<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Act of 1934
KNOX NURSERY, INC.
------------------
(Name of Small Business issuer in its charter)
FLORIDA 59-1787808
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
4349 N. HIAWASSEE ROAD, ORLANDO, FLORIDA 32818
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(Address of principal executive offices)
(407) 293-3721
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(Issuer's telephone number)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
- ------------------- -----------------------------------------
NONE NONE
Securities registered or to be registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $0.001 PAR VALUE PER SHARE
----------------------------------------
(Title of Class)
On June 30, 1999 the Registrant had outstanding 11,605,000 shares of Common
Stock, par value $0.001 per share.
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KNOX NURSERY, INC.
FORM 10-SB
<TABLE>
<CAPTION>
PART I
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<S> <C>
ITEM 1 DESCRIPTION OF BUSINESS
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
ITEM 3 DESCRIPTION OF PROPERTIES
ITEM 4 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
ITEM 5 DIRECTORS, OFFICERS, PROMOTERS & CONTROL PERSONS
ITEM 6 EXECUTIVE COMPENSATION
ITEM 7 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 8 DESCRIPTION OF SECURITIES
PART II
- -------
ITEM 1 MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON
EQUITY AND OTHER SHAREHOLDER MATTERS
ITEM 2 LEGAL PROCEEDINGS
ITEM 3 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ITEM 4 RECENT SALES OF UNREGISTERED SECURITIES
PART F/S
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FINANCIAL STATEMENTS
PART III
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ITEM I INDEX TO EXHIBITS
ITEM 2 DESCRIPTION OF EXHIBITS
SIGNATURES
</TABLE>
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
THE COMPANY
Knox Nursery, Inc. (the Company), is a Florida corporation, having its offices
in Orlando, Florida. The Company is a wholesale plant nursery with two
operating divisions: 1) the Plug Division, with sales of seedling annuals
(plugs) to brokers and other nurseries located throughout the United States and
Canada; and 2) the Finished Products Division, with sales of annual plants to
wholesalers, landscapers and large final-use customers located primarily in
Central Florida.
The Plug Division, which accounts for 60% of the Company's sales, is
responsible for sowing millions of seeds annually, then precisely growing the
seedlings for 4 to 8 weeks until the "prefinished" plants are shipped to
commercial growers throughout the country. These growers will then transplant
the plugs into larger pots and containers for resale to their customers.
The Finished Products Division receives its prefinished material from the Plug
Division, transplants it into the appropriate containers, then carefully grows
the material to a mature, ready-to-sell condition. The finished plants are then
delivered to mass merchandisers such as Lowe's, landscapers, and local tourist
attractions such as Walt Disney World and Universal Studios.
The Company, in February, 1997, completed its new 6 acre plug production
facility in Winter Garden, Florida, on a 33 acre parcel purchased in 1966. This
location is 12 miles from the original, main location in Orlando. With the
completed building, Knox's growing space has doubled.
The new location does much more than add additional plant space. It is a
technologically advanced facility, costing the company $6,000,000 to construct.
This addition gives Knox Nursery a competitive advantage in the marketplace.
Now, the total growing environment can be micro managed. The temperature,
moisture, humidity and light within the growing facility can be accurately
controlled to provide optimum growing environments for maximum growth in the
shortest periods. Additionally, this new facility lowers labor costs by
approximately 40%, which constitutes the largest single cost to the Company.
Therefore, even though the cost for the new facility was considerable, the
advantages for the Company will provide greater future profits.
The funds for the new facility came primarily from loans from Nations Bank. At
this time, the Company has loan balances of approximately $4,150,000. The terms
of the loans call for level monthly payments of interest and principal on the
majority of the principal, and interest only payments on a smaller amount (See
Financial Statement "Summary of Loans from Nations Bank".) It is the Company's
objective to pay off the loans from not
<PAGE> 4
only cash flow, but from future private and public security offerings. It
should be noted, however, that the Company cannot guarantee that additional
equity and/or debt funds will be able to be raised. In the event additional
funds are not raised, and cash flow from operations are insufficient to meet
loan obligation, the operation of the business might be affected.
MARKET ENVIRONMENT
The Company targets medium to large wholesale growers for its pre-finished
lines of plants, however, smaller growers are not ignored. The overall
floriculture industry in the United States is a $3.7 billion industry. In
Florida alone, the industry generates over $642 million in sales.
INDUSTRY ANALYSIS
The bedding plant industry consists of a small group of independent producers.
Many are customers of Knox Nursery. The industry is currently being
consolidated by large growers who are expanding and beginning to control sales
to large, mass marketers. These large marketers are important to the Company,
and it is the plan of Knox Nursery to take advantage of its current plant
expansion, and attempt to further its share of the larger, mass marketer
business.
MARKET SEGMENT
Knox Nursery has over 200 independent salespeople representing the Company
selling its pre-finished products around the United States. The Company has
certain advantages in the Southeastern United States because of its location,
and the Company run distribution system of delivery trucks. Also, with its
Florida location and its warm climate, the Company escapes the high energy
costs needed in northern areas. This competitive advantage allows the Company
to offer better prices than many of its competitors. In one popular area, the
supplying of Gerbera Daisies, Knox Nursery is the largest grower and supplier
of this species in the United States.
COMPETITION
The Floriculture industry is, by its nature, very competitive. There does not
appear to be many new companies entering into the industry. However,
consolidation of other growers is taking place. However, because of the
specialized nature of the Company's pre-finished lines, many other growers are
not able to compete against Knox Nursery. However, there are approximately two
dozen other companies that specialize in the pre-finished products known as
"Plugs." Even with this competition, the Company has been able to produce solid
sales with yearly increases, due to the new expansion at the Winter Garden
facility. The new facility has given the Company a doubling of sales coupled
with utilization of the newest technology.
<PAGE> 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
The following is a discussion of the financial condition and results of
operation of the Company as of the date of this Registration Statement. This
discussion and analysis should be read in conjunction with the Company's
audited Consolidated Financial including the Notes thereto which are included
elsewhere in this Form 10-SB.
GENERAL
Knox Nursery, Inc. is located in Central Florida and has two operating
divisions: 1) the Plug Division, with sales of seedling annuals (plugs) to
brokers and other nurseries located throughout the United States; and 2) the
Finished Products Division, with sales of four inch annuals to wholesalers,
landscapers and large final-use customers located primarily in Central Florida.
1998 V. 1997
REVENUE
For the year ended December 31, 1998, revenue was $5,485,870, a decrease of
$161,125, or 3% from the $5,646,995 posted for the year ended December 31,
1997. Plug Division revenue declined $531,549 due to its single largest
customer purchasing $1,146,245 less product in 1998 compared to 1997. However,
$614,696 of that shortfall was made up in increased sales to other customers, a
42% increase. Finished Products Division ended 1998 with $370,424 revenue gain,
or 20% over 1997, spurred by sales to its marquis customers, Disney World, Wal
Mart, Home Depot, and particularly, Lowe's, Inc.
Knox Nursery recorded a net loss from operations in 1998 of $211,629 compared
to a net loss of $1,134,127 in 1997, a bottom-line improvement of $921,498.
More significantly, the Company showed a $485,757 cash profit before
depreciation in 1998 compared to a $458,797 cash loss in 1997.
COSTS AND EXPENSES
Total cost of sales in 1998 decreased $1,000,512, or 21% from $4,711,616 in
1997. Labor and material costs decreased significantly as the Company improved
operating efficiency at its gigantic new plug production facility which opened
in the first quarter of 1997. The implementation of sophisticated seed sowing,
growing and shipping techniques enabled the Plug Division to post a $599,883,
or 154% gross profit increase over 1997. The Finished Product Division ended
1998 with a $222,593, or 29% gross profit gain over 1997.
<PAGE> 6
Operating expenses in 1998 totaled $1,799,919, an increase of $33,892, or 2%,
from $1,766,027 in 1997. Interest expenses in 1998 declined $8,997 to $421,289,
or 2%, from $430,286 in 1997. The decrease results from lower outstanding
credit line balances.
SIX MONTHS ENDED JUNE 30, 1999 AND 1998
REVENUE
For the six months ended June 30, 1999, revenue was $3,992,838, an increase of
$66,835, or 2%, over the $3,926,003 posted during the same period in 1998. Plug
Division revenue declined $209,943 due to its single largest customer
purchasing $654,932 less product in 1999 compared to 1998. However, $444,989 of
that shortfall was made-up in increased sales to other customers, a 28%
increase. For the six months ended June 30, 1999, Finished Product Division
revenue increased $276,778 to $1,352,157, or 26% over the $1,075,379 in 1997.
The increase results from heavier product shipments to Lowe's stores in Central
Florida.
Knox Nursery recorded net income from operations of $231,004 for the six months
ended June 30, 1999, a $123,338 decrease, or 35% from the $354,342 net income
for the same period in 1998. The decrease in net income was due to an increase
in operating expenses from 1998 to 1999.
COSTS AND EXPENSES
Total cost of sales for the six months ended June 30, 1999 increased $60,376,
or 2% to $2,550,524 from $2,490,148 during the same period last year. Gross
profit for the six months ended June 30, 1999 increased $6,459, or 4% to
$1,442,314 from $1,435,855 during the same period in 1998. Operating expenses
totaled $1,035,319 for the six months ended June 30, 1999, an increase of
$139,035, or 15%, over the $896,284 for the same period in 1998. The increase
resulted primarily from spending $124,062 more on advertising expense for the
six months ended June 30, 1999, as compared to the $5,043 spent for the same
period in 1998. Interest expense for the six months ended June 30, 1999
declined $49,086 to $171,355, or 22%, from $220,441 for the same period in
1998. The decrease results from lower outstanding credit line balances and
refinancing debt at 7.5%, down from over 9%.
LIQUIDITY AND CAPITAL RESOURCES
1998 V. 1997
As of December 31, 1998, the Company had a working capital surplus of $428,524,
compared to a deficit of $576,187 at December 31, 1997, an increase of
$1,004,711. The increase in working capital was substantially due to the
issuance of common stock, a net increase of $792,813 over the year ended
December 31, 1997.
<PAGE> 7
The Company has available a $600,000 bank credit line to cover short-term cash
flow requirements. The credit line balance at December 31, 1998 was $100,000,
compared to $600,000 at December 31, 1997, a decrease of $500,000. The
Officer's have provided funds to the Company from time to time to provide
additional working capital. Loans from officers amounted to $250,000 at
December 31, 1998, an increase of $165,000 over the $85,000 balance at December
31, 1997.
SIX MONTHS ENDED JUNE 30, 1999 AND 1998
As of June 30, 1999, the Company had a working capital surplus of $631,885,
compared to a surplus of $1,210,930 at June 30, 1998, a decrease in surplus of
$579,045. The decrease in working capital was substantially due to proceeds of
$887,813 from the issuance of common stock in June, 1998; no common stock was
issued during the six months ended June 30, 1999.
The Company has available a $600,000 bank credit line to cover short-term cash
flow requirements. No credit line balances existed at June 30, 1999 or 1998.
The Officer's have provided funds to the Company from time to time to provide
additional working capital. Loans from officers amounted to $200,000 at June
30, 1999, a decrease of $275,000 over the $475,000 balance at June 30, 1998.
