SECURITIES AND EXCHANGE COMMISSION
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Washington, D. C. 20549
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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 ACT OF 1934
SANDY CREEK CORPORATION
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(Name of Small Business Issuer in its charter)
FLORIDA 62-1661659
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
6227 Highway 393
Crestview, Florida 32539
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(Address of principal executive offices (Zip Code)
Issuer's Telephone Number (850) 683-0602
Issuer's Fax Number (850) 683-9969
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
NONE NONE
SECURITIES TO BE REGISTERED PURSUANT OT SECTION 12(g) OF THE ACT:
COMMON STOCK no par value 10,000,000
(Title of Class)
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SANDY CREEK CORPORATION
TABLE OF CONTENTS
Part Item Description of Item Page
- ---- ---- ------------------- ----
Part I Item 1 Description of Business 3
Business Development 3-4
Business of the Issuer 3-4
Item 2 Management's Discussion and Analysis 4
and results of Operations 4
Product Background 5
Marketing Plans 5
Vertical Integration 5
Breeder colony sales 6
Operations 6
Regulations 6
Competition 6
Economic Risks 6
Employees 7
Research and development 7
Patents and trademarks 7
Reports to security holders 7
Impact of Y2K on Company 7
Item 3 Description of Property 7
Item 4 Security Ownership of Certain Beneficial Owners
and Management 8
Item 5 Directors, Executive Officers, Promoters and
Control Persons 8
Directors and Executive Officers 8
Business Experience 8-9
Item 6 Executive Compensation 9
Item 7 Certain Relationships and Related Transactions 9
Item 8 Description of Securities 9
Common Stock 9
Preferred Stock 9
Item 9 Transfer Agent 10
Part II Item 1 Market Price of and Dividends on Registrant's 10
Common Equity and Related Shareholder matters 10
Market Information
Holders
Dividends
Item 2 Legal Proceedings 10
Item 3 Changes in and Disagreements with Accountants 10
Item 4 Recent Sales of Unregistered Securities 10
Item 5 Indemnification of Directors and Officers 11
Part F/S Item 1 Financial Statements - Annual December 31, 1998 11-22
Item 2 Index to Financial Statements - Annual 11
Item 3 Interim Financial Statements June 30, 1999 23-26
Part III Item 1 Index to Exhibits 27
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SANDY CREEK CORPORATION
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Sandy Creek Corporation's business is the breeding, raising and maintenance of
Ostrich and the processing of Ostrich products for sale to domestic and
international markets. The Company has been in the Ostrich ranching business for
three years and has researched and studied the industry in depth. The Company's
primary office is located on an eighty-acre ranch property with 1,300 feet of
road frontage, is completely landscaped including a double wide mobile home for
the President and Chief Executive Officer of the Company, pens for over 1,000
ostrich breeders and a Computerised Incubation and Hatchery Facility.
The Company was incorporated under the laws of the State of Florida on the 15th
day of July 1996 as Sandy Creek Ostrich Ranch Inc. Through a filing in the
office of the Secretary of State of Florida on November 22, 1996. The Company
amended its Articles of Incorporation to increase the authorized capital stock
from 100 shares no par value to 5,000,000 shares no par value. On the 12th of
October 1998 the Company filed an amendment with the Office of the Secretary of
State of the State of Florida to change its corporate name to Sandy Creek
Corporation and on the 14th of December 1998 the Company filed in the office of
the Secretary of State of the State of Florida an amendment increasing its
capital stock from 5,000,000 shares of common stock no par value to 10,000,000
shares of common stock, no par value.
The Company has completed a buy-out of an 80-acre Sandy Creek property located
in Crestview, Florida, thereby assuming 100% ownership. Major refurbishing done
to date includes upgrading the existing structures and the construction of two
new feed barns. Other improvements include land clearing, building of pens and
the outfitting of a fully Computerised Hatchery and Incubation Facility. Sandy
Creek has also leased a 15,000 square foot processing plant with a 5 acre feed
lot in Ocala, Florida and secured USDA-approved status for the plant.
Ostrich birds are micro-chipped for identification and for collection of
fertility rate and other data. Feeding programs are designed to keep birds
healthy, and to ensure consistent grow out. At six-eight months old the birds
are sorted by size and placed in grow-out pens. They are placed on special
rations designed to produce a maximum growth of lean muscle. The market-ready
Ostrich is 12 to 14 months of age and will produce from 70-90 pounds of lean red
meat. A yearling Ostrich also produces from 12 to 14 square feet of hide. Skins
are graded on size, color, thickness and damage (cuts and scars). Green skins
are removed from the bird, bactericized, salted and shipped to the Tannery. The
Company also has an agreement with Texas A & M University for the rendering to
food-grade quality of all the fat from its processed birds. The state-of-the-art
facilities at the University will produce oils with the purity to be used even
as cooking oil.
The Ostrich is the largest of the flightless birds, standing a full seven to
eight feet tall and weighing 250-300 pounds in adulthood. It is a member of the
Ratite family as is the EMU and Rhea. Ostriches are by nature calm and docile
birds and are highly adaptable to different climates. Ostriches live 70-80 years
in the wild and have a reproductive life of about 40 years. Males reach maturity
at 30 months of age while females at 20 plus months. Domestic egg production per
female ranges widely and fertility rates depend on a variety of factors. Eggs
may number from 30 to 65 or more annually. Furthermore, the offspring from a cow
is typically one calf per year; in comparison to 20 chicks for an Ostrich in a
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season. By two years of age the Ostrich offspring will dress out at four times
the amount of meat and seven times the amount of leather compared to a single
calf.
The breeding and raising of Ostrich for harvest has been a successful livestock
business in South Africa for nearly 150 years. South African exports of Ostrich
product to European countries have been long established, beginning with prized
Ostrich plumes for fashion in the 1800's, and more recently (since the end of
World War II), Ostrich meat as a delicacy in exclusive restaurants. The Ostrich
industry currently generates estimated revenues in excess of US$250 million for
South Africa, which controls over 90% of the global market for unprocessed
Ostrich products.
In the United States, Canada and Australia Ostrich ranching is beginning to
develop into a serious agri-business. Each of these countries has a national
Ostrich association and members often form regional branches as well. Commercial
viability for producers is dependent upon their experience, the focus of the
business (i.e. raising breeders vs. raising offspring for slaughter), the size
and scale of operations and their skill at marketing
The Ostrich market includes the buyers of meat, hides for leather, oils for
cosmetics and skin and hair treatments and feathers. These animal products are
unique and have long been considered exotic due to their rarity. Though
available in Europe and Asia for many years, Ostrich meat has not been of
sufficient supply to make it commonplace in the United States or Canada. In the
United States Ostrich meat is served or carried by only a small number of
high-end restaurants and supermarkets or specialty meat stores. Ostrich leather
is a high-priced commodity and is used by manufacturers to make very expensive
and exclusive items. Products containing Ostrich oil are hard to find, and
because Ostrich feathers are labor-intensive in their processing, the supply of
feathers is minimal.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
PRODUCT BACKGROUND
Ostrich meat has been referred to as "heart-healthy" because of its low
cholesterol, low calorie, and low fat content. This red meat is also high in
iron, comparable to beef in protein, and high in essential fatty acids. (The
body cannot manufacture these; they must be obtained from food.) The similarity
of Ostrich meat to beef in appearance, texture and flavor is a primary selling
feature.
Premium qualities and limited supply make Ostrich leather an exotic commodity.
Highly prized for its unusual quill appearance, strength and pliability, Ostrich
hide wholesales for more than other animal hides. Because of the natural oils
inherent in most Ostrich skin, there is very little cracking, stiffening and
drying. Even though ostrich is one of the toughest hides available, its
suppleness makes it extremely versatile. Demand for Ostrich leather is unlikely
to be met by supply during the next twenty-five years.
Oil rendered from the fat of Ostriches is a remarkable healing substance.
Although how it works remains a mystery, it has proved to safely and quickly
alleviate (if not cure) psoriasis, soothe radiation treated skin, heal cold
sores, relieve contact dermatitis, remedy diaper rash promote hair growth and
diminish acne inflammation. It is used to soothe muscle and joint pain and to
stop the pain of burns. It contains linoleic and linolenic acids, the same
essential fatty acids responsible for fish oil's importance in cardiac and
vascular health. There are perhaps more than 25 different fatty acids inherent
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in Ostrich oil and the unique combination of these may be the formula for its
healing characteristics. The oil is easily absorbed and transported through the
skin and won't clog the pores. It is used to carry other therapeutic ingredients
deep into dermal tissues to facilitate treatment and healing. It is a natural
emollient and moisturizer making it highly attractive to the cosmetics industry.
MARKETING PLANS
It is the market for Ostrich meat that dictates profitability for a producer.
The Company has identified four target markets for its Ostrich meat:
1. Restaurants and Restaurant Chains
2. Supermarkets and Grocery Chains
3. The individual consumer
4. The export market
VERTICAL INTEGRATION
The Company is targeting a breeding population of 1,500 Ostrich birds for the
fiscal year end of June 30, 1999. These birds will annually produce
approximately 30,000 chicks, which will be raised for market. A population of
30,000 market-ready birds produces sufficient quantities of meat, hide and fat
to support major marketing efforts.
