-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EXQfp6kRCPgNnqDKzKFe4mvYOw+t/VL8OH2ujMSohcU1MPZkNi7GFNTKQyESwIe7 enSiasCC7PfdCikN29ReUQ== 0001042910-99-001577.txt : 19991118 0001042910-99-001577.hdr.sgml : 19991118 ACCESSION NUMBER: 0001042910-99-001577 CONFORMED SUBMISSION TYPE: 10SB12B/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19991117 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HEALTH EXPRESS USA INC CENTRAL INDEX KEY: 0001070050 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 650847995 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10SB12B/A SEC ACT: SEC FILE NUMBER: 000-27569 FILM NUMBER: 99760041 BUSINESS ADDRESS: STREET 1: 275 COMMERCIAL BLVD STREET 2: SUITE 260 CITY: FT LAUDERDALE STATE: FL ZIP: 33308 BUSINESS PHONE: 9547765401 MAIL ADDRESS: STREET 1: 275 COMMERCIAL BOULEVARD STREET 2: SUITE 260 CITY: FORT LAUDERDALE STATE: FL ZIP: 33308 10SB12B/A 1 GENERAL FORM FOR REGISTRATION OF SECURITIES UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 AMENDMENT NO. 1 --------------- FORM 10-SB GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS UNDER SECTION 12(B) OR (G) OF THE SECURITIES EXCHANGE ACT OF 1934 HEALTH EXPRESS USA, INC. ------------------------ (Name of Small Business Issuer in its Charter) Florida 65-0847995 ------- ---------- (State or Other Jurisdiction of (I.R.S. Employer Identification Incorporation or Organization) Number) 275 Commercial Blvd., Suite 260 Fort Lauderdale, FL 33308 ------------------- ----- (Address of Principal Executive (Zip Code) Offices) Issuer's Telephone Number: (954) 776-5401 Securities to be Registered Pursuant to Section 12(B) of the Act: Common Stock, Par Value $.001 Per Share --------------------------------------- (Title of Class) ---------------- Securities to be Registered Pursuant to Section 12(G) of the Act: None ---- 1 PART 1 ITEM 1. DESCRIPTION OF BUSINESS (a) Business Development Health Express USA, Inc. ("Health Express" or the "Company"), was incorporated in Florida on July 2, 1998 to develop, construct and operate gourmet, fast food restaurants. Since inception, the Company has had no operations and has conducted no business. It is currently in the development stage and is in the process of completing construction of its first restaurant, which is expected to open for business in LATE DECEMBER 1999. (b) Business of the Issuer (1) Principal Products and Services and their Markets. Management's present focus is the COMPLETION AND OPENING of its first restaurant and satisfying consumer demands and preferences in the healthy and nutritious fast food arena in the local market. The Company's initial restaurant and all future restaurants, if any, will operate under the name "Healthy Bites Grill". The principal products that will be offered by the Company through its restaurants are gourmet, healthy and nutritious fast food items. These items are expected to include vegetable (veggie) burgers, mushroom burgers, salads, smoothies and natural, healthy beverages. The items will be available for consumption on site or as take-out items purchased in the restaurant or at the drive-thru. Under an agreement with data central usa, inc. A data base management company, the company is assembling a select group of high profile product lines for its joint marketing effort. These high profile product lines consist of those products with already established national brand name recognition which health conscious consumers already identify as high quality products in the health food industry. The products will include meal supplements such as Met-Rx protein shakes and protein bars (dietary supplements) and Myoplex protein shakes, Barnie's coffee, Bell and Evans' ( chickens ) and Muir Glen (tomato products). based in Ocala, Florida, data central manages the frequent-dining programs for multi-unit restaurant chains by providing turnkey electronic loyalty/frequency solution services this is a sales tracking database specific to each customer. Each of the restaurant's customers will be provided with a healthy bites grill identification card with a magnetic strip. The card is then swiped on each visit, sales information is accumulated and the customer is awarded points relative to the frequency of patronage. These points are redeemable for company discounts. This data-based sales information will assist the company in identifying the frequent customer. Through the loyalty discount program, the company will then be able to reward that customer through dining discounts based on the number of points accumulated during each visit to the company's restaurant thereby encouraging the customer to return. Management anticipates that this program will increase sales by bringing the customer back in order to use the earned discounts. It is