SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
Small Business Issuers
Under Section 12(b) or 12(g) of the Securities Exchange
Act of 1934
PINECREST INVESTMENT GROUP, INC. f/k/a
SYNTHETIC FLOWERS OF AMERICA, INC.
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(Name of Small Business Issuer in its Charter)
Florida 59-3467929
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(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
1211 Tech Blvd., Suite 101, Tampa, FL 33619
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(813) 620-0044
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(Issuer's Telephone Number)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class to be registered: Name of each exchange on which each
class is to be registered:
N/A N/A
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Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock
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PART I
Item 1. DESCRIPTION OF BUSINESS.
INTRODUCTION
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Pinecrest Investment Group, Inc. ("Pinecrest" or the "Company") has developed
new techniques in hydroponic (soil-free) farming for growing gourmet produce and
medicinal quality organic plants. Through the use of its new hydroponic growing
system, Pinecrest will build Hydroponic Food Production Facilities to produce
totally organic herbs, lettuces, edible flowers, gourmet vegetables and
medicinal herbs. This growing system combines over 80 micronutrients and
vitamins needed to produce quality plants and a system whereby each plant is fed
on exact time intervals and with the proper volume dosages needed for each plant
to reach its optimum growth.
HISTORICAL BACKGROUND
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The Company was incorporated on September 9, 1997, in the State of Florida under
the name of Synthetic Flowers of America, Inc. ("Synthetic Flowers") for the
purpose of producing and selling silk flowers. In connection with its original
organization, 4,000,000 shares of common stock of Synthetic Flowers was issued
to Sheila Langley, the original President of the Company, for services provided
and reimbursement of organizational costs and stock offering costs incurred by
the Company, but paid for by Langley.
On January 15, 1999, a Stock Purchase Agreement was entered into between
Synthetic Flowers, Sheila Langley ("the Selling Shareholder") and David Howe
("the Buyer") wherein the Selling Shareholder agreed to sell up to a total of
3,680,000 of her 4,000,000 restricted shares to the Buyer and several
independent investors for $150,000 cash. At the time of the transaction,
Synthetic Flowers was a non-reporting public company listed on the OTC Bulletin
Board under the trading symbol "SYFA." In conjunction therewith, the following
actions took place: (i) the name of the Company was changed to Pinecrest
Investment Group, Inc., (ii) new officers and directors were elected, (iii) the
corporate office location and registered agent were changed, and (iv) and the
Articles of Incorporation were amended to provide that the aggregate number of
shares of common stock that the Corporation is authorized to have outstanding at
any one time be increased from 50,000,000 to 100,000,000 at $.001 par value per
share, and that 25,000,000 shares of preferred stock be authorized to be
outstanding at $.001 par value per share.
On March 2, 1999, Pinecrest purchased 2,185,000 shares of restricted common
stock from its President, David B. Howe and several independent investors for
$90,000 (the cost to David B. Howe) payable as follows: $30,000 cash and a note
in the principal amount of $60,000 bearing 10% simple interest, due September 2,
2000. These shares were originally acquired by Mr. Howe and the investors in
connection with the purchase of the Company.
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Also, on March 2, 1999, the Company entered into agreements with Michael
Foundation, Limited, a West Indies corporation, and Tillman & Associates, Inc.,
a Florida corporation, for the purchase of certain hydroponics information and
technology at a total purchase price of $3,437,500. The purchase price in the
agreement with Michael Foundation, Limited, consisted of 2,185,000 shares of
restricted common stock with a market value at that time of $1.50 per share. The
purchase price in the agreement with Tillman & Associates, Inc. consisted of
50,000 shares of restricted common stock with a market value at that time of
$1.50 per share plus a note in the amount of $85,000. The hydroponics
information and technology purchase included proprietary hydroponic growth
solution formulas, trade secrets, equipment and greenhouse specifications and
crop and equipment maintenance plans and programs.
An independent expert analysis opinion, dated January 22, 1999, was performed by
Jerry Pruitt, an agricultural consultant from Marbury, Maryland. His tests
included the validity of the hydroponics growing system and the salability of
the retail/wholesale products derived from the process. Mr. Pruitt valued the
hydroponics growing system purchased by the Company at $3.2 million dollars
based on man hours and research and development costs.
In March 1999 the Company entered into a revolving line of credit arrangement
with Perfect Produce, Inc. which called for a maximum credit line of $100,000.
Interest on the credit line was at 8% per annum with the entire principal and
interest due in full on or before October 1, 1999. From inception of this
agreement through August 12, 1999, a total of $83,052.74 was borrowed against
this line of credit and a total of $38,825.68 was repaid. On August 12, 1999,
the total principal balance due of $44,227.06 plus total accrued interest due of
$1,002.37 was paid in full in connection with a convertible line of credit
arrangement with Michael Foundation, Limited.
In March 1999, the Company entered into a convertible line of credit arrangement
with Michael Foundation, Limited, a major stockholder of the Company. This
credit arrangement called for Michael Foundation, Limited to provide working
capital for the Company while it was arranging for acceptable long-term funding
for its Phase I construction and working capital needed until the Company
attained profitability. This line of credit was for a total of $900,000, which
amount could be converted into restricted common stock of the Company at a price
of $6.00 per share. By the end of November, 1999, the Company had borrowed
approximately $300,000 against the Michael Foundation, Limited line of credit.
In December, 1999, the line of credit arrangement with Michael Foundation,
Limited, was modified to call for the absolute purchase of 150,000 shares of
restricted common stock by Michael Foundation, Limited at a price of $6.00 per
share for a total of $900,000. As of December 31, 1999, the shares had been
issued to Michael Foundation, Limited and were being held in escrow by legal
counsel for Pinecrest, the Company had received a total of $463,000 cash and
carried a Subscription Receivable of approximately $437,000.
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On April 8, 1999, Articles of Incorporation were filed for Pinecrest Farms,
Inc., ("Pinecrest Farms") a Florida corporation wholly-owned by Pinecrest
Investment Group, Inc. Pinecrest Farms functions as a subsidiary of the Company
and was formed for the purpose of owning and operating the produce farms. The
growing technology and the land for the farms is owned by the Company.
On April 9, 1999, the Company purchased approximately 40 acres of land located
in Lithia, Florida, approximately 20 miles southeast of its Tampa, Florida
corporate offices from Hopewell Land Partners. The land will be the site of the
Company's first Food Production Facility and will be comprised of 20 greenhouse
ranges, a 10,000 square foot packing and distribution building and
administrative offices for its farming operations. Each greenhouse range will
contain 30,000-sq. ft. of harvestable production area.
Phase I calls for the construction of the first 60,000 square foot production
area to be in operation in April, 2000, as well as all local, state and federal
approvals, if any, for another 540,000 square foot production area to be
completed within 18 months thereafter. The initial 60,000 square foot production
area will produce weekly harvests within 45 days after completion, generating
revenues in May or June, 2000.
Phase II, which is expected to overlap with Phase I, will increase the
production area by an additional 210,000 square feet by July 1, 2000.
Phase III encompasses the remaining 390,000 square feet and is expected to be
completed by the summer of 2001.
On January 10, 2000 the Company's Board of Directors approved a 5 for 4 stock
split for shareholders of record on December 31, 1999, with any fractional
shares being rounded up to the next whole share. Certificates for a total of
1,506,770 additional shares were issued by the Company's transfer agent and
mailed to shareholders on February 4, 2000. After giving effect to this
transaction, the total common shares outstanding are 7,533,804.
On January 26, 2000 the Company amended its Articles of Incorporation to
authorize a class of preferred shares consisting of 10,000,000 shares with no
par value per share. (See details under "Information Statement" under Part II,
Item 2, Market Price of and Dividends on the Registrant's Common Equity and
Other Shareholder Matters.)
The Company has previously announced that it was considering joint ventures with
several entities as technology partners in various geographical locations. At
this time, the Company has determined that it is not in the best interest of the
Company to pursue and/or consummate any joint ventures.
There have been no bankruptcies, receiverships or similar proceedings in this
company.
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INDUSTRY OVERVIEW
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Hydroponics is the method of growing plants without soil and is a more efficient
way to provide water and nutrients to plants. Instead of using soil where a
plant must first grow a large root system to find food and water, hydroponics
uses a wet growing medium and specially prepared nutrient solutions that go
directly to the roots of the plant. This enables the plant to spend more energy
growing above the surface, producing more vegetation and larger flowers and
vegetables. Because root systems are compact in size in the hydroponic growing
environment, plants may be grown closer together, yielding greater crops per
square foot, as well as growing up to twice as fast due to the high levels of
oxygen in the root system.
Other advantages of a hydroponic growing system are (i) because there is no
soil, there will be no weeds or soil-borne pests and disease, and (ii) plants
will maintain optimum nutrient and moisture levels which produces healthier
plants, faster growing plants and plants that will be more disease resistance as
they are not stressed by drought. Because of these advantages, hydroponic
produce has a longer shelf life than soil-grown produce.
BUSINESS OVERVIEW
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Pinecrest's growing system centers around the design of high-tech greenhouses
and specific nutrient feeding formula and feeding schedules. Pinecrest's
greenhouses differ from traditional greenhouses. Whereas traditional greenhouses
have a screening and translucent cover, Pinecrest's design has a microscreen to
keep out virtually all insects and a special roof to allow sunlight in without
the damaging ultraviolet rays that can burn leaves and cause a waxy buildup on
the plants, both of which deplete the plant of its essential oils that provide
flavor and nutrition. Pinecrest's feeding system is designed to precisely
monitor correct dosages of specific nutrients for delivery to plants based on
its individual needs.
Pinecrest's system is a closed environment without polluted water, airborne
pesticides or mechanically induced non-organic chemicals. Due to the closed
environment, Pinecrest methods provides: (i) the elimination of damage control
of infestation by the addition of insects that are natural predators to
plant-eating insects, (ii) limited organic pesticides, and (iii) the inclusion
of barrier plants which are not only discouraging to insects but are harvestable
as well; such as rosemary as a shrub line and marigolds and dandelions as edible
flowers.
The Company's farming system encompasses greenhouse design, nutritional
supplements, feeding cycles and dosages and environmental effects. A three and a
half year study of this new hydroponic growing system was conducted in Florida
using experts from the University of Florida, Disney World's Land Pavilion,
Florida Southern College and the University of Utah, as well as experienced
farmers. Other research contributors included individuals from the fields of
mechanical, electrical and chemical engineering, finance and accounting,
nutrition, organic fertilization and pest control, and hydroponic and greenhouse
equipment manufacturers. These individuals performed detailed analyses of the
technical, fiscal and nutritional aspects of the technology. During this testing
phase, the produce was used by Walt Disney World, Renaissance Vinoy Hotel, Hyatt
Regency, Marriott World Center and Carrabba's Italian Grills. All participants
indicated their utmost satisfaction with the products.
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OPERATIONAL OVERVIEW
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Pinecrest's business operations will be categorized into the following areas:
Hydroponic Food Production Facilities (HFPF), Product Mix and Cost of
Production, Nutrient Mix and Feeding Schedules, Greenhouse Design, Method of
Irrigation, Product Distribution and Delivery, Marketing and Personnel and
Administration.
The Company anticipates that each HFPF location will be built on a 40 to 50 acre
tract of land. These tracts would contain up to approximately 750,000 square
feet of hydroponic growing area, as well as support and processing buildings.
Roughly one-half of each site is dedicated to hydroponic facilities. Depending
on local building codes and ordinances, the remainder of the site will be needed
for parking, storm water retention and office facilities.
The Company anticipates its product mix to include herbs, gourmet lettuces,
herbal medicinals, edible flowers and plants for medicinal derivatives. Product
mix during the first six months of production will be limited to herbs and
lettuces with approximately 80% of production concentrated in lettuces and
spinach. It is anticipated that the basic crop mix for the lettuce crops will be
60% spring mix/mesclun mix, 30% romaine lettuce and 10% spinach.
INITIAL FACILITIY
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The location for Pinecrest's initial hydroponic herb and lettuce production
facility is on Country Road 640 approximately one mile east of State Road 39 in
the community of Lithia, in southeastern Hillsborough County, Florida. This
40-acre tract of land was purchased in April 1999 for $360,000. Pinecrest
provided $72,000 as a down payment and the seller, Hopewell Land Partners,
Limited, provided purchase money mortgage financing for the balance of $288,000.
The terms of the purchase money mortgage are interest only at 12% per annum,
payable monthly, for one year at which time the balance is due and payable in
full. The Company is pursuing mortgage financing through the use of a U.S. Rural
Development Act loan as discussed in the Cash Requirements section of Item 2
below. In addition, discussions with interested private lenders and individuals
indicate that refinancing of the first mortgage is possible, if needed.
Pinecrest anticipates receiving building and development permits from
Hillsborough County with respect to the property in February 2000. The permits
should allow for a total of 20 greenhouse ranges (10 greenhouse hoops per range)
and a processing/distribution facility including offices. Construction on the
first two greenhouse ranges will begin immediately after we receive permits and
take approximately 30 to 45 days to build. Assuming we receive permits by
mid-February 2000, we anticipate the greenhouses will be completed by the end of
March 2000. Several phases of construction will be planned with the complete
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build-out scheduled for June 2001. Approximately 13 greenhouse ranges are
targeted for construction by the end of December 2000. This will provide total
harvestable area in each range of approximately 30,000 square feet for a total
of approximately 390,000 square feet.
Based on the schedule described above, initial planting of the first two
greenhouses should take place by April 1, 2000 with the first harvests and
delivery of product beginning by the first week in May 2000.
GREENHOUSE DESIGN
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The typical greenhouse structure will consist of 10 hoop-style greenhouse
buildings ("hoops"). Each hoop will be 30 feet in width, 120 feet in length and
10 foot high side walls. When gutter-connected together, these 10 buildings will
make up a "range." The dimensions of each range will be 120 feet wide by 300
feet long. The interior area of each range will be approximately 36,000 square
feet with harvestable area being approximately 30,000 square feet.
In addition, each range will have a 300-foot long by 12-foot wide screened
lean-to that will serve as an intake chamber for cooling pads. The cooling pads
will help to keep temperatures down during the hot, Florida summer months.
The roof of the buildings will be made of a double layer of polyvinyl sheeting
that will be inflated to provide a small degree of insulation without
significantly reducing beneficial solar rays. The side walls will be similarly
constructed using a single layer of polyvinyl sheeting permanently attached. The
end walls will be made of corrugated polycarbonate panels.
Air circulation will be provided by greenhouse exhaust fans in each greenhouse
range (2 fans per greenhouse hoop). These fans draw air into the lean-to intake
chamber, through the cooling pads into the greenhouse growing area and
eventually out of the greenhouse. In addition, circulating fans will be located
throughout each greenhouse range to keep air constantly moving within the
greenhouse growing area.
FEEDING SYSTEM
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The actual mix of nutritional supplements and feeding schedules needed for
optimum growth varies with the following criteria: (i) the daily, weekly and
seasonal climate, (ii) daily analysis of the water supply at the farm location,
(iii) the desired weight and density of the product at harvest, and (iv) plant
absorption rates. Using a hydroponic framework, Pinecrest's testing and
experimentation has resulted in an 80+ mineral supplement for each plant
containing growth-optimizing nutrients not found in the soil or in current
commercial fertilizing products. By using this new supplement mixture, maximum
growth is achieved: in the same square footage where an ordinary soil-based
farmer may plant three harvestable crops in one year, a total of 36 harvests is
achieved.
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Over-farming has depleted soil-grown produce of the micronutrients and trace
minerals that are needed for proper human health. Pinecrest's growing process
schedules the delivery of these micronutrients so that the produce harvested
from each greenhouse is a consistently reliable source of micronutrients for the
consumer. All micronutrients used are plant derived and non-toxic.
Several methods of feeding were considered. After considerable experimentation
and analysis, it was determined that a feed/starve flood system design was the
best all-around system. A brief discussion of the reasoning follows.
Many early hydroponic systems used a constant drip method of irrigation or a
pool that remained present at all times. One of the problems with these
irrigation methods was that beds were constantly wet and it promoted pest and
fungi growth. The feed/starve concept of irrigation is based on the idea that if
the plants are only fed at certain intervals rather than a constant drip feed,
the plants will be heartier and when harvested will survive for a longer period
of time before wilting occurs. This will provide a longer shelf life for the
crops. In addition, since water/nutrient mix is only present for short periods
of time and these periods are few and far between, a significant reduction in
pest and fungi problems related to stagnant moisture will be experienced.
Another benefit of this irrigation method is a significant reduction in the
amount of water and fertilizer needed during the growing process.
A primary variable to be dealt with on a location by location basis is the water
supply. An analysis of the water will be necessary to determine the natural
level of sulfur and iron in the water along with the unmodified pH content of
the water.
In addition, specific levels of certain nutrients will be increased or decreased
on a daily basis regardless of the makeup of the basic formula for that
particular crop in order to thicken the leaves, increase oil content in the
plants and increase stamina or shelf life immediately prior to harvesting.
Increased oil content means more flavor and a higher quality product. Thicker
leaves and increased oil content increases the weight of the produce, which is
sold by the pound.
PINECREST PRODUCTS
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The product mix of each Pinecrest farm will initially be limited to two
categories; herbs and lettuces. Pinecrest anticipates that lettuces and spinach
will comprise approximately 80% of overall production. It is anticipated that
the basic crop mix for the lettuce crops will be: 60% spring mix/mesclun mix;
20% romaine lettuce and 20% spinach.
In addition, gourmet herb crops carrying high markup will also be produced.
Although the anticipated herb crops will only account for approximately 20% of
overall production, approximately one-third of total projected revenues and 40%
of total gross profits will be derived from these crops. The initial anticipated
crop mix for herbs will be approximately: 26% basil, 20% chives, 20% rosemary,
13% thyme, 8% cilantro, 7.5% mint, 2% sage, 1.5% tarragon, 1.5% dill, .5%
chervil and arugula. However, this crop mix may vary somewhat based on customer
base and market trends.
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The costs of production for each type of crop will vary due to crop life,
germination periods, and frequency of harvest and growth rates. The average
production cost of the lettuce and herb crops should approximate 33% of
revenues.
PRODUCT DELIVERY
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One of the Company's primary concerns is with the prompt delivery of fresh, high
quality produce. The Company intends that products will be delivered to its
customers within 24 hours of the time it was harvested. The Company has designed
an inventory management system for its larger customers which requires delivery
personnel to constantly monitor the customer's product usage and shelf life and
replenish as needed while supplementing with additional specific orders. Local
delivery will be accomplished using a 20' x 24' refrigerated box truck with
regional, bulk deliveries being accomplished by refrigerated semi-truck. The
Company plans to lease the box trucks and to contract for the semi-trucks.
TARGET MARKETS
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Pinecrest has defined its primary market as four and five-star hotels and
resorts. Historically, these establishments use large volumes of herbs, lettuces
and gourmet vegetables and usually employ master chefs who concentrate on
quality rather than price. An added attraction is that the hydroponics
technology allows the crops to grow in a completely soil-free environment which
virtually eliminates need for repeated washing.
Secondary markets are cruise ship lines, smaller restaurants, caterers and
retail consumers. These markets are typically more cost conscious and may have
lower consumption levels. The Company believes that establishments having lower
consumption levels but a reputation for higher quality foods will be attracted
to the variety of gourmet lettuce mixes grown by Pinecrest. By offering high
volume crops such as spring mix, mesclun mix, romaine lettuce and spinach, it
will be affordable for the Company to deliver to smaller volume restaurants
because the gourmet herbs and vegetables carry larger profit margins.
The Company will also continue its research and development of producing high
potency medicinal herbs and plants.
MARKETING STRATEGY
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Pinecrest's primary marketing strategy is to target executive chefs at four and
five star resorts and restaurants through distribution of samples and
promotional account servicing. We targeted an initial customer base in central
Florida comprised of several large, high profile restaurants and resorts during
the research and development phase. Contact has been maintained and the Company
has received strong indication of their business. In fact, in some instances,
the potential customers have asked the Company to explore an expanded product
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line with comparable or potentially higher profit margins. Based on indications,
this potential customer base should purchase most of our production for the year
2000. Based upon our experience during the research and development phase,
management does not feel that sales will be a primary concern.
As business increases, a significant number of customers will be acquired within
a central geographic area prior to having enough volume to justify another farm
location. In this situation, a refrigerated semi-truck will transport the
products in bulk to a central distribution facility. This facility could be
similar to a florist shop in design with a large area in the back portion of the
facility to allow for repackaging of the products for delivery to local
customers. The front of the facility would provide a small area for retail and
walk-in traffic for small customers such as caterers. When volume reaches a
level that it can support another farm facility, we will determine a centralized
location and construct a new facility.
We also plan to use Internet marketing to reach customers in remote locations.
Public relations articles written on the quality of the products are expected to
interest many restaurants.
COMPETITION
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The hydroponic produce industry is competitive but fragmented. The Company could
face significant competition. The Company's competitors differ depending on
product type and geographic market with the primary volume of competition coming
from California, Florida, Israel, Central America and Mexico. Several of the
Company's competitors are well established and may have greater assets and
financial resources than the Company, and larger marketing and research and
development budgets.
However, competition in the fresh produce industry is influenced not as much by
price, as by the consistent supply of high-quality produce. In many cases,
competitor products are delivered from another state, across the U.S. or in some
instances from another country. Generally, the produce is not delivered until
over a week after it is harvested. Pinecrest Farms expects to be able to deliver
its products within 24 hours of the time it is harvested and in many instances
within 12 hours.
The Company believes that it can successfully compete in its chosen target
markets due to its advanced hydroponic growing techniques that can produce the
highest quality produce available, efficient, timely delivery and the ability to
meet customers' product demands and price points.
WORLD WIDE WEB
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The Company has a World Wide Web home page at http://www.pncr.net. This web page
contains basic information about the Company, its latest news, technology,
products, investor information and frequently asked questions, as well as how to
contact the Company.
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TRADEMARKS AND PATENTS
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At this time, the Company has no patents or trademarks, however the Company's
intellectual property attorneys are reviewing the possibilities of a patent on
the nutritional formula used in its growing process.
GOVERNMENT APPROVALS
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Other than local business licenses, none of the Company's products or services
require any government approval. The Company does not know of any existing or
probable governmental or environmental regulations that would have an effect on
its business.
SERVICE AND SUPPORT
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The primary concern of the market to be serviced is the prompt delivery of
fresh, high quality produce. Generally, the products will be delivered to the
customers within 24 hours of the time they are harvested. In addition, the use
of an inventory management system for larger customers is anticipated. This
system requires the Company's delivery personnel to constantly monitor the
customer's product usage volume and shelf life similar to bread truck delivery
personnel. Many customers prefer this service because it guarantees the freshest
produce and saves time.
Fresh produce must be stored and transported at certain constant temperatures.
Most herbs and lettuces must be stored at approximately 37 degrees Fahrenheit.
However, basil must be stored at approximately 54 degrees Fahrenheit. In many
instances, produce from competitors may be unrefrigerated for several hours
after harvest before it is received at a warehouse where all produce is stored
in one area, regardless of the specific refrigeration requirements of particular
varieties of produce in order to maintain optimum freshness. In addition,
temperature variances within the warehouse can be dramatic. The Company will
typically deliver in 20'-24' refrigerated box trucks partitioned for zoned
cooling to maintain temperatures at desired levels.
Sales and delivery personnel will discuss product and service concerns of
customers on a frequent and regular basis in an effort to avoid product quality
problems, service issues and to address changing product needs of customers.
SEASONALITY
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The Company's product diversification and its ability to grow products year
round is such that it does not expect to experience seasonal up or down turns.
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SOURCES AND AVAILABILITY OF RAW MATERIALS
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The Company's regular operations relies on the availability of seeds, growing
media, and nutrient growing solution ingredients in order to grow its products.
None of these materials are proprietary, it is how and when they are used that
is unique. All of these ingredients are readily available from a wide variety of
vendors, none of which are deemed to be a critical single source supplier.
Materials used to build the greenhouse ranges are also readily available from
numerous vendors across the U.S.
WORKFORCE
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The Company currently employs 2 administrative individuals with one
administrative individual being employed in Pinecrest Farms. Once construction
is complete and production begins, the Company expects to employ additional
individuals in areas of production, sales and marketing and administration. By
the end of December 2000, the Company expects to hire five additional employees
for administration and plans to lease approximately 100 individuals in the
following functional areas: 80 Production individuals for quality control,
distribution, production and greenhouse supervisors, harvesting, packing and
shipping and delivery; 7 individuals in Sales & Marketing; and 13 individuals in
Administration. The Company does not currently have nor does it expect to have a
collective bargaining agreement with its employees.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
Introduction
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This discussion summarizes the significant factors affecting the operating
results, financial condition and liquidity/cash flow of the Company during the
period from Inception (September 5, 1997) to June 30, 1999 and the six months
ended December 31, 1999. This should be read in conjunction with the financial
statements and notes thereto included. Meaningful quarterly results are
unavailable for the period from Inception (September 5, 1997) to December 31,
1999 because of the development stage nature of the Company and the fact that it
had no revenue generating operations during that period. However, a financial
audit was performed for the period from Inception to June 30, 1998 and also for
the period from July 1, 1998 to June 30, 1999. Reviewed interim financial
statements are also provided for the six months ended December 31, 1999. The
following comments will discuss the Company's development stage operating
results on a standalone basis as opposed to a comparative basis.
Cash Requirements Analysis
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Due to the Company being in a development stage, operations and capital
expenditures have been completely financed through the use of short-term and
long-term credit arrangements as well as the sale and/or exchange of the
Company's common stock. Cash generated over the past 12 months from the
Company's financing activities has totaled approximately $558,000 (inclusive of
the funds raised through Michael Foundation, Limited, with a subscription
receivable due of $437,000). Arrangements have been made for the availability
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of approximately $600,000 in additional cash from financing activities including
Long-term debt and lease arrangements. This should provide adequate funding to
carry the Company until Phase I of the Lithia Food Production Facility is
complete and operational at the end of June, 2000. At that point the Company
believes that cash generated from its farming operation will be sufficient to
maintain operations.
Once in operation, it is anticipated that Phase I will produce monthly gross
revenues of approximately $200,000 and monthly net income of approximately
$75,000.
The Company is pursuing a Federal Rural Development Act Loan or other comparable
financing to finance Phase II of the Lithia facility. While the Company has
already received significant interest and expects to complete such a transaction
within the next few months, it is possible the Company could be unsuccessful in
obtaining such financing. In this event, the rate of build-out of Phase II, and
resulting revenues and profits would be slower than projected since construction
would then be financed out of profits. However, the Company would still be able
to maintain a positive cash flow position and positive net profits from
operations.
Once Phase II is completed and in operation, total monthly revenues from Phase I
and Phase II facilities are anticipated to be in excess of $700,000 and monthly
net income to be in excess of $300,000.
