UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
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FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
UNDER SECTION 12(B) OR (G)
OF THE SECURITIES EXCHANGE ACT OF 1934
HEALTH EXPRESS USA, INC.
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(Name of Small Business Issuer in its Charter)
Florida 65-0847995
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(State or Other Jurisdiction of (I.R.S. Employer Identification
Incorporation or Organization) Number)
275 Commercial Blvd., Suite 260
Fort Lauderdale, FL 33308
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(Address of Principal Executive (Zip Code)
Offices)
Issuer's Telephone Number:
(954) 776-5401
Securities to be Registered Pursuant to Section 12(B) of the Act:
Common Stock, Par Value $.001 Per Share
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(Title of Class)
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Securities to be Registered Pursuant to Section 12(G) of the Act:
None
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PART 1
ITEM 1. DESCRIPTION OF BUSINESS
(a) Business Development
Health Express USA, Inc. ("Health Express" or the "Company"), was
incorporated in Florida on July 2, 1998 to develop, construct and operate
gourmet, fast food restaurants. Since inception, the Company has had no
operations and has conducted no business. It is currently in the development
stage and is in the process of completing construction of its first restaurant,
which is expected to open for business in LATE DECEMBER 1999.
(b) Business of the Issuer
(1) Principal Products and Services and their Markets.
Management's present focus is the COMPLETION AND OPENING of its first
restaurant and satisfying consumer demands and preferences in the healthy and
nutritious fast food arena in the local market. The Company's initial restaurant
and all future restaurants, if any, will operate under the name "Healthy Bites
Grill". The principal products that will be offered by the Company through its
restaurants are gourmet, healthy and nutritious fast food items. These items are
expected to include vegetable (veggie) burgers, mushroom burgers, salads,
smoothies and natural, healthy beverages. The items will be available for
consumption on site or as take-out items purchased in the restaurant or at the
drive-thru.
Under an agreement with data central usa, inc. A data base management
company, the company is assembling a select group of high profile product lines
for its joint marketing effort. These high profile product lines consist of
those products with already established national brand name recognition which
health conscious consumers already identify as high quality products in the
health food industry. The products will include meal supplements such as Met-Rx
protein shakes and protein bars (dietary supplements) and Myoplex protein
shakes, Barnie's coffee, Bell and Evans' ( chickens ) and Muir Glen (tomato
products). based in Ocala, Florida, data central manages the frequent-dining
programs for multi-unit restaurant chains by providing turnkey electronic
loyalty/frequency solution services this is a sales tracking database specific
to each customer. Each of the restaurant's customers will be provided with a
healthy bites grill identification card with a magnetic strip. The card is then
swiped on each visit, sales information is accumulated and the customer is
awarded points relative to the frequency of patronage. These points are
redeemable for company discounts. This data-based sales information will assist
the company in identifying the frequent customer. Through the loyalty discount
program, the company will then be able to reward that customer through dining
discounts based on the number of points accumulated during each visit to the
company's restaurant thereby encouraging the customer to return. Management
anticipates that this program will increase sales by bringing the customer back
in order to use the earned discounts. It is expected that such increased sales
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will foster customer loyalty. Management expects to use the database it obtains
through the program identification card for promotional and advertising
purposes. It is anticipated that such promotional materials will include gift
certificates for birthdays and announcements of new products and locations. The
company has entered into an agreement with data central to provide the database
management services described once the restaurant is in operation. As of the
date hereof, no retainer has been paid and no fixed fees have been determined.
The fees for this service will be negotiated when the restaurant opens and when
management determines that it is appropriate to commence the program.
As a restaurant operation designed with the goal to ultimately expand
nationwide, management has focused its attention on gaining an understanding of
consumer demands in healthy foods. Management is currently developing the
restaurant's initial menu selections with the assistance of its menu and food
preparation team comprised of Mr. David Maltrotti, Executive Vice President of
Operations, and Mr. Roy A. Kindberg, General manager.
In an effort not to duplicate consumer taste tests already fully
implemented by major players in the health food industry, such as Wild Oats and
WholeFoods, the Company is creating its initial menu based on currently known
consumer preferences and by including new menu items not traditionally found in
fast food restaurants such as complete protein vegi-burgers and grilled
portobella pannini. This is an ongoing process, the results of which will not be
fully known until the Company's first restaurant is opened and consumer surveys
are completed and analyzed. The results of such surveys will play a key role in
the addition, deletion and modification of menu items. Management expects the
expansion of the Company's restaurant operations will require the establishment
of a department dedicated to market survey and testing in order to refine its
menu items in response to internally generated market surveys.
A key element of the Company's business plan is to enter into franchise
agreements with potential and qualified franchisees to open and operate
restaurants under the "Healthy Bites Grill" name. The Company has retained the
services of an experienced franchise consultant, Donald Luria, to assist in this
process. Mr Luria previously worked with subway restaurants as a vice president
of operations and as a franchise consultant for ten years. He was responsible
for assisting and developing over 100 subway franchises in the southeastern
united states. Mr. Luria has also been a franchise consultant for the Coffee
Beanery and Miami Subs in the South Florida region. Mr. Luria will assist in the
development and implementation of the Company's franchise operations and will be
involved in helping franchisees in product development, hiring and training,
site selection, lease negotiation, store design. In consideration for these
services, in consideration for providing these services to the Company, Mr.
Luria has received 1000 restricted shares of the Company's common stock and will
be paid on an hourly basis at the rate of $75 per hour. Management believes that
the Company has found a niche in the fast food industry by being the sole
provider of healthy food on a fast food format. It is expected that the
franchise agreements will include royalty fees based on sales volume and require
operational and quality control.
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Mr. David Maltrotti, executive vice president of operations will be in
charge of all aspects of restaurant operations, including equipment purchasing
decisions and restaurant layout recommendations. Although Mr. Maltrotti has not
started any franchises, he has been actively involved in the food service and
hospitality industry for over 25 years and is an experienced
vegetarian\conventional chef. He was instrumental in starting whole earth
markets in Boca Raton, Florida where he assisted in developing the restaurant's
menu. he was also responsible for starting and developing the menu at the
Natural Food Market of South Beach, Miami, a successful vegetarian and
macrobiotic gourmet food store with multi-establishment operations. Mr.
Maltrotti was an instructor for the Miami Dade Community College health and
nutrition program. He has recently designed recipes for the Broward General
Medical Center, Fort Lauderdale, and the dean ornish wellness center. Mr.
Maltrotti has consulted on numerous projects including the Sundy house of Delray
Beach, Florida where he developed a traditional southern style menu to reflect
the historical significance of the property on which it is located. Mr.
Maltrotti designed the food service program for the Gas Light Club restaurant
located in Boca Raton florida.
(2) Distribution Methods
It is anticipated that the initial restaurant will serve food prepared
in its on-site kitchen. A warehouse/storage facility is planned to be leased for
short-term distribution items such as ancillary food products and supplies.
Management anticipates that once franchise operations commence, the Company will
operate a drop shipment facility for the distribution of certain menu items that
allow for the pre-preparation and delivery to various franchises within regional
boundaries based on logistical factors such as distance and delivery time. The
"drop shipment facility"is a storage/warehouse that will serve initially to
store the restaurant's non-perishable items such as paper products and supplies.
The Company is already leasing warehouse space for this purpose. A drop shipment
facility with kitchen facilities will be used only when sufficient franchise
operations have commenced. Since the Company has not yet entered into any
franchise agreements, a drop shipment facility with kitchen facilities is only
in the planning stages at this time. The kitchen facilities, when operational,
will be used for the production of the company's signature line products,
including the "Health Bites Burger", "Salmon Burger" and "Organic Baked French
Fries". Thereafter, management anticipates that additional distribution
facilities will be needed if franchise restaurants are opened in different
geographic regions of the country. The Company's initial franchises are expected
to be in the South Florida area.
The Company has received local, regional and nationwide attention with
various write-ups in several industry publications such as "Restaurant News",
"Crittendens Restaurant Chain Report", "Sunbelt Food Service Magazine" and
"Natural Products Industry Provider". The Company has also joined with Barnie's
Coffee Co., a major specialty coffee Company, which is distributed by Standard
Coffee Service Company. The Company currently has a contract with Standard
Coffee Service Company to distribute Barnie's Coffee in exchange for the free
use of its equipment, provided that the Company only sell the Barnie's Coffee
line which will be purchased on a c.o.d. basis. The Company is currently
involved in aligning supplier relationships with SYSCO Food Service, a
conventional food service supplier that will provide assorted supplies including
cleaning agents, trash bags, paper towels and plastic ware; Organica, an
all-natural organic products distributor which will supply wholesale bulk food
service ingredients; cornucopia, also known as United Distributors, which will
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supply most of the all-natural dry goods and produce goods; Kinfolk, a
distributor of health products, will provide soy, cheese and tofu lines; Green
Garden, A live foods distributor which will provide sprouts, sprouted beans and
wheat grass; and Tree of Life, a multi-faceted national distributor of natural
product labels which will supply vitamin supplement lines, gourmet specialty
lines and a variety of specific industry products. The Company does not have
contracts with the above suppliers but is in the process of establishing lines
of credit with most of them, as it is the industry practice to make bulk
purchases on credit.
Management believes that the site chosen for its flagship restaurant
represents the ideal type of location for all of the Company's PLANNED FUTURE
restaurants. It is expected that this model will serve as the blueprint for SUCH
future restaurants. Location represents one of the factors to the success of the
Company's restaurants, with other factors being food related (quality, price,
timeliness and convenience) and quality of service. Management believes that its
restaurant will attract the attention of the local consumer because the
restaurant will be the only gourmet health food restaurant in South Florida with
both a drive-thru and sit-down facility. It is expected that the initial
customers will come from the local area, attracted by a Bally's Scandinavian Gym
which is being built approximately one half mile from the restaurant. The
restaurant site is also in close proximity to two hospitals, two high schools
and various apartment complexes. Management anticipates that it will initially
draw customers from these locations. If the operations of the initial restaurant
are profitable then management believes that it will have found the ideal target
area for future expansion, both for company-owned restaurants as well as
franchise operations.
(3) Status of Publicly Announced New Products or Services
On September 28, 1999, the Company announced the opening of its initial
flagship restaurant for the fall of 1999. This news release to Business Wire
introduced Health Express as a fast food restaurant chain offering healthy food
and announced the opening of its first restaurant for the fall of 1999. As of
today, the Company has begun construction and is planning a grand opening for
the late December, 1999. The delays experienced in the opening of the restaurant
are directly attributable to the process of obtaining various local building
permits. All permits have since been obtained and construction, which began on
september 28, 1999, is nearing completion,
(4) Competitive Business Conditions
The Company has competition from existing fast food chains offering
conventional fast food. However none offer the type of products that the Company
is specializing in. In fact, the major competitors are the ones that offer the
type of fast food that the health conscious American consumer is now avoiding.
Additionally, management anticipates that it may have competition from
established health food stores and small single proprietary health food
restaurants. There are no direct competitors in the area of healthy fast food.
Management believes that the Company can develop name identification with
specific menu items offered in the healthy gourmet fast food industry, which is
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expected to enable the Company to compete in its niche market. Management
believes, although no assurances can be given, that the Company has a
competitive edge which is based on a combination of consumer demands for a
reasonably priced healthy meal served in less time and with consistently good
taste. Competitors in the health food market such as Wild Oats and Whole Foods,
which are operating in Fort Lauderdale, are currently successful but do not
offer fast food service with convenient drive-thru.
(5) Dependence on Major Customers
The Company, as a fast food restaurant, is not dependent on any major
customers but will seek to gain the patronage of the local consumers within a
strategic location. The current sight for the initial restaurant represents what
management perceives as an ideal location for a flagship operation. It is
centrally located in a business and medical community within a few mile radius
of two popular health clubs, a karate center and apartment and residential
areas.
It is also on a busy thoroughfare which links a major highway and the
ocean with substantial traffic flow of business people, tourists and local
residents. The mission of the Company is to ensure repeat business and customer
loyalty by providing a high quality nutritious and delicious meal at a
reasonable price in relatively short time and within pleasant surroundings.
(6) Intellectual Property
The Company has filed a trademark application for a federally
registered trademark for the name "Healthy Bites Grill" which is intended to be
used as the name for all restaurants and has received provisional approval from
the U.S. Patent and Trademark Office for its use. Confidentiality agreements
will be required from all production personnel on the Healthy Bites Grill
recipes.
(7) Governmental Approval
At the present time there is no government approval required for the
Company's principal products or services. Restaurant operations are generally
subject to local, county and state restaurant operation, health, sanitation and
quality guidelines. The Company's operations are also subject to standard
hospitality, food safety and sanitation guidelines. The majority of governmental
regulations regarding restaurant operations are handled at the state level by
The Florida State Division of Hotels and Restaurants. The first step of the
approval process is completed at the Plan Review Office to insure design
compliance. Next, the design is submitted to the department of NATURAL RESOURCE
PROTECTION, A COUNTY AGENCY, FOR ENVIRONMENTAL IMPACT REVIEW. AFTER CONSTRUCTION
IS COMPLETED, THE STATE DIVISION OF HOTELS AND RESTAURANTS AND THE CITY BUILDING
AND ZONING DEPARTMENT PHYSICALLY INSPECT THE FACILITY. ON APPROVAL, THE CITY OF
OAKLAND PARK WILL ISSUE AN OCCUPATIONAL LICENSE AND A BUSINESS REGULATIONS.
LICENSE WILL BE ISSUED BY THE STATE OF FLORIDA. AFTER OPENING, THE RESTAURANT
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WILL BE INSPECTED EVERY FOUR MONTHS BY THE STATE OF FLORIDA FOR COMPLIANCE WITH
THE HEALTH AND SANITATION CODE AND EVERY YEAR BY THE LOCAL FIRE MARSHAL. THE
COMPANY EXPECTS TO INCUR APPROXIMATELY $500 IN LICENSE FEES IN ITS FIRST YEAR OF
OPERATION AND APPROXIMATELY $400 EACH YEAR THEREAFTER. THE COMPANY DOES NOT
FORESEE ANY ADDITIONAL COSTS ASSOCIATED WITH GOVERNMENT REGULATIONS OR
COMPLIANCE THEREOF AT THE PRESENT TIME.
(8) Governmental Approval, Regulation and Environmental Compliance
The Company is and will be subject, both directly and indirectly, to
various laws and regulations relating to its business, including city and county
occupational licenses and health and sanitation inspections. At the present
time, management believes that it is in material compliance with all applicable
ordinances, rules and regulations, however, new rules, ordinances and
regulations may be enacted in the future, which may require compliance by the
Company in the future. The Company anticipates that it will have no material
costs associated with compliance with current federal, state and local
environmental laws.
(9) Research and Development
The Company retained SOUTHERN HOSPITALITY SERVICES, AN independent
contractor, to conduct market surveys and similar studies. THE SURVEY RESULTS
OBTAINED BY THE COMPANY FROM SUCH SURVEYS SUPPORT MANAGEMENT'S BELIEF THAT THE
CONSUMER MARKET IN THE FOOD INDUSTRY IS POSITIVELY RECEPTIVE TO A HEALTHY FOOD
RESTAURANT WITH A FAST FOOD FORMAT. AFTER RECEIVING THE RESULTS OF SUCH SURVEYS,
MANAGEMENT CONDUCTED AN INTERNAL EVALUATION OF THE POTENTIAL SUCCESS OF THE
COMPANY'S BUSINESS MODEL AND CONCLUDED THAT THE CURRENT TREND IS FOR HEALTHIER
FOODS WITHOUT SACRIFICING TIME OR GOOD TASTE. THEREFORE, MANAGEMENT DOES NOT
ANTICIPATE THAT IT WILL CONDUCT ANY RESEARCH AND DEVELOPMENT IN THE FORESEEABLE
FUTURE WITH OUTSIDE MARKET SURVEY COMPANIES. MANAGEMENT EXPECTS TO CONDUCT
INTERNALLY GENERATED SURVEYS BY UTILIZING CUSTOMER RESPONSE CARDS COLLECTED AT
ITS RESTAURANT WHICH WILL BE AVAILABLE AT THE COUNTER FOR VOLUNTARY COMPLETION
BY CUSTOMERS. IT IS ANTICIPATED THAT THE RESPONSES GENERATED BY THESE CARDS WILL
PROVIDE MANAGEMENT WITH VALUABLE INFORMATION CONCERNING CONSUMER PREFERENCE AND
DEMANDS. MANAGEMENT WILL THEN BE ABLE TO MAKE MENU AND OTHER CHANGES NECESSARY
TO KEEP PACE WITH ITS CUSTOMERS PREFERENCES AND CONCERNS. MANAGEMENT EXPECTS
THAT THIS WILL BE AN ON-GOING PROCESS TO SATISFY THE CHANGING TASTES OF ITS
CUSTOMERS AND BY QUICKLY RESPONDING TO THESE INTERNAL CUSTOMER SURVEYS.