expected that such increased sales 2 will foster customer loyalty. Management expects to use the database it obtains through the program identification card for promotional and advertising purposes. It is anticipated that such promotional materials will include gift certificates for birthdays and announcements of new products and locations. The company has entered into an agreement with data central to provide the database management services described once the restaurant is in operation. As of the date hereof, no retainer has been paid and no fixed fees have been determined. The fees for this service will be negotiated when the restaurant opens and when management determines that it is appropriate to commence the program. As a restaurant operation designed with the goal to ultimately expand nationwide, management has focused its attention on gaining an understanding of consumer demands in healthy foods. Management is currently developing the restaurant's initial menu selections with the assistance of its menu and food preparation team comprised of Mr. David Maltrotti, Executive Vice President of Operations, and Mr. Roy A. Kindberg, General manager. In an effort not to duplicate consumer taste tests already fully implemented by major players in the health food industry, such as Wild Oats and WholeFoods, the Company is creating its initial menu based on currently known consumer preferences and by including new menu items not traditionally found in fast food restaurants such as complete protein vegi-burgers and grilled portobella pannini. This is an ongoing process, the results of which will not be fully known until the Company's first restaurant is opened and consumer surveys are completed and analyzed. The results of such surveys will play a key role in the addition, deletion and modification of menu items. Management expects the expansion of the Company's restaurant operations will require the establishment of a department dedicated to market survey and testing in order to refine its menu items in response to internally generated market surveys. A key element of the Company's business plan is to enter into franchise agreements with potential and qualified franchisees to open and operate restaurants under the "Healthy Bites Grill" name. The Company has retained the services of an experienced franchise consultant, Donald Luria, to assist in this process. Mr Luria previously worked with subway restaurants as a vice president of operations and as a franchise consultant for ten years. He was responsible for assisting and developing over 100 subway franchises in the southeastern united states. Mr. Luria has also been a franchise consultant for the Coffee Beanery and Miami Subs in the South Florida region. Mr. Luria will assist in the development and implementation of the Company's franchise operations and will be involved in helping franchisees in product development, hiring and training, site selection, lease negotiation, store design. In consideration for these services, in consideration for providing these services to the Company, Mr. Luria has received 1000 restricted shares of the Company's common stock and will be paid on an hourly basis at the rate of $75 per hour. Management believes that the Company has found a niche in the fast food industry by being the sole provider of healthy food on a fast food format. It is expected that the franchise agreements will include royalty fees based on sales volume and require operational and quality control. 3 Mr. David Maltrotti, executive vice president of operations will be in charge of all aspects of restaurant operations, including equipment purchasing decisions and restaurant layout recommendations. Although Mr. Maltrotti has not started any franchises, he has been actively involved in the food service and hospitality industry for over 25 years and is an experienced vegetarian\conventional chef. He was instrumental in starting whole earth markets in Boca Raton, Florida where he assisted in developing the restaurant's menu. he was also responsible for starting and developing the menu at the Natural Food Market of South Beach, Miami, a successful vegetarian and macrobiotic gourmet food store with multi-establishment operations. Mr. Maltrotti was an instructor for the Miami Dade Community College health and nutrition program. He has recently designed recipes for the Broward General Medical Center, Fort Lauderdale, and the dean ornish wellness center. Mr. Maltrotti has consulted on numerous projects including the Sundy house of Delray Beach, Florida where he developed a traditional southern style menu to reflect the historical significance of the property on which it is located. Mr. Maltrotti designed the food service program for the Gas Light Club restaurant located