal bedding, building materials, consumer products and industrial   
absorbents;                                                                     

Industrial hemp products offer many unique, beneficial features to the          
marketplace that can be readily identifiable as follows:                        

Health and Nutritional Properties:                                              

Cannabinoids and other phytochemical compounds of the plant have proven to be   
neuroprotective antioxidants, natural analgesics and anti-inflammatory          
facilitators;                                                                   

Edible oil, nut, protein powder and cake contain the "perfect" natural profile  
of essential fatty acids for the human body;                                    

Edible oil, nut and cake contain a high quality and concentration of protein,   
and a high protein efficiency ratio;                                            

Hemp nut and protein powder contains all eight essential amino acids;           

Hemp grain products are closest to "organic quality" - nearly free of           
pesticides, herbicides and artificial fertilizers;                              

Hemp oil in cosmetics can penetrate skin three layers deep, improving effect.   

Environmental Benefits:                                                         

Fiber is natural and an eco-friendly alternative to various petrochemical       
products in composites, plastics and synthetic fibers (e.g., fiberglass);       

Fiber is a substitute for wood products, such as pulp for paper, positively     
impacting forest conservation;                                                  

Plant has the unusual characteristics to remediate the soil and water of        
certain hazardous waste contaminants;                                           

Plant requires less herbicides / insecticides (than other crops with comparable 
uses) avoiding groundwater and other contamination.                             

GENERAL                                                                         

Hemp is more versatile than a combination of other alternative industrial crops 
in product application and the fiber is stronger and more durable than other    
industrial crops.  The Company has been aggressive in its pursuit of            
technological advancements that would benefit from the use of industrial hemp.  
Management has concluded an Exclusive Agreement with NTech Corporation, a       
company involved in atomic and molecularly                                      
assembled substances, for the use of hemp fiber in combination with other       
compounds to produce recyclable / biodegradable products to compete with        
certain plastics and metal products.  The Company anticipates completion of     
formal product application tests to occur during 2000, after which the          
Company will pursue the most profitable production and marketing strategies.    

The Company has also acquired the exclusive license for a phytoremediation      
process technology for all applications that would utilize industrial hemp as   
the plant.  Phytoremediation is a natural process utilized to remediate         
polluted sites such as radioactive soil and water, as well as metals,           
pesticides, hydrocarbons, etc., from weapons facilities or landfills.  Plants   
break down or degrade organic pollutants and stabilize metal contaminants by    
acting as filters or traps.  Industrial hemp is proving itself to be one of     
the best plants available for this process.                                     

Although planting seed is the critical raw material for all of the Company's    
products, it is also a saleable product to create another revenue stream.  Of   
significant importance to the seed supply is the Company's relationship with    
The Bast Institute, Glukhiv, Ukraine. There are several types of seed           
varieties with different natural origins presently in use.  The Bast            
Institute, the leading agronomic research institute for industrial hemp and     
flax, excels at breeding the lowest level THC cultivars available, which is a   
critical factor for both planting certification (licensing) and crop            
processing.  The Company owns the exclusive rights for The Bast Institute       
Ukrainian seed sales and development (breeding) for North America, important    
growing countries in Europe and South America, as well as Australia.            

RESEARCH                                                                        

Research efforts will continue to focus on agronomic studies in Africa and      
Canada to find the optimum growing conditions to maximize yields of industrial  
hemp fiber and seed.  The Company has already received a $60,000 (CND) Grant in 
Canada to conduct such agronomic studies, and is in the process of negotiations 
for other government grants and research programs for industrial hemp.  The     
Company will also focus on continued research into the production of "hemp      
metals" and "hemp plastics" as naturally produced materials to compete with     
today's common metals and plastics.  Also, the Company has a contract with      
Phytomedics, Inc. to study the nutraceutical and pharmaceutical potential of    
industrial hemp.  The Company's work at Rutgers University will be initially    
to develop completely THC (drug) free varieties of industrial hemp.             

GOVERNMENT REGULATION                                                           

The Company's activities are at present subject to federal regulations          
controlling the right to grow industrial hemp commercially in each respective   
country in which it currently and / or plans to do business in.  In addition,   
some of the products that the Company currently may produce, such as            
industrial hemp oil, may be subject to regulation by the United States Food     
and Drug Administration ("FDA") or other similar governmental bodies in other   
countries.  However, CGP's primary research will be to develop non-narcotic     
varieties of industrial hemp that have superior seed and fiber yields without   
diminishing any nutritional value or compromise the positive attributes of the  
hemp fiber.  CGP's scientific staff will maintain the strictest internal        
controls to meet the compliance of all government testing protocols.            

DEPENDENCE UPON KEY PERSONNEL                                                   

The Company relies greatly in its efforts on the services and expertise of its  
current senior officers: Susan M. Brana, Chairman of the Board, CGP Inc.;       
Dr. Werner Thelen, President, NAWARO; Hansjorg Spoerri, President, CGP Europe;  
Mark Kaeller, Chief Operating Officer, CGP Inc. and; Darrell McElroy, Senior    
Vice President, Agriculture, CGP Canada.  The operation and future success of   
the Company could be adversely affected in the event that the above key         
personnel were incapacitated or the Company were to lose their services.        

OPERATIONS                                                                      

The Company reported a loss of ($544,410) for its first year of operations      
ended June 30, 1998 and a loss of approximately ($1,912,707) for its second     
year of operations ended June 30, 1999.                                         

The Company maintains its main offices at: 6350 Laurel Canyon Blvd., Suite 406  
North Hollywood, California 91606.                                              

MANAGEMENT AND OWNERSHIP                                                        

The strategic business affairs of the Company are managed by the Board of       
Directors, which presently consists of five members.  It is anticipated that    
the current members will continue to serve until the next annual meeting of the 
shareholders.  At that meeting, new members will be elected for staggered       
one-three year terms.  Daily operations of the Company are the responsibility   
of its executive officers.  The officers, who are appointed by the Board, are   
under contract for the specific term of their respective employment agreements. 
It is anticipated that each of the officers will remain for the foreseeable     
future, and one or more will be elected to the Board.                           

PROFESSIONAL SERVICES / ADVISORS                                                

The Company has retained the following firms as advisors of record:             

Program & Construction                                                          
Management                    Dugan & Associates Construction Management        

Auditor                       Kevin G. Breard, C.P.A.                           

International Attorneys       Loyens and Volkmaar                               

These highly qualified advisors will support management and the Board of        
Directors in making strategic and certain operational decisions.                

MARKET RESEARCH AND ANALYSIS                                                    

GENERAL MARKET DATA                                                             

The demand for industrial hemp and industrial hemp products is rapidly          
increasing.  A 1997 story in the Wall Street Journal found that the demand      
should triple from $75 million to greater than $250 million by 1999. A recent   
ABC TV news story shows that worldwide hemp sales will reach an estimated       
$500 million this year.  Research indicates exponential growth of worldwide     
individual sales increased from approximately $5 million in 1993 to a projected 
$750 million for 2001.                                                          

Based upon discussions between CGP management and executives of major           
multinationals, demand for raw materials from hemp (e.g., fiber, pulp) would be 
significantly greater if planned supply quantities were sufficiently large for  
a major company to make a long term commitment to its use. Although worldwide   
global market data by market segment is difficult to ascertain, the University  
of Kentucky completed a study of the "Economic Impact of Industrial Hemp in     
Kentucky" (July 1998) that includes conservative estimates of market size by    
category for the USA domestic markets only. In summary, the study concludes     
that potential domestic markets exist for:                                      

- 300,000 tons of industrial hemp hurd for horse bedding;                       

- 112,000 tons of industrial hemp fiber for other products as follows:          

- 80,000 tons: Paper                                                            
- 19,000 tons: Auto parts                                                       
- 7,000 tons: Fiberglass                                                        
- 2,500 tons: Textiles                                                          
- 3,500 tons: Capreting                                                         

The study also found that the potential domestic markets exist for:             

-36,000 tons of industrial hemp grain meal                                      
-18,000 tons of industrial hemp oil (for edible and other uses)                 

The total estimate for the domestic market is approximately 466,000 tons / year 
based upon conservative figures used and an assumption of 10-20 percent market  
penetration.                                                                    

MARKET SEGMENTS                                                                 

Nutraceuticals                                                                  

The nutraceutical / herbal food supplements industry has worldwide sales of     
more than $17 billion and a 15-20 percent annual growth rate.  Nutraceuticals   
are food substances with health / medical benefits, primarily derived from      
plants.  The industry is, to a large extent, self-regulated, although the       
predominant trend and consumer demand is for proven efficacy, safety and        
increased standardization of products.  Consumers, particularly those of the    
"baby boomer" generation, are showing dramatically increased interest in these  
products as they search for new means to prolong health and well being.         