(10) Employees and Facilities
As of NOVEMBER 15, 1999, the Company had four (4) full-time and
two (2) part-time employees. The Company also employs independent contractors
and other temporary employees. None of the Company's employees is represented by
a labor union, and the Company considers its employee relations to be good.
The Company expects the number of employees to grow significantly over
the next twelve months once its initial restaurant opens and it commences
operations. The Company believes that its future success will depend in part on
its continued ability to attract, hire and retain qualified personnel.
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The Company expects growth by both franchising and direct ownership in
various locations. Each restaurant is expected to require approximately twelve
employees. IT IS EXPECTED THAT ALL ACCOUNTING FUNCTIONS WILL be highly
centralized AND WILL BE INTERFACED OR LINKED TO THE COMPANY'S ACCOUNTING
PROGRAM. IT IS EXPECTED THAT BOTH COMPANY-OWNED RESTAURANTS AND FRANCHISE
OPERATIONS WILL USE THE SAME POINT OF SALE SYSTEM AND THEY, IN TURN, WILL REPORT
ON A MONTHLY BASIS TO A CENTRALIZED ACCOUNTING DEPARTMENT OF THE COMPANY FOR
MANAGERIAL AND FINANCIAL REPORTING PURPOSES.
The Company's first restaurant operation will be in leased space
located at 1538 East Commercial Blvd, Fort Lauderdale, Florida. See Item 3.
Description of Property. The Company's executive offices are at 275 Commercial
Boulevard, Suite 260, Fort Lauderdale, Florida. The Company believes that
additional space will be required as its business expands and that it will be
able to obtain suitable space as needed. The Company does not own any real
estate.
(c) Reports to Security Holders
Prior to filing this Form 10-SB, the Company has not been required to
deliver annual reports. To the extent that the Company is required to deliver
annual reports to security holders through its status as a reporting company,
the Company shall deliver annual reports. Also, to the extent the Company is
required to deliver annual reports by the rules or regulations of any exchange
upon which the Company's shares are traded, the Company shall deliver annual
reports. If the Company is not required to deliver annual reports, the Company
will not go to the expense of producing and delivering such reports. If the
Company is required to deliver annual reports, they will contain audited
financial statements as required.
Prior to the filing of this Form 10-SB, the Company has not filed
reports with the Securities and Exchange Commission. Once the Company becomes a
reporting company, management anticipates that Forms 3, 4, 5, 10-KSB, 10-QSB,
8-K and Schedules 13D along with appropriate proxy materials will have to be
filed as they come due. If the Company issues additional shares, the Company may
file additional registration statements for those shares.
The public may read and copy materials the Company files with the
Securities and Exchange Commission at the Commission's Public Reference Room at
450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain
information on the operation of the Public Reference Room by calling the
Commission at 1-800-SEC-0330. The Commission maintains an Internet site that
contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the Commission. The Internet
address of the Commission's site is (http://www.sec.gov).
(d) Year 2000 Disclosure
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The Company does not anticipate any problem in dealing with computer
entries in the year 2000 or thereafter, with any computers currently used at its
facilities. All of the Company's computer systems are new and have been Year
2000 compliant since their acquisition. The Company keeps current with all
updates and revisions with all software the Company currently uses. It is
anticipated that the software updates reflect required revisions to accommodate
transactions in the Year 2000 and thereafter. Nonetheless, management recognizes
the problems that may arise in connection with the Year 2000 issue.
The Year 2000 issue is the result of computer programs being written
using two digits rather than four to define the applicable year. In other words,
date-sensitive software may recognize a date using A00" as the year 1900 rather
than the year 2000. This could result in system failures or miscalculations
causing disruptions of operations, including, among others, a temporary
inability to process transactions, send invoices, or engage in similar normal
business activities. The Company does not believe that it has material exposure
to the Year 2000 issue with respect to its own information systems since its
existing systems correctly define the year 2000. The Company intends to survey
its major vendors to determine the extent to which their computer systems
(insofar as they relate to the Company's business) are Year 2000 compliant. The
Company is currently unable to predict the extent to which the Year 2000 issue
will affect its vendors, or the extent to which it would be vulnerable to the
vendor's failure to remediate any Year 2000 issues on a timely basis. The
failure of a major vendor subject to the Year 2000 to convert its systems on a
timely basis or a conversion that is incompatible with the Company's systems
could have an adverse effect on the Company. In addition, in a worst case
scenario, if the Company's vendor's computer systems do not contain the
necessary software updates to be Year 2000 compliant, a multitude of problems
could occur which may include, among others, lost orders, supplies not shipped
or shipped to incorrect addresses and credit card purchases incorrectly credited
or debited. As a result, the Company's operations could be adversely affected
which could result in lost business, which may have a material adverse effect on
its business and its financial condition
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF
OPERATION
Plan of Operation
The Company's plan of operations has been developed using a step by
step approach, with each phase of the plan closely monitored and implemented
prior to implementation of the next phase of the plan. The phases can be divided
as follows:
1. Completion of construction phase
2. Initial restaurant opening and operation
3. Preparation of franchise circulars and agreements
4. Franchising efforts
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Management originally expected that the total cost for its initial
flagship restaurant would be approximately $250,000 including approximately
$213,000 for construction, equipment, furniture, supplies and opening inventory,
and approximately $37,000 as a reserve for overhead expenses and unexpected
costs. The company raised approximately $525,000 from the sale of securities and
the exercise of common stock purchase warrants and stock options. Of this
amount, approximately $245,000 has been expended on general operating expenses
which includes salaries, commissions, advertising and overhead, $140,000 on
construction related costs, kitchen equipment and restaurant furniture and
supplies, and $18,000 for deposits and expenses related to the company's private
placement offering . The remaining balance of cash on hand of $122,000 is
expected to satisfy the company's cash flow requirements of approximately
$73,000 for the completion of the first restaurant and overhead expenses over
the next three months.
Management has developed a preliminary monthly budget of cash flows
from restaurant operations based upon anticipated restaurant sales with an
average meal ticket sale of approximately $8.00 and 180 customers per day.
Management believes, based upon such budget, that there is sufficient cash on
hand for the next three months to attain a steady revenue stream from restaurant
operations. Management further believes that after approximately two months of
operations, there will be sufficient restaurant revenues to satisfy the
company's cash requirements during the next 12 months. If cash flow from
restaurant operations is not sufficient to support the company's financial
obligations after february 2000 or the restaurant opening is date is extended
due to unexpected last minute construction delays, management may seek
additional financing through the sale of its debt and/or equity securities.
Toward this end, the Company has extended the expiration date of the warrants to
February 1, 2000 to raise additional capital. The Company's officers also may
provide additional funds by exercising their stock options. If all 1,670,200
outstanding warrants and 3,683,000 options are exercised at an exercise price of
$.35 per warrant and option, the Company will receive $584,570 and $1,289,050,
respectively, in additional financing. It may also seek alternative sources of
financing, including from more conventional sources such as bank loans and
credit lines or loans from the Company's officers. However, no assurances can be
given that the Company will be able to raise sufficient capital to meet its
needs through the sale of its securities or otherwise. Further, the availability
of any future financing may not be on terms which are satisfactory to the
Company.
After opening the initial restaurant and developing a standard menu
during approximately two to three months of operations, management expects to
commence the sale of restaurant franchises. Through the use of direct mail
marketing as well as numerous telephone interviews conducted by management with
potential franchisees, management has generated a number of potential
franchisees. It is management's belief, based on the responses received through
such marketing efforts, that up to five franchises can be sold by the end of
2000. Franchising efforts will require that the Company respond to inquires
concerning franchise opportunities although management expects to locate its
initial franchise in the South Florida area. It is anticipated that donald
luria, the company's franchise consultant, will assist in all franchising
efforts and activities. It is currently anticipated that each franchise sold
will generate a franchise fee of $ 15,000 to $ 20,000 and there will be
royalties payable to the Company of between 6% and 8% of gross sales.
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It is management's current intention to operate one Company-owned
restaurant in early 2000 and possibly open and operate one additional Company
restaurant in Boca Raton, Florida with agreements for three to five franchise
restaurants by the end of the year. For the year 2001, it is management's goal
to own a total of four restaurants and to have sold between five and 10
franschises. The Company plans to grow conservatively through cash flow from
operations and franchise revenues, if any.
From time to time the Company may evaluate potential acquisitions
involving complementary businesses, content, products or technologies. The
Company has no present agreements or understanding with respect to any such
acquisition. The Company's future capital requirements will depend on many
factors, including growth of the Company's restaurant business, the success of
its franchising operations, economic conditions and other factors including the
results of future operations.
The Company currently has four (4) full time employees. Management
expects to hire approximately 12 additional people for the operations of its
initial restaurant as follows:
<TABLE>
<CAPTION>
NO. OF EMPLOYEES DEPARTMENT JOB DESCRIPTIONS.
---------------- ---------- -----------------
<S> <C> <C> <C>
2 Management General Manager and
Assistant
2 Production Food Preparation
3 Line Food Preparation
5 Cashiers Cashier/Customer
Service
</TABLE>
ITEM 3. DESCRIPTION OF PROPERTY
On January 25, 1999 the Company entered into a five-year lease with
three renewal options of three years each for the location of its flagship
restaurant comprised of 3,129 square feet at a rate of $12.50 per square foot.
The current monthly rent is $3,250 with scheduled annual increases. The leased
property is located at 1538 E. Commercial Boulevard, Fort Lauderdale, Florida,
which is a major east-west thoroughfare in the northeast section of the city.
The location is adjacent to or near sprawling businesses, medical centers and
hospitals. The restaurant is easily accessible by several major thoroughfares
including Interstate 95 and US 1. The Company received approval for final city
and county building permits and began construction in late September 1999. The
opening of the first restaurant is scheduled for late December 1999.
The current lease contains provisions for hazard, liability and flood
insurance, which, in the opinion of management, are adequate for coverage from
potential property damage. In addition, the Company will acquire additional
coverage under an umbrella policy to cover potential liability arising from
restaurant operations. Employee worker compensation coverage is mandatory and
covered under separate policy.
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The Company's executive offices are located at 275 Commercial
Boulevard, Suite 260, Fort Lauderdale, Florida. It leases 1,000 square feet at a
monthly rental rate of $ 500 on a month-to-month basis. Management believes that
it will be able to obtain suitable space as needed and has the physical ability
to acquire additional office space at its current location. The Company leases
its office space and does not own any real estate. The Company is not in the
business of investing in real estate or real estate mortgages.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) 5% Shareholders.
The following information sets forth certain information as of November
15, 1999 about each person who is known to the Company to be the beneficial
owner of more than 5% of the Company's Common Stock:
<TABLE>
<CAPTION>
Name and Address Amount and Nature Percentage
TITLE OF CLASS OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP (1) OF CLASS (2)
- -------------- ------------------- --------------------------- ------------
<S> <C> <C> <C>
Common Douglas Baker 4,000,000 43.2%
5206 NW 28th St.
Margate, Fla. 33063
Common Marco D'Alonzo 4,000,000 43.2%
3557 Dunes Vista Dr.
Pompano Beach, Fla. 33068
(b) Security Ownership of Management:
Common Douglas Baker 4,000,000 43.2%
5206 NW 28th St.
Margate, Fla. 33063
Common Marco D'Alonzo 4,000,000 43.2%
3557 Dunes Vista Dr.
Pompano Beach, Fla. 33068
Common David Maltrotti 110,000 2.0% *
4501 W. Atlantic Blvd., #1510
Coconut Creek, FL 33066
All Officers and
directors as a group 8,110,000 88.4%
(3) persons
</TABLE>
---------------------
12
<PAGE>
(1) Messrs. D'Alonzo and Baker have options to purchase 1,780,000 and 1,903,000
shares, respectively, of common stock at an exercise price of $0.35 per share.
The options are exercisable for a period of 10 years from June 15, 1999 and are
included in the calculation of ownership in accordance with Rule 13(d) of the
Securities Act.
(2) All percentages are calculated based upon 5, 476,817 shares issued and
outstanding and 3,683,000 presently exercisable options for Messrs. D'Alonzo and
Baker and 100,000 presently exercisable for Mr. Maltrotti as of November 15,
1999.
(c) Changes in Control:
There is no arrangement, which may result in a change of control.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
(a) Directors and Executive Officers [UPDATE AGES]
As of November 15, 1999, the directors and executive officers of the
Company, their ages, positions in the Company, the dates of their initial
election or appointment as director or executive officer, and the expiration of
the terms as directors are as follows:
<TABLE>
<CAPTION>
NAME OF AGE POSITION PERIOD SERVED
- ------- --- -------- -------------
DIRECTOR
- --------
<S> <C> <C>
Douglas Baker 37 Director, President and Chief July 2, 1998 to
-- Executive Officer date
Marco D'Alonzo 34 Director, Secretary and Chief July 2, 1998 to
-- Operating Officer date
David Maltrotti 40 Executive Vice President Feb. 3, 1999 to
-- date
</TABLE>
- ------------------------------------------------------
* The Company's directors are elected at the annual meeting of stockholders and
hold office until their successors are elected and qualified. The Company's
officers are appointed by the Board of Directors and serve at the pleasure of
the Board and subject to employment agreements, if any, approved and ratified by
the Board.
13
<PAGE>
(b) Business Experience
Douglas Baker has more than 10 years of sales experience in the
competitive financial services industry. He had been actively involved in the
financial public relations industry since 1994. He has been a licensed
stockbroker, 220 insurance agent and mortgage broker. From 1994 to 1998 he was
co-owner with Marco D'Alonzo and Vice President of First Equity Group, a
financial public relations company where he was in charge of company operation
including cash flow management, budgeting, public relations and human resources.
From 1992 to 1993 he was an insurance manager with Aachen Insurance Company.
From 1986 to 1991, he was a stockbroker of various brokerage firms in South
Florida. From 1981 to 1985, he owned Bakers Forrest Floor Service, a tile
refinishing company.
Marco D'Alonzo is experienced in all aspects of corporate, financial
and business affairs. He has owned and operated two financial related
businesses. He owned Equity Management Group, a full service public relations
firm specializing in corporate promotions where his duties included marketing,
business development and client relations. From 1994 to 1998 he also was
co-owner of First Equity Group, Inc. with Mr. Douglas Baker where he acted as
President, with duties including marketing, business development and client
relations. From 1986 to 1991, he was a stockbroker in various brokerage firms in
South Florida.
David Maltrotti has a long track record with various South Florida
gourmet establishments as a chef in charge of designing healthy menus. His 25
years experience includes management positions in the area of restaurant design
and operational implementation. From 1998 to 1999, he was Executive Chief for
the North Broward Hospital District located in Fort Lauderdale, Florida. From
1995 to1998 he was Executive Chef for Natural Food Markets of South Florida.
From 1989 to1995 he was Executive Chef for Whole Earth Market located in Boca
Raton, Florida.
The Company currently does not have any employees expected to make a
significant contribution to the business. The Company has engaged Creative
Connections of Pompano Beach, Florida, a professional marketing firm AS A
CONSULTANT for their local and national campaign. THE AGREEMENT IS ON A
MONTH-TO-MONTH BASIS AT A MONTHLY FEE OF $3,500. MANAGEMENT expects that some
individuals who are currently working on a consulting basis may be retained as
full time employees at the operational/managerial level in the future. The
Company is currently reviewing several portfolios in order to add key personnel
at the executive/directorship level.
c) Directors of Other Reporting Companies:
None of the Company's executive officers or directors is a director of
any company that files reports with the Securities and Exchange Commission.
14
<PAGE>
(d) Employees:
The Company currently has four full time employees. MESSRS. D'Alonzo
and Mr. Baker, the principal shareholders and officers and directors of the
Company, have not yet formulated a formal compensation plan. DAVID Maltrotti is
EMPLOYED PURSUANT TO THE TERMS OF an employment agreement with no stated
monetary compensation package. Mr. Maltrotti has been issued 10,000 shares of
restricted common stock as part of an incentive package.
(e) Family Relationships:
There are no family relationships between the directors, executive
officers or any other person who may be selected as a director and executive
officer of the Company.
(f) Involvement in Certain Legal Proceedings:
None of the officers, directors, promoters or control persons of the
Company have been involved in the past five (5) years in any of the following:
(1) Any bankruptcy petition filed by or against any business of
which such person was a general partner or executive officer
either at the time of the bankruptcy or within two years prior
to that time;
(2) Any conviction in a criminal proceedings or being subject to a
pending criminal proceeding (excluding traffic violations and
other minor offenses);
(3) Being subject to any order, judgment or decree, not
subsequently reversed, suspended or vacated, or any Court of
competent jurisdiction, permanently or temporarily enjoining,
barring, suspending or otherwise limiting his involvement in
any type of business, securities or banking activities; or
(4) Being found by a court of competent jurisdiction (in a civil
action), the Commission or the Commodity Futures Trading
Commission to have violated a federal or state securities laws
or commodities law, and the judgment has not been reversed,
suspended, or vacated.