in Boca Raton florida. (2) Distribution Methods It is anticipated that the initial restaurant will serve food prepared in its on-site kitchen. A warehouse/storage facility is planned to be leased for short-term distribution items such as ancillary food products and supplies. Management anticipates that once franchise operations commence, the Company will operate a drop shipment facility for the distribution of certain menu items that allow for the pre-preparation and delivery to various franchises within regional boundaries based on logistical factors such as distance and delivery time. The "drop shipment facility"is a storage/warehouse that will serve initially to store the restaurant's non-perishable items such as paper products and supplies. The Company is already leasing warehouse space for this purpose. A drop shipment facility with kitchen facilities will be used only when sufficient franchise operations have commenced. Since the Company has not yet entered into any franchise agreements, a drop shipment facility with kitchen facilities is only in the planning stages at this time. The kitchen facilities, when operational, will be used for the production of the company's signature line products, including the "Health Bites Burger", "Salmon Burger" and "Organic Baked French Fries". Thereafter, management anticipates that additional distribution facilities will be needed if franchise restaurants are opened in different geographic regions of the country. The Company's initial franchises are expected to be in the South Florida area. The Company has received local, regional and nationwide attention with various write-ups in several industry publications such as "Restaurant News", "Crittendens Restaurant Chain Report", "Sunbelt Food Service Magazine" and "Natural Products Industry Provider". The Company has also joined with Barnie's Coffee Co., a major specialty coffee Company, which is distributed by Standard Coffee Service Company. The Company currently has a contract with Standard Coffee Service Company to distribute Barnie's Coffee in exchange for the free use of its equipment, provided that the Company only sell the Barnie's Coffee line which will be purchased on a c.o.d. basis. The Company is currently involved in aligning supplier relationships with SYSCO Food Service, a conventional food service supplier that will provide assorted supplies including cleaning agents, trash bags, paper towels and plastic ware; Organica, an all-natural organic products distributor which will supply wholesale bulk food service ingredients; cornucopia, also known as United Distributors, which will 4 supply most of the all-natural dry goods and produce goods; Kinfolk, a distributor of health products, will provide soy, cheese and tofu lines; Green Garden, A live foods distributor which will provide sprouts, sprouted beans and wheat grass; and Tree of Life, a multi-faceted national distributor of natural product labels which will supply vitamin supplement lines, gourmet specialty lines and a variety of specific industry products. The Company does not have contracts with the above suppliers but is in the process of establishing lines of credit with most of them, as it is the industry practice to make bulk purchases on credit. Management believes that the site chosen for its flagship restaurant represents the ideal type of location for all of the Company's PLANNED FUTURE restaurants. It is expected that this model will serve as the blueprint for SUCH future restaurants. Location represents one of the factors to the success of the Company's restaurants, with other factors being food related (quality, price, timeliness and convenience) and quality of service. Management believes that its restaurant will attract the attention of the local consumer because the restaurant will be the only gourmet health food restaurant in South Florida with both a drive-thru and sit-down facility. It is expected that the initial customers will come from the local area, attracted by a Bally's Scandinavian Gym which is being built approximately one half mile from the restaurant. The restaurant site is also in close proximity to two hospitals, two high schools and various apartment complexes. Management anticipates that it will initially draw customers from these locations. If the operations of the initial restaurant are profitable then management believes that it will have found the ideal target area for future expansion, both for company-owned restaurants as well as franchise operations. (3) Status of Publicly Announced New Products or Services On September 28, 1999, the Company announced the opening of its initial flagship restaurant for the fall of 1999. This news release to Business Wire introduced Health Express as a fast food restaurant