RECENT ACCOUNTING PRONOUNCEMENTS
There is no impact on the Company's financial statement.
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS
This Registration Statement on Form 10-SB contains forward-looking statements
made pursuant to the safe harbor provisions of the Securities Litigation Reform
Act of 1995. Such statements consist of any statement other than a recitation
of historical facts and can be identified by words such as "may," "expect,"
"anticipate," "estimate," "hopes," "believes," "continue," "intends," "seeks,"
"contemplates," "suggests," "envisions" or the negative thereof or other
variations thereon or comparable terminology. These forward-looking statements
are based largely on the Company's expectations and are subject to a number of
risks and uncertainties, including but not limited to, those risks associated
with economic conditions generally and the economy in those areas where the
Company has or expects to have assets and operations. Competitive and other
risk factors affecting the Company's operations, markets, products and services
and risks relating to existing litigation, attorney general investigations,
taxes owed, and associated costs arising out of the Company's activities and
the matters discussed in this report; risks relating to changes in interest
rates and in the availability, cost and terms of financing; risks related to
the performance of financial markets; risks related to changes in domestic and
foreign laws, regulations and taxes; risks related to changes in business
strategy or development plans; risks related to the outcomes of the pending
lawsuits against the Company and the associated costs; risks associated with
future profitability; and other factors discussed elsewhere in this report and
in documents filed
<PAGE> 8
by the Company with the Securities and Exchange Commission. Many of these
factors are beyond the Company's control. Actual results could differ
materially from these forward-looking statements. In light of these risks and
uncertainties, there can be no assurance that the forward-looking information
contained in this registration on Form 10-SB will, in fact, occur. The Company
does not undertake any obligation to revise these forward-looking statements to
reflect future events or circumstances and other factors discussed elsewhere in
this report and the documents filed by the Company with the Securities and
Exchange Commission.
YEAR 2000
The Company has reviewed internal computer systems and their capability of
recognizing the year 2000 and years thereafter. Knox Nursery, Inc. expects that
any costs relating to ensuring such systems to be year 2000 compliant will not
be material to the Company's financial condition or results of operation.
ITEM 3. DESCRIPTION OF PROPERTIES
The Company's principal executive and administrative offices are located in
Orlando, Florida at 4349 N. Hiawassee Road on a 12.5 acre site, which contains
not only these offices, but over 260,000 square feet of greenhouses. The
executive and administrative offices occupy a single building with a total of
2,500 square feet. The Company does not anticipate that it will require any
additional office facilities, as the current space is sufficient to meet
current needs. However, if additional office space is required in the future,
the available property will allow for needed expansion.
In 1996, the Company, in anticipation of expansion, purchased 33 acres of
vacant land on Avalon Rd. in Winter Garden, Florida, 12 miles from the
Hiawassee Road offices. In 1997, on this site, the Company completed
construction of a state of the art automated greenhouse covering 300,000 square
feet. Also at this location is a 30,000 square foot production and shipping
facility and under construction presently is a 4,500 square foot germination
building, which should be in operation late 1999. The entire Avalon Road
property is a "Master Planned Project" which provides pre-approved expansion
plans to the Company.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth certain information regarding the beneficial
ownership of the Company's Common Stock as of June 30, 1999 by (i) each person
(or group of affiliated persons who to the knowledge of the company is the
beneficial owner of five percent or more of the Company's outstanding Common
Stock, (ii) each director and each Named Executive Officer of the Company and
(iii) all directors and executive officers of the Company as a group. Except as
otherwise noted, the Company believes
<PAGE> 9
that the persons listed in this table have sole voting and investment power
respecting all shares of Common Stock owned by them. The business address of
each director and named Executive Officer listed below is the company's
corporate address, 4349 Hiawassee Road, Orlando, Florida 32818.
Table 1. Security Ownership of Certain Beneficial Owners
<TABLE>
<CAPTION>
(2) (3) (4)
(1) NAME AND ADDRESS AMOUNT AND NATURE PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER OF BENEFICIAL OWNER OF CLASS
- -------------- ------------------- ------------------- --------
<S> <C> <C> <C>
Common Stock James M Knox, Jr. 720,000 6.2%
</TABLE>
Table 2. Security Ownership of Management
<TABLE>
<CAPTION>
(2) (3) (4)
(1) NAME AND ADDRESS AMOUNT AND NATURE PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER OF BENEFICIAL OWNER OF CLASS
- -------------- ----------------------- ------------------- --------
<S> <C> <C> <C>
Common Stock Bruce R. Knox 2,426,666 20.9%
4349 N. Hiawassee Rd.
Orlando, Florida 32818
Common Stock James M. Knox, III 2,426,666 20.9%
4349 N. Hiawassee Rd.
Orlando, Florida 32818
Common Stock M. Nadine Knox 2,426,668 20.9%
11056 Bayshore Dr.
Windermere, Florida
</TABLE>
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information as of the date of this
Registration Statement with respect to the directors and executive officers of
the Company. A summary of the background and experience of each of these
individuals is set forth after the table. The executive officers serve at the
discretion of the Company's Board of Directors.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
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<S> <C> <C>
Bruce R. Knox 34 President, Director
James M. Knox, III 37 Vice President, Director
M. Nadine Knox 65 Director
</TABLE>
<PAGE> 10
BRUCE R. KNOX, PRESIDENT
Bruce R. Knox was born in Orlando, Florida on October 5, 1965. He graduated
from Bishop Moore High School in May, 1983 and soon entered the family
business. Bruce began in production and has been a supervisor in all areas of
the nursery, culminating with his appointment as President of Knox Nursery in
March, 1995.
Bruce has served the state industry as well. He has previously served on the
State Board of Directors for the Florida Ornamental Growers Association, and
the Board of Directors of the Action Chapter of the Florida Nurseryman and
Growers Association. Bruce is a widely respected speaker on industry topics and
has been a featured speaker at such forums as the Seeley Conference, the
Professional Plant Growers Association, and the Southeast Greenhouse
Conference.
Bruce has done extensive travel researching nursery automation systems in the
United States and Europe. The benefits of this research resulted in the
construction of one of the most technologically advanced greenhouse ranges in
the world, Knox Nursery's Avalon Plug Production Facility, which opened in
February, 1997.
JAMES M. (MONTY) KNOX, III, VICE PRESIDENT
Monty Knox was born on January 23, 1962 in Orlando, Florida. Monty graduated
from Bishop Moore High School in May, 1980 and attended the University of
Central Florida. He joined Knox Nursery in October, 1983. Monty started in
production, planning and sales. Monty was appointed Vice President in January,
1987.
Monty has served the nursery industry extensively in the State of Florida.
Monty has served on the Florida Nurseryman and Growers Association State Board
of Directors, Marketing Committee and FNATS Trade Show. He has served on the
Action Chapter of FNGA's Board of Directors, culminating as President in 1998.
Monty serves on the Florida Farm Bureau's State Water Advisory Committee, Tax
Advisory Committee, the Orange County Farm Bureau's Board of Directors and is
Vice Chairman of the Orange County Farm Bureau PAC. Monty also serves on Orange
County's Planning and Zoning Commission and Local Planning Agency. Monty has
been Chairman of Orange County's Agricultural Board since 1995.
ITEM 6. EXECUTIVE COMPENSATION
The following table sets forth certain information relating to the compensation
paid by the Company for the years 1997, 1998 and 1999.
<PAGE> 11
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term Compensation
--------------------------
Annual Compensation Awards Payouts
--------------------------------------- -------------------------- -------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Name and Year Salary ($) Bonus ($) Other Annual Restricted Securities LTIP All other
Principal Compensation Stock Awards Underlying Payouts Compensation
Position ($) Options
------------------ ---- ---------- --------- ------------ ------------ ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bruce R. Knox, 1999 26,000 -0- -0- -0- -0- -0- -0-
President, Director 1998 70,000 2,000 37,809 -0- -0- -0- -0-
1997 34,000 -0- 40,303 -0- -0- -0- -0-
James Knox, III, 1999 12,500 -0- 925 -0- -0- -0- -0-
Vice President, 1998 25,000 1,000 1,857 -0- -0- -0- -0-
Director 1997 25,000 -0- 1,968 -0- -0- -0- -0-
M. Nadine Knox, 1999 37,500 -0- -0- -0- -0- -0- -0-
Secretary, 1998 101,500 2,885 -0- -0- -0- -0- -0-
Treasurer, Director 1997 48,500 -0- -0- -0- -0- -0- -0-
</TABLE>
Footnotes:
1. In 1997, Bruce R. Knox and M. Nadine Knox did not receive salary for 18
weeks. That unpaid salary was paid in 1998.
2. In 1995, the Company loaned Bruce R. Knox $107,000, repayment of which has
been forgiven. In 1996, 1997 and 1998, Mr. Knox received 1099's reflecting
the forgiven debt and interest.
3. In 1996, the Company loaned James M. Knox $5,000, repayment of which has
been forgiven. In 1997 and 1998, Mr. Knox received 1099's reflecting the
forgiven debt and interest. In 1999 the final 1099 will be issued.
4. On August 1, 1999, M. Nadine Knox retired from the Company. Mrs. Knox
remains on the Board of Directors.
5. Salary received in 1999 is through June 30.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the preceding two years the Company has not been a party to any
transactions with related parties. Additionally, the Company is not now a party
to any transactions with related parties.
ITEM 8. DESCRIPTION OF SECURITIES
COMMON STOCK
The Company has 40,000,000 authorized shares of Common Stock, $0.001 par value
per share, of which 11,605,000 shares are issued and outstanding as of June 30,
1999.
<PAGE> 12
All shares of Common Stock outstanding are legally issued, fully paid and
non-assessable. Holders of the Common Shares are entitled to one vote per share
with respect to all matters that are required by law to be submitted to a vote
of the shareholders. Holders of the Common Stock are not entitled to cumulative
voting. The common Stock has no redemption, preemptive or sinking fund rights.
Holders of the Common Stock are entitled to dividends, when, as and if declared
by the Board of Directors from funds legally available therefore. Future
dividend policy will be determined by the Board of Directors of the Company in
light of financial need and earnings, if any, of the Company and other relevant
factors. In the event of liquidation, dissolution or winding up of the Company,
holders of Common Stock are entitled to share proportionately all the remaining
assets of the Company, after satisfaction of the liabilities of the Company.
PREFERRED STOCK
The Company is authorized to issue 10,000,000 shares of preferred stock, par
value $0.001 per share, issuable in such series and bearing such voting,
dividend, conversion, liquidation and other rights and preferences as the Board
of Directors may determine without further action by the Company's
shareholders. As of the date hereof, there are no shares of Preferred Stock
issued and outstanding.