ITEM 6. EXECUTIVE COMPENSATION
The Company did not compensate management in the year ended December
31, 1998. The Company has compensated Messrs. D'Alonzo and Baker $ 7,576 each in
1999. They have also each been granted certain stock options as additional
monetary compensation in 1999. Mr. Maltrotti has received compensation in the
amount of $ 15,170 and shares of common stock through an employment agreement.
None of the Company's executive officers earned more than $100,000 during the
years ended December 31, 1998.
15
<PAGE>
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Restricted Under- Other
Name and Compen- Stock lying LTIP Comp-
Principal Position Year Salary Bonus Sation Awards Options Payouts Ensation
- ------------------ ---- ------ ----- ------ ------ ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Douglas Baker President, CEO
and Director 1998 None None None None None None None
1997 None None None None None None None
1996 None None None None None None None
Marco D'Alonzo, Secretary, CEO
and Director 1998 None None None None None None None
1997 None None None None None None None
1996 None None None None None None None
David Maltrotti, Executive
Vice President 1998 None None None None None None None
1997 None None None None None None None
1996 None None None None None None None
</TABLE>
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the past two (2) years, the Company has not entered into a
transaction with a value in excess of $60,000 with a director, officer or
beneficial owner of 5% or more of the Company's Common Stock, except as
disclosed in the following paragraphs:
On June 14, 1999 the Company's Board of Directors granted options to
each of Mr. D'Alonzo and Baker to purchase 2,000,000 shares of common stock at a
purchase price of $.035 per share. The options are exercisable in whole or in
part at any time until the earlier to occur of (i) the exercise of all options;
(ii) he is no longer employed by the Company; and (iii) the expiration of ten
years from the date of grant.
Mr. David Maltrotti, executive vice president of operations, is
employed under a three-year employment agreement. He received 10,000 shares upon
the execution of the agreement dated February 3, 1999. Under the agreement, he
will receive 10,000 shares of common stock upon the opening of each Company
owned restaurant. The agreement also grants Mr. Maltrotti options to acquire
200,000 shares of the Company's common stock.. The options are exercisable
pursuant to the following schedule:
16
<PAGE>
First Year: 50,000 shares exercise price = $.75 per share
First Year: 50,000 shares exercise price = $1.00 per share
- -----
Second Year: 50,000 shares exercise price = $1.25 per share
- ------
Second Year: 50,000 shares exercise price = $1.50 per share
- ------
The options are exercisable in whole or in part at any time until the earlier to
occur of (i) the exercise of all options: (ii) he is no longer employed by the
Company; and (iii) the expiration of three years from the date of the grant.
ITEM 8. DESCRIPTION OF SECURITIES
The Company's Articles of Incorporation authorizes the issuance of
50,000,000 shares of Common Stock, $.001 par value per share. Holders of shares
of Common Stock are entitled to one vote for each share on all matters to be
voted on by the stockholders. Holders of shares of Common Stock are entitled to
share ratably in dividends, if any, as may be declared from time to time by the
Board of Directors in its discretion from funds legally available therefore. In
the event of a liquidation, dissolution or winding up of the Company, the
holders of shares of Common Stock are entitled to share pro rata all assets
remaining after payment in full of all liabilities. Holders of Common Stock have
no preemptive or other subscription rights, and there are no conversion rights
or redemption or sinking fund provisions with respect to such shares. All of the
shares of Common Stock issued and outstanding are fully paid and non-assessable.
The Company has authorized the issuance of 10,000,000 shares of
preferred stock, $.01 par value per share of which no shares are currently
issued and outstanding. The Company does not plan to offer the preferred stock
to the public.
PART II.
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS
Market Information:
The Company's Common Stock currently trades on the Over-The-Counter
Bulletin Board (OTC:BB) under the trading symbol "HEXS". As of January 1999 the
Company began trading on the NASD Bulletin Board. Since such time, there has
been a limited trading market for the Company's Common Stock.
The following table sets forth the highest and lowest bid prices for
the Common Stock for each calendar quarter and subsequent interim period since
the Common Stock commenced actual trading, as reported by the National Quotation
Bureau, and represent interdealer quotations, without retail markup, markdown or
commission and may not be reflective of actual transactions:
17
<PAGE>
HIGH BID LOW BID
-------- -------
FISCAL 1999
- ------------
First Quarter 1.59 .13
Second Quarter 1.72 .75
Third Quarter 3.75 1.31
Fourth Quarter through 2.00 1.00
November 12, 1999
There can be no assurance that an active public market for the Common
Stock will develop or be sustained. In addition, the shares of Common Stock are
subject to various governmental or regulatory body rules, which affect the
liquidity of the shares.
Holders:
There were approximately 31 holders of record of the Company's Common
Stock as of November 15, 1999.
Dividends:
The Company has never paid cash dividends on its Common Stock and does
not intend to do so in the foreseeable future. The Company currently intends to
retain its earnings for the operation and expansion of its business. The
Company's continued need to retain earnings for operations and expansion are
likely to limit the Company's ability to pay dividends in the future.
ITEM 2. LEGAL PROCEEDINGS
The Company is not a party to, and none of the Company's property is
subject to any pending or threatened legal, governmental, administrative or
judicial proceedings.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
On August 12, 1999 the Company's independent accounting firm of Sartori
CPA, resigned. There were no disagreements with Sartori CPA and Sartori CPA
issued an unqualified audit report for the period ended December 31, 1998. The
Company's Board of Directors is in the process of interviewing qualified CPA
firms to engage as the Company's independent auditor for its 1999 audit and on a
going-forward basis.
18
<PAGE>
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
In September 1998, the Company sold 200,000 units at $ 0.10 per unit to
residents in the states of Florida and Delaware in a private placement offering.
Each unit consisted of one share of common stock and seven common stock purchase
warrants. Each warrant entitled the holder to purchase one share of common stock
of the Company at a purchase price of $ 0.70 per share. In June 1999 the
exercise price was reduced to $.35 per share. The warrants will expire February
1, 2000. As of November 15, 1999, warrants to purchase 632,467 shares and
options to purchase 317,000 shares of common stock were exercised, which
together with the sale of all units, has resulted in total gross proceeds to the
Company of approximately $525,000. The offering of units was conducted in
reliance on an exemption from registration under Rule 504 of Regulation D of the
Securities Act of 1933, as amended (the "Securities Act").
All certificates representing the shares of common stock comprising the
units and the shares issued upon exercise of the warrants prior to April 7, 1999
do not bear a restrictive legend restricting transferability under the
Securities Act. All shares of common stock issued upon exercise of warrants and
options subsequent to April 7, 1999 bear a restrictive legend restricting
transferability under the Securities Act.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 607.0850 of the Florida Business Corporation Act (the "FBCA")
allows the Company to indemnify any person who was or is a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, except an action by or in the right
of the Company, by reason of the fact that such person is or was a director,
officer, employee or agent of the Company, or is or was serving at the request
of the Company as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
liability incurred in connection with such proceeding, including any appeal
thereof, if he or she acted in good faith and in a manner he or she reasonably
believed to be in, or not opposed to, the best interests of the Company, and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his or her conduct was unlawful. The termination of any proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contende or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he or she reasonably believed to be in,
or not opposed to, the best interests of the Company or, with respect to any
criminal action or proceeding, such person had reasonable cause to believe that
his or her conduct was unlawful.
Section 607.0850 of the FBCA also allows the Company to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed proceeding by or in the right of the Company to
procure a judgment in the Company's favor by reason of the fact that such person
is or was a director, officer, employee or agent of the Company or is or was
serving at the request of the Company as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise,
against expenses and amounts paid in settlement not exceeding, in the judgment
of the board of directors, the estimated expense of litigating the proceeding to
conclusion, actually and reasonably incurred in connection with the defense or
19
<PAGE>
settlement of such proceeding, including any appeal thereof. Such
indemnification shall be authorized if such person acted in good faith and in a
manner he or she reasonably believed to be in, or not opposed to, the best
interests of the Company. Indemnification shall not be made for any claim, issue
or matter as to which such a person has been adjudged by a court of competent
jurisdiction determining, after exhaustion of all appeals there from, to be
liable to the Company or for amount paid in settlement to the Company, unless
and only to the extent that, the court in which the proceeding was brought, or
any other court of competent jurisdiction, determines upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which such court shall deem proper.
Section 607.0850 of the FBCA also provides that to the extent that a
director, officer, employee or agent of the Company has been successful on the
merits or otherwise in defense of any proceeding referred to in the paragraphs
above, or in defense of any claim, issue or matter therein, he or she shall be
indemnified against expenses actually and reasonably incurred by him or her in
connection therewith.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. The Company's Articles of Incorporation provide
for similar indemnification as provided by the FBCA.
PART F/S
UNAUDITED FINANCIAL STATEMENTS September 30,1999
<TABLE>
<CAPTION>
<S> <C> <C>
Financial Statements
Balance Sheet F-1
Statement of Operations F-2
Statement of Stockholders' Equity F-3
Statement of Cash Flows F-4
Notes to Financial Statements F-5-9
20
<PAGE>
AUDITED FINANCIAL STATEMENTS December 31, 1998
Accountant's Report F-10
Financial Statements F-11
Balance Sheet F-12
Statement of Operations F-13
Statement of Stockholders' Equity F-14
Statement of Cash Flows F-15-18
Notes to Financial Statements
PART III.
ITEM 1. Index to Exhibits
The following exhibits are filed with this Form 10-SB:
ASSIGNED NUMBER DESCRIPTION
- --------------- -----------
(2) Articles of Incorporation, as amended
(3)(ii) By-laws
(10) Lease between Health Express USA, Inc. and Saul Strachman
(27) Financial Data Schedule
</TABLE>
- --------------------------------
21
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this Amendment Number 1 to the
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized.
Dated: November 16, 1999. HEALTH EXPRESS USA, INC.
By:/s/ Douglas Baker
-------------------------
Douglas Baker, President
22
<PAGE>
HEALTH EXPRESS USA, INC.
(A Development Stage Company)
BALANCE SHEET
September 30, 1999
(unaudited)
ASSETS
Current Assets
Cash $ 225,119
-----------
Total Current Assets 225,119
-----------
Property and Equipment
Leasehold improvements 10,830
Construction in progress 24,404
Restaurant equipment 32,866
Office equipment 500
Sign 9,228
-----------
Total Property and Equipment 77,828
-----------
Other Assets
Prepaid Rent 5,305
Rent deposit 4,350
-----------
Total Other Assets 9,655
-----------
TOTAL ASSETS $ 312,602
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accrued Rent Expense $ 10,706
Notes payable to stockholders 1,000
Note payable 3,000
-----------
Total Current Liabilities 14,706
-----------
STOCKHOLDERS' EQUITY
Common Stock, $0.001 par value, 50,000,000 authorized
5,472,967 shares issued and outstanding 5,473
Additional Paid-In Capital 4,365,692
Deficit Accumulated During the Development Stage (4,073,269)
-----------
297,896
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 312,602
===========
F-1
<PAGE>
HEALTH EXPRESS USA, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended Six Months Ended 7/2/98
September 30, June 30, (Inception)
1999 1998 1999 1998 to 9/30/99
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Revenues $ 0 $ 0 $ 0 $ 0 $ 0
----------- ----------- ----------- ----------- -----------
0 0 0 0 0
Expenses
General and Administrative 219,279 5,255 142,038 0 224,569
Officers compensatory stock options 3,800,000 0 3,800,000 0 3,800,000
Employee compensatory stock options 32,500 0 32,500 0 32,500
Compensatory stock issued 16,200 0 16,200 0 16,200
----------- ----------- ----------- ----------- -----------
4,067,979 5,255 3,990,738 0 4,073,269
Net loss before income taxes (4,067,979) (5,255) (3,990,738) 0 (4,073,269)
----------- ----------- ----------- ----------- -----------
Income tax expense 0 0 0 0 0
----------- ----------- ----------- ----------- -----------
Net Loss $(4,067,979) $ (5,255) $(3,990,738) $ 0 $(4,073,269)
=========== =========== =========== =========== ===========
Loss per weighted average share
Basic and diluted $ (0.865) $ (0.002) $ (0.900) $ 0 $ (0.967)
=========== =========== =========== =========== ===========
Weighted average number of shares
outstanding 4,701,950 2,587,330 4,433,366 0 4,214,001
=========== =========== =========== =========== ===========
</TABLE>
F-2
<TABLE>
<CAPTION>
<PAGE>
HEALTH EXPRESS USA, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Period from July 2, 1998 (Inception) to
September 30, 1999
(unaudited)
Additional
0.001 Paid-In
Shares Par Value Capital Deficit Total
<S> <C> <C> <C> <C>
Issuance of 20,000 shares for services 20,000 $ 20 $ 0 -- $ 20
Issuance of 4,000,000 shares 4,000,000 4,000 -- -- 4,000
Issuance of 200,000 shares 200,000 200 19,800 -- 20,000
Issuance of 91,000 shares 91,000 91 63,609 -- 63,700
Net Loss ( 5,290) (5,290)
----------------------------------------------------------------------------
Balance December 31, 1998 4,311,000 $ 4,311 $ 83,409 ($ 5,290) $ 82,430
----------------------------------------------------------------------------
Issuance of 13,500 shares for services 13,500 14 16,186 -- 16,200
Issuance of 116,333 shares 116,333 116 79,333 -- 79,449
Issuance of 254,800 shares 254,800 255 86,783 -- 87,038
Options granted for 100,000 shares -- -- 32,500 -- 32,500
Options granted for 3,683,000 shares -- -- 3,498,850 -- 3,498,850
Exercise of options for 317,000 shares 317,000 317 411,783 -- 412,100
Issuance of 460,334 shares 460,334 460 156,848 -- 157,308
Net Loss -- -- -- (4,067,979) (4,067,979)
----------------------------------------------------------------------------
Balance September 30, 1999 5,472,967 $ 5,473 $ 4,365,692 ($4,073,269) $ 297,896
============================================================================
</TABLE>
F-3
<TABLE>
<CAPTION>
<PAGE>
HEALTH EXPRESS USA, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
(unaudited)
Nine Months Ended Six Months Ended July 2, 1998
September 30, June 30, (inception) to
1999 1998 1999 9/30/99
------------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net Loss $(4,067,979) $ (5,255) $(3,990,738) $(4,073,269)
Adjustments to reconcile net loss to net
cash used by operating activities
Options granted-market over price 3,832,500 3,832,500 3,832,500
Common stock issued for services 16,200 16,200 16,200
Changes in assets and liabilities
Increase in deposits (4,350) -- (4,350) (4,350)
Increase in prepaid expenses (5,305) -- (9,550) (5,305)
Increase in accrued expenses 10,706 9,680 10,706
----------- ----------- ----------- -----------
Net cash utilized by operating activities (218,228) (5,255) (146,258) (223,518)
INVESTING ACTIVITIES
Increase in property and equipment (77,828) -- (33,472) (77,828)
----------- ----------- ----------- -----------
Net cash utilized by investing activities (77,828) (33,472) (77,828)
FINANCING ACTIVITIES
New borrowings - notes payable to shareholders -- 1,000 -- 1,000
New borrowings - note payable -- 3,000 -- 3,000
Net proceeds from issuance of common stock 442,680 80,164 281,563 522,465
----------- ----------- ----------- -----------
Net cash provided by financing activities 442,680 84,164 281,563 526,465
Net increase in cash and cash equivalents 146,624 78,909 101,833 225,119
----------- ----------- ----------- -----------
Cash - Beginning of Period 78,495 0 78,495 0
----------- ----------- ----------- -----------
Cash - End of Period $ 225,119 $ 78,909 $ 180,328 $ 225,119
=========== =========== =========== ===========
Supplemental Schedule of Noncash Financing Activities
20,000 shares were issued to counsel as incentive to provide services. These
shares were valued at par which management believed to be the fair value of
services. These shares were issued when there was no market for the Company's
stock
Supplemental Disclosures of Cash Flow Information
Cash Paid During the Period for:
Interest $ 0 $ 0 $ 0 $ 0
----------- ----------- ----------- -----------
Income Taxes $ 0 $ 0 $ 0 $ 0
----------- ----------- ----------- -----------
</TABLE>
F-4
<PAGE>
HEALTH EXPRESS USA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
UNAUDITED INTERIM FINANCIAL STATEMENTS
The accompanying financial statements of the company for the nine months
ended September 30, 1999 are unaudited, but, in the opinion of management,
reflect the adjustments, all of which are of normal recurring nature,
necessary for a fair presentation of such financial statements in accordance
with generally accepted accounting principles. The results of operations for
an interim period are not necessarily indicative of the results for a full
year.
GENERAL
Health Express USA, Inc. (the "Company") is a Florida corporation, formed on
July 2, 1998. The Company is in development stage and has raised capital for
a gourmet, fast-food health and nutrition restaurant.
DEVELOPMENT STAGE OPERATIONS
The Company has raised sufficient capital from a Rule 504 Private Placement
Offering to develop its initial flagship restaurant, which will serve
healthy food in a fast food format, with drive-in and sit down consumption .