Oil                                                                             

The market for edible oil at present is approximately 6.9 million metric tons.  
The food industry generally serves as an indicator of demand.  For this reason, 
food companies are stressing new product introductions. "Functional foods and   
nutraceuticals" are two relatively new terms in the industry to describe foods  
containing significant levels of biologically active components that impart     
health benefits or desirable physiological effects beyond basic nutrition.      
Consumers are showing continued strong interest in reduced calories and less    
detrimental fats in food products.                                              

Personal Care Products                                                          

Personal care products, encompassing personal soaps, skin care products, hair   
care products, cosmetics and other toiletries, is a primary consumer end use    
market for fats and oils and their derivatives. Demand for personal care        
products is dependent upon demographic and consumer spending patterns, and tends
to be highly income elastic. Personal care product shipments are projected to   
advance 4.3 percent annually to $28 billion in the year 2000, based on new      
product introductions and an aging population.  Consumer preferences for        
value-priced, environmentally-responsible and better performing products are    
increasing. Environmental regulations and narrower profit margins have driven   
personal care products manufacturers' research and development efforts.  The    
economic downturn of the early 1990's sparked renewed consumer interest in      
value-priced products, such as better performing multifunctional hair care      
formulations incorporating shampoo, conditioner and other specialty additives.  

Another important trend in the personal care products market is growing         
consumer preference for environmentally compatible products.  In addition, the  
aging population will also influence trends in the use of personal care product 
consumption. As the baby-boomer population grows older, the group will continue 
to demand new, better performing products based on advancing technologies and   
materials to offset signs of aging. In                                          
addition, this demographic trend will also provide opportunities for milder,    
more effective formulations of many personal care products.                     

Nuts                                                                            

The North American market for nuts is in excess of $10 billion annually of      
which the non-peanut segment is approximately $1.3 billion. Nuts with a high    
nutritional content profile are sold in "health stores" as a nutraceutical      
food, as well as in mainstream markets, where consumers seek healthier          
alternatives to peanuts.                                                        

Protein Powder                                                                  

The health food market for high quality whey protein has been dramatically      
increasing due to its benefits in building lean muscle mass, weight loss and    
nutritional content.  At present, soy based whey protein is the leading         
product.  The market in North America for whey protein was in excess of         
150,000 MT in 1998.                                                             

Animal Feed                                                                     

Flax meal used to serve this market in North America has declined significantly 
to 159,000 tons annually, since customers have begun to switch to "higher       
protein" soy meal, particularly due to noted health improvements in horses.     

Horse Bedding (Hurd)                                                            

The market for bedding in the USA alone is approximately 3 million tons ($400+  
million) annually. Most of this market is served presently by bedding made from 
straw, wood chips, and to a lesser extent, composition mats.                    

Natural Fibers                                                                  

Natural fibers have proven to be eco-friendly substitutes for hydrocarbon (e.g. 
petrochemical products) and wood in diverse product categories.  Different      
qualities of fiber are better suited for different product categories. The      
global markets for these products easily exceed $20 billion annually.  The      
product categories include: paper, automotive parts, building materials,        
non-wovens, plastics, etc.                                                      

Phytoremediation                                                                

This is an alternative natural process to remediate various types of polluted   
sites from radioactive, chemical and hydrocarbon contaminants. The USA market   
alone exceeds $230 billion according to the USA Department of Energy.           

COMPETITION                                                                     

The Company faces competition from numerous companies in each of its targeted   
market segments.  For example:                                                  

Hemp fiber - competition from other agricultural, wood and synthetic fibers and 
petrochemical products.                                                         

Hemp oil - competition from other edible oils such as soy, canola, flax or      
olive, and also from coconut, palm oils, sunflower etc. used in cosmetics.      

Hemp nuts - competition from walnuts, cashews, almonds, peanuts, etc.           

Most of the competitors in the above-named product markets are more             
established, benefit from market recognition and have greater financial,        
production and marketing resources than the Company.  Management believes that, 
due to the large number of companies that operate in its diverse product        
markets, it has no single or group of competitors.  Notwithstanding the extent  
of competition and available products that serve its target markets, the        
Company's products shall successfully penetrate and compete in these markets    
based upon the following principal factors:                                     

Agronomic, environmental and economic advantages from growing hemp that will    
increase supply to enable market development;                                   

CGP's advanced processing technology will generate efficient production of all  
parts of the industrial hemp plant to facilitate both supply and competitive    
pricing;                                                                        

The potential to develop valuable nutraceuticals and pharmaceuticals from       
process waste / by-product that contain proven medical benefits;                

Optimum health and nutritional profiles of food products for the nutraceutical  
and mainstream food markets;                                                    

Proven ability of hemp oil to penetrate three layers of skin, improving the     
effects in cosmetic uses;                                                       

Biodegradability and higher absorbency of horse bedding product;                

Fine fiber that is stronger, more flexible, safer, eco-friendly and lower cost  
than existing petrochemical products or synthetic fibers used in automobile     
parts, insulation, etc.;                                                        

Raw fiber to serve as a "tree-free" fiber for making paper;                     

Unusual capability of industrial hemp to remediate certain hazardous materials  
in soil and water.                                                              

All of these qualities distinguish industrial hemp from existing products       
currently serving large volume and revenue markets.                             

DESCRIPTION OF PROPERTY                                                         

REG. 228.102 (ITEM 102)                                                         

As of June 30, 1999 the Company did not own any real property.                  

The investment policies of the Company are left to the discretion of the quorum 
of the Board of Directors.  Resolutions can be passed by the Board of Directors 
to allow input from security holders as required.                               

LEGAL PROCEEDINGS                                                               

REG. 228.103 (ITEM 103)                                                         

As of the date of this filing, the Company is not a party to any legal          
proceeding.                                                                     

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                        

REG. 228.201 (ITEM 201)                                                         

Market Information                                                              

The registrant's securities are traded on the Over-The-Counter Bulletin Board   
(OTC-BB) operated by the National Association of Securities Dealers, Inc. under 
the symbol CGPR.  The registrant's securities began trading on the OTC-BB on    
October 27, 1997.                                                               

Holders                                                                         

As of 6/30/99, there were 197 shareholders of Common Stock in the Company, and  
32,173,802 shares of Common Stock outstanding.                                  

Dividends                                                                       

There have been no cash dividends declared on any shares of common equity in    
the company since the inception of the Company to present.                      

DESCRIPTION OF SECURITIES                                                       

REG. 228.202 (ITEM 202)                                                         

Common Stock                                                                    

Warrants - At present, there are no outstanding warrants to purchase common     
equity in the Company.                                                          

Options - At present, there are no options outstanding that can be exercised to 
purchase equity in the company.                                                 

Convertible Stock - At present, there is no convertible stock.                  