chain offering healthy food and announced the opening of its first restaurant for the fall of 1999. As of today, the Company has begun construction and is planning a grand opening for the late December, 1999. The delays experienced in the opening of the restaurant are directly attributable to the process of obtaining various local building permits. All permits have since been obtained and construction, which began on september 28, 1999, is nearing completion, (4) Competitive Business Conditions The Company has competition from existing fast food chains offering conventional fast food. However none offer the type of products that the Company is specializing in. In fact, the major competitors are the ones that offer the type of fast food that the health conscious American consumer is now avoiding. Additionally, management anticipates that it may have competition from established health food stores and small single proprietary health food restaurants. There are no direct competitors in the area of healthy fast food. Management believes that the Company can develop name identification with specific menu items offered in the healthy gourmet fast food industry, which is 5 expected to enable the Company to compete in its niche market. Management believes, although no assurances can be given, that the Company has a competitive edge which is based on a combination of consumer demands for a reasonably priced healthy meal served in less time and with consistently good taste. Competitors in the health food market such as Wild Oats and Whole Foods, which are operating in Fort Lauderdale, are currently successful but do not offer fast food service with convenient drive-thru. (5) Dependence on Major Customers The Company, as a fast food restaurant, is not dependent on any major customers but will seek to gain the patronage of the local consumers within a strategic location. The current sight for the initial restaurant represents what management perceives as an ideal location for a flagship operation. It is centrally located in a business and medical community within a few mile radius of two popular health clubs, a karate center and apartment and residential areas. It is also on a busy thoroughfare which links a major highway and the ocean with substantial traffic flow of business people, tourists and local residents. The mission of the Company is to ensure repeat business and customer loyalty by providing a high quality nutritious and delicious meal at a reasonable price in relatively short time and within pleasant surroundings. (6) Intellectual Property The Company has filed a trademark application for a federally registered trademark for the name "Healthy Bites Grill" which is intended to be used as the name for all restaurants and has received provisional approval from the U.S. Patent and Trademark Office for its use. Confidentiality agreements will be required from all production personnel on the Healthy Bites Grill recipes. (7) Governmental Approval At the present time there is no government approval required for the Company's principal products or services. Restaurant operations are generally subject to local, county and state restaurant operation, health, sanitation and quality guidelines. The Company's operations are also subject to standard hospitality, food safety and sanitation guidelines. The majority of governmental regulations regarding restaurant operations are handled at the state level by The Florida State Division of Hotels and Restaurants. The first step of the approval process is completed at the Plan Review Office to insure design compliance. Next, the design is submitted to the department of NATURAL RESOURCE PROTECTION, A COUNTY AGENCY, FOR ENVIRONMENTAL IMPACT REVIEW. AFTER CONSTRUCTION IS COMPLETED, THE STATE DIVISION OF HOTELS AND RESTAURANTS AND THE CITY BUILDING AND ZONING DEPARTMENT PHYSICALLY INSPECT THE FACILITY. ON APPROVAL, THE CITY OF OAKLAND PARK WILL ISSUE AN OCCUPATIONAL LICENSE AND A BUSINESS REGULATIONS. LICENSE WILL BE ISSUED BY THE STATE OF FLORIDA. AFTER OPENING, THE RESTAURANT 6 WILL BE INSPECTED EVERY FOUR MONTHS BY THE STATE OF FLORIDA FOR COMPLIANCE WITH THE HEALTH AND SANITATION CODE AND EVERY YEAR BY THE LOCAL FIRE MARSHAL. THE COMPANY EXPECTS TO INCUR APPROXIMATELY $500 IN LICENSE FEES IN ITS FIRST YEAR OF OPERATION AND APPROXIMATELY $400 EACH YEAR THEREAFTER. THE COMPANY DOES NOT FORESEE ANY ADDITIONAL COSTS ASSOCIATED WITH GOVERNMENT REGULATIONS OR COMPLIANCE THEREOF AT THE PRESENT TIME. (8) Governmental Approval, Regulation and Environmental Compliance The Company is and will be subject, both directly and indirectly, to various laws and regulations relating to its business, including city and county occupational licenses and health and sanitation inspections. At