Processing capacity at the Ocala plant will soon be inadequate to accommodate
the volume of market-ready birds. Current productions is limited to 16,000 lbs.
processed per month. The plant employs eight and has equipment for weighing,
skinning, cryo-vac packaging and a vacuum sealer. The Company plans to construct
a new 25,000 square foot processing plant and secure USDA certification, as well
as European Union (EU) certification. Using both plants at full production,
processing will be about 1,000 Ostrich birds per month per shift. Double
shifting will produce about 160,000 pounds of meat. By managing its own
processing facilities the Company realizes cost benefits in two ways. First,
costs to process each bird are operational costs only there are no charges to an
outside plant owner; and second, as USDA/EU approved facilities, Sandy Creek's
plant will be attractive to other Ostrich producers who wish to have birds
processed for meat thereby providing an additional revenue stream for the
Company.
BREEDER COLONY SALES
The Company is in the process of developing a program for absentee-ownership of
Ostrich breeding colonies for the purpose of generating operating revenues in
both the short and long term. A colony of breeders (10 females and 5 males) will
sell for US$60,000. The Company will feed and maintain the birds, and incubate,
hatch and raise the offspring to slaughter age. Each year the absentee-owner
will receive a percentage of the proceeds from the sale of products. The one
time purchase price of the colony can be returned many times over the
reproductive life of the Ostrich breeders (up to 40 years). As part of the
Purchase and Boarding Agreement the Company will provide a package of benefits
to the absentee-owner which include but are not limited to 1) Membership in the
American Ostrich Association; 2) Discounts on meat catalogue products; and 3)
Discounts on affiliate companies Ostrich products (leather goods from Ostrich
hide, cosmetics and therapeutic products made from Ostrich oil.) The Breeder
Colony Sales Program is currently being reviewed by Company Counsel for
conformity to Regulatory Rules as well as State and Federal laws.
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The Company plans to sell 100 colonies per year. Revenues from these colony
sales will be used to purchase additional birds to continue with business
development activities including more capital purchases and expanding the market
base, and to make acquisitions of smaller operations as may be opportune.
Through the end of July 1999 no colonies have been sold.
OPERATIONS
There are many variables involved in developing and commercializing an ostrich
breeding operation. The Company cannot project with certainty the outcome of its
operations. There are no assurances that the Company will operate profitably.
REGULATIONS
The Company is subject to many laws and regulations both in the United States
and internationally as its market expands. The meat products are subject to the
laws of the USDA and are under regular review. The Company must also comply with
Federal, State and Local Laws including the Environmental Protection Act. The
Company does not produce or utilize any toxic, hazardous or harmful substance
that could injure the health of the individual or the environment. The Company
is in compliance with all applicable laws and regulations and does not
anticipate any difficulty in the future in complying with all applicable Laws
and Regulations in the performance of its operations. The Company cannot predict
the impact of possible changes in response to future legislation, rules or
governmental requirements including the Food and Drug Administration regulations
which may affect the ability of the Company, as well as others in the industry,
to develop and market products. However, the Company does not presently believe
that existing applicable legislative and administrative rules and regulations
will have a significant impact on operations.
COMPETITION
The food industry in which the Company will engage is extremely competitive.
Shelf space in supermarkets is at a premium and the Company's meat products
compete not only with other Ostrich producers but also with other specialty meat
products for space. There can be no assurance that the Company can develop
superior or more cost-effective products than its competitors, or that it can
successfully market its product.
ECONOMIC RISKS
Local, national and international economic conditions may have a substantial
adverse effect on the efforts of the Company. A downturn in the United States
economy could reduce the amount of disposable cash that individuals are willing
to pay for specialty foods or the amount of times they eat in restaurants.
Ostrich meat is perceived today as "heart healthy" however studies have not had
the length of time or the market base to compare to beef, pork or poultry
products. Any adverse finding in the health area could have an adverse effect on
the Company. As of the present moment, the interest in food that is "heart
healthy" is considered an advantage by the Company.
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EMPLOYEES
At the present time the Company employs a total of 2 management personnel, 2
administrative and 5 farm employees.
RESEARCH AND DEVELOPMENT
During the first three years of operation, the total cost of research and
development was $0.00.
PATENTS AND TRADEMARKS
The Company does not own any Patents or Trademarks and does not have any
intention at the present time to file any Patent or Trademark applications.
REPORTS TO SECURITY HOLDERS
Prior to filing this Form 10-SB, the Company has not been required to deliver
annual reports. However, once the Company becomes a reporting company, it will
deliver annual reports to securities holders as required by the Securities
Exchange Act of 1934 (the "Exchange Act"), as amended and as required by the
rules or regulations of any exchange upon which the Company shares may be
traded.
Prior to the filing of this Form 10-SB, the Company has not filed reports with
the Securities and Exchange Commission (the "Commission"). Once the Company
becomes a reporting company, management anticipates that Forms 3, 4, 5, 10-K-SB,
10-Q-SB, 8-Kand Schedules 13D along with appropriate proxy materials will have
to be filed as they come due. If the Company issues additional shares, then the
Company will file registration statements for those shares.
IMPACT OF Y2K ON COMPANY
The Year 2000 issue arising out of computer programs is not expected to affect
the Company, its Ostrich Community or its plans for sales. The Company intends
to timely update its accounting and other systems which are determined to be
affected by Year 2000 by purchasing Year 2000 compliant software and hardware
available from retail vendors at reasonable cost. The Company has not yet
contacted any of its vendors to determine their status as to the Y2K compliance.
ITEM 3. DESCRIPTION OF PROPERTY
The Ranch
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The Company owns 80 acres of real estate including a double wide mobile home
utilized as a residence by the President Leslie M. Lerner, farm buildings,
office facilities, ostrich pens and all personal property, tangible and
intangible utilized in or associated with the Ostrich Ranch located at 6227
Highway 393, Crestview, Florida. The ownership is on file with the Public
Records of Okaloosa County, Florida. The property was purchased for a price of
US$150,000 and a mortgage in the amount of US$126,400 is held by First National
Bank of Florida.
The Company holds a lease to a meat processing plant in Ocala, Florida. A copy
of the lease is provided herein as Exhibit 11 to the Form 10.
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ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to the beneficial
ownership of the Company's Common Shares by (a) each person known to be the
beneficial owner of more than 5% of the Company's outstanding Common Shares, (b)
the Directors of the Company and (c) the Directors and Officers as a group.
NAME NUMBER OF SHARES OWNED PERCENTAGE OF
(COMMON STOCK) SHARES ISSUED
Leslie M. Lerner 1,665,000 26.694%
Judith A. King 239,000 3.832%
Nicholas Demoleas and Family 435,000 8.750%
All Directors and Officers as a Group 1,909,000 38.401%
Beneficial owners of more than 5% of the Company's outstanding shares are:
Leslie M. Lerner
6227 Highway 393
Crestview, Florida 32539
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The Directors, Executive Officers, Promoters and Control Persons are listed
below:
Name Age Position
- ---- --- --------
Leslie M. Lerner 67 Chairman, President & CEO
Nicholas P. Demoleas 45 Vice President and Director
Judith A. King 59 Treasurer and Director
The biographies of the Directors and Officers are set forth below. All Directors
hold office until the next annual shareholder's meeting or until their death,
resignation, retirement or until their successors have been elected and
qualified. Vacancies in the existing Board are filled by a majority vote of the
remaining Directors.
Mr. Leslie M. Lerner, Chairman, President and CEO. Mr. Lerner brings more than
40 years of business experience in sales and marketing in a variety of fields.
His background includes sales training classes in communications for Delta
Communications. As the California distributor and President of ABS
Communications having 25 sales persons and a total of 40 installation
specialists. Direct sales marketing for Technicolor Corporation in their film
processing division. He also managed the international distribution of a
cordless telephone known as the Escort Cordless Telephone with Mech-Tronics
Corporation. Seven years ago he began the Sandy Creek Ostrich facility building
the breeding farm on a step-by-step managed basis with a belief that the timing
was right for a commercial ostrich farm to be run on a professional basis.
Mr. Nicholas P. Demoleas, Vice President and Director. Mr. Demoleas has spent
his 24 year career as a biochemist and currently works in that capacity at
Columbia Presbyterian Medical Center in New York. He received his Bachelor of
Science degree in Biochemistry at Fordham University.
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Mrs. Judith A. King, Treasurer and Director. Mrs. King's 20 year career has
provided experience in banking, finance, commerce, management and management
training. She received a degree from the American Institute of Banking.
ITEM 6. EXECUTIVE COMPENSATION
No officer or director has received a monetary salary. Restricted securities
were issued to Mr. Les Lerner and to Mrs. Judith King for services rendered
through July 31, 1999.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
No Director, Officer, Promoter or Control Person is, or has been in debt to the
Company. The $27,704 that was due from related companies has been written of
during the first quarter of 1999 (Note 8 in the audited financial of December
1998).
ITEM 8. DESCRIPTION OF SECURITIES
The Company is authorized to issue 10,000,000 shares of Common Stock, no par
value of which on the 31st of July 1999 6,237,265 shares were issued and
outstanding. The Company does not have any Preferred Shares authorized and no
preferred shares are issued and outstanding.
Shareholders of Common Stock are entitled to receive ratably such dividends as
may be declared by the Board of Directors without any preference. Holders of
Common Stock are entitled to one vote per share. Cumulative voting is not
allowed and thus holders of more than 50% of the shares voting for Directors can
elect all Directors. The holders of Common Stock have no preference rights to
purchase new issues of the securities of the Company.