Selling Security Holders - There are no securities to be registered for the     
account of any security holders.                                                

MANAGEMENT'S DISCUSSION AND ANALYSIS                                            

REG. 228.303 (ITEM 303)                                                         

OVERVIEW                                                                        

Consolidated Growers and Processors, Incorporated (the "Company") is a          
multinational industrial hemp company.  The Company's primary business          
objectives are to provide financing, technical, and marketing expertise to the  
farming, processing, and marketing of products made from industrial hemp and    
other industrial crops.  From June 10, 1997 (inception) to June 30, 1998, the   
Company's operations were in the development stage.  On July 1, 1998 the        
Company began to receive revenue from hemp products.  The Company's activities  
primarily have been related to raising capital, establishing or acquiring key   
subsidiaries, performing market analysis, sponsoring research, developing       
technology, developing products, establishing a grower base, and recruiting     
employees.  The Company's operations primarily have been funded by the sale of  
common stock and warrants.                                                      

In October 1997, the Company signed an agreement with the Ukrainian Academy of  
Academy of Agricultural Sciences / Institute of Bast Crops (the "Institute").   
The Institute has granted the Company exclusive licensing rights for certain    
registered industrial hemp seed varieties which were bred by the Institute.  In 
addition, the Company has exclusive rights for seed production / multiplication 
in North America, Central America, South America, Africa, Australia, New        
Zealand, and Asia (excluding the countries of the former Soviet Union).  The    
Company believes this agreement with the Institute is key to its being a leader 
in industrial hemp as the Institute's industrial hemp seed varieties have the   
lowest THC content of any industrial hemp seed varieties available.  The        
availability of low THC industrial hemp seed varieties has opened up the        
commercial growing of industrial hemp in Canada.  A comprehensive seed          
multiplication program has been established by the Company to multiply seeds    
for planting in Canada, Europe, Australia, and South Africa.  Most governments, 
including the Canadian Government, have imposed strict THC requirements for the 
commercial cultivation of industrial hemp.  The Company's exclusive rights to   
these low THC industrial hemp seed varieties in North America gives it a        
strategic advantage to build business in the key North American markets.        

In November 1997, the Company established an agreement with NTECH Corporation,  
which had developed a coded microparticle known as StuffDust.  This agreement   
gives the Company the worldwide license for this product for use in various     
paper products.  The Company believes that use of this microparticle will allow 
it to introduce industrial hemp fiber into the specialty and security paper     
markets.                                                                        

The Company also increased its ownership in Badische Naturfaseraufbereitung     
("BaFa") from 15% to 75%.  BaFa is the first modern grower and processor of     
industrial hemp in Germany.  BaFa has the ability to produce very fine fibers   
from industrial hemp, which can and are being used by automotive manufacturers  
in automotive panels and insulation.                                            

The Company continued to develop operations of its strategic subsidiaries in    
Canada (CGP Canada, Ltd.), Germany (NAWARO GmbH), and Switzerland               
(CGP Europe AG) to facilitate the development of worldwide markets for          
industrial hemp and other industrial crops.                                     

In December 1998, the Company sold a subsidiary (Werner Zoellig AG and Glulam   
Lumber Manufacturing Corporation) to be able to focus on development of         
industrial hemp products and increase its ownership and control of BaFa.        

The Company has successfully planted, for the second consecutive year, several  
hectares of industrial hemp in Chernobyl, Ukraine.  While this project has not  
generated revenue to the Company, the Company has garnered great scientific     
repute and numerous, high profile speaking engagements at international         
conferences within the agricultural and scientific communities.                 

The Company executed a research agreement with Rutgers University for the       
research and development of the biotech, nutraceutical and pharmaceutical       
properties of industrial hemp.  A primary research project will be to           
completely eliminate THC (or the psychoactive component) of the industrial hemp 
plant.                                                                          

The Company was engaged as the official editor for industrial hemp for the      
UN / FAO internet site, disseminating fundamental and scientific information    
about industrial hemp throughout the world.                                     

RESULTS OF OPERATIONS                                                           

Because the Company was in the developmental stage from inception through       
June 30, 1998, and only began to receive income in July of 1998, only limited   
revenues were recognized since inception.  The amount of these revenues was     
$1,108,297 for the fiscal year ending on June 30, 1998 and $1,181,865 for the   
fiscal year ending on June 30, 1999.  Revenue from BaFa is not included in      
these amounts since the increase in ownership in BaFa above the level at which  
CGP may reflect BaFa's operations as other than an "investment" occurred on the 
last day of the fiscal year.  Although BaFa has been in operation for 4 years,  
overall, the Company has a limited operating history, and its prospects are     
subject to the risks, expenses and difficulties frequently encountered by       
companies in an evolving market, in this case industrial crops.  To address     
these risks, the Company must, among other things, continue to respond to       
competitive developments, attract, retain and motivate qualified personnel, and 
successfully market the use of industrial hemp as an alternative to timber and  
petroleum based products.  There can be no assurance that the Company will be   
successful in addressing these risks.  As of June 30, 1999, the Company had an  
accumulated deficit of $2,457,117.  The Company had a negative cash flow from   
operations of $2,270,298 and used $206,977 of cash in investing activities,     
but financing activity provided $2,422,787 of cash infusion for the Company.    

As a result of the Company's limited operating history, the Company does not    
have historical financial data for any significant period of time on which to   
base planned operating expenses.  The limited operating history of the Company  
makes the prediction of future results of operations difficult.  The Company's  
expense levels are based in part on its expectations concerning future          
revenue.  The Company's operating expenses have increased significantly since   
the Company's inception.  This trend reflects the costs associated with         
formation of the Company, development of infrastructure, and increased efforts  
in the research and development and marketing of industrial hemp products.  The 
Company anticipates marketing expenses to increase in future periods as it      
pursues an aggressive marketing campaign through a well-established pubic       
relations firm and established distribution channels.                           

Product development costs consist primarily of the development of hemp fiber,   
hemp oil products, "hemp plastics," a material the Company will market to       
replace traditional plastics, and "hemp metals," a material the Company will    
market to replace certain metal products.                                       

General and Administrative expenses have consisted primarily of compensation    
and fees for salaries and professional consulting services.                     

The Company's operating results may fluctuate significantly in the future as a  
result of a variety of factors, many of which are outside the Company's         
control.  These factors include the acceptance by businesses and consumers of   
industrial hemp, the availability of industrial hemp, the amount and timing of  
capital expenditures and other costs relating to the expansion of the Company's 
operations, the introduction of new products or services by the Company or      
competitors, pricing changes in the industry, or general economic conditions    
and economic conditions specific to industrial crops and / or non-wood fibers.  
As a strategic response to changes in the competitive environment, the Company  
may from time to time make certain pricing or marketing decisions or            
acquisitions that could have a material adverse effect on the Company's         
business, results of operations, and financial condition.                       

As part of the production process, the Company has established a network of     
independent distributors in Canada and entered into multi-year contracts to     
sell its seed to Canadian farmers.  These exclusive contracts also provide for  
the Company to purchase the crop at harvest time.  The Company had              
approximately 730 acres under contract in Canada in 1998.  The 1998 Canadian    
crop had a higher yield than predicted based on typical yields experienced in   
Europe.  The Company purchased the 1998 crop from the Growers in accordance     
with the Grower contracts.  The stalk portion of the 1998 crop is currently in  
storage awaiting construction of a fiber processing facility.  A portion of the 
1998 seed crop has been sold under long term agreements.  The remainder of the  
1998 seed harvest (approximately 140 MT) also remains in storage pending        
completion of a temporary seed processing facility which is scheduled to        
commence operations in January 2000.                                            

In 1999, 13,400 acres of industrial hemp were planted for commercial production 
in Canada.  This crop is growing in accordance with expectations.  The Company  
anticipates its second Canadian harvest to be completed in October 1999 and is  
preparing plans for a Spring 2000 planting.  Additionally, 4,800 acres were     
planted in Canada for seed multiplication, which will be harvested by October   
1999 for the spring 2000 planting season.                                       