TRANSFER AGENT
The transfer agent for the Company is Atlas Stock Transfer Company, whose
address is 5899 S. State Street, Salt Lake City, Utah 84107.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON AND OTHER
STOCKHOLDER MATTERS
The Company's Common Stock is quoted on the OTC Bulletin Board under the symbol
"KNUR." On December 11, 1997 the Board of Governors of the National Association
of Securities Dealers, Inc. ("NASD") approved a series of changes for the OTC
Bulletin Board which affect the Company. The principal changes include: (i) a
rule that only those companies that report their current financial information
to the Securities and Exchange Commission, banking or insurance regulators will
be included for quotation on the OTC Bulletin Board, (ii) that brokers must
review current financial statements on a company they are recommending before
they recommend a transaction in an OTC security, and (iii) that prior to the
initial purchase of an OTC security, every investor must receive a standard
disclosure statement prepared by the NASD emphasizing the differences between
the OTC securities and other market-listed securities, such as those traded on
the NASDAQ Stock Market, Inc. This Registration Statement is being filed on
Form 10-SB with the Securities and Exchange Commission to register the
<PAGE> 13
Company's Common Stock under Section 12(g) of the Securities Exchange Act of
1934, as amended, to comply with the above-stated rule change. In the event the
Company's proposed Registration Statement is not declared effective, the
Company's securities would not be eligible for continued quotation on the OTC
Bulletin Board, which would materially and adversely affect the liquidity in
the Company's Common Stock.
PRICE RANGE OF COMMON STOCK
In June of 1998, the Company obtained the symbol, "KNUR" and application was
made for trading on the NASD OTC Bulletin Board system. under the symbol
"KNUR." Prior to June, 1998 the company's shares were not traded on any market.
The first active trading in the shares of the Company began in the fourth
quarter of 1998. Once the Company complies with the new rules change, however,
there can be no assurances that a market for the Company's shares will be
sustained or that if sustained, such market will operate in a stable manner.
The following table sets forth for the periods indicated the high and low
closing prices of the Company's Common Stock as reported on the OTC Bulletin
Board. The following quotations are over-the-market quotations and,
accordingly, reflect inter-dealer prices, without retail mark-up, mark-down or
commission and may not represent actual transactions.
COMMON STOCK
<TABLE>
<CAPTION>
QUARTER 1998 TRADE 1999 TRADE
HIGH HIGH
LOW LOW
- ----------------------------------- ---------------- ----------------
<C> <C> <C>
1st Quarter 1 3/16
15/32
2nd Quarter 5/8
11/32
3rd Quarter 7/16
7/32
4th Quarter 1 5/8
1/4
</TABLE>
NO DIVIDENDS ANTICIPATED TO BE PAID
The Company has not paid any cash dividends on its Common Stock since its
inception and does not anticipate paying cash dividends in the foreseeable
future. The future payment of dividends is directly dependent upon future
earnings of the Company, its financial requirements and other factors to be
determined by the Company's Board of Directors, in its sole discretion. For the
foreseeable future, it is anticipated that any earnings which may be generated
from the Company's operations will be used to finance the growth of the
Company, and that cash dividends will not be paid to Common Stockholders.
<PAGE> 14
CONTROL OF THE COMPANY; POSSIBLE ISSUANCES OF PREFERRED STOCK
Due to the widely dispersed ownership of the issued and outstanding shares of
Common Stock of the Company and the number of shares owned by the Knox family,
the Company's officers and directors and will be able to influence the election
of all of the Company's directors and thereby control the operations of the
Company. In addition, the Board of Directors has the authority to issue up to
10,000,000 shares of preferred stock and to fix the dividend, liquidation,
conversion, redemption and other rights, preferences and limitation of such
shares without any further vote or action of the shareholders. Accordingly, the
Board of Directors is empowered, without shareholder approval, to issue
preferred stock and dividend, liquidation, conversion, voting or other rights
which could adversely affect the voting power or the rights of the holders of
the Company's Common Stock. In the event of issuance, the preferred stock could
be utilized, under certain circumstances, as a method of discouraging, delaying
or preventing a change in control of the Company. Although the Company has no
present intention to issue any additional shares of its preferred stock, there
can be no assurance that the Company will do so in the future. See Part 1, Item
8. "DESCRIPTION OF SECURITIES."
ITEM 2. LEGAL PROCEEDINGS
NONE
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Tedder, James, Worden & Associates of Orlando, Florida, is the Company's
independent auditor at the present time. The Company has no disagreements with
the reports issued by their auditors.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
In April of 1998, the Company offered and sold 200,000 shares of the Company's
common securities ($.001par value) and realized, after expenses, $95,000.00.
The shares were sold for cash, directly by the Company's officers in a
Regulation D, Rule 504 offering, to only accredited investors. No underwriter
was involved.
In June of 1998, the Company offered and sold 3,405,000 shares of the Company's
common securities ($.001par value) and realized, after expenses, $887,813.00.
The shares were sold for cash, directly by the Company's officers in a
Regulation D, Rule 504 offering, to only accredited investors. No underwriter
was involved.
<PAGE> 15
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Bylaws provide that the Company will indemnify its directors and
executive officers and may indemnify its other officers, employees and agents
to the fullest extent not prohibited by Florida law. The Company is also
empowered under its Bylaws to enter into indemnification agreements with its
directors and officers and to purchase insurance on behalf of any person it is
required or permitted to indemnify.
There is no pending litigation or proceeding involving a director or officer of
the Company as to which indemnification is being sought, nor is the Company
aware of any pending or threatened litigation that may result in claims for
indemnification by any director or officer.
ITEM 6. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters have been submitted to a vote of the stockholders of the Company
during the past three years through the date of this Registration Statement.
PART F/S
The Company's financial statements for the years ending 1997 and 1998 have been
examined to the extent indicated in their reports by Tedder, James, Worden and
Associates, P.A., independent certified accountants, and have been prepared in
accordance with generally accepted accounting principles and pursuant to
Regulation S-B as promulgated by the Securities and Exchange Commission and are
included herein. Additionally, included herein are the June 1999 interim
financial statements. Both are made a part of Part F/S of this form 10-SB.
PART III
ITEMS 1 AND 2. INDEX TO AND DESCRIPTION OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT NAME
- ----------- ------------
<S> <C>
3(i) Certificate of Incorporation of Knox Nursery, Inc.
3(i)(1) Certificate of Amendment of Certificate of Incorporation
of Knox Nursery, Inc.
3(ii) Bylaws of Knox Nursery, Inc.
</TABLE>
<PAGE> 16
Index to Financial Statements
<TABLE>
<S> <C>
Independent Auditors' Report .................................................1
1997 and 1998 Balance Sheets..................................................2
1997 and 1998 Statements of Operations........................................3
1997 and 1998 Statements of Stockholder's Equity..............................4
1997 and 1998 Statements of Cash Flows........................................5
Notes to Financial Statements.................................................7
1997 and 1998 Schedule of Operating Expenses.................................14
June 1999 Interim Balance Sheet..............................................15
June 1999 Interim Statement of Operations....................................16
June 1999 Interim Statement of Stockholders Equity...........................17
June 1998 Interim Statement of Cash Flows....................................18
</TABLE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
KNOX NURSERY, INC.
By: /s/ Bruce R. Knox
---------------------------------
Bruce R. Knox, President
Date: October 25, 1999
<PAGE> 17
KNOX NURSERY, INC.
Financial Statements and Schedule
December 31, 1998 and 1997
(With Independent Auditors' Report Thereon)
<PAGE> 18
KNOX NURSERY, INC.
Table of Contents
<TABLE>
<S> <C>
Independent Auditors' Report .......................................... 1
Financial Statements
Balance Sheets .................................................... 2
Statements of Operations .......................................... 3
Statements of Stockholders' Equity ................................ 4
Statements of Cash Flows .......................................... 5
Notes to Financial Statements ......................................... 7
Schedule
Schedule of Operating Expenses .................................... 14
</TABLE>
<PAGE> 19
TEDDER, JAMES, WORDEN Warren L. Tedder, Partner
& ASSOCIATES, P.A. Johnnie P. James, Partner
Certified Public Accountants Clay T. Worden, Partner
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Knox Nursery, Inc.:
We have audited the accompanying balance sheets of Knox Nursery, Inc. as of
December 31, 1998 and 1997, and the related statements of operations,
stockholders' equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Knox Nursery, Inc. as of
December 31, 1998 and 1997, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.
Our audit was made for the purpose of forming an opinion on the financial
statements of Knox Nursery, Inc. taken as a whole. The supplementary
information included in Schedules 1 is presented for purposes of additional
analysis and is not a required part of the basic financial statements. The
supplementary information has been subject to the auditing procedures applied
in the audit of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
/s/ Tedder, James, Worden & Associates, P.A.
--------------------------------------------
Tedder, James, Worden & Associates, P.A.
February 9, 1999
<PAGE> 20
KNOX NURSERY, INC.
BALANCE SHEETS
December 31, 1998 and 1997
<TABLE>
<CAPTION>
ASSETS
1998 1997
----------- ---------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 123,345 44,101
Trade accounts receivable 353,969 431,382
Refundable income taxes -- 91,294
Inventories 979,419 893,335
Prepaid expenses 15,382 15,789
Note receivable from officer 1,694 40,067
Deposits 2,508 2,358
----------- ---------
Total current assets 1,476,317 1,518,326
Investment in cooperative bank 13,591 13,591
Property, plant and equipment, net 6,163,202 6,781,691
Deferred loan cost, net of accumulated amortization
of $41,852 and $26,157 in 1998 and 1997 52,315 68,010
----------- ---------
$ 7,705,425 8,381,618
=========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt $ 388,609 863,872
Accounts payable 494,541 981,209
Accrued expenses 164,643 249,432
----------- ---------
Total current liabilities 1,047,793 2,094,513
Long-term debt, excluding current installments 4,009,520 4,312,749
Due to stockholders 250,000 85,000
Deferred income taxes 364,753 511,778
----------- ---------
Total liabilities 5,672,066 7,004,040
Stockholders' equity:
Common stock 11,605 8,200
Additional paid-in capital 1,184,670 306,200
Retained earnings 851,549 1,063,178
Treasury stock (14,465) --
----------- ---------
Total stockholders' equity 2,033,359 1,377,578
----------- ---------
$ 7,705,425 8,381,618
=========== =========
</TABLE>
See accompanying notes to financial statements.
2
<PAGE> 21
KNOX NURSERY, INC.
STATEMENTS OF OPERATIONS
For the years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
----------- ----------
<S> <C> <C>
Sales $ 5,485,870 5,646,995
Cost of sales 3,711,104 4,711,616
----------- ----------
Gross profit 1,774,766 935,379
Operating expenses 1,799,919 1,766,027
----------- ----------
Operating loss (25,153) (830,648)
Other income (expense):
Interest expense (421,289) (430,286)
Interest and dividend income 11,252 7,324
Gain on sale of equipment -- 4,808
Gain on sale of investments 44,063 --
Other, net 32,473 (14,802)
----------- ----------
Total other expense (333,501) (432,956)
----------- ----------
Net loss before income taxes (358,654) (1,263,604)
Income tax benefit 147,025 129,477
----------- ----------
Net loss $ (211,629) (1,134,127)
=========== ==========
Basic loss per common share $ (0.021) (0.140)
=========== ==========
</TABLE>
See accompanying notes to Financial Statements.
