CVF Technologies Corp. (CNVT)
Interview with:
Jeffrey Dreben, Chairman, President and CEO
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The common thread between the companies CVF Technologies chose to invest in is principally environmental or information technology and principally early stage

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Finance
Misc. Financial Services
(CNVT-OTC: BB)

CVF Technologies Corp.

8604 Main Street, Suite #1
Williamsville, NY 14221
Phone: 716-565-4711


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Jeffrey Dreben
Chairman, President and
Chief Executive Officer

Interview conducted by:
Lynn Fosse
Senior Editor

CEOCFOinterviews.com
July 2004

BIO:
Jeffrey Dreben founded CVF Technologies in 1989 and has worked in the venture capital industry for the last sixteen years.Prior to that he ran his own investment  advisory company after having begun his investment career with Merrill Lynch in 1979, where he worked for several years.Mr.Dreben has an Honours Bachelor of Arts Degree from Loyola College..

Company Profile:
CVF Technologies Corporation (OTC: BB-CNVT) headquartered in Williamsville, New York, is a technology development company, whose principal business is sourcing, funding and managing emerging pre-public technology companies with significant market potential. Founded in 1989, shareholders include a number of major institutional investors, insurance companies and corporate pension funds. CVF's holdings include five companies involved in two primary business areas, environmental products/services and information technology.

CVF aims to offer investors where feasible, the opportunity to participate in the initial public offerings of its holdings through rights offerings, once they have achieved significant levels of maturity and profitability, and as shareholders in CVF, to continue to participate in these ventures through CVF's retained ownership of the company. CVF's proven record of sourcing and financing, as well as its ability to understand complex technologies, has afforded them an excellent pipeline of technology opportunities. It is in a position to invest in pre-public offerings of significantly undervalued technology companies and assist these firms in realizing their potential, while creating quality returns for CVF.

CVF's group of companies include:
Biorem Technologies Inc. is an industrial biotech company based in Guelph, Ontario and is engaged in the business of applying bioconversion and biotransformation technology to municipal and industrial environmental applications. The current business focus of Biorem is the design and installation of biological air filters, or biofilters, for the removal of odor and other air pollutants from municipal and industrial sources. Since 1999, Biorem has made significant progress in the commercialization of its biofilter technology, having successfully completed more than 50 large-scale biofilter installations in the US and Canada.

Gemprint Corporation makes, markets and services the only economically viable, fool-proof system in the world that uniquely identifies diamonds and other precious gems. This patented system, using a low power laser imaging system, is used by consumer and retail jewelry industry to provide a non-invasive Gemprint, or legal identifier that is recognized by the FBI and other law enforcement agencies as proof of ownership. This provides evidence of ownership, which can assist in the recovery of lost or stolen gems or diamonds. In addition, embedded in the system is appraisal software that assists jewelers in the valuation of gems. Recently, Gemprint's technology has been adopted by a number of jewelry manufacturers and wholesalers for use in inventory control and security. Today, over 20 insurance companies offer a 10% discount on diamond insurance policies if a gem is identified by the Gemprint process. CVF currently owns 67% of Gemprint.

SRE Controls Inc. is a maker and marketer of high efficiency, microprocessor-based electronic motor speed control products for direct current motors, primarily for battery powered vehicles such as electric fork lift trucks and various other industrial and leisure-time. CVF’s Ecoval Technologies Inc. has made significant steps forward in marketing its brand of 100% natural, environmentally safe,  patented non-toxic organic herbicide and insecticide and patented tree recovery systems. The Company’s  Petrozyme Technologies Inc. is an early-stage company that boasts a unique proprietary fermentation technology for the safe on-line remediation of sludge from treatment streams at oil refineries and chemical plants.

CEOCFOinterviews: Mr. Dreben, where was CVF when you started and where are you today?

Mr. Dreben: “CVF was founded n 1989. We are founded by institutional investors originally and private partnerships. We had very well known institutions like Prudential Insurance of American, which is still a shareholder, and, a number of other insurance companies. There were about ten original backers and we began with about 20 million dollars in capital. We have sought out and have invested in ten companies in which we usually the co- founders that helped create them. We have exited five of the companies, which have produced an annual rate of return (IRR) of 40.4% and the other five in our portfolio we believe are going to match those numbers. The way we make money is we sell off our portfolios and get a rate of return on that sale. An example is a data encryption company called Certicom, which we founded in 1990 and invested a total of about one-and-a-half million dollars, and received a return of about $22 million.”