Based on our cash flow projection, Phase III is to be financed out of profits
and, therefore, no financing is anticipated at this time.
Product Research & Development
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The Company will continue to research new product lines and methods of
production. However, these expenditures have already been budgeted for and it is
not anticipated that any additional funding will be necessary for these
operations.
Significant Capital Expenditures
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The Company spent approximately $175,000 on engineers, permitting, materials and
equipment to be incorporated into the Phase I Lithia facility and approximately
$10,000 on research and development in November and December of 1999. We
anticipate that the additional costs to complete Phase I of the Lithia facility
and necessary overhead expenditures will total approximately $500,000.
Phase II costs for greenhouses and equipment will total approximately $250,000
per greenhouse range. Phase II will consist of 5 greenhouse ranges for a total
of $1,250,000.
Phase I and II costs are all expected to be expended in the year 2000.
Phase III costs are anticipated to be expended beginning at the end of 2000 and
continuing into 2001. The rate of completion of Phase III will depend greatly
upon the timing of the build-out of Phase II. Phase III construction costs will
also be approximately $250,000 per greenhouse range. A total of 13 greenhouse
ranges will be built in Phase III at a total cost of $3,250,000.
Changes in Personnel
- --------------------
The Company currently has 2 employees that are employed by the parent
corporation, Pinecrest Investment Group, Inc. and 1 employee of the subsidiary
corporation, Pinecrest Farms, Inc. It is anticipated that Pinecrest will hire
approximately five employees over the next twelve months. Pinecrest Farms is
anticipated to increase to approximately 100 employees over the next twelve
months with the majority of them being provided through an employee leasing
firm.
13
<PAGE>
Impact of Year 2000 Issues
- --------------------------
Due to the method of storing date information in computers using two digits to
indicate the year instead of four digits (for example "99 instead of "1999")
some computer systems may not accept input of, store, manipulate or output dates
in the years 2000 or thereafter without error or interruption. This is known as
the Year 2000 or Y2K problem. It is possible that the Company's software
products and internal information systems and the business systems of its
suppliers or customers will be negatively impacted by Year 2000 problems.
Pinecrest has conducted a review of its business systems in an attempt to
identify ways in which its systems could be affected by Year 2000 problems.
Based on this review, the Company believes that its internal information systems
are Year 2000 compliant and the Company does not expect the Year 2000 issue to
have a material adverse affect on its systems.
All internal information systems of the Company were purchased in 1998 or later,
well after software vendors stated that their products were Year 2000 compliant.
The Company believes that the risk of Year 2000 issues and the costs associated
with Year 2000 issues are minimal.
The Company has backed up all corporate information systems and all systems are
properly functioning.
Item 3. PROPERTIES.
The Company's principal office is located at 1211 Tech Blvd., Suite 101, Tampa,
Florida 33619, where it leases approximately 1,200 square feet on a month to
month basis.
The Company also owns approximately 40 acres in eastern Hillsborough County,
Florida located one mile east of Highway 39 on Highway 640 where it plans to
build its first hydroponic farming facility in March 2000.
14
<PAGE>
Item 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth, as of the filing date of this Form 10SB,
information concerning ownership of the Company's securities by (i) each
Director, (ii) each executive officer, (iii) all Directors and executive
officers as a group; and (iv) each person known to the Company to be the
beneficial owner of more than five percent of each class:
<TABLE>
<CAPTION>
Name and Address Amount Percent
Title of Class of Beneficial Owner (1) Owned of Class(2)
-------------- ------------------------- ------- -----------
<S> <C> <C> <C>
Common David B. Howe, Chairman, President
and Chief Executive Officer
1211 Tech Blvd., Suite 101
Tampa, FL 33619 512,500 6.803%
Common Sheryl B. Salvadore, Secretary,
Treasurer and Director
1211 Tech Blvd., Suite 101
Tampa, FL 33619 12,500 0.165%
Common Thomas M. Tillman(3)
President of Pinecrest Farms, Inc.
1211 Tech Blvd., Suite 101
Tampa, FL 33619 79,168 1.051%
Common Robert Goldberg
PO Box 17663
Clearwater, FL 33762 450,000 5.973%
Common Walter W. Knitter
PO Box 22023
Tampa, FL 33622 635,500 8.435%
Common Michael Foundation, Limited(4)
c/o First Nevisian Corporate Serv.
Henville Building, Prince Charles St.
Charleston, Nevis
West Indies 3,804,589 50.500%
All Executive Officers and Directors
as a group (3 persons) 604,168 8.019%
- -------------------------------------------------------------------------------------------
</TABLE>
(1) Beneficial ownership has been determined in accordance with Rule 13d-3
under the Exchange Act and unless otherwise indicated, represents
securities for which the beneficial owner has sole voting and investment
power.
(2) Based upon 7,533,804 shares currently outstanding.
(3) All shares issued to Tillman & Associates, Inc., a corporation controlled
by Thomas M. Tillman.
(4) Michael Foundation, Ltd. is controlled by Simon Shaw.
Incentive Stock Option Plan
- ---------------------------
On January 10, 2000, the Board of Directors of the Company adopted the Pinecrest
Investment Group, Inc. Incentive Stock Option Plan December 1999 (the "Plan")
which was subsequently approved by a majority of the shareholders on January 10,
2000. The Plan will be administered by the Executive Committee of the Board of
Directors of the Company and authorizes the Committee to grant or award to
eligible executive and employees of the Company and its subsidiaries, until
January 10, 2010, incentive stock options for up to 1,200,000 shares of
restricted common stock of the Company.
15
<PAGE>
The following is a general description of certain features of the Plan that is
annexed in this filing as an exhibit.
Participation. Participants will be selected by the Committee from time to
time among the executives and key employees of the Corporation or of any
subsidiary of the Corporation. Directors who are employees of the
Corporation or of any subsidiary of the Corporation will be eligible for
inclusion. Participation in the Plan will be on an individual basis and the
Committee shall have complete discretion in selecting those persons, if
any, who may participate.
Number of Shares. The total number of shares of common stock for which
options may be granted pursuant to this Plan shall not exceed 1,200,000
shares except that, if options as to any shares lapse without being
exercised, such shares may be re-optioned. Within the limits herein
contained, the number of shares for which options will be granted from time
to time and the periods for which the options will be outstanding will be
determined by the Committee.
No participant may be granted an option pursuant to this Plan in any one
calendar year to purchase more than $100,000 of common stock of the
Corporation, valued at the time of the grant, provided, however, that
one-half of any unused portion of such amount may be carried over or
granted in any of the three succeeding calendar years, and as such shall be
added to the otherwise applicable dollar limitation for such succeeding
years.
Option Price. The Option price of options granted pursuant to this Plan
shall be (a) one hundred percent (100%) or (b) in the case of an individual
who owns stock possessing more than 10 percent of the total combined voting
power of all classes of stock of the Corporation or of any subsidiary of
the Corporation one hundred ten percent (110%), of the fair market value of
the shares of common stock at the date on which the options are granted,
which date shall be the date on which the letters to the grantees setting
forth the terms of the option are executed by the Corporation.
Term of the Option. No option granted pursuant to this Plan shall be
exercisable after the expiration of ten years from the date the option is
granted. Within these limits, the Committee will determine the expiration
date of the options.
Time of Exercise. An option granted pursuant to this Plan may be exercised
in whole or in part at any time after one year from the date of grant until
the expiration of the term of the option. No option granted pursuant to
this Plan shall be exercised by the grantee while there is outstanding any
Incentive Stock Option previously granted to him to purchase stock in the
Corporation or any corporation which at the time of granting the option is
a parent or a subsidiary of the Corporation or a predecessor corporation of
any such corporation.
16
<PAGE>
Payment of Shares. Upon the exercise of an option granted pursuant to this
Plan, payment may be made at Employee's option, in cash or by check.
Sale of Option Shares. The participant must represent and warrant to the
Corporation as condition of the granting of an Option hereunder, and for
the continued validity thereof, that the participant will not sell or offer
for sale any shares of stock obtained hereunder in the absence of an
effective registration statement as to such stock under the Securities Act
of 1933, as amended, unless the Corporation shall have received opinion of
counsel satisfactory that such registration is not required, and that no
stock will be sold or offered for sale in violation of any applicable state
securities legislation. The Corporation may legend any shares issued on
exercise of an Option to reflect this provision.
Amendment to the Plan. The Plan may be amended at any time by the Board of
Directors, provided that no amendment shall be made without the approval of
the stockholders which shall increase the total number of shares covered by
the Plan, change the description of the class of employees eligible to
receive options, or reduce the option price.
No stock options have yet been granted under the Plan.
Item 5. DIRECTORS AND EXECUTIVE OFFICERS.
The following table sets forth certain information concerning each of the
Company's directors and executive officers:
Name Age Position
- ---- --- --------
David B. Howe 47 Chairman of the Board, President, Chief
Executive Officer
Sheryl B. Salvadore 43 Secretary, Treasurer, Director
Thomas M. Tillman 42 President, Pinecrest Farms, Inc.
David B. Howe - Chairman of the Board, President, and Chief Executive Officer -
Mr. Howe has served as Chairman of the Board, President and Chief Executive
Officer of the Company since founding the Company in January 1999. From 1988 to
the present, Mr. Howe has served as President of Blackhawk Financial Group,
Inc., a privately held Florida corporation specializing in mergers and
acquisitions. Mr. Howe earned a BA in business finance at the State University
of New York at Fredonia where he has just completed a 12-year term as a member
of its Foundation Board.
Sheryl B. Salvadore - Secretary, Treasurer and Director - Ms. Salvadore has
served as Secretary, Treasurer and Director of the Company since January 1999.
From 1995 to the present, Ms. Salvadore has served as Secretary of Blackhawk
Financial Group, Inc., a privately held Florida corporation specializing in
mergers and acquisitions.
17
<PAGE>
Thomas M. Tillman - President of Pinecrest Farms, Inc. - Mr. Tillman has served
as President of Pinecrest Farms, Inc. since November, 1999. From 1997 to the
present, he has served as President of Tillman & Associates, Inc., a privately
held Florida corporation specializing in financial and management consulting.
From 1996 to 1997, Mr. Tillman served as Vice President and Chief Financial
Officer of Employers 1st Trust Corp., an employee leasing company. In October,
1992, Mr. Tillman filed for protection under Chapter 7 of the United States
Bankruptcy Code with the action being discharged as of January 1993. From 1993
to 1997, Mr. Tillman served as President of ATR Financial Group, Inc., a
privately held Florida corporation providing accounting and financial
consulting. Mr. Tillman earned a BA in Pre-law and Accounting from the
University of South Florida.
Item 6. EXECUTIVE COMPENSATION.
The Summary Compensation Table below details all plan and non-plan compensation
awarded to, earned by, or paid to the named executive officers in 1998 and in
1999.
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------
Annual Compensation
- --------------------------------------------------------------------------------
Name
and Principal Position Year Salary ($)
(a) (b) (c)
- --------------------------------------------------------------------------------
David B. Howe (1) 1999 0
Chairman, President, CEO 1998 0
- --------------------------------------------------------------------------------
Sheryl B. Salvadore (2) 1999 0
Secretary, Treasurer, Director 1998 0
- --------------------------------------------------------------------------------
Thomas M. Tillman (3) 1998 0
President of Pinecrest Farms, Inc. 1999 $13,846
- --------------------------------------------------------------------------------
(1) Mr. Howe entered into an employment agreement with the Company at an annual
salary of $156,000 beginning in January, 2000.
(2) Ms. Salvadore will receive annual compensation of $39,000 beginning in
January, 2000. During 1999, Ms. Salvadore received a stock grant of 10,000
shares of restricted common stock of the Company valued at $1.50 per share.
(3) Mr. Tillman entered into an employment agreement with the Company at an
annual salary of $120,000 beginning in November 1999 of which $13,846 was
paid through December 31, 1999. Mr. Tillman was also paid car and gasoline
allowances in 1999 totaling $1,038. In 1999, Mr. Tillman also received
compensation in the amount of $71,500 in exchange for consulting services
paid to Tillman & Associates, Inc.
In 1998 and in 1999 there were no Bonuses or Other Annual Compensation awarded,
earned or paid.
In 1998 and in 1999 there was no Long Term Compensation and no Other
Compensation awarded, earned or paid. Pinecrest's directors are not compensated
and the Company has no compensation plan for its directors. The Company's
directors are elected by the shareholders at an annual meeting.
18
<PAGE>
Item 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On March 2, 1999, the Company purchased 2,185,000 shares of restricted common
stock from President, David B. Howe and independent investors for $90,000 (Mr.
Howe's cost) payable as follows: $30,000 cash and a note in the principal amount
of $60,000 bearing 10% simple interest, due September 2, 2000. These shares were
acquired by Mr. Howe and the investors in connection with his purchase of the
Company. These shares were then simultaneously exchanged as part of the purchase
price for the hydroponics technology from Michael Foundation, Limited, and
Tillman & Associates, Inc., that is necessary in the overall operation of the
hydroponic growing system. On December 6, 1999, the $60,000 promissory note to
Mr. Howe was converted into restricted common shares of the Company at a rate of
$6.00 per share for a total of 10,000 shares. The interest due on the note of
$3,027.13 was paid in cash.
On December 6, 1999, the remaining balance of $80,000 due to Tillman &
Associates, Inc. on the promissory note given in exchange for technology, was
converted into restricted common stock of the Company at a rate of $6.00 per
share for a total of 13,334 shares. The interest due on the note of $6,525.19
was paid in cash. Mr. Tillman is President of Tillman & Associates, Inc. and is
President of Pinecrest Farms, Inc.
In March 1999, the Company entered into a convertible line of credit arrangement
with Michael Foundation, Limited, a major stockholder of the Company. This
credit arrangement called for Michael Foundation, Limited to provide working
capital for the Company while it was arranging for acceptable long-term funding
for its Phase I construction and working capital needed until the Company
attained profitability. This line of credit was for a total of $900,000, which
amount could be converted into restricted common stock of the Company at a price
of $6.00 per share. By the end of November, 1999, the Company had borrowed
approximately $300,000 against the Michael Foundation, Limited line of credit.
In December, 1999, the line of credit arrangement with Michael Foundation,
Limited, was modified to call for the absolute purchase of 150,000 shares of
restricted common stock by Michael Foundation, Limited at a price of $6.00 per
share for a total of $900,000. As of December 31, 1999, the shares had been
issued to Michael Foundation, Limited and were being held in escrow by legal
counsel for Pinecrest, the Company had received a total of $463,000 cash and
carried a Subscription Receivable of approximately $437,000.
Item 8. DESCRIPTION OF SECURITIES.
Common Stock
- ------------
The Company is authorized to issue 100,000,000 shares of common stock, .001 par
value per share. The holders of each share are entitled to one vote for each
share held and are entitled to dividends when and as declared by the Board of
Directors. At December 31, 1999, common shares issued and outstanding totaled
6,027,134. Currently, 7,533,804 common shares are issued and outstanding.
Preferred Stock
- ---------------
The Company is authorized to issue 10,000,000 shares of preferred stock, no par
value, which may be issued in classes or series with various rights and
designations to be determined by the Board of Directors. Each share of preferred
stock is entitled to dividends when and if declared by the Board of Directors.
To date, no preferred shares have been issued.
19
<PAGE>
PART II
Item 1. LEGAL PROCEEDINGS.
The Company is not a party to any material litigation.
Item 2. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS.
The Company's common stock is listed on the OTC Bulletin Board under the trading
symbol "PNCR." The Company's common stock has been traded since January 1999.
Currently, the following brokerage firms are making a market in the Company's
common stock: Wien Securities, Herzog & Co., Mayer Schweitzer, Inc., GVR
Company, Hill Thompson Magid & Co., Knight Securities, Sharpe Capital, Inc.,
Brockington Securities, Inc., NAIB Trading Corp., Lloyd Wade Securities, Inc.,
Paragon Capital Corp., Sierra Brokerage Services, Inc., Fleet Bank, Inc., and
Paradise Securities, Inc.
The following table sets forth for the period indicated, the range of high and
low closing bid quotations per share. These quotations represent inter-dealer
prices, without retail markups, markdowns or commissions and may not necessarily
represent actual transactions.
Price per Share
---------------
Period Ended High Low
- ------------ ---- ---
Second Quarter 1999 (ending 12/31/99) $20.00 $5.00
First Quarter 1999 (ending 09/30/99) $ 6.38 $3.00
Fourth Quarter 1998 (ending 06/30/99) $10.38 $2.00
Third Quarter 1998 (ending 03/31/99) $ 5.75 $1.50
The Company has approximately 201 shareholders of record. The Company has not
paid, nor does it anticipate paying dividends in the foreseeable future.
Although the Company announced in June, 1999 that it was finalizing arrangements
to be listed on the American Stock Exchange, these arrangements had not been
finalized as of the filing of this document.
The common shares of the Company are subject to the "Penny Stock Rules" of Rule
15(g) of the Securities Exchange Act of 1934. These rules impose additional
sales requirements on broker dealers selling securities to persons other than
established customers and accredited investors as defined in the Securities Act
of 1933. Brokerage transactions falling within these rules require brokers to
20
<PAGE>
make a special suitability determination for the purchaser and to obtain the
purchaser's written consent to make the trade before making the sale.
Accordingly, these Penny Stock Rules may adversely affect the ability of the
purchasers to resell these securities.
Information Statement
- ---------------------
On or about January 10, 2000, the Company mailed to shareholders of record as of
close of business on December 31, 1999, an Information Statement in which
proxies were not requested or required. The Information Statement was mailed to
the Company shareholders in connection with a proposed action by written consent
to authorize and approve the following actions:
(a) an Amendment to the Company's Articles of Incorporation to authorize a
class of Preferred Stock, consisting of 10,000,000 authorized shares,
no par value and to authorize the Board of Directors to issue such
Preferred Stock in one or more series, without further approval of
stockholders of the Company and to permit the Board of Directors to
establish the attributes of any series of Preferred Stock prior to the
issuance of any such series.
(b) A forward stock split of 5 shares for each 4 shares of common stock
issued and outstanding on the record date of December 31, 1999. Any
fractional share will be rounded up to the nearest full share. The end
result will be the addition of approximately 1,506,770 shares of
common stock.
(c) A tender offer by the Company to purchase shares of common stock from
its shareholders for $12 per share with the purchase price to be paid
in the form of a debenture with 12% interest to be paid quarterly. The
Company shareholders will have until February 29, 2000 to tender the
shares and can call for payment anytime after August 31, 2000 and the
Company can redeem the debentures at any time. At the time of this
filing, no shares had been tendered.
(d) An Agreement and Plan of Reorganization to acquire 100% of the issued
and outstanding common stock of ISBRE or an aggregate of 7,600,000
shares of common stock of the Company. The acquisition is expected to
close on or about January 31, 2000. Pursuant to the Agreement, the
Company will issue an aggregate of 7,600,000 shares of the Company's
common stock to the ISBRE shareholders and retire certain shares owned
by the current shareholders of ISBRE. Accordingly, the new combined
entity will have approximately 15,200,000 shares issued and
outstanding with the ISBRE shareholders owning approximately 50% of
the outstanding common stock of the Company.
21
<PAGE>
Subsequent to the mailing of the Information Statement to the Company's
shareholders, (i) the Articles of Amendment to the Articles of Incorporation
were filed to provide for the authorization of 10,000,000 preferred shares at no
par value; (ii) 1,506,770 common shares were issued by the Company's transfer
agent in connection with the 5 for 4 stock split and the certificates were
mailed to the shareholders on February 4, 2000; (iii) based on the advice of
legal counsel, the Company notified its shareholders on February 4, 2000 that
the stock tender offer had been abandoned; and (iv) due to protracted due
diligence on the potential merger with ISBRE, the Company notified its
shareholders on February 4, 2000 that the Company had abandoned its plans to
pursue this merger.
Item 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
None.
Item 4. RECENT SALES OF UNREGISTERED SECURITIES.
The following securities were sold in reliance upon Regulation D, Rule 504 of
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder. The company kept 100% of the proceeds from the sale of
securities and no underwriters were used and no commissions or discounts were
paid.
ISSUE NO. OF
DATE TITLE SHARES SHARES ISSUED TO CONSID. AMOUNT
- ---- ----- ------ ---------------- ------- ------
02/11/99 Common 380,000 Michael Foundation Services $ 3,800
02/11/99 Common 380,000 Maple Hill Trust Services 3,800
02/11/99 Common 280,000 Daisy Schapheer Cash 2,800
02/11/99 Common 360,000 Robert Goldberg Cash 3,600
02/11/99 Common 200,000 Walter W. Knitter Cash 2,000
02/24/99 Common 150,000 Ralph Loveday Cash 4,500
12/15/99 Common 150,000 Michael Foundation (1) Cash 900,000
- ------------
(1) As of December 31, 1999, these shares had been isued and are being held in
escrow pending payment of a subscription receivable of $437,000.
Item 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Articles of Incorporation provide that the Company shall
indemnify, to the fullest extent permitted under Florida law, its directors and
officers against certain liabilities incurred with their service in such
capacities. In addition, the Articles provide that the personal liability of the
officers to the Company and its stockholders for monetary damages will be
limited.
ADDITIONAL INFORMATION
The Exchange Act Registration Statement and the exhibits and schedules thereto
filed by Pinecrest may be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 5th Street NW,
Washington, D.C. 20549. Information may be obtained on the operation of the
Public Reference Room by calling the Commission at 1-800-SEC-0330. The
Commission maintains an Internet site that contains reports, proxy and
information statements, and other information regarding issuers that file
electronically (http://www.sec.gov.) The Internet address for the Company is
http://www.pncr.net.
22
<PAGE>
PINECREST INVESTMENT GROUP, INC.
FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 1999
<PAGE>
INDEPENDENT AUDIT REPORT
To Shareholders of:
PINECREST INVESTMENT GROUP, INC.
TAMPA, FLORIDA
We have audited the accompanying balance sheet of PINECREST INVESTMENT GROUP,
INC. as of June 30, 1999, and the related statements of income, stockholders'
equity and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our 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 accompanying financial statements referred to above present
fairly, in all material respects, the financial position of PINECREST INVESTMENT
GROUP, INC. as of June 30, 1999, and the results of its operations and its cash
flows for the year then ended in conformity with generally accepted accounting
principles.
DRAKEFORD & DRAKEFORD, L.L.C.
August 4, 1999
F-1
<PAGE>
PINECREST INVESTMENT GROUP, INC.
FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 1999
INDEX
-----
Auditor's Report ................................................. F-1
Balance Sheet .................................................... F-2
Income Statement ................................................. F-3
Statement of Cash Flows .......................................... F-4
Statement of Changes in Stockholders' Equity ..................... F-5
Notes to Financial Statements .................................... F-6-10
<PAGE>
PINECREST INVESTMENT GROUP, INC.
BALANCE SHEET
JUNE 30, 1999
ASSETS
------
Current Assets
Cash $ 1,882
----------
Total Current Assets 1,882
Property, Plant, and Equipment
Land 366,263
----------
Total Property, Plant, and Equipment 366,263
Other Assets
Hydroponic Technology- R & D 3,452,550
Organizational Cost 193
Less: accumulated amortization (5,878)
----------
Total Other Assets 3,446,865
----------
TOTAL ASSETS $3,815,010
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities
Accounts Payable $ 2,305
Accrued Interest Payable 6,205
Notes Payable-Current 129,464
Mortgage Payable-Current 288,000
----------
Total Current Liabilities 425,974
Long-Term Liabilities
Notes Payable, Officer 60,000
----------
Total Long-Term Liabilities 60,000
Stockholders' Equity
Common Stock, $.001 par value,
100,000,000 authorized, 5,841,200 issued
and outstanding 5,841
Additional Paid-in Capital 3,401,992
Retained Earnings (Deficit) (78,797)
----------
Total Stockholders' Equity 3,329,036
----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $3,815,010
The accompanying notes are an integral part of the financial statements.
F-2
<PAGE>
PINECREST INVESTMENT GROUP, INC.
INCOME STATEMENT
FOR THE YEAR ENDED JUNE 30, 1999
Income (Development Stage)
Operating Expenses
Bank Charges $ 115
Dues and Subscriptions 160
Consulting Fees 26,760
Amortization Expense 5,853
Insurance 430
Legal and Professional 8,500
Postage and freight 875
Marketing Expense 679
Rent 1,000
Office Supplies and Expense 569
Telephone 2,337
Stock Transfer Fees 2,198
Public Stock and Administrative Fees 5,000
Miscellaneous Expense 844
--------
Total Operating Expenses 55,320
Other Expenses
Interest Expense 13,256
NET LOSS ($68,576)
========
Earnings Per Share (Loss) $ (.014)
Weighted Average Shares Outstanding 4,806,132
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
PINECREST INVESTMENT GROUP, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 1999
Net Loss ($ 68,576)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Amortization expense 5,853
-----------
Net cash used in operating activities (62,723)
Increase (Decrease) in:
Accounts payable 2,305
Accrued interest 6,205
-----------
Net Cash Provided (Used by
Operating Activities) (54,213)
Cash Flows From Investing Activities:
Land (366,263)
Other assets (3,452,620)
-----------
Net Cash Used By Investing Activities (3,873,096)
Cash Flows From Financial Activities:
Notes & mortgages 477,464
Common Stock 3,397,410
-----------
Increase in cash $ 1,778
Cash and cash equivalents,
beginning of period 104
-----------
Cash and cash equivalents,
end of period $ 1,882
===========
The accompanying notes are an integral part of the financial statements
F-4
<PAGE>
<TABLE>
<CAPTION>
PINECREST INVESTMENT GROUP, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED JUNE 30, 1999
Common Shares Preferred Shares Capital Amount Retained Earnings
------------- ---------------- -------------- -----------------
<S> <C> <C> <C> <C>
Balance, June 30, 1998 4,041,200 $ 6,382 ($ 10,221)
Common Shares Issued under
Rule 504 1,750,000 $ 13,660
Activity Pursuant to Technology
Purchase:
Common Shares Retired (2,185,000) $ (90,000)
Common Shares Issued 2,235,000 $ 3,473,750
Net Loss -Year Ended
June 30, 1999 (68,576)
----------- -------- ----------- ------------
Balance, June 30, 1999 5,841,200 3,407,833 ($ 78,797)
=========== ======== =========== ===========
The accompanying notes are an integral part of the financial statements.
F-5
</TABLE>
<PAGE>
PINECREST INVESTMENT GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE A- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
The Company was incorporated on September 9, 1997, in the State of Florida under
the name of Synthetic Flowers of America, Inc. On January 15, 1999, a stock
purchase agreement was signed between Synthetic Flowers of America, Inc. and
David B. Howe, and the corporate name was changed to Pinecrest Investment Group,
Inc. (See Note B-Stockholders' Equity)
Year End
The Company has elected June 30th as its fiscal year end.