3
<PAGE> 22
KNOX NURSERY, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
For the years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN RETAINED TREASURY
STOCK CAPITAL EARNINGS STOCK TOTAL
---------- ---------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C>
Balances, December 31, 1996 $ 500 218,900 2,197,305 -- 2,416,705
Increase of authorized common
stock 7,500 (7,500) -- -- --
Issuance of common stock 200 94,800 -- -- 95,000
Net loss -- -- (1,134,127) -- (1,134,127)
---------- ------- ---------- -------- ---------
Balances, December 31, 1997 8,200 306,200 1,063,178 -- 1,377,578
Issuance of common stock 3,405 884,408 -- -- 887,813
Purchase of treasury stock -- -- -- (25,403) (25,403)
Issuance of treasury stock -- (5,938) -- 10,938 5,000
Net loss -- -- (211,629) -- (211,629)
---------- --------- ---------- -------- ---------
Balances, December 31, 1998 $ 11,605 1,184,670 851,549 (14,465) 2,033,359
========== ========= ========== ======== =========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE> 23
KNOX NURSERY, INC.
STATEMENTS OF CASH FLOWS
For the years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
Increase in cash and cash equivalents:
Cash flows from operating activities:
Net income (loss) $ (211,629) (1,134,127)
Adjustments to reconcile net loss to cash
provided by (used in) operating activities:
Depreciation and amortization 697,386 675,330
Gain on sale of equipment -- (4,808)
Gain on sale of investments (44,063) --
Patronage distributions 4,250
Deferred income taxes (147,025) (38,183)
Cash provided by (used for) changes in:
Trade accounts receivable 77,413 (63,374)
Refundable income taxes 91,294 (3,489)
Inventories (86,084) 423,363
Prepaid expenses 407 20,023
Deposits (150) 9,747
Accounts payable (486,668) 322,608
Accrued expenses (84,789) 198,921
---------- ----------
Net cash provided by (used in) operating activities (193,908) 410,261
---------- ----------
Cash flows from investing activities:
Purchase of property, plant and equipment (63,202) (1,451,006)
Proceeds from sale of property, plant and equipment -- 6,000
Patronage refunds -- (1,282)
Proceeds from sale of investments 44,063 --
---------- ----------
Net cash used in investing activities (19,139) (1,446,288)
---------- ----------
</TABLE>
See accompanying notes to financial statements. (Continued)
5
<PAGE> 24
KNOX NURSERY, INC.
STATEMENTS OF CASH FLOWS, CONTINUED
For the years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
---------- ---------
<S> <C> <C>
Cash flows from financing activities:
Repayment of long-term debt (878,492) (690,677)
Proceeds from long-term borrowings 100,000 1,442,895
Net increase in due to stockholders 165,000 85,000
Collections on note receivable from officer 38,373 38,371
Issuance of common stock 887,813 95,000
Purchase of treasury stock (25,403) --
Proceeds from the sale of treasury stock 5,000 --
Loan issuance fees -- (12,285)
---------- ---------
Net cash provided by financing activities 292,291 958,304
Net increase (decrease) in cash and cash equivalents 79,244 (77,723)
Cash and cash equivalents at beginning of year 44,101 121,824
---------- ---------
Cash and cash equivalents at end of year $ 123,345 44,101
========== =========
Supplemental disclosures of cash flow information:
Cash paid for:
Interest, exclusive of payable to stockholder
and capitalized interest $ 466,780 440,754
========== =========
</TABLE>
See accompanying notes to financial statements.
6
<PAGE> 25
KNOX NURSERY, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and 1997
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) DESCRIPTION OF BUSINESS
Knox Nursery, Inc. is located in Central Florida and has two operating
divisions: 1) the Finished Product Division, with sales of 4 inch
annuals to wholesalers, landscapers, and large final-use customers
located primarily in Central Florida, and 2) the Plug Division, with
sales of seedling annuals (plugs) to brokers and other nurseries
located throughout the United States.
(b) INVENTORIES
Inventories of plants, seeds and supplies are stated at the lower of
cost (first-in, first-out) or market.
(c) PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Assets are depreciated by
the straight-line and accelerated methods over the estimated useful
lives of the individual assets.
(d) INCOME TAXES
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax credit carryforwards.
Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates
is recognized in income in the period that includes the enactment date.
General business credits which include investment tax credits and job
credits are accounted for as a reduction of income tax liability in the
year realized.
(e) CASH EQUIVALENTS
Cash equivalents represent short-term, highly liquid commercial paper
readily convertible to cash and with an original maturity of three
months or less.
7 (Continued)
<PAGE> 26
KNOX NURSERY, INC.
NOTES TO FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
(f) INVESTMENT IN COOPERATIVE BANK
Investment in cooperative bank is carried at cost increased for the
amount of patronage refund certificates and patrons' equity allocated,
less distribution received.
(g) USE OF ESTIMATES
Management of the Company has made certain estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure
of contingent assets and liabilities to prepare these financial
statements in conformity with generally accepted accounting principles.
Actual results could differ from those estimates.
(i) BASIC LOSS PER COMMON SHARE
Net loss per common share is computed by dividing the net loss by the
weighted average number of common and common stock equivalents issued
and outstanding during the period.
(j) APPLICATION OF ACCOUNTING STANDARDS
The Financial Accounting Standards Board recently issued SFAS 131,
"Disclosures about Segments of an Enterprise and Related Information",
which is effective for the Association's fiscal year beginning October
1, 1998. Under SFAS 131 the basis for determining an enterprise's
operating segments is the manner in which management operates the
businesses. The Company does not expect that the adoption of this
pronouncement will significantly effect its financial disclosure
obligations.
The Financial Accounting Standards Board recently issued SFAS 132,
"Employer's Disclosures about Pensions and other Postretirement
Benefits", which is effective for the Association's fiscal year
beginning October 1, 1998. SFAS 132 requires certain additional
disclosures and standardizes the disclosure requirements for pensions
and other postretirement benefits. The Company does not expect that the
adoption of this pronouncement will significantly effect its financial
disclosure obligations.
8 (Continued)
<PAGE> 27
KNOX NURSERY, INC.
NOTES TO FINANCIAL STATEMENTS
(2) INVENTORIES
Inventories at December 31, 1998 and 1997 consisted of:
<TABLE>
<CAPTION>
1998 1997
-------- -------
<S> <C> <C>
Work in process $835,480 770,664
Materials and supplies 143,939 122,671
-------- -------
$979,419 893,335
======== =======
</TABLE>
(3) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at December 31, 1998 and 1997 consist of the
following:
<TABLE>
<CAPTION>
1998 1997
----------- ----------
<S> <C> <C>
Land $ 272,169 272,169
Buildings and improvements 6,824,687 6,788,866
Machinery and equipment 1,535,472 1,527,852
Automotive equipment 259,732 251,933
Office furniture and equipment 194,595 182,438
Construction in process 6,365 6,365
----------- ----------
9,093,020 9,029,633
Less accumulated depreciation and amortization (2,929,818) (2,247,932)
----------- ----------
Net property, plant and equipment $ 6,163,202 6,781,691
=========== ==========
</TABLE>
Interest of $31,532 was capitalized into the cost of property, plant and
equipment during the year ended December 31, 1997. No interest was
capitalized during 1998.
9 (Continued)
<PAGE> 28
KNOX NURSERY, INC.
NOTES TO FINANCIAL STATEMENTS
(4) LONG-TERM DEBT
Long-term debt consists of the following at December 31, 1998 and 1997:
<TABLE>
<CAPTION>
1998 1997
---------- ---------
<S> <C> <C>
NationsBank:
Construction loan ($4,500,000 limit) with interest
fixed at 7.5%, principal and interest due in
level monthly payments based on a 15-year
amortization with a final balloon payment of all
unpaid principal and accrued interest on May 8,
2002. Loan is collateralized by land, buildings
and improvements. $4,133,893 4,308,939
Credit line loan ($600,000 limit) with interest
equal to the prime rate plus 1%. Line of credit
renews annually with similar terms and rates.
Loan is collateralized by land, buildings and
improvements. 100,000 600,000
Commercial loan ($160,000 limit) with interest
at a fixed rate of 7.5%, due with principal and
interest due in 59 equal monthly installment
ending May 8, 2001. Loan is collateralized by
land, buildings and improvements. 85,079 117,689
Commercial loan ($200,000 limit) with interest
at a fixed rate of 7.5%, due in 36 equal
monthly installments ending February 5, 2000.
Loan is collateralized by land, buildings and
improvements. 79,157 149,993
---------- ---------
4,398,129 5,176,621
Less current installments 388,609 863,872
---------- ---------
Long-term debt, excluding current installments $4,009,520 4,312,749
========== =========
</TABLE>
Aggregate principal maturities for the years subsequent to December 31,
1998 are as follows:
<TABLE>
<S> <C>
1999 $ 388,609
2000 243,601
2001 233,338
2002 3,532,581
----------
$4,398,129
==========
</TABLE>
10 (Continued)
<PAGE> 29
KNOX NURSERY, INC.
NOTES TO FINANCIAL STATEMENTS
(4) LONG-TERM DEBT, CONTINUED
The Company's loans have certain financial covenants, some of which were
waived for the years ended December 31, 1998 and 1997.
(5) LEASES
The Company leases certain production equipment under lease agreements
classified as operating leases. Future minimum lease payments under
non-cancelable operating leases (with initial or remaining lease terms in
excess of one year) as of December 31, 1998 are:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
<S> <C>
1999 $ 117,843
2000 117,843
2001 90,843
---------
Total $ 326,529
=========
</TABLE>
Rent expense for the years ended December 31, 1998 and 1997 was $124,913
and $145,618, respectively.
(6) INCOME TAXES
Income tax expense (benefit) for the years ended December 31, 1998 and 1997
consists of the following:
<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
--------- --------- ---------
<S> <C> <C> <C>
1998:
Federal $ -- (141,688) (141,688)
State -- (5,337) (5,337)
--------- -------- --------
$ -- (147,025) (147,025)
========= ======== ========
1997:
Federal $ (91,294) (31,045) (122,339)
State -- (7,138) (7,138)
--------- -------- --------
$ (91,294) (38,183) (129,477)
========= ======== ========
</TABLE>
11 (Continued)
<PAGE> 30
KNOX NURSERY, INC.
NOTES TO FINANCIAL STATEMENTS
(6) INCOME TAXES, CONTINUED
Total income tax expense for the years ended December 31, 1998 and 1997
differed from amounts computed by applying the U.S. federal income tax rate
of 34% to net earnings (loss) before income taxes as a result of the
following:
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
Computed "expected" tax benefit $(121,942) (429,625)
Increase (Reduction) in income taxes resulting
from:
State income taxes, net of federal income tax
benefit (13,168) (44,000)
Non deductible expenses 1,190 4,718
General business credits -- (32,000)
Change in valuation allowance for deferred tax
assets -- 337,000
Tax rate difference relating to federal net
operating loss carried back to prior year tax
return -- 12,049
Other, net (13,105) 22,381
--------- --------
$(147,025) (129,477)
========= ========
</TABLE>
The tax effects of temporary differences that give rise to a significant
portion of the deferred tax assets and deferred tax liabilities as of
December 31, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
1998 1997
--------- --------
<S> <C> <C>
Deferred tax assets:
General business credits $ 291,000 293,000
Net operating loss carryforward 445,592 44,000
Allowance for bad debts 9,544 --
--------- -------
Total gross deferred tax assets 746,136 337,000
Less valuation allowance (337,000) (337,000)
--------- -------
Net deferred tax assets 409,136 --
Deferred tax liabilities:
Inventory 368,262 335,894
Property and equipment, principally due to
differences in depreciation 405,627 175,884
--------- -------
Total gross deferred tax liabilities 773,889 511,778
--------- -------
Net deferred tax liability $ 364,753 511,778
========= =======
</TABLE>
12 (Continued)
<PAGE> 31
KNOX NURSERY, INC.