Dividends may be paid if, and when, declared by the Board of Directors. All
shares are non-assessable and fully paid.
Upon liquidation or dissolution of the Company, holders of Common Stock are
entitled to receive pro rata, either in cash or in kind, all of the assets of
the Company after payment of the debts. There are no redemption, conversion or
pre-emptive rights attached to the Common Stock.
Transfer Agent and Registrar
- ----------------------------
The Transfer and Registrar of the company is:
Corporate Stock Transfer
Attn: Carolyn Bell
Republic Plaza
307 - 17th Street Suite 2350
Denver, Colorado 80202
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PART II
ITEM 1. MARKET PRICE AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND OTHER
SHAREHOLDER MATTERS
The Company's Common Stock is traded over-the-counter on the Bulletin Board by
the National Association of Securities Dealers (NASD) under the Symbol - "SCRK".
There are 1,597,365 shares of free trading shares of the Company's Common Stock.
As of July 31, 1999 the High and Low Bids for the securities during the
preceding year were $.30 and $.34 respectively. These prices reflect
inter-dealer prices, without retail mark-up, mark-down, or commission and may
not represent actual transactions.
As of July 31, 1999 there were 189 shareholders of the Company's Common Stock.
The Company has not declared or paid any dividends on its stock, and does not
anticipate declaring any dividends in the foreseeable future.
ITEM 2. LEGAL PROCEEDINGS.
Neither the Company, nor its Directors, nor any Officer is a party to any
material legal proceeding or litigation, which would impact the operations of
the Company.
ITEM 3. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS
None
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
13,000 shares were issued in January 1999 for services.
31,380 shares were issued in January 1999 for acquisition of ostrich birds.
10,000 shares were issued in January 1999 as a donation to a 501-c-3 charity not
affiliated with any party at Sandy Creek Ostrich Corporation.
1,500 shares were issued in February 1999 for the purchase of a tractor to be
used on the farm.
1,620 shares were issued in February 1999 for services.
25,000 shares were issued in March 1999 for services.
102,650 shares were issued in March 1999 for the acquisition of ostrich birds.
15,000 shares were issued in April 1999 for services.
23,000 shares were issued in April 1999 for the acquisition of ostrich birds.
9,000 shares were issued in May 1999 for services.
44,000 shares were issued in May 1999 for the acquisition of ostrich birds.
10,000 share gift to charity in June 1999.
5,000 shares were issued in June 1999 for services.
82,500 shares were issued in June 1999 for the acquisition of ostrich birds.
3,000 shares were issued in July 1999 for the acquisition of ostrich birds.
430,000 shares were issue to Les Lerner and Judith King in lieu of salary for
services in July 1999.
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ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company has provided in its by-laws under Article Eleven that it "may
indemnify any Director, Officer, agent or employee as to liabilities as provided
in Section 607.0850 of the Business Corporation Act of the State of Florida. The
Directors as far as permissible under Florida Statutes are without personal
liability for actions taken on behalf of the Corporation which are consistent
with the purposes of the Corporation and the laws of the State of Florida and
the United States of America.
The by-laws provide further that the Corporation shall have the power to
purchase and maintain insurance on behalf of any person who is a director,
officer, employee or agent against any liability asserted against the person and
incurred by the person in any such capacity or arising out of the person's
status as such whether or not the corporation would have the power to indemnify
the person against such liability under provisions of the law. The Company has
not purchased such insurance as of this date.
PART F/S
The Independent Auditor's Report and the Financial Statements for the period
July 16, 1996 (date of inception) to December 31, 1998 are included.
SANDY CREEK CORPORAITON
FINANCIAL STATEMENTS
December 31, 1998
(with accountants report thereon)
SANDY CREEK CORPORATION
FINANCIAL STATEMENTS
December 31, 1998
Independent Auditors Report F-1
Financial Statements
Balance Sheet - Assets F-2
Balance Sheet - Liabilities and Stockholders Equity F-3
Income Statements F-4
Statement of Changes in Stockholders' Equity F-5
Statement of Cash Flows F-6
Notes to Financial Statements F-7 - F-10
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CARR, RIGGS & INGRAM, LLP
CERTIFIED PUBLIC ACCOUNTANTS
P.O. Box 5438 (850) 837-3141
Destin, Florida 32540 Fax: (850) 654-4619
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Sandy Creek Corporation
Crestview, Florida
We have audited the accompanying balance sheet of Sandy Creek Corporation (a
development stage Company) as of December 31, 1998 and the related statements of
operations, stockholders' equity and cash flows for the year then ended and for
the period from July 16, 1996 (date of inception) to December 31, 1998. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Sandy Creek Corporation as of
December 31, 1998 and the results of its operations and its cash flows for the
year then ended and for the period from July 16, 1998 (date of inception) to
December 31, 1998 in conformity with generally accepted accounting principles.
/s/ CARR RIGGS & INGRAM
CARR RIGGS & INGRAM, LLP
Certified Public Accountants
Destin, Florida
May 24, 1999
F-1
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SANDY CREEK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
DECEMBER 31, 1998
ASSETS
Current Assets
Cash $ 4,145
Advances to employees 1,450
Inventory, at cost 65,723
Accounts Receivable 28,436
---------
Total Current Assets 99,754
Property and Equipment
Building and ranch improvements 174,539
Furniture and fixtures 3,622
Vehicles 40,590
Machinery and equipment 102,680
Breeding flock 237,600
Office equipment 9,242
Land 74,100
---------
Total Property and equipment 642,373
Accumulated Depreciation (46,842)
---------
Net Property and equipment 595,531
---------
TOTAL ASSETS $ 695,285
=========
see accompanying notes
F-2
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SANDY CREEK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET (CONTINUED)
DECEMBER 31, 1998
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 102,278
Payroll taxes payable 1,438
Due to related parties 157,661
Current portion of long term debt 27,248
-----------
Total Current liabilities 288,625
Long term liabilities
Long term debt less current portion 152,660
-----------
Total liabilities 441,285
Stockholders' equity
Common stock, no par 10,000,000
Shares authorized, 4,962,465 shares
issued and outstanding 1,094,332
Deficit accumulated during the development stage (840,332)
-----------
Total Stockholders' equity $ 695,285
===========
see accompanying notes
F-3
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SANDY CREEK CORPORATION
(A DEVELOPMENT STAGES COMPANY)
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998 AND THE PERIOD
FROM JULY 16, 1996 (DATE OF INCEPTION) TO DECEMBER 31, 1998
July 15, 1996
Year Ended Inception
December 31, to December 31,
1998 1998
---- ----
Sales $ 18,982 $ 18,982
Cost of Sales 11,030 11,030
Gross Profit $ 7,952 $ 7,952
Selling, general and administrative
Expenses (785,498) (831,102)
--------- ---------
Operating (loss) (777,546) (823,150)
Other income (expense)
Interest income 10 10
Interest expense (13,265) (23,262)
Gain (loss) on disposal of
fixed asset (600) (600)
Other income 6,670 6,670
--------- ---------
(7,185) (17,182)
--------- ---------
Net loss before taxes (784,731) (840,332)
Income tax expense (benefit) -- --
--------- ---------
Net Loss $(784,731) $(840,332)
========= =========
see accompanying notes
F-4
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SANDY CREEK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
PERIOD FROM JULY 15, 1996 (DATE OF INCEPTION)
TO DECEMBER 31, 1998
Common Stock Accumulated
Shares Amount Deficit
------ ------ -------
Common stock issued for cash during 1996 52,800 $ 13,200 $ --
Net Loss during 1996 -- -- (4,714)
--------- --------- ---------
BALANCE AT DECEMBER 31, 1996 52,800 13,200 (4,714)
Common stock issued for cash and assets
during 1997 197,200 398,853 --
Net Loss during 1997 -- -- (50,887)
--------- --------- ---------
BALANCE AT DECEMBER 31, 1997 250,000 412,053 (55,601)
Common stock issued for cash and assets
during 1998 4,712,465 682,279 --
Net Loss during 1998 -- -- (784,731)
--------- --------- ---------
BALANCE AT DECEMBER 31, 1998 -- -- (840,332)
See accompanying notes.
F-5
<PAGE>
<TABLE>
<CAPTION>
SANDY CREEK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1998 AND THE PERIOD FROM
JULY 15, 1996 DATE OF INCEPTION TO DECEMBER 31, 1998
July 15, 1996
Year Ended (Inception)
December 31, to December 31,
1998 1998
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net Loss $ (784,731) $ 840,332
Adjustments to reconcile net income to net cash
provided (used) by operating activities 40,529 43,712
Stock issued for services 315,875 315,875
Loss on disposal of fixed assets (600) (600)
(Increase) decrease in:
Advances to employees (1,400) (1,450)
Advances to related parties (25,252) (27,704)
Inventory (31,318)
Accounts receivable (732) (732)
(Increase) decrease in:
Accounts payable 94,728 102,278
Payroll taxes payable (540) 1,438
----------- -----------
NET CASH USED BY OPERATING ACTIVITIES (362,123) (438,833)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment (84,273) (567,839)
----------- -----------
NET CASH USED BY INVESTING ACTIVITIES (84,273) (567,839)
CASH FLOWS FROM FINANCING ACTIVITIES
Common stock issued 324,586 736,839
Borrowings of long-term debt 126,400 251,400
Repayments of long-term debt (140,700) (134,883)
Advances from related parties 137,671 157,661
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 447,957 1,010,817
NET INCREASE IN CASH 1,561 4,145
CASH, BEGINNING OF PERIOD 2,584 --
----------- -----------
CASH, END OF YEAR $ 4,145 $ 4,145
=========== ===========
SUPPLEMENTAL DISCLOSURES
Property and equipment acquired by borrowing
under notes payable or capital lease obligations
or for stock issued $ 74,534 $ 75,534
Inventory acquired by stock issuance $ 34,405 $ 34,405
Interest paid $ 13,265 $ 23,262
See accompanying notes
F-6
</TABLE>
<PAGE>
SANDY CREEK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENT
YEAR ENDED DECEMBER 31, 1998 AND THE PERIOD FROM
JULY 15, 1996 (INCEPTION) TO DECEMBER 31, 1998
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Sandy Creek Corporation, (the "Company") was formed on July 15, 1996 to engage
in the commercial production of ostrich meat and various products derived from
the animal's hide and oils. The company owns and operates an 80-acre ostrich
ranch in Crestview, Florida and leases a processing facility in Ocala, Florida.