During October 1999, the Company anticipates commencing growing trials in       
Australia.                                                                      

INFLATION AND CHANGING PRICES                                                   

To date, the impacts of inflation and changing prices on the Company's          
operations have been minimal.                                                   

GOING CONCERN QUALIFICATIONS                                                    

The auditors of the consolidated financial statements of the Company have       
stated that the financial statements have been prepared on a going-concern      
basis for the year ended June 30, 1999.  That basis of accounting contemplates  
the realization of assets and the satisfaction of liabilities in the normal     
course of conducting business operations.  As shown in the consolidated         
financial statements, operations for the year ended June 30, 1999 resulted in a 
net loss of $1,912,707.  The Company's future is dependent on its ability to    
continue to obtain additional capital and realize a level of sales adequate to  
support its operations.                                                         

CAPITAL RESOURCES AND LIQUIDITY                                                 

The need for sustained funding of the current operations drives the Company's   
efforts to raise additional capital from qualified investors.  The Company      
expects to privately place additional common stock and / or conduct an          
additional public offering of equity securities.  The proceeds used from any    
offering are expected to fund the Company's general working capital needs and   
provide for construction of physical processing facilities.  The Company has no 
significant commitments for equipment purchases, product manufacturing, or      
marketing efforts at present.                                                   

The Company's Canadian subsidiary, CGP Canada, Ltd., is leasing a facility      
under a contract terminating in January 2001.  The monthly expense is           
approximately $1,375 US Dollars ($1,926 Canadian Dollars).                      

FINANCIAL STATEMENTS                                                            

REG. 228.310 (ITEM 310)                                                         

The selected financial data presented below has been derived from the financial 
statements of the Company.  The following table summarizes certain financial    
information and should be read in conjunction with "Management's Discussion and 
Analysis" and the Financial Statements and related notes included elsewhere in  
this Registration Statement.  The information below may not be indicative of    
the Company's future results of operations.                                     

                           JUNE 30, 1998               JUNE 30, 1999

Statement of Operations Data:                                                   
Revenue                       $   1,108,297                $  1,181,865   
Operating Expenses              $   1,024,433                $  2,843,988 
Net Loss                      $    (544,410)               $ (1,912,707)  
Net Loss per Share            $        (.08)               $       (.09)  

Balance Sheet Data:                                                             
Current Assets                $   4,034,412                $    982,373   
Total Assets                  $  21,246,651                $  1,527,508   
Total Stockholders Equity     $  12,663,517                $  1,166,101   

CASH CONTRIBUTIONS                                                              

Upon organization of the Company, there was an initial $200 paid in capital.    
In exchange for these funds, the company issued 6,123,000 shares to the         
founders, which were dispersed as follows:                                      

Susan M. Brana (1)              3,541,500 shares                                
Martin Moravcik                   581,500 shares                                
Gero Leson                      2,000,000 shares                                

(1) Susan M. Brana is the beneficial owner.  The owner of record is GAIN        
Integrated Systems, Inc.                                                        

The following is a list of cash contributions made by officers, directors,      
promoters, and affiliated persons made subsequent to the organization of the    
company, and made for the purpose of acquiring common equity in the company:    

Shareholder                   Cash Contribution         No. of Shares Issued    

Susan M. Brana (1)              $1,364,967                         9,257,333    

Mark Kaeller                    $  295,367                    1,275,000         

Aries Capital Management (2)    $  250,000                      100,000         

(1) Susan M. Brana is the beneficial owner.  The owner of record is GAIN        
Integrated Systems, Inc.                                                        

(2) Aries Capital Management is affiliated with Sierra Brokerage, Inc.,         
the Company's market maker.                                                     

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS                    

REG. 228.401 (ITEM 401)                                                         

Directors                                                                       

Susan M. Brana; 46 years old; Chairman of the Board since July 1997             

Susan Brana is an entrepreneur in technology companies.  Ms. Brana also has     
broad experience in securities compliance and commercial / investment banking.  

Hansjorg Spoerri; 53 years old; President, CGP Europe; Director since December  
1997                                                                            

Hansjorg Spoerri is managing director of Papierfabrik, Netstal, Switzerland and 
has morethan 25 years experience in the innovative development and production   
of paper in Europe, and consequently, brings expertise and relationships in the 
pulp and paper industry.                                                        

Dr. Werner Thelen; 43 years old; President, NAWARO; Director since September    
1998                                                                            

Dr. Werner Thelen is an accomplished, independent attorney in Cologne, Germany, 
specializing in banking, finance and corporate law.  Dr. Thelen has been        
instrumental in the investment in and development of BaFa.                      

Alan Cade; 43 years old; Director since July 1998                               

Alan Cade is Senior Vice President of Dugan & Associates, a highly regarded     
construction management company in Los Angeles, CA.  Dugan & Associates will    
manage the construction of all planned, state-of-the-art, integrated            
straw / fiber and seed processing facilities.                                   

Mark Kaeller; 32 years old; Chief Operating Officer; Director effective 9/99    

Mark Kaeller has ten years of commercial banking management and operations      
experience.  Mr. Kaeller was a A.V.P. of Sanwa Bank and Wells Fargo Bank.       

Executive Officers                                                              

Susan M. Brana           Chairman of the Board and Secretary, CGP Inc.          
Hansjorg Spoerri         President, CGP Europe AG                               
Dr. Werner Thelen        President, NAWARO GmbH                                 
Dr. Slavik Dushenkov     Executive Vice President, Research and Development,    
CGP Inc.                      
Mark Kaeller             Senior Vice President, Chief Operating Officer,        
CGP Inc.                      
Darrell McElroy          Senior Vice President, Agriculture, CGP Canada Ltd.    

Dr. Slavik Dushenkov, who has been a consultant to the Company, has over 20     
years of innovative research experience that includes agricultural molecular    
biology, plant physiology and bioremediation.  He is co-inventor on three US    
patents, and has authored / co-authored numerous books and articles.  Dr.       
Dushenkov will direct the Company's biotechnology and breeding research and     
development programs.                                                           

Darrell McElroy has over 23  years as an independent pedigree seed grower in    
cereals, canola and flax.   He was one of the first growers in 1998 to plant a  
commercial plot of industrial hemp in Western Canada.                           

EXECUTIVE COMPENSATION                                                          

REG. 228.402 (ITEM 402)                                                         

Following is the amount of cash and stock compensation for executives of the    
Company since inception to 6/30/99:                                             

Dr. Slavik Dushenkov - $9,999.30; 13,000 shares of Common Stock                 
Dr. Werner Thelen - $22,000.00; 200,000 shares of Common Stock                  
Hansjorg Spoerri - 600,000 shares of Common Stock                               
Mark Kaeller - $40,500; 1,695,000 shares of Common Stock                        
Darrell McElroy - $15,333.33; 10,000 shares of Common Stock                     

SECURITY OWNERSHIP OF CERTAIN                                                   
BENEFICIAL OWNERS AND MANAGEMENT                                                

REG. 228.403 (ITEM 403)                                                         

The following table sets forth the Common Stock ownership of each person known  
by the Company to be the beneficial owner of five percent or more of the        
Company's Common Stock, each director individually, and all officers and        
directors of the Company as a group.  Each person has sole voting and           
investment power with respect to the shares of Common Stock shown, and all      
ownership is of record and beneficial:                                          

Title         Name and address         Amount and nature        Percent         
of class      of beneficial owner      of beneficial ownership  of Class        

Common        Susan M. Brana (1)            12,953,183          36.82%          
Stock           1015 Gayley Ave.                                                
No. 387                                             
Los Angeles, CA.  90024                             

Common        Mark G. Kaeller                1,970,000           5.60%          
Stock         P.O Box 572285                                                    
Tarzana, CA.  91357                                 

Common        Meekin Holdings Ltd.           3,000,000           8.53%          
Stock                                                                           