NOTES TO FINANCIAL STATEMENTS
(6) INCOME TAXES, CONTINUED
At December 31, 1997, the Company has net operating loss carryforwards of
approximately $2,090,000 for the state of Florida and $869,000 for federal
income tax purposes, which are available to offset future taxable income,
if any, through 2014. The Company also has general business credit
carryforwards for federal income tax purposes of approximately $293,000
which are available to reduce future federal income taxes, if any, through
2013.
(7) PROFIT SHARING PLAN
The Company has established a voluntary employee savings plan, 401(k),
available to all employees who meet certain eligibility requirements. The
plan provides for a matching by the Company of the employee's contribution
to the plan not to exceed certain specified limits. During the years ended
December 31, 1998 and 1997, total Company contributions to the plan were
$18,964 and $20,783, respectively.
(8) COMMON STOCK
During 1997 the Company amended the original Articles of Incorporation to
reflect an increase in the authorized common shares from 7,500 to
50,000,000; of which 40,000,000 are to be common and to provide for the
authorization of 10,000,000 preferred shares, both with a par value of
$.001 per share. At December 31, 1997, 8,200,000 shares of common stock
were issued and outstanding. During 1998 the Company issued an additional
3,405,000 shares of common stock and repurchased 580,636 shares of
previously issued common stock to be held as treasury stock. The Company
then sold 250,000 shares of its treasury stock resulting in 330,636 shares
of treasury stock held at December 31, 1998. At December 31, 1998,
11,605,000 shares of common stock were issued and outstanding.
(9) CONTINGENCIES
In the normal course of business, the Company is subject to certain
obligations and litigation. Management, after consultation with counsel,
intends to vigorously defend its positions and is of the opinion that the
ultimate resolution of such matters will not have a material adverse effect
on the Company's financial position or results of operations.
13
<PAGE> 32
KNOX NURSERY, INC. SCHEDULE 1
SCHEDULE OF OPERATING EXPENSES
For the years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
---------- ---------
<S> <C> <C>
Advertising $ 17,525 5,737
Bad debt expense 20,000 20,000
Computer support 8,666 13,185
Consultant fees 14,688 12,718
Depreciation and amortization 697,386 675,330
Employee benefits 29,984 29,674
Equipment lease 124,913 145,618
Gas and oil 20,279 19,227
Insurance 167,013 154,707
Legal and accounting 42,603 22,304
Miscellaneous 7,450 6,765
Office supplies and postage 17,894 21,618
Payroll taxes 142,321 149,958
Propane and natural gas 24,688 38,089
Salaries and wages 231,548 243,215
Taxes and licenses 84,488 40,197
Telephone 53,740 48,720
Trash removal 11,759 10,046
Travel and entertainment 19,284 21,614
Utilities 63,690 87,305
---------- ---------
Total operating expenses $1,799,919 1,766,027
========== =========
</TABLE>
14
<PAGE> 33
KNOX NURSERY, INC.
BALANCE SHEETS
June 30, 1999 & 1998
<TABLE>
<CAPTION>
ASSETS 1999 1998
----------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 145,341 $ 739,544
Trade accounts receivable 467,249 912,356
Refundable income taxes 0 138,834
Inventories 779,419 452,671
Prepaid expenses 6,497 9,405
Note receivable 1,694 40,067
Deposits 4,158 3,358
----------- -----------
Total current assets 1,404,358 2,296,235
Investment in cooperative bank 10,478 13,591
----------- -----------
Total investments 10,478 13,591
Property and equipment 9,246,492 9,060,961
Less accumulated depreciation/amortization (3,268,122) (2,577,932)
----------- -----------
Net property and equipment 5,978,370 6,483,029
Deferred loan issuance fees, net of amortization 66,555 60,162
----------- -----------
$ 7,459,761 $ 8,853,017
LIABILITIES and STOCKHOLDERS' EQUITY
Current liabilities:
Current installment of long-term debt $ 700,000 $ 268,000
Accounts payable 265,031 622,304
Accrued expenses 207,442 195,001
----------- -----------
Total current liabilities 1,172,473 1,085,305
Long-term debt, excluding current installments 3,458,172 4,161,201
Due to stockholders 200,000 475,000
Deferred tax liability 364,753 511,778
----------- -----------
Total liabilities 5,195,398 6,233,284
Stockholders' equity
Common stock 11,605 11,605
Additional paid-in capital 1,184,670 1,190,608
Retained earnings 1,082,553 1,417,520
Treasury stock (14,465) 0
----------- -----------
Total stockholders' equity 2,264,363 2,619,733
----------- -----------
$ 7,459,761 $ 8,853,017
</TABLE>
15
<PAGE> 34
KNOX NURSERY, INC.
STATEMENTS OF OPERATIONS
For the six months ended June 30, 1999 & 1998
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Sales $ 3,992,838 $ 3,926,003
Cost of Sales 2,550,524 2,490,148
----------- -----------
Gross Profit 1,442,314 1,435,855
Operating expenses 1,035,319 896,284
----------- -----------
Operating income 406,995 539,571
Other income (expense):
Interest expense (171,355) (220,441)
Interest and dividend income 194 702
Other (4,830) 34,510
----------- -----------
Total other income (expense) (175,991) (185,229)
----------- -----------
Net income before income taxes $ 231,004 $ 354,342
</TABLE>
16
<PAGE> 35
KNOX NURSERY, INC.
STATEMENTS OF OPERATIONS
For the six months ended June 30, 1999 & 1998
<TABLE>
<CAPTION>
Six months ended June 30: Variance
------------------------------------------------ ------------------------
Per Cent Per Cent Increase/(Decrease)
1999 of Sales 1998 of Sales Amount Per Cent
---------- -------- ---------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Sales:
Plug Division $2,640,681 66.1% $2,850,624 72.6% ($209,943) -7.4%
Finished Product Division 1,352,157 33.9% 1,075,379 27.4% 276,778 25.7%
---------- ------- ---------- ------- --------- -------
Total Sales 3,992,838 100.0% 3,926,003 100.0% 66,835 1.7%
Cost of sales:
Plugs 1,647,586 62.4% 1,762,368 61.8% (114,782) -6.5%
Finished Products 902,938 66.8% 727,780 67.7% 175,158 24.1%
---------- ------- ---------- ------- --------- -------
Total Cost of Sales 2,550,524 63.9% 2,490,148 63.4% 60,376 2.4%
---------- ------- ---------- ------- --------- -------
Gross profit 1,442,314 36.1% 1,435,855 36.6% 6,459 0.4%
Operating expenses
Advertising 129,105 3.2% 5,043 0.1% 124,062 2460.1%
Amortization 7,847 0.2% 7,847 0.2% 0 0.0%
Bad debt 6,000 0.2% 10,000 0.3% (4,000) -40.0%
Computer 6,413 0.2% 3,836 0.1% 2,577 67.2%
Consulting fees 5,355 0.1% 6,281 0.2% (926) -14.7%
Depreciation 340,500 8.5% 330,000 8.4% 10,500 3.2%
Employee welfare 17,754 0.4% 16,771 0.4% 983 5.9%
Equipment lease 62,456 1.6% 62,457 1.6% (1) -0.0%
Gas & oil 16,141 0.4% 9,841 0.3% 6,300 64.0%
Insurance 103,659 2.6% 96,227 2.5% 7,432 7.7%
Interest 171,355 14.2% 220,441 5.6% (49,086) -22.3%
Legal and accounting 20,635 1.7% 35,915 0.9% (15,280) -6.9%
Miscellaneous 3,920 0.1% 1,861 0.0% 2,059 5.7%
Office supplies and postage 9,520 0.2% 11,791 0.3% (2,271) -19.3%
Payroll taxes 86,087 2.2% 80,369 2.0% 5,718 7.1%
Propane and natural gas 15,316 0.4% 23,160 0.6% (7,844) -33.9%
Salaries - office 123,964 3.1% 112,909 2.9% 11,055 9.8%
Taxes, licenses, and fees 2,020 0.1% 20,592 0.5% (18,572) -90.2%
Telephone 25,762 0.6% 27,015 0.7% (1,253) -4.6%
Trash removal 7,704 0.2% 6,203 0.2% 1,501 24.2%
Travel and entertainment 10,041 0.3% 5,861 0.1% 4,180 71.3%
Utilities 35,120 0.9% 22,305 0.6% 12,815 57.5%
---------- ------- ---------- ------- --------- -------
Total operating expense 1,206,674 30.2% 1,116,725 28.4% 89,949 8.1%
---------- ------- ---------- ------- --------- -------
Operating income (loss) 235,640 5.9% 319,130 8.1% (83,490) -26.2%
Other income (expense) (4,636) -0.1% 35,212 0.9% (39,848) -113.2%
---------- ------- ---------- ------- --------- --------
Net profit before income taxes $ 231,004 5.8% $ 354,342 9.0% ($123,338) -34.8%
</TABLE>
17
<PAGE> 36
KNOX NURSERY, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
For the years ended December 31, 1998 & 1997
Six months ended June 30, 1999
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN RETAINED TREASURY
STOCK CAPITAL EARNINGS STOCK TOTAL
------- ---------- ------------ --------- -----------
<S> <C> <C> <C> <C> <C>
Balances, December 31, 1996 $ 500 $ 218,900 $ 2,197,305 $ 0 $ 2,416,705
Increase of authorized common stock 7,500 (7,500) 0
Issuance of common stock 200 94,800 95,000
Net loss (1,134,127) (1,134,127)
------- ---------- ------------ -------- -----------
Balances, December 31, 1997 8,200 306,200 1,063,178 0 1,377,578
Issuance of common stock 3,405 884,408 0 0 887,813
Purchase of treasury stock 0 0 0 (25,403) (25,403)
Sale of treasury stock 0 (5,938) 0 10,938 5,000
Net income (loss) 0 0 (211,629) 0 (211,629)
------- ---------- ------------ -------- -----------
Balances, December 31, 1998 $11,605 $1,184,670 $ 851,549 (14,465) $ 2,033,359
Issuance of common stock 0 0 0 0 0
Purchase of treasury stock 0 0 0 0 0
Net income (loss) 0 0 231,004 0 231,004
------- ---------- ------------ -------- -----------
Balances, June 30, 1999 $11,605 $1,184,670 $ 1,082,553 $(14,465) $ 2,264,363
</TABLE>
18
<PAGE> 1
EXHIBIT 3(i)
STATE OF FLORIDA
DEPARTMENT OF STATE - DIVISION OF CORPORATIONS
I certify that the following is a true and correct copy of the Articles of
Incorporation of KNOX NURSERY, INC., filed on October 11, 1977.