SUMMARY OF SIGNIFIANT ACCOUNTING POLICIES
Inventory
Inventory is valued at cost determined by the first-in, first-out method.
Inventory acquired for Company common stock is valued at management's estimated
value of the goods received. Inventory consists of ostrich yearlings that are
being held for slaughter, and processed meat held for sale.
Property and Equipment
Property and equipment are stated at cost. Additions, renewals and betterments
are capitalized whereas expenditures for maintenance and repairs are charged to
expense. Depreciation is provided using declining methods over the following
estimated useful lives.
Years
-----
Building and ranch improvements 39
Furniture and fixtures 7
Vehicles 5
Machinery and equipment 7
Breeding flock 35
Office equipment 5
Advertising
Advertising costs are expensed as incurred.
Income Taxes
Income taxes are provided for the tax effects of transactions reported in the
financial statements and consist of taxes currently due plus deferred taxes
related primarily to differences between the bases of certain assets and
liabilities for financial and tax reporting. Deferred taxes represent future tax
return consequences of these differences, which will either be taxable or
deductible when the assets and liabilities are recovered or settled.
Estimates
The preparation of financial statements in conformity with generally accepting
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly the actual results
could differ from those estimates.
NOTE 2 - DEVELOPMENT STAGE OPERATIONS
The Company was formed July 15, 1996. Operations through December 31, 1998
consisted principally of the acquisition of breeder flocks and the development
of the ranch and processing facilities. Significant portions of the Company's
assets and operating expenses were financed through the issuance of shares of
common stock, and were valued at management's estimation of fair value of the
goods or services rendered. The Company intends to commence operations in 1999
and will no longer be in the development stage.
F-7
<PAGE>
SANDY CREEK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENT
YEAR ENDED DECEMBER 31, 1998 AND THE PERIOD FROM
JULY 15, 1996 (INCEPTION) TO DECEMBER 31, 1998
NOTE 3 - INVENTORY AND BREEDING FLOCKS
Inventory and breeding flocks consisted of the following at December 31, 1998
Carrying
Number Value
------ -----
Breeders 396 $ 237,600
=========
Yearlings 240 $ 48,000
Chicks 15 --
Processed products N/A $ 17,723
---------
$ 65,723
=========
NOTE 4 - LONG TERM DEBT
Long-term debt at December 31, 1998 consist of the following:
Mortgage note payable to bank, interest at 8.5%, due $1,107
monthly including Interest through September, 2003 when the
remaining balance is due; secured by Company real estate and
trailer in Crestview, Florida $ 125,605
Note payable to Chrysler Financial Company, interest at
10.75%, due $640 monthly including interest through January
2004; secured by a truck $ 29,593
Note payable to S&P Financial Services, Inc. due $1,544
monthly including interest through January 2000; secured by
equipment $ 15,900
Note payable to Associates Commercial Corporation, including
interest at 10%, due $527 monthly including interest through
July, 2000; secured by equipment $ 8,810
---------
$ 179,908
Less current maturities 27,248
---------
$ 152,660
=========
F-8
<PAGE>
SANDY CREEK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENT
YEAR ENDED DECEMBER 31, 1998 AND THE PERIOD FROM
JULY 15, 1996 (INCEPTION) TO DECEMBER 31, 1998
Maturities of long-term debt for years subsequent to 1998 are as follows:
1999 $ 27,248
2000 12,643
2001 8,819
2002 9,745
2003 121,222
2004 231
NOTE 5 - COMMON STOCK
Of the total number of common shares issued at December 31, 1998, a total of
3,500,500 shares are restricted as to the ability to resell for periods up to
one year from the date of issuance.
NOTE 6 - LEASES
The Company is leasing its Ocala, Florida processing facility under a five year
operating lease through July 31, 2003. The lease contains a renewal option for
an additional five years. Monthly rentals under this lease are $3,500. Rent
expense for 1998 and for the period form inception through December 31, 1998 was
$17,500. Future minimum lease payments under this lease are as follows:
1999 $ 42,000
2000 42,000
2001 42,000
2002 42,000
2003 24,500
NOTE 7 - INCOME TAXES
At December 31, 1998 the Company had approximately $850,000 in net operating
loss carry-forwards for Federal and State tax reporting purposes. These
carry-forwards expire in various years though 2018. Due to the uncertainty of
the ultimate realisation of any deferred tax assets associated with these
available loss carry-forwards, management has elected to provide a valuation
allowance for those deferred tax asset amounts.
F-9
<PAGE>
SANDY CREEK CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENT
YEAR ENDED DECEMBER 31, 1998 AND THE PERIOD FROM
JULY 15, 1996 (INCEPTION) TO DECEMBER 31, 1998
NOTE 8 - RELATED PARTY TRANSACTIONS
Included in the Accounts Receivable at December 31, 1998 is $27,704 from related
companies. These companies have common ownership with the Company. These
receivables originated from advances made by the Company, as well as $6,120 in
sales from the Company to two of the related companies.
Due to shareholders of $157,661 at December 31, 1998 consists of the following:
Due to Les Lerner $ 1,700
Due to Judy King 40,961
Due to John Demoleas 115,000
--------
$157,661
========
All of the above amounts have no stated terms or conditions. These amounts were
advanced to the Company for operating capital.
NOTE 9 - YEAR 2000 ISSUE (UNAUDITED)
Like other entities, the Company could be adversely affected if the computer
systems used by the Company, its suppliers, or customers do not properly process
and calculate date-related information and data from the period surrounding and
including January 1, 2000. This is commonly known as the "Year 2000" issue.
Additionally, this issue could impact noncomputer systems and devices such as
production equipment, elevators, etc. At this time, because of the complexities
involved in the issue, assurances cannot be provided that the Year 2000 issue
will not have an impact on the Company's operations.
F-10
<PAGE>
CARR, RIGGS & INGRAM, LLP
CERTIFIED PUBLIC ACCOUNTANTS
P.O. Box 5438 (850) 837-3141
Destin, Florida 32540 Fax: (850) 654-4619
ACCOUNTANTS REPORT
To the Board of Directors
Sandy Creek Corporation
Crestview, Florida
We have compiled the accompanying balance sheet of Sandy Creek Corporation as of
June 30, 1999 and the related statements of income, and changes in stockholders'
equity for the six months then ended, in accordance with Standards for
Accounting and Review Services issued by the American Institute of Certified
Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. We have not audited or
reviewed the accompanying financial statements and, accordingly, do not express
an opinion or any other assurance on them.
Management has elected to omit substantially all of the disclosures and the
statement of cash flows required by generally accepted accounting principles. If
the omitted disclosures and statement of cash flows were included in the
financial statements, they might influence the user's conclusion about the
Company's financial position, results of operations, and cash flows.
Accordingly, these financial statements are not designed for those who are not
informed about such matters.