Common        Avoriaz Holdings Ltd.          4,000,000          11.37%          
Stock                                                                           

All Officers                                16,633,183          47.29%          
Directors as                                                                    
a Group                                                                         

(1) Susan M. Brana is the beneficial owner of 12,953,183 shares.  The owner of  
record is GAIN Integrated Systems, Inc.                                         

Note: Shareholder records with the Company's transfer agent as of June 30, 1999 
show Werner Zoellig AG with 3,000,000 shares outstanding.  These shares are     
to be considered returned to the Company as part of its sale of Zoellig as of   
June 30, 1999, but were not cancelled on record by the transfer agent until     
after June 30, 1999.                                                            

PRINCIPAL SHAREHOLDERS AND DIRECTORS                                            

A total of 32,174,802 shares of Common Stock were issued and 32,173,802 were    
outstanding as of June 30, 1999.  The authorized capital stock of the Company   
constitutes 50 million shares of common stock at $0.0001 par value.  The        
holders of Common stock are entitled to one vote per share on all matters to be 
voted by the shareholders.                                                      

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                  

REG. 228.404 (ITEM 404)                                                         

Management has concluded an Exclusive Agreement with NTech Corporation, a       
company involved in atomic and molecularly assembled substances, for the use of 
hemp fiber in combination with other compounds to produce r                     
ecyclable / biodegradable products to compete with certain plastics and metal   
products.  The Company anticipates completion of formal product application     
tests to occur during 1999, after which the Company will pursue the most        
profitable production and marketing strategies.  Susan M. Brana, Chairman of    
the Board of CGP, is also the Chairman of the Board of NTech Corporation.  As   
of June 30, 1999, the Company had a note receivable of $24,200 due from NTech   
Corporation that is unsecured, non-interest bearing and due on demand           

Instruments defining the rights of Securityholders, including indentures.       

Not applicable.                                                                 

Voting trust agreements and amendments thereto.                                 

Not applicable.                                                                 

Company subsidiaries                                                            

All of the following companies are 100% wholly-owned subsidiaries of            
Consolidated Growers and Processors, Inc.:                                      

Consolidated Growers and Processors (CGP) Canada Limited                        
93 Lombard Ave., Suite 205                                                      
Winnipeg, Manitoba                                                              
R3B 3B1 Canada                                                                  

CGP Canada Ltd. is incorporated in Winnipeg, Manitoba, Canada, and operates     
under the name Consolidated Growers and Processors (CGP) Canada Limited.        

CGP Europe AG                                                                   
Industrie Strasse 1                                                             
CH 6304  Zug, Switzerland                                                       

CGP Europe AG is incorporated in Baar, Switzerland, and operates under the name 
CGP Europe AG.                                                                  

NAWARO GmbH                                                                     
Kattenbug 18-24                                                                 
50667                                                                           
Cologne, Germany                                                                

NAWARO GmbH is incorporated in Cologne, Germany, and operates under the name    
NAWARO GmbH.                                                                    

The following company is owned 75% by NAWARO GmbH:                              

Badische Naturfaseraufbereitung (BaFa)                                          
Stephanstrasse 2                                                                
76316 Malsch    Germany                                                         

Badische Naturfaseraufbereitung is incorporated in Malsch, Germany, and         
operates under the name BaFa.                                                   

Contacts                                                                        

Transfer Agent                                                                  

Interwest Transfer Company, Inc.                                                
Lorraine Brighton-Smith                                                         
P.O. Box 17136                                                                  
1981 E. 4800 S.                                                                 
Suite 100                                                                       
Salt Lake City, CA.  84117-5126                                                 
(801) 272-9294 Tel.                                                             
(801) 277-3147 Fax                                                              

Market Maker                                                                    

Sierra Brokerage                                                                
Merv Roland or Jeff Richardson                                                  
2000 Bethel Rd.                                                                 
Columbus, OH. 43220                                                             
(614) 442-9400 Tel.                                                             
(614) 442-9486 Fax                                                              

Certified Public Accountant                                                     

Kevin G. Breard                                                                 
9010 Corbin Ave.                                                                
Suite 7                                                                         
Northridge, CA.  91324                                                          
(818) 886-0940 Tel.                                                             
(818) 886-1924 Fax                                                              

RECENT SALES OF UNREGISTERED SECURITIES                                         

Upon organization, the management of the Company created incentive stock        
options covering a total of 1,000,000 shares and exercisable at $.01 per        
share.  These options were granted to either new or existing officers or        
directors at any time through the fiscal year ending June 30, 1998.  In         
November 1997, all 1,000,000 of these options were exercised at $.01 per share; 
thus, the Company received $10,000 for the exercising of these options.         

In July 1997 (pursuant to Reg. 504 of the Securities Act of 1933), the Company  
sold 195,000 "units," whereby each unit consisted of one share of Common Stock  
and two warrants.  Each unit was sold at $.10 per unit.  Each warrant was       
exercisable by the holder thereof to purchase one common share of the Company   
at an exercise price of $2.50 per share.  The warrants were immediately         
detachable from the common shares for separate transfer and were exercisable    
from the date of the offering circular (July 1, 1997) for a period of twelve    
months thereafter.  At the discretion of the board of directors of the Company, 
and on thirty days prior written notice to warrant holders, the exercise period 
of the warrants could be extended, or the exercise price of the warrants could  
be reduced.  At any time during the exercise period of the warrants, or any     
extension thereof, the Company could, on thirty days prior written notice, call 
the warrants for redemption at a price of $.0001 per warrant.  The warrants     
would expire and become void on conclusion of their exercise period or any      
extension thereof, if applicable.  Of the original 390,000 warrants issued,     
286,743 warrants were exercised (total $716,857.50).                            

Since inception to present, the Company has issued "restricted" shares of       
Common Stock to various parties.  The following is a list of the amount of      
"restricted" shares issued for cash to 6/30/99, the price in which they were    
issued at, and the consideration received:                                      

Number of "restricted" shares sold   Price per share    Consideration received  

   600,000                      $   .08                 $ 50,000

      4,605,000                           $   .10                 $ 95,000

 1,300,000                      $   .12                 $161,831

   819,000                      $   .14                 $114,660

 1,725,000                      $   .20                 $345,000

 3,500,000                      $   .24                 $850,000

 1,000,000                      $   .31                 $310,000

   275,000                      $   .50                 $137,500

    55,000                      $  1.00                 $ 55,000

    62,700                      $  2.00                 $125,400

With respect to these shares of Common Stock issued by the Company, the Company 
believes that these transactions did not involve any public offering, in as     
much as all these shares were issued to the Company's Officers, Directors and   
others, who purchased the shares for investment purposes only and not with a    
view to further public distribution.  Further, no commissions were paid to any  
persons in connection with such sales, no advertising of any nature was made in 
connection with the sale of said shares, all Company information was made       
available to said purchasers, and said purchasers were required to execute a    
subscription agreement restating the aforementioned, among other things.        
Accordingly, the Company believes that the aforementioned transactions were     
exempt from registration pursuant to Section 4(2) of the Securities Act of      
1933, as amended.                                                               

Since inception to 6/30/99, the Company has issued 12,466 "restricted" shares   
of Common Stock to various parties for consideration of services rendered, at a 
Fair Market Value of $2.50 per share (total consideration $31,165).  Since      
inception to 6/30/99, the Company has issued 10,000 "restricted" shares of      
Common Stock to various parties for consideration of services rendered, at a    
Fair Market Value of $2.00 per share (total consideration $20,000).  Since      
inception to 6/30/99, the Company has issued 1,100 "restricted" shares of       
Common Stock to various parties for consideration of services rendered, at a    
Fair Market Value of $1.00 per share (total consideration $1,100).  Since       
inception to 6/30/99, the Company has issued 2,556,500 "restricted" shares of   
Common Stock to various parties for consideration of services rendered, at a    
Fair Market Value of $.05 per share (total consideration $127,825).   Since     
inception to 6/30/99, the Company has issued 121,600 "restricted" shares of     
Common Stock to various parties for consideration of services rendered, at a    
Fair Market Value of $.01 per share (total consideration $1,216).  Since        
inception to 6/30/99, the Company has issued 6,838,000 "restricted" shares of   
Common Stock to various parties for consideration of services rendered, at a    
Fair Market Value of $.0001 per share (total consideration $683.80).            