the present time, management believes that it is in material compliance with all applicable ordinances, rules and regulations, however, new rules, ordinances and regulations may be enacted in the future, which may require compliance by the Company in the future. The Company anticipates that it will have no material costs associated with compliance with current federal, state and local environmental laws. (9) Research and Development The Company retained SOUTHERN HOSPITALITY SERVICES, AN independent contractor, to conduct market surveys and similar studies. THE SURVEY RESULTS OBTAINED BY THE COMPANY FROM SUCH SURVEYS SUPPORT MANAGEMENT'S BELIEF THAT THE CONSUMER MARKET IN THE FOOD INDUSTRY IS POSITIVELY RECEPTIVE TO A HEALTHY FOOD RESTAURANT WITH A FAST FOOD FORMAT. AFTER RECEIVING THE RESULTS OF SUCH SURVEYS, MANAGEMENT CONDUCTED AN INTERNAL EVALUATION OF THE POTENTIAL SUCCESS OF THE COMPANY'S BUSINESS MODEL AND CONCLUDED THAT THE CURRENT TREND IS FOR HEALTHIER FOODS WITHOUT SACRIFICING TIME OR GOOD TASTE. THEREFORE, MANAGEMENT DOES NOT ANTICIPATE THAT IT WILL CONDUCT ANY RESEARCH AND DEVELOPMENT IN THE FORESEEABLE FUTURE WITH OUTSIDE MARKET SURVEY COMPANIES. MANAGEMENT EXPECTS TO CONDUCT INTERNALLY GENERATED SURVEYS BY UTILIZING CUSTOMER RESPONSE CARDS COLLECTED AT ITS RESTAURANT WHICH WILL BE AVAILABLE AT THE COUNTER FOR VOLUNTARY COMPLETION BY CUSTOMERS. IT IS ANTICIPATED THAT THE RESPONSES GENERATED BY THESE CARDS WILL PROVIDE MANAGEMENT WITH VALUABLE INFORMATION CONCERNING CONSUMER PREFERENCE AND DEMANDS. MANAGEMENT WILL THEN BE ABLE TO MAKE MENU AND OTHER CHANGES NECESSARY TO KEEP PACE WITH ITS CUSTOMERS PREFERENCES AND CONCERNS. MANAGEMENT EXPECTS THAT THIS WILL BE AN ON-GOING PROCESS TO SATISFY THE CHANGING TASTES OF ITS CUSTOMERS AND BY QUICKLY RESPONDING TO THESE INTERNAL CUSTOMER SURVEYS. (10) Employees and Facilities As of NOVEMBER 15, 1999, the Company had four (4) full-time and two (2) part-time employees. The Company also employs independent contractors and other temporary employees. None of the Company's employees is represented by a labor union, and the Company considers its employee relations to be good. The Company expects the number of employees to grow significantly over the next twelve months once its initial restaurant opens and it commences operations. The Company believes that its future success will depend in part on its continued ability to attract, hire and retain qualified personnel. 7 The Company expects growth by both franchising and direct ownership in various locations. Each restaurant is expected to require approximately twelve employees. IT IS EXPECTED THAT ALL ACCOUNTING FUNCTIONS WILL be highly centralized AND WILL BE INTERFACED OR LINKED TO THE COMPANY'S ACCOUNTING PROGRAM. IT IS EXPECTED THAT BOTH COMPANY-OWNED RESTAURANTS AND FRANCHISE OPERATIONS WILL USE THE SAME POINT OF SALE SYSTEM AND THEY, IN TURN, WILL REPORT ON A MONTHLY BASIS TO A CENTRALIZED ACCOUNTING DEPARTMENT OF THE COMPANY FOR MANAGERIAL AND FINANCIAL REPORTING PURPOSES. The Company's first restaurant operation will be in leased space located at 1538 East Commercial Blvd, Fort Lauderdale, Florida. See Item 3. Description of Property. The Company's executive offices are at 275 Commercial Boulevard, Suite 260, Fort Lauderdale, Florida. The Company believes that additional space will be required as its business expands and that it will be able to obtain suitable space as needed. The Company does not own any real estate. (c) Reports to Security Holders Prior to filing this Form 10-SB, the Company has not been required to deliver annual reports. To the extent that the Company is required to deliver annual reports to security holders through its status as a reporting company, the Company shall deliver annual reports. Also, to the extent the Company is required to deliver annual reports by the rules or regulations of any exchange upon which the Company's shares are traded, the Company shall deliver annual reports. If the Company is not required to deliver annual reports, the Company will not go to the expense of producing and delivering such reports. If the Company is required to deliver annual reports, they will contain audited financial statements as required. Prior to the filing of this Form 10-SB, the Company has not filed reports with the Securities and Exchange Commission. Once the Company becomes a reporting company, management anticipates that Forms 3, 4, 5, 10-KSB, 10-QSB, 8-K and Schedules 13D along with appropriate proxy materials will have to be filed as they come due. If the Company issues additional shares, the Company may file additional registration statements for those shares. The public may read and copy materials the Company files with the Securities and Exchange Commission at the