CEOCFOinterviews: What is the common thread?

Mr. Dreben: “The common thread among the companies we chose to invest in is principally environmental and principally early stage when we first get involved with them. We have incubated these companies from the level of an idea in the inventor’s mind, to an actual company that we helped create and develop. Typically there is an environmental thread, so we have companies with air pollution controls and electric vehicle technology. Anything that has to do with the environment is what we typically invest in. We have also invested in some information technology companies where there is a socially interesting aspect to them.”

CEOCFOinterviews: Will you give us some idea of what goes into your decision making process and how do you decide what to go with?

Mr. Dreben: “Because we haven’t hesitated to be the entrepreneurs and co-founders of these companies, we typically haven’t had the management team in-place. Normally you would like to make your main decision based on the management, which is a rule of thumb. However, in many cases we haven’t had that available to us from the start. We had to make the decision based on the idea or the invention. What we would do is evaluate the technological breakthrough and asked that there be proprietary or patented technology; which is an important barrier to entry. It gives you a chance to develop your company before the competition. If there was already a management team in-place, then that would be an area of equal importance.”

CEOCFOinterviews: What do you focus on?

Mr. Dreben: “Right now, we are focused on the five that we currently have, and we are not proactively seeking new investment opportunities, but rather what we are doing is taking the five we have and making sure they grow and achieve their planned business models. Our major focus as a management group is to help the companies that we’ve invested in, grow and prosper. That could be anything from bringing major sales contacts to those companies through our networking, to helping them through a technological evaluation. We are proactive with the management team in each of these companies to do what ever is necessary to help them be successful.”

CEOCFOinterviews: Will you tell us about the companies you have in focus now, and where they are today?

Mr. Dreben: “Our most successful company today is a company called Biorem Technologies, which earned $1.6 million on $6.2 million in sales in 2003.Biorem has developed proprietary systems for purifying air, particularly where odor is the major issue. The target market has been the municipal waste processing plants and also the food processing industry; those are the two major categories we have been focusing on. The proprietary technology that they use is a biofiltration system, which is a filter media that uses biological organisms to filter out the impurities in the air. It is the most cost effective system; and efficient way to filter air that has an odor issue problem. The company has been successful in having achieved 50 installations right now, which are mostly in the Southern U.S. and Canada. You find them in markets in North Carolina to Birmingham Alabama and central Canada. The installation value of a contract could be anywhere from 100-150 thousand to three or four million. We have had good sales growth; if you look at our history, we did four million in sales in 2002; the company is based in Canada so I am giving Canadian figures They went from four million Canadian to eight-and-a-half million Canadian in 2003, with two million dollars in profit. The company is geared to grow at a similar pace for 2004 as well. The company currently has a $6 million backlog in purchase orders and signed letters of intent. The company is bidding on about $160 thousand of qualified leads right now. The company we is clearly a very successful company and we currently own about 65% of it.”

CEOCFOinterviews: Will you tell us briefly about the other holdings?

Mr. Dreben: “The other holdings are much smaller and earlier on in their growth. There is a company called Gemprint Corporation, which has developed patented technology to identify diamonds and it is used to protect a number of players in the industry, anywhere from the wholesaler who has to sell his inventory of diamonds, often on consignment, to the consumer who is worried about his or her stones getting switched when they takes them to a jeweler to get cleaned or appraised. It is an insurance policy against any kind of fraud or thievery or getting diamonds stolen and it is protective on all levels. It also protects the brand identity of the diamonds because a lot of diamonds now are being branded with a brand name and the only way to insure that the brand name is not forged on another diamond is to use the Gemprint technology.

It is a technology that takes a laser light and aims it at the diamonds and the way it is reflected creates a unique fingerprint for each diamond in the world. No two diamonds reflect laser light the same way and that pattern of laser light will be used to identify the diamonds. There are hundreds of millions of stones out there in the market today and we collect a click fee of $15.00 for every diamond that is run through one of our machines. So not only do we sell or rent the machines, but we also generate recurring revenues through the collection of these click fees. We are looking for that to be an interesting cash generator for our company as it starts to mature and becomes the world’s standard for diamond identification. In this direction one of the most well known users of the Gemprint System is Zale’s stores the largest jewellery chain in the country

Another company that is interesting is a company called Ecoval Technologies, which has developed proprietary patented, non-toxic pesticides and herbicides. That is important because the chemical products on the market today are often toxic and our product is both efficacious, so it is as good as the chemical products in what they do, and at the same time, it is totally non-toxic and biodegradable. We are in the process of licensing this technology to some of the multi-national corporations to distribute this product throughout the world.”