Since inception to 6/30/99, the Company has issued 41,293 "restricted" shares   
of Common Stock to various growers for the purchase of their harvest, at a Fair 
Market Value of $1.00 per share (total consideration $41,293).                  

In November 1997, the Company entered into an agreement with Minus 9, Inc., a   
Nevada Corporation which developed a coded microparticle product known as       
StuffDust.  This agreement gives the worldwide license in regard to this        
product to the Company, which allows for the use of the particle in the         
manufacture of various paper products.  As payment for this license, the        
Company issued 125,000 "restricted" shares of common stock.  These shares were  
issued at a Fair Market Value of $.05 per share (total consideration $6,250).   
See notes to Consolidated Financial Statements for more specifics.              

In May 1998, the Company entered into an agreement to acquire 100% of the net   
assets of Werner Zoellig AG and Glulam Lumber Mfg. For 3,000,000 shares of      
Common Stock.  The stock was valued at $4.00 per share.  See the notes to       
Consolidated Financial Statements for more specifics.  The Company has since    
sold this subsidiary to focus on their core business, i.e., industrial hemp     
cultivation and processing.                                                     

INDEMNIFICATION OF DIRECTORS AND OFFICERS                                       

REG. 228.702 (ITEM 702)                                                         

The Company's Certificate of Incorporation states the following:                

"No director of the corporation shall have personal liability to the            
corporation or its shareholders for monetary damages for breach of fiduciary    
duty as a director, provided that this provision shall not eliminate or limit   
the liability of a director (a) for any breach of the director's duty or        
loyalty to the corporation or its stockholders, (b) for acts or omissions not   
in good faith or which involve intentional misconduct or a knowing violation of 
law, (c) under Section 174 of the Delaware Corporation Law, or (d) for any      
transaction from which the director derived an improper personal benefit."      

The Company's BY-LAWS, Section 7.4, Indemnity, states the following:            

"The corporation shall indemnify its directors, officers and employees to the   
fullest extent allowed by law, provided, however, that it shall be within the   
discretion of the Board of Directors whether to advance any funds in advance of 
disposition of any action, suit or proceeding, and provided further that        
nothing in this section 7.4 shall be deemed to obviate the necessity of the     
Board of Directors to make any determination that indemnification of the        
director, officer or employee is proper under the circumstances because he has  
met the applicable standard of conduct set forth in subsections (a) and (b) of  
Section 145 of the Delaware General Corporation Law."                           

At the present time, the Company is in the process of obtaining D & O           
(Directors and Officers) insurance.                                             

Consolidated Growers & Processors, Incorporated and Subsidiaries  

Consolidated Financial Statements       

June 30, 1999       

(Audited)       

KEVIN G. BREARD, C.P.A.                                                         
AN ACCOUNTANCY CORPORATION                                                      

To the Board of Directors                                                       
Consolidated Growers & Processors, Incorporated                                 
Monterey, California                                                            

Independent Auditor's Report                                                    

I have audited the accompanying consolidated balance sheet of Consolidated      
Growers & Processors, Incorporated  and Subsidiaries as of June 30, 1999 and    
the related consolidated statements of operations and retained earnings, and    
changes in cash flows for the year then ended.  These financial statements are  
the responsibility of the Company's management.  My responsibility is to        
express an opinion on these financial statements based on my audit.             

I have conducted my audit in accordance with generally accepted auditing        
standards.  Those standards require that I plan and perform the audit to obtain 
reasonable assurance about whether the financial statements are free of         
material misstatements.  An audit includes examining, on a test basis, evidence 
supporting the amounts and disclosures in the financial statements.  An audit   
also includes assessing the accounting principles used and significant          
estimates made by management, as well as evaluating the overall financial       
statement presentation.  I believe that my audit provides a reasonable basis    
for my opinion.                                                                 

In my opinion, the consolidated financial statements referred to above present  
fairly, in all material respects, the financial position of Consolidated        
Growers & Processors, Incorporated  and Subsidiaries as of June 30, 1999, and   
the results of its operations and its cash flows for the year then ended in     
conformity with generally accepted accounting principles.                       

The accompanying financial statements have been prepared assuming that the      
Company will continue as a going concern.  As discussed in Note 1 to the        
consolidated financial statements, the Company's operations to date have        
resulted in a substantial net loss of $1,912,707 during the year ended          
June 30, 1999.  The sole reason for the positive equity balance is the          
continuing effort of company personnel to sell common stock.  There is no       
certainty they will be able to continue to do so, however management plans to   
rely on product sales to sustain operations.   The financial statements do not  
include any adjustments that might result from the outcome of this uncertainty. 

/s/ Kevin G. Breard, CPA                                                    
Kevin G. Breard, CPA                                                

Northridge, California                                                          
September 25, 1999                                                              

NORTHRIDGE OFFICE PLAZA,                                                        
9010 CORBIN AVENUE, SUITE 7                                                     
NORTHRIDGE, CALIFORNIA 91324                                                    
(818) 886-0940   FAX (818) 886-1924                                             

Consolidated Growers & Processors, Incorporated and Subsidiaries  
Consolidated Balance Sheet    
June 30, 1999         

Assets        

Current assets                                                                  

Cash and cash equivalents                                          $      88,683
Accounts receivable, net                                                 731,351
Inventories                                                              156,583
Prepaid expenses and other current assets               5,756                   

Total current assets                                                   982,373  

Other assets                                                                    
Property, plant and equipment, net                                       167,414
Note receivable related party                                          24,200   
Investments                                                              353,521

Total other assets                                                       545,135

Total assets                                                      $  1,527,508  

  Liabilities & Stockholders' Equity

Current liabilities                                                             

Accounts payable                                                       $ 259,504
Current portion of long term debt                                         25,476

Total current liabilities                                                284,980

Long-term liabilities                                                           

Note payable, net of current portion                                    76,427  

Total long-term liabilities                                              76,427 

Total liabilities                                                        361,407

Stockholders' equity                                                            

Common stock, $0.0001 par value,                                                
50,000,000 shares authorized,                                                   
32,174,802 shares issued,                                                       
32,173,802 outstanding                                          3,217           
Common stock to be issued                                                 35,778
Additional paid-in capital                                             3,632,349
Accumulated deficit during the development stage          (2,457,117)           
Accumulated other comprehensive income                               (44,926)   
Treasury stock, at cost, 1,000 shares                                  (3,200)  

Total stockholders' equity                                             1,166,101

Total liabilities & stockholders' equity                             $ 1,527,508

The accompanying notes are an integral part of these financial statements       

Consolidated Growers & Processors, Incorporated and Subsidiaries  
Consolidated Statement of Operations  
For the Year Ended June 30, 1999  

Revenue                                                                         

Hemp seeds, grains and by-products                                  $  1,181,865

Total revenue                                                        1,181,865  

Costs and expenses                                                              

Costs of hemp seeds, grains, and transportation                      790,830    
General and administrative expenses                                    1,894,168
Research and development                                                 158,990

Total costs and expenses                                               2,843,988

Net ordinary income                                                  (1,662,123)

Other income and expenses                                                       

Other income                                                     $       14,277 
Other expenses                                                       (55,944)   
Total other income and expenses                                     (41,667)    

Income (loss) before provision for taxes                             (1,703,790)

Provision for income taxes                                                     -

Income (loss) from continuing operations                         (1,703,790)    