The Company has begun construction and expects the opening of its first
restaurant in December of 1999. The Company is planning to enter into
franchise agreements as well as developing additional Company owned
restaurants.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect reported amounts and disclosures. Accordingly,
actual results could differ from those estimates.
PROPERTY AND EQUIPMENT
Property and equipment are valued at cost. Maintenance and repair costs are
charged to expense as incurred. Gain and losses on the disposition of
property and equipment are reflected in income. Depreciation is computed on
a straight-line basis for financial reporting purposes, based on the
estimated useful lives of the assets, which, in the opinion of management
will commence upon the start of restaurant operations.
F-5
<PAGE>
HEALTH EXPRESS USA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
LEASES
The Company leases property for its restaurant operations from February 1,
1999. The lease calls for scheduled yearly increases. Total rental payments
are being amortized over the life of the lease on a straight line basis in
accordance with SFAS 13.
INCOME TAXES
Deferred income taxes are provided for temporary differences between the
basis of the Company's assets and liabilities for financial reporting and
income taxes under the provisions of Statement of Financial Accounting
Standards No. 109 "Accounting for Income Taxes".
NET LOSS PER SHARE
The Company adopted SFAS No. 128, "Earnings Per Share", which established
new standards for computing and presenting earnings per share. SFAS No. 128
replaced the calculation of primary and fully diluted earnings per share
with basis and diluted earnings per share
2. NOTES PAYABLE - SHAREHOLDERS
As of September 30, 1999 notes payable to shareholders consisted of the
following:
Due to majority shareholder, dated August 7, 1998. The note
is due on demand and carries no interest rate. $ 500
Due to majority shareholder, dated August 7, 1998. The note
is due on demand and carries no interest rate. 500
-----
Total notes payable to shareholders $1,000
=====
3. NOTE PAYABLE
As of September 30, 1999 the note payable consisted of the following:
Due to corporation owned by majority shareholders. The note is
dated August 31, 1998, is due on demand and carries no interest $3,000
=====
F-6
<PAGE>
HEALTH EXPRESS USA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
4. STOCKHOLDERS' EQUITY
On June 10, 1999 the Board of Directors increased the authorized shares of
the Company' common stock from 15,000,000 shares to 50,000,000 shares,
having a par value of $0.001 per share and 10,000,000 shares of "blank
check" preferred stock. As of September 30, 1999 the Company has issued
5,472,967 shares of common stock. No preferred stock has been issued.
The Company's private placement represented the issuance of 200,000 Units,
each unit consisting of one share of common stock at a price of $ 0.10 and
warrants for the purchase of seven (7) shares at $ 0.70 per share. The
expiration date for the exercise of the warrants was August 31,1999. On June
3, 1999, the Company reduced the exercise price of warrants to $ 0.35 per
share.
On July 28, 1999, the Board of Directors of the Company voted to extend the
expiration date for the exercise of the outstanding warrants to November 1,
1999.
On October 28, 1999, the Board of Directors of the Company voted to extend
the expiration date for the exercise of the outstanding warrants to February
1, 2000.
STOCK COMPENSATION AND OPTIONS
The Company issued 13,500 shares of common stock for consultation services,
including 10,000 shares to an officer/employee. The amount of compensation
was valued at the then market price of $ 1.20 per share, which management
believed to be the fair value of services provided.
Management granted options for 100,000 shares of the Company's common stock
to an officer/employee. The amount of compensation was valued at the then
market price of $ 1.20 per share over the option price, which management
believed to be the fair value of services provided.
The Company granted stock options to its officer/directors for 4,000,000
shares. Options for 317,000 shares were exercised. Management has valued
compensation as the excess of the market value of the stock, $ 1.30, over
the exercise price, $ 0.35, which management believed to be the fair value
of services provided.
F-7
<PAGE>
HEALTH EXPRESS USA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
5. INCOME TAXES
The Company has a net operating loss carryforward of approximately $ 570,000
for federal and state income tax purposes, respectively, that expires in the
year 2018.
Deferred income taxes (benefits) are provided for certain income and
expenses which are recognized in different periods for tax and financial
reporting purposes. Sources of temporary differences and the resulting tax
assets and liabilities are as follows:
Deferred Tax Assets
Net Operating Loss Carryforward
Federal and State 570,000
Applicable tax rates
(34% Federal, 5% State) 37.63 %
-------
215,000
Valuation allowance (215,000)
-------
Provision for income taxes 0
=======
6. LEASE COMMITMENTS
The Company is obligated under a lease agreement on its restaurant location.
The rental expense for the period ending September 30, 1999 was $ 36,530.
Lease expense represents total lease payments amortized over the life of the
lease on a straight line basis. The lease is for a five year period ending
January 31, 2004. The future annual minimum rental payments as of September
30, 1999 were as follows:
1999 $ 12,735
2000 52,212
2001 53,484
2002 60,480
2003 63,660
F-8
<PAGE>
HEALTH EXPRESS USA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
7. AGREEMENTS
The Company signed an agreement with Data Central USA, Inc. for data base
management services for customer sales tracking. The agreement calls for
services to be provided upon the start of restaurant operations. There is no
commitment for the use of the services and price negotiations will be
entered into prior to the commencement of the services.
The Company entered into a contract with Standard Coffee Services to carry
their line of Barnie's Coffee. The contract is on a COD, 30 day payment
basis. No purchase commitments have been entered into.
The Company is also establishing supplier relationships with various food
and supplies distributors. No contracts or commitments have been entered
into and purchases are on a COD basis.
There were no purchase commitments as of September 30, 1999
F-9
<PAGE>
SARTORI CPA, P.A.
ACCOUNTING & CONSULTING
275 Commercial Boulevard, Suite 260 Phone (954) 351-1154
Lauderdale by the Sea, Florida 33308 Fax (954) 351-7760
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
Health Express USA, Inc.
Fort Lauderdale, Florida
I have audited the accompanying balance sheet of Health Express USA, Inc. (a
Florida development stage company) as of December 31, 1998 and the related
statement of operations, stockholders' equity, and cash flows for the period
July 2, 1998 (inception) to December 31, 1998. These financial statements are
the responsibility of the Company's management. My responsibility is to express
an opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan 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. I believe that my
audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Health Express USA, Inc. as of
December 31, 1998 and the results of its operations and cash flows for the
initial period then ended in conformity with generally accepted accounting
principles.
Sartori CPA, P.A.
May 21, 1999
F-10
<PAGE>
HEALTH EXPRESS USA, INC.
(A Development Stage Company)
BALANCE SHEET
December 31, 1998
ASSETS
Current Assets
Cash $ 78,495
--------
Other Assets
Deferred offering costs 7,935
--------
TOTAL ASSETS $ 86,430
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable to shareholders $ 1,000
Note payable 3,000
--------
--------
4,000
--------
STOCKHOLDERS' EQUITY
Common Stock,$0.001 par value, 15,000,000 shares
authorized, 4,311,000 shares issued and outstanding 4,311
Additional Paid-In Capital 83,409
Deficit Accumulated During the Development Stage (5,290)
--------
82,430
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 86,430
========
See accompanying notes
F-11
<PAGE>
HEALTH EXPRESS USA, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
Period from July 2, 1998 (Inception) to December 31, 1998
Revenues $ 0
-----------
Expenses
Officer's Compensation 1,500
Bank fees 109
Accounting 1,000
Licenses 89
Office expense 1,342
Contract labor 1,250
-----------
Total Expenses 5,290
-----------
Net Loss $ (5,290)
===========
Loss per weighted average share-Basic and diluted $ (0.0015)
===========
Weighted average number of shares outstanding 3,477,577
===========
See accompanying notes
F-12
<PAGE>
HEALTH EXPRESS USA, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
Period from July 2, 1998 (Inception) to December 31, 1998
<TABLE>
<CAPTION>
Additional
$0.001 Paid-In
Shares Par Value Capital Deficit Total
------ --------- ------- ------- -----
<S> <C> <C> <C> <C> <C>
Restricted stock
Issuance of 20,000 shares
for offering costs at par value 20,000 $20 $0 - 20
Restricted stock
Issuance of 4,000,000 shares at par
to officers and directors 4,000,000 4,000 - - 4000
Unrestricted stock
Issuance of 200,000 shares
at $ 0.10 per share 200,000 200.00 19,800.00 - 20,000.00
Unrestricted stock
Issuance of 91,000 shares
at $ 0.70 per shares 91,000 91 63,609 - 63,700
Net Loss (Development Stage) - - (5,290) (5,290)
--------------------------------------------------------------------
Balance December 31, 1998 4,311,000 $4,311 $83,409 ($5,290) $82,430
====================================================================
</TABLE>
See accompanying notes
F-13
<PAGE>
HEALTH EXPRESS USA, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
Period from July 2, 1998 (Inception) to December 31, 1998
Cash flows from operating activities
Net Loss $ (5,290)
--------
Net cash used by operating activities (5,290)
--------
Cash flows from financing activities
New borrowings - notes payable to shareholders 1,000
New borrowing - note payable 3,000
Net proceeds from issuance of common stock 87,700
Increase in deferred offering costs (7,935)
Issuance of common stock for offering costs 20
--------
Net cash provided by financing activities 83,785
--------
Net Increase in Cash 78,495
--------
Cash-Beginning of Period 0
--------
Cash-End of Period $ 78,495
========
Supplemental Schedule of Noncash Financing Activities
During the period 20,000 shares at par value $0.001 totaling $ 20
were issued and charged to offering costs
Supplemental Disclosures of Cash Flow Information
Cash Paid During the Year For:
Interest $ 0
--------
Income Taxes $ 0
--------
See accompanying notes
F-14
<PAGE>
HEALTH EXPRESS USA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
GENERAL
Health Express USA, Inc. (the "Company") is a Florida corporation, formed on
July 2, 1998. The Company is a development stage enterprise engaged in
raising capital for a gourmet, fast-food health and nutrition restaurant.
The financial statements and notes are the representations of the Company's
management, which is responsible for their integrity and objectivity. The
accounting policies of the Company are in accordance with generally accepted
accounting principles and conform to the standards applicable to development
stage companies.
INCOME TAXES
Deferred income taxes are provided for temporary differences between the
basis of the Company's assets and liabilities for financial reporting and
income taxes under the provisions of Statement of Financial Accounting
Standards No. 109 "Accounting for Income Taxes".
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principals requires management to makes estimates and
assumptions that affect reported amounts and disclosures. Accordingly,
actual results could differ from those estimates.
NET LOSS PER SHARE
The Company has adopted SFAS No. 128, "Earnings Per Share", which
established new standards for computing and presenting earnings per share.
SFAS No. 128 replaced the calculation of primary and fully diluted earnings
per share with basic and diluted earnings per share
2. DEFERRED OFFERING COSTS
Deferred offering costs represent costs deferred pending completion of a
proposed public public offering. At the time the offering is completed such
costs will be netted against the proceeds received. Should the offering be
unsuccessful, these costs will be expensed. Deferred offering costs include
stock compensation paid to legal counsel. As of December 31, 1998, all of
the 200,000 Units (one unit represents one share of common stock with
warrants for the right to purchase 7 additional shares of common stock) have
been issued and the offering is closed. However, only 91,000 shares have
been issued through the exercise of the warrants and 1,309,000 remain
unexercised. As a result, deferred offering costs are not netted against
proceeds because sufficient warrants have not been exercised to deem the
offering successful.
F-15
<PAGE>
HEALTH EXPRESS USA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
3. RELATED PARTY TRANSACTIONS
As described in note 5, the Company is indebted to stockholders in the
amount of $ 1,000. The loans carry no interest rate and are due on demand.
The Company is also indebted to a corporation owned by the majority
stockholders, in the amount of $ 3,000. The loan carries no interest and is
payable on demand (note 6).
4. RELATED PARTY AGREEMENTS
On July 15, 1998 the Company entered into an Attorney Fee Agreement which
includes the issuance of 20,000 shares at par value toward offering costs.
The shares were issued as an incentive to provide services. These shares
were valued at par value which management believed to be fair value. These
shares were issued when there was no market for the Company's stock. Counsel
did not value the shares toward costs of services provided.
5. NOTES PAYABLE - SHAREHOLDERS
As of August 31, 1998 notes payable to shareholders consisted of the
following:
Due to majority shareholder, dated August 7, 1998. The note
is due on demand and carries no interest rate. $ 500
Due to majority shareholder, dated August 7, 1998. The note
is due on demand and carries no interest rate. 500
-----
Total notes payable to shareholders $ 1,000
=====
6. NOTE PAYABLE
As of December 31, 1998 notes payable consisted of the following:
Due to corporation owned by majority shareholders. The note
is dated August 31, 1998, is due on demand and carries
no interest. $ 3,000
=====
F-16
<PAGE>
HEALTH EXPRESS USA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
7. STOCKHOLDERS' EQUITY
The Company is authorized to issue 15,000,000 shares of common stock having
a par value of $0.001 per share. As of December 31, 1998 the Company has
issued 4,311,000 shares to its shareholders.
<TABLE>
<CAPTION>
0.001 Paid-in
Shares Par Value Capital
<S> <C> <C> <C>
UNRESTRICTED STOCK 291,000 $ 291 $ 83,409
RESTRICTED STOCK
Corporate Officers 4,000,000 4,000
Legal counsel-non cash 20,000 20
Total Restricted Stock 4,020,000 4,020
Total 4,311,000 $ 4,311 $ 83,409
========= ========= =========
</TABLE>
The value of the shares issued to the legal counsel is included at par in
deferred offering costs. As disclosed in Note 4, since there was no market,
this value represents what management believed to be the fair value of the
services provided.
Unrestricted stock represents the issuance of 200,000 Units, each unit
consisting of one share of Common Stock at a price of $0.10 with Warrants,
which entitle the record owner to purchase seven (7) shares of Common Stock
at $ 0.70 per share. Total common stock to be issued through the exercise
of the warrants is 1,600,000. As of December 31, 1998 the Company issued
all of its Units at $0.10 per unit and 91,000 shares were issued through
the exercise of warrants. The warrants expire August 31, 1999. On July 28,
1999, the Board of Directors voted to extend the expiration date of the
warrants to November 1, 1999.
$0.001 Paid-in
Price Par Value Capital
Issuance of 200,000 shares $ 0.10 $ 200 $19,800
Warrants for 91,000 shares $ 0.70 91 63,609
------- -------
Total 291,000 shares $ 291 $83,409
======= =======
F-17
<PAGE>
HEALTH EXPRESS USA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
8. INCOME TAXES
The Company has a net operating loss carryforward of approximately $ 5,000
for federal and state income tax purposes, respectively, that expires in
the year 2018.
Deferred income taxes (benefits) are provided for certain income and
expenses which are recognized in different periods for tax and financial
reporting purposes. Sources of temporary differences and the resulting tax
assets and liabilities are as follows:
Deferred Tax Assets
Net Operating Loss Carryforward
Federal and State 5,000
Applicable tax rates
(34% Federal, 5% State) 39 %
1,950
Valuation allowance (1,950)
Provision for income taxes 0
=====
F-18
STATE OF FLORIDA
DEPARTMENT OF STATE
I certify the attached is a true and correct copy of the
Articles of Amendment, filed on June 30,1999, to Articles of
Incorporation for HEALTH EXPRESS USA, INC., a Florida
corporation, as shown by the records of this office.
The document number of this corporation is P98000058948.
Given under my hand and the
Great Seal of the State of Florida
at Tallahassee, the Capitol, this the
Sixth day of July, 1999
/s/Katherine Harris
---------------------
Katherine Harris
Secretary of State
GREAT SEAL OF THE STATE OF FLORIDA
<PAGE>
FLORIDA DEPARTMENT OF STATE
Katherine Harris
Secretary of State
July 6,1999
MICHELLE KRAMISH KAIN, P.A.
750 SE THIRD AVE., STE. 100
FORT LAUDERDALE, FL 33316
Re: Document Number P98000058948
The Articles of Amendment to the Articles of Incorporation for HEALTH EXPRESS
USA, INC., a Florida corporation, were filed on June 30, 1999.
The certification requested is enclosed.
Should you have any question regarding this matter, please telephone (850)
487-6050, the Amendment Filing Section.
Velma Shepard
Corporate Specialist
Division of Corporations Letter Number. 199AO0035087
Division of Corporations - P.O. BOX 6327 -Tallahassee, Florida 32314
<PAGE>
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
HEALTH EXPRESS USA, INC.
The Articles of Incorporation of Health Express USA, Inc.,
a Florida corporation (the "Corporation"), are hereby amended as follows:
Article 7 is deleted in its entirety and substituted by the following:
ARTICLE 7 - CAPITAL STOCK
7.1 The maximum number of shares that this Corporation shall be authorized
to issue and have outstanding at any one time shall consist of
60,000,000 shares of Capital Stock as follows:
(a) 50,000,000 shares of common stock, having a par value of $.001
per share; and
(b) 10,000,000 shares shall be designated "blank check" preferred
stock, having a par value of $.01 per share to be issued with such
rights, designations, preferences and other terms and conditions as
may be determined by the Corporation's Board of Directors, from
time to time and at any time, in their sole discretion, without any
further action by the shareholders of the corporation.