The Charter Number for this corporation is 548960.
GIVEN under my hand and the Great
Seal of the State of Florida, at
Tallahassee, the Capital, this the
13th day of October, 1977.
/s/ Bruce A. Smathers
----------------------------------
[SEAL] SECRETARY OF STATE
CER INI 8-15-77 KN596264
<PAGE> 2
ARTICLES OF INCORPORATION
OF
KNOX NURSERY, INC.
The undersigned, acting as subscribers of a corporation under the Florida
Corporation Law, adopt the following Articles of Incorporation for such
corporation:
FIRST: The name of the corporation is KNOX NURSERY, INC.
SECOND: The general nature of the business or businesses to be carried on
or conducted by the said corporation and the purposes for which the corporation
is organized and the general and special powers granted and reserved unto the
corporation shall be as follows:
A. To grow, cultivate, buy, sell, market, and deliver house plants and
outside plants, foliage and ferns and to act as a broker for the same and to
engage in the business of clearing and developing land, earth moving, filling,
grading, and to operate drag lines, cranes, and all other equipment in
connection therewith; and to engage generally in the business of landscape
architects; to develop, improve and beautify land by means of shrubbery,
flowers, plants, trees, vines, and otherwise to beautify and improve the same;
to engage generally in the business of sprigging, and planting of grasses of
every nature and kind and to engage in the business of a grass sprigging and
planting contractor, and to do any of the things herein mentioned for itself or
for others.
B. To engage generally in the business of builders or real estate
developers, or both, and to do any and all things necessary or convenient in
connection therewith or in connection with any other business or activity of the
corporation; and to engage in any business or other activity which from time to
time may appear desirable.
<PAGE> 3
C. To mine and take from pits, sand, gravel and stone or other
building or paving materials, to wash and screen sand and gravel and to crush
stone by means of machinery or otherwise, to sell and otherwise deal in sand,
gravel and crushed stone and any and every type or kind of building or other
material and to mine, quarry, grind, prepare, buy and sell mineral substances
and materials of every kind; to buy, sell, import, export, exchange,
manufacture, warehouse and deal in all materials, machinery, and equipment
necessary, convenient, or incidental to a general contracting or a general
paving and road construction business and a general building or contracting
business.
D. To build, construct, equip, operate and maintain testing
equipment and laboratories, and to engage in research of every nature and kind.
E. To own, maintain, use and operate, trucks, automobiles and other
vehicles, for itself or for hire, and, in connection therewith, to transport
from point to point freight or any articles whatsoever in consideration of the
charges to be made therefor, or for itself.
F. To own, lease, sell, exchange, mortgage, buy, transfer, hold,
work, develop, improve, divide, subdivide, dedicate, pledge, or acquire in any
manner whatsoever and dispose of, for itself or for others, on its own accounts
or on commission, property of all kinds, real, personal, and mixed, and
including rights, easements, and incorporeal hereditaments appurtenant thereto,
and including patents, and patent rights and processes, permits, privileges,
franchises, licenses, plants for the generation, distribution and supply of
electricity, gas, steam, and other agencies for light and heat and other
purposes to which the same may be adopted; and to build, construct,
manufacture, maintain and operate any of the properties above-mentioned and
supply conveniences therefrom; to own, lease, or otherwise acquire and dispose
of buildings or other structures or improvements whatsoever
-2-
<PAGE> 4
for the purposes of the corporation; and while the owner of any property to
exercise all the rights, powers and privileges of ownership to the same extent
as a natural person might do, including the right to vote the stock of other
corporations owned by it, with power to designate some person or persons for
that purpose from time to time to the same extent as natural persons might or
could do.
G. To maintain and keep storage warehouses for the storage and deposit of
goods and merchandise of all kinds and descriptions, and conduct all business
appertaining thereto, including the making of advances on goods stored and
deposited with it, and to have and receive all the rights and emoluments thereto
belonging.
H. To own, lease, or supervise for hire, citrus groves, farms, gardens,
nurseries, hothouses, greenhouses, and agricultural and horticultural lands of
all kind and character, and to conduct a general caretaking business for the
maintenance and care of the same.
I. To do a general chemical research business; and to engage in the
exterminating business and kindred lines.
J. To purchase or otherwise acquire letters patent, concessions, licenses,
inventions, rights and privileges, subject to royalty or otherwise, and whether
exclusive, nonexclusive, or limited, or any part interest in such letters
patent, concessions, licenses, inventions, rights and privileges, whether in the
United States or in any other part of the world; to sell, let or grant any
patent rights, concessions, licenses, inventions, rights or privileges belonging
to the company, or which it may acquire, or any interest in the same; to
register any patent or patents for any invention or inventions, or obtain
exclusive or other privileges in respect of the same, in any part of the world,
and to apply for, exercise, use or otherwise deal with or turn rights or
privileges either in the United States or in any other part of the world; to
-3-
<PAGE> 5
manufacture and produce, and trade and deal in all machinery, plant, articles,
appliances, and things capable of being manufactured, produced or traded in by
virtue of or in connection with any such letters patent, concessions, licenses,
inventions, rights or privileges as aforesaid.
K. To use and apply its surplus earnings or accumulated profits authorized
by law to be reserved, to the purchase or acquisition of property, and to
purchase or gain acquisition of its own capital stock form time to time, and to
such extent and in such manner, and upon such terms as its Board of Directors
shall determine, and to hold the same in its treasury to be thereafter sold,
issued or disposed of when and in such manner as the Board of Directors may deem
expedient; and neither such property nor the capital stock so purchased and
acquired, nor any of its capital stock taken in payment of satisfaction of any
debt due the corporation shall be regarded as profits for the purpose of
declaration of payment of dividends unless otherwise determined by a majority of
the Board of Directors, or by a majority of the stockholders.
L. To acquire by purchase, subscription, or otherwise and to hold or
dispose of stocks, bonds, coupons, mortgages, deeds of trust, debentures,
securities, obligations, notes and other evidences of indebtedness of any
corporation, stock company, or association, now or hereafter existing, and
whether created by or under the laws of the State of Florida, or otherwise; and
to pay for any of the same in cash, in property of any kind, in services, in
stock of this corporation, in bonds, in notes, or otherwise, or by undertaking
the whole or any part of the liabilities of the transferor; and to acquire and
hold the same for investment, or otherwise to acquire and use, and to sell,
assign, transfer, mortgage, pledge, exchange, distribute or otherwise dispose of
the whole or any part of the same; and to aid in any manner any corporation,
stock company, or association whose stock, bonds or other obligations are held
or are in any manner guaranteed
-4-
<PAGE> 6
by the company, and to do any other acts or things for the preservation,
protection, or improvement or enhancement of the value of any such stock, bonds,
or other obligations, or to do any acts or things designed for any such purpose;
and while owner of any such stock, bonds, or other obligations, to exercise all
the rights, powers and privileges of ownership thereof, and to exercise all
voting power thereon, with power to designate some person for that purpose from
time to time to the same extent as natural persons might or could do.
M. To do all other things incidental to the foregoing powers or connected
with the foregoing powers that are not forbidden by the Florida Corporation Laws
or by any other law, or by these Articles of Incorporation, and to carry out the
said purposes in any state, territory, district, or possession of the United
States, or in any foreign country, to the extent that these purposes are not
forbidden by the law of the state, territory, district, or possession of the
United States, or by the foreign country.
N. None of the objects and powers hereinabove specified and clauses and
paragraphs contained in this article shall in anywise be limited or restricted
by reference to or inference from the terms of any other objects, powers,
clauses, or paragraphs of this subdivision of any other paragraph in this
certificate, but the objects and powers specified in each of the paragraphs and
clauses of this article shall be regarded as independent objects and powers, and
the corporation shall be authorized to engage in all or any of the activities
authorized in any and all of the paragraphs and clauses in this article set
forth and referred to it. The foregoing clauses and paragraphs shall be
construed both as objects and powers, and it is expressly provided that the
foregoing enumeration of specific powers shall not be held to restrict or limit
in any manner the powers of this corporation as may be provided
-5-
<PAGE> 7
or authorized or permitted by law or otherwise, it being the intention that
this corporation shall have the right to engage in any business or activity not
expressly prohibited by applicable law.
THIRD: AUTHORIZED SHARES
A. Number - The aggregate number of shares that the corporation shall
have the authority to issue is 7,500 shares of Capital Stock with par value of
$1.00 per share.
B. Initial Issue - Five Hundred (500) shares of Capital Stock of the
corporation shall be issued for cash at a par value of $1.00 per share.
C. Stated Capital - The sum of par value of all shares of Capital
Stock of the corporation that have been issued shall be the stated capital of
the corporation at any particular time.
D. Dividends - The holders of the outstanding capital stock shall be
entitled to receive, when and as declared by the Board of Directors, dividends
payable either in cash, in property, or in shares of the capital stock of the
corporation.
E. No Classes of Stock - The shares of the corporation are not to be
divided into classes.
F. No Share in Series - The corporation is not authorized to issue
shares in series.
FOURTH: The amount of capital with which this corporation shall begin
business is not less than $500.
FIFTH: The shareholders of record shall have preemptive rights in all
issues of stock.
SIXTH: The period of duration of the corporation is perpetual.
SEVENTH: The initial street address in Florida of the initial registered
office of the corporation is 4349 NORTH HIAWASSEE ROAD, ORLANDO, FLORIDA 32808,
and the name of the initial registered agent at such address is
JAMES N. KNOX, JR.
-6-
<PAGE> 8
EIGHTH: The initial Board of Directors shall consist of two (2) members,
who need not be a resident of the State of Florida or shareholders of the
corporation.
NINTH: The name and address of the persons who shall serve as Directors
until the first annual meeting of shareholders, or until their successors shall
have been elected and qualified, is as follows:
<TABLE>
<CAPTION>
NAME ADDRESS AND STREET CITY STATE ZIP CODE
- ---- ------------------ ---- ----- --------
<S> <C> <C> <C> <C>
JAMES M. KNOX, JR. 4349 N. HIAWASSEE RD. ORLANDO FL 32808
M. NADINE KNOX 4349 N. HIAWASSEE RD. ORLANDO FL 32808
</TABLE>
TENTH: The name and address of the initial subscribers are as follows:
<TABLE>
<CAPTION>
NAME ADDRESS AND STREET CITY STATE ZIP CODE
- ---- ------------------ ---- ----- --------
<S> <C> <C> <C> <C>
JAMES M. KNOX, JR. 4349 N. HIAWASSEE RD. ORLANDO FL 32808
M. NADINE, KNOX 4349 N. HIAWASSEE RD. ORLANDO FL 32808
</TABLE>
ELEVENTH: Majority consent of the Shareholders of the corporation shall be
required for any Shareholder action.
TWELFTH: The Shareholders shall have the power to adopt, amend, alter,
change or repeal the certificate of incorporation when proposed and approved at
a Shareholders' meeting, with not less than a majority vote of the common stock.
