SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): SEPTEMBER 22, 2000
AEI ENVIRONMENTAL, INC.
(Exact name of registrant as specified in its charter)
COLORADO
(State or other jurisdiction of incorporation)
000-24987 05-0499525
(Commission File No.) (I.R.S. Employer Identification No.)
105 EAST FIRST STREET, HINSDALE, ILLINOIS 60521
(Address of Principal Executive Offices)
60521
(Zip Code)
(630) 325-7029
(Registrant's Telephone Number, Including Area Code)
The undersigned Registrant hereby amends Item 2 and Item 7 of its Current
Report on Form 8-K dated October 9, 2000 to read in its entirety as follows:
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On September 22, 2000, AEI Environmental, Inc. (the "Registrant") acquired
certain assets and assumed certain of the liabilities of CattleSale.com, Inc.
pursuant to a "Limited Liability Company Purchase Agreement" (the "Agreement")
dated August 15, 2000. CattleSale.com, Inc., whose principal office is
located in Boise, Idaho, is an internet-based livestock marketing service,
providing e-business solutions for the livestock industry.
The net assets acquired were purchased for $3,250,000 in cash and included all
of CattleSale.com, Inc.'s computer equipment and software, internet domain
names and IP addresses, trademarks, trade names and other intangibles. The
Registrant anticipates that it will continue to use such assets to further
develop its business plan. The transaction was financed by the Registrant
through issuance of debentures totaling $3,150,000 that are due at various
times through March 22, 2001.
Concurrent with the above transaction, shareholders of CattleSale.com, Inc.
and other investors signed subscription agreements to purchase shares of
Common Stock of the Registrant. As of the date of filing of this Current
Report on Form 8-K/A, subscription agreements totaling approximately
$1,335,000 have been received. The proceeds from the sale of stock will be
used for general working capital purposes.
The description contained herein of the Agreement is qualified in its entirety
by reference to the Agreement, which is attached hereto as Exhibit 2 and
incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
a) Financial Statements.
Audited consolidated financial statements of CattleSale.com, Inc. and
subsidiaries as of and for the year ended December 31, 1999 and as of
December 31, 1998 and for the period from inception (March 2, 1998)
through December 31, 1998 are attached hereto and filed herewith.
b) Pro Forma Financial Information.
As of the date of filing of this Current Report on Form 8-K/A, it is
impracticable for the Registrant to provide the pro forma financial
information required by this Item 7(b). The Registrant has not completed
the closing of its financial records for the fiscal year ended June 30,
2000. Accordingly, additional time is required before it will have the
necessary information to complete the pro-forma financial information
required by this Item 7(b). The Registrant is working to complete the
financial statements for the fiscal year ended June 30, 2000 and the
aforementioned pro-forma financial information as soon as possible. Such
financial information shall be filed by amendment to this Form 8-K/A as
soon as it is available.
<PAGE>
1) Exhibits.
Exhibit
NUMBER DESCRIPTION
2 Limited Liability Company Purchase Agreement Between AEI
Environmental, Inc. and CattleSale.com, Inc., dated August 15,
2000.
23.1 Consent of Independent Public Accountants - Balukoff Lindstrom
& Co., P.A.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AEI ENVIRONMENTAL, INC.
By: /s/ Tom F. Perles
Date: DECEMBER 8, 2000 Tom F. Perles
Chief Financial Officer
<PAGE>
INDEX TO FINANCIAL STATEMENTS
PAGE NO.
INDEPENDENT AUDITORS' REPORT ....................................... 1
FINANCIAL STATEMENTS
Consolidated Balance Sheets as of December 31, 1999 and 1998....... 2
Consolidated Statements of Operations for the Year Ended
December 31, 1999 and for the Period from Inception (March 2, 1998)
through December 31,1998........................................... 3
Consolidated Statements of Cash Flows for the Year Ended
December 31, 1999 and for the Period from Inception (March 2, 1998)
through December 31,1998........................................... 4
Consolidated Statements of Changes in Shareholders' Equity for the
Year Ended December 31, 1999 and for the Period from Inception
(March 2, 1998) through December 31,1998........................... 5
Notes to Consolidated Financial Statements......................... 6
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
CattleSale.com, Inc. and Subsidiaries
Boise, Idaho
We have audited the accompanying consolidated balance sheets of
CattleSale.com, Inc. and Subsidiaries as of December 31, 1999 and 1998 and
the related consolidated statements of operations, cash flows and changes
in shareholders' equity, for the year ended December 31, 1999 and for the
period from inception (March 2, 1998) through December 31, 1998. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the
accounting principles used and the significant estimates made by
management, as well as evaluating the overall consolidated financial
statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
CattleSale.com, Inc. and Subsidiaries as of December 31, 1999 and 1998, and
the results of its operations and its cash flows for the year ended
December 31, 1999, and for the period from inception (March 2, 1998)
through December 31, 1998, in conformity with generally accepted accounting
principles.