Cash, Equivalents and Fair Value of Financial Instruments
All highly liquid investments with maturaties of three months or less when
purchased are cash equivalents. Cash equivalents are carried at the lower of
cost or market. Financial instruments that potentially subject the Company to a
concentration of credit risk consist principally of cash. During the period
presented the Company did not maintain cash deposits at financial institutions
in excess of the $100,000 limit covered by the Federal Deposit Insurance
Corporation. The Company does not hold or issue financial instruments for
trading purposes nor does it hold or issue interest rate or leveraged derivative
financial instruments.
Net Loss Per Share
In February 1997, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 128, "Earnings Per Share." SFAS No. 128 supersedes and simplifies the
existing computational guidelines under Accounting Principles Board ("APB")
Opinion No. 15, "Earnings Per Share." The statement is effective for financial
statements issued for periods ending after December 15, 1997. Among other
changes, SFAS No. 128 eliminates the presentation of primary earnings per share
and replaces it with basic earnings per share for which common stock equivalents
are not considered in the computation. It also revises the computation of
diluted earnings per share. The Company has adopted SFAS No. 128 and there is no
material impact to the Company's earnings per share, financial condition, or
results of operations. The Company's earnings per share have been restated for
all periods presented to be consistent with SFAS No. 128. The basic loss per
share is computed by dividing the net loss for the period by the weighted
average number of common shares outstanding for the period. When present, common
stock equivalents are excluded from the computation if their effect would be
anti-dilutive. Shares issued at inception are considered to be outstanding for
the entire period presented.
F-6
<PAGE>
PINECREST INVESTMENT GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE A- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-(Continued)
Income Taxes
Deferred income taxes may arise from temporary differences resulting from income
and expense items reported for financial accounting and tax purposes in
different periods. Deferred taxes are classified as current or non-current,
depending on the classifications of the assets and liabilities to which they
relate. Deferred taxes arising from temporary differences that are not related
to an asset or liability are classified as current or non-current depending on
the periods in which the temporary differences are expected to reverse. The
deferred tax asset related to the operating loss carryforward has been fully
reserved. The Company has not provided current or deferred income taxes for the
period presented due to a loss from operations. The Company currently has a net
operating loss carryforward which expires in 2013. The tax benefit of the loss
has been fully reserved as its realization in future periods is not assured.
NOTE B-STOCKHOLDERS' EQUITY
On September 5, 1997, in connection with the original organization of the
Company, 4,000,000 shares of common stock was issued to Sheila Langley, the
original President of the Company, for services provided and reimbursement of
organizational costs and stock offering costs incurred by the Company but paid
for by Langley. Fair value used for this transaction of $.0025 per share is
based upon the fair value to the Company of the services provided and billings
from the Company's attorney.
Subsequently, on January 15, 1999, David B. Howe executed a stock purchase
agreement on behalf of himself and several independent investors to purchase
3,680,000 of the 4,000,000 shares owned by Langley for $150,000 cash. On March
2, 1999, the Company repurchased 2,185,000 shares of the 3,680,000 purchased by
Howe and the investors, for the purchase of the hydroponics technology from
Michael Foundation, Ltd. (See Note-E- Related Party Transactions); of the
remaining 1,495,000 shares, 400,000 shares were issued to Howe and the balance
between the investors.
On January 16, 1999, the Articles of Incorporation were amended to provide that
the aggregate number of shares of capital stock that the Corporation shall be
authorized to have outstanding at any one time shall be one hundred million
shares of common stock at $.001 par value per share and twenty-five million
shares of preferred at $.001 par value per share.
F-7
<PAGE>
PINECREST INVESTMENT GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE C-OTHER ASSET-HYDROPONICS TECHNOLOGY
On March 2, 1999, the Company entered into agreements with Michael Foundation,
Ltd., a West Indies corporation, and Tillman & Associates, Inc., a Florida
corporation, for the purchase of certain hydroponics technology at a total
purchase price of $3,437,500. The purchase price in the agreement with Michael
Foundation, Ltd., consisted of 2,185,000 shares of restricted common stock with
a current market value of $1.50 per share. The purchase price in the agreement
with Tillman & Associates, Inc., consisted of 50,000 shares of restricted common
stock with a current market value of $1.50 per share plus a note in the amount
of $85,000.
The aforementioned information and technology includes, hydroponic growth
solution formulas, equipment and greenhouse specifications, crop and equipment
maintenance plans and programs, and trade secrets.
An independent expert analysis opinion, dated January 22, 1999, was performed by
Jerry Pruitt, an agricultural consultant from Marbury, MD. His test included the
validity of the Hydroponics Growing System and the salability of the
retail/wholesale products derived from the process. Mr. Pruitt valued the
Hydroponics Growing System purchased by the Company at $3.2 million dollars
based on man hours and research and development costs.
F-8
<PAGE>
PINECREST INVESTMENT GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE D-CURRENT AND NON-CURRENT DEBT
Current and non-current debt consists of the following notes and mortgages
payable:
<TABLE>
<CAPTION>
Current Non-Current Total
------- ----------- -----
<S> <C> <C> <C>
Perfect Produce, Inc.-Line of Credit
Dated March 9, 1999, $100,000 Limit
Rate of interest- 8% per annum. Due
October 1, 1999 $ 44,464 -0- $ 44,464
Tillman & Associates, Inc.
Hydroponic technology purchase,
dated March 2, 1999. Rate of
interest- 10% per annum. Due
December 31, 1999. 85,000 -0- 85,000
Hopewell Land Partners. Ltd.
Secured by 40 acres,Lithia, Fl.
Dated April 9, 1999. Rate of
interest- 12%, simple interest.
Interest only, balance April 9, 2000 288,000 -0- 288,000
David Howe,Officer Stock purchase
dated March 2, 1999. Rate of
interest- 10% per annum.
Due September 2, 2000 -0- 60,000 60,000
--------- ------- ---------
TOTALS $ 417,464 60,000 $ 477,464
========= ======= =========
(See Note-E)
F-9
</TABLE>
<PAGE>
PINECREST INVESTMENT GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE E- RELATED PARTY TRANSACTIONS
On March 2, 1999, the Company purchased 2,185,000 shares of restricted common
stock from President, David B. Howe and independent investors for $90,000
(Howe's cost) payable as follows: $30,000 cash and a note in the principal
amount of $60,000 bearing 10% simple interest, due September 2, 2000. These
shares were acquired by Howe and the investors in connection with his purchase
of the Corporation. (See Note-B-Stockholders' Equity).
These shares were then simultaneously exchanged as part of the purchase price
for the hydroponics technology from Michael Foundation, Ltd., and Tillman &
Associates, Inc., that is necessary in the overall operation of the hydroponic
herb and lettuce farm.
On March 2, 1999, Sheryl Salvadore, the Company's Corporate Secretary, was
issued a grant of 10,000 restricted common shares as a bonus at a value of $1.50
per share. As of the date of this audit the shares had not been issued.
F-10
<PAGE>
PINECREST INVESTMENT GROUP, INC.
REVIEWED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
To Shareholders of:
PINECREST INVESTMENT GROUP, INC.
TAMPA, FLORIDA
We have reviewed the accompanying balance sheet of PINECREST INVESTMENT GROUP,
INC. as of December 31,1999, and the related statements of income, stockholders'
equity and cash flows for the six months then ended, in accordance with
Statements on Standards for Accounting and Review Services issued by the
American Institute of Certified Public Accountants. All information included in
these financial statements is the representation of PINECREST INVESTMENT GROUP,
INC.
A review consists principally of inquiries of management and analytical
procedures applied to financial data. It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements in order for them to be in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared solely from the
accounts of PINECREST INVESTMENT GROUP, INC.
DRAKEFORD & DRAKEFORD, L.L.C.
February 1, 2000
F-11
<PAGE>
PINECREST INVESTMENT GROUP, INC.
REVIEWED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999
INDEX
-----
Accountant's Report .............................................. F-11
Balance Sheet .................................................... F-12
Income Statement ................................................. F-13
Statement of Cash Flows .......................................... F-14
Statement of Changes in Stockholders' Equity ..................... F-15
Notes to Financial Statements .................................... F-16-21
<PAGE>
PINECREST INVESTMENT GROUP, INC.
BALANCE SHEET
DECEMBER 31, 1999
REVIEWED
ASSETS
------
Current Assets
Cash $ 54,213
Stock Subscriptions Receivable 437,219
----------
Total Current Assets 491,432
Property, Plant, and Equipment
Office Equipment 7,129
Land 370,263
----------
Total Property, Plant, and Equipment 377,392
Other Assets
Hydroponic Technology- R & D 3,452,550
Organizational Cost 193
Investment in Sub-Pinecrest Farms, Inc. 218,985
----------
3,671,728
Less: Accum. Deprec. & Amort. ( 5,878)
----------
Total Other Assets 3,665,850
----------
TOTAL ASSETS $4,534,674
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities
Mortgage Payable-Current $ 288,000
----------
Total Current Liabilities 288,000
Stockholders' Equity
Common Stock, $.001 par value,
100,000,000 authorized, 6,024,530 issued
and outstanding 6,025
Additional Paid-in Capital 4,456,808
Retained Earnings (Deficit) (216,159)
----------
Total Stockholders' Equity 4,246,674
----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $4,534,674
==========
The accompanying notes are an integral part of the financial statements.
F-12
<PAGE>
PINECREST INVESTMENT GROUP, INC.
INCOME STATEMENT
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999
REVIEWED
Income (Development Stage)
Operating Expenses
Executive Bonuses $ 15,000
Advertising 311
Automotive Expense 3,072
Bank Charges 199
Travel and Entertainment 2,204
Consulting Fees 48,756
Insurance 1,608
Repairs and Maintenance 331
Taxes and Licenses 550
Postage and freight 1,225
Marketing Expense 25,023
Rent 6,311
Office Supplies and Expense 2,290
Telephone 6,658
Stock Transfer Fees 1,119
Public Stock and Administrative Fees 6,339
Miscellaneous Expense 627
---------
Total Operating Expenses 121,623
---------
Other Expenses
Interest Expense 15,739
---------
NET LOSS ($137,362)
=========
Earnings Per Share (Loss) $ (.023)
Weighted Average Shares Outstanding 5,858,138
The accompanying notes are an integral part of the financial statements.
F-13
<PAGE>
PINECREST INVESTMENT GROUP, INC.
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999
REVIEWED
Net Loss ($ 137,362)
-----------
Net cash used in operating activities (137,362)
Increase (Decrease) in:
Stock Subscriptions Receivable (437,219)
Accounts payable (2,305)
Accrued interest (6,205)
Notes Payable (189,464)
-----------
Net Cash Provided (Used by
Operating Activities) (772,555)
Cash Flows From Investing Activities:
Land (4,000)
Other assets (7,129)
Other Investments (218,985)
-----------
Net Cash Used By Investing Activities (230,114)
Cash Flows From Financial Activities:
Common Stock 1,055,000
-----------
Increase in cash $ 52,331
Cash and cash equivalents,
beginning of period 1,882
Cash and cash equivalents,
end of period $ 54,213
===========
The accompanying notes are an integral part of the financial statements
F-14
<PAGE>
<TABLE>
<CAPTION>
PINECREST INVESTMENT GROUP, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999
REVIEWED
Common Shares Preferred Shares Capital Amount Retained Earnings
------------- ---------------- -------------- -----------------
<S> <C> <C> <C> <C>
Balance, June 30, 1999 5,841,200 3,401,992 (78,797)
Common Shares Issued
Under rule 504 150,000 900,000
Common Shares Issued
To Discharge Debt 23,334 140,000
Common Shares Issued
As Executive Bonus 10,000 15,000
Net Loss for the six
months ended
December 31,1999 (137,362)
--------- ------- --------- ---------
Balance, December 31, 1999 6,024,534 -- 4,462,833 (216,159)
========= ======= ========= =========
The accompanying notes are an intergral part of the financial statements
F-15
</TABLE>
<PAGE>
PINECREST INVESTMENT GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE A- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
The Company was incorporated on September 9, 1997, in the State of Florida
under the name of Synthetic Flowers of America, Inc. On January 15, 1999, a
stock purchase agreement was signed between Synthetic Flowers of America,
Inc. and David B. Howe, and the corporate name was changed to Pinecrest
Investment Group, Inc. (See Note B-Stockholders' Equity)
Year End
The Company has elected June 30th as its fiscal year end.
Cash, Equivalents and Fair Value of Financial Instruments.
All highly liquid investments with maturaties of three months or less when
purchased are cash equivalents. Cash equivalents are carried at the lower
of cost or market. Financial instruments that potentially subject the
Company to a concentration of credit risk consist principally of cash.
During the period presented the Company did not maintain cash deposits at
financial institutions in excess of the $100,000 limit covered by the
Federal Deposit Insurance Corporation. The Company does not hold or issue
financial instruments for trading purposes nor does it hold or issue
interest rate or leveraged derivative financial instruments.
Net Loss Per Share
In February 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 128, "Earnings Per Share." SFAS No. 128 supersedes and simplifies
the existing computational guidelines under Accounting Principles Board
("APB") Opinion No. 15, "Earnings Per Share." The statement is effective
for financial statements issued for periods ending after December 15, 1997.
Among other changes, SFAS No. 128 eliminates the presentation of primary
earnings per share and replaces it with basic earnings per share for which
common stock equivalents are not considered in the computation. It also
revises the computation of diluted earnings per share. The Company has
adopted SFAS No. 128 and there is no material impact to the Company's
earnings per share, financial condition, or results of operations. The
Company's earnings per share have been restated for all periods presented
to be consistent with SFAS No. 128. The basic loss per share is computed by
dividing the net loss for the period by the weighted average number of
common shares outstanding for the period. When present, common stock
equivalents are excluded from the computation if their effect would be
anti-dilutive. Shares issued at inception are considered to be outstanding
for the entire period presented.
F-16
<PAGE>
PINECREST INVESTMENT GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE A- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-(Continued)
Income Taxes
Deferred income taxes may arise from temporary differences resulting from
income and expense items reported for financial accounting and tax purposes
in different periods. Deferred taxes are classified as current or
non-current, depending on the classifications of the assets and liabilities
to which they relate. Deferred taxes arising from temporary differences
that are not related to an asset or liability are classified as current or
non-current depending on the periods in which the temporary differences are
expected to reverse. The deferred tax asset related to the operating loss
carryforward has been fully reserved. The Company has not provided current
or deferred income taxes for the period presented due to a loss from
operations. The Company currently has a net operating loss carryforward
which expires in 2013. The tax benefit of the loss has been fully reserved
as its realization in future periods is not assured.
NOTE B-STOCKHOLDERS' EQUITY
On September 5, 1997, in connection with the original organization of the
Company, 4,000,000 shares of common stock was issued to Sheila Langley, the
original President of the Company, for services provided and reimbursement
of organizational costs and stock offering costs incurred by the Company
but paid for by Langley. Fair value used for this transaction of $.0025 per
share is based upon the fair value to the Company of the services provided
and billings from the Company's attorney.
Subsequently, on January 15, 1999, David B. Howe executed a stock purchase
agreement on behalf of himself and several independent investors to
purchase 3,680,000 of the 4,000,000 shares owned by Langley for $150,000
cash. On March 2, 1999, the Company repurchased 2,185,000 shares of the
3,680,000 purchased by Howe and the investors, for the purchase of the
hydroponics technology from Michael Foundation, Ltd. (See Note-E- Related
Party Transactions); of the remaining 1,495,000 shares, 400,000 shares were
issued to Howe and the balance between the investors.
On January 16, 1999, the Articles of Incorporation were amended to provide
that the aggregate number of shares of capital stock that the Corporation
shall be authorized to have outstanding at any one time shall be one
hundred million shares of common stock at $.001 par value per share and
twenty-five million shares of preferred at $.001 par value per share.
F-17
<PAGE>
PINECREST INVESTMENT GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE C-OTHER ASSET-HYDROPONICS TECHNOLOGY
On March 2, 1999, the Company entered into agreements with Michael
Foundation, Ltd., a West Indies corporation, and Tillman & Associates,
Inc., a Florida corporation, for the purchase of certain hydroponics
technology at a total purchase price of $3,437,500. The purchase price in
the agreement with Michael Foundation, Ltd., consisted of 2,185,000 shares
of restricted common stock with a current market value of $1.50 per share.
The purchase price in the agreement with Tillman & Associates, Inc.,
consisted of 50,000 shares of restricted common stock with a current market
value of $1.50 per share plus a note in the amount of $85,000.
The aforementioned information and technology purchase includes, hydroponic
growth solution formulas, equipment and greenhouse specifications and crop
and equipment maintenance plans and programs, and trade secrets.
An independent expert analysis opinion, dated January 22, 1999, was
performed by Jerry Pruitt, an agricultural consultant from Marbury, MD. His
test included the validity of the Hydroponics Growing System and the
salability of the retail/wholesale products derived from the process. Mr.
Pruitt valued the Hydroponics Growing System purchased by the Company at
$3.2 million dollars based on man hours and research and development costs.
F-18
<PAGE>
PINECREST INVESTMENT GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE D-MORTGAGE PAYABLE
Current debt consists of the following mortgage payable:
<TABLE>
<CAPTION>
Current Non-Current Total
------- ----------- -----
<S> <C> <C> <C>
Hopewell Land Partners. Ltd.
Secured by 40 acres,Lithia, Fl.
Dated April 9, 1999. Rate of
interest- 12%, simple interest.
Interest only, balance April 9, 2000 $ 288,000 -0- $ 288,000
---------- ---------- ----------
TOTALS $ 288,000 -0- $ 288,000
========== ========== ==========
</TABLE>
On April 9, 1999 the Company purchased a 40-acre tract of land in Lithia,
Fl., approximately 20 miles southeast of its Tampa, Fl. corporate offices,
for $360,000. The Company provided $72,000 as a down payment and the
seller, Hopewell Land Partners, Limited, provided purchase money mortgage
financing for the balance of $288,000. The terms of the purchase money
mortgage are interest only at 12% per annum, payable monthly for one year,
at which time, April 9, 2000, the balance is due and payable in full. The
Company is pursuing mortgage financing via a U.S. Rural Development Act
Loan. However, discussions with interested private lenders and individuals
indicate that, should the need arise, refinancing the first mortgage would
not be a problem since the value of the property along with the
improvements to be built over the next couple of months would indicate a
loan-to-value ratio of less than 50 percent.
F-19
<PAGE>
PINECREST INVESTMENT GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE E- RELATED PARTY TRANSACTIONS
On March 2, 1999, the Company purchased 2,185,000 shares of restricted
common stock from President, David B. Howe and affiliated investors for
$90,000 (Howe's cost) payable as follows: $30,000 cash and a note in the
principal amount of $60,000 bearing 10% simple interest, due September 2,
2000. These shares were acquired by Howe and the investors in connection
with his purchase of the Corporation. (See Note-B-Stockholders' Equity). As
of December 6, 1999, this debt was converted to 10,000 shares of restricted
stock.
These shares were then simultaneously exchanged as part of the purchase
price for the hydroponics technology from Michael Foundation, Ltd., and
Tillman & Associates, Inc., that is necessary in the overall operation of
the hydroponic herb and lettuce farm.
On December 6, 1999, the remaining balance of $80,000 due Tillman &
Associates, Inc. on the promissory note given in exchange for technology,
was converted into restricted common stock of the Company at a rate of
$6.00 per share for a total of 13,334 shares. The interest due on the note
of $6,525.19 was paid in cash. Mr. Tillman is President of Tillman &
Associates, Inc. and is President of Pinecrest Farms, Inc.
In December 1999, 10,000 restricted shares of common stock were issued to
Sheryl Salvadore, the Company's Corporate Secretary, pursuant to a grant to
her as a bonus on March 2, 1999 at a value of $1.50 per share.
In March 1999, the Company entered into a convertible line of credit with
Michael Foundation, Limited, a major stockholder of the Company. This
credit arrangement called for Michael Foundation, Limited, to provide
working capital for the Company while it was arranging for acceptable
long-term funding for its Phase I construction and working capital needed
until the Company attained profitability. This line of credit was for a
total of $900,000, which amount could be converted into restricted common
stock of the Company at a price of $6.00 per share. By the end of November
1999, the Company had borrowed approximately $300,000 against the Michael
Foundation, Limited line of credit. In December 1999, the line of credit
arrangement with Michael Foundation, Limited, was modified to call for the
absolute purchase of 150,000 shares of restricted common stock by Michael
Foundation, Limited at a price of $6.00 per share for a total of $900,000.
As of December 31, 1999, the shares had been issued to Michael Foundation,
Limited and were being held in escrow by legal counsel for Pinecrest, the
Company had received a total of $463,000 cash and carried a Subscription
Receivable of approximately $437,000.
F-20
<PAGE>
PINECREST INVESTMENT GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE F- INVESTMENT IN SUBSIDIARY
On April 8, 1999, Articles of Incorporation were filed for Pinecrest Farms,
Inc., a Florida corporation wholly-owned by Pinecrest Investment Group,
Inc. Pinecrest Farms, Inc., functions as a subsidiary of the Company and
was formed for the purpose of owning and operating the produce farms. The
growing technology and the land for the farms is owned by the Company.
As of December 31, 1999, substantially all expenditures charged to
Investment in Subsidiary-Pinecrest Farms, Inc., were comprised of deposits
on greenhouse materials, engineering and subcontractor retainers,
permitting costs and Thomas Tillman's salary. Therefore, these financial
statements account for those expenses as one line rather than as
consolidated financial statements.
NOTE G- SUBSEQUENT EVENTS
On January 10, 2000 the Company's Board of Directors' approved a 5 for 4
stock split for shareholders of record on December 31, 1999, for a total of
1,506,770 additional shares. Also, the Board adopted the Pinecrest
Investment Group, Inc. Incentive Stock Option Plan December 1999, which was
approved by a majority of the shareholders. The Plan will be administered
by the Executive Committee of the Board of Directors of the Company and
authorizes the Committee to grant or award to eligible executives and
employees of the Company and its subsidiaries, until January 10, 2010,
incentive stock options for up to 1,200,000 shares of restricted common
stock of the Company.
On January 26, 2000 the Company amended its Articles of Incorporation to
authorize a class of preferred shares consisting of 10,000,000 shares with
no par value per share.
F-21
<PAGE>
<TABLE>
<CAPTION>
PART III
Item 1. INDEX TO EXHIBITS.
Exhibit Description of Document
- ------- -----------------------
<S> <C>
3(i) Articles of Incorporation for Synthetic Flowers of America, Inc. (now known as
Pinecrest Investment Group, Inc.) filed September 5, 1997.
3(ii) Articles of Amendment to Articles of Incorporation of
Synthetic Flowers of America, Inc., (name change) filed
February 15, 1999.
3(iii) Articles of Amendment to Articles of Incorporation of Pinecrest Investment Group, Inc.
(to authorize preferred shares) filed January 25, 2000.
3(iv) Bylaws.
10.0 Stock Purchase Agreement between Synthetic Flowers of
America, Inc., Sheila Langley and David B. Howe and assigns,
dated January 15, 1999.
10.1 Stock Purchase Agreement between Pinecrest Investment Group and David B. Howe, dated
March 2, 1999.
10.2 Agreement for Sale and Purchase of Business Assets between Tillman & Associates, Inc.
and Pinecrest Investment Group, Inc., dated March 2, 1999.
10.3 Agreement for Sale and Purchase of Business Assets between Michael Foundation, Limited
and Pinecrest Investment Group, Inc. dated March 2, 1999.
10.4 Mortgage and accompanying Promissory Note on purchase of 40 acre land tract
10.5 Employment Agreement between Pinecrest Investment Group, Inc. and Thomas M. Tillman,
dated November 22, 1999.
10.6 Employment Agreement between Pinecrest Investment Group, Inc. and David B. Howe, dated
January 1, 2000.
21.0 Subsidiaries of Pinecrest Investment Group, Inc.
27.0 Financial Data Schedule.
99.0 Form of Stock Certificate.
99.1 Pinecrest Investment Group, Inc. Incentive Stock Option Plan December 1999.
</TABLE>
<PAGE>
Item 2. DESCRIPTION OF EXHIBITS.
The required exhibits are attached hereto, as noted in Item 1 above.
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
PINECREST INVESTMENT GROUP, INC.
Date: February 7, 2000 By: s/ David B. Howe
------------------ ------------------------------------
David B. Howe, President
EXHIBIT 3(i)
STATE OF FLORIDA
Department of State
I certify from the records of this office that SYNTHETIC FLOWERS OF AMERICA,
INC. is a corporation organized under the laws of the State of Florida filed on
September 5, 1997.
The document number of this corporation is P97000076929.
I further certify that said corporation has paid all fees and penalties due this
office through December 31, 1998, that its most recent annual report was filed
on April 27, 1998, and its status is active.
I further certify that said corporation has not filed Articles of Dissolution.
Given under my hand and the
Great Seal of the State of Florida
at Tallahassee, the Capitol, this the
Twenty-seventh day of April, 1998
S/ Sandra B. Mortham
Sandra B. Mortham
Secretary of State
<PAGE>
ARTICLES OF INCORPORATION
OF
SYNTHETIC FLOWERS OF AMERICA, INC.
The undersigned, desiring to form a corporation (the `Corporation") under the
laws of Florida, hereby adopts the following Articles of Incorporation.
ARTICLE I
CORPORATE NAME
The name of the Corporation is SYNTHETIC FLOWERS OF AMERICA, INC.
ARTICLE II
PURPOSE
The Corporation shall be organized for any and all purposes authorized under the
laws of the state of Florida.
ARTICLE III
PERIOD OF EXISTENCE
The period during which the Corporation shall continue perpetual.
ARTICLE IV
SHARES
The capital stock of this corporation shall consist of 50,000,000 shares of
common stock, $0.001 par value.
ARTICLE V
PLACE OF BUSINESS
The initial address of the principal place of business of this corporation in
the State of Florida shall be 774 S. Pennsylvania Ave. Winter Park, FL 32789,
The Board of directors may at any time and from time move the principal office
of this corporation.
ARTICLE VI
DIRECTORS AND OFFICERS
The business of this corporation shall be managed by its Board of Directors. The
number of such directors shall not be less than one (1) and, subject to such
minimum may be increased or decreased from time to time in the manner provided
in the By-Laws.
<PAGE>
The number of persons constituting the initial Board of Directors shall be 1.
The Board of Directors shall be elected by the Stockholders of the corporation
at such time and in such manner as provided in the By-Laws. The name and
addresses of the initial Board of Directors and officers are as follows:
Sheila Langley, President/Director
774 S. Pennsylvania Avenue
Winter Park, FL 32789
ARTICLE VII
DENIAL OF PREEMPTIVE RIGHTS
No shareholder shall have any right to acquire shares or other securities of the
Corporation except to the extent such right may be granted by an amendment to
these Articles of Incorporation or by a resolution of the board of Directors.