THIRTEENTH: Meetings of the directors and of the Shareholders may be
held upon notice thereof as may be set forth in the bylaws of the corporation
in the manner provided for or permitted by the Statutes of Florida and any
meeting shall be deemed to be a meeting with Shareholders or Directors present
if a conference telephone or similar communications equipment is used by means
of which persons participating in the meeting can hear each other.
FOURTEENTH: The Board of Directors or the Shareholders of the
corporation may provide for create and participate in any pension or
profit-sharing plan determined to be appropriate and nothing herein contained
shall prevent the participation in such plan of any Directors or Officers of
the corporation.
FIFTEENTH: This corporation shall have first lien on all of the common
capital stock outstanding holding such
- 7 -
<PAGE> 9
stock; provided, however, that the said corporation's right to such a lien shall
be noted on each certificate of stock issued.
SIXTEENTH: Each Director and Officer, in consideration of his
services, shall be indemnified, whether then in office or not for the
reasonable costs and expenses incurred by him in connection with the defense
of, or for the advice concerning, any claim asserted or proceeding brought
against him by reason of his being or having been a Director or Officer of the
corporation or of any subsidiary of the corporation, whether or not wholly
owned, or by reason of any act or omission to act as such Director or Officer,
provided that he shall not have been derelict in the performance of this duty
to the matter or matters in respect of which such claim is asserted or
proceedings brought. The foregoing right of indemnification shall not be
exclusive of any other rights to which any Director or Officer may be entitled
as a matter of law.
SEVENTEENTH: No contract or other transaction between the corporation and
by any other firm or corporation shall be affected or invalidated by reason of
the fact that any one or more of the Directors or Officers of this corporation
is, or are interested in, or is a member, Shareholder, Director or Officer or
member, Shareholder, Director or Officer of such other firm or corporation and
any Director or Officer or Officers, individually or jointly, may be a party or
parties to, or may be interested in any contract or transaction of this
corporation in which this corporation is interested, and no contract, act or
transaction of this corporation with any other person, or persons, firm,
association, or corporation shall be affected or invalidated by reason of the
fact that any Director or Directors or Officers or Officers of this corporation
is a party or are parties to, or are interested in, such contract, act or
association or corporation, any each and every person who may become a Director
or Officer of this corporation is hereby relieved from any liability that might
otherwise exist from thus contracting with this
- 8 -
<PAGE> 10
corporation for the benefit of himself or any firm, association, or corporation
in which he may in anywise be interested.
IN WITNESS WHEREOF, the undersigned has made and subscribed of these
Articles of Incorporation at Orlando, Orange County, Florida, on the 7th day of
October, A.D., 1977.
ACCEPTANCE OF REGISTERED AGENT:
/s/ JAMES M. KNOX, JR. /s/ JAMES M. KNOX. JR. (SEAL)
- ------------------------------- ----------------------
JAMES M. KNOX, JR. JAMES M. KNOX. JR.
/S/ M. NADINE KNOX (SEAL)
----------------------
STATE OF FLORIDA) M. NADINE KNOX
SS
COUNTY OF ORANGE)
BEFORE ME, the undersigned authority, personally appeared, JAMES M. KNOX,
JR. and M. NADINE KNOX, who to me well known to be the persons described in and
who subscribed to the above Articles of Incorporation, and did freely and
voluntarily acknowledge before me according to law that they made and
subscribed the same for the uses and purposes herein mentioned and set forth.
IN WITNESS WHEREOF, I, have hereunto set my hand and official seal, at
Orlando, Orange County, Florida, this 7th day of October, A.D., 1977.
/s/ Peggy J. Brice
--------------------------------------------------------
Notary Public State of Florida at Large
My Commission Expires: Notary Public, State of Florida
at Large
My Commission Expires
July 18, 1981
(SEAL)
-9-
<PAGE> 1
EXHIBIT 3(i)(1)
STATE OF FLORIDA
[LOGO]
DEPARTMENT OF STATE
I certify the attached is a true and correct copy of the Articles of Amendment,
filed on November 17, 1997, to Articles of Incorporation for KNOX NURSERY, INC.,
a Florida corporation, as shown by the records of this office.
The document number of this corporation is 548960.
[SEAL]
Given under my hand and the
Great Seal of the State of Florida
at Tallahassee, the Capitol, this the
Twenty-fourth day of November, 1997
/s/ Sandra B. Mortham
----------------------------------
Sandra B. Mortham
Secretary of State
<PAGE> 2
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
KNOX NURSERY, INC.
The Articles of Incorporation of KNOX NURSERY, INC. were amended by the
corporation's board of directors on September 25, 1997. The Corporation is
filing these Articles of Amendment to Articles of Incorporation pursuant to F.S.
607.0602.
1. The name of the corporation is KNOX NURSERY, INC.
2. Article III of the Articles of Incorporation of KNOX NURSERY, INC.
was amended as follows:
ARTICLE III. CAPITALIZATION
The total number of shares of capital stock which the Corporation has
the authority to issue in fifty million (50,000,000). The total number of shares
of common stock which the Corporation is authorized to issue is forty million
(40,000,000) and the par value of each share of such common stock is one-tenth
of one cent ($.001) for an aggregate par value of forty thousand dollars
($40,000). The total number of shares of preferred stock which the Corporation
is authorized to issue is ten million (10,000,000) and the par value of each
share of such preferred stock is one-tenth of one cent ($.001) for an aggregate
par value of ten thousand dollars ($10,000). The voting powers, designations,
preferences and relative, participating, optional or other rights, if any, and
the qualifications, limitations or restrictions, if any, of the preferred stock,
in one or more series, shall be fixed by one or more resolutions providing for
the issuance of such stock adopted by the Corporations' board of directors (the
Board of Directors), in accordance with the provisions of the General
Corporation Law of the State of Florida and the Board of Directors is expressly
vested with authority to adopt one or more such resolutions.
3. Article V of the Articles of Incorporation of KNOX NURSERY, INC. was
amended as follows:
The Shareholders of record shall not have preemptive rights in any
issues of stock.
4. Article VIII of the Articles of Incorporation of KNOX NURSERY, INC.
was amended as follows:
The Board of Directors shall consist of not less than three (3) nor
more than twelve (12) members, who need not be residents of the State of Florida
or shareholders of the Corporation. The Board of Directors shall set the number
of directors, within the limits set forth in these Articles. All other matters
concerning the Board of Directors shall be determined and governed as provided
for in the Bylaws of the Corporation.
<PAGE> 3
The foregoing amendment to articles of incorporation was duly adopted by
the board of directors on September 25, 1997.
In witness whereof, the undersigned Director of this corporation has
executed these articles of amendment on September 25, 1997.
/s/ Bruce Knox
----------------------------
Bruce Knox, Chairman
<PAGE> 1
EXHIBIT 3(ii)
BY-LAWS
OF
KNOX NURSERY, INC.
ARTICLE I - OFFICES
The principal office of the corporation in the State of Florida shall
be located in the City of Orlando, County of Orange. The corporation may have
such other offices, either within or without the State of incorporation as the
board of directors may designate or as the business of the corporation may from
time to time require.
ARTICLE II - STOCKHOLDERS
1. ANNUAL MEETING.
The annual meeting of the stockholders shall be held on the 5th day
of January in each year, beginning with the year 1978 at the hour 10:00
o'clock A.M., for the purpose of electing directors and for the transaction of
such other business as may come before the meeting. If the day fixed for the
annual meeting shall be a legal holiday such meeting shall be held on the next
succeeding business day.
2. SPECIAL MEETINGS.
Special meetings of the stockholders, for any purpose or purposes,
unless otherwise prescribed by statute, may be called by the president or by
the directors, and shall be called by the president at the request of the
holders of not less than _____ per cent of all the outstanding shares of the
corporation entitled to vote at the meeting.
3. PLACE OF MEETING.
The directors may designate any place, either within or without the
State unless otherwise prescribed by statute, as the place of meeting for any
annual meeting or for any special meeting called by the directors. A waiver of
notice signed by all stockholders entitled to vote at a meeting may designate
By-Laws 1
<PAGE> 2
any place, either within or without the state unless otherwise prescribed by
statute, as the place for holding such meeting. If no designation is made, or
if a special meeting be otherwise called, the place of meeting shall be the
principal office of the corporation.
4. NOTICE OF MEETING.
Written or printed notice stating the place, day and hour of the
meeting and, in case of a special meeting, the purpose or purposes for which
the meeting is called, shall be delivered not less than one day nor more than
three days before the date of the meeting, either personally or by mail, by
or at the direction of the president, or the secretary, or the officer or
persons calling the meeting, to each stockholder of record entitled to vote
at such meeting. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail, addressed to the stockholder at his
address as it appears on the stock transfer books of the corporation, with
postage thereon pre-paid.
5. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE.
For the purpose of determining stockholders entitled to notice of or
to vote at any meeting of stockholders or any adjournment thereof, or
stockholders entitled to receive payment of any dividend, or in order to make
a determination of stockholders for any other proper purpose, the directors of
the corporation may provide that the stock transfer books shall be closed for a
stated period but not to exceed, in any cases, ______ days. If the stock
transfer books shall be closed for the purpose of determining stockholders
entitled to notice of or to vote at a meeting of stockholders, such books shall
be closed for at least ______ days immediately preceding such meeting. In lieu
of closing the stock transfer books, the directors may fix in advance a date
as the record date for any such determination of stockholders, such date in any
case to be not more than ______ days and, in case of a meeting of stockholders,
not less than ______ days prior to the date on which the particular action
requiring such determination of stockholders is to be taken. If the stock
transfer books are not closed and no record date is fixed for the determination
of stockholders entitled to notice of or to vote at a meeting of stockholders,
or stockholders entitled to receive payment of a dividend, the date on which
notice of the meeting is mailed or the date on which the resolution of the
directors declaring such dividend is adopted, as the case may be, shall be the
record date for such determination of stockholders. When a determination of
stockholders entitled to vote at any meeting of stockholders
By-Laws 2
<PAGE> 3
has been made as provided in this section, such determination shall apply to
any adjournment thereof.
6. VOTING LISTS.
The officer or agent having charge of the stock transfer books for
shares of the corporation shall make, at least 60 days before each meeting of
stockholders, a complete list of the stockholders entitled to vote at such
meeting, or any adjournment thereof, arranged in alphabetical order, with the
address of and the number of shares held by each, which list, for a period of
30 days prior to such meeting, shall be kept on file at the principal office of
the corporation and shall be subject to inspection by any stockholder at any
time during usual business hours. Such list shall also be produced and kept
open at the time and place of the meeting and shall be subject to the
inspection of any stockholder during the whole time of the meeting. The
original stock transfer book shall be prima facie evidence as to who are the
stockholders entitled to examine such list or transfer books or to vote at the
meeting of stockholders.
7. QUORUM.
At any meeting of stockholders 51% of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of stockholders. If less than said number of
the outstanding shares are represented at a meeting, a majority of the shares
so represented may adjourn the meeting from time to time without further
notice. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally notified. The stockholders present at a duly
organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough stockholders to leave less than a
quorum.