Commission's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. The Commission maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Commission. The Internet address of the Commission's site is (http://www.sec.gov). (d) Year 2000 Disclosure 8 The Company does not anticipate any problem in dealing with computer entries in the year 2000 or thereafter, with any computers currently used at its facilities. All of the Company's computer systems are new and have been Year 2000 compliant since their acquisition. The Company keeps current with all updates and revisions with all software the Company currently uses. It is anticipated that the software updates reflect required revisions to accommodate transactions in the Year 2000 and thereafter. Nonetheless, management recognizes the problems that may arise in connection with the Year 2000 issue. The Year 2000 issue is the result of computer programs being written using two digits rather than four to define the applicable year. In other words, date-sensitive software may recognize a date using A00" as the year 1900 rather than the year 2000. This could result in system failures or miscalculations causing disruptions of operations, including, among others, a temporary inability to process transactions, send invoices, or engage in similar normal business activities. The Company does not believe that it has material exposure to the Year 2000 issue with respect to its own information systems since its existing systems correctly define the year 2000. The Company intends to survey its major vendors to determine the extent to which their computer systems (insofar as they relate to the Company's business) are Year 2000 compliant. The Company is currently unable to predict the extent to which the Year 2000 issue will affect its vendors, or the extent to which it would be vulnerable to the vendor's failure to remediate any Year 2000 issues on a timely basis. The failure of a major vendor subject to the Year 2000 to convert its systems on a timely basis or a conversion that is incompatible with the Company's systems could have an adverse effect on the Company. In addition, in a worst case scenario, if the Company's vendor's computer systems do not contain the necessary software updates to be Year 2000 compliant, a multitude of problems could occur which may include, among others, lost orders, supplies not shipped or shipped to incorrect addresses and credit card purchases incorrectly credited or debited. As a result, the Company's operations could be adversely affected which could result in lost business, which may have a material adverse effect on its business and its financial condition ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF OPERATION Plan of Operation The Company's plan of operations has been developed using a step by step approach, with each phase of the plan closely monitored and implemented prior to implementation of the next phase of the plan. The phases can be divided as follows: 1. Completion of construction phase 2. Initial restaurant opening and operation 3. Preparation of franchise circulars and agreements 4. Franchising efforts 9 Management originally expected that the total cost for its initial flagship restaurant would be approximately $250,000 including approximately $213,000 for construction, equipment, furniture, supplies and opening inventory, and approximately $37,000 as a reserve for overhead expenses and unexpected costs. The company raised approximately $525,000 from the sale of securities and the exercise of common stock purchase warrants and stock options. Of this amount, approximately $245,000 has been expended on general operating expenses which includes salaries, commissions, advertising and overhead, $140,000 on construction related costs, kitchen equipment and restaurant furniture and supplies, and $18,000 for deposits and expenses related to the company's private placement offering . The remaining balance of cash on hand of $122,000 is expected to satisfy the company's cash flow requirements of approximately $73,000 for the completion of the first restaurant and overhead expenses over the next three months. Management has developed a preliminary monthly budget of cash flows from restaurant operations based upon anticipated restaurant sales with an average meal ticket sale of approximately $8.00 and 180 customers per day. Management believes, based upon such budget, that there is sufficient cash on hand for the next three months to attain a steady revenue stream from restaurant operations. Management further believes that after approximately two months of operations, there will be sufficient restaurant revenues to satisfy the company's cash requirements during the next 12 months. If cash flow from restaurant operations is not