ARTICLE VIII
AMENDMENT OF BYLAWS
Anything in these Articles of Incorporation, the Bylaws, or the Florida
Corporation Act notwithstanding, bylaws shall not be adopted, modified, amended
or repeated by the shareholders of the Corporation except upon the affirmative
vote of a simple majority vote of the holders of all the issued and outstanding
shares of the corporation entitled to vote thereon.
ARTICLE IX
SHAREHOLDERS
9.1. lnspection of books. The board of directors shall make reasonable rules to
determine at what times and places and under what conditions the books of the
Corporation shall be open to inspection by shareholders or a duly appointed
representative of a shareholder.
9.2. Control Share Acquisition. The provisions relating to any control share
acquisition as contained in Florida Statutes now, or hereinafter amended, and
any successor provision shall not apply to the Corporation.
9.3 Quorum. The holders of shares entitled to one-third of the votes at a
meeting of shareholder's shall constitute a quorum.
9.4. Required Vote. Acts of shareholders shall require the approval of holders
of 50.01% of the outstanding votes of shareholders.
<PAGE>
ARTICLE X
LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS
To the fullest extent permitted by law, no director or officer of the
Corporation shall be personally liable to the Corporation or its shareholders
for damages for breach of any duty owed to the Corporation or its shareholders.
In addition, the Corporation shall have the power, in its By-Laws or in any
resolution of its stockholders or directors, to undertake to indemnify the
officers and directors of this corporation against any contingency or peril as
may be determined to be in the best interests of this corporation, and in
conjunction therewith, to procure, at this corporation's expense, policies of
insurance.
ARTICLE Xl
SUBSCRIBER
The name and address of the person signing these Articles of Incorporation as
subscriber is:
Eric P. Littman
8th Floor
1428 Brickell Avenue
Miami, FL 33131
ARTICLE XII
CONTRACTS
No contract or other transaction between this corporation and any person, firm
or corporation shall be affected by the fact that any officer or director of
this corporation is such other party or is, or at some time in the future
becomes, an officer, director or partner of such other contracting party, or has
now or hereafter a direct or indirect interest in such contract,
ARTICLE XIII
RESIDENT AGENT
The name and address of the initial resident agent of this corporation is:
Eric P. Littman
1428 Brickell Avenue
8th Floor
Miami, FL 33131
IN WITNESS WHEREOF, I have hereunto subscribed to and executed these
Articles of Incorporation this on September 4, 1997.
S/ Eric P. Littman
Eric P. Littman, Subscriber
Subscribed and Sworn on September 4, 1997
S/ Isabel Cantera, Notary Public
My Commission Expires: February 25, 1999
<PAGE>
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR
DOMICILE FOR SERVICE OF PROCESS WITHIN THIS STATE
NAMING THE AGENT UPON WHOM PROCESS MAY BE SERVED
Having been named to accept service of process for SYNTHETIC FLOWERS OF AMERICA,
INC. at the place designated in the Articles of Incorporation, the undersigned
is familiar with and accepts the obligations of that position pursuant to F.S.
607.0501(3).
S/ Eric P. Littman
Eric P. Littman
EXHIBIT 3(ii)
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
SYNTHETIC FLOWERS OF AMERICA, INC.
Pursuant to the provisions of section 607.1006, Florida Statutes, this
corporation adopts the following articles of amendment to its articles of
incorporation:
ARTICLE I
Corporate Name
- --------------
The name of this corporation shall be changed from Synthetic Flowers of America,
Inc. to Pinecrest Investment Group, Inc.
ARTICLE IV
Capital Stock
- -------------
The aggregate number of shares of capital stock that this corporation shall be
authorized to have outstanding at any one time shall be one hundred million
shares of common stock at $.001 par value per share and twenty five million
shares of preferred stock at $.001 par value per share. Each share of issued and
outstanding common stock shall entitle the holder thereof to participate in all
shareholder meetings, to cast one vote on each matter with respect to which
shareholders have the right to vote, and to share ratably in all dividends and
other distributions declared and paid with respect to the common stock, as well
as in the net assets of the corporation upon liquidation or dissolution.
ARTICLE V
Place of Business
- -----------------
The address of the principal place of business of this corporation in the State
of Florida shall be 1211 Tech Blvd., Suite 101, Tampa, Fl. 33619. The Board of
Directors may at any time and from time move the principal office of this
corporation.
<PAGE>
ARTICLE VI
Directors and Officers
- ----------------------
The business of this corporation shall be managed by its Board of Directors. The
number of such directors shall not be less than one (1) and, subject to such
minimum may be increased or decreased from time to time in the manner provided
in the By-Laws. The Board of Directors shall be elected by the Stockholders of
the corporation at such time and in such manner as provided by the By-Laws. The
name and address of the new Board of Director and Officers are as follows:
David B. Howe Chairman of the Board
1211 Tech Blvd., Suite 101 President/Chief Executive Officer
Tampa, Fl. 33619
Sheryl B. Salvadore Secretary/Treasurer
1211 Tech Blvd. Suite 101
Tampa, Fl. 33619
ARTICLE X
Indemnification
- ---------------
If in the judgment of a majority of the entire Board of Directors, (excluding
from such majority any director under consideration for indemnification), the
criteria set forth in 607.0850 (1) or (2), Florida Statutes, as then in effect,
have been met, then the corporation shall indemnify any director, officer,
employee, or agent thereof, whether current or former, together with his or her
personal representatives, devises or heirs, in the manner and to the extent
contemplated by 607.0850, as then in effect, or by any successor law thereto.
ARTICLE XIII
Registered Agent
- ----------------
The name and street address of the registered agent of the corporation shall be
Walter H. C. Drakeford, Esq., 2212 4th Ave., Tampa, Fl. 33605.
<PAGE>
The date of each amendment's adoption is January 16, 1999.
The amendments were adopted by the board of directors without shareholder action
and shareholder action was not required.
IN WITNESS WHEREOF, the undersigned has executed these Articles of Amendment of
the Articles this 16th day of January, 1999.
PINECREST INVESTMENT GROUP, INC.
/s/ David B. Howe
- ------------------------------------
David B. Howe
Chairman of the Board
President and Chief Executive Officer
ACKNOWLEDGEMENT
I hereby accept my appointment as Registered Agent of the above named
corporation, acknowledge that I am familiar with and accept the obligation
imposed by Florida law upon that position, and agree to act as such in
accordance with provisions of 48.091 and 607.0505, Florida Statutes.
/s/ Walter H.C. Drakeford
- ------------------------------
Walter H.C. Drakeford, Esq.
EXHIBIT 3(iii)
ARTICLES OF AMENDMENT TO THE
ARTICLES OF INCORPORATION OF
PINECREST INVESTMENT GROUP, INC.
-------------------------------------------
PINECREST INVESTMENT GROUP, INC., a Florida corporation (the
"Corporation"), hereby certifies as follows:
1. The Articles of Incorporation of the Corporation are hereby amended by
deleting the present form of each of Articles I and IV in their entirety and by
substituting, in lieu thereof, the following:
ARTICLE I
Corporate Name and Principal Office
-----------------------------------
The name of this corporation is Pinecrest Investment Group, Inc. and its
principal office and mailing address is 1211 Tech Blvd., Suite 100, Tampa,
Florida 33619.
ARTICLE II
Commencement of Corporate Existence
-----------------------------------
The corporation came into existence on September 5, 1997.
ARTICLE III
General Nature of Business
--------------------------
This corporation may engage in any activity or business permitted under the
laws of the United States or of the State of Florida.
ARTICLE IV
Capital Stock
-------------
The aggregate number of shares of capital stock authorized to be issued by
this Corporation shall be 50,000,000 shares of common stock, .001 par value per
share (the "Common Stock"), and 10,000,000 shares of preferred stock, no par
value per share (the "Preferred Stock"). Each share of issued and outstanding
common stock shall entitle the holder thereof to one vote on each matter with
respect to which shareholders have the right to vote, to fully participate in
all shareholder meetings, and to share ratably in the net assets of the
corporation upon liquidation or dissolution, but each such share shall be
subject to the rights and preferences of the Preferred Stock as hereinafter set
forth.
<PAGE>
The preferred Stock may be issued from time to time by the Board of
Directors and stated in any resolution providing for the issuance of such shares
adopted by the Board of Directors pursuant to authority hereby vested in it,
each series to be appropriately designated, prior to the issuance of any shares
thereof, by some distinguishing letter, number or title. All shares of each
series of preferred Stock shall be alike in every particular and equal rank,
have the same powers, preferences and rights and be subject to same
qualifications limitations and restrictions, without distinction between the
shares of different series thereof, except in regard to the following
particulars, which may differ as to different series:
a. the annual rate of dividends payable and the dates from which such
dividends shall commence to accrue, if at all:
b. the amount payable upon a share redemption and the manner in which
shares of a particular series may be redeemed;
c. the amount payable upon any voluntary or involuntary liquidation,
dissolution or winding up of the corporation;
d. the provisions of any sinking fund established with respect to the
shares of a series.;
e. the terms and rates of conversion or exchange, if shares of a series
are convertible or exchangeable; and
f. the provisions as to voting rights, if any; provided that the shares
of any series of Preferred Stock having voting power shall not have
more than one vote per share.
Before any shares of a particular series of Preferred Stock are issued, the
designations of such series and its terms in respect of the foregoing
particulars shall be fixed and determined by the Board of Directors in any
manner permitted by law and stated in a resolution providing for the issuance of
such shares adopted by the Board of Directors pursuant to authority hereby
vested in it. Such shares adopted by the Board of Directors pursuant to
authority hereby vested in it. Such designations and terms shall set forth in
full or summarized on the certificates for such series. The Board of Directors
may increase the number of such shares by providing that any unissued shares of
Preferred Stock shall constitute part of such series, or may decrease (but not
below the number of shares thereof then outstanding) the number of shares of any
series of Preferred Stock already created by providing that any unissued shares
previously assigned to such series shall no longer constitute part thereof. The
Board of Directors is hereby empowered to classify or reclassify any unissued
shares of Preferred Stock by fixing or altering the terms thereof in respect to
the above-referenced particulars and by assigning the same to an existing or
newly established series from time to time before the issuance of such shares.
The holders of shares of each series shall be entitled to receive, out of
any funds legally available therefor, when and as declared by the Board of
Directors, cash dividends at such rate per annum as shall be fixed by resolution
of the Board of Directors for such series, payable periodically on the dates
fixed by the Board of Directors for the series. Such dividends may be cumulative
or noncumulative, deemed to accrue from day to day regardless of whether or not
earned or declared, and may commence to accrue on each share of Preferred Stock
from such date or dates, and as may be determined and stated by the Board of
Directors prior to the issuance thereof. The corporation shall make dividend
payments ratably upon all outstanding shares of Preferred Stock in proportion to
the amount of dividends thereon to the date of such dividend payment, if any.
<PAGE>
As long as any shares of Preferred Stock shall remain outstanding, no
dividend (other than as dividend payable in shares ranking junior to such
Preferred Stock with respect to the payment of dividends or liquidated assets)
Shall be declared or paid upon, nor shall any distribution be made or ordered in
respect of, shares of the Common Stock or any other class of shares ranking
junior to the shares of such Preferred Stock as to the payment or dividends or
liquidating assets, nor shall any monies (other than the net proceeds received
from the sale of shares ranking junior to the shares of such Preferred Stock as
to the payment of dividends or liquidating assets) be set aside for or applied
to the purchase or redemption (through a sinking fund or otherwise) of shares of
the Common Stock or of any other class of shares ranking junior to the shares of
such Preferred Stock as to dividends or assets unless:
(a) all dividends on the shares of Preferred Stock of all series for past
dividend periods shall have been paid and the full dividend on all
outstanding shares of Preferred Stock of all series for the then
current dividend period shall have been paid or declared and set apart
for payment; and
(b) the corporation shall have set aside all amounts, if any, required to
be set aside as and for sinking funds, if any, for the shares of
Preferred Stock of all series for the then current year, and all
defaults, if any, in complying with any such sinking fund requirements
in respect of previous years shall have cured.
The corporation, at the option of the Board of Directors, may at any time
redeem the whole, or from time to time any part, of any series of Preferred
Stock, subject to such limitations as may be adopted by the Board authorizing
the issuance of such shares, by paying therefor in cash the amount which shall
have been determined by the Board of Directors, in the resolution authorizing
such series, to be payable upon the redemption of such shares at such time.
Redemption may be made of the whole or any part of the outstanding shares of any
one or more series, in the discretion of the Board of Directors; but if the
redemption shall be effected only with respect to a part of a series, the shares
to be redeemed may be selected by lot, or all of the shares of such series may
be redeemed pro rata, in such manner as may be prescribed by resolution of the
Board of Directors.
Subject to the foregoing provisions and to any qualifications, limitations,
or restrictions applicable to any particular series of Preferred Stock which may
be stated in the resolution providing for the issuance of such series, the Board
of Directors shall have authority to prescribe from time to time the manner in
which any series of Preferred Stock be redeemed.
Upon any liquidation, dissolution or winding up of the corporation, whether
voluntary or involuntary, the shares of Preferred Stock of each series shall be
entitled, before any distribution shall be made with respect to shares of Common
Stock or to any other class of shares junior to the shares of Preferred Stock as
to the payment of dividends or liquidating assets, to be paid the full
preferential amount fixed by the Board of Directors for such series as herein
authorized; but the shares of Preferred Stock shall not be entitled to any
further payment and any remaining net assets shall be distributed ratably to all
outstanding shares of Common Stock. If upon such liquidation or dissolution of
<PAGE>
the corporation, whether voluntary or involuntary, the net assets of the
corporation shall be insufficient to permit the payment to all outstanding
shares of Preferred Stock of all series of the full preferential amounts to
which they are respectively entitled, the entire net assets of the corporation
shall be distributed ratably to all outstanding shares of Preferred Stock in
proportion to the full preferential amount to which each such share is entitled.
Neither as consolidation nor a merger of the corporation with or into any other
entity nor the sale of all or substantially all of the assets of the corporation
shall be deemed to be a liquidation or dissolution within the meaning of this
paragraph."
2. The foregoing amendment shall become effective as of the close of
business on the date these Articles of Amendment are approved by the Florida
Department of State and all filing fees then due have been paid, all in
accordance with the corporation laws of the State of Florida.
3. The amendment recited in Section 1 above has been duly adopted in
accordance with the provisions of ss.607.1003, Florida Statutes, the Board of
Directors of the corporation having adopted a resolution setting forth such
amendment, declaring its advisability and directing that such amendment be
considered by the shareholders of the corporation; a majority in interest of the
corporation's single class of voting stock having voted in favor thereof by
written action dated December 31, 1999; and the number of votes cast for
amendment by the shareholders was sufficient for approval
In witness whereof, the Corporation has caused these Articles of Amendment
to be prepared under the signature of its Chief Executive Officer and the
attestation of its Vice President, this 10th day of January, 2000.
Attest: PINECREST INVESTMENT GROUP. INC.
By: /s/ Sheryl B. Salvadore By: David B. Howe
------------------------- -----------------------------------
Sheryl B. Saladore David B. Howe
Secretary President
STATE OF FLORIDA
COUNTY OF HILLSBOROUGH
The foregoing instrument was acknowledged before me, this 31st day of
December, 1999 by David B. Howe and Sheryl B. Salvadore, individuals known to me
to President and Secretary respectively of Pinecrest Investment Group, Inc., on
behalf of the corporation and for the uses and purposes described therein.
/s/ Alicia Alvarez.Garcia, Notary Public
EXHIBIT 3(iv)
BY-LAWS
-------
OF
--
SYNTHETIC FLOWERS OF AMERICA, INC.
----------------------------------
A Florida Corporation
Article I.--Shareholders
1.1 Annual Meeting. A meeting of shareholders shall be held each year for the
election of directors and for the transaction of any other business that may
come before the meeting. The time and place of the meeting shall be designated
by the Board of Directors.
1.2 Special Meeting. Special meetings of the shareholders, for any purpose or
purposes, shall be held when directed by the Chairman of the Board, or at the
request of the holders of not less than one tenth of all outstanding shares of
the corporation entitled to vote at the meeting.
1.3 Place of Meeting. The Board of Directors may designate any place, either
within or without the State of Florida, as the place of meeting for any annual
or special meeting of the shareholders. If no designation is made, the place of
meeting shall be the principal office of the corporation in the state of
Florida.
1.4 Action Without a Meeting. Unless otherwise provided in the articles of
incorporation, action required or permitted to be taken at any meeting of the
shareholders may be taken without a meeting, without prior notice, and without a
vote if the action is taken by the holders of outstanding shares of each voting
group entitled to vote on it having not less than the minimum number of votes
with respect to each voting group that would be necessary to authorize or take
such action at a meeting at which all voting groups and shares entitled to vote
were present and voted. In order to be effective, the action must be evidenced
by one or more written consents describing the action taken, dated and signed by
approving shareholders having the requisite number of votes of each voting group
entitled to vote, and delivered to the corporation at its principal office in
Florida or its principal place of business, or to the corporate secretary or
another office or agent of the corporation having custody of the book in which
proceedings of meetings of shareholders are recorded. No written consent shall
be effective to take corporate action unless, within 60 days of the date of the
earliest dated consent delivered in the manner required by this section, written
consents signed by the number of holders required to take action are delivered
to the corporation.
Any written consent may be revoked before the date that the corporation receives
the required number of consents to authorize the proposed action. No revocation
is effective unless in writing and until received by the corporation at its
principal office or its principal place of business, or received by the
corporate secretary or other office or agency of the corporation having custody
of the book in which proceedings of meetings of shareholders are recorded.
<PAGE>
Within ten days after obtaining authorization by written consent, notice must be
given to those shareholders who have not consented in writing or who are not
entitled to vote on the action. The notice shall fairly summarize the material
features of the authorized action and, if the action is one for which
dissenters' rights are provided under the articles of incorporation or by law,
the notice shall contain a clear statement of the right of shareholders
dissenting there from to be paid the fair value of their shares upon compliance
with applicable law.
A consent signed as required by this section has the effect of a meeting vote
and may be described as such in any document.
Whenever action is taken as provided in this section, the written consent of the
shareholders consenting or the written reports of inspectors appointed to
tabulate such consents shall be filed with the minutes of proceedings of
shareholders.
1.5 Notice of Meeting. Except as provided in F.S. Chapter 607, the Florida
Business Corporation Act, written or printed notice stating the place, day, and
hour of the meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than 10
nor more than 60 days before the date of the meeting, either personally or by
first-class mail, by, or at the direction of, the president or the secretary, or
the officer or other persons calling the meeting, to each shareholder of record
entitled to vote at the meeting. If the notice is mailed at least 30 days before
the date of the meeting, it may be effected by a class of United States mail
other than first-class. If mailed, the notice shall be effective when mailed, if
mailed, postage prepaid and correctly addressed to the shareholder's address
shown in the current record of shareholders of the corporation.
When a meeting is adjourned to another time or place, it shall not be necessary
to give any notice of the adjourned meeting if the time and place to which the
meeting is adjourned are announced at the meeting at which the adjournment is
taken. At the adjourned meeting any business may be transacted that might have
been transacted on the original date of the meeting. If, however, after the
adjournment the Board of Directors fixes a new record date for the adjourned
meeting, a notice of the adjourned meeting shall be given as provided in this
section to each shareholder of record on the new record date entitled to vote at
such meeting.
1.6 Waiver of Notice of Meeting. Whenever any notice is required to be given to
any shareholder, a waiver in writing signed by the person or persons entitled to
such notice, whether signed before, during, or after the time of the meeting and
delivered to the corporation for inclusion in the minutes or filing with the
corporate records, shall be equivalent to the giving of such notice. Attendance
of a person at a meeting shall constitute a waiver of (a) lack of, or defective
notice of the meeting, unless the person objects at the beginning of the meeting
to the holding of the meeting or the transacting of any business at the meeting
or (b) lack of defective notice of a particular matter at a meeting that is not
within the purpose or purposes described in the meeting notice, unless the
person objects to considering the matter when it is presented.
1.7 Fixing of Record Date. In order that the corporation may determine the
shareholders entitled to notice of, or to vote at, any meeting of shareholders
or any adjournment thereof, or to express consent to corporate action in writing
<PAGE>
without a meeting, or to demand a special meeting, the board of directors may
fix, in advance, a record date, not more than 70 days before the date of the
meeting or any other action. A determination of shareholders of record entitled
to notice of, or to vote at, a meeting of shareholders shall apply to any
adjournment of the meeting unless the board fixes a new record date, which it
must do if the meeting is adjourned to a date more than 120 days after the date
fixed for the original meeting.
If no prior action is required by the board, the record date for determining
shareholders entitled to take action without a meeting is the date the first
signed written consent is delivered to the corporation under Section 1.4 of this
Article.
1.8 Voting Record. After fixing a record date for a meeting of shareholders, the
corporation shall prepare an alphabetical list of the names of all its
shareholders entitled to notice of the meeting, arranged by voting group with
the address of, and the number, class, and series, if any, of shares held by,
each shareholder. The shareholders' list must be available for inspection by any
shareholder for a period of ten days before the meeting or such shorter time as
exists between the record date and the meeting and continuing through the
meeting at the corporation's principal office, at a place identified in the
meeting notice in the city where the meeting will be held, or at the office of
the corporation's transfer agent or registrar. Any shareholder of the
corporation or the shareholder's agent or attorney is entitled on written demand
to inspect the shareholders' list (subject to the requirements of F.S.
607.1602[3]) during regular business hours and at the shareholder's expense,
during the period it is available for inspection.
The corporation shall make the shareholders' list available at the meeting of
shareholder, and any shareholder or the shareholder's agent or attorney is
entitled to inspect the list at any time during the meeting or any adjournment.
1.9 Voting Per Share. Except as otherwise provided in the articles of
incorporation or by F.S. 607.0721, each shareholder is entitled to one vote for
each outstanding common share held by him or her on each matter voted at a
shareholders' meeting.
1.10 Voting of Shares. A shareholder may vote at any meeting of shareholders of
the corporation, either in person or by proxy.
Shares standing the name of another corporation domestic or foreign, may be
voted by the officer, agent, or proxy designated by the by-laws of the corporate
shareholder, or in the absence of any applicable by-law, by a person or persons
designated by the board of directors of the corporate shareholder. In the
absence of any such designation or, in case of conflicting designation by the
corporate shareholder, the chairman of the board, the president, any vice
president, the secretary, and the treasurer of the corporate shareholder, in
that order, shall be presumed to be fully authorized to vote the shares. Shares
held by an administrator, executor, guardian, personal representative, or
conservator may be voted by him or her, either in person or by proxy, without a
transfer of such shares into his or her name. Shares standing in the name of a
trustee may be voted by him or her, either in person or by proxy, but no trustee
shall be entitled to vote shares held by him or her without a transfer of such
shares into his or her name or the name of his or her nominee.
<PAGE>
Shares held by or under the control of, a receiver, a trustee in bankruptcy
proceedings, or any assignee for the benefit of creditors may be voted by such
person without the transfer into his or her name.
If shares stand of record in the names of two or more persons, whether
fiduciaries, members of a partnership, joint tenants, tenants in common, tenants
by the entirety, or otherwise, or if two or more persons have the same fiduciary
relationship respecting the same shares, unless the secretary of the corporation
is given notice to the contrary and furnished with a copy of the instrument or
order appointing them or creating the relationship wherein it is so provided,
then acts with respect to voting shall have the following effect: (a) if only
one votes, in person or by proxy, that act binds all (b) if more than one vote,
in person or by proxy, 51% out of the majority so voting binds all (c) if more
than one votes, in person or by proxy, but the vote is evenly split on any
particular matter, each faction is entitled to vote the share or shares in
question proportionally or (d) if the instrument or order so filed shows that
any such tenancy is held in unequal interest, a majority or a vote evenly split
for purposes hereof shall be a majority or a vote evenly split in interest. The
principles of this paragraph shall apply, insofar as possible, to execution of
proxies, waivers, consents, or objections and for the purpose of ascertaining
the presence of a quorum.
1.11 Proxies. Any shareholder of the corporation, other person entitled to vote
on behalf of a shareholder pursuant to F.S. 607.0721, or attorney-in-fact for
such persons, may vote the shareholder's shares in person or by proxy. Any
shareholder may appoint a proxy to vote or otherwise act for him or her by
signing an appointment form, either personally or by an attorney-in-fact. An
executed telegram or cablegram appearing to have been transmitted by such
person, or a photographic, photostatic, or equivalent reproduction of an
appointment form, shall be deemed a sufficient appointment form.
An appointment of a proxy is effective when received by the secretary of the
corporation or such other officer or agent authorized to tabulate votes, and
shall be valid for up to 11 months, unless a longer period is expressly provided
in the appointment form. The death or incapacity of the shareholder appointing a
proxy does not affect the right of the corporation to accept the proxy's
authority unless notice of the death or incapacity is received by the secretary
or other officer or agent authorized to tabulate votes before the proxy
exercises authority under the appointment.
An appointment of a proxy is revocable by the shareholder unless the appointment
form conspicuously states that it is irrevocable and the appointment is coupled
with an interest.
1.12 Quorum. Shares entitled to vote as a separate voting group may take action
on a matter at a meeting only if a quorum of those shares exists with respect to
that matter. Except as otherwise provided in the articles of incorporation or by
law, a majority of the shares entitled to vote on the matter by each voting
group, represented in person or by proxy, shall constitute a quorum at any
meeting of shareholders, but in no event shall a quorum consist of less than one
<PAGE>
third of the shares of each voting group entitled to vote. If less than a
majority of outstanding shares entitled to vote are represented at a meeting, a
majority of the shares so represented may adjourn the meeting from time to time
without further notice. After a quorum has been established at any shareholders'
meeting, the subsequent withdrawal of shareholders, so as to reduce the number
of shares entitled to vote at the meeting below the number required for a
quorum, shall not affect the validity of any action taken at the meeting or any
adjournment thereof.
Once a share is represented for any purpose at a meeting, it is deemed present
for quorum purposes for the remainder of the meeting and for any adjournment of
that meeting unless a new record date is or must be set for that adjourned
meeting.
1.13 Manner of Action. If a quorum is present, action on a matter (other than
the election of directors) by a voting group is approved if the votes cast
within the voting group favoring the action exceed the votes cast opposing the
action, unless a greater or lesser number of affirmative votes is required by
the articles of incorporation or by law.
1.14 Voting for Directors. Unless otherwise provided in the articles of
incorporation, directors will be elected by a plurality of the votes cast by the
shares entitled to vote in the election at a meeting at which a quorum is
present.