7.2 No holder of shares of stock of any class shall have any preemptive
right to subscribe to or purchase any additional shares of any class,
or any bonds or convertible securities of any nature; provided,
however, that the Board of Director(s) may, in authorizing the
issuance of shares of stock of any class, confer any preemptive right
that the Board of Director(s) may deem advisable in connection with
such issuance.
7.3 The Board of Director(s) of the Corporation may authorize the issuance
from time to time of shares of its stock of any class, whether now or
hereafter authorized, or securities convertible into shares of its
stock of any class, whether now or hereafter authorized, for such
consideration as the Board of Director(s) may deem advisable, subject
to such restrictions or limitations, if any, as may be set forth in
the bylaws of the Corporation.
7.4 The Board of Director(s) of the Corporation may, by Restated Articles
of Incorporation, classify or reclassify any unissued stock from time
to time by setting or changing the preferences, conversions or other
rights, voting powers, restrictions, limitations as to dividends,
qualifications, or term or conditions of redemption of the stock.
<PAGE>
Article 8 is deleted in its entirety and substituted by the following:
ARTICLE 8 - AFFILIATED TRANSACTION
The Corporation expressly elects not to be governed by Section
607.0901 of the Florida Business Corporation Act, as amended from time to time,
relating to affiliated transactions.
The following Article 18 shall be added:
ARTICLE 18 - CONTROL SHARE-ACQUISITIONS
The Corporation expressly elects not to be governed by Section
607.0901 of the Florida Business Corporation Act, as amended from time to time,
relating to control share acquisitions.
The foregoing was adopted by resolutions of the Board of Directors
dated June 10, 1999 and by consent of the shareholders dated June 10, 1999
representing a majority of the Corporation's shares issued and outstanding which
voted in favor thereof and which number of votes cast for the amendment by the
shareholders was sufficient for approval pursuant to Sections 607.0704 and
607.0821.
Dated as of June 11, 1999.
Douglas Baker, President/Secretary
STATE OF FLORIDA )
)SS:
COUNTY OF BROWARD)
The foregoing instrument was acknowledged before me this 21st day of
June, 1999 by Douglas Baker as President and Secretary of Health Express USA,
Inc., a Florida Corporation, on behalf of the Corporation. He or she is
personally known to me or has produced Florida license- B260-176-62-426-0 as
identification and did take an oath.
Notary Public
ANGELA CUSTODE
State of Florida
2
<PAGE>
State of Florida
DEPARTMENT OF
STATE
I certify the attached is a true and correct copy of the Articles of
Amendment, filed on July 24, 1998, to Articles of Incorporation for
HEALTH EXPRESS USA, INC., a Florida corporation, as shown by the records
of this office.
The document number of this corporation is P98000058948.
Given under my hand and the
Great Seal of the State of Florida at
Tallahassee, the Capitol, this the
Twenty-eighth day of July, 1998
/S/Sandra B. Mortham
Secretary of State
GREAT SEAL OF THE STATE OF FLORIDA
<PAGE>
FLORIDA DEPARTMENT OF STATE
Sandra B. Mortham
Secretary of State
July 28, 1998
LORI A. VAN DAELE
11801 N. TATUM BLVD., STE. 108
PHOENIX, AZ 85028-1612
Re: Document Number P98000058948
The Articles of Amendment to the Articles of Incorporation for HEALTH EXPRESS
USA, INC., a Florida corporation, were filed on July 24, 1998.
The certification requested is enclosed.
Should you have any question regarding this matter, please telephone (850) 487-
6050, the Amendment Filing Section.
Velma Shepard
Corporate Specialist
Division of Corporations Letter Number: 798AO0039720
08-01-98P01:01 RCVD
Division of Corporations - P.O. BOX 6327 -Tallahassee, Florida 32314
<PAGE>
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
HEALTH EXPRESS U S A, INC.
Pursuant to the provisions of section 607.1006, Florida Statutes, this
Florida profit corporation adopts the following articles of amendment to its
articles of incorporation:
FIRST: Amendment(s) adopted: (indicate article number(s) being amended, added
or deleted)
Article 7 is amended to read as follows:
7.1 The maximum number of shares that this Corporation is authorized to have
outstanding at any time is fifteen million (15,000,000) shares of common stock,
each share having the par value of $0.001.
7.2 No holder of shares of stock of any class shall have any preemptive right
to subscribe to or purchase any additional shares of any class, or any bonds or
convertible securities of any nature; provided, however, that the Board of
Director(s) may, in authorizing the issuance of shares of stock of any class,
confer any preemptive right that the Board of Director(s) may deem advisable in
connection with such issuance.
7. 3 The Board of Director(s) of the Corporation may authorize the issuance
from time to time of shares of its stock of any class, whether now or hereafter
authorized, or securities convertible into shares of its stock of any class,
whether now or hereafter authorized, for such consideration as the Board of
Director(s) may deem advisable, subject to such restrictions or limitations, if
any, as may be set forth in the bylaws of the Corporation.
7.4 The Board of Director(s) of the Corporation may, by Restated Articles of
Incorporation, classify or reclassify any unissued stock from time to time by
setting or changing the preferences, conversions or other rights, voting
powers, restrictions, limitations as to dividends, qualifications, or term or
conditions of redemption of the stock.
SECOND: If an amendment provides for an exchange, reclassification or
cancellation of issued shares, provisions for implementing the amendment if not
contained in the amendment itself, are as follows:
<PAGE>
THIRD: The date of each amendment's adoption: July 21, 1998
FOURTH: Adoption of Amendment(s) (CHECK ONE)
[X] The amendment(s) was/were approved by the shareholders. The
number of votes cast for the amendment(s) was/were sufficient
for approval.
[ ] The amendment(s) was/were approved by the shareholders
through voting groups. The following statement must be
separately provided for each voting group entitled to vote
separately on the amendment(s):
"The number of votes cast for the amendment(s) was/were
sufficient for approval by____________________________."
voting group
[ ] The amendment(s) was/were adopted by the board of directors
without shareholder action and shareholder action was not
required.
[ ] The amendment(s) was/were adopted by the incorporators
without shareholder action and shareholder action was not
required.
Signed this 21 day of July 1998,
Signature /s/ Douglas Baker
---------------------------------------------------------------------
By the Chairman or Vice Chairman of the Board of Directors, President
or other officer if adopted by the shareholders)
OR
(By a director if adopted by the directors)
OR
(By an incorporator if adopted by the incorporators)
Douglas Baker
-------------
Typed or printed name
President
---------
Title
<PAGE>
FLORIDA DEPARTMENT OF STATE
Sandra B. Mortham
Secretary of State
July 2, 1998
AMERILAWYER
343 ALMERIA AVENUE
CORAL GABLES, FL 33134
The Articles of Incorporation for HEALTH EXPRESS USA, INC. were filed on July
2, 1998 and assigned document number P98000058948. Please refer to this number
whenever corresponding with this office regarding the above corporation.
PLEASE NOTE: COMPLIANCE WITH THE FOLLOWING PROCEDURES IS ESSENTIAL TO
MAINTAINING YOUR CORPORATE STATUS. FAILURE TO DO SO MAY RESULT IN DISSOLUTION
OF YOUR CORPORATION.
A CORPORATION ANNUAL REPORT MUST BE FILED WITH THIS OFFICE BETWEEN JANUARY 1
AND MAY 1 OF EACH YEAR BEGINNING WITH THE CALENDAR YEAR FOLLOWING THE YEAR OF
THE FILING DATE NOTED ABOVE AND EACH YEAR THEREAFTER. FAILURE TO FILE THE
ANNUAL REPORT ON TIME MAY RESULT IN ADMINISTRATIVE DISSOLUTION OF YOUR
CORPORATION.
A FEDERAL EMPLOYER IDENTIFICATION (FEI) NUMBER MUST BE SHOWN ON THE ANNUAL
REPORT FORM PRIOR TO ITS FILING WITH THIS OFFICE. CONTACT THE INTERNAL REVENUE
SERVICE TO INSURE THAT YOU RECEIVE THE FEI NUMBER IN TIME TO FILE THE ANNUAL
REPORT. TO OBTAIN A FEI NUMBER, CONTACT THE IRS AT 1-800-829-3676 AND REQUEST
FORM SS-4.
SHOULD YOUR CORPORATE MAILING ADDRESS CHANGE, YOU MUST NOTIFY THIS OFFICE IN
WRITING, TO INSURE IMPORTANT MAILINGS SUCH AS THE ANNUAL REPORT NOTICES REACH
YOU.
Should you have any questions regarding corporations, please contact this
office at the address given below.
Loria Poole, Corporate Specialist
New Filings Section Letter Number: 998AO0035899
Division of Corporations - P.O. BOX 6327 -Tallahassee, Florida 32314
<PAGE>
ARTICLES OF INCORPORATION
OF
HEALTH EXPRESS USA, INC.
The undersigned subscriber to these Articles of Incorporation is a
natural person competent to contract and hereby form a Corporation for profit
under Chapter 607 of the Florida Statutes.
ARTICLE 1 - NAME
----------------
The name of the Corporation is HEALTH EXPRESS USA, INC., (hereinafter,
"Corporation").
ARTICLE 2 - PURPOSE OF CORPORATION
----------------------------------
The Corporation shall engage in any activity or business permitted
under the laws of the United States and of the State of Florida.
ARTICLE 3 - PRINCIPAL OFFICE
----------------------------
The address of the principal office of this Corporation is 1901 West
Cypress Creek Road, Suite 100, Fort Lauderdale, Florida 33309 and the mailing
address is the same.
ARTICLE 4 - INCORPORATOR
------------------------
The name and street address of the incorporator of this Corporation is:
Elsie Sanchez
343 Almeria Avenue
Coral Gables, Florida 33134
ARTICLE 5 - OFFICERS
--------------------
The officers of the Corporation shall be:
President: Marco D'Alonzo
Secretary: Marco D'Alonzo
Treasurer: Marco D'Alonzo
whose addresses shall be the same as the principal office of the Corporation.
AMERILAWYER
343 ALMERIA AVENUE CORAL GABLES, FL 33134 - (305) 445-2700 - (800) 603-3900 -
FACSIMILE (305) 447-8900
MAILING ADDRESS - POST OFFICE Box 144479, CORAL GABLES, FL 33114-4479
http://www.ameri1awyer.com
<PAGE>
HEALTH EXPRESS USA, INC.
Page 2
ARTICLE 6 - DIRECTOR(S)
-----------------------
The Director(s) of the Corporation shall be:
Marco D'Alonzo
whose addresses shall be the same as the principal office of the Corporation.
ARTICLE 7 - CORPORATE CAPITALIZATION
------------------------------------
7.1 The maximum number of shares that this Corporation is authorized
to have outstanding at any time is SEVEN THOUSAND FIVE HUNDRED (7,500) shares of
common stock, each share having the par value of ONE DOLLAR ($1.00).
7.2 No holder of shares of stock of any class shall have any
preemptive right to subscribe to or purchase any additional shares of any
class, or any bonds or convertible securities of any nature; provided, however,
that the Board of Director(s) may, in authorizing the issuance of shares of
stock of any class, confer any preemptive right that the Board of Director(s)
may deem advisable in connection with such issuance.
7.3 The Board of Director(s) of the Corporation may authorize the
issuance from time to time of shares of its stock of any class, whether now or
hereafter authorized, or securities convertible into shares of its stock of any
class, whether now or hereafter authorized, for such consideration as the Board
of Director(s) may deem advisable, subject to such restrictions or limitations,
if any, as may be set forth in the bylaws of the Corporation.
7.4 The Board of Director(s) of the Corporation may, by Restated
Articles of Incorporation, classify or reclassify any unissued stock from time
to time by setting or changing the preferences, conversions or other rights,
voting powers, restrictions, limitations as to dividends, qualifications, or
term or conditions of redemption of the stock.
ARTICLE 8 - SUB-CHAPTER S CORPORATION
-------------------------------------
The Corporation may elect to be an S Corporation, as provided in
Sub-Chapter S of the Internal Revenue Code of 1986, as amended.
AMERILAWYER
343 ALMERIA AVENUE CORAL GABLES, FL 33134 - (305) 445-2700 - (800) 603-3900 -
FACSIMILE (305) 447-8900
MAILING ADDRESS - POST OFFICE Box 144479, CORAL GABLES, FL 33114-4479
http://www.ameri1awyer.com
<PAGE>
HEALTH EXPRESS USA, INC.
Page 3
8.1 The shareholders of this Corporation may elect and, if elected,
shall continue such election to be an S Corporation as provided in Sub-Chapter
S of the Internal Revenue Code of 1986, as amended, unless the shareholders of
the Corporation unanimously agree otherwise in writing.
8.2 After this Corporation has elected to be an S Corporation, none of
the shareholders of this Corporation, without the written consent of all the
shareholders of this Corporation shall take any action, or make any transfer or
other disposition of the shareholders' shares of stock in the Corporation,
which will result in the termination or revocation of such election to be an S
Corporation, as provided in Subchapter S of the Internal Revenue Code of 1986,
as amended.
8.3 Once the Corporation has elected to be an S Corporation, each
share of stock issued by this Corporation shall contain the following legend:
"The shares of stock represented by this certificate cannot be transferred if
such transfer would void the election of the Corporation to be taxed under
Sub-Chapter S of the Internal Revenue Code of 1986, as amended."
ARTICLE 9 - SHAREHOLDERS' RESTRICTIVE AGREEMENT
-----------------------------------------------
All of the shares of stock of this Corporation may be subject to a
Shareholders' Restrictive Agreement containing numerous restrictions on the
rights of shareholders of the Corporation and transferability of the shares of
stock of the Corporation. A copy of the Shareholders' Restrictive Agreement, if
any, is on file at the principal office of the Corporation.
ARTICLE 10 - POWERS OF CORPORATION
----------------------------------
The Corporation shall have the same powers as an individual to do all
things necessary or convenient to carry out its business and affairs, subject
to any limitations or restrictions imposed by applicable law or these Articles
of Incorporation.
ARTICLE 11 - TERM OF EXISTENCE
------------------------------
This Corporation shall have perpetual existence.
AMERILAWYER
343 ALMERIA AVENUE CORAL GABLES, FL 33134 - (305) 445-2700 - (800) 603-3900 -
FACSIMILE (305) 447-8900
MAILING ADDRESS - POST OFFICE Box 144479, CORAL GABLES, FL 33114-4479
http://www.ameri1awyer.com
<PAGE>
HEALTH EXPRESS USA, INC.
Page 4
ARTICLE 12 - REGISTERED OWNER(S)
--------------------------------
The Corporation, to the extent permitted by law, shall be entitled to
treat the person in whose name any share or right is registered on the books of
the Corporation as the owner thereto, for all purposes, and except as may be
agreed in writing by the Corporation, the Corporation shall not be bound to
recognize any equitable or other claim to, or interest in, such share or right
on the part of any other person, whether or not the Corporation shall have
notice thereof.
ARTICLE 13 - REGISTERED OFFICE AND REGISTERED AGENT
---------------------------------------------------
The initial address of registered office of this Corporation is
Amerilawyer, located at 343 Almeria Avenue, Coral Gables, Florida 33134. The
name and address of the registered agent of this Corporation is Amerilawyer,
343 Almeria Avenue, Coral Gables, Florida 33134.
ARTICLE 14 - BYLAWS
-------------------
The Board of Director(s) of the Corporation shall have power, without
the assent or vote of the shareholders, to make, alter, amend or repeal the
Bylaws of the Corporation, but the affirmative vote of a number of Directors
equal to a majority of the number who would constitute a full Board of
Director(s) at the time of such action shall be necessary to take any action
for the making, alteration, amendment or repeal of the Bylaws.
ARTICLE 15 - EFFECTIVE DATE
---------------------------
These Articles of Incorporation shall be effective immediately upon
approval of the Secretary of State, State of Florida.
ARTICLE 16 - AMENDMENT
----------------------
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in these Articles of Incorporation, or in any amendment
hereto, or to add any provision to these Articles of Incorporation or to any
amendment hereto, in any manner now or hereafter prescribed or permitted by the
provisions of any applicable statute of the State of Florida, and all rights
conferred upon shareholders in these Articles of Incorporation or any amendment
hereto are granted subject to this reservation.
AMERILAWYER
343 ALMERIA AVENUE CORAL GABLES, FL 33134 - (305) 445-2700 - (800) 603-3900 -
FACSIMILE (305) 447-8900
MAILING ADDRESS - POST OFFICE Box 144479, CORAL GABLES, FL 33114-4479
http://www.ameri1awyer.com
<PAGE>
HEALTH EXPRESS USA, INC.