CEOCFOinterviews: How does it stack up price wise?

Mr. Dreben: “In large volume, it will be cost competitive, in small volume, the large manufacturers would have the advantage. Right now you can buy these products in selected retail stores on the west coast of the U.S. and in Canada. Many governmental authorities like municipal parks departments are also using them. Further, many governmental levels are starting to ban the use of pesticide products for retail use that are not non-toxic. We believe we are in the position to have one of the few products on the market that are not going to become banned by the regulators. It is a multibillion-dollar market opportunity. In the US, the total pesticide market is about $20 billion per year, so it is a large market opportunity.”

CEOCFOinterviews: How do you decide when to let go of a company?

Mr. Dreben: “We let go when we have reached certain goals that a company should be achieving, such as desired earnings and revenue levels. When it achieves those goals it has hit a plateau level of where the company will start to grow slower and that will be a target point to exit. If it goes public in the market and it gets a level of appreciation that is far beyond what we expected, we will also sell then as well. In the case of Certicom, a company that was involved in data encryption; we invested a million-and-a-half dollars and got back about 22 million dollars, but that company’s market value was so much higher than our target that we felt that was an opportunity to sell. Even though the company had much more potential for earnings and revenue growth, we felt that because it had gone public in the market, which put a value on it that was years ahead of its revenue and earnings, we decided to exit.”

CEOCFOinterviews: Why should investors be interested in CVF, and what should they know that perhaps they don’t realize when they first look at the company?

Mr. Dreben: “One of the reasons investors should look at us is because in the next few weeks, we are going to publish a net asset value per share of what our company will be worth. We have already done the graph work on that area and it is clear that our stock is trading at substantial discount. I think number one is that we are undervalued and the documentation we will be publishing will verify that. Up till now, we have been showing our financial statements as consolidated using GAAP, and the problem with that is you can’t tell what the value of the actual portfolio is. All you see are the revenues and earnings and all the payables and receivables of all the companies together in one statement and it is almost impossible to figure out what the value is. So, firstly we are going to verify value by showing what the fair market value really is. The second reason, is the growth potential of our companies is fairly large and we are diversified, because if there are five of these companies in our portfolio, then you are diversified through five separate investments, with a management team that has had a successful track record in the past with growing companies like these. The potential is to see the market value of CVF increase dramatically in the coming years. If somebody likes to invest in an environmental type deal, with companies that are growing rapidly at 50-100% per year and have become profitable then this is a way to get in, in the early stages of a companies genesis before it goes public. That, “in a nutshell,” is why people should invest in CVF rather than other companies. There are not too many other companies like CVF. We are kind of an unusual investment concept in that we have five early stage rapidly growing companies in our portfolio.”

CEOCFOinterviews: What do you see are your main challenges as a company?

Mr. Dreben: “The main challenges when you are small, there is always the challenge that somebody much bigger than you, could get control of the market that you want to be in so that is one thing. Secondly, when you don’t’ have huge amounts of cash reserves around each of your companies, your companies have to learn to operate on a tight budget and sometimes they can’t do the things they always want to do because they don’t have cash available for every possible opportunity. The positive side of all of this is that you have a tendency to be very cost efficient. There are many companies out there that received large amounts of capital and the worst example would be during the Internet craziness where companies were spending hundreds of millions of dollars in investments and watching them disappear. There is something to say about running a lean and mean operation and treating every penny like it’s your last. I would say the challenges are that we are small, the companies have to work with a limited amount of financial reserves, and on the other hand, when you are small you tend to be below the radar screen of the market and you tend to be able to grow and get your market niche before anyone else can figure it out and then eventually, what often happens, is the bigger companies will come along and offer to buy you. So there are advantages to being small, but there are challenges such as management challenges such as finding the right talent for the job. I have been doing this now for fourteen years, and you start to learn a great deal about judging who you want managing your companies.”

CEOCFOinterviews: In closing, what would you like readers to remember about CVF Technologies?

Mr. Dreben: “I think 2004 is going to be an exciting year for us and a good time to invest in our company if you want to be part of the dynamic growth we expect this year.”

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