1.15 Inspectors of Election. Before each shareholders' meeting, the board of
directors or president shall appoint one or more Inspectors of Election. Upon
appointment, each inspector shall take and sign an oath faithfully to execute
the duties of inspector at the meeting with strict impartiality and to the best
of his or her ability. Inspectors shall determine the number of shares
outstanding, the number of shares present at the meeting, and whether a quorum
is present. The inspectors shall receive votes and ballots and determine all
challenges and questions as to the right to vote. The inspectors shall count and
tabulate all votes and ballots and determine the results. Inspectors shall
perform other duties as are proper to conduct elections of directors and votes
on other matters with fairness to all shareholders. Inspectors shall make a
certificate of the results of elections of directors and votes on other matters.
No inspector shall be a candidate for election as a director of the corporation.
Article 2 -- Board of Directors
2.1 General Powers. Except as provided in the articles of incorporation and by
law, all corporate powers shall be exercised by or under the authority of, and
the business and affairs of the corporation shall be managed under the direction
of, its board of directors.
2.2 Number. Terms Classification. and Qualification. The board of directors of
the corporation shall consist of a minimum of one person but no more than 21
people. The number of directors may at any time and from time to time be
increased or decreased by action of either the shareholders or the board of
directors, but no decrease in the number of directors shall have the effect of
shortening the term of any incumbent director. A director must be a natural
<PAGE>
person of at least 18 years of age, but need not be a citizen of the United
States of America, a resident of the State of Florida, nor a shareholder of the
corporation. Each director shall hold office until a successor has been elected
and qualified or until an earlier resignation, removal from office, or death.
2.3 Regular Meetings. An annual regular meeting of the board of directors shall
be held without notice immediately after, and at the same place as, the annual
meeting of the shareholders and at such other time and place as may be
determined by the board of directors. The board may, at any time and from time
to time, provide by resolution the time and place, either within or without the
State of Florida, for the holding of the annual regular meeting or additional
regular meeting of the board without other notice than the resolution.
2.4 Special Meetings. Special meetings of the board of directors may be called
by the chairman of the board, the president, or any two directors.
The person or persons authorized to call special meetings of the board may
designate any place, either within or without the State of Florida, as the place
for holding any special meeting of the board called by them. If no designation
is made, the place of the meeting shall be the principal office of the
corporation in Florida.
Notice of any special meeting of the board may be given by any reasonable means,
oral or written, and at any reasonable time before the meeting. The
reasonableness of notice given in connection with any special meeting of the
board shall be determined in light of all pertinent circumstances. It shall be
presumed that notice of any special meeting given at least two days before the
meeting either orally (by telephone or in person), or by written notice
delivered personally or mailed to each director at his or her business or
residence address, is reasonable. If mailed, the notice of any special meeting
shall be deemed to be delivered on the second day after it is deposited in the
United States mail, so addressed, with postage prepaid. If notice is given by
telegram, it shall be deemed to be delivered when the telegram is delivered to
the telegraph company. Neither the business to be transacted at, nor the purpose
or purposes of, any special meeting need to be specified in the notice or in any
written waiver of notice of the meeting.
2.5 Waiver of Notice of Meeting. Notice of a meeting of the board of directors
need not be given to any director who signs a written waiver of notice before,
during, or after the meeting. Attendance of a director at a meeting shall
constitute a waiver of notice of the meeting and a waiver of any and all
objections to the place of the meeting, the time of the meeting, and the manner
in which it has been called or convened, except when a director states, at the
beginning of the meeting or promptly upon arrival at the meeting, any objection
to the transaction of business because the meeting is not lawfully called or
convened.
2.6 Quorum. A majority of the number of directors fixed by, or in the manner
provided in, these by-laws shall constitute a quorum for the transaction of
business provided however, that whenever, for any reason, a vacancy occurs in
the board of directors, a quorum shall consist of a majority of the remaining
directors until the vacancy has been filled.
<PAGE>
2.7 Manner of Action. The act of a majority of the directors present at a
meeting at which a quorum is present when the vote is taken shall be the act of
the board of directors.
2.8 Presumption of Assent. A director of the corporation who is present at a
meeting of the board of directors or a committee of the board when corporate
action is taken shall be presumed to have assented to the action taken, unless
he or she objects at the beginning of the meeting, or promptly upon arrival, to
holding the meeting or transacting specific business at the meeting, or he or
she votes against or abstains from the action taken.
2.9 Action Without a Meeting. Any action required or permitted to be taken at a
meeting of the board of directors or a committee of it may be taken without a
meeting if a consent in writing, stating the action so taken, is signed by all
the directors. Action taken under this section is effective when the last
director signs the consent, unless the consent specifies a different effective
date. A consent signed under this section shall have the effect of a meeting
vote and may be described as such in any document.
2.10 Meetings by Means of Conference Telephone Call or Similar Electronic
Equipment. Members of the board of directors may participate in a meeting of the
board by means of a conference telephone call or similar communications
equipment if all persons participating in the meeting can hear each other at the
same time. Participation by such means constitutes presence in person at a
meeting.
2.11 Resignation. Any director may resign at any time by giving written notice
to the corporation, the board of directors, or its chairman. The resignation of
any director shall take effect when the notice is delivered unless the notice
specifies a later effective date, in which event, the board may fill the pending
vacancy before the effective date if they provide that the successor does not
take office until the effective date.
2.12 Removal. Any director, or the entire board of directors, may be removed at
any time, with or without cause, by action of the shareholders, unless the
articles of incorporation provide that directors may be removed only for cause.
If a director was elected by a voting group of shareholders, only the
shareholders of that voting group may participate in the vote to remove that
director. The notice of the meeting at which a vote is taken to remove a
director must state that the purpose or one of the purposes of the meeting is
the removal of the director or directors.
2.13 Vacancies. Any vacancy in the board of directors, including any vacancy
created by reason of an increase in the number of directors, may be filled by
the affirmative vote of a majority of the remaining directors though less than a
quorum of the board of directors, or by the shareholders.
2.14 Compensation. Each director may be paid the expenses, if any, of attendance
at each meeting of the board of directors, and may be paid a stated salary as a
director of a fixed sum for attendance at each meeting of the board of directors
or both, as may from time to time be determined by action of the board of
directors. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefore.
<PAGE>
Article 3 -- Committees of the Board of Directors
The board of directors, by resolution adopted by a majority of the full board,
may designate from among its members an executive committee and one or more
other committees each of which, to the extent provided in the resolution, shall
have and may exercise all the authority of the board of directors, except as
prohibited by F.S.607.0825(1).
Each committee must have two or more members who serve at the pleasure of the
board. The board of directors, by resolution adopted in accordance with this
article, may designate one or more directors as alternate members of any
committee, who may act in the place and stead of any absent member or members at
any meeting of the committee.
Article 4 - Officers
4.1 Officers. The officers of this corporation shall be a chief executive
officer, president, vice president, secretary, treasurer and any other officers
and assistant officers as may be deemed necessary, and as shall be approved by
the board of directors. Any two or more offices may be held by the same person.
4.2 Appointment and Term of Office. The officers of the corporation shall be
appointed annually by the board of directors at the first meeting of the board
held after the shareholders' annual meeting. If the appointment of officers does
not occur at this meeting, the appointment shall occur as soon thereafter as
practicable. Each officer shall hold office until a successor has been duly
appointed and qualified, or until an earlier resignation, removal from office,
or death.
4.3 Resignation. Any officer of the corporation may resign from his or her
respective office or position by delivering notice to the corporation. The
resignation is effective when delivered unless the notice specifies a later
effective date. If a resignation is made effective at a later date and the
corporation accepts the future effective date, the board of directors may fill
the pending vacancy before the effective date if the board provides that the
successor does not take office until the effective date.
4.4 Removal. Any officer of the corporation may be removed from his or her
respective office or position at any time, with or without cause, by the board
of directors.
4.5 Chief Executive Officer. The chief executive officer (CEO) of the
corporation shall, subject to the control of the board of directors, generally
supervise and control the business and affairs of the corporation as such
business and affairs related to financing issues, public stock offerings, and
stockholder relations. These responsibilities shall include, but not be limited
to, filings and correspondence with the SEC, stock exchanges and any other
governmental agencies related to or regulating the corporation's public stock
issues. The CEO shall preside at all meetings of the shareholders, the board of
directors and committees of the board of directors on which he or she may serve.
In addition, the CEO shall possess, and may exercise, such power and authority,
and shall perform such duties, as may from time to time be assigned to him or
her by the board of directors, and as are incident to the office of the chief
executive officer.
<PAGE>
4.6 President. The president shall be the chief operating
officer of the corporation and shall, subject to the control of the board of
directors, generally supervise and control the day to day business and affairs
of all operations of the corporation. These duties shall include, but not be
limited to, the management and supervision of all employees, design and
implementation of employee benefits plans, determine non-officer employee
compensation plans, determine appropriate production quantities, types of
products, and product mixes, approve all sales and marketing programs and
oversee all vendor and customer relations. The president shall, in the absence
of the CEO, preside at all meetings of the shareholders, the board of directors
and committees of the board of directors on which he or she may serve. In
addition, the president shall possess, and may exercise, such power and
authority, and shall perform such duties, as may from time to time be assigned
to him or her by the board of directors, and as are incident to the office of
president and chief operating officer.
4.7 Vice Presidents. Each vice president shall possess, and may exercise, such
power and authority and shall perform such duties, as may from time to time be
assigned to him or her by the board of directors.
4.8 Secretary. The secretary shall keep the minutes of the proceedings of the
shareholders and of the board of directors in one or more books provided for
that purpose; see that all notices are duly given in accordance with the
provisions of these bylaws or as required by law; be custodian of the corporate
records and of the seal of the corporation; and keep a register of the post
office address of each shareholder of the corporation. In addition, the
secretary shall possess, and may exercise, such power and authority, and shall
perform such duties, as may from time to time be assigned to him or her by the
board of directors and as are incident to the office of secretary.
4.9 Treasurer. The treasurer shall have charge and custody of, and be
responsible for, all funds and securities of the corporation; receive and give
receipts for money due and payable to the corporation from any source
whatsoever; and deposit all such money in the name of the corporation in such
banks, trust companies or other depositories as shall be used by the
corporation. In addition, the treasurer shall possess, and may exercise such
power and authority, and shall perform such duties, as may from time tom time be
assigned to him or her by the board of directors and as are incident to the
office of treasurer.
4.10 Other Officers Employees, and Agents. Each and every other officer,
employee, and agent of the corporation shall possess, and may exercise, such
power and authority, and shall perform such duties, as may from time to time be
assigned to him or her by the board of directors, the officer appointing him or
her, and such officer or officers who may from time to time be designated by the
board to exercise supervisory authority.
4.11 Compensation. The compensation of the officers of the corporation shall be
fixed from time to time by the board of directors.
<PAGE>
Article S--Certificates of Stock
5.1 Certificates for Shares. The board of directors shall determine whether
shares of the corporation shall be uncertificated or certificated. If
certificated shares are issued, certificates representing shares in the
corporation shall be signed (either manually or by facsimile) by the president
or chairman and the secretary or an assistant secretary and may be sealed with
the seal of the corporation or a facsimile thereof. A certificate that has been
signed by an officer or officers who later ceases to be such officer shall be
valid.
5.2 Transfer of Shares; Ownership of Shares. Transfers of shares of stock of the
corporation shall be made only on the stock transfer books of the corporation,
and only after the surrender to the corporation of the certificates representing
such shares. Except as provided by F.S. 607.0721, the person in whose name
shares stand on the books of the corporation shall be deemed by the corporation
to be the owner thereof for all purposes and the corporation shall not be bound
to recognize any equitable or other claim to, or interest in, such shares on the
part of any other person, whether or not it shall have express or other notice
thereof.
5.3 Lost Certificates. The corporation shall issue a new stock certificate in
the place of any certificate previously issued if the holder of record of the
certificate (a) makes proof in affidavit form that the certificate has been
lost, destroyed, or wrongfully taken (b) requests the issuance of a new
certificate before the corporation has notice that the lost, destroyed, or
wrongfully taken certificate has been acquired by a purchaser for value in good
faith and without notice of any adverse claim (c) at the discretion of the board
of directors, gives bond in such form and amount as the corporation may direct,
to indemnify the corporation, the transfer agent, and registrar against any
claim that may be made on account of the alleged loss, destruction, or theft of
a certificate and (d) satisfies any other reasonable requirements imposed by the
corporation.
Article 6 -- Actions With Respect to
Securities of Other Corporations
Unless otherwise directed by the board of directors, the president or a designee
of the president shall have power to vote and otherwise act on behalf of the
corporation, in person or by proxy, at any meeting of shareholders of, or with
respect to any action of shareholders of, any other corporation in which this
corporation may hold securities and to otherwise exercise any and all rights and
powers that the corporation may possess by reason of its ownership of securities
in other corporations.
Article 7 -- Amendments
These by-laws may be altered, aunended, or repealed, and new by-laws may be
adopted, by action of the board of directors, subject to the limitations of F.S.
607.1020(1). The shareholders of the corporation may alter, amend, or repeal
these bylaws or adopt new by-laws even though these by-laws may also be amended
or repealed by the board of directors.
Article 8 -- Corporate Seal
The board of directors shall provide for a corporate seal which shall be
circular and shall have the name of the corporation, the year of its
incorporation, and the state of incorporation inscribed on it.
EXHIBIT 10.0
STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made by and among, Synthetic Flowers of America, Inc., a
Florida corporation (the "Company"), Sheila Langley (the "Seller"), the
principal and majority shareholder of (the "Company") and David Howe and
assigns, the "Buyer").
WHEREAS, the Seller has agreed to sell up to a total of 3,680,000
restricted shares (the "Shares") of the common stock of the Company.
WHEREAS, the parties have reached the following agreement with respect to
the sale by the Seller to the Buyer of the Shares.
NOW THEREFORE, for valuable consideration and upon the mutual covenants and
promises contained herein, it is agreed as follows:
1. Purchase Price and Terms of Payment. The Seller agrees to sell to Buyer the
Shares for a total of $ 150,000.00, payable as follows:
1.1 Upon execution hereof, the sum of $50,000 or a non-refundable deposit
1.2 On February 5, 1999 the sum of $100,000.00 is due in exchange for
3,680,000 shares
2. Payment for the shares shall be by wire transfer to Eric P. Littman, P. A.,
Trust Account, as follows:
CITY NATIONAL. BANK
801 Brickell Avenue
Miami, FL 33131
ABA: 066004367
CREDIT THE ACCOUNT OF ERIC P. LITTMAN, P.A.,
TRUST ACCOUNT
ACCOUNT NUMBER: 10002924139
3. Irrevocable Agreement. Once executed by the parties, this Agreement will be
irrevocable. The Seller will have the obligation to sell the Shares to the
Buyer and the Buyer shall have the obligation to purchase the Shares from
the Seller strictly in accordance to this Agreement
4. Resignation of Current Officers and Board Directors. At or before the
Closing, the Seller shall cause each person who is an officer and/or
director of the Company to resign such position from the Company.
5. Representation and Warrants. The Seller represents and warrants to the
Buyer as follows:
<PAGE>
a. Prior to the consummation of this transaction, the Company has
4,041,200 shares of common stock and outstanding. It is understood and
agreed by the parties that upon receipt of the first $50,000, th~t the
current officers and directors of the Company will resign in favor of
the those chosen by the Buyer.
b. The currently issued and outstanding shares of the Company are fully
paid and non assessable and have been duly issued.
c. The Company is a corporation is duly organized and validly existing
under the laws of the State of Florida and has all corporate powers
necessary to engage in all transactions in which it has engaged.
d. The Company is in good standing in the state of Florida.
e. The Company has no outstanding debts or obligations whatsoever except
for any items which may have been already expressly disclosed to the
Buyer.
f. The Company is not subject to any pending, or threatened litigation,
claims, or lawsuits for any party.
g. The Company is not a party to any contract, lease, or agreement, which
would subject it to any performance or obligation in the future after
the Closing of this Agreement.
h. The Company does not own any real estate or any interest in real
estate.
i. The Company is not liable for any income, real or personal property
taxes to any governmental agencies whatsoever.
j. The Company is not in violation of any provision of laws or
regulations of federal, state or local government agencies whatsoever.
k. There are no pending or threatened proceedings against the Company.
1. The shares of the Company have been legally and validly issued,
and all such shares are fully paid and non-assessable.
m. The execution and delivery of this Agreement, and the subsequent
Closing thereof, will not result in the breach by the Company, or the
Sellers of any agreements or other instruments to which they are a
party nor will it result in the creation of any lien, charge or
encumbrance whatsoever against the Company or the Seller.
n. The representation and warrants contained by the Seller shall be true
and correct in all material respects on and as of the Closing, with
the same force and effect as though said representation had been made
on and as of the Closing.
o. Seller shall furnish Buyer with Company's complete set of books and
records.
<PAGE>
p. Attached hereto are the Financial Statements of June 30, ~998, and the
related statements of income and retained earnings for the period then
ended. The financial statements have been prepared in accordance with
generally accepted accounting, principles consistently followed by the
Company throughout the periods indicated, and fairly present the
financial position of the Company as of the date of the balance sheet
in the financial statements, and the results of its operations of the
periods indicated.
q. Since the date of the financial statements, there has not been any
material change in the financial condition or operations of the
Company, except the changes in the ordinary course of business, or
which have been otherwise disclosed.
r. The Company does not have any debt, liability, or obligations of any
nature, whether accrued, absolute, contingent, or otherwise, and
whether due or to become due, that is not reflected on the Company's
financial statement. The Company is not aware of any pending,
threatened or asserted claims, lawsuits, or contingencies involving
the Company or its common stock. There is no dispute of any kind
between the Company and any third party, and no such dispute will
exist at the closing of this Agreement. At closing, the Company will
be free from any and all liabilities, liens, claims and/or
commitments.
s. This agreement shall be governed by and construed in accordance with
the laws of the State of Florida. In the event a suit or action is
brought by any party under this Agreement to enforce any of do terms,
or in any appeal therefrom. It is agreed that the prevailing party
shall be entitled to reasonable attorneys fees at trial and all
appellate levels. If any such action is brought, including any
counterclaim, the parties agree to waive their right to a trial by
jury and agree that exclusive jurisdiction for any such action shall
be the state Courts of Miami-Dade, Florida.
6. Representations and Warranties. Unit the purchase price is paid in full,
the Buyer represents and warrants to the Company and Seller as follows:
6a. Anti-Dilution Provision For a period of 45 days from the date of Closing,
PURCHASER, their agents or assigns shall not issue any additional shares of
the ISSUER which would cause the Selling Shareholder to be a holder of less
than 8% of the issued and outstanding shares of ISSUER.
6b. PURCHASER further represents that until the Shares are paid for in full,
neither the PURCHASER nor anyone on its behalf will (I) cause the ISSUER to
issue shares in a regulation D, Rule 504 offering at a price of less than
.50 per share; and, (2) cause the issuance of any shares which will dilute
the Selling shareholder to below 8% of the total issued and outstanding
shares of the ISSUER.
v. Entire Agreement. This Agreement contains the entire Agreement and
understanding between the parties hereto, and supersede all prior
agreements and understandings.
<PAGE>
vi. Counterparts. This Agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
vii. Notice. All notices, requests, demands and other communications under this
Agreement shall be in writing shall be deemed to have been duly given the
date of service is served personally on the party to whom notice is to be
given, or on the third day after mailing if mailed to the party to whom
notice is to be given, by first class mail, registered or certified,
postage prepaid, and properly addressed, and by fax, as follows:
ISSUER: Sheila Langley
200 E Robinson Street, Suite 450 Orlando, FL 32801
Copy To; Eric P. Littman, Esquire
7695 5. W l04th Street, Suite 210 Miami1 FL 33156
IN WITNESS THEREOF, the undersigned has executed this Agreement this 15th
day of January 1999.
By: /s/ Sheila Langley By: /s/ David B. Howe
Sheila Langley David Howe, President
EXHIBIT 10.1
Stock Purchase Agreement
------------------------
This agreement dated this 2nd day of March, 1999 is by and between David B.
Howe, of 2008 Aderway, Brandon, Florida, hereinafter referred to as "SELLER",
and PINECREST INVESTMENT GROUP, INC., a Florida Corporation, hereinafter
referred to as "BUYER". In consideration of the mutual covenants and conditions
in this Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, BUYER and SELLER hereby agree as
follows:
1. BUYER'S OBLIGATIONS:
Upon full execution of this Agreement BUYER shall issue a promissory note
in the amount of $90,000.00 in favor of SELLER as a deposit on this Agreement.
Said promissory note shall bear interest at 10% per annum and be payable as
follows:
a) $30,000.00, plus accrued interest, on or before March 31, 1999;
b) The balance of $60,000.00 shall be paid in full, including accrued
interest, on or before September 2, 2000.
2. SELLER'S OBLIGATIONS:
Upon full execution of this Agreement, SELLER shall, within fifteen (15)
days, transfer to BUYER 2,185,000 restricted shares of common stock of BUYER,
hereinafter referred to as "SHARES".
3. SELLER'S REPRESENTATIONS AND WARRANTIES:
The SELLER makes the following representations and warranties to BUYER, all
of which shall expressly survive closing:
A. That the SHARES are fully paid and non-assessable.
B. That the SHARES have been duly issued and that he is fully
authorized to sell or assign same free and clear of all debts,
liens and encumbrances other than as is outlined in this
agreement.
C. That there is no litigation or proceedings pending at execution of
this Agreement against or relating to the SHARES, and that SELLER
does not have any reasonable grounds to know of any basis of any
such action or governmental investigation relative to the SHARES.
D. That all records and documentation exhibited to BUYER incident to
this transaction were true and correct as to the matters set forth
therein.
<PAGE>
E. That SELLER shall indemnify and hold BUYER harmless from and against
all liabilities, debts, claims, actions or causes or action, losses, damages and
attorney's fees, now existing or that may hereafter or arise from or grow out of
SELLER's ownership of the SHARES.
4. DEFAULT OF SELLER:
SELLER acknowledges that the SHARES are subject to that certain Stock
Purchase Agreement by and among BUYER, SELLER and Sheila Langley, hereinafter
referred to as "LANGLEY", dated January 15, 1999, hereinafter referred to as
"LANGLEY AGREEMENT". In the event SELLER fails or refuses to perform any of it's
obligations under the LANGLEY AGREEMENT or any of the convenants of this
agreement, BUYER shall be entitled to any and all remedies they may have because
of such default, including but limited to, terminating this Agreement and, in
such event, the promissory note issued pursuant to Paragraph 1 above and any and
all other obligations of BUYER under this Agreement shall be null and voided and
shall have no further force or effect.
5. DEFAULT OF BUYER:
In the event BUYER fails or refuses to perform any of the convenants of
this agreement, SELLER shall be entitled to any and all remedies they may have
because of such default, including but limited to requiring specific performance
or damages. Or, at it's option, in the event of default by BUYER under this
Agreement, SELLER may terminate this agreement except that BUYER shall remain
fully obligated on that certain promissory note issued pursuant to Paragraph 1
above as liquidated damages to SELLER and any and all other obligations of
SELLER shall be null and void and have no further force or effect.
6. CLOSING:
The closing of this sale shall take place within forty-eight (48) hours
from full execution of this Agreement by all parties hereto.
7. DATE OF AGREEMENT:
The date of the last signature affixed to this Agreement shall be the
effective date of this document.
8. PARTIES BOUND:
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors, administrators, and
successors. Upon notification of any claim arising from the breach of a warranty
contained herein, BUYER shall promptly notify the SELLER and SELLER shall either
pay or contest such claim by appropriate judicial process.
<PAGE>
9. ASSIGNMENT:
This agreement and subsequent closing documents shall be wholly assignable
by BUYER to a Third Party.
10. ATTORNEY'S FEES:
The parties agree that in the event either party is required to institute
legal action against the other, then the prevailing party in such litigation
shall be entitled to be reimbursed from the non-prevailing party for all costs
plus a reasonable attorney's fee.
11. SURVIVAL OF AGREEMENT:
The parties agree that this Agreement shall survive the closing hereunder.
WITNESSES: SELLER:
DAVID B. HOWE
/s/ Ricky A. Howe /s/ David B. Howe
- -------------------------------- ------------------------------------
BUYER:
PINECREST INVESTMENT GROUP, INC.
/s/ Ricky A. Howe By: /s/ David B. Howe
- -------------------------------- -------------------------------
David B. Howe, President
EXHIBIT 10.2
Agreement for Sale and Purchase of Business Assets
--------------------------------------------------
This agreement dated this 2nd day of March, 1999 is by and between Tillman
& Associates, Inc., a Florida Corporation, hereinafter referred to individually
as "SELLER", with it's corporate mailing address as P.O. Box 205, Lithia,
Florida and PINECREST INVESTMENT GROUP, INC., a Florida Corporation, or its
assigns, hereinafter referred to as "BUYER. In consideration of the mutual
covenants and conditions in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
SELLER hereby agrees that it shall sell the following business assets to BUYER
and BUYER shall buy said business assets on the following terms and conditions.
1. DESCRIPTION OF ASSETS:
The Assets that SELLER shall convey to BUYER at closing, in conjunction
with that certain Agreement for Sale and Purchase of Business Assets between
BUYER and Michael Foundation, Ltd., a West Indies Corporation, dated March 2,
1999, include all the rights of SELLER to any and all proprietary information
and technology necessary in the overall operation of a hydroponic herb and
lettuce farm. The aforementioned information and technology shall include, all
hydroponic growth solution formulas, equipment and greenhouse specifications,
crop and equipment maintenance plans and programs, and trade secrets.
2. PURCHASE PRICE AND CONDITIONS:
BUYER shall pay $160,000.00 to SELLER as follows:
A. 50,000 Shares of Restricted Common stock of Purchaser $ 75,000
B. Promissory note in the amount of $85,000.00
in favor of TILLMAN. Said promissory note shall bea
interest at the rate of 10% per annum and be payable
in full, including accrued interest as soon as funds
are available. However, in no event shall payment be
any later than December 31, 1999. 85,000
---------
Total Purchase Price $ 160,000
=========
3. REPRESENTATIONS AND WARRANTIES OF SELLER:
The SELLER makes the following representations and warranties to BUYER, all
of which shall expressly survive closing:
a. That it is the owner of and has good and marketable title
to the business assets, free and clear of all debts, liens and encumbrances.
b. That the business is in compliance with all laws, rules and
regulations of governmental authorities having jurisdiction over same, and that
SELLER warrants that there is no litigation or proceedings pending at closing
against or relating to the business or its assets, and that SELLER does not have
reasonable grounds to know of any basis of any such action or governmental
investigation relative to the Company, it's assets, properties or business.
c. That is all records and documentation exhibited to BUYER
incident to this transaction were true and correct as to the matters set forth
therein.
d. That SELLER shall indemnify and hold BUYER harmless from
and against all liabilities, debts, claims, actions or causes or action, losses,
damages and attorney's fees, now existing or that may hereafter or arise from or
grow out of SELLER's past operation and ownership of the assets. In the event
SELLER is unable to pay any legitimate liabilities, debt, claims, damages, etc.
then BUYER at it's option may pay any such losses, damages, claims, etc. and
offset same against promissory note to SELLER.