Discontinued operations:                                                        

Income from operations of Werner Zoellig AG                                     
& Glulam Lumber Mfg.                                            205,457         
Loss on disposal of Werner Zoellig AG                                           
& Glulam Lumber Mfg., net of tax                                   (414,374)    

Income loss from discontinued operations                           (208,917)    

Net income (loss)                                                   $(1,912,707)

Income (loss) from continuing                                                   
operations per share                                     $        (0.08)        

Net income (loss) per share                               $        (0.09)       

The accompanying notes are an integral part of these financial statements       

Consolidated Growers & Processors, Incorporated and Subsidiaries  
Consolidated Statement of Cash Flows    
For the Year Ended June 30, 1999      

Cash flows from operating activities                                            

Net income (loss)                                                  $ (1,912,707)

Adjustments to reconcile net income to                                          
net cash used by operating activities:                                          

Depreciation                                        $      36,205               
Foreign currency translation                       (35,452)                     
Issuance of common stock for                                                    
goods and services                           922                                
Issuance of additional paid-in                                                  
capital for goods and services            104,737                               
Income from Zoellig operations                  (255,457)                       
Loss on sale of investment in Zoellig             414,374                       

(Increase) decrease in:                                                         
Accounts receivable                                (731,351)                    
Inventory                                             (68,920)                  
Prepaid expenses and other                                                      
current assets                            (4,898)                               
Other assets                                        25,400                      

(Decrease) increase in:                                                         
Accounts payable                                       156,849                  
Total adjustments                                                      (357,591)

Net cash used by operating activities                             (2,270,298)   

Cash flow from investing activities                                             

Purchase of investment in BaFa                  (183,832)                       
Purchase of property and equipment                   (28,150)                   
Additional investment in Zoellig                         5,005                  

Net cash used in investing activities                               (206,977)   

Net cash flows from financing activities                                        
Net (increase) loans to related parties         (24,200)                        
Net increase in short term debt                  25,476                         
Net increase in long term debt                    76,427                        
Proceeds from issuance of common stock             1,157                        
Proceeds from additional                                                        
paid-in capital                               2,311,349                         
Proceeds from common stock                                                      
to be issued                                        35,778                      
Purchase treasury stock                          (3,200)                        
Net cash provided by financing activities                              2,422,787

Net decrease in cash and cash equivalents                               (54,488)

Cash and cash equivalents                                                       
at the beginning of the year                                           143,171  

Cash and cash equivalents at the end of the year                        $ 88,683

The accompanying notes are an integral part of these financial statements       

Consolidated Growers & Processors, Incorporated and Subsidiaries  
Consolidated Statement of Cash Flows      
For the Year Ended June 30, 1999      

Supplemental disclosures of cash flow information                               

Cash paid during the period for:                                                
Interest                                       $             -0-                
Income taxes                               $             -0-                    

Noncash investing and financing transactions                                    

Issuance of common stock for $105,659 in goods and outside services             
Common stock                               $            922                     
Additional paid-in capital                            104,737                   

Total                                 $   105,659                               

The Company sold back the acquired assets and liabilities of Werner Zoellig AG  
and Glulam Lumber Mfg. ("Zoellig").  This was a noncash transaction.  The stock 
given in exchange for the net asset and liabilities was returned to the Company 
and canceled.  The stock given in the initial purchase was worth $12,000,000,   
the value of Zoellig.  When the Company disposed of Zoellig on December 31,     
1998, the book value of the Company was $12,414,374.  The book value of Zoellig 
appreciated $414,374, but when the Company disposed of Zoellig, no              
consideration was received for the increased value.  Accordingly, a noncash     
loss of $414,374 was recorded in the Statement of Operations.                   

The accompanying notes are an integral part of these financial statements       

                                                        [Enlarge/Download Table]



                     Consolidated Growers & Processors, Incorporated and Subsidiaries                                                                             
                  Consolidated Statement of Changes in Stockholder's Equity                                                                                       
                      For the Year Ended June 30, 1999                                                                                                            

                                                                                                                                                                  

                                                                            Accumulated                                                                           
                  Common       Common      Additional   Other         Stock                                                                                       
                  Stock        Stock       Paid-in      Compehensive  To Be           Accumulated     Treasury                                                    
                         Shares       Amount      Capital      Income            Issued          Deficit         Stock      Totals                                

                                                                                                                                                                  

Balances                                                                                                                                                          
as of                                                                                                                                                             
June 30, 1998       14,527,251  $ 1,138            $ 845,885       $ (9,474)        $12,370,378            $ (544,410)  $-            $ 12,663,517                

Reclassification                                                                                                                                                  
of stock to be                                                                                                                                                    
issued at                                                                                                                                                         
June 30, 1998                -             315    12,370,063              -        (12,370,378)             -       -                    -                        

Sale of subsidiary                                                                                                                                                
(Zoellig) back to                                                                                                                                                 
stockholders                (3,000,000)    (300)         (11,999,700)             -                  -                  -       -              (12,000,000)       

Issuance of stock                                                                                                                                                 
for services          9,224,459             922              104,737              -                  -                  -       -                  105,659        

Issuance of stoc                11,423,092        1,142            2,311,364              -                  -                 -        -                2,312,506

Foreign currency                                                                                                                                                  
translation adjustment      -        -                    -      (35,452)                     -               -          -                 (35,452)               

Stock subscribed,                                                                                                                                                 
stock to be issued              -            -                    -             -               35,778              -    -                  35,778                

Treasury Stock                       (1,000)          -                   -             -                    -                 -  (3,200)                  (3,200)

Net income (loss)                      -              -             -            -                -      (1,912,707)    -               (1,912,707)               

Balances as of                                                                                                                                                    
June 30, 1999       32,173,802  $ 3,217         $  3,632,349       $(44,926)        $ 35,778     $(2,457,117) $(3,200)         $ 1,166,101                        

The accompanying notes are an integral part of these financial statements                                                                                         


Consolidated Growers & Processors, Incorporated and Subsidiaries
Notes to Consolidated Financial Statements
For the Year Ended June 30, 1999  

NOTE 1:  ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES                       

General                                                                         

Consolidated Growers & Processors, Incorporated was incorporated under the laws 
of the State of Delaware on June 10, 1997 for the primary purpose of providing  
financing, technical and marketing expertise to the farming, processing and     
marketing of products from industrial hemp and other industrial crops.  The     
Company in the prior period was in the development stage, but has commenced     
operating activities as of July 1, 1998.  The accompanying consolidated         
financial statements include the accounts of Consolidated Growers & Processors, 
Incorporated (the Parent) and its wholly owned Subsidiaries Consolidated        
Growers & Processors, Canada Ltd. (CGP Canada), NAWARO Beteiligungsgesellschaft 
mbH (NAWARO), and its 98% owned subsidiary Consolidated Growers & Processors,   
Europe (CGP Europe) (collectively, the Company).  All significant intercompany  
accounts and transactions have been eliminated in consolidation.                

Summary of Significant Accounting Policies                                      

The presentation of financial statements in conformity with generally accepted  
accounting principles requires management to make estimates and assumptions     
that affect the reported amounts of assets and liabilities and disclosure of    
contingent assets and liabilities at the date of the financial statements and   
the reported amounts of revenue and expenses during the reporting period.       
Actual results could differ from those estimates.                               

The Parent and the Subsidiaries have allowed borrowing and lending on an        
interest free basis.                                                            

The Company considers all highly liquid investments with a maturity of three    
months or less when purchased to be cash equivalents.                           

Property and equipment are recorded at cost.  Depreciation of property and      
equipment is recorded on the straight-line method over the respective useful    
lives of the assets.                                                            

Inventory is valued at the lower of cost or market.  Inventory will be recorded 
on a first-in first-out basis.                                                  

Research and development expenditures are expensed as incurred.                 