Boise, Idaho
October 13, 2000
/s/ Balukoff, Lindstrom & Co., P.A.
BALUKOFF,LINDSTROM & CO., P.A.
<PAGE>
<TABLE>
CATTLESALE.COM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 1999 and 1998
<CAPTION>
1999 1998
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $193,563 $ 182
Accounts receivable 123,583 342
TOTAL CURRENT ASSETS 317,146 524
Furniture and equipment, at cost, net of
accumulated depreciation 48,869 --
Software costs, net of amortization 21,845 --
Web site development costs, net of
amortization 39,035 13,775
Lease deposits 2,723 --
$429,618 $ 14,299
CURRENT LIABILITIES
Accounts payable $ 58,571 $ 1,758
Accrued expenses 29,276 --
Short-term notes payable -- 1,373
Current portion of shareholder -
notes payable 100,000 9,000
Current portion of capital leases 11,097 --
TOTAL CURRENT LIABILITIES 198,944 12,131
Capital leases, less current portion 46,627 --
Shareholder notes payable,
less current portion 71,436 --
118,063 --
SHAREHOLDERS' EQUITY
Common stock, no par value, authorized
10,000,000 and 1,000,000, issued and
outstanding 756,002 and 51,000 shares
in 1999 and 1998, respectively 433,530 7,500
Retained earnings (320,919) (5,332)
112,611 2,168
$429,618 $ 14,299
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
CATTLESALE.COM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31, 1999 and for the Period from
Inception (March 2, 1998) through December 31, 1998
<CAPTION>
1999 1998
<S> <C> <C>
REVENUES $ 9,129,151 $ 6,591
COSTS OF GOODS SOLD 9,004,200 --
GROSS PROFIT 124,951 6,591
Selling, general, and administrative expenses 433,889 11,923
OPERATING LOSS (308,938) (5,332)
OTHER INCOME AND EXPENSES
Interest income 1,437 --
Interest expense (8,086) --
(6,649) --
NET LOSS $ (315,587) $(5,332)
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
CATTLESALE.COM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31, 1999 and for the Period from
Inception (March 2, 1998) through December 31, 1998
<CAPTION>
1999 1998
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (315,587) $ (5,332)
Adjustments to reconcile net loss-
to net cash used by operating activities
Depreciation 8,079 --
Amortization 7,175 725
Changes in assets and liabilities
Accounts receivable (123,241) (342)
Accounts payable 56,813 1,758
Accrued liabilities 29,276 --
Other (2,723) --
NET CASH USED BY OPERATING ACTIVITIES (340,208) (3,191)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of equipment and software (21,578) --
Web site development costs (29,642) (14,500)
NET CASH USED BY INVESTING ACTIVITIES (51,220) (14,500)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock
(net of issuance costs of $12,434 in 1999) 426,030 7,500
Proceeds from borrowings 171,436 19,373
Payments on notes payable (10,373) (9,000)
Payment on capital lease obligation (2,284 --
NET CASH PROVIDED BY FINANCING ACTIVITIES 584,809 17,873
NET INCREASE IN CASH 193,381 182
CASH AT BEGINNING OF YEAR 182 --
CASH AT END OF YEAR $ 193,563 $ 182
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid $ 3,161 $ --
Noncash investing and financing activities
Purchases of equipment with capital leases $ 60,008 $ --
Equity issuance costs funded by -
stock issuance $ 250,000 $ --
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
CATTLESALE.COM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Year Ended December 31, 1999 and for the Period from Inception
(March 2, 1998) through December 31, 1998
<CAPTION>
Common Retained
STOCK EARNINGS TOTAL
<S> <C> <C> <C>
BALANCE AT MARCH 2, 1998 $ -- $ -- $ --
Issuance of stock 7,500 -- 7,500
Net loss -- (5,332) (5,332)
BALANCE AT DECEMBER 31, 1998 7,500 (5,332) 2,168
Issuance of stock 426,030 -- 426,030
Net loss -- (315,587) (315,587)
BALANCE AT DECEMBER 31, 1999 $ 433,530 $(320,919) $ 112,611
</TABLE>
See accompanying notes.