/s/ CARR RIGGS & INGRAM
CARR RIGGS & INGRAM, LLP
Certified Public Accountants
Destin, Florida
July 19, 1999
F-11
<PAGE>
SANDY CREEK CORPORATION
BALANCE SHEET
JUNE 30, 1999
ASSETS
Current Assets
Cash $ --
Inventory, at cost 73,080
Accounts Receivable 20,019
---------
Total Current Assets 93,099
Property and Equipment
Building and ranch improvements 190,854
Furniture and fixtures 6,806
Vehicles 40,590
Machinery and equipment 135,530
Breeding flock 447,600
Office equipment 8,978
Land 74,100
---------
Total Property and equipment 904,458
Accumulated Depreciation (77,768)
---------
Net Property and equipment 826,690
---------
TOTAL ASSETS $ 919,789
=========
F-12
<PAGE>
SANDY CREEK CORPORATION
BALANCE SHEET (CONTINUED)
JUNE 30, 1999
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Bank Overdraft $ 71,483
Accounts Payable $ 105,499
Due to related parties 315,830
Current portion of long term debt 23,724
-----------
Total Current liabilities 516,536
Long term liabilities
Long term debt less current portion 147,377
-----------
Total liabilities 663,913
Stockholders' equity
Common stock, no par 10,000,000
Shares authorised, 6,073,065 shares
issued and outstanding 1,965,704
Deficit accumulated during the development stage (1,709,828)
-----------
Total Stockholders' equity $ 255,876
-----------
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $ 919,789
===========
see accountants report
F-13
<PAGE>
SANDY CREEK CORPORATION
STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1999
Sales $ 53,608
Cost of Sales (14,500)
Gross Profit $ 39,108
Selling, general and administrative
Expenses (897,432)
Operating (loss) (858,324)
Other income (expense)
Interest expense (11,172)
Net loss before taxes (869,496)
Income tax expense (benefit) --
---------
Net Loss $(869,496)
=========
see accountants report
F-14
<PAGE>
SANDY CREEK CORPORATION
STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
SIX MONTHS ENDED JUNE 30, 1999
- --------------------------------------------------------------------------------
Common Stock Accumulated
Shares Amount Deficit
- --------------------------------------------------------------------------------
BALANCE DECEMBER 31, 1998 4,962,465 $ 1,094,332 $ (840,332)
Common stock issued for cash, assets
and services 1,110,600 871,372 --
Net Loss -- -- (869,496)
----------- ----------- -----------
BALANCE JUNE 30, 1999 6,073,065 $ 1,965,704 $(1,709,828)
=========== =========== ===========
See accountants report
F-15
<PAGE>
PART III
ITEM 1 INDEX TO EXHIBITS
Exhibit 1 State of Florida Certified True Copy of Articles of Incorporation
Exhibit 2 Articles of Incorporation
Exhibit 3 Amendment to Articles of Incorporation November 20, 1996
Exhibit 4 Amendment to Articles of Incorporation October 5, 1998
Exhibit 5 Amendment to Articles of Incorporation November 23, 1998
Exhibit 6 By-laws of Sandy Creek Corporation
Exhibit 7 Specimen Share Certificate
Exhibit 8 Lease on Ocala Meat packing facility
Exhibit 1 Certified True Copy Articles of Incorporation
STATE OF FLORIDA (seal) DEPARTMENT OF STATE
I certify the attached is a true and correct copy of the Articles of
Incorporation of SANDY CREEK OSTRICH RANCH INC., a Florida corporation filed on
July 15, 1996, as shown by the records of this office.
The document number of this corporation is P96000059293
Given under my hand and the Great Seal of the State of Florida, at Tallahassee,
the Capitol, this the 16th day of July, 1996
Sandra B. Mortham
Secretary of State
Exhibit 2 Articles of Incorporation
ARTICLES OF INCORPORATION OF
SANDY CREEK OSTRICH RANCH INC.
The undersigned incorporator(s), for the purpose of forming a corporation under
the Florida Business Corporation Act, hereby adopt(s) the following Articles of
Incorporation.
ARTICLE I NAME
The name of the corporation shall be SANDY CREEK OSTRICH RANCH INC.
ARTICLE II PRINCIPAL OFFICE
The principal place of business and mailing address of this corporation shall
be:
Principal place of business: 6225 Hwy 393 Crestview, Florida 32539
Mailing address is P.O. Box 326 Shalimar, Florida 32579
ARTICLE III SHARES
The number of shares of stock that this corporation is authorized to have
outstanding at any one time is:
100
ARTICLE IV INITIAL REGISTERED AGENT AND STREET ADDRESS
The name and address of the initial registered agent is:
Charles Broome, PhD.
2559 Palm Shores Drive
Shalimar, Florida 32579
ARTICLE V INCORPORATOR(S)
The name(s) and street address(es) of the incorporator(s) to these Articles of
Incorporation is (are):
Steve Bartolic 5377n Harvest Ridge Cn. Birmingham, Alabama 35242
Les Lerner 2571 Barron Ct. Shalimar, Florida 32549
Charles Broome PhD 2559 Palm Shores Drive Shalimar, Florida 32579
The undersigned incorportor(s) has (have) executed these Articles of
Incorporation this 9th day of July 1996.
Signed: Charles Broome PhD
Steve Bartolic
Les Lerner
<PAGE>
CERTIFICATE OF DESIGNATION OF
REGISTERED AGENT/REGISTERED OFFICE
PURSUANT TO THE PROVISIONS OF SECTION 607.0501, FLORIDA STATUTES, THE
UNDERSIGNED CORPORATION, ORGANIZED UNDER THE LAWS OF THE STATE OF FLORIDA,
SUBMITS THE FOLLOWING STATEMENT IN DESIGNATING THE REGISTERED OFFICE/REGISTERED
AGENT, IN THE STATE OF FLORIDA.
1. The name of the corporation is: Sandy Creek Ostrich Ranch Inc.
2. The name and address of the registered agent and office is:
Charles Broome PhD
2559 Palm Shores Drive
Shalimar, Florida 32579
Having been named as registered agent and to accept service of process for the
above stated corporation at the place designated in this certificate, I hereby
accept the appointment as registered agent and agree to act in this capacity. I
further agree to comply with the provisions of all statutes relating to the
proper and complete performance of my duties, and I am familiar with and accept
the obligations of my position as registered agent.
Signed: Charles Broome PhD 7/9/96
DIVISION OF CORPORATIONS, P.O. BOX 6327 TALLAHASSEE, FL. 32314
Exhibit 3 - Amendment to Articles of Incorporation
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
SANDY CREEK OSTRICH RANCH INC.
SANDY CREEK OSTRICH RANCH INC., a corporation organized and existing under the
laws of the State of Florida.
DOES HEREBY CERTIFY:
FIRST, that a meeting of the Board of Directors of SANDY CREEK OSTRCH RANCH INC.
resolutions were duly adopted and filed with the Minutes of the Corporation
setting forth a proposed amendment to the Articles of Incorporation declaring
said amendment advisable and calling a meeting of the shareholders of said
corporation pursuant to Florida Statute 607.0705 for consideration thereof. The
resolution setting forth the proposed amendment is as follows:
RESOLVED, that the Articles of Incorporation be amended by increasing the
authorized capital stock of the corporation to be designated as common shares
and the common shares to be increased from 100 shares no par value to 5,000,000
shares no par value.
SECOND, that thereafter, pursuant to a resolution of the Board of Directors, a
special meeting of the stockholders of said corporation was duly called and
held, at which meeting the number of shares as required by statute were voted in
favor of the amendment.
THIRD, that said amendments were adopted pursuant to 607.1003 Florida Statutes
on November 20, 1996.
IN WITNESS WHEREOF, said SANDY CREEK OSTRICH RANCH INC. has caused this
Amendment to be signed by its President Leslie M. Lerner and its Secretary
Harold B. Logsdon, this 20th day of November 1996.
Signed by: Leslie M. Lerner, President
Harold B. Logsdon, Secretary
Filed in the Office of the
Secretary of State
State of Florida
November 22, 1996
Exhibit 4 -- Amendment to Articles of Incorporation
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
SANDY CREEK OSTRICH RANCH INC.
SANDY CREEK OSTRICH RANCH INC., a corporation organized and existing under the
laws of the State of Florida.
DOES HEREBY CERTIFY:
FIRST, that a meeting of the Board of Directors of SANDY CREEK OSTRICH RANCH
INC. resolutions were duly adopted and filed with the Minutes of the corporation
setting forth a proposed amendment to the Articles of Incorporation, declaring
said amendment advisable and calling a meeting of the shareholders of said
corporation pursuant to the Florida Statute 607.0705 for consideration thereof.
The resolution setting forth the proposed amendment is as follows:
RESOLVED, that the Articles of Incorporation be amended by having the
corporation name changed to SANDY CREEK CORPORATION.
SECOND, that thereafter, pursuant to a resolution of the Board of Directors, a
special meeting of the stockholders of said corporation was duly called and
held, at which meeting the changing of the corporate name was voted in favor of
the amendment.
THIRD, that said amendment was adopted pursuant to 607.1003 Florida Statutes on
October 5, 1998.
IN WITNESS WHEREOF, said SANDY CREEK OSTRICH RANCH, INC. has caused this
Amendment to be signed by its President, Leslie M. Lerner, and its Secretary,
Judith a. King, this 5th day of October 1998.
Signed by: Leslie M. Lerner, President
Judith A. King, Secretary
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE
STATE OF FLORIDA
OCTOBER 12, 1998
Exhibit 5 - Amendment to Articles of Incorporation
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
SANDY CREEK CORPORATION
SANDY CREEK CORPORATION, a corporation organized and existing under the laws of
the State of Florida.
DOES HEREBY CERTIFY:
FIRST, that a meeting of the Board of Directors of SANDY CREEK CORPORATION
resolutions were duly adopted and filed with the Minutes of the corporation
setting forth a proposed amendment to the Articles of Incorporation, declaring
said amendment advisable and calling a meeting of the shareholders of said
corporation pursuant to the Florida Statute 607.0705 for consideration thereof.
The resolution setting forth the proposed amendment is as follows:
RESOLVED, that the Articles of Incorporation be amended by increasing the
authorized capital stock of the corporation to be designated as common shares
and the common shares to be increased from 5,000,000 shares no par value to
10,000,000 shares no par value.
SECOND, that thereafter, pursuant to a resolution of the Board of Directors, a
special meeting of the stockholders of said corporation was duly called and
held, at which meeting the number of shares as required was voted in favor of
the amendment.
THIRD, that said amendments were adopted pursuant to 607.1003 Florida Statutes
on November 23, 1998.
IN WITNESS WHEREOF, said SANDY CREEK CORPORATION has caused this Amendment to be
signed by its President Leslie M. Lerner and its Secretary Judith A. King this
23rd day of November 1998.
Signed by: Leslie M. Lerner, President
Judith A. King, Secretary
Filed in the Office of the
Secretary of State
State of Florida
December 14, 1998
Exhibit 6 - By-laws of Sandy Creek Corporation
BY LAWS
OF
SANDY CREEK OSTRICH RANCH INC.