Page 5
ARTICLE 17 - INDEMNIFICATION
----------------------------
The Corporation shall indemnify a director or officer of the
Corporation who was wholly successful, on the merits or otherwise, in the
defense of any proceeding to which the director or officer was a party because
the director or officer is or was a director or officer of the Corporation
against reasonable attorney fees and expenses incurred by the director or
officer in connection with the proceeding. The Corporation may indemnify an
individual made a party to a proceeding because the individual is or was a
director, officer, employee or agent of the Corporation against liability if
authorized in the specific case after determination, in the manner required by
the board of directors, that indemnification of the director, officer, employee
or agent, as the case may be, is permissible in the circumstances because the
director, officer, employee or agent has met the standard of conduct set forth
by the board of directors. The indemnification and advancement of attorney fees
and expenses for directors, officers, employees and agents of the Corporation
shall apply when such persons are serving at the Corporation's request while a
director, officer, employee or agent of the Corporation, as the case may be, as
a director, officer, partner, trustee, employee or agent of another foreign or
domestic Corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise, whether or not for profit, as well as in their official
capacity with the Corporation. The Corporation also may pay for or reimburse
the reasonable attorney fees and expenses incurred by a director, officer,
employee or agent of the Corporation who is a party to a proceeding in advance
of final disposition of the proceeding. The Corporation also may purchase and
maintain insurance on behalf of an individual arising from the individual's
status as a director, officer, employee or agent of the Corporation, whether or
not the Corporation would have power to indemnify the individual against the
same liability under the law. All references in these Articles of Incorporation
are deemed to include any amendment or successor thereto. Nothing contained in
these Articles of Incorporation shall limit or preclude the exercise of any
right relating to indemnification or advance of attorney fees and expenses to
any person who is or was a director, officer, employee or agent of the
Corporation or the ability of the Corporation otherwise to indemnify or advance
expenses to any such person by contract or in any other manner. If any word,
clause or sentence of the foregoing provisions regarding indemnification or
advancement of the attorney fees or expenses shall be held invalid as contrary
to law or public policy, it shall be severable and the provisions remaining
shall not be otherwise affected. All references in these Articles of
Incorporation to "director", "officer", "employee" and "agent" shall include
the heirs, estates, executors, administrators and personal representatives of
such persons.
AMERILAWYER
343 ALMERIA AVENUE CORAL GABLES, FL 33134 - (305) 445-2700 - (800) 603-3900 -
FACSIMILE (305) 447-8900
MAILING ADDRESS - POST OFFICE Box 144479, CORAL GABLES, FL 33114-4479
http://www.ameri1awyer.com
<PAGE>
IN WITNESS WHEREOF, I have hereunto set my hand and seal, acknowledged
and filed the foregoing Articles of Incorporation under the laws of the State
of Florida, this July 02 1998
/s/ Elsie Sanchez
-----------------
Elsie Sanchez, Incorporator
ACCEPTANCE OF REGISTERED AGENT DESIGNATED
IN ARTICLES OF INCORPORATION
AmeriLawyer, having a business office identical with the registered
office of the Corporation name above, and having been designated as the
Registered Agent in the above and foregoing Articles of Incorporation, is
familiar with and accepts the obligations of the position of Registered Agent
under the applicable provisions of the Florida Statutes.
AmeriLawyer(R)
By: /s/ Natalia Utrera
----------------------
Natalia Utrera, Vice President
AMERILAWYER
343 ALMERIA AVENUE CORAL GABLES, FL 33134 - (305) 445-2700 - (800) 603-3900 -
FACSIMILE (305) 447-8900
MAILING ADDRESS - POST OFFICE Box 144479, CORAL GABLES, FL 33114-4479
http://www.ameri1awyer.com
BY LAWS
OF
HEALTH EXPRESS USA, INC.
AMERILAWYER
343 ALMERIA AVENUE CORAL GABLES, FL 33134 - (305) 445-2700 - (800) 603-3900 -
FACSIMILE (305) 447-8900
MAILING ADDRESS - POST OFFICE Box 144479, CORAL GABLES, FL 33114-4479
http://www.ameri1awyer.com
<PAGE>
ARTICLE I - OFFICES
The principal office of the corporation shall be established and maintained as
designated in the Articles of Incorporation. The corporation may also have
offices at such places within or without the State of Florida as the Board of
Directors (hereinafter, "Board") may from time to time establish.
ARTICLE II - STOCKHOLDERS
1. PLACE OF MEETINGS. Meetings of the Stockholders shall be held at the
principal office of the corporation or at such place within or without the
State of Florida as the Board shall authorize.
2. ANNUAL MEETING. The annual meeting of Stockholders shall be held on the
first Monday of each year in the month which this Corporation's initial
Articles of Incorporation were first filed with the Secretary of State;
however, if such day falls on a legal holiday, then on the next business day
following at the same time, the Stockholders shall elect a Board and transact
such other business as may properly come before the meeting.
3. SPECIAL MEETINGS. Special meetings of the Stockholders may be called by the
Board or by the President or at the written request of Stockholders owning a
majority of the stock entitled to vote at such meeting. A meeting requested by
the Stockholders shall be called for a date not less than ten nor more than
sixty days after a request is made. The Secretary shall issue the call for the
meeting unless the President, the Board, or the Stockholders shall designate
another to make said call.
4. NOTICE OF MEETINGS. Written Notice of each meeting of Stockholders shall
state the purpose of the meeting and the time and place of the meeting. Notice
shall be mailed to each Stockholder having the right and entitled to vote at
such meetings, at his last address as it appears on the records of the
corporation, not less than ten nor more than sixty days before the date set for
such meeting. Such notice shall be sufficient for the meeting and any
adjournment thereof. If any Stockholder shall transfer his stock after notice,
it shall not be necessary to notify the transferee. Any Stockholder may waive
notice of any meeting either before, during or after the meeting.
5. RECORD DATE. The Board may fix a record date not more than forty days prior
to the date set for a meeting of Stockholders as the date of which the
Stockholders of record who have the right to and are entitled to notice of and
to vote at such meeting and any adjournment thereof shall be determined. Notice
that such date has been fixed may be published in the city, town or county
where the principal office of the corporation is located and in each city or
town where a transfer agent of the stock of the corporation is located.
6. VOTING. Every Stockholder shall be entitled at each meeting and upon each
proposal presented at each meeting to one vote for each share of voting stock
recorded in his name on the books of the corporation on the record date as
fixed by the Board. If no record date was fixed, on the date of the meeting the
book of records of Stockholders shall be produced at the meeting upon the
request of any Stockholder. Upon demand of any Stockholder, the vote for
Directors and the vote 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.
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<PAGE>
7. QUORUM. The presence, in person or by proxy, of Stockholders holding a
majority of the stock of the corporation entitled to vote shall constitute a
quorum at all meetings of the Stockholders. In case a quorum shall not be
present at any meeting, a majority in interest of the Stockholders entitled to
vote thereat present in person or by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until the requisite amount of stock entitled to vote shall be present.
At any such adjourned meeting at which the requisite amount of stock entitled
to vote be represented, any business may be transacted which might have been
transacted at the meeting as originally noticed; but only those Stockholders
entitled to vote at the meeting as originally noticed shall be entitled to vote
at any adjournment or adjournments thereof.
8. PROXIES. At any Stockholders' meeting or any adjournment thereof, any
Stockholder of record having the right and entitled to vote thereat may be
represented and vote by proxy appointed in a written instrument. No such proxy
shall be voted after three years from the date of the instrument unless the
instrument provides for a longer period. In the event that any such instrument
provides for two or more persons to act as proxies, a majority of such persons
present at the meeting, or if only one be present, that one, shall have all the
powers conferred by the instrument upon all persons so designated unless the
instrument shall otherwise provide.
9. STOCKHOLDER LIST. After fixing a record date for a meeting, the corporation
shall prepare an alphabetical list of the names of all its Stockholders who are
entitled to notice of a Stockholders' meeting. Such list shall be arranged by
voting group with the names and addresses of, and the number and class and
series if any, of shares held by each. This list shall be available for
inspection by any Stockholder for a period of ten days prior to the meeting.
ARTICLE III - DIRECTORS
1. BOARD OF DIRECTORS. The business of the corporation shall be managed and its
corporate powers exercised by a Board each of whom shall be of full age. It
shall not be necessary for Directors to be Stockholders. The number of
Director(s) shall be determined by the Stockholders at their annual meeting.
2. ELECTION AND TERM OF DIRECTORS. Directors shall be elected at the annual
meeting of Stockholders and each Director elected shall hold office until his
successor has been elected and qualified, or until the Director's prior
resignation or removal.
3. VACANCIES. If the office of any Director, member of a committee or other
office becomes vacant, the remaining Directors in office, by a majority vote,
may appoint any qualified person to fill such vacancy, who shall hold office
for the unexpired term and until a successor shall be duly chosen.
4. REMOVAL OF DIRECTORS. Any or all of the Directors may be removed with or
without cause by vote of a majority of all the stock outstanding and entitled
to vote at a special meeting of Stockholders called for that purpose.
5. NEWLY CREATED DIRECTORSHIPS. The number of Directors may be increased by
amendment of these By-laws by the affirmative vote of a majority of the
Directors, though less than a quorum, or, by the affirmative vote of a majority
in interest of the Stockholders, at the annual meeting or at a
2
<PAGE>
special meeting called for that purpose, and by like vote the additional
Directors may be chosen at such meeting to hold office until the next annual
election and until their successors are elected and qualify.
6. 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.
7. QUORUM OF DIRECTORS. A majority of the Directors shall constitute a quorum
for the transaction of business. If at any meeting of the Board there shall be
less than a quorum present, a majority of those present may adjourn the meeting
until a quorum is obtained and no further notice thereof need be given other
than by announcement at the meeting which shall be so adjourned.
8. PLACE AND TIME OF BOARD MEETINGS. The Board may hold its meetings at the
office of the corporation or at such other places either within or without the
State of Florida as it may from time to time determine.
9. REGULAR ANNUAL MEETING. A regular meeting of the Board shall be held
immediately following the annual meeting of the Stockholders at the place of
such annual meeting of Stockholders.
10. NOTICE OF MEETINGS OF THE BOARD. Regular meetings of the Board may be held
without notice at such time and place as it shall from time to time determine.
Special meetings of the Board shall be held upon notice to the Directors and
may be called by the President upon three days notice to each Director either
personally or by mail or by wire or by facsimile; special meetings shall be
called by the President or by the Secretary in a like manner on written request
by two Directors. Notice of a meeting need not be given to any Director who
submits a Waiver of Notice whether before or after the meeting or who attends
the meeting without protesting prior thereto or at its commencement, the lack
of notice to him.
11. EXECUTIVE AND OTHER COMMITTEES. The Board, by resolution, may designate two
or more of their number to one or more committees, which, to the extent
provided in said resolution or these By-laws may exercise the powers of the
Board in the management of the business of the corporation.
12. 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.
ARTICLE IV - OFFICERS
1. OFFICERS, ELECTION AND TERM.
1.1 The Board may elect or appoint a Chairman, a President, one
or more Vice Presidents, a Secretary, an Assistant Secretary,
a Treasurer and an Assistant Treasurer and such other
officers as it may determine who shall have duties and powers
as hereinafter provided.
3
<PAGE>
1.2 All officers shall be elected or appointed to hold office
until the meeting of the Board following the next annual
meeting of Stockholders and until their successors have been
elected or appointed and qualified.
2. REMOVAL, RESIGNATION, SALARY, ETC..
2.1 Any officer elected or appointed by the Board may be removed by
the Board with or without cause.
2.2 In the event of the death, resignation or removal of an officer,
the Board in its discretion. may elect or appoint a successor to
fill the unexpired term.
2.3 Any two or more offices may be held by the same person.
2.4 The salaries of all officers shall be fixed by the Board.
2.5 The Directors may require any officer to give security for the
faithful performance of his duties.
3. CHAIRMAN. The Chairman of the Board, if one be elected, shall preside at all
meetings of the Board and shall have and perform such other duties from time to
time as may be assigned to him by the Board or the executive committee.
4. PRESIDENT. The President may be the chief executive officer of the
corporation and shall have the general powers and duties of supervision and
management usually vested in the office of the President of the corporation.
The President shall preside at all meetings of the Stockholders if present
thereat, and in the absence or non-election of the Chairman of the Board, at
all meetings of the Board, and shall have general supervision, direction and
control of the business of the corporation. Except as the Board shall authorize
the execution thereof in some other manner, the President shall execute bonds,
mortgages and other contracts in behalf of the corporation and shall cause
the seal to be affixed to any instrument requiring it and when so affixed, the
seal shall be attested by the signature of the Secretary or the Treasurer or an
Assistant Secretary or an Assistant Treasurer.
5. VICE PRESIDENTS. During the absence or disability of the President, the
Vice-President, or if there be more than one, the executive Vice-President,
shall have all the powers and functions of the President. Each Vice-President
shall perform such other duties as the Board shall prescribe.
6. SECRETARY. The Secretary shall attend all meetings of the Board and of the
Stockholders, record all votes and minutes of all proceedings in a book to kept
for that purpose, give or cause to be given notice of all meetings of
Stockholders and of meetings and special meetings of the Board, keep in safe
custody the seal of the corporation and affix it to any instrument when
authorized by the Board or the President, when required, prepare or cause to be
prepared and available at each meeting of Stockholders a certified list in
alphabetical order of the names of Stockholders entitled to vote thereat,
indicating the number of shares of each respective class held by each, keep all
the documents and records of the corporation as required by law or otherwise in
a proper and safe manner, and perform such other duties as may be prescribed by
the Board or assigned by the President.
7. ASSISTANT SECRETARIES. During the absence or disability of the Secretary,
the Assistant-Secretary, or if there are more than one, the one so designated
by the Secretary or by the Board, shall have all the powers and functions of
the Secretary.
4
<PAGE>
8. TREASURER. The Treasurer shall have the custody of the corporate funds and
securities, keep full and accurate accounts of receipts and disbursements in
the corporate books, deposit all money and other valuables in the name and to
the credit of the corporation in such depositories as may be designated by the
Board, disburse the funds of the corporation as may be ordered or authorized by
the Board and preserve proper vouchers for such disbursements, render to the
President and Board at the regular meetings of the Board, or whenever they
require it, an account of all the transactions made as Treasurer and of the
financial condition of the corporation. The Treasurer shall also render a full
financial report at the annual meeting of the Stockholders if so requested. The
Treasurer may request and shall be furnished by all corporate officers and
agents with such reports and statements as he may require as to all financial
transactions of the corporation, and perform such other duties as are
designated by these By-laws or as from time to time are assigned by the Board.
9. ASSISTANT TREASURERS. During the absence or disability of the Treasurer, the
Assistant Treasurer, or if there be more than one, the one so designated by the
Treasurer or the Board, shall have all the powers and functions of the
Treasurer.
10. SURETIES AND BONDS. In case the Board shall so require, any officer or
agent of the corporation shall execute to the corporation a bond in such sum
and with such surety or sureties as the Board may direct, conditioned upon the
faithful performance of duties to the corporation and including responsibility
for negligence and for the accounting of all property, funds or securities of
the corporation which the officer or agent may be responsible for.
ARTICLE V - CERTIFICATES FOR SHARES
1. CERTIFICATES. The shares of the corporation shall be represented by
certificates. They shall be numbered and entered in the books of the
corporation as they are issued. They shall exhibit the holder's name, the
number of shares and shall be signed by the President and Secretary and shall
bear the corporate seal. When such certificates are signed by the transfer
agent or an assistant transfer agent or by a transfer clerk acting on behalf of
the corporation and a registrar, the signatures of such officers may be
facsimiles.
2. LOST OR DESTROYED CERTIFICATES. The Board may direct a new certificate or
certificates to be issued in place of any certificates theretofore issued by
the corporation alleged to have been lost or destroyed, upon the making of an
affidavit of that fact by the person claiming the certificate to be lost or
destroyed. When authorizing such issue of a new certificate or certificates,
the Board may, in its discretion as a condition preceding the issuance thereof,
require the owner of such lost or destroyed certificate or certificates, or the
owner's legal representative, to advertise the same in such manner as it shall
require and/or give the corporation a bond in such sum and with such surety or
sureties as it may direct as indemnity against any claim that may be made
against the corporation with respect to the certificate alleged to have been
lost or destroyed.
3. TRANSFER OF SHARES. 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. Whenever a transfer shall be made for
5
<PAGE>
collateral security, and not absolutely, it shall be so expressed in the entry
of the transfer ledger. No transfer shall be made within ten days next
preceding the annual meeting of the Stockholders.
4. CLOSING TRANSFER BOOKS. The Board shall have the power to close the share
transfer books of the corporation for a period of not more than ten days during
the thirty day period immediately proceeding
4.1 any Stockholder's meeting, or
4.2 any date upon which Stockholders shall be called upon to or
have a right to take action without a meeting, or
4.3 any date fixed for the payment of a dividend or any other
form of distribution, and only those Stockholders of record
at the time the transfer books are closed, shall be
recognized as such for the purpose of
4.3.1 receiving notice of or voting at such meeting or
4.3.2 allowing them to take appropriate action, or
4.3.3 entitling them to receive any dividend or other
form of distribution.