<PAGE>
CATTLESALE.COM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999 and 1998
NOTE A - SIGNIFICANT ACCOUNTING POLICIES
GENERAL
CattleSale.com, Inc. and Subsidiaries (Company) is a licensed and bonded
livestock dealer, operating throughout the United States. Regional
representatives go to seller's ranches and collect biographical
information and photos of their cattle. The description and photographs
are posted to the Company's web site with an asking price in an online
catalog. Prospective buyers visit the web site to preview the
consignment. Buyers have the option to accept the asking price or place
a bid on the cattle. The cattle are sold when either the buyer or the
seller accepts the other's offer.
The regional representatives are independent contractors hired by the
Company. The regional representatives and their agents are not employees
of the Company. They receive a commission for each sales transaction
made on behalf of the Company.
ENTITY
The Company was formed on March 2, 1998. During 1999, the Company formed
two wholly owned Subsidiaries: CS Auction Co., LLC and CS Livestock
Commission Co., LLC. All cattle sale transactions are recorded in the CS
Livestock Commission Co., LLC and all the significant operating
transactions are recorded in the CS Auction Co., LLC.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of
CattleSale.com and the two wholly owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated.
CASH AND CASH EQUIVALENTS
For cash flow reporting purposes, the Company considers all highly liquid
investments with a maturity of three months or less to be cash
equivalents. All significant cash deposits are maintained with Columbia
River Bank, Idaho Independent Bank and Morgan Stanley Dean Whitter.
The Company's cash balances exceed the insurance limits by $77,460 at
December 31, 1999.
<PAGE>
CATTLESALE.COM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999 and 1998
EQUIPMENT
Acquisitions of equipment are recorded at cost. Depreciation of
equipment is provided over the estimated useful lives, five to seven
years, using the 150% declining balance method. Depreciation expense is
$8,079 and $0 for 1999 and 1998, respectively.
WEB-SITE DEVELOPMENT COSTS
Web-site development costs associated with the development of the
Company's web site that meet the criteria in Statement of Position (SOP)
98-1 are capitalized and amortized over five years. Amortization expense
for 1999 and 1998 was $4,382 and $725, respectively. Accumulated
amortization was $5,107 and $725 as of December 31, 1999 and 1998,
respectively.
START-UP AND ORGANIZATIONAL COSTS
In accordance with SOP 98-5, all start-up costs and organization costs
are expensed as incurred. Costs meeting the criteria of SOP 98-5 and
expensed in 1999 and 1998 were $30,650 and $1,472, respectively.
SOFTWARE COSTS
Software is amortized over the estimated useful life of three years, on a
straight-line basis. Amortization expense for 1999 and accumulated
amortization as of December 31, 1999 is $2,793.
COMMON STOCK
The Company issued 51,000 shares of no par value common stock in 1998.
In 1999, the Company issued an additional 9,616 shares. In addition,
there was a 10 for 1 stock split which increased the total common stock
to 606,160 shares. In 1999, the Company completed an initial private
offering and issued 149,842 shares of no par value common stock.
REVENUE AND COST RECOGNITION
The Company, under contract with cattle sellers and approved buyers,
brokers cattle sales throughout the United States. The sales consist of
two portions: a non-refundable deposit which is paid by the buyer and
immediately transferred to the seller at between $30-50 per head of
cattle, depending on the type of cattle. The balance of the sale is due
when the shipment of the cattle is made. The Company's revenue consists
of the sales price of the cattle and the commission earned on the
transaction. Cost of sales consists of payments
<PAGE>
CATTLESALE.COM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999 and 1998
made to the seller for the cattle and the commissions paid to the
regional representatives.
Revenue and the related costs of sales are recognized in part when a non-
refundable deposit is received from the buyer. The remainder of the
revenue and cost of sales is recognized when the transfer of the cattle
between the seller and the buyer has occurred.
The Company records revenue at the gross amount received from the buyers.
The amounts paid to the sellers and commissions paid to the regional
representatives are then recorded as costs of sales and selling costs,
respectively. The Company has determined that the following
circumstances support this position:
a) The Company acts as a principal in the transaction. The Company
enters into a separate contract with the seller and the buyer to
purchase and sell the cattle respectively. According to the
contracts, the Company maintains the right to remove a sale from its
web site at any time, and reserves the right to refuse a bid at any
time.
b) The Company takes title to the cattle during the period in which
the cattle are removed from the seller's property but before they
are loaded onto the buyer's property.
c) The Company has the risks and rewards of ownership, such as the
risk of loss for collection, delivery, or returns.