ARTICLE ONE
REGISTERED OFFICE
1.01 The initial location of the principal place of business of the corporation
shall be as specified in the Articles of Incorporation and may be changed from
time to time by resolution of the Board of Directors. It may be located at any
place within or outside the State of Florida. The registered office of the
Corporation is located at 103 B Rickey Avenue Ft. Walton Beach, FL 32547. [BCA
Sec. 607.0202(b)]
The principal place of business of the corporation shall also be known as the
principal office of the Corporation. The corporation may also have offices at
such other places as the Board of Directors may from time to time designate, or
as the business of the corporation may require.
ARTICLE TWO
SHAREHOLDERS' MEETINGS
2.01 All meetings of the shareholders shall be held at the registered office of
the Corporation, or at any other place inside or outside the State of Florida
that the Board of Directors designates for that purpose. [BCA Secs. 607.0701(2)
& 607.0702(2)]
2.02 The annual meeting of the shareholders shall be held each year at 7:00 PM
on Monday of the last week in September commencing with the year 1997 at which
time the shareholders shall elect a Board of Directors and transact any other
proper business. If this day falls on a legal holiday, the annual meeting shall
be held at the same time on the next business day at the same hour. [BCA Sec.
607.0701(1)]
2.03 Except as provided in this paragraph, written notice of each shareholder'
meeting shall be delivered to each shareholder of record entitled to vote at the
meeting. Notice shall be delivered not less than 10 days nor more than 60 days
before the date of the meeting, in accordance with Section with Section
607.0705, Florida Statutes. The notice must be delivered personally or by mail,
or at the direction of the president, secretary or the persons calling the
meeting. If mailed, notice shall be deemed to be delivered when deposited in the
United States Mail. The notice shall be postage prepaid and addressed to the
shareholder at the address appearing on the Corporation's books or supplied by
the shareholder to the Corporation for the purpose of notice.
2.04 Special meetings of the shareholders may be called at any time by the
Chairman, the President, any two or more directors, or one or more shareholders
holding not less than 56 percent or more of all of the outstanding shares. A
written notice of such meeting and the purpose or purposes for which it is to be
held shall be delivered to the Secretary of the Corporation. [BCA Sec. 607.0702]
2.05 Fifty Six percent of the outstanding shares constitutes a quorum for the
transaction of business. Business may be continued after withdrawal of enough
shareholders to leave less than a quorum. [BCA Secs. 607.0727 & 607.0728]
2.06 Only persons in whose names shares appear on the share transfer books of
the corporation on the date on which notice of the meeting is mailed shall be
entitled to vote at the meeting, unless some other date is fixed by the Board of
Directors for the determination of shareholders of record. The date shall not be
less than 10 nor more than 70 days before the date of the meeting. Each
outstanding share, regardless of class, shall be entitled to one vote on each
matter submitted to a vote. However, in all elections for Directors, every
shareholder shall have the right: (1) to vote, in person or by proxy, for the
number of shares owned by him or her, for as many persons as there are Directors
to be elected; (2) cumulative voting of shares of any one candidate or issue
shall not be allowed.
<PAGE>
2.07 Each outstanding share shall be entitled to one vote on each matter
submitted to a vote at a meeting of shareholders, except as may be provided
under law or the articles of incorporation. At all meetings, any shareholder may
vote either in person or by proxy executed in writing by the shareholder or by
the shareholder's duly authorized attorney-in-fact. No proxy shall be valid
after 11 months from the date of its execution, unless otherwise provided in the
proxy. An appointment of a proxy is revocable by the shareholder unless the
appointment form conspicuously states that is not revocable and is coupled with
an interest as provided in Section 607.0722(5) of the Business Corporation Act.
2.08 No defect in the noticing of a shareholders' meeting will affect the
validity of any action at the meeting if a quorum was present, and if each
shareholder entitled to notice signs a written waiver of notice either before or
after the meeting. All waivers, consents, or approvals must be filed with the
corporate records or made a part of the minutes of the meeting. For a special
shareholders' meeting, the waiver of notice must state the purpose of the
meeting and the business that will be transacted at the meeting.
2.09 Any action that may be taken at a meeting of the shareholders may be taken
without a meeting if a consent in writing, setting for the action that was
taken, is signed by shareholders with sufficient votes to have taken the action
at a meeting at which all voting groups and shares entitled to vote on the
action were present and voted. [BCA Sec. 607.0704]
2.10 The shareholders list shall be available for inspection by any shareholder
for a period of 10 days prior to the meeting, or such shorter time as exists
between the record date and the meeting, and continuing through the meting, at
the corporation's principal place of business. [BCA Sec. 607.0720]
ARTICLE THREE
DIRECTORS
3.01 The Directors shall act only as a board; an individual Director shall have
no power to take any actions on behalf of the Corporation unless the action is
authorized by a majority of the Directors or unless the director is the sole
director. The business and affairs of the Corporation shall be managed by the
Board of Directors, subject, however, to such limitations as are imposed by law,
the Articles of Incorporation, or by these by-laws, with regard to actions to be
authorized or approved by the shareholders. The Board of Directors may, by
contract or otherwise, give general, or limited, or special power and authority
to the officers and employees of the Corporation to transact the Corporation's
general business or any special business, and may give powers of attorney to
agents of the Corporation to transact any special business requiring that
authorization.
3.02 The Directors need not be shareholders of this Corporation or residents of
the State of Florida and only two directors are required. Directors shall be
individuals who are 18 years of age or older. [BCA Sec. 607.0802]
3.03 The Directors shall be elected annually by the shareholders and shall hold
office until the next succeeding annual meeting and until their successors are
elected and qualified to act as Directors. [BCA Sec. 607.0805]
3.04 There shall be a minimum of two members on the Board of Directors.
Vacancies occurring in the Board of Directors and directorships available
because of an increase in the number of directors shall be filled by a person
elected by a majority of the members of the Board. All directors elected by the
Board shall serve until the shareholders elect a director at an annual meeting
or at a special meeting of shareholders called for that purpose. [BCA Sec.
607.0803 & 607.0805(3)(4)]
3.05 All meetings of the Board of Directors shall be held at the place
designated by a majority of the Directors or that is designated in the noticed
calling the meeting.
3.06 Regular meetings of the Board of Directors shall be held, without call or
notice, immediately following each annual meeting of the shareholders of this
Corporation, and at any other times as the Directors may determine.
<PAGE>
3.07 Special meetings of the Board of Directors shall be called at any time, for
any purpose, by the Chairman & CEO, or if he or she is absent or unable or
refuses to act, by the President, or any two directors. Written notices of the
special meeting stating the time and, in general terms, the purpose or purposes
of the special meeting, shall be mailed, telegraphed, or personally delivered to
each Director no later than one day before the day appointed for the meeting.
3.08 A majority of the Directors in office shall constitute a quorum for the
transaction of business. The act of the majority of the Directors present at a
meeting at which a quorum is present shall be the act of the Board of Directors.
3.09 Any action required or permitted to be taken at a meeting of the Board of
Directors may be taken without a meeting, provided a consent in writing, setting
forth the action so taken, is signed by all of the Directors and filed with the
Secretary of the Corporation.
3.10 Any action required or permitted to be taken at a meeting of the Board of
Directors may be taken by telephonic conversation subject only to the fact that
each and every director is able to listen to and to speak directly to every
other director no matter where situated.
3.11 A quorum of the Directors may adjourn any Directors' meeting to meet again
at a stated day and hour. Notice of the time and place of reconvening the
meeting need not be given to absent Directors if the time and place is fixed at
the meeting that is adjourned. In the absence of a quorum, a majority of the
Directors present at any Directors' meeting, either regular or special, any
adjourn until the time fixed for the next regular meeting of the Board.
3.12 Directors and members of committees may receive compensation for their
services and reimbursement for their expenses as determined by resolution of the
Board.
3.13 A director who is present at a meeting of the Board of Directors or a
committee of the Board of Directors when corporate action is taken shall be
deemed to have assented to the action taken unless:
1. The Director votes against or abstains from the action taken, or;
2. The Director objects at the beginning of the meeting or promptly upon
the director's arrival to holding the meeting or transacting specified
business at the meeting. [BCA Sec. 607.0824(4)]
3.14 Unless the Articles of Incorporation provide that a director may only be
removed for cause, at a meeting of shareholders called expressly for that
purpose, one or more directors may be removed with or without cause, if the
number of votes cast to remove the director exceeds the number of votes not to
remove the director. [BCA Sec. 607.0808]
3.15 The Board of Directors may, by resolution adopted by a majority of the
authorized number of directors, designate from its members an executive
committee and one or more other committees each of which to the extent provided
in such resolution, the articles of incorporation or these bylaws shall have and
may exercise the authority of the Board of Directors, except that no such
committee shall have the authority to:
1. Approve or recommend to shareholders actions or proposals required by
law to be approved by shareholders.
2. Fill vacancies on the Board of Directors or any committee thereof.
3. Adopt, amend or repeal the bylaws.
4. Authorize or approve the reacquisition of shares unless pursuant to a
general formula or method specified by the Board of Directors.
Each such committee shall have two or more members who serve at the pleasure of
the Board of Directors. The Board, by resolution adopted by a majority of the
authorized number of directors may designate one or more directors as alternate
members of any such committee who may act in the place and stead of any absent
member or members at any meeting of such committees.