ARTICLE VI - DIVIDENDS
The Board may out of funds legally available, at any regular or special
meeting, declare dividends upon the capital stock of the corporation as and
when it deems expedient. Before declaring any dividend there may be set apart
out of any funds of the corporation available for dividends, such sum or sums
as the Board from time to time in their discretion deem proper for working
capital or as a reserve fund to meet contingencies or for equalizing dividends
for such other purposes as the Board shall deem conducive to the interest of
the corporation.
ARTICLE VII - CORPORATE SEAL
The seal of the corporation shall bear the name of the corporation, the year of
its organization and the words "CORPORATE SEAL, FLORIDA" or "OFFICIAL CORPORATE
SEAL, FLORIDA". The seal may be used by causing it to be impressed directly on
the instrument or writing to be sealed, or upon adhesive substance affixed
thereto. The seal on the certificates for shares or on any corporate obligation
for the payment of money may be facsimile, engraved or printed.
ARTICLE VIII - EXECUTION OF INSTRUMENTS
All corporate instruments and documents shall be signed or countersigned,
executed, verified or acknowledged by such officer or officers or other person
or persons as the Board may from time to time designate. 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 be
determined from time to time by resolution of the Board.
6
<PAGE>
ARTICLE IX - FISCAL YEAR
The fiscal year shall begin on the first day of each year.
ARTICLE X - NOTICE AND WAIVER OF NOTICE
1. SUFFICIENCY OF NOTICE. Whenever any notice is required by these By-laws to
be given, personal notice is not meant unless expressly so stated, and any
notice so required shall be deemed to be sufficient if given by depositing the
same in a United States Postal Service post office mail collecting container in
a sealed postage-paid wrapper, addressed to the person entitled thereto at the
last known post office address, and such notice shall be deemed to have been
given on the day of such mailing. Stockholders not entitled to vote shall not
be entitled to receive notice of any meetings except as otherwise provided by
Statute.
2. WAIVERS. Whenever any notice whatever is required to be given under the
provisions of any law, or under the provisions of the Articles of incorporation
of the corporation or these By-laws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto.
ARTICLE XI - CONSTRUCTION
Whenever a conflict arises between the language of these By-laws and the
Articles of Incorporation, the Articles of Incorporation shall govern.
ARTICLE XII - CLOSE CORPORATION
1. CONDUCT OF BUSINESS WITHOUT MEETINGS. Any action of the Stockholders,
Directors or committee may be taken without a meeting of consent in writing,
setting forth the action so taken, shall be signed by all persons who would be
entitled to vote on such action at a meeting and filed with the Secretary of
the corporation as part of the proceedings of the Stockholders, Director or
committees as the case may be.
2. MANAGEMENT BY STOCKHOLDERS. In the event the Stockholders are named in the
Articles of Incorporation and are empowered therein to manage the affairs of
the corporation in lieu of Directors, the Stockholders of the corporation shall
be deemed Directors for the purposes of these By-laws and wherever the words
"Directors", "Board of Directors" or "Board" appear in these By-laws those
words shall be taken to mean Stockholders.
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<PAGE>
3. MANAGEMENT BY A BOARD. The Stockholders may, by majority vote, create a
Board to manage the business of the corporation and exercise its corporate
powers.
ARTICLE XIII - AMENDMENTS
These By-laws may be altered or repealed and By-laws may be made at any annual
meeting of the Stockholders or at any special meeting thereof if notice of the
proposed alteration or repeal to be made is contained in the notice of such
special meeting, by the affirmative vote of a majority of the stock issued and
outstanding and entitled to vote thereat, or by the affirmative vote of a
majority of the Board if notice of the proposed alteration or repeal to be made
is contained in the notice of such special meeting.
ARTICLE XIV - EMERGENCY BY-LAWS
1. CONDUCT OF BUSINESS WITHOUT MEETINGS. Pursuant to Florida Statue 607.0207
the corporation adopts the following By-laws, which shall be effective only if
a quorum of the Directors of the corporation cannot be readily assembled
because of some catastrophic event.
2. CALLING A MEETING. In the event of such catastrophic event, any member of
the Board shall be authorized to call a meeting of the Board. Such member
calling an emergency meeting shall use any means of communication at their
disposal to notify all other members of the Board of such meeting.
3. QUORUM. Any one member of the Board shall constitute a quorum of the Board.
The members of the Board meeting during such an emergency may select any person
or persons as additional Board members, officers or agents of the corporation.
4. INDEMNIFICATION. The members of such emergency Board are authorized to
utilize any means at their disposal to preserve and protect the assets of the
corporation. Any action taken in good faith and acted upon in accordance with
these By-laws shall bind the corporation; and the corporation shall hold
harmless any Director, officer, employee or agent who undertakes an action
pursuant to these By-laws.
5. TERMINATION OF EMERGENCY BY-LAWS. These emergency By-laws shall not be
effective at the end of the emergency period.
8
BUSINESS PROPERTY LEASE
This Lease, executed this 25th day of January, 1999 between SAUL STRACHMAN,
1261-98th Street, Bay Harbor Islands, FL 33154 (954) 722-5542 (305)
866-3747..........., the Lessor, and THE HEALTH EXPRESS GRILL, INC., 1901 W.
Cypress Creek Road, Suite 100, Ft. Lauderdale, FL. 33309 (954) 776-5401, the
LESSEE:
WITNESSETH: The Lessor, for and in consideration of the rent herein reserved to
be paid by the Lessee, and in consideration of the covenants herein to be kept
and performed by the Lessee, does hereby lease and demise unto the said Lessee
the following described premises, situated, lying and being in the City of
Oakland Park, County of Broward, State of Florida:
A building situated at the corner of N.E. 15th Terrace and E. Commercial
Boulevard, Oakland Park, Florida. Said building having the street address of
1538-A East Commercial Boulevard, and as depicted on a rough sketch attached
hereto and entitled Exhibit "A". Said building containing approximately 3,129
square feet of area, which includes the overhang areas also depicted on Exhibit
"A".
TO HAVE AND TO HOLD the said premises unto the said Lessee, from the
1st day of February A.D. 1999, to and including the 31st day of
January, A.D. 2004 the Lessee yielding and paying to the Lessor the
following rental:
The entire rental for this period to be Two Hundred Six Thousand Six.
Hundred Dollars $206,600, payable as follows:
$7,500.00 upon the execution and delivery of the within Lease by all parties
hereto, which said sum shall represent rents in advance in the amounts of
$3,250.00 and $4,250.00, for the months of June 1999, and January 2004
respectively. (SEE PARAGRAPH NO. 25 HEREINAFTER FOR PROVISIONS CONCERNING FREE
RENTAL); $3,250.00 on July 1,1999; and $3,250.00 on the lst day of each and
every month thereafter, up to and including January 2000; $3,350.00 on February
1, 2000; and $3,350.00 on the 1st day of each and every month thereafter, up to
and including January 2001; $3,450.00 on February 1, 2001 and $3,450.00 on the
lst day of each and every month thereafter, up to and including January 2002;
$4,000.00 on February 1,2002, and $4,000.00 on the lst day of each and every
month thereafter, up to and including January 2003; $4,250.00 on February 1,
2003, and $4,250.00 on the lst day of each and every month thereafter, up to
and including January 2004.
The Lessee agrees to keep, conform to and abide by each and every of
the following which are hereby made conditions of this lease.
1. To pay the rent herein reserved at the times and in the manner
aforesaid, and should said rent herein provided at any time remain due
and unpaid for a space of five (5) days after same shall become due,
the Lessor may, at Lessor's option, consider the Lessee a tenant at
sufferance and Lessor may immediately re-enter upon said premises and
the entire rent for the remainder of the entire term sha11 at once
become due and payable and may forthwith be collected by distress or
otherwise.
2. To pay all charges for gas, electricity and other illuminant and
power, and for water used upon and in connection with the said demised
premises not more than ten (10) days after the same shall become due
and payable.
3. That said Lessee may not assign Lessee's interest in this lease,
nor underlet the whole or any part of said premises, nor shall the
same be used for any other purpose than. See paragraph no. 24
hereinafter following re: provisions concerning uses permitted without
first having obtained the written consent to such assignment or
underletting, or to such change of purpose for the use of the premises
from the Lessor and the said Lessee further covenants that the said
premises will not be used for any purpose that will invalidate any
policies of insurance now or hereafter written on the building on
which said premises are located, or will increase the rate of premium
thereof. Lessor's consent shall not be unreasonably withheld.
4. To use said premises in pursuance with all laws and ordinances
now or hereinafter applicable; also to exercise all reasonable
care in the use of halls, stairs, corridors, toilets and other fixtures
and parts of said premises used in common with other tenants in said
building which may be necessary for the preservation of the property and
comfort of the other tenants.
<PAGE>
5. Not to permit or suffer any noise, disturbance or nuisance
whatsoever on said premises detrimental to same or annoying to the
neighbors, and the Lessee acknowledges that the premises have been
received in thoroughly good order, tenantable condition and repair, of
which the execution of this lease, and taking possession thereunder
shall be conclusive evidence; and that no representation as to the
condition of said premises have been made by the Lessor, or Lessor's
agents, and that no obligation as to the repairing, adding to, or
improving said premises has been assumed by the Lessor, and that no
oral arrangements have been entered into in consideration of making
this lease and that said lease contains a full statement of the
obligation of both parties hereto.
6. That the Lessee will keep in good condition during the
continuation of the term herein described the interior of said demised
premises, and every part thereof, including the plumbing, doors and
windows, and awnings, if any (which said awnings, if any, the Lessor
shall not be called upon to furnish or replace during the term of the
lease), and will keep the same in good, sound, clean condition and
repair, ordinary wear and tear, fire, hurricane or other act of God
alone excepted, and will not suffer or permit any strip or waste of
demised premises, and that the said Lessee shall within ten days after
entry and occupancy of said premises cause to be written a policy of
plate glass insurance in a company to be approved by the Lessor,
insuring all of the plate glass in said premises, which said policy
will bear an endorsement thereon, naming the Lessor as the party to
whom all payments that may accrue from said policy of insurance shall
be payable and should the Lessee fail and omit to cause said policy
insurance to be written, and should the Lessor waive Lessor's option
to cancel said lease for breach of this covenant, then, and in that
event, said Lessee shall be responsible for any breakage that may
occur from any cause whatsoever to the plate glass windows, and agrees
to replace the same at Lessee's cost. If the Lessee desires to furnish
awnings, he shall first obtain the written approval of the Lessor as
to style, color and quality of material. Lessee shall also be
responsible for damage to the demised premises caused by burglary or
attempt thereat.
7. Not to make any alterations or changes in the demised
premises without the written consent of the Lessor, and all additions,
fixtures, or improvements, except only store and office furniture and
fixtures which shall be readily removable without injury to the
premises, shall be and remain a part of the premises at the expiration
of this lease.
8. That the Lessor, or Lessor's agent, may at any reasonable
time enter and view said premises, and make repairs, if Lessor should
elect to do so.
9. That if the Lessee shall not pay the rents herein reserved at
the time and in the manner stated, or shall fail to keep and perform
any other condition, stipulation or agreement herein contained, on the
part of the Lessee to be kept and performed, or if the Lessee shall
suffer to be filed against Lessee an involuntary petition in
bankruptcy or shall be adjudged voluntary or involuntary bankrupt or
make an assignment for the benefit of creditors, or should there be
appointed a Receiver to take charge of the premises either in the
state courts, or in the Federal courts, then, in any of such events,
the Lessor may, at lessor's option, terminate and end this lease and
re-enter upon the property, whereupon the term hereby granted, and at
the Lessor's option all right, title and interest under it, shall end
and the Lessee become a tenant at sufferance: or else said Lessor may,
at Lessor's option, elect to declare the entire rent for the balance
of the term, or any part thereof, due and payable forthwith, and may
proceed to collect the same by distress or otherwise, and thereupon
said term shall terminate, at the option of the Lessor, or else the
said Lessor may take possession of the premises and rent the same for
the account of the Lessee, the exercise of any of which options herein
contained shall not be deemed the exclusive Lessor's remedy; the
expression "entire rent for the balance of the term" as used herein,
shall mean all of this rent prescribed to be paid by the Lessee unto
the Lessor for the full term of the lease, less, however, any payments
that shall have been made on account of any pursuant to the terms of
said lease.
10. If the Lessee shall abandon, vacate or remove the major
portion of the goods, wares and merchandise usually kept at the
option of the lessor said premises when the same is open for business
and shall cease doing business in said premises, then and in such
event, lease shall immediately become cancelled and null and
void, and all payments made by said Lessee shall
be retained by the Lessor as payment in full for the period of time
the premises are occupied by the Lessee and Lessee shall not be
entitled to any monies so paid by him, even though such payment is
for time subsequent to such closing of the store and removal of the
goods, wares and merchandise.
11. That the Lessee pledges with and assigns unto the Lessor all
the furniture and fixtures, goods and chattels of the said Lessee,
which may be brought or put on said premises as security for the
payment of the rent herein reserved, and agrees that the Lessor's lien
for the payment of said rent may be enforced by distress, foreclosure
or otherwise, at the option of the said Lessor, and Lessee agrees that
such lien is granted to the Lessor and vested in said Lessor, and the
Lessee further agrees that, in case of the failure of the said Lessee
to pay the rent herein reserved when the same shall become due, and it
becomes necessary for the Lessor to collect said rent by suit or
through an attorney, the Lessee will pay the Lessor a reasonable
attorney's fee not to exceed 10% of the amount so collected or found
due, together with all costs and charges thereof.
12. That upon the performance by the Lessee of all the covenants
and agreements hereinabove set forth, in case the demised premises,
or any part thereof, shall at any time be destroyed or so damaged by
fire or other elements as to be unfit for occupancy or use by the
Lessee, then and in that event, the Lessor shall have the option (1)
to terminate this lease, (2) to repair and rebuild the said premises,
remitting rents hereby reserved, or a fair and just proportion
thereof, according to the damage sustained, until the said premises
are reinstated and made fit for occupancy and use; and in the event
the Lessor elects to exercise the option to repair and rebuild, the
same shall be done and completed within a reasonable time.
13. That the Lessee takes all risk of any damage to Lessee's
property that may occur by reason of water or the bursting or leaking
of any pipes or waste water about said premises, or from any act of
negligence of any co-tenant or occupants of the building, or of any
other person, or fire, or hurricane, or other act of God, or from any
cause whatsoever.
14. That the Lessee shall not attach any signs to the premises,
or place any lettering on the plate glass windows, unless such
signs, and such lettering, be of a type, kind, character and
description to be approved by the Lessor, in the interests of having a
uniform system of lettering and display signs on all of the stores in
the building of which the demised premises are a part.
15. If the said Lessee shall occupy said premises with or without
the consent of the lessor after the expiration of this lease, and the
rent accepted from said Lessee, such occupancy and payment shall be
construed as an extension of this lease for the term of one month only
from the date of such expiration; and occupation thereafter shall
operate to extend the lease from month to month only unless other
terms of such extension are endorsed herein or hereon in writing and
signed by the parties hereto.
16. That Lessee shall indemnify and save harmless the said Lessor
from and against any and all claims, suits, actions, damages, and/or
causes of action arising during the term of this lease for any
personal injury, loss of life and/or damage to property sustained in
or about the leased premises, by reason or as a result of the Lessee's
occupancy thereof, and from and against any orders, judgments, and/or
decrees which may be entered thereon, and from and against all costs,
counsel fees, expenses and liabilities incurred in and about the
defense of any such claim and the investigation thereof; provided,
however, that before the Lessee shall become liable for all of said
costs, counsel fees, expenses and liabilities, Lessee shall be given
notice in writing that the same are about to be incurred and shall
have the option itself to make the necessary investigation and employ
counsel of Lessee's own selection but satisfactory to the Lessor, for
the necessary defense of any claims.
17. It is further agreed and understood that the Lessee agrees
that this lease shall be subject and subordinate to any mortgage or
deed of trust now on premises, or which may hereafter be made on
account of any proposed loan to be placed on said premises by the
Lessor to the full extent of all debts and charges secured thereby;
and to any renewals and extension of all or any part thereof, which
said Lessor may hereafter at any time elect to place on said premises,
and said Lessee agrees upon request to hereafter execute any paper or
papers which the counsel for the Lessor deems necessary to accomplish
that end, and in default of the Lessee's so doing, that the Lessor is
hereby empowered to execute such paper or papers in the name of the
Lessee and as the act and deed of said Lessee and this authority is
declared to be coupled with an interest and not revocable. No estate
for years is created by this lease.
2
<PAGE>
18. At the expiration of said term, said Lessee shall quietly and
peaceably deliver said premises to the Lessor in the same repair and
condition in which they were received, ordinary wear and tear
excepted.