The functional currency for the Company's foreign subsidiaries is the           
applicable local currency.  Assets and liabilities of the foreign subsidiaries  
are translated into U.S. dollars at year-end exchange rates.  Income and        
expense items are translated at the average rates of exchange prevailing during 
the year.  The adjustments resulting from translating the financial statements  
of the foreign subsidiary are reflected in stockholders' equity.                

In February 1997, the Financial Accounting Standards Board ("FASB") issued SFAS 
No. 128, "Earnings Per Share" ("EPS").  SFAS No. 128 requires dual presentation 
of basic EPS and diluted EPS on the face of all statements of operations issued 
after December 15, 1997 for all entities with complex capital structures.       
Adoption of SFAS No. 128 had no effect on the Company's financial statements.   
Basic EPS is computed as net income (loss) divided by the weighted averaged     
number of common shares outstanding for the period.  Diluted EPS reflects the   
potential dilution that could occur from common shares that may be issued       
through stock options, warrants, and other                                      
convertible securities.                                                         

Loss per share is computed using the weighted average number of common shares   
outstanding (22,429,496) at that date.  The computation of loss per share does  
not include common stock equivalents because the Company does not carry these   
instruments.                                                                    

NOTE 2:  ACCOUNTS RECEIVABLE, NET                                               

The accounts receivable are trade contracts with growers for the production of  
industrial hemp.  The Company will receive the receivable balance over two      
installment periods: November 30, 1999 and January 31, 2000.  No material       
amounts were provided for an allowance for doubtful accounts at June 30, 1999.  

NOTE 3:  INVENTORIES                                                            

Inventories consist of:                                                         
Grain                                                    $   134,947            
Planting seed                                      11,061                       
Straw bales                                          10,575                     

Total                                        $   156,583                        

NOTE 4:   INVESTMENT                                                            

The Company purchased 15% ownership interest in Badische Naturfaseraufbereitung 
GmbH ("BaFa") for $169,689 for the year ended June 30, 1998.  On June 30, 1999, 
the Company purchased another 60% of BaFa for $183,832.  At June 30, 1999 the   
Company owns 75% of BaFa, carried at cost for $353,521.  The primary reason for 
the investment in BaFa is that BaFa has represented to the Company that it      
possesses the required skills to operate as a mechanical processing facility    
for industrial hemp crops.  BaFa then would provide industrial hemp fiber to    
the Company, as ordered, at the prevailing fair market wholesale prices.        

NOTE 5:   PROPERTY, PLANT AND EQUIPMENT                                         

Property, plant and equipment consists of the following:                        

                                                                     Depreciable
                                                               Lives

Machinery & equipment                       $    198,557              5   years 
Furniture & fixtures                                5,513             7   years 

Total property, plant and equipment                204,070                      

Accumulated depreciation                              (36,656)                  

Total property, plant and                                                       
equipment, net                             $    167,414                         

Depreciation expense for the year ended June 30, 1999 was $36,205.              

NOTE 6:   NOTE RECEIVABLE-RELATED PARTY                                         

The note is unsecured, non-interest bearing, and due on demand.  The related    
party is NTech Corporation.  A majority shareholder in the Company is also a    
majority shareholder in NTech.                                                  

NOTE 7:   COMMITMENTS  AND CONTINGENCIES                                        

Effective on October 1, 1997, the Company signed an agreement with the          
Ukrainian Academy of Agricultural Sciences/Institute of Bast Crops (the         
"Institute") whereby the Institute exclusively licensed to the Company certain  
industrial hemp registered seed varieties, which were bred by the Institute.    

Under the terms of this agreement, the Institute will provide seed production   
services for the Company on an exclusive basis for certain specified seed       
varieties in the following geographic territories: North America, Central       
America, South America, Africa, Australia, New Zealand and Asia (excluding the  
countries of the former Soviet Union).                                          

The Company is committed to pay a royalty of 5% of the gross sales price        
(excluding the costs of packaging, insurance, taxes, duties, transportation or  
other non-production expenses) of these seed varieties to the Institute.        
This agreement will continue in effect until canceled by either party upon      
providing three years notice to the other party.                                

On November 15, 1997, the Company entered into an agreement with Minus 9 Inc.,  
a Nevada Corporation, which had developed a coded micro particle product known  
as Stuff Dust.  This agreement gives the worldwide license in regard to this    
product to the Company, which allows the use of the particle in the manufacture 
of various paper products.                                                      

As payment for this license, the Company issued 125,000 shares of common stock  
in 1997, and is committed to pay Minus 9 Inc. royalties on net revenues derived 
from the sales of this product.  Royalties range from 4% of net revenues to     
7.5%, depending upon such factors as user application and volume of sales.      
Regardless of net revenues derived from the sale of particle products, the      
Company is committed to pay the following annual minimum advance royalties:     

Year                                 Amount                 

1999                           $   -0-                      
2000                           100,000                      
2001                           100,000                      
2002 and thereafter             100,000                     

Minimum advance royalty payments will be credited against royalties due based   
upon actual sales.                                                              

This license agreement will terminate upon the expiration of the last-to-expire 
patent relating to the licensed product.                                        

NOTE 8:   RELATED PARTY TRANSACTIONS                                            

Related party transactions are summarized as follows:                           

1) 8,474,000 shares of common stock was issued to the chairman of the board for 
$1,309,169.  The value of the shares ranged from $0.10 to $0.249671.            

2) 1,625,000 shares of common stock was issued to the chief financial officer   
for $252,231.  The value of the shares ranged from $0.0001 to $0.249671.        

NOTE 9:   INCOME TAXES                                                          

No provision for income taxes have been provided.  The Company incurred a loss  
for the year.  The Company has elected to carry forward the loss to offset      
future taxable income.  The Company conservatively have not valued the tax      
benefit as the amount and date of realization is uncertain.                     

NOTE 10:   DISPOSITION                                                          

On May 31, 1998, the Company purchased the net assets of Werner Zoellig AG. &   
Glulam Lumber Mfg.  The purchase was accomplished via issuing 3,000,000 shares  
of stock at $4.00 per share.                                                    

On December 31, 1998, after seven (7) months, the Company decided to sell the   
subsidiary back to it's prior shareholder.  The Company took back the issued    
shares of stock, and the ownership reverted back to it's prior ownership.       

This transaction qualifies as a disposal of a business segment.  This           
subsidiary had a separate product line of glue laminated wooden beams.          

NOTE 11:   SEGMENT INFORMATION                                                  

Industry Segment Data                                                           

The Company will have one business segment: industrial hemp fiber, seeds, oil,  
and by-products. No revenues have been received from imports.  The Canadian     
sales are exclusively within Canada.                                            

Consolidated Growers & Processors, Incorporated (the Parent) employs two (2)    
people, Consolidated Growers & Processors, Canada Ltd. employs five (5) people, 
Consolidated Growers & Processors, Europe employs one (1)                       
person and NAWARO Beteiligungsgesellschaft mbH employs one (1) person.          

Geographic Area Data                                                            

June 30, 1999                             Adjustments                           
United                         and                  
Revenues                          States Canada Europe Eliminations Consolidated

Unaffiliated                                                                    
customers           $  -0-  $1,181,865  $  -0-  $          -    $  1,181,865    

Transfers                                                                       
between                                                                         
geographic                                                                      
areas             -          -         -             -             -            

Total                                                                           
revenues         -0-    1,181,865       -0-               -     1,181,865       

Earnings                                                                        
before                                                                          
income                                                                          
   taxes        (1,865,877)       5,788           (52,618)         - (1,912,707)

Identifiable                                                                    
assets    1,464,743         938,682       498,304       (1,374,221)    1,527,508

Net                                                                             
assets                   1,342,905          (64,870) (66,863) (45,071) 1,166,101

SUSAN M. BRANA                                                                  
CHAIRMAN OF THE BOARD OF DIRECTORS                                              

Dates Referenced Herein

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