<PAGE>
ARTICLE FOUR
OFFICERS
4.01 The officers of the Corporation shall consist of a President, a Vice
President, a Secretary, a Treasurer, and such other officers and assistant
officers, as the Board of Directors shall from time to time determine. Any two
offices, except President and Secretary, may be held by the same person unless
there is only one officer in the Corporation. Each officer shall have the
authority and shall perform the duties set forth in these bylaws and to the
extent consistent with these bylaws shall have such duties and powers as may be
determined by the Board of Directors. [BCA Secs. 607.08401 & 607.0841] All
officers shall be elected by and hold office at the pleasure of the Board of
Directors, which shall fix the compensation and tenure of all officers. An
election or appointment of an officer shall not itself create contract rights.
[BCA Secs. 607.08401 and 607.0843]
4.02 The officers of the Corporation shall have such powers and duties as may
from time to time be determined by resolution of the Board of Directors.
4.03 An officer may resign at any time by delivering notice to the corporation.
A resignation is effective when the notice is delivered unless the notice
specifies a later effective date. If a resignation is made effective at a later
date, the Board of Director may fill the pending vacancy before the effective
date if the Board provides that the successor does not take office until the
effective date.
The Board of Directors may remove any officer at any time with or without cause.
Any officer or assistant officer, if appointed by another officer, may likewise
be removed by such officer.
An officer's removal shall not affect the officer's contract rights, if any,
with the corporation. An officer's resignation shall not affect the
corporation's contract rights, if any, with the officer. [BCA Secs. 607.0842 &
607.0843]
4.04 The office of President shall be the chief executive officer and general
manager of the corporation and shall be subject to the direction and control of
the Board of Directors, have general supervision, direction and control of the
business and affairs of the corporation. He shall preside at all meetings of the
shareholders if present thereat and be an ex-officio member of all the standing
committees, including the executive committee, if any, and shall have the
general powers and duties of management usually vested in the office of the
president of a corporation.
In the absence or disability of the president, the vice president, if any, shall
perform all the duties of the president and, when so acting, shall have all the
powers of, and be subject to all the restrictions imposed upon the president.
4.05 The Secretary shall be responsible for preparing or causing to be prepared,
minutes of all meetings of directors and shareholders and for authenticating
records of the corporation. [BCA Sec. 607.08401(3)]
The Secretary shall keep or cause to be kept, at the principal place of business
of the Corporation, minutes of all meetings of the shareholders or the Board of
Directors; a record of all actions taken by the shareholders or the Board of
Directors without a meeting for the past three years; and a record of all
actions taken by a committee of the Board of Directors in place of the Board of
Directors on behalf of the corporation. [BCA Sec. 607.1601]
Minutes of Meetings shall state the date, time and place of the meeting; whether
regular or special; how called or authorized; the notice thereof given or the
waivers of notice received; the names of those present at director's meetings;
the number of shares present or represented at shareholders' meetings; and an
account of the proceedings thereof.
The Secretary shall maintain, at the principal place of business of the
corporation, a record of its shareholders, showing the names of the shareholders
and their addresses, the number, class, and series, if any, held by each, the
number and date of certificates issued for share, and the number and date of
cancellation of every certificate surrendered for cancellation. [BCA Sec.
607.1601(3)]
<PAGE>
The Secretary shall make sure that the following papers and reports are included
in the secretary's records kept at the principal place of business of the
corporation.
1. The articles of Incorporation or restated articles and all amendments
to them currently in effect;
2. The bylaws or restate bylaws and all amendments to them currently in
effect;
3. Resolutions adopted by the Board of Directors creating one or more
classes or series of shares and fixing their relative rights,
preferences and limitations, if shares issued pursuant to those
resolutions are outstanding;
4. Minutes of all shareholders' meetings and records of all action taken
by shareholders without a meeting for the past three years;
5. Written communications to all shareholders general or all shareholders
of a class or series within the past three years including the
financial statements furnished for the past three years under Article
VIII, Section 8.01 of these bylaws.
6. A list of names and business street addresses of current directors and
officers, and;
7. The corporation's most recent annual report delivered to the
Department of State under Article VIII Section 8.03 of these bylaws.
[BCA Sec. 607.1601(5)]
The Secretary shall give, or cause to be given, notice of all meetings of
shareholders and directors required to be given by law or by the provisions of
these bylaws.
The Secretary shall have charge of the seal of the corporation.
In the absence or disability of the secretary, the assistant secretary, or if
there is none or more than one, the assistant secretary designated by the Board
of Directors, shall have all the powers of, and be subject to all the
restrictions imposed upon the Secretary.
4.06. The Treasurer shall have custody of the funds and securities of the
corporation and shall keep and maintain, or cause to be kept and maintained, at
the principal business office of the corporation, adequate and correct books and
records of accounts of the income, expenses, assets, liabilities, properties and
business transactions of the corporation. [BCA Sec. 607.1601(2)]
The Treasurer shall prepare or cause to be prepared, and shall furnish to
shareholders, the annual financial statements and other reports required
pursuant to Article VIII Section 8.04 of these bylaws.
The Treasurer shall deposit monies and other valuables in the name and to the
credit of the corporation with such depositories as may be designated by the
Board of Directors. the Treasurer shall disburse the funds of the Corporation in
payment of the just demands against the corporation as authorized by the Board
of Directors and shall render to the president and directors, whenever requested
an account of all his or her transactions as treasurer and of the financial
condition of the corporation.
In the absence or disability of the treasure, the assistant treasurer, if any,
shall perform all the duties of the treasurer and, when so acting, shall have
all the powers of and be subject to all the restrictions imposed upon the
treasurer.
<PAGE>
ARTICLE FIVE
DIVIDENDS
5.01 The Board of Directors may authorize and the corporation may make,
dividends on its shares in cash, property or its own shares and other
distributions to its shareholders, subject to any restrictions contained in the
articles of incorporation, to the requirements of sections 607.0623 and
607.06401 of the Business Corporation Act, and to all applicable provisions of
law. [BCA Secs. 607.01401(15), 607.0623(2) & 607.06401(3)]
ARTICLE SIX
ISSUANCE AND TRANSFER OF SHARES
6.01 Certificates for share of the Corporation shall be issued only when fully
paid except as provided for in section 6.05 of these bylaws.
6.02 The Corporation shall deliver certificates representing all shares to which
shareholders are entitled. These certificates shall be in a form as the Board of
Directors may provide, except as provided in this Paragraph 6.02. Each
certificate shall bear on its face the statement that the corporation is
organized under the laws of the State of Florida, the name of the registered
holder, the number and class of shares and the designation of the series, if
any, and the par value or a statement that the shares are without par value. The
certificates shall be signed by the President or a Vice President and the
Secretary or an Assistant Secretary, whose signatures may be in facsimile if the
certificates are to be signed by a transfer agent or registrar, and the seal of
the Corporation shall be affixed to the certificates. [BCA Sec. 607.0625] All
certificates for shares shall be consecutively numbered. The certificates shall
contain on the faces or backs such recitations or references as are required by
law.
6.03 No new certificates shall be issued until the former certificates for the
shares represented by it has been surrendered and canceled. However, in the case
of lost or destroyed certificates, the Board of Directors may order new
certificates to be issued on such terms, conditions, and guarantees as the Board
may see fit to impose, including the filing of sufficient indemnity.
6.04 Shares of the Corporation may be transferred by endorsement by the
signature of the owner or his agent, attorney, or legal representative, and the
delivery of the certificate. The transferee in any transfer of Shares shall be
deemed to have full notice of, and to consent to, the By Laws of the Corporation
to the same extent as if he or she had signed a written consent to the By Laws.
6.05 The Corporation may place in escrow shares issued for a contract for future
services or benefits or a promissory note, or make other arrangements to
restrict the transfer of the shares, and may credit distributions, in respect of
the shares against their purchase price, until the services are performed, the
note is paid or the benefits received. If the services are not performed, the
shares escrowed or restricted and their distributions credited may be canceled
in whole or in part. [BCA Sec. 607.0621]
<PAGE>
ARTICLE SEVEN
TAKEOVER PROVISIONS
7.01 The corporation shall not be subject to Section 607.0901, Florida Statutes,
governing affiliated transactions between the corporation and interested
shareholders, as defined therein, or to Section 607.0902, Florida Statutes,
governing the acquisition by an interested shareholder of control shares of the
corporation in a control-share acquisition.
ARTICLE EIGHT
RECORDS AND REPORTS
8.01 All books and records provided for by statute shall be open to inspection
of the shareholders from time to time and to the extent expressly provided by
statute, and not otherwise. The Directors may examine such books and records at
all reasonable time.
8.02 The Board of Directors may close the transfer books at their discretion for
a period not exceeding 70 days preceding any annual or special meeting of the
Shareholders or the day appointed for the payment of a dividend. A written or
printed notice of the closing of the transfer books shall be mailed at least 10
days before the closing to each shareholder of record at the address appearing
on the records of the Corporation or supplied by the Shareholder for the purpose
of notice.
8.03 The Corporation shall prepare and deliver an annual report form to the
Department of State each year within the time limits imposed, and containing the
information required by Section 607.1622 of the Business Corporation Act.