4. DEFAULT:
If SELLER refuses or fails to perform any of the convenants of this
agreement, BUYER shall be entitled to any and all remedies they may have because
of such default, including but limited to requiring specific performance or
damages.
<PAGE>
5. CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE:
The obligation to BUYER to purchase the assets under this Agreement is
subject to the satisfaction, at or before closing, of the following conditions:
a. The SELLER shall warrant at the time of closing that they
know of no violations of any local, State or Federal statute, ordinances or
regulations pertaining to the assets being sold including, but not limited to,
the Occupational Safety and Health Act (OSHA), Division of Licensing, and
Environmental Protection Act (EPA) by SELLER. This provision shall survive the
closing.
b. That BUYER and SELLER, or their respective representatives,
shall approve all closing instruments as to form and substance, provided such
approval shall not be withheld if in the form customarily used in Hillsborough
County, Florida.
c. That all-transferable licenses be transferred to BUYER at
time of Closing.
6. CLOSING:
The closing of this sale shall take place on or before thirty (30) days
from full execution of this Agreement by all parties hereto.
7. DATE OF AGREEMENT:
The date of the last signature affixed to this Agreement shall be the
effective date of this document.
8. PERSONS BOUND:
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors, administrators, and
successors. Upon notification of any claim arising from the breach of a warranty
contained herein, BUYER shall promptly notify the SELLER and SELLER shall either
pay or contest such claim by appropriate judicial process.
9. ASSIGNMENT:
This agreement and subsequent closing documents shall be wholly assignable
by BUYER to a Third Party.
10. ATTORNEY'S FEES:
The parties agree that in the event either party is required to institute
legal action against the other, then the prevailing party in such litigation
shall be entitled to be reimbursed from the non-prevailing party for all costs
plus a reasonable attorney's fee.
11. SURVIVAL OF AGREEMENT:
The parties agree that this Agreement shall survive the closing hereunder.
WITNESSES: SELLER:
TILLMAN & ASSOCIATES, INC.
/s/ Sheryl B. Salvadore By: /s/ Thomas M. Tillman
- -------------------------------- ---------------------------------
Thomas M. Tillman, President
BUYER:
PINECREST INVESTMENT GROUP, INC.
/s/ Ricky A. Howe By: /s/ David B. Howe
- -------------------------------- ---------------------------------
David B. Howe, President
EXHIBIT 10.3
Agreement for Sale and Purchase of Business Assets
--------------------------------------------------
Hillsborough County, Florida March 2, 1999
MICHAEL FOUNDATION, LIMITED, a West Indies Corporation, hereinafter called
"Seller", it's business address being in care of First Nevisian Corporate
Services, Henville Building, Prince Charles Street, Charleston, Nevis, West
Indies and PINECREST INVESTMENT GROUP, INC., a Florida Corporation, or its
assigns, here in after called "Buyer", in consideration of the mutual promises
in this Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, agree that Seller shall sell the
following business assets to buyer and Buyer shall buy said business assets on
the following terms and conditions.
1. DESCRIPTION OF ASSETS:
The Assets that Seller shall convey to Buyer at closing include all the
rights of Seller to any and all proprietary information and technology necessary
in the overall operation of a hydroponic herb and lettuce farm. The
aforementioned information and technology shall include all hydroponic growth
solution formulas, equipment and greenhouse specifications, crop and equipment
maintenance plans and programs, and trade secrets.
2. PURCHASE PRICE AND CONDITIONS:
A. Purchase Price:
1. 2,185,000 Shares of Restricted Common stock
of Purchaser with a current estimated market
value of $ 1.50 per share. $ 3,277,500
-----------
Total Purchase Price $ 3,277,500
3. REPRESENTATIONS AND WARRANTIES OF SELLER:
The Seller makes the following representations and warranties to Buyer, all
of which shall expressly survive closing:
a. That it is the owner of and has good and marketable title to
the business assets, free and clear of all debts, liens and encumbrances.
b. That the business is in compliance with all laws, rules and
regulations of governmental authorities having jurisdiction over same, and that
Seller warrants that there is no litigation or proceedings pending at closing
against or relating to the business or its assets, and that Seller does not have
reasonable grounds to know of any basis of any such action or governmental
investigation relative to the Company, it's assets, properties or business.
c. That seller has duly filed, or will file prior to closing, all
Federal, State and local tax returns required to be filed by it and has paid, or
will pay prior to closing, all Federal, State and local taxes for periods up to
the date of sale. In the event that after closing a deficiency is determined for
the period prior to closing, Seller shall be responsible for payment of said
deficiency.
d. That is all records and documentation exhibited to Buyer
incident to this transaction were true and correct as to the matters set forth
therein.
e. That Seller shall indemnify and hold Buyer harmless from and
against all liabilities, debts, claims, actions or causes or action, losses,
damages and attorney's fees, now existing or that may hereafter or arise from or
grow out of Seller's past operation and ownership of the assets.
4. DEFAULT:
If Seller refuses or fails to perform any of the convenants of this
agreement, Buyer shall be entitled to any and all remedies they may have because
of such default, including but limited to requiring specific performance or
damages.
<PAGE>
5. CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE:
The obligation to Buyer to purchase the assets under this Agreement is
subject to the satisfaction, at or before closing, of the following conditions:
a. The Seller shall warrant at the time of closing that they know
of no violations of any local, State or Federal statute, ordinances or
regulations pertaining to the assets being sold including, but not limited to,
the Occupational Safety and Health Act (OSHA), Division of Licensing, and
Environmental Protection Act (EPA) by Seller. This provision shall survive the
closing.
b. That Buyer and Seller, or their respective representatives,
shall approve all closing instruments as to form and substance, provided such
approval shall not be withheld if in the form customarily used in Hillsborough
County, Florida.
c. That all-transferable licenses be transferred to Buyer at time
of Closing.
5. CLOSING:
The closing of this sale shall take place on or before thirty (30) days
from full execution of this Agreement by all parties hereto.
6. DATE OF AGREEMENT:
The date of the last signature affixed to this Agreement shall be the
effective date of this document.
7. PERSONS BOUND:
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors, administrators, and
successors. Upon notification of any claim arising from the breach of a warranty
contained herein, Buyer shall promptly notify the Seller and Seller shall either
pay or contest such claim by appropriate judicial process.
8. This agreement and subsequent closing documents shall be wholly
assignable by Buyer to a Third Party.
9. ATTORNEY'S FEES:
The parties agree that in the event either party is required to institute
legal action against the other, then the prevailing party in such litigation
shall be entitled to be reimbursed from the non-prevailing party for all costs
plus a reasonable attorney's fee.
10. SURVIVAL OF AGREEMENT:
The parties agree that this Agreement shall survive the closing hereunder.
WITNESSES: SELLER:
- ---------------------------- MICHAEL FOUNDATION, LIMITED
By: /s/ Richard Smith
- ---------------------------- -----------------------------
Richard Smith, Director/CEO
WITNESSES: BUYER:
/s/ Sheryl Savadore
- ---------------------------- PINECREST INVESTMENT GROUP, INC.
/s/ Ricky A. Howe By: /s/ David B. Howe
- ---------------------------- -----------------------------
David B. Howe, President
EXHIBIT 10.4
It is expressly understood that any reference herein to "I" or "We" is to
Pinecrest Investment Group, Inc.
(This is a purchase money first mortgage)
This Mortgage ("Security Instrument") is given on this 9th day of April
1999. The Mortgagor is Pinecrest Investment Group, Inc. ("Borrower"). This
Security Instrument is given to HOPEWELL LAND PARTNERS, LTD., a Florida Limited
Partnership, whose address is Post Office Box 112, Winter Haven, Florida
33882("Lender"). Borrower owes Lender the principal sum of Two Hundred Eighty
Eight Thousand and No/l00's Dollars. This debt is evidenced by Borrower's
Promissory Note ("Note"), dated same date as this Security Instrument, which
provides for monthly payments, with the full debt, if not paid earlier, due and
payable on April 9, 2000. This Security Instrument secures to Lender:
(A) The repayment of the debt evidenced by the Note, with interest,
and all renewals, extensions and modifications;
(B) The payment of all other sums, with interest, advanced under
Paragraph 7 to protect the security of this Security Instrument;
and
(C) The performance of Borrower's covenants, and agreements under
this Security Instrument and the Note. For this purpose, Borrower
does hereby mortgage, grant and convey to Lender the following
described property located in Hillsborough County, Florida.
The SE 1/4 of the SE 1/4 of Section 20, Township 30 South, Range 22 East,
Hillsborough County, Florida, less right of way for State Road 640 which
has the address of vacant land on Lithia-Pinecrest Road, Lithia, FL ("Property
Address")
Together with all improvements now or hereafter erected on the property and
all easements, rights, appurtenances rents, royalties, mineral, oil and gas
rights and profits, water rights and stock, and all fixtures now or hereafter a
part of the property. All replacements and additions shall also be covered by
this Security Instrument. All of the foregoing is referred to in this Security
Instrument as the "Property".
Borrower covenants that Borrower is lawfully seized of the estate hereby
conveyed and has the right to mortgage, grant and convey the Property that the
Property is unencumbered, except for encumbrances of record. Borrower warrants
and will defend generally the title to the Property against claims and demands,
subject to any encumbrances of record.
Borrower and Lender covenant and agree as follows:
1. Payment of Principal and Interest: Pre-payment and Late Charges.
Borrower shall promptly pay when due the principal of and interest on
the debt evidenced by the Note and any prepayment and late charges due
under the Note.
<PAGE>
2. Funds for Taxes and Insurance. Upon demand by Lender, Borrower shall,
subject to applicable law, pay to Lender on the day monthly payments
are due under the Note, until the Note is paid in full, a sum
("Funds") equal to one-twelfth (1/12) of: (a) Yearly taxes and
assessments which may attain priority over this Security Instrument;
(b) Yearly leasehold payments or ground rents on the Property, if any;
(c) Yearly hazard insurance premiums, and; (d) Yearly mortgage
insurance premiums, if any. These are called "Escrow Items". Lender
may estimate the funds due on the basis of current data and reasonable
estimates for future escrow items. At the inception of this loan
Lender is not requiring payment of escrow items.
The funds shall be held in an institution the deposits or accounts of
which are insured or guaranteed by a federal or state agency, if
available. Lender shall apply the funds to pay the escrow items.
Lender may not charge for holding and applying the funds, analyzing
the account or verifying the escrow items, unless Lender pays Borrower
interest on the funds and applicable law permits the Lender to make
such a charge. Borrower and Lender may agree in writing that interest
shall be paid on the funds. Unless an agreement is made or applicable
law requires interest to be Paid, Lender shall not be required to pay
Borrower any interest or earnings on the funds. Lender shall give to
Borrower without charge, an annual accounting of the funds showing
credits and debits to the funds and the purpose for which each debit
to the funds was made.
The funds are pledged as additional security for the sums secured by
this Security Instrument.
If the amount of the funds held by Lender, together with the future
monthly payments of funds payable prior to the due dates of the escrow
items, shall exceed the amount required to pay the escrow items when
due, the excess shall be at Borrower's option, either promptly repaid
to Borrower or credit to Borrower on monthly payments of funds. If the
amount of the funds held by Lender is not sufficient to pay the escrow
items when due, Borrower shall pay to Lender any amount necessary to
make up the deficiency in one or more payments as required by Lender.
Upon payment in full of all sums secured by this Security Instrument,
Lender shall promptly refund to Borrower any funds held by Lender. If
under Paragraph 19 the property is sold or acquired by Lender, Lender
shall apply, no later than immediately prior to the sale of the
property or its acquisition by Lender, any funds held by Lender at the
time of application as a credit against the sums secured by this
Security Instrument.
Lender may require or waive the requirement of payment of escrow for
any given year.
3. Application of Payment. Unless applicable law provides otherwise, all
payments received by Lender under Paragraph 1 and 2 shall be applied;
First to late charges due under the Note Second, to pre-payment
charges due under the Note; Third, to amounts payable under Paragraph
2; Fourth, to interest due; and last, to principal due.
4. Charges; Liens. Borrower shall pay all taxes, assessments, charges,
fines and impositions attributable to the Property, which may attain
priority over this Security Instrument, and leasehold payments or
grounds rents, if any. Borrower shall pay these obligations in the
manner provided in Paragraph 2, or if not paid in that manner, shall
pay them on time directly to the person owed payment. Borrower shall
promptly furnish to Lender all notice of amounts to be paid under this
paragraph. If Borrower makes these payments directly, Borrower shall
promptly furnish to the Lender receipts evidencing the payments.
Borrower shall promptly discharge any lien, including, but not limited
to, superior mortgages, which has priority over this Security
Instrument unless Borrower: (A) Agrees in writing to the payment of
the obligation secured by the lien in a manner acceptable to Lender;
(B) Contest in good faith the lien by, or defends against enforcement
of the lien in, legal proceedings which in the Lender's opinion
operates or prevents the enforcement of the lien or forfeiture of any
part of the Property; or (C) secures from the holder of the lien an
agreement satisfactory to Lender subordinating the lien to this
<PAGE>
Security Instrument. If Lender determines that any part of the
Property is subject to a lien, which may attain priority over this
Security Instrument, Lender may give Borrower a notice identifying the
lien. Borrower shall satisfy the lien or take one or more of the
actions set forth above within ten (10) days of the giving f the
notice.
5. Hazard Insurance. Borrower shall keep the improvements now existing or
hereafter erected on the Property insured against loss by fire,
hazards included within the term "extended coverage" and any other
hazards for which Lender requires insurance. This insurance shall be
maintained in the amounts and for the periods that Lender requires.
The insurance carrier providing the insurance shall be chosen by
Borrower subject to Lender's approval, which shall not be unreasonably
withheld.
All insurance policies and renewals shall be acceptable to Lender and
shall include a standard mortgage clause. Lender shall have the right
to hold the policies and renewals. If Lender requires, Borrower shall
promptly give to Lender all receipts of paid premiums and renewal
notices. In the event of loss, Borrower shall give prompt notice to
the insurance carrier and Lender. The Lender .may make proof of loss
if not made promptly by Borrower.
Unless Lender and Borrower otherwise agree in writing, insurance
proceeds shall be applied to restoration or repair of the Property
damage the restoration or repair is economically feasible and Lender's
security not lessened. If the restoration or repair is not
economically feasible Lender's security would be lessened, the
insurance proceeds shall be applied to the sums secured by this
Security Instrument, whether or not then due, any excess paid to
Borrower. If Borrower abandons the Property, but does not answer
within thirty (30) days a notice from Lender that the insurance
carrier has offered to settle a claim, then Lender may collect the
insurance proceeds. Lender may use the proceeds to repair or restore
the Property or to pay sums secured by this Security Instrument,
whether or not then due. The thirty (30) day period will begin at the
time the notice is given.
Unless Lender and Borrower otherwise agree in writing, any application
of proceeds to principal shall not extend or postpone the due date of
the monthly payments referred to in paragraphs 1 and 2 or change the
amount of the payment. If under paragraph 19 the Property is acquired
by Lender, Borrower's right to any insurance policies and proceeds
resulting from damage to the property prior to the acquisition shall
pass to Lender to the extent of the sums secured by this Security
Instrument immediately prior to the acquisition.
6. Preservation and Maintenance of Property; Leaseholds. Borrower shall
not destroy, damage or substantially change the Property, allow the
Property to deteriorate or commit waste. If this Security Instrument
is; on a leasehold, Borrower shall comply with the provisions of the
lease, and if Borrower acquires fee title to the Property, the
leasehold and fee title shall not merge unless Lender agrees to the
merger in writing.
No building or other structure or improvement, fixture or personal
property mortgaged hereby shall be removed or demolished without the
prior written consent of Lender. Borrower will not make, permit, or
suffer any alteration of or addition to any building or other
structure or improvement now or which may hereafter be erected or
installed upon the Property, C any part thereof, nor will the Borrower
use, or permit or suffer the use of any of the Property for any
purpose other than the purpose or purposes for which the same is now
intended to be used, without the prior written consent of Lender.
Borrower will maintain Property in good condition and state of repair
and will not suffer or permit any waste to any part thereof, and will
promptly comply with all the requirements of federal, state, and local
governments, or of any departments, divisions or bureaus thereof,
pertaining to such Property or any part thereof.
7. Protection of Lender's Rights in Property; Mortgage Insurance. If
Borrower fails to perform the covenants and agreements contained in
this. Security Instrument, or there is a legal proceeding that may
significantly affect Lender's rights in Property (such as a proceeding
in bankruptcy, probate or condemnation or to enforce laws or
regulations), then Lender may do and pay for whatever is necessary to
protect the value of the Property and Lender's rights in the Property.
<PAGE>
Lender's actions may include paying any sums secured by a lien, which
has priority over this Security Instrument, appearing in court, paying
reasonable attorney's fees and entering on Property to make repairs.
Although Lender may take action under this paragraph 7, Lender does
not have to do so.
Any amounts disbursed by Lender under this paragraph 7 shall become
additional debt of Borrower secured by this Security Instrument.
Unless Borrower and Lender agree to other terms of payment, these
amounts shall bear interest from the date of disbursement at the Note
rate and shall be payable, with interest, upon notice from Lender to
Borrower requesting payment.
If Lender required mortgage insurance as a condition of making the
loan secured by this Security Instrument, Borrower shall pay the
premiums required to maintain the insurance in effect until such tie
as the requirement for the insurance terminates in accordance with
Borrower's and Lender's written agreement or applicable law.
8. Inspection. Lender or its agent may make reasonable entries upon and
inspections of Property. Lender shall give Borrower notice at the tie
of or prior to an inspection specifying reasonable cause of the
inspection.
9. Condemnation. The proceeds of any award or claim for damages, direct
or consequential, in connection with any condemnation or other taking
or any part of the Property, or for conveyance in lieu of
condemnation, are hereby assigned and shall be paid to Lender.
In the event of a total or partial taking of the Property, unless
Borrower and Lender otherwise agree, the proceeds shall be applied to
the sums secured by this Security Instrument, whether or not then due,
with any excess paid to Borrower.
If the Property is abandoned by Borrower, or is, after notice by
Lender to Borrower that the condemnor offers to make an award or
settle a claim for damages, Borrower fails to respond to Lender within
30 days after the date the notice is given, Lender is authorized to
collect and apply the proceeds, at its option, either to restoration
or repair of the Property or to the suns secured by this Security
Instrument, whether or not then due.
Unless Lender and Borrower otherwise agree in writing, any application
of proceeds to principal shall not extend or postpone the due date of
the monthly payments referred to in paragraphs 1 and 2 or change the
amount of such payments.
10. Borrower Not Released; Forbearance by Lender Not a Waiver. Extension
of the time for payment or modification of amortization of the sums
secured by this Security Instrument granted by Lender to any successor
<PAGE>
in interest of Borrower shall not operate to release the liability f
the original Borrower or Borrowers successors in interest. Lender
shall not be required to commence proceedings against any successor in
interest or refuse to extend time for payment or otherwise modify
amortization of the sums secured by this Security Instrument by reason
of any demand made by the original Borrower or Borrower's successors n
interest. Any forbearance by Lender in exercising any right or remedy
shall not be a waiver of or preclude the exercise of any right or
remedy.
11. Successors and Assigns Bound; Joint and Several Liability Cosignors.
The covenants and agreements of this Security Instrument shall bind
and benefit the successors and assigns of Lender and Borrower subject
to the provisions of Paragraph 17. Borrower's covenants and agreements
shall be joint and several. Any Borrower who co-signs this Security
Instrument but does not execute the Note; (a) is co-signing this
Security Instrument only to mortgage, grant and convey the Borrower's
interest in the Property under the terms of this Security Instrument
(b) is not personally obligated to pay the sums secured by this
Security Instrument; and (c) agrees that Lender and ay other Borrower
may agree to extend, modify, forbear or make any accommodations with
regard to the terms of this Security Instrument or the Note without
that Borrower's consent.
12. Loan Charges. If the loan secured by this Security Instrument is
subject to a law which sets maximum loan charges, and that law is
finally interpreted so that the interest or other loan charges
collected or to be any such loan charge shall be reduced by the amount
necessary to reduce the charge to the permitted limits and (b) any
sums already collected from Borrower which exceeded permitted limits
will be refunded to Borrower, Lender my choose to make this refund by
reducing the principal owed under the Note, if permitted by law. Or by
making a direct payment to Borrower. If a refund reduces principal,
the reduction will be treated as a partial prepayment without any
prepayment charge under the Note.
13. Legislation Affecting Lender's Rights. If enactment or expiration of
applicable laws has the effect of rendering any provision of the Note
or this Security Instrument unenforceable according to its terms,
Lender, at its option, may require immediate payment in full of all
sums secured by this Security Instrument and may invoke any remedies
permitted by paragraph 19. If Lender exercises this option, Lender
shall take the steps specified in the second paragraph of paragraph
17.
14. Notices. Any notice to Borrower provided for in this Security
Instrument shall be given by mailing it by first class mail unless
applicable Law request use of another method. The notice shall be
directed to the Property Address or any other address Borrower
designates by notice to lender. Any notice to Lender shall be given by
first class mail to Lender's address stated herein or any other
address Lender designates by notice to Borrower. Any notice provided
for in this Security Instrument shall be deemed to have been given to
Borrower or Lender when given as provided in this paragraph.
<PAGE>
15. Governing Law; Severability. This Security Instrument shall be
governed by federal law and the law of the jurisdiction in which the
Property is located. In the event that any provision or clause of this
Security Instrument or the Note conflicts with applicable law, such
conflict shall not affect other provisions of this Security Instrument
or the Note which can be given effect without the conflict provision.
To this end the provisions of this Security Instrument and the Note
are declared to be severable.
16. Borrower's Copy. Borrower does hereby acknowledge receipt of one
conformed copy of the Note and of this Security Instrument.
17. Transfer of the property or a Beneficial Interest in Borrower. If all
or any part of the Property or any interest in it is sold or
transferred (or if a beneficial interest in Borrower is sold or
transferred an Borrower is not a natural person) without Lender's
prior written consent, lender may, at its option, require immediate
payment if full of all sums secured by this Security Instrument.
If Lender exercises this option. Lender shall give Borrower notice of
acceleration. The notice shall provide a period of not less than 10
days from the date the notice is delivered or mailed within which
Borrower must pay all sums secured by this Security Instrument. If
Borrowers fails to pay these sums prior to the expiration of this
period, Lender may invoke any remedies permitted by this Security
instrument without further notice or demand on Borrower.
18. Borrower's Right to Reinstate. If Borrower meets certain conditions,
Borrower shall have the right to have enforcement of this Security
Instrument discontinued at any time prior to the earlier of: (a) 5
days (or such other period as applicable law may specify for
reinstatement) before sale of the Property pursuant to any power of
sale contained in this Security Instrument. Those conditions are that
Borrower: (a) pays lender all sums which then would be due under this
Security Instrument and the Note had no acceleration occurred' (b)
cures any default of any other covenants or agreements; (c) pays all
expenses incurred in enforcing this Security instrument, including,
but not limited to, reasonable attorney's fees; and (d) takes such
action as Lender may reasonably require to assure that the lien of
this Security Instrument shall continue unchanged. Upon reinstatement
by Borrower, this Security Instrument and the obligation secured
hereby shall remain fully effective as if no acceleration had
occurred. However, this right to reinstate shall not apply in the case
of acceleration under paragraphs 13 or 17.
NON-UNIFORM COVENANTS. Borrower and Lender further covenant and agree
as follows:
<PAGE>
19. Acceleration; Remedies. Lender shall give notice to Borrower prior to
acceleration following Borrower's breach of any covenant or agreement
in this Security Instrument (but not prior to acceleration under
paragraphs 13 and 17 unless applicable law provides otherwise). The
notice shall specify" (a) the default: (b) the action required to cure
the default; (c) a date, not less than 10 days from the date the
notice is given to Borrower, by which the default must be cured; and
(d) that failure to cure the default on or before the date specified
in the notice may result in acceleration of the sums secured by this
Security Instrument, foreclosure by judicial proceedings and sale of
the Property. The notice shall further inform Borrower of the right to
reinstate after acceleration and the right to assert n the foreclosure
to reinstate after acceleration and the right to assert in the
foreclosure proceeding the non-existence of a default or any other
defense of Borrower to acceleration and foreclosure. If the default is
not cured on or before the date specified in the notice, or is not
capable of being cured, Lender at its option may require immediate
payment in full of all sums secured by this Security Instrument
without further demand any may foreclose this Security Instrument by
judicial proceeding. Lender shall be entitled to collect all expenses
incurred in pursing the remedies provided in this paragraph 19,
including, but not limited, reasonable attorney's fees and costs of
title evidence.
20. Lender in Possession. Lender in any action to foreclose this mortgage
shall be entitled to the appointment of a receiver, without notice, as
a matter or right and without regard to the value of Property, or the
solvency or insolvency of Borrower or other party liable of the
payment of the Note and other indebtedness secured by this mortgage.
Upon acceleration, under paragraph 19 or abandonment of the property.
Lender, in accordance with law, shall be entitled to enter upon, take
possession of and mange the Property and to collect the rents of the
Property including those past due. Any rents collected by lender or
the receiver shall be applied first to payments of the cost of
management of the property and collection of tents, including, but not
limited to, receiver's fees, premiums on receiver's bonds and
reasonable attorney's fees, and then to the sums secured by this
Security Instrument.
21. Release. Upon payment of all sums secured by this Security Instrument,
Lender shall release this Security instrument without charge to
Borrower. Borrower shall pay any recordation costs.
22. Attorney's Fees. As used in this Security Instrument and the Note,
"attorney's fees" shall include, but not be limited to, attorney's
fees award by an appellate court.
<PAGE>
BY SIGNING BELOW, Borrower accepts and agrees to the terms and covenants
contained in this Security Instrument executed by Borrower and any rider (s)
executed by Borrower.
Signed, sealed and delivered Pinecrest Investment Group, Inc.
in the presence of:
s/ David B. Howe
By: David B. Howe
Its: Chairman
State of Florida
County of Hillsborough
I hereby certify that on this day, before me, an officer duly authorized n
the state aforesaid and in the county aforesaid to take acknowledgments,
personally appeared David B. Howe, Chairman* to me know to be the person(s)
described in or produced a driver's license as identification, and who executed
the foregoing instrument and acknowledged before that executed the same for the
purpose therein expressed.
* of Pinecrest Investment group, Inc.
Witness my hand and official seal in the count and state aforesaid this 9th day
of April, 1999.
s/ E. Michelle Yeomans
Notary Public, State of Florida
E. Michelle Yeomans
Printed Name of Notary
My commission expires: 8/26/01
<PAGE>
PROMISSORY NOTE
---------------
DATED this 9th day of April, 1999, Plant City, Florida.