19. The Lessor hereby covenants with the Lessee that, upon the
performance of the Lessee of all the conditions hereinabove set forth
on the part of the Lessee to be kept and performed, Lessee may quietly
have, hold, occupy and use the above described premises without
interruption by the Lessor; provided that, upon the breach of any of
the covenants, conditions, and stipulations herein contained to be
kept and performed by the Lessee, the Lessor may immediately without
notice and without the necessity of legal process re-enter said
premises, and, thereupon, at the Lessor's option, said lease shall
forthwith be terminated and/or the Lessor may exercise any of the
options hereinbefore provided for the Lessor's benefit in case of
default on the part of the Lessee.
20. The Lessor further covenants that Lessor will keep the
exterior of the building in which are situated the demised premises
in good repair, and the portion of building intended to be designated
as the exterior shall exclude those portions herein
before covenanted and agreed by the Lessee to be kept in repair, but
the Lessee shall give to the Lessor seven (7) days written notice of
needed repairs and the Lessor shall have a reasonable time thereafter
to make them.
21. The terms Lessor and Lessee as herein contained shall
include singular and/or plural masculine, feminine, and/or neuter,
heirs, successors, personal representatives and/or assigns wherever
the context so requires or admits.
22. The failure of the Lessor in one or more instances to insist
upon strict performance of observance of one or more of the covenants
or conditions hereof or to exercise any remedy, privilege or option
herein conferred upon or reserved to the Lessor, shall not operate or
be construed as a relinquishment or waiver for the future of such
covenant or condition or of the right to enforce the same or to
exercise such privilege, option, or remedy, but the same shall
continue in full force and effect. The receipt by the Lessor of rent,
or additional rent or any other payment required to be made by the
Lessee, or any part thereof, shall not be a waiver of any other
additional rent or payment then due, nor shall such receipt, though
with knowledge of the breach of any covenant or condition hereof,
operate as or be deemed to be a waiver of such breach, and no waiver
by the Lessor of any of the provisions hereof, or any of the Lessor's
rights, remedies, privileges or options hereunder shall be deemed to
have been made unless made by the Lessor in writing. If the Lessor
shall consent to the assignment of this lease or to a subletting of
all or a part of the demised premises, no further assignment or
subletting shall be made without the written consent of the Lessor
first obtained. No surrender of the demised premises for the remainder
of the term hereof shall be valid unless accepted by the Lessor in
writing.
23. Lessee shall pay to the Lessor, in addition to the rent, the
present Florida sales tax of 6% of the rent, and any other future
taxes, and/or fees, and/or charges which may be imposed upon the rent
reserved hereunder by any governmental authority acting under present
or future law. Such sales tax being payable to the Lessor when rent is
payable.
24. A health food type restaurant, including the accessory retail
sales of packaged health foods to Customers. It is understood and
agreed that the demised premises is situated in the City of Oakland
Park, and is subject to Oakland Park B-1 Zoning. To the best of the
Lessor's knowledge and belief, the uses set forth herein are
permissable under the existing zoning.
25. It is understood and agreed the Lessee shall be granted free
rent for the months of February, March, April, and May, 1999.
Therefore, the total rental of $206,600.00 for the initial term, as
set forth on page 1 of the within Lease is an amount for 56 months,
and allows for free rent for the said first four(4) months of the
term.
26. Lessee shall carry public liability insurance covering for
bodily injury and property damage in limits of at least $100,000 for 1
person, $300,000 for more than 1 person, and $50,000 for property
damage. Lessee shall provide Lessor with a certificate of insurance,
evidencing that said coverage is in force.
27. Lessee shall arrange for and pay for adequate removal of
waste, in connection with Lessee's operation. At the present time
there is a concrete block enclosure behind the demised premises at the
back end of the lot. Lessee agrees to contract with the City of
Oakland Park, or a private hauler, (if the City of Oakland Park
permits), for placement of a dumpster inside the concrete enclosure,
or other appropriate approved container for the temporary storage of
waste. Lessee shall also contract for and arrange for the frequent
required removal of the stored waste, by the City or a private hauler.
Lessee agrees to keep the exterior of the demised premises clean, and
not to permit the storage or discarding of waste or debris outside the
demised premises.
28. Lessor shall turn over the demised premises to the Lessee
with all existing equipment in good operating condition. Such existing
equipment meaning basically to include water piping, toilet fixtures,
drains, electric wiring, electric fixtures, (not including signs), air
conditioning equipment, doors, windows, roof, and walls. Following
such physical occupancy by the Lessee, should the Lessee find any of
the foregoing malfunctioning, Lessee shall so notify Lessor, and
Lessor shall, as soon as reasonably possible following such
notification, make the necessary repairs, and/or replacement to
correct such malfunctioning equipment. Lessor shall give the Lessee a
"warranty period" of 30 days following the date upon which Lessee
takes physical possession. Following this 30-day period, Lessee shall
maintain the entire interior of the demised premises, (not including
roof or exterior walls), at Lessee's sole cost and expense.
Notwithstanding anything contained hereinabove, it is understood that
the Lessor, at Lessor's expense, shall maintain the exterior walls,
roof, sidewalks and parking lot, at all times during the term of the
within Lease and any renewals of same.
3
<PAGE>
29. Excepting for any required repairs by the Lessor, as set
forth specifically in Paragraph No. 28 hereinbefore, Lessee shall
accept the demised premises "as is". Lessor shall not be required to
make any exterior or interior improvements of any kind neither during
the initial term hereof, nor during and renewals of same.
30. Lessee shall make no major alterations to the demised
premises, nor any structural changes, nor any penetrations of the
exterior walls or roof without the prior written approval of the
Lessor. (SEE PARAGRAPH NO. 36 HEREINAFTER)
31. In addition to the payment of rent and sales taxes, Lessee
shall pay a monthly estimate of 1/12 of the total annual real estate
taxes on the demised premises, plus 1/12 of the total annual hazard
and liability insurance premiums on the demised premises, plus 1/12 of
the total annual flood insurance premium on the demised premises. The
real estate taxes for 1998 which have been paid was 8,066.70. 1/12 of
this amount is $672.23. The annual hazard and liability insurance
premium on the demised premises is projected to be $1,031.00 by
Lessor's Insurance Company. 1/12 of this amount is $85.92. The
projected annual flood insurance premium on the demised premises is
$500.00. 1/12 of this amount is $41.67. The total of these three
amounts is $799.82. Rounded off this would be $800.00 per month. It is
agreed that, in addition to the base rent and sales taxes hereinbefore
provided for, the Lessee shall also pay to the Lessor the real estate
taxes and insurance covering the demised premises. The foregoing is an
accounting of the amounts for these items at present. Accordingly,
commencing with July 1, 1999, and continuing through the entire lease
term, and all renewals of same, Lessee shall pay to the Lessor the
estimated monthly amounts of these items. Same shall be paid for each
month at the same time that rent is paid. Specifically, commencing
with July 1, 1999, Lessee shall pay to the Lessor, in addition to the
base rent and sales taxes, $800.00 each month during the first year of
the within lease term. Within thirty days following the completion of
the first year, Lessor shall provide Lessee with an accounting of the
actual total paid by the Lessor for real estate taxes, and insurance
for 1998/1999. If such accounting reveals that the total paid by the
Lessor is greater than the total of the monthly payments made by the
Lessee, such deficiency shall be added to the total actually paid by
the Lessor for 1998/1999 and this total shall then be considered to be
the new estimate for the next year (1999/2000) and 1/12 of this new
total shall become the monthly Lessee contribution commencing with
February 2000. If the accounting reveals that the Lessee overpaid the
actual amount for 1998/1999, this overpayment shall be deducted from
the total actually paid by the Lessee to the Lessor for the first
year, and the resulting total shall become the new estimate for
1999/2000 and 1/12 of this sum shall become the monthly Lessee
contribution commencing with February 2000. In like fashion, for each
successive year of the within lease term, and all renewals of same the
above method shall be utilized to develop the Lessee's monthly payment
of real estate taxes and insurance. The only deviation from the
foregoing will be at the end of the initial term hereof, in the event
the Lessee does not exercise its renewal option(s), or at the end of
any option period without further renewal. In such cases any annual
overpayments or annual underpayments will be paid and/or reimbursed
as the case may be following the accounting.
32. It is understood and agreed that the demised premises is part
of an existing shopping center, and is situated on a corner lot.
Lessee shall be permitted to utilize the parking spaces immediately
surrounding the demised premises, and the existing parking spaces in
the adjacent shopping center for parking for the Lessee's customers.
Such parking privilege shall be in common with other tenants
occupying the adjacent shopping center. It is understood that the
Lessor provides all of the parking spaces for the benefit of all of
the tenants in common, and no tenant has, or will have an exclusive
use for any specific parking spaces. It is further understood and
agreed that the Lessee herein shall use reasonably that number of
spaces that normal business requires. The Lessor shall retain the
right to control the number of spaces that all tenants utilize, so
that no one tenant can unfairly consume an unreasonable number of
spaces. It is further understood and agreed that the Lessee will
direct its employees to park in the rear of the center, leaving
closest spaces for the customers of all tenants of the shopping
center.
4
<PAGE>
33. Further to Paragraph No. 14 hereinbefore, resigns. At the
present time there is an existing pylon sign at the northeast corner
of the corner lot on which the demised premises is located. Lessor
makes no representation concerning the condition of this sign, nor
does the Lessor guarantee the proper operation and/or illumination of
same. It is on an electric circuit from the panel in the demised
premises. (Elsewhere in the within lease the Lessor does make
representation concerning existing circuits and water lines etc).
Further Lessor makes no representation about what copy of lettering or
colors is required by City Sign Code. Lessee shall contact the City
Building and Zoning Department and be guided by their regulations.
Lessee shall have the exclusive use of this sign with the
understanding that Lessee, at Lessee's expense shall maintain same.
Further, as with any other signs which Lessee may desire to install or
attach in or about the exterior of the demised premises, Lessee shall
provide Lessor with a sketch of such changes or additions for Lessor's
approval. Lessor shall not withhold approval unreasonably.
34. Lessee shall have three lease renewal options of three years
each. All of the renewal options shall be on the same terms,
conditions, and covenants as during the initial term hereof, except
for the renewal period rents which are set forth hereinbelow. Lessee's
right to exercise the renewal options shall be conditioned on the
Lease being in good standing and that the options be exercised
successively as follows:
(a) The first renewal option - February 1, 2004 through January 31,
2007. If the Lessee shall desire to exercise this first renewal
option, Lessee shall so notify Lessor in writing on or before
November 1, 2003 and accompany such notice with a check in the
amount of $250.00. Such sum will be added to the $4,250.00 security
deposited hereunder, and the then $4,500.00 shall be held as a
security deposit during the first renewal term. The total base rent
for this first renewal term shall be $162,000.00 and shall be paid
in monthly payments of $4,500.00 on the first day of each and every
month commencing with February 2004 and continuing up to and
including January, 2007. Lessee shall additionally pay with the base
rent the sales taxes which may be then imposed on same, plus the
monthly estimate for real estate taxes and insurance, as provided
for in Paragraph No. 31 hereinbefore.
(b) Second renewal option - February 1, 2007 through January 31, 2010.
If the Lessee shall have exercised the first renewal option as set
forth above, and Lessee shall desire to exercise this second renewal
option, Lessee shall so notify Lessor in writing on or before
November 1, 2006 and accompany such notice with a check in the
amount of $500.00. Such sum will be added to the $4,500.00 security
deposit then being held by the Lessor, and the then $5,000.00 shall
be held as a security deposit during this second renewal term. The
total base rent for this second renewal term shall be $180,000.00
and shall paid in monthly payments of $5,000.00 on the first day of
each and every month commencing with February 2007 and continuing up
to and including January 2010. Lessee shall additionally pay with
the base rent the sales taxes which may be then imposed by
Governmental Authority on same, plus the monthly estimate for real
estate taxes and insurance, as set forth in Paragraph 31
hereinbefore.
(c) Third renewal option- February 1,2010 through January 31, 2013. If
the Lessee shall have exercised both the first and second renewal
options as provided for above, and Lessee shall desire to exercise
this third renewal option, Lessee shall so notify Lessor in writing
on or before November 1, 2009 and accompany such notice with a check
in the amount of $500.00. Such sum will be added to the $5,000.00
security deposit then being held by the Lessor, and the then
$5,500.00 shall be held as a security deposit during this third
renewal term. The total base rent for this third renewal term shall
be $198,000.00 and shall be payable in monthly payments of $5,500.00
on the first day of each and every month commencing with February
2010 and continuing up to and including January 2013. Lessee shall
additionally pay with the base rent the sales taxes which may be
then imposed by Governmental Authority on same, plus the monthly
estimate for real estate taxes, and insurance, as set forth in
Paragraph No. 31 hereinbefore.
5
<PAGE>
35. Lessor acknowledges receipt from the Lessee of a security
deposit in the amount of $4,250.00. Said security deposit shall be
held by the Lessor during the entire Lease term, and any renewals of
same. Said security deposit shall be against the faithful
performance by the Lessee of all the terms and conditions of the
within Lease, and shall be in addition to all other lawful remedies
available to the Lessor in the event of default by the Lessee of the
terms and conditions of the within Lease.
36. Notwithstanding the provisions of paragraph no. 30,
hereinbefore, it is understood and agreed that the Lessee shall be
permitted to make certain interior improvements to the demised
premises so as to construct their desired restaurant configuration.
Such improvements shall not include any major structural changes in
the roof, supporting beams, exterior walls, sidewalks, and
surrounding drive. However, it is the intent of the parties that, to
the extent permissable by local zoning laws and governmental
regulations, Lessee shall be permitted to install additional air
conditioning and/or venting systems, and remove and/or replace
existing doors and windows, and/or make penetrations to the existing
walls. Lessee shall also be permitted to make electrical and
plumbing modifications to the interior. Prior to commencing such
intended improvements, Lessee shall do and/or be responsible to the
Lessor as follows:
(a) Provide the Lessor with a complete copy of the same plans and
specifications as will be required by City Code for the Lessor's
approval, which approval shall not be unreasonably withheld.
(b) Arrange for and secure and post on the premises, all necessary
permits, notices, and other regulatory documents.
(c) Employ licensed and insured contractors and other tradesmen, and
provide Lessor with certificates of insurance, covering all who
perform work and/or provide materials, evidencing coverage for
public liability, including bodily injury and property damage with
appropriate limits. Lessor shall also be provided with certificates
of insurance evidencing workers compensation insurance carried by
all who perform labor and/or deliver materials, and/or perform any
type of services, in or about the demised premises, relating to the
permitted improvements.
(d) Lessee shall comply with all existing Florida statutory
mechanics lien laws, and post the premises, prior to the first
workmen delivering material or performing work, with a notice of
commencement, as is required by law.
(e) Lessee shall pay timely all architects, engineers, contractors,
subcontractors, materialmen, and suppliers, and all who perform
labor or services in connection with the improvements. Such timely
payment to insure that all of the work and materials connected with
the improvements have been paid, and to insure that no liens are
placed upon the demised premises and/or claims are made against the
Lessor.
(f) It is understood and agreed that Lessee, at the Lessee's sole
cost and expense, shall pay for all the improvements connected with
the foregoing.
IN WITNESS WHEREOF, the respective parties hereto have caused these presents
to be signed, sealed, and delivered on the day and year first above written.
Witnesses
LESSOR: SAUL STRACHMAN
/s/ illegible /s/ SAUL STRACHMAN
----------------------------------- -----------------------------------
/s/ illegible Lessee: Health Express Grill, Inc
-----------------------------------
/s/ illegible
-----------------------------------
/s/ illegible /s/ Douglas Baker
----------------------------------- -----------------------------------
Douglas Baker, President
-----------------------------------
-----------------------------------
/s/ Marco D'Alonzo
-----------------------------------
Marco D'Alonzo, Secretary-Treasurer
6
<PAGE>
Addendum to paragraph 36
36. Notwithstanding the provisions of paragraph no. 30,
hereinbefore, it is understood and agreed that the Lessee shall be
permitted to make certain interior and exterior improvements to the
demised premises. Lessee shall be permitted to upgrade exterior
patio area, cosmetic improvements for customer service, painting
interior and exterior of building, installing drive-thru intercom
system in surrounding drive to the extent permissible by local
zoning laws and governmental regulations.
Lessor: SAUL STRACHMAN
/s/ SAUL STRACHMAN
------------------------
Lessee THE HEALTH EXPRESS GRILL, INC.
/s/ Douglas Baker
------------------------
Douglas Baker, President
/s/ Marco D'Alonzo
------------------------
Marco D'Alonzo, Secretary-Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains financial information extracted from Health express USA,
Inc. September 30, 1999 financial statements is qualified in its entirety by
reference to such financial statement.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 225,119
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 9,655
<PP&E> 77,828
<DEPRECIATION> 0
<TOTAL-ASSETS> 312,602
<CURRENT-LIABILITIES> 14,706
<BONDS> 0
0
0
<COMMON> 4,371,165
<OTHER-SE> (4,073,269)
<TOTAL-LIABILITY-AND-EQUITY> 312,602
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,067,979
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (4,067,979)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,067,979)
<EPS-BASIC> (0.865)
<EPS-DILUTED> (0.865)
</TABLE>