8.04 The Corporation shall mail to each shareholder, unless modified by
resolution of the shareholders, within 120 days of the close of each fiscal
year, its annual financial statements which may be consolidated or combined
statements of the corporation and one or more of its subsidiaries, as
appropriate, that include a balance sheet as of the end of the fiscal year, an
income statement for that year, and a statement of cash flow for that year. If
financial statements are prepared on the basis of generally accepted accounting
principles the annual statements must also be prepared on that basis.
8.05 Other reports to shareholders will include but are not limited to the
following:
If the Corporation indemnifies or advances expenses to any director,
officer, employee or agent, other than by court order or action by the
shareholders or by an insurance carrier pursuant to insurance maintained by
the corporation, the corporation shall report the indemnification or
advance in writing to the shareholders with or before the notice of the
next shareholders' meeting, or prior to such meeting if the indemnification
or advance occurs after the giving of such notice but prior to the time
that such meeting is held. The report shall include a statement specifying
the persons paid, the amounts paid, and the nature and status at the time
of such payment of the litigation or threatened litigation. [BCA Sec
607.1621(1)]
If the corporation issues or authorizes the issuance of shares for promises
to render services in the future, the corporation shall report in writing
to the shareholders the number of shares authorized or issued, and the
consideration received by the corporation with or before the notice of the
next shareholders' meeting. [BCA Sec. 607.1621(2)]
<PAGE>
ARTICLE NINE
AMENDMENT OF BY LAWS
9.01 The power to make, alter, amend, or repeal the By Laws is vested in the
Board of Directors, except to the extent that such power is reserved to the
shareholders by statute.
9.02 The shareholders may amend or repeal these bylaws even though the bylaws
may also be amended or repealed by the Board of Directors. [BCA Sec. 607.1020]
ARTICLE TEN
AMENDMENT OF THE ARTICLES OF INCORPORATION
10.01 The Board of Directors may propose one or more amendments to the articles
of incorporation for submission to the shareholders. For the amendment to be
effective:
1. The Board of Directors must recommend the amendment to the
shareholders, unless the directors determine that because of conflict
of interest or other special circumstances it should make no
recommendation and communicates the basis for its determination to
these shareholders with the amendment, and;
2. The shareholders entitled to vote on the amendment must approve the
amendment as provided below.
The Board of Directors may condition its submission of the proposed
amendment to the shareholders on any basis. The shareholders shall approve
amendments to the Articles of Incorporation by the vote of a majority of
the votes entitled to cast on the amendment, except as may otherwise be
provided by the articles of incorporation, Sections 607.1003 and 607.1004
of the Business Corporation Act and other applicable provisions of law, and
these bylaws.
The corporation shall notify each shareholder whether or not entitled to
vote of the proposed shareholders meeting to amend the articles of
incorporation in accordance with Article II of these by-laws. The notice of
meeting must state that the purpose or one of the purposes of the meeting
is to consider the proposed amendment and contain or be accompanied by a
copy or summary of the amendment.
Notwithstanding the above provisions of this section and unless otherwise
provided in the articles of incorporation, if this corporation has 35 or
fewer shareholders then, pursuant to Section 607.1002(6) of the Business
Corporation Act, the shareholders may amend the articles of incorporation
without an act of the directors at a meeting of the shareholders for which
the notice of the changes to be made is given. [BCA Sec. 607.1002 -
607.1005]
<PAGE>
ARTICLE ELEVEN
LIMITATION OF DIRECTOR'S LIABILITY
11.01 The corporation may indemnify any Director, Officer, agent or employee as
to liabilities as provided in Section 607.0850 of the Business Corporation Act.
The Directors as far as permissible under Florida Statutes are without personal
liability for actions taken on behalf of the Corporation which are consistent
with the purposes of the Corporation and the laws of the State of Florida and
the United States of America.
11.02 The Corporation may make any other or further indemnification or
advancement of expenses of any of its directors, officers, employees, or agents,
under any by-law, agreement, vote of shareholders or disinterested directors or
otherwise, both as to action in the person's official capacity and as to action
in another capacity while holding such office. However, such further
indemnification or advancement of expenses shall not be made in those instances
specified in Section 607.0850 (7)(a-d) of the Business Corporation Act.
11.03 The corporation shall have the power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee, or agent of
the corporation against any liability asserted against the person and incurred
by the person in any such capacity or arising out of the person's status as such
whether or not the corporation would have the power to indemnify the person
against such liability under provisions of the law. [BCA Sec. 607.0850(12)]
I CERTIFY THAT THE FOREGOING ARE THE TRUE AND CORRECT BYLAWS OF SANDY CREEK
OSTRICH RANCH INC. a FLORIDA CORPORATION.
DATED: November 26, 1996
/s/ Harold B. Logsdon
---------------------
Harold B. Logsdon
SECRETARY
Exhibit 7 -- Specimen Share Certificate
SPECIMEN SHARE CERTIFICATE
--------------------------
SANDY CREEK CORPORATION
(artwork The Bird That Lays the Golden Egg)
NUMBER SHARES
INCORPORATED UNDER THE LAWS OF THE STATE OF FLORIDA
AUTHORIZED 10,000,000 COMMON SHARES
See Reverse Side for Certain Definitions
CUSIP 800302 10 1
This Certifies That_____________________________________________________________
is the owner of ________________________________________________________________
fully paid and non-assessable Common Shares of
SANDY CREEK CORPORATION
Transferable only on the books of the Company by the holder hereof in person or
by duly authorized attorney upon the surrender of the Certificate properly
endorsed. This Certificate and the shares represented hereby are issued and
shall be subject to all the provisions of the Articles of Incorporation, to all
of which the holder by acceptance hereby assents.
IN WITNESS WHEREOF, the Company has caused this Certificate to be signed in
facsimile by its duly authorized officers and the facsimile seal of th4e Company
to be duly affixed hereto.
This Certificate is not valid unless duly countersigned by the Transfer Agent
and Registrar.
Dated:
____________________________ (seal) ____________________________
Secretary President
Exhibit 8 Lease of Processing Facilities
LEASE OF PREMISES
THIS LEASE AGREEMENT, made and entered into this First day of August 1998,
by and between GREEN VALLEY POULTRY, INC. , a Florida corporation, whose
principal business is located at 6151 NE 21st Avenue, Ocala, Florida 34479
hereinafter referred to as the "Lessor", and SANDY CREEK OSTRICH RANCH, INC.
whose address is 6227 Highway 393 Crestview, Florida, hereinafter referred to as
the "Lessee".
W I T N E S S E T H:
WHERAS, The Lessor represents that it holds free simple title in and to,
and has good right to lease, sell and convey, the following described real
property located in Marion County, Florida, to-wit:
That portion of the premises located at 6151 NE 21st Avenue, Ocala,
Florida, depicted in orange on the building sketch attached hereto,
together with use in common with the Lessor of the property depicted in
Blue on such sketch; the warehouse connected to the office building shall
be used by the parties who lease the premises in common with each other.
WHEREAS, the Lessee desire to least the said premises of and from the
Lessor;
NOW THEREFORE, it is hereby agreed and covenanted by and between the
parties hereto as follows:
1. The Lessor hereby demises, leases and lets unto the Lessee the above
described premises for a term of five years beginning on August 1, 1998 and
ending July 31, 2003, unless extended as provided herein.
2. The Lessee hereby agrees and promises to pay to the Lessor as and for
rental during the term of this Lease the total sum of $210,000 which shall be
payable at the rate of $3,500 per month on the 1st day of each month, in
advance, beginning on August 1, 1998.
3. The Lessee and Lessor shall share equally in equipment maintenance and
surrounding property for the term hereof, except for cosmetic purposes only. The
Lessee shall make no alterations in or addition to the property without the
prior written consent of the Lessor.
4. The Lessee and the Lessor shall share equally the utility bills for the
entire building of which the leased premises are a part, including electric and
gas. Cleaning services for the bath/locker room, including paper supplies shall
be shared equally by the parties during the term hereof.
5. The Lessor shall keep the building insured against damage by fire and
windstorm. The Lessee shall maintain public liability insurance on lease
premises in an amount no less than $100,000.00 and shall furnish the Lessor a
copy of such policy. It shall be the responsibility of the Lessee to carry
insurance on the contents of the premises, if desired, and for workers'
compensation.
6. No offensive or unlawful use of the leased premises shall be made during
the term hereof, at the end of the term the lessee shall return the property to
the Lessor in good condition as it is now, ordinary ware and tare excepted with
any permanent improvements placed thereon.
<PAGE>
7. The Lessee shall use the property only for all phases of processing
ratites for human consumption. No other products may be processed on the
premises by the Lessee without the prior written consent of the Lessor.
8. This Lease may be extended for an additional term of five years by the
Lessees giving the Lessor at least sixty (60) days notice of their intention to
renew.
9. This Lease may not be assigned nor any part of the leased premises
sublet without prior written consent of the Lessor.
10. The property is being leased and acquired by the lessees in an "As is
Condition".
11. In the event the Lessee shall violate any of the covenants of the Lease
Agreement, it shall become a tenant at the sufferance, hereby waiving all rights
of notice, and the Lessor shall immediately be entitled to re-enter and take
possession of the leased premises; provided that this right shall be cumulative
to any other right sand remedies which are available under the laws of the State
of Florida.
12. This Lease shall be binding on the parties and their successors and
assigns.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
Signed, sealed and delivered
In the presence of:
GREEN VALLEY POULTRY, INC. By William Musser PresidentLessor
SANDY CREEK OSTRICH RANCH INC. By Les Lerner, President Lessee