ADVERTISING COSTS
Advertising costs are charged to operations when incurred. Advertising
costs for 1999 and 1998 were $40,141 and $4,566, respectively.
INCOME TAXES
The shareholders' have elected to have the Company taxed as an "S"
Corporation as defined by the Internal Revenue Code, wherein the
shareholders' report net earnings of the Company on their personal tax
returns. Accordingly, no provision or liability for income taxes has
been included in the financial statements.
ESTIMATES
Management uses estimates and assumptions in preparing financial
statements. Those estimates and assumptions affect the reported amounts
of assets and liabilities, the disclosure of contingent assets and
liabilities, and the reported revenues and expenses. It is at least
reasonably possible that the estimates will change within the next year.
<PAGE>
CATTLESALE.COM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999 and 1998
NOTE B - LEASES
In 1999, the Company acquired various furniture, equipment, and software
under capital leases. Amortization expense for these fixed assets and
software is included in depreciation expense. Information for capital
leased asset cost and related accumulated amortization is as follows at
December 31, 1999:
Accumulated
COST AMORTIZATION
Furniture and fixtures $ 8,312 $ 889
Equipment and software 50,159 6,772
$ 58,471 $ 7,661
The Company has an operating lease on their office space. Future minimum
payments under this lease are as follows at December 31:
2000 $ 27,391
2001 27,391
2002 13,695
$ 68,477
Rent expense is $12,668 and $0 for 1999 and 1998, respectively.
NOTE C - LONG-TERM OBLIGATIONS
A summary of long-term obligations at December 31, 1999 is as follows:
Note payable to shareholder, bearing
interest at 5.48%, principal and
accrued interest payable on demand
after September 1, 2000. $ 100,000
Revolving note payable to shareholder,
bearing interest at 5.48%, principal
and accrued interest payable on
April 23, 2004. Shareholder maintains
the right to convert the note into
common stock at a value of $.40
per share. 71,436
171,436
Less current portion 100,000
$ 71,436
<PAGE>
CATTLESALE.COM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999 and 1998
Maturities on these obligations for each of the next five years at
December 31 are as follows:
2000 $100,000
2001 --
2002 --
2003 --
2004 71,436
$ 171,436
NOTE D - CAPITAL LEASE OBLIGATIONS
A summary of the capital lease
obligations at December 31, 1999
is as follows:
Capital lease for accounting
software package, bearing interest
at 31.32%, payable in monthly
installments of $574 through
September 2002, secured by
personal guarantee of shareholder. $ 13,188
Capital lease for phone equipment,
bearing interest at 36.996%, payable
in monthly installments of $260 through
August 2002. 5,551
Capital lease for Micron Work Stations,
bearing interest at 46.712%, payable in
monthly installments of $648 through
December 2003, secured by personal
guarantee of shareholder. 15,667
Capital lease for computer equipment,
bearing interest at 45.146%, payable in
monthly installments of $497 through
March 2005, secured by personal guarantee
of shareholder. 13,534
Capital lease for computer equipment,
bearing interest at 28.07%, payable in monthly
installments of $92 through May 2002, secured by
personal guarantee of shareholder. 1,993
Capital lease for office equipment, bearing
interest at 48.327%, payable in monthly
installments of $407 through July 2002,
secured by personal guarantee of shareholder. 7,791
57,724
<PAGE>
CATTLESALE.COM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999 and 1998
Less current portion 11,097
$46,627
Maturities on the capital lease obligations for each of the next five
years at December 31 are as follows:
2000 $ 29,749
2001 29,749
2002 24,307
2003 13,747
2004 5,965
Thereafter 1,491
105,008
Less amount
representing
interest 47,284
Present value
of net minimum
lease payments $ 57,724
NOTE E - RELATED PARTY TRANSACTIONS
Several of the Company's shareholders are also qualified buyers and
sellers who use the Company's web site to purchase or sell their cattle.