sufficient to support the company's financial obligations after february 2000 or the restaurant opening is date is extended due to unexpected last minute construction delays, management may seek additional financing through the sale of its debt and/or equity securities. Toward this end, the Company has extended the expiration date of the warrants to February 1, 2000 to raise additional capital. The Company's officers also may provide additional funds by exercising their stock options. If all 1,670,200 outstanding warrants and 3,683,000 options are exercised at an exercise price of $.35 per warrant and option, the Company will receive $584,570 and $1,289,050, respectively, in additional financing. It may also seek alternative sources of financing, including from more conventional sources such as bank loans and credit lines or loans from the Company's officers. However, no assurances can be given that the Company will be able to raise sufficient capital to meet its needs through the sale of its securities or otherwise. Further, the availability of any future financing may not be on terms which are satisfactory to the Company. After opening the initial restaurant and developing a standard menu during approximately two to three months of operations, management expects to commence the sale of restaurant franchises. Through the use of direct mail marketing as well as numerous telephone interviews conducted by management with potential franchisees, management has generated a number of potential franchisees. It is management's belief, based on the responses received through such marketing efforts, that up to five franchises can be sold by the end of 2000. Franchising efforts will require that the Company respond to inquires concerning franchise opportunities although management expects to locate its initial franchise in the South Florida area. It is anticipated that donald luria, the company's franchise consultant, will assist in all franchising efforts and activities. It is currently anticipated that each franchise sold will generate a franchise fee of $ 15,000 to $ 20,000 and there will be royalties payable to the Company of between 6% and 8% of gross sales. 10 It is management's current intention to operate one Company-owned restaurant in early 2000 and possibly open and operate one additional Company restaurant in Boca Raton, Florida with agreements for three to five franchise restaurants by the end of the year. For the year 2001, it is management's goal to own a total of four restaurants and to have sold between five and 10 franschises. The Company plans to grow conservatively through cash flow from operations and franchise revenues, if any. From time to time the Company may evaluate potential acquisitions involving complementary businesses, content, products or technologies. The Company has no present agreements or understanding with respect to any such acquisition. The Company's future capital requirements will depend on many factors, including growth of the Company's restaurant business, the success of its franchising operations, economic conditions and other factors including the results of future operations. The Company currently has four (4) full time employees. Management expects to hire approximately 12 additional people for the operations of its initial restaurant as follows:
NO. OF EMPLOYEES DEPARTMENT JOB DESCRIPTIONS. ---------------- ---------- ----------------- 2 Management General Manager and Assistant 2 Production Food Preparation 3 Line Food Preparation 5 Cashiers Cashier/Customer Service
ITEM 3. DESCRIPTION OF PROPERTY On January 25, 1999 the Company entered into a five-year lease with three renewal options of three years each for the location of its flagship restaurant comprised of 3,129 square feet at a rate of $12.50 per square foot. The current monthly rent is $3,250 with scheduled annual increases. The leased property is located at 1538 E. Commercial Boulevard, Fort Lauderdale, Florida, which is a major east-west thoroughfare in the northeast section of the city. The location is adjacent to or near sprawling businesses, medical centers and hospitals. The restaurant is easily accessible by several major thoroughfares including Interstate 95 and US 1. The Company received approval for final city and county building permits and began construction in late September 1999. The opening of the first restaurant is scheduled for late December 1999. The current lease contains provisions for hazard, liability and flood insurance, which, in the opinion of management, are adequate for coverage from potential property damage. In addition, the Company will acquire additional coverage under an umbrella policy to cover potential liability arising from restaurant operations. Employee worker compensation coverage is mandatory and covered under separate policy. 