8. PROXIES.
At all meetings of stockholders, a stockholder may vote by proxy
executed in writing by the stockholder or by his duly authorized attorney in
fact. Such proxy shall be filed with the secretary of the corporation before or
at the time of the meeting.
9. VOTING.
Each stockholder entitled to vote in accordance with the terms and
provisions of the certificate of incorporation and these by-laws shall be
entitled to one vote, in person or by
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proxy, for each share of stock entitled to vote held by such stockholders. Upon
the demand of any stockholder, the vote for directors and upon any question
before the meeting shall be by ballot. All elections for directors shall be
decided by plurality vote; all other questions shall be decided by majority
vote except as otherwise provided by the Certificate of Incorporation or the
laws of this State.
10. ORDER OF BUSINESS.
The order of business at all meetings of the stockholders, shall be as
follows:
1. Roll Call.
2. Proof of notice of meeting or waiver of notice.
3. Reading of minutes of preceding meeting.
4. Reports of Officers.
5. Reports of Committees.
6. Election of Directors.
7. Unfinished Business.
8. New Business.
11. INFORMAL ACTION BY STOCKHOLDERS.
Unless otherwise provided by law, any action required to be taken at a
meeting of the shareholders, or any other action which may be taken at a
meeting of the shareholders, may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all of the
shareholders entitled to vote with respect to the subject matter thereof.
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ARTICLE III - BOARD OF DIRECTORS
1. GENERAL POWERS.
The business and affairs of the corporation shall be managed by its
board of directors. The directors shall in all cases act as a board, and they
may adopt such rules and regulations for the conduct of their meetings and the
management of the corporation, as they may deem proper, not inconsistent with
these by-laws and the laws of this State.
2. NUMBER, TENURE AND QUALIFICATIONS.
The number of directors of the corporation shall be two. Each
director shall hold office until the next annual meeting of stockholders and
until his successor shall have been elected and qualified.
3. REGULAR MEETINGS.
A regular meeting of the directors, shall be held without other notice
than this by-law immediately after, and at the same place as, the annual
meeting of stockholders. The directors may provide, by resolution, the time and
place for the holding of additional regular meetings without other notice than
such resolution.
4. SPECIAL MEETINGS.
Special meetings of the directors may be called by or at the request
of the president or any two directors. The person or persons authorized to call
special meetings of the directors may fix the place for holding any special
meeting of the directors called by them.
5. NOTICE.
Notice of any special meeting shall be given at least five days
previously thereto by written notice delivered personally, or by telegram or
railed to each director at his business address. If mailed, such notice shall
be deemed to be delivered when deposited in the United States mail so
addressed, with postage thereon prepaid. If notice be given by telegram, such
notice shall be deemed to be delivered when the telegram is delivered to the
telegraph company. The attendance of a director at a meeting shall constitute a
waiver of notice of such meeting, except where a director attends a meeting for
the express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened.
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6. QUORUM.
At any meeting of the directors two shall constitute a quorum for the
transaction of business, but if less than said number is present at a meeting,
a majority of the directors present may adjourn the meeting from time to time
without further notice.
7. MANNER OF ACTING.
The act of the majority of the directors present at a meeting at which
a quorum is present shall be the act of the directors.
8. NEWLY CREATED DIRECTORSHIPS AND VACANCIES.
Newly created directorships resulting from an increase in the number
of directors and vacancies occurring in the board for any reason except the
removal of directors without cause may be filled by a vote of a majority of the
directors then in office, although less than a quorum exists. Vacancies
occurring by reason of the removal of directors without cause shall be filled
by vote of the stockholders. A director elected to fill a vacancy caused by
resignation, death or removal shall be elected to hold office for the unexpired
term, of his predecessor.
9. REMOVAL OF DIRECTORS.
Any or all of the directors may be removed for cause by vote of the
stockholders or by action of the board. Directors may be removed without cause
only by vote of the stockholders.
10. RESIGNATION.
A director may resign at any time by giving written notice to the
board, the president or the secretary of the corporation. Unless otherwise
specified in the notice, the resignation shall take effect upon receipt
thereof by the board or such officer, and the acceptance of the resignation
shall not be necessary to make it effective.
11. COMPENSATION.
No compensation shall be paid to directors, as such, for their
services, but by resolution of the board a fixed sum and expenses for actual
attendance at each regular or special meeting of the board may be authorized.
Nothing herein contained shall be construed to preclude any director from
serving the corporation in any other capacity and receiving compensation
therefor.
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12. PRESUMPTION OF ASSENT.
A director of the corporation who is present at a meeting of the
directors at which action on any corporate matter is taken shall be presumed to
have assented to the action taken unless his dissent shall be entered in the
minutes of the meeting or unless he shall file his written dissent to such
action with the person acting as the secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to the
secretary of the corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a director who voted in favor of such
action.
13. EXECUTIVE AND OTHER COMMITTEES.
The board, by resolution, may designate from among its members an
executive committee and other committees, each consisting of three or more
directors. Each such committee shall serve at the pleasure of the board.
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ARTICLE IV - OFFICERS
1. NUMBER.
The officers of the corporation shall be a president, a
vice-president, a secretary and a treasurer, each of whom shall be elected by
the directors. Such other officers and assistant officers as may be deemed
necessary may be elected or appointed by the directors.
2. ELECTION AND TERM OF OFFICE.
The officers of the corporation to be elected by the directors shall
be elected annually at the first meeting of the directors held after each
annual meeting of the stockholders. Each officer shall hold office until his
successor shall have been duly elected and shall have qualified or until his
death or until he shall resign or shall have been removed in the manner
hereinafter provided.
3. REMOVAL.
Any officer or agent elected or appointed by the directors may be
removed by the directors whenever in their judgment the best interests of the
corporation would be served thereby, but such removal shall be without
prejudice to the contract rights, if any, of the person so removed.
4. VACANCIES.
A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, may be filled by the directors for the unexpired
portion of the term.
5. PRESIDENT.
The president shall be the principal executive officer of the
corporation and, subject to the control of the directors, shall in general
supervise and control all of the business and affairs of the corporation. He
shall, when present, preside at all meetings of the stockholders and of the
directors. He may sign, with the secretary or, any other proper officer of the
corporation thereunto authorized by the directors, certificates for shares of
the corporation, any deeds, mortgages, bonds, contracts, or other instruments
which the directors have authorized to be executed, except in cases where the
signing and execution thereof shall be expressly delegated by the directors or
by these by-laws to some other officer or agent of the corporation, or shall be
required by law to be otherwise signed or executed; and in general shall
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perform all duties incident to the office of president and such other duties as
may be prescribed by the directors from time to time.
6. VICE-PRESIDENT.
In the absence of the president or in event of his death, inability or
refusal to act, the vice-president shall perform the duties of the president,
and when so acting, shall have all the powers of and be subject to all the
restrictions upon the president. The vice-president shall perform such other
duties as from time to time may be assigned to him by the President or by the
directors.
7. SECRETARY.
The secretary shall keep the minutes of the stockholders' and of the
directors' meetings in one or more books provided for that purpose, see that
all notices are duly given in accordance with the provisions of these by-laws
or as required, be custodian of the corporate records and of the seal of the
corporation and keep a register of the post office address of each stockholder
which shall be furnished to the secretary by such stockholder, have general
charge of the stock transfer books of the corporation and in general perform
all duties incident to the office of secretary and such other duties as from
time to time may be assigned to him by the president or by the directors.
8. TREASURER.
If required by the directors, the treasurer shall give a bond for the
faithful discharge of his duties in such sum and with such surety or sureties
as the directors shall determine. He shall have charge and custody of and be
responsible for all funds and securities of the corporation; receive and give
receipts for moneys due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the corporation in such
banks, trust companies or other depositories as shall be selected in accordance
with these by-laws and in general perform all of the duties incident to the
office of treasurer and such other duties as from time to time may be assigned
to him by the president or by the directors.
9. SALARIES.
The salaries of the officers shall be fixed from time to time by the
directors and no officer shall be prevented from receiving such salary by
reason of the fact that he is also a director of the corporation.
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ARTICLE V - CONTRACTS, LOANS, CHECKS AND DEPOSITS
1. CONTRACTS.
The directors may authorize any officer or officers, agent or agents,
to enter into any contract or execute and deliver any instrument in the name of
and on behalf of the corporation, and such authority may be general or confined
to specific instances.
2. LOANS.
No loans shall be contracted ON behalf of the corporation and no
evidences of indebtedness shall be issued in its name unless authorized by a
resolution of the directors. Such authority may be general or confined to
specific instances.
3. CHECKS, DRAFTS, ETC.
All checks, drafts or other orders for the payment of money, notes or
other evidences of indebtedness issued in the name of the corporation, shall be
signed by such officer or officers, agent or agents of the corporation and in
such manner as shall from time to time be determined by resolution of the
directors.
4. DEPOSITS.
All funds of the corporation not otherwise employed shall be deposited
from time to time to the credit of the corporation in such banks, trust
companies or other depositaries as the directors may select.
ARTICLE VI - CERTIFICATES FOR SHARES AND THEIR TRANSFER
1. CERTIFICATES FOR SHARES.
Certificates representing shares of the corporation shall be in such
form as shall be determined by the directors. Such certificates shall be signed
by the president and by the secretary or by such other officers authorized by
law and by the directors. All certificates for shares shall be consecutively
numbered or otherwise identified. The name and address of the stockholders, the
number of shares and date of issue, shall be entered on the stock transfer
books of the corporation. All certificates surrendered to the corporation for
transfer shall be canceled and no new certificate shall be issued until the
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former certificate for a like number of shares shall have been surrendered and
canceled, except that in case of a lost, destroyed or mutilated certificate a
new one may be issued therefor upon such terms and indemnity to the corporation
as the directors may prescribe.
2. TRANSFERS OF SHARES.
(a) Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, and cancel the old certificate; every such transfer shall be entered
on the transfer book of the corporation which shall be kept at its principal
office.
(b) The corporation shall be entitled to treat the holder of record of
any share as the holder in fact thereof, and, accordingly, shall not be bound
to recognize any equitable or other claim to or interest in such share on the
part of any other person whether or not it shall have express or other notice
thereof, except as expressly provided by the laws of this state.
ARTICLE VII - FISCAL YEAR
The fiscal year of the corporation shall begin on the 1st day of
January in each year.
ARTICLE VIII - DIVIDENDS
The directors may from time to time declare, and the corporation may
pay, dividends on its outstanding shares in the manner and upon the terms and
conditions provided by law.
ARTICLE IX - SEAL
The directors shall provide a corporate seal which shall be circular
in form and shall have inscribed thereon the name of the corporation, the state
of incorporation, year of incorporation and the words, "Corporate Seal".
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ARTICLE X - WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is required to
be given to any stockholder or director of the corporation under the provisions
of these by-laws or under the provisions of the articles of incorporation, a
waiver thereof in writing, signed by the person or persons entitled to such
notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice.
ARTICLE XI - AMENDMENTS
These by-laws may be altered, amended or repealed and new by-laws may
be adopted by a vote of the stockholders representing a majority of all the
shares issued and outstanding, at any annual stockholders' meeting or at any
special stockholders' meeting when the proposed amendment has been set out in
the notice of such meeting.
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