1. Borrowers Promise to Pay. In return for the loan that I have received, I
promise to pay. Two Hundred, Eighty-Eight Thousand & No/100's U.S. Dollars.
(This amount is called "principal"), plus interest, to the order of the Lender.
The Lender is HOPEWELL LAND PARTNERS, LTD., a Florida Limited Partnership. I
understand that Lender may transfer this Promissory Note ("Note"). Lender or
anyone who takes this Note by transfer and who is entitled to receive payments
under this Note is called the "Note Holder".
2. Interest will be charged on unpaid principal until the full amount of
principal has been paid in accordance with the terms of this Note. I will pay
interest at a yearly rate of 12 percent. simple interest. The interest rate
required by this section is the rate I will pay before any default described in
Section 6 of this Note. After default, I will pay the highest interest rate
allowable by law.
3. Payments
(A) Time and Place of Payments. I will pay interest only payments
every month. I will make my monthly payments on the 9th day of each month
beginning on May 9, 1999 and a balloon and final payment on the 9th day of
April, 2000. My monthly payments will be applied to interest before principal.
If, on April 9, 2000, I still owe amounts under this Note, I will pay those
amounts in full on that date, which is called the "maturity date". I will make
my monthly payments at Post Office Box 112, Winter Haven, Florida 33892, or at a
different place if required by the Note Holder. In the event I make all payments
timely in the amount indicated, then, my final payment of April 9, 2000, will be
$288,000.60 plus interest.
(B) Amount of my Initial Monthly Payments. Each of my monthly payments
will be in the amount of U.S. Dollars $32,880.00 This amount represents interest
only and does not include escrows, late fees, or such other obligations which
may be required under the terms of the security instrument.
4. Borrowers Right to Pre-Pay. I have the right to make payments of
principal at any time before they are due. A payment of principal only is known
as a "pre-payment". When I make a pre-payment. I will tell the Note Holder, in
writing, that I am doing so. I may make a full pre-payment or partial
pre-payments without paying any pre-payment charge. The Note Holder will use all
of my pre-payments to reduce the amount of principal that. I owe under this
Note. If I make a partial pre-payment there will be no changes in the due dates
of my monthly payments unless the Note Holder agrees in writing to those
changes.
5. Loan Charges. If a law, which applies to this loan and which sets
maximum loan charges, is finally interpreted so that the interest 'or' other
loan charges collected or to be collected in connection with this loan 'exceed
the permitted limits, then:
(i) Any such loan charge shall be reduced by the amount necessary to reduce
the charge to the permitted limit; and
(ii) Any sums already collected from me that exceed permitted limits will
be refunded to me. The Note Holder may choose to make this refund by reducing
the principal I owe under this Note or by making a direct payment to me if a
refund reduces principal. The reduction will be treated as a partial
pre-payment.
6. Borrowers Failure to Pay as Required
(A) Late Charges for Overdue Payments. If the Note Holder has not
received the full amounts of any monthly payment by the end of 15 calendar days
after the date it is due, I will pay a late charge to the Note Holder. The
amount of the charge will be 5% percent of my overdue payment of principal and
interest. I will pay this late charge promptly but only one on each late
payment.
<PAGE>
(B) Default. If I do not pay the full amount of each monthly payment
on the date it is due, I will be in default.
(C) Notice of Default. If I am in default, the Note Holder may send me
a written notice telling me if I do not pay the overdue amount by a certain
date, the Note Holder may require me to pay immediately the full amount of
principal that has not been paid and all the interest that I owe on that amount.
That date must be at least Ten (10) days after the date on which the notice is
delivered or mailed to me.
(D) No Waiver by Note Holder. Even if, at a time when I am in default,
the Note Holder does not require me to pay immediately in full and as described
above, the Note Holder will still have the right to do so if I am in default at
a later date.
(E) Payment of Note Holder's Costs and Expenses. If the' Note Holder
has required me to pay immediately in full as described above, the Note Holder
will have the right to be paid back by me for all of its cost, and expenses in
enforcing this Note to the extent not prohibited by applicable law. Those
expenses include, for example, reasonable attorney's fees, including but not
limited to attorney's fees incurred on appeals.
7. Giving of Notices Unless applicable law requires a different method, any
notice that must be given to me under this Note will be given by mailing it by
First Class Mail to me at 1211 Tech Blvd., Suite 101, Tampa, FL 33619 or a
different address if I give the Note Holder a notice of my different address.
Unless the Note Holder requires a different method, any notice that must be
given to the Note Holder under this Note will be given by mailing it by First
Class Mail to the Note Holder at the address stated in Section 3(A) above or at
a different address if I am given a notice of that different address.
8. Obligations of Persons Under this Note. If more than one person signs
this Note, each person is fully and personally obligated to keep all of the
promises made in this Note, including the promise to pay the full amount owed.
Any person who is a guarantor, surety or endorser of this Note is also obligated
to do these things. Any person who takes over these obligations, including the
obligations of a guarantor, surety or endorser of this Note, is also obligated
to keep all of the promise made in this Note. The Note Holder may enforce its
rights under this Note against each person individually or against all of us
together. This means that any one of us may be required to pay all of the
amounts owed under this Note.
9. Waivers. I and any other person who has obligations under this Note
waive the rights of presentment and notice of dishonor. "Presentment" means the
right to require the Note Holder to demand payment of amounts due. "Notice of
Dishonor" means the right to require the Note Holder to give notice to other
persons that amounts due have not bee
10. Other provisions Requiring Immediate Payment The Security Instrument
describes how and under what conditions I am to be required to make immediate
payment in full of all amounts I owe under this Note. One of those conditions is
described as follows:
Transfer of the Property or a Beneficial Interest in Borrower. If all
of any part of the property or any interest in it is sold or transferred (or if
a beneficial interest in Borrower is sold or transferred and Borrower is not a
natural person) without Lender's prior written consent, Lender may, at its
option, require immediate payment in full of all sums secured by this Security
Instrument.
If Lender exercises this option, Lender shall give Borrower notice of
acceleration. The notice shall provide a period of not less than Ten (10) days
from the date the notice is delivered or mailed within which Borrower must pay
all sums secured by this Security Instrument. If Borrower fails to pay these
sums prior to the expiration of this period, Lender may invoke any remedies
permitted by the Security Instrument without further notice of demand on
Borrower.
WITNESS the hand(s) and seal(s) of the undersigned.
PINECREST INVESTMENT GROUP, INC.
S/ David B. Howe (Borrower)
By: David B. Howe
Its: Chairman
EXHIBIT 10.5
EMPLOYMENT AGREEMENT
--------------------
THIS AGREEMENT made as of this 22nd day of November, 1999, between
Pinecrest Investment Group. Inc. (PNCR-OTCBB), a Florida corporation
(hereinafter sometimes called the "Employer"), having its corporate offices
located at 1201 Tech Blvd., Suite 101, Tampa, Florida 33619, principal place of
business and Thomas M. Tillman, whose mailing address is P.O. Box 205, Lithia,
Florida 33547 (hereinafter sometimes called the "Employee").
WHEREAS, the Employee and Employer desire to set forth in writing their
contract with respect to Employee's employment by Employer;
NOW, THEREFORE, in consideration of their mutual promises set forth herein,
the parties hereby agree as follows:
1. EMPLOYMENT. Employer hereby employs Employee, and Employee hereby
accepts such employment, upon the terms and conditions set forth in
this Agreement.
2. DUTIES AND AUTHORITIES.
A. Employee will occupy the position of President and Chief
Operating Officer (hereinafter referred to as "Position" or
"Assignment") with the Employer's wholly owned subsidiary known
as PINECREST FARMS, INC. (hereinafter referred to as
"Subsidiary").
B. Employee agrees to devote full business time equal to at least a
40-hour business workweek while this agreement is in effect,
dedicating all attention, skill and effort to the faithful
performance of this agreement.
C. Employee will not, during the term of this Agreement, directly or
indirectly engage in a like or similar business as that of
Employer, either as an employee, employer, or consultant,
principal, corporate officer, or in any other capacity, whether
or not compensated, without the prior written consent of
Employer.
3. TERM OF EMPLOYMENT. The term of employment shall be for a period of 5
years beginning November 22, 1999 and continue to November 21, 2004
(hereinafter called the "Initial Term"). After the Initial Term, this
Agreement shall be extended automatically for successive periods of
one year each upon the same terms and conditions set forth in this
contract, or other terms and conditions as the parties hereto shall
agree, unless this Agreement is terminated by either party as herein
provided.
4. COMPENSATION. Employee will receive compensation during the term of
this Agreement as follows:
A. BASE SALARY. An Annual Base Salary (hereinafter "Annual Base
Salary"), of $120,000 payable bi-weekly.
B. BONUSES/INCENTIVE PAY. Employee shall earn a bonus, on a pro-rata
basis, for meeting the Revenues, Gross Profit and Gross Net
Operating Profit guideline indicated in Exhibit A attached hereto
and made a part hereof. Thresholds shall be calculated pursuant
to GAAP (Generally Accepted Accounting Principles) and as
indicated in Exhibit A except that Gross Net Operating Profit
shall be calculated as follows: Gross Net Operating Profit shall
be the Net Profit before federal, state and local income taxes,
determined in accordance with GAAP and adjusted to exclude: (i)
any bonus or incentive payments paid to officers, directors,
and/or stockholders; (ii) any extraordinary gains or losses
(including, but not limited to, gains or losses in disposition of
assets); (iii) any deficiency of federal and state income taxes
paid in a prior year; and (iv) depreciation. The Bonus shall be
calculated within thirty days after the end of each quarter.
One-half of the Annually Disbursable Bonus shall be disbursed to
Employee within forty-five (45) days after the end of the
quarter, and the remaining one-half shall be disbursed within
ninety (90) days after the end of the fiscal year. The Accrued
Bonus shall be disbursed within 90 days after the end of the 60th
month from the inception of this Agreement or as otherwise
indicated in this Agreement.
1
<PAGE>
C. PENSION AND PROFIT SHARING. The Employee shall be entitled to
participate in any pension or profit sharing plan, or other type
of plan adopted by the Employer for the benefit of its officers.
If the corporation establishes more than one plan, Employee may
choose the plan in which to participate.
D. SEVERANCE PAY. In the event of termination of this Agreement for
any reason other than those set forth in Paragraph 12.A. below,
or if Employer breaches, or attempts to breach this Agreement,
Employer shall pay Employee the sum of (a) the Annual Base Salary
of $120,000, plus (b) an amount equal to the total Annually
Disbursable Bonus/Incentive Pay paid or payable in the
immediately preceding quarter multiplied by a factor of 4, plus
(c) all Accrued Bonus accrued through the date of termination.
The Severance Pay shall be paid in cash within 30 days.
5. DEFERRED COMPENSATION. The Employee shall be entitled to participate
in any deferred compensation plan adopted by the Employer for the
benefit of its officers.
6. RELOCATION. In the event Employee is transferred and assigned to a new
principal place of work located more than fifty (50) miles from
Employee's residence, Employer will pay for all reasonable relocation
expenses including:
a. Transportation fares, meals, and lodging for Employee, his
spouse, and family from Employee's residence to any new residence
located near the new principal place of work.
b. Moving of Employee's household goods and the personal effects of
Employee and Employee's family from Employee's residence to the
new residence.
c. Lodging and meals for Employee and Employee's family for a period
of not more than sixty (60) consecutive days while occupying
temporary living quarters located near the new principal place of
work.
d. Round trip travel expenses and lodging expenses for Employee's
family for no more than two (2) house hunting trips to locate a
new residence, each trip not to exceed fourteen (14) days; and
e. Expenses in connection with the sale of the residence of Employee
including realtor fees, mortgage prepayment penalties, termite
inspector fees, title insurance policy and revenue stamps, escrow
fees, fees for drawing documents, state or local sales taxes,
mortgage discount points (if in lieu of a prepayment penalty),
and seller's attorneys fees. At the option of Employee and in
lieu of reimbursement for these expenses, Employee may sell the
residence of Employee to the Employer at the fair market value of
the residence determined by an appraiser chosen by the Employer.
The appraisal will be performed within ten (10) days after notice
of transfer and notice of appraised value will be submitted by
report to Employee. Employee will have the right to sell the
residence to the Employer at the appraised price by giving notice
of intent to sell within thirty (30) days from the date of the
appraisal report. The term "residence" shall mean the property
occupied by Employee as the principal residence at the time of
transfer and does not include summer homes, multiple-family
dwellings, houseboats, boats, or airplanes but does include
condominium or cooperative apartment units and duplexes (two
family) occupied by Employee.
7. MEDICAL, DENTAL, AND OTHER INSURANCE. At its sole cost and expense,
Employer agrees to include Employee and Employee's family in the group
medical, dental, hospital and disability insurance plans of Employer,
when such plans are established and will provide group life insurance
for Employee in the amount of not less than $100,000. Said life
insurance policy shall then remain in effect for the remainder of the
term of the Agreement. In the event that the Employer does not
establish such plans for the benefit of its employees, Employer shall
reimburse Employee for a private health benefits and disability
package that is at least as comprehensive as the benefits that
Employee currently has in place.
8. LEAVE.
A. VACATION. Employee shall be entitled to three (3) weeks of paid
vacation each year during this agreement. Employee and Employer
shall mutually agree upon the time for the vacation. If vacation
is not taken, for the benefit of the Employer, Employee shall be
reimbursed at his base salary rate for time not taken.
2
<PAGE>
B. HOLIDAYS. The Employee will be entitled to nine (9) paid holidays
each year as follows: New Years Day, Presidents Day, Employee's
Birthday (March 27), Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, the Friday following Thanksgiving Day, and
Christmas Day. Additional holidays may be allowed in connection
with holidays which fall on weekends.
C. SICK LEAVE. The Employee shall be allowed up to ten (10) sick
days per year. Sick days are not cumulative and may not be
carried from year to year.
D. EMERGENCY LEAVE. If a member of the Employee's immediate family
dies or becomes critically ill, the Employee will be allowed up
to three days of leave with pay. Additional time may be granted,
with or without pay, upon approval of the Employer.
9. AUTOMOBILE. Employer will pay to Employee an automobile allowance of
$600 per month plus a gas allowance of $150 per month.
10. EXPENSE REIMBURSEMENT. Employee shall be entitled to reimbursement for
all reasonable expenses, including travel and entertainment, incurred
by Employee in the performance of Employee's duties. Employee will
maintain records and written receipts as required by federal and state
tax authorities to substantiate expenses as an income tax deduction
for Employer and shall submit vouchers for expenses for which
reimbursement is made.
11. DEATH. In the event that Employee dies during the term of this
Agreement, this Agreement shall be immediately terminated.
12. TERMINATION.
A. This Agreement may be terminated upon ten (10) days' notice to
Employee if: (i) Employee willfully breaches or habitually
neglects the duties to be performed under Paragraph 2, or engages
in any conduct which is dishonest or damages the reputation of
Employer; (ii) an act of God renders impossible performance of
this Agreement or, (iii) failure of Employer to conduct business
due to financial inability to maintain its operations.
B. This Agreement may be terminated by Employee without cause by
giving ninety (90) days notice to Employer. Under this provision,
Employer will have the option of terminating this Agreement at
any time subsequent to Employee's notice of termination to
Employer. In the event Employer decides to terminate this
Agreement prior to expiration of said 90 day period provided for
above, Employer shall only be liable to employee for compensation
under this Agreement up to the date that employee no longer
provides service to employer.
C. In the event employment is terminated pursuant to subparagraph A
or B, Employee will be entitled to only base salary compensation
earned prior to the date of termination as provided for in
Paragraph 4 of this agreement computed pro rata up to and
including the date of termination, and any earned incentive
salary payments, or the deferred compensation payments provided
for in Paragraph 4.B and 5, respectively.
D. In the event Employer is acquired, is a non-surviving party in a
merger, or transfers substantially all of its assets, this
agreement shall not be terminated and Employer agrees to take all
actions necessary to assure that the transferee or surviving
company is bound by the provisions of this agreement.
E. In the event of termination of this Agreement for any reason
other than those set forth in subparagraph A or B above, or if
Employer breaches, or attempts to breach this Agreement, Employer
shall pay Employee the Severance Pay as set forth in paragraph
4.E above.
13. NOTICES. Any notice provided for in this agreement shall be given in
writing. Notices shall be effective from the date of service, if
served personally on the party to whom notice is to be given or on the
second day after mailing, if mailed by first class mail, postage
prepaid. Notices shall be properly addressed to the parties at their
respective addresses or to such other address as either party may
later specify by notice to the other.
3
<PAGE>
14. ENTIRE AGREEMENT. This Agreement contains the entire agreement and
supersedes all prior agreements and understanding, oral or written,
with respect to the subject matter hereof. This Agreement may be
changed only by an agreement in writing signed by the party against
whom any waiver, change, amendment or modification is sought.
15. WAIVER. The waiver by either party of a breach of any of the
provisions of this Agreement by the other party shall not be construed
as a waiver of any subsequent breach.
16. GOVERNING LAW: VENUE. This Agreement shall be construed and enforced
in accordance with the laws of the State of Florida, Hillsborough
County, Florida, shall be proper venue for any litigation arising out
of this Agreement.
17. PARAGRAPH HEADINGS. Paragraph headings are for convenience only and
are not intended to expand or restrict the scope or substance of the
provisions of this Agreement.
18. ASSIGNABLIITY. The rights and obligations of the Employer under this
Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of the Employer. This Agreement is a personal
employment agreement and the rights, obligations and interests of the
employee hereunder may not be sold, assigned, transferred, pledged or
hypothecated.
19. SEVERABILITY. If any provisions of this Agreement is held by a court
of competent jurisdiction to be invalid or unenforceable, the
remainder of the Agreement shall remain in full force and shall in no
way be impaired.
20. ARTITRATION. Any controversy or claim arising out of or relation to
this contract, or breach thereof, shall be settled by arbitration in
accordance with the Rules of the American Arbitration Association and
judgment upon the award rendered by the arbitrators may be entered in
any court having jurisdiction thereof.
21. LITIGATION. In the event of any litigation for the enforcement of this
agreement, or collection of the obligations evidenced hereby, the
prevailing party shall be entitled to recover costs and expenses of
such action, including reasonable attorneys' fees, from the
non-prevailing party.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the 22nd day
of November 1999.
EMPLOYEE:
/s/ Sheryl Salvadore /s/ Thomas M. Tillman
- ------------------------------------ ------------------------------------
Thomas M. Tillman
- ------------------------------------
Witnesses
EMPLOYER:
PINECREST INVESTMENT GROUP. INC.
a Florida Corporation
Attested:
/s/ Sheryl Salvadore By: /s/ David B. Howe
- ------------------------------------ -------------------------------
Secretary David B. Howe, CEO
4
EXHIBIT 10.6
PINECREST INVESTMENT GROUP, INC.
EMPLOYMENT AGREEMENT
Agreement, effective as of January 1, 2000, by and between David B. Howe,
an individual currently residing at 2008 Alder Way Tampa, Florida 33510, (the
"Executive"), and Pinecrest Investment Group, Inc., a Florida corporation
maintaining business offices at 1211 Tech Blvd., Suite 101, Tampa, Florida 33619
(the "Corporation").
BACKGROUND INFORMATION
----------------------
The Corporation wishes to secure the employment services of the Executive
for a definite period of time and upon the particular terms and conditions
hereinafter set forth. The Executive is willing to be so employed. Accordingly,
the parties agree as follows:
OPERATIVE PROVISIONS
--------------------
1. Employment and Term.
--------------------
The Corporation hereby employs Executive and the latter hereby accepts
employment by the Corporation for the five year period commencing January 1,
2000 (the "Commencement Date"), which employment shall be automatically extended
for unlimited successive one year periods (each a "Successor Term") unless it is
terminated during the pendency of any such Term, whether Initial or Successor,
by the occurrence of one of the events described in Section 8. hereof, or at the
end of any such Term by one party furnishing the other with written notice, at
least 60 days prior to the expiration of such Term, of an intent to terminate
this Agreement upon the expiration of such Term.
2. Duties.
-------
During the Term of this Agreement, whether Initial or Successor, the
Executive shall render to the Corporation services as its President and Chief
Executive Officer, and shall perform such duties as may be designated by and
subject to the supervision of the Corporation's Board of Directors, and shall
serve in such additional capacities appropriate to his responsibilities and
skills as shall be designated by the Corporation, through action of its Board of
Directors. During such period, the Executive shall devote his full business
attention, time and energies to the operations and affairs of the Corporation
(subject to the terms of Section 7. below), and will use his best efforts to
promote the interests and reputation of the Corporation; provided that he may
pursue such noncompetitive activities during weekday evenings and on weekends,
such as teaching, consulting or other remunerative or non-remunerative
activities, as do not interfere, to any degree, with the complete performance of
his obligations hereunder. Any question of interpretation, which may arise under
the preceding provison, shall be resolved by majority decision of the
Corporation's Board of Directors. Hours of service to the Corporation during the
Term of this Agreement shall be a minimum of 40 per week and otherwise as
reasonably determined by the Corporation's Board of Directors. The Corporation
shall not, without his consent, remove the Executive's principal place of
business from Florida.
<PAGE>
3. Base Compensation.
------------------
For the services to be rendered by the Executive under this Agreement the
Corporation shall pay him, while he is rendering such services and performing
his duties hereunder, and the Executive shall accept as periodic payment for
such service, a base compensation (inclusive of any amounts subject to federal
or state employment related withholding requirements) of $156,000 per annum,
which amount will be payable in arrears in substantially equal semi monthly
installments coinciding with the Corporation's normal employment compensation
payment cycle or pursuant to such other arrangements as the parties may agree
upon (the "Base Compensation"). Such Base Compensation shall be reviewed as of
each anniversary of the Commencement Date and may then be increased to take into
account increases, if any, in the annual cost of living, or in recognition of
the Corporation's attainment of operational goals, all as determined by action
of the Corporation's Board of Directors; but under no condition may the
Executive's Base Compensation be decreased below the figure then being paid him
regardless of any change in or diminution of the Executive's duties owed to the
Corporation.
4. Vacation: Fringe Benefits: Reimbursement of Expenses.
-----------------------------------------------------
The Executive shall be entitled to 4 weeks of fully paid vacation during
the first annual period of his employment hereunder and to 4 weeks during each
successive annual period occurring within the Term of this Agreement, whether
Initial or Successor. The timing of vacation periods shall be within the
discretion of the Corporation's Board of Directors, reasonably exercised so as
not to unnecessarily inconvenience the Executive.
During his period of employment hereunder, the Executive shall further be
entitled to (a) such leave by reason of physical or mental disability or
incapacity and to such participation in individual or group medical, health,
disability, dental and life insurance programs; pension, profit sharing and
other retirement benefit plans; and any other fringe benefits, both for the
Executive and his family, as the Corporation may make generally available to its
most senior executive employee from time to time; and (b) reimbursement for all
normal and reasonable expenses necessarily incurred by him in the performance of
his obligations hereunder, subject in each case to such reasonable
substantiation requirements as may be imposed by the Corporation.
5. Bonus / Insentive Pay
---------------------
Employee shall earn a bonus, on a pro-rata basis, for meeting the Revenues,
Gross Profit and Net Operating Profit guideline indicated in Exhibit A attached
hereto and made a part hereof. Thresholds shall be calculated pursuant to GAAP
(Generally Accepted Accounting Principles) and as indicated in Exhibit A except
that Net Operating Profit shall be calculated as follows: Net Operating Profit
shall be the Net Profit before federal, state and local income taxes, determined
in accordance with GAAP and adjusted to exclude: (i) any bonus or incentive
payments paid to officers, directors, and/or stockholders; (ii) any
extraordinary gains or losses (including, but not limited to, gains or losses in
disposition of assets); (iii) any deficiency of federal and state income taxes
<PAGE>
paid in a prior year; and (iv) depreciation. The Bonus shall be calculated
within thirty days after the end of each quarter. One-half of the Annually
Disbursable Bonus shall be disbursed to Employee within forty-five (45) days
after the end of the quarter, and the Bonus, paid annually, shall be disbursed
within 90 days after the end of the 60th month from the inception of this
Agreement or as otherwise indicated in this Agreement. If Net Operating Profit
drops below 50% of projections, No bonus will be paid.
6. Stock Options.
--------------
Employee shall be entitled to incentive qualified stock options in the
amount of the market bid price. This price will be determined by the average of
the 10 business days prior to granting the option. Employee shall be entitled to
receive shares equivalent to 7% of the outstanding shares at the date of
granting the option. (See attached Option Agreeement)
7. Proprietary Interests.
----------------------
During or after the expiration of his term of employment with the
Corporation, the Executive shall not communicate or divulge to, or use for the
benefit of, any individual, association, partnership, trust, corporation or
other entity except the Corporation, any proprietary or confidential information
of the Corporation received by the Executive by virtue of such employment,
without first being in receipt of the Corporation's written consent to do so;
provided that nothing contained herein shall restrict the Executive's use or
disclosure of such information known to the public (other than that which he may
have disclosed in breach of this Agreement), or as required by law (so long as
the Executive gives the Corporation prior notice of such required disclosure).