A shareholder has also provided financing for the Company. Transactions
with related parties are as follows:
December 31, 1998
John Freeman, Shareholder and Director
Shareholder notes payable, bearing interest
at 7.5%, principal and accrued interest
due in full in 1999 $ 9,000
December 31, 1999
William Freeman, Shareholder and Director
Shareholder notes payable, bearing interest
at 5.48%, principal and accrued interest
Due April 2004 $ 71,436
Shareholder notes payable, bearing interest
at 5.48%, principal and accrued interest
due on demand after September 2000 100,000
Revenue from sales as buyer 76,418
Cost of sales as seller 399,191
Cost of equity issuance 250,000
<PAGE>
CATTLESALE.COM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999 and 1998
Bonus for services 20,000
John Freeman, Shareholder and Director
Cost of sales as seller 283,477
Neal Kottke, Shareholder and Chairman
Cost of sales as seller 255,978
NOTE F - STOCK OPTION PLAN
Effective September 1, 1999, the Company adopted a stock option plan
which allows employees and regional representatives of the Company to
receive incentive stock options. The stock options for the employees
vest 20% on the first anniversary of the vesting commencement date as set
forth in the grant notice, and vest an additional 20% on each of the
following anniversaries thereafter. The stock options for the regional
representatives will be 100% vested on the fourth anniversary of the
vesting commencement date as set forth in the grant notice. The Board of
Directors set aside 125,000 shares of common stock for issuance upon
exercise of the options.
The stock options are exercisable at the earliest of a) 180 days after
the date on which the Company completes and underwritten initial public
offering of its common stock, b) December 31, 2008, or c) the occurrence
of an Accelerating Event as defined by the plan.
The Board of Directors maintains the right to terminate the plan in the
occurrence of an Accelerating Event as described in the plan.
The Company accounts for these plans under APB Opinion No. 25,
"Accounting for Stock Issued to Employees."
Regional
Employee Representative
1999 Incentive 1999 Incentive
STOCK OPTION PLAN STOCK OPTION PLAN
Number of option shares
Beginning of year -- --
Granted 9,000 90,000
Exercised/Canceled -- --
Became exercisable -- --
Outstanding at end of year 9,000 90,000
Exercisable at end of year -- --
<PAGE>
CATTLESALE.COM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999 and 1998
Weighted-average exercise prices
Beginning of year $ -- $ --
Granted at fair value 1 1
Outstanding at end of year 1 1
Exercisable at end of year -- --
As more fully described in Note H, on September 22, 2000 the Company sold
the majority of its assets and liabilities to AEI Environmental, Inc.
Since this event was determined to be an Accelerating Event as described
in the 1999 Incentive Stock Option Plan, the Board of Directors exercised
its right to terminate the plan before any vesting occurred or any
options were exercised. With the plan termination, no expense is present
for 1999.
NOTE G - REVOLVING LINE-OF-CREDIT
During 1999, the Company obtained, for borrowing in the name of CS
Livestock Commission Co., LLC, a revolving line-of-credit from Columbia
River Bank for $1,000,000 of which none was outstanding at December 31,
1999. The line-of-credit bears interest at prime plus 1% (9.5% at
December 31, 1999), and is secured by corporate and commercial guarantees
of shareholders.
NOTE H - SUBSEQUENT EVENTS
On February 8, 2000, William Freeman, a shareholder, converted a note
payable for $71,436 into 178,590 shares of stock pursuant to an agreement
dated April 23, 1999.
In accordance with a stock bonus agreement, the Company was obligated to
provide 107,030 in stock to William Freeman for his services in
conjunction with raising capital. Costs related to these services have
been determined to be $250,000 based on the price of the stock sold
during the offering. The costs of issuance were netted against the
common stock issued resulting in no change in the underlying common stock
account balance. The common stock was issued in February 2000.
William Freeman also converted $20,000 owed to him under a bonus
agreement into 10,645 shares of stock on February 24, 2000. The bonus
agreement related to services performed in 1999.
On September 22, 2000, AEI Environmental, Inc. acquired certain assets
and assumed certain liabilities of the Company pursuant to a "Limited
Liability Company Purchase Agreement" dated August 15, 2000. The net
assets acquired were purchased for $3,250,000 in cash.
<PAGE>
CATTLESALE.COM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999 and 1998
NOTE I - EQUITY TRANSACTIONS
John Freeman, the majority shareholder of the Company, contributed common
stock to the Company during 1999. The first contribution took place in
September and involved 45,488 shares. The shares were subsequently sold
to another investor for $50,000. The second contribution was done in
February 2000 and involved 107,030 shares. These shares were
subsequently used to satisfy the Company's obligation for the stock bonus
award discussed in Note H. The Company reported no gain or loss or any
net change in equity as a result of the contributions of stock.
NOTE J - PURCHASE COMMITMENTS
As of December 31, 1999, the Company had outstanding purchase commitments
to buy cattle totaling $1,849,313.