8. Restrictive Covenant.
---------------------
a. Scope of Covenant. Subject to the provisions of Section 10e. below
(the occurrence of which shall render this ss.8. ineffective), the
Executive shall not (1) within any geographical area while employed by the
Corporation; or (2) within any state within which the Corporation is
actively engaged in the conduct of its business, during the two year period
following termination of such employment, engage or become interested in,
directly or indirectly, as owner, shareholder, partner, co-venturer,
director, officer, employee, agent, consultant or otherwise, any activity
which is then engaged in by the Corporation, nor, during the two year
post-termination period, employ or attempt to employ any employee of the
Corporation, or otherwise encourage or attempt to encourage any employee of
the Corporation to leave the Corporation's employ.
b. Confidentiality: Disclosure; Proprietary Information. The Executive
acknowledges that all records with respect to customers serviced by the
Corporation or with respect to employees of the Corporation ("Associated
Employees") and lists of customers or proposed customers of the
Corporation, or of Associated Employees, and all personal, financial or
<PAGE>
business information concerning the customers or proposed customers of the
Corporation or of Associated Employees, obtained by the Executive during
the course of the Executive's employment by the Corporation, are valuable
and unique and are proprietary assets of the Corporation. During the
Executive's employment by the Corporation and following the termination
thereof; the Executive will not at any time disclose any of the records,
lists or information previously described in this subsection, nor utilize
the same for any reason not previously authorized in writing by the
Corporation.
c. Divisibility of Covenant Period. If any portion of the restrictive
covenant contained herein is held to be unreasonable, arbitrary or against
public policy, each covenant shall be considered divisible both as to time
and geographic area, such that each month within the specified period shall
be deemed a separate period of time and each state shall be deemed a
separate geographical area, resulting in an intended requirement that the
longest lesser time and largest lesser geographic area determined not to be
unreasonable, arbitrary or against public policy shall remain effective and
be specifically enforceable against the Executive.
d. Covenant Independent. Each restrictive covenant on the part of the
Executive set forth in this Agreement shall be construed as a covenant
independent of any other covenant or provision of this Agreement or any
other agreement which the Executive may have, whether fully performed or
executory, and the existence of any claim or cause of action by the
Executive against the Corporation, whether predicated upon another covenant
or provision of this Agreement or otherwise, shall not constitute a defense
to the enforcement by the Corporation of any other covenant.
e. Court Proceedings. In any action or proceeding by the Corporation
relating to or involving the enforcement of this covenant, the Executive
hereby waives any and all right to a trial by jury with respect to the
action, proceeding, or other litigation resulting from or involving the
enforcement of this covenant. Further, in any action or proceeding by the
Corporation to obtain a temporary restraining order and/or preliminary
injunction, the Executive hereby agrees to waive the necessity of the
Corporation posting an injunction bond in order to obtain a temporary
restraining order and/or preliminary injunction. Should the Corporation's
action for a temporary restraining order and/or motion for preliminary
injunction be granted in whole or in part and should the Corporation be
ultimately unsuccessful in obtaining a permanent injunction to enforce the
covenant, the Executive hereby waives any and all rights the Executive may
have against the Corporation for any injuries or damages, including
consequential damages, sustained by the Executive and arising directly or
indirectly from the issuance of the temporary restraining order and/or
preliminary injunction.
f. Indemnification. The Executive hereby agrees to indemnify and hold
the Corporation harmless from and against any losses, claims, damages or
expenses, and/or all costs of prosecution or defense of his rights
hereunder, whether in judicial proceedings, including appellate
proceedings, or whether out of court, including without limiting the
generality of the foregoing, attorney's fees, and all costs and expenses of
<PAGE>
litigation, arising from or growing out of the Executive's breach or
threatened breach of any covenant contained herein.
g. Extension of Covenant Period. The period of time during which the
Executive is prohibited from engaging in the practices identified in a.
above shall be extended by any length of time during which the Executive is
in breach of such covenants.
h. Survival of Covenants. All restrictive covenants contained in this
Agreement shall survive the termination of this Agreement.
9. Remedies for Breach of Obligations.
-----------------------------------
The parties agree that the services of the Executive are of a
personal, specific, unique and extraordinary character and cannot be readily
replaced by the Corporation. They further agree that in the course of performing
his services, the Executive will have access to various types of proprietary
information of the Corporation, which, if released to others or used by the
Executive other than for the benefit of the Corporation, in either case without
the Corporation's consent, could cause the Corporation to suffer irreparable and
continuing injury. Therefore, the obligations of the Executive established under
ss.7. and 8. hereof shall be enforceable by the Corporation both at law and in
equity, by injunction, specific performance, damages or other remedy; and the
right of the Corporation to obtain any such remedy shall be cumulative and not
alternative and shall not be exhausted by any one or more uses thereof.
10. Termination of Employment.
--------------------------
a. Death. The Executive's employment hereunder shall terminate in the
event of the Executive's death. Except for any salary and benefits accrued,
vested and unpaid as of the date of any such termination and except for any
benefits to which the Executive or his heirs or personal representatives may be
entitled under and in accordance with the terms of any employee benefit plan,
policy or program maintained by the Corporation, the Corporation shall be under
no further obligation hereunder to the Executive or to his heirs or personal
representatives, and the Executive or his heirs or personal representatives no
longer shall be entitled to receive any payments or any other rights or benefits
under this Agreement.
b. Disability. The Corporation may terminate the Executive's
employment hereunder for disability if an independent physician mutually
selected by the Executive (or his legal representative) and the Board of
Directors or its designee (or, upon an inability of such parties to effect the
selection within a period often days, by the independent certified public
accounting firm then serving the Corporation) shall have determined that the
Executive has been substantially unable to render to the Corporation services of
the character contemplated by Section 2. of this Agreement, by reason of a
physical or mental illness or other condition, for more than 30 consecutive days
or for shorter periods aggregating more than 45 days in any period of 12
consecutive months (excluding in each case days on which the Executive shall be
on vacation). In the event of such disability, the Executive shall be entitled
to receive any salary and benefits accrued, vested and unpaid as of the date of
any such termination and any benefits to which the Executive may be entitled
<PAGE>
under and in accordance with the terms of any employee benefit plan, policy or
program maintained by the Corporation; and upon the Executive's receipt of such
salary and benefits the Corporation shall be under no further obligation
hereunder to the Executive and the Executive no longer shall be entitled to
receive any payments or any other rights or benefits under this Agreement.
c. Termination by the Corporation for Cause. The Corporation may
terminate the Executive's employment hereunder for "Cause." For purposes of this
Agreement, "Cause" shall mean any of the following:
i. The Executive's repeated willful misconduct or gross
negligence;
ii. The Executive's repeated conscious disregard of his
obligations hereunder or of any other written duties reasonably
assigned to him by the Board of Directors;
iii.The Executive's repeated conscious violation of any provision
of the Corporation's bylaws or of its other stated policies, standards
or regulations;
iv. The Executive's commission of any act involving fraud or
moral turpitude; or
v. A determination that the Executive has demonstrated a
dependence upon any addictive substance, including alcohol, controlled
substances, narcotics or barbiturates;
provided, however, that if the Board of Directors of the Corporation desires to
terminate the Executive for any of the reasons set forth in: (1) clause (i),
(ii) or (iii) of this Section 10c., the Corporation must be able to demonstrate
that, within the 60 day period immediately following the alleged occurrence of
each proscribed act or omission preceding the act or omission upon which it is
basing its right to effect a termination for Cause, it furnished to the
Executive a written description of the allegedly proscribed act or omission and
a statement advising him that the Corporation views such conduct as being of the
type which could lead to a termination of the Executive for Cause; (2) clause
(ii) or (iii) of this Section 10c., the Board must be able to demonstrate that
the Executive has been furnished with a copy of the written duty, bylaw
provision, policy, standard or regulation, the violation of which the Executive
is being accused, at a time prior to the alleged commission of the violation; or
(3) clause (iv) or (v) of this Section 10c., the Board shall first be required
to obtain an opinion from Corporation counsel to the effect that there is an
adequate basis upon which either such determination may be made. Except for any
salary and benefits accrued, vested and unpaid as of the date of any such
termination, the Corporation shall be under no further obligation hereunder to
the Executive and the Executive no longer shall he entitled to receive any
payments or any other rights or benefits under this Agreement.
d. Termination by the Corporation Other Than for Cause. The
Corporation may terminate the Executive's employment hereunder upon the
expiration of the Initial Term or any Successor Term, provided that notice of
termination is furnished as set forth in Section 1, or at any time prior to the
<PAGE>
expiration of any successor Term, upon 30 days notice to the Executive, and
subject, in either event, to the right of the Executive, within such
notification period, to effect his own Good Reason termination as described in
subsection e. below. In the event of either such termination, the Executive
shall be entitled to receive any salary and benefits accrued, vested and unpaid
as of the date of any such termination and any benefits to which the Executive
may be entitled under and in accordance with the terms of any employee benefit
plan, policy or program maintained by the Corporation, as well as, in the event
that the Executive shall have timely effected a Good Reason termination, those
benefits authorized under the provisions of subsection e.; and following his
receipt of such salary and benefits the Corporation shall be under no further
obligation hereunder to the Executive and the Executive no longer shall be
entitled to receive any payments or any other rights or benefits under this
Agreement.
e. Termination by the Executive for Good Reason. Notwithstanding
anything herein to the contrary, the Executive shall be entitled to terminate
his employment hereunder for "Good Reason" without breach of this Agreement. For
purposes of this Agreement, "Good Reason" shall exist upon the occurrence of any
of the following, in each case without the Corporation first being in receipt of
the Executive's written consent:
i. A material change in the title or a substantial elimination of
the duties and responsibilities of the Executive;
ii. A material breach by the Corporation of its obligations
hereunder;
iii. A decision by the Corporation to effect an early termination
of the Executive's employment under this Agreement pursuant to the
applicable provisions of Section 10d. above.
In the event of a Good Reason termination by the Executive, the
Executive shall nonetheless be entitled to continue to receive from the
Corporation his Base Compensation for the succeeding two month period. Except
for such continuing entitlement to compensation following any such termination,
and except for any salary and benefits accrued, vested and unpaid as of the date
of any such termination, the Executive no longer shall be entitled to receive
any payments or any other rights or benefits under this Agreement, and the
Corporation shall have no further obligation hereunder to the Executive
following any such termination.
f. Termination by the Executive for other Than Good Reason. The
Executive may terminate his employment hereunder upon the expiration of the
Initial Term or any Successor Term, provided that notice of termination is
provided as set forth in Section 1. In the event of such termination, the
Executive shall be entitled to receive any salary and benefits accrued, vested
and unpaid as of the date of any such termination and any benefits to which the
Executive may be entitled under and in accordance with the terms of any employee
benefit plan, policy or program maintained by the Corporation; and following his
receipt of such salary and benefits to the Corporation shall be under no further
obligation hereunder to the Executive and the Executive no longer shall be
entitled to receive any payments or any other rights or benefits under this
Agreement.
<PAGE>
g. Life and Disability Insurance Coverage. If termination of
employment is due to any reason other than death, the Executive shall have the
right, subject to receiving approval of the Corporation (which shall not be
unreasonably withheld), to purchase any policy of insurance on his life or
insuring against his disability which is owned by the Corporation, the exercise
of which right shall be made by notice furnished to the Corporation within 30
days subsequent to the date of termination. The purchase price of each policy of
life insurance shall be the sum of its interpolated terminal reserve value
(computed as of the closing date) and the proportional part of the gross premium
last paid before the closing date which covers any period extending beyond that
date; or if the policy to be purchased shall not have been in force for a period
sufficient to generate an interpolated terminal reserve value, the price shall
be an amount equal to all net premiums paid as of the closing date. The purchase
price of each disability income policy shall be the sum of its cash value and
the proportional part of the gross premium last paid before the closing date,
which covers any period extending beyond that date. The purchase of any
insurance policy by the Executive shall be closed as promptly as may be
practicable after the giving of notice, in no event to exceed 30 days therefrom.
11. Indebtedness of Executive.
If, during the course of his employment, the Executive becomes indebted to
the Corporation for any reason, the Corporation shall, if it so elects, have the
right to set-off and to collect any sums due it from the Executive out of any
amounts which it may owe to the Executive for unpaid compensation. In the event
that this Agreement terminates for any reason, all sums owed by the Executive to
the Corporation shall become immediately due and payable.
12. Miscellaneous Provisions.
a. Notice: All notices or other communications required or permitted
to be furnished pursuant to this Agreement shall be in writing and shall be
considered as properly furnished if hand delivered, mailed from within the
United States by certified or registered mail, or sent by prepaid telegram to
the recipient party at the address appearing in the preamble to this Agreement
or to such other address as any such party may have designated by like notice
forwarded to the other party hereto. Change of address notices shall be deemed
furnished when received. All other notices shall be deemed furnished when
mailed, telegraphed or hand delivered.
b. Non-Assignability: Neither this Agreement nor any right or interest
hereunder shall be assignable by the Corporation or the Executive, but shall
inure to the benefit of and be binding upon the legal representatives and
successors in interest of each.
<PAGE>
c. Entire Agreement: This Agreement, and any other document referenced
herein, constitute the entire understanding of the parties hereto with respect
to the subject matter hereof; and no amendment, modification or alteration of
the terms hereof shall be binding unless the same be in writing, dated
subsequent to the date hereof and duly approved and executed by each of the
parties hereto.
d. Enforceability: If any term or condition or this agreement shall be
invalid or unenforceable to any extent or in any application, then the remainder
of this agreement, and such term or condition except to such extent or in such
application, shall not be affected thereby and each and every term and condition
of this agreement shall be valid and enforced to the fullest extent and in the
broadest application permitted by law.
e. Application of Florida Law Jurisdiction: This Agreement, and the
application or interpretation thereof; shall be governed exclusively by its
terms and by the laws of the State of Florida. Venue shall be deemed located in
Hillsborough County, Florida. The parties agree that, irrespective of any
wording that might be construed to be in conflict with this paragraph, this
agreement is one for performance in Florida, The parties to this agreement agree
that they waive any objection, constitutional, statutory or otherwise, to a
Florida Court's taking jurisdiction of any dispute between them. By entering
into this agreement, the parties, and each of them understand that they might be
called upon to answer a claim asserted in a Florida court.
f. Counterparts: This Agreement may be executed by any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
g. Binding Effect: Each of the provisions and agreements herein
contained shall be binding upon and inure to the benefit of the personal
representatives, devisees, heirs, successors, transferees and assigns of the
respective parties hereto.
h. Legal Fees and Costs: If a legal action is initiated by any party
to this Agreement against another, arising out of or relating to the alleged
performance or non-performance of any right or obligation established hereunder,
or any dispute concerning the same, any and all fees, costs and expenses
reasonably incurred by each successful party or his or its legal counsel in
investigating, preparing for, prosecuting, defending against, or providing
evidence, producing documents or taking any other action in respect of; such
action shall be the joint and several obligation of and shall be paid or
reimbursed by the unsuccessful party(ies).
<PAGE>
i. Beneficiary: As used herein, the term "Beneficiary" shall mean the
person or persons (who may be designated contingently or successively and who
may be an entity other than an individual, including an estate or trust)
designated on a written form prescribed by the Board of Directors to receive the
expiration of Agreement or death benefits described in Section 10. above. Each
Beneficiary designation shall be effective only when filed with the secretary of
the Corporation during the Executive's lifetime. Each Beneficiary designation
filed with the Secretary will cancel all designations previously so filed. If
the Executive fails to properly designate a Beneficiary or if the Beneficiary
predeceases the Executive or dies before complete distribution of the benefit
has been made, the Corporation shall distribute the benefit (or balance thereof)
to the Executive's probate estate.
In witness whereof; the parties have executed this Agreement.
PINECREST INVESTMENT GROUP, INC.
By: /s/ David B. Howe
--------------------------------------------
David B. Howe, President
EXECUTIVE
/s/ David B. Howe
--------------------------------------------
David B. Howe
EXHIBIT 21.0
SUBSIDIARIES OF THE REGISTRANT
------------------------------
Pinecrest Farms, Inc., a wholly-owned subsidiary of the Company, is a Florida
corporation operating under the name of Pinecrest Farms, Inc.
PINECREST INVESTMENT GROUP, INC.
NUMBER SHARES
INCORPORATED UNDER THE LAWS OF THE STATE OF FLORIDA
AUTHOIRZED: 100,000,000 COMMON SHARES, $.01 PAR VALUE
SEE REVERSE FOR
CERTAIN DEFINITIONS
CUSIP 7230234 10 4
This Certifies That
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, $.001 PAR VALUE
PINECREST INVESTMENT GROUP, INC.
transferable only on the books of the Corporation by the holder hereof in person
or by duly authorized attorney upon surrender of this Certificate properly
endorsed. This Certificate is not valid until countersigned and registered by
the Transfer Agent and Registrar.
In Witness Whereof, the Corporation has caused this Certificate to be
signed by the facsimile signatures of its duly authorized officers and to be
sealed with the facsimile seal of the Corporation.
Dated:
/s/ Sheryl B. Salvadore [corporate seal /s/ David B. Howe
Secretary omitted] President
Countersigned and Registered:
INTERWEST TRANSFER CO., INC.
1981 East 4800 South, Suite 100
Salt Lake City, Utah 84117
- -------------------------------
Transfer Agent
<PAGE>
Pinecrest Investment Group, Inc.
Interwest Transfer Co., Inc.
- --------------------------------------------------------------------------------
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according the applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian for
(Cust.) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts to Minors
JT TEN - as joint tenants with right of Act of
survivorship and not as tenants (State)
in common
Additional abbreviations may also be used though not in the above list.
For Value Received _________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- ---------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------Shares
of the Common Stock represented by the within certificate, and do hereby
irrevocably constitute and appoint__________________________________Attorney to
transfer the said stock on the books of the within named Corporation with full
power of substitution in the premises.
Dated:
----------------------------
SIGNATURE GUARANTEED: X
---------------------------------------
X
---------------------------------------
THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN
UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATSOEVER. THE SIGNATURE(S) MUST BE GUARANTEED BY AN
ELIGIBLE GUARANTOR INSTITUTION (Banks, Stockbrokers, Savinsg and Loan
Associations and Credit Unions) WITH MEMBERSHIP IN AN APPROVED SIGNATURE
GUARNATEE MEDALLION PROGRAM.
EXHIBIT 99.1
PINECREST INVESTMENT GROUP, INC.
INCENTIVE STOCK OPTION PLAN
DECEMBER 1999
-------------------------------------------
(1) PURPOSE OF THE PLAN
It is the opinion of the Board of Directors that the Corporation will
benefit by increasing the interest of its executives and keep employees in the
welfare of the Corporation through the added incentive created by the
opportunity to purchase and own common stock in the Corporation under the Plan.
(2) TYPES OF OPTIONS
It is the intention of the Corporation that options granted pursuant to
this Plan be incentive stock option ("Incentive Stock Options") under Section
422A of the Internal Revenue Code as now in force or as hereafter amended.
(3) ADMINISTRATION OF THE PLAN
The Plan will be administered by the Executive Committee of the Board of
Directors of the Corporation. The Committee is authorized to interpret the Plan
and to establish and amend rules and regulations for its administration, and its
decision shall be binding on all persons claiming any rights thereunder.
(4) PARTICIPANTS
Participants will be selected by the Committee from time to time among the
executives and key employees of the Corporation or of any subsidiary of the
Corporation. Directors who are employees of the Corporation or of any subsidiary
of the Corporation will be eligible for inclusion. Participation in the Plan
will be on and individual basis and the Committee shall have complete discretion
in selecting those persons, if any, who may participate.
(5) NUMBER OF SHARES
(a) The total number of shares of common stock for which options may
be granted pursuant to this Plan shall not exceed 1,200,000
shares except that, if options as to any shares lapse without
being exercised, such shares may be re-optioned. Within the
limits herein contained, the number of shares for which options
will be granted from time to time and the periods for which the
options will be outstanding will be determined by the Committee.
<PAGE>
(b) No participant may be granted an option pursuant to this
Plan in any one calendar year to purchase more than $100,000
of common stock of the Corporation, valued at the time of
the grant, provided, however, that one-half of any unused
portion of such amount may be carried over for grants in any
of the three succeeding calendar years, and as such shall be
added to the otherwise applicable dollar limitation for such
succeeding years.
(6) OPTION PRICE
The Option price of options granted pursuant to this Plan shall be (a) one
hundred percent (100%) or (b) in the case of an individual who owns stock
possessing more than 10 percent of the total combined voting power of all
classes of stock of the Corporation or of any subsidiary of the Corporation one
hundred ten percent (110%), of the fair market value of the shares of common
stock at the date on which the options are granted, which date shall be the date
on which the letters to the grantees setting forth the terms of the option are
executed by the Corporation. For this purpose:
(a) "fair market value" shall be which ever of the following is
applicable:
(i) If the common stock of the Corporation is listed on an
exchange, the mean between the highest and lowest
quoted selling prices of said stock on the exchange on
the date the options are granted, or, if no sale of
said stock shall have been made on the exchange on that
day, then on the next preceding day on which there was
such as sale; or
(ii) If the common stock of the Corporation is not listed on
an exchange, the mean between the representative
closing "bid and asked" quotations on the
"over-the-counter" market of said stock on the date of
options such granted, or, if no such bid and asked
prices are made on that day, then on the next preceding
day on which there were such "bid and asked
quotations"; and
(b) The "quoted selling prices" and "bid and asked quotations"
shall be those reported by the National Association of
Securities Dealers Automated Quotation (NASDAQ) system or
such other source as may be designated from time to time by
the Committee.
<PAGE>
(7) TERMS OF OPTIONS
No option granted pursuant to this Plan shall be exercisable after the
expiration of ten years from the date the option is granted. Within these
limitations, the Committee will determine the expiration date of the options.
(8) TIME OF EXERCISE
(a) An option granted pursuant to this Plan may be exercised in whole or
in part at any time after one year from the date of grant until the
expiration of the term of the option.
(b) No option granted pursuant to this Plan shall be exercised by the
grantee while there is outstanding (within the meaning of Section
422A(c)(7) of the Internal Revenue Code) any Incentive Stock Option
previously granted to him to purchase stock in the Corporation or any
corporation which at the time of granting the option is a parent or a
subsidiary of the Corporation or a predecessor corporation of any such
corporations.
(9) PAYMENT FOR SHARES
Upon the exercise of an option granted pursuant to this Plan, payment may
be made at Employee's option, in cash or by check.
(10) PURCHASE FOR INVESTMENT
The holder of and option granted pursuant to this Plan must represent, at
the time of exercise of the option, that he is acquiring the shares for
investment purposes only and not with a view to their sale or distribution,
unless the shares purchased on the exercise of the option are at that time
registered under the Securities Act of 1933, as amended (the "Act"). If in the
opinion of the Corporation any shares covered by this Option as to which the
participant gives valid notice of exercise may not be issued to the participant
without registration under the Act as amended, (the "Act"), the Corporation may
so notify the participant and return to him any consideration tendered to
exercise this Option until such time as the shares are registered under the Act
or in the opinion of the Corporation an exemption form such registration is
applicable.
(11) SALE OF OPTION SHARES - REGISTRATION
The participant must represent and warrant to the Corporation as condition
of the granting of an Option hereunder, and for the continued validity thereof,
that the participant (and his estate, heirs or legatees, as the case may be)
will not sell or offer for sale any shares of stock obtained hereunder in the
absence of and effective registration statement as to such stock under the Act,
unless the Corporation shall have received opinion of counsel satisfactory to
that such registration is not required, and that no stock will be sold or
offered for sale in violation of any applicable state securities legislation.
The Corporation may legend any shares issued on exercise of an Option to reflect
this provision.
<PAGE>
(12) TIME OF GRANT OF OPTIONS
Options may be granted pursuant to this Plan from time to time by the
Committee, within the limits set forth herein.
(13) FORM OF OPTIONS AND CONDITIONS TO THEIR EXERCISE
(a) The options granted pursuant to this Plan will be in such form as
shall be approved by the Committee and shall conform to the
requirements of Section 422A of the Internal Revenue Code as now
in force or hereafter amended.
(b) The options granted pursuant to this Plan will not be
transferable by the grantees otherwise than by will or by the
laws of descent and distribution.
(c) During the lifetime of the grantee, an option granted pursuant to
this Plan may be exercised only by him and only while he is in
the employ of the Corporation or a subsidiary or within three
months after the termination of such employment, and only to the
extent that the option would be exercisable by the grantee at the
time of termination in accordance with Paragraph (8) hereof. In
the event of the death of the grantee, the option may be
exercised, in whole or in part, to the extent it would have been
exercisable by the grantee at the time of his death in accordance
with said Paragraph (8), during the twelve months following the
date of death, by his estate or the person or persons to whom his
rights under the option shall have passed by will or by the laws
of descent or distribution. In no event may and option be
exercisable after the expiration of five years from the date such
option is granted.
14. CHANGES IN CAPITAL STRUCTURE
If all or any portion of the Option shall be exercised subsequent to any
share dividend, split-up, recapitalization, merger, consolidation, combination
or exchange of shares, separation, reorganization, or liquidation occurring
after the date hereof, as a result of which shares of any class shall be issued
in respect of outstanding common stock or common stock shall be changed into the
same or a different number of shares of the same or another class or classes, to
the extent permitted by Section 422A of the Internal Revenue Code, as now in
force or hereafter amended, the person or persons so exercising the Option shall
receive, for the aggregate price paid upon such exercise, the aggregate number
and class of shares which, if common stock (as authorized ate the date hereof)
had been purchased at the date hereof for the same aggregate price (on the basis
of the price per share set forth in Paragraph (6) hereof and had not been
disposed of, such person or persons would be holding at the time of such
exercise, as a result of such purchase and all such share dividends, split-ups,
recapitalization, mergers, consolidations, combinations or exchanges of shares,
separations, reorganizations, or liquidation's; provided, however, that no
fractional share shall be issued upon any such exercise, and the aggregate price
<PAGE>
paid shall be appropriately reduced on account of any fractional share not
issued. Any decision of the Committee regarding adjustments under this Paragraph
(14) shall be conclusive and binding on the participant.
(15) EFFECTIVE DATE AND TERMINATION
The Plan shall be effective upon adoption by the Board of Directors of the
Corporation, although such adoption shall be contingent upon approval by the
stockholders. The Plan may be terminated at any time by the Corporation by
action of its Board of Directors. Unless the Plan shall have been terminated
sooner by the Board of Directors, it shall terminate on 10 years after the Board
of Directors of the Corporation adopts the Plan, and no option shall be granted
hereunder after that date. Termination of the Plan will not affect rights and
obligations under options theretofore granted and then in effect.
(16) AMENDMENT OF PLAN
The Plan may be amended at any time by the Board of Directors, provided
that (except pursuant to Paragraph (5)(b)) no amendment shall be made without
the approval of the stockholders which shall increase the total number of shares
covered by the Plan, change the description of the class of employees eligible
to receive options, or reduce the option price.
(17) EMPLOYMENT BY CORPORATION
(a) So long as a participant shall continue to be and employee of the
Corporation or one or more of its subsidiaries, the Option shall
not be affected by any change in his duties or position.
(b) Nothing in this Incentive Stock Option Plan shall confer upon the
participant any right to continue in the employ of the
Corporation or any of its subsidiaries, or interfere in any way
with the right of the Corporation or any such subsidiary to
terminate his employment at any time.
(18) SUBSIDIARY
As used herein, the term "subsidiary" shall mean any present or future
corporation which would be a "subsidiary corporation" of Corporation as that
term is defined in Section 425 of the Internal Revenue Code of 1954.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 6-MOS
<FISCAL-YEAR-END> JUN-30-1999 JUN-30-2000
<PERIOD-END> JUN-30-1999 DEC-31-1999
<CASH> 1,882 54,213
<SECURITIES> 0 0
<RECEIVABLES> 0 437,219
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 1,882 491,432
<PP&E> 366,263 377,392
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 3,815,010 4,534,674
<CURRENT-LIABILITIES> 425,974 288,000
<BONDS> 0 0
0 0
0 0
<COMMON> 5,841 6,025
<OTHER-SE> 3,323,195 4,240,649
<TOTAL-LIABILITY-AND-EQUITY> 3,815,010 4,534,674
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 55,320 121,623
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 13,256 15,739
<INCOME-PRETAX> 0 0
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (68,576) (137,362)
<EPS-BASIC> (.014) (.023)
<EPS-DILUTED> 0 0
</TABLE>