11 The Company's executive offices are located at 275 Commercial Boulevard, Suite 260, Fort Lauderdale, Florida. It leases 1,000 square feet at a monthly rental rate of $ 500 on a month-to-month basis. Management believes that it will be able to obtain suitable space as needed and has the physical ability to acquire additional office space at its current location. The Company leases its office space and does not own any real estate. The Company is not in the business of investing in real estate or real estate mortgages. ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT (a) 5% Shareholders. The following information sets forth certain information as of November 15, 1999 about each person who is known to the Company to be the beneficial owner of more than 5% of the Company's Common Stock:
Name and Address Amount and Nature Percentage TITLE OF CLASS OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP (1) OF CLASS (2) - -------------- ------------------- --------------------------- ------------ Common Douglas Baker 4,000,000 43.2% 5206 NW 28th St. Margate, Fla. 33063 Common Marco D'Alonzo 4,000,000 43.2% 3557 Dunes Vista Dr. Pompano Beach, Fla. 33068 (b) Security Ownership of Management: Common Douglas Baker 4,000,000 43.2% 5206 NW 28th St. Margate, Fla. 33063 Common Marco D'Alonzo 4,000,000 43.2% 3557 Dunes Vista Dr. Pompano Beach, Fla. 33068 Common David Maltrotti 110,000 2.0% * 4501 W. Atlantic Blvd., #1510 Coconut Creek, FL 33066 All Officers and directors as a group 8,110,000 88.4% (3) persons
--------------------- 12 (1) Messrs. D'Alonzo and Baker have options to purchase 1,780,000 and 1,903,000 shares, respectively, of common stock at an exercise price of $0.35 per share. The options are exercisable for a period of 10 years from June 15, 1999 and are included in the calculation of ownership in accordance with Rule 13(d) of the Securities Act. (2) All percentages are calculated based upon 5, 476,817 shares issued and outstanding and 3,683,000 presently exercisable options for Messrs. D'Alonzo and Baker and 100,000 presently exercisable for Mr. Maltrotti as of November 15, 1999. (c) Changes in Control: There is no arrangement, which may result in a change of control. ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS (a) Directors and Executive Officers [UPDATE AGES] As of November 15, 1999, the directors and executive officers of the Company, their ages, positions in the Company, the dates of their initial election or appointment as director or executive officer, and the expiration of the terms as directors are as follows:
NAME OF AGE POSITION PERIOD SERVED - ------- --- -------- ------------- DIRECTOR - -------- Douglas Baker 37 Director, President and Chief July 2, 1998 to -- Executive Officer date Marco D'Alonzo 34 Director, Secretary and Chief July 2, 1998 to -- Operating Officer date David Maltrotti 40 Executive Vice President Feb. 3, 1999 to -- date
- ------------------------------------------------------ * The Company's directors are elected at the annual meeting of stockholders and hold office until their successors are elected and qualified. The Company's officers are appointed by the Board of Directors and serve at the pleasure of the Board and subject to employment agreements, if any, approved and ratified by the Board. 13 (b) Business Experience Douglas Baker has more than 10 years of sales experience in the competitive financial services industry. He had been actively involved in the financial public relations industry since 1994. He has been a licensed stockbroker, 220 insurance agent and mortgage broker. From 1994 to 1998 he was co-owner with Marco D'Alonzo and Vice President of First Equity Group, a financial public relations company where he was in charge of company operation including cash flow management, budgeting, public relations and human resources. From 1992 to 1993 he was an insurance manager with Aachen Insurance Company. From 1986 to 1991, he was a stockbroker of various brokerage firms in South Florida. From 1981 to 1985, he owned Bakers Forrest Floor Service, a tile refinishing company. Marco D'Alonzo is experienced in all aspects of corporate, financial and business affairs. He has owned and operated two financial related businesses. He owned Equity Management Group, a full service public relations firm specializing in corporate promotions where his duties included marketing, business development and client relations. From 1994 to 1998 he also was co-owner of First Equity Group, Inc. with Mr. Douglas Baker where he acted as President, with duties including marketing, business development and client relations. From 1986 to 1991, he was a stockbroker in various brokerage firms in South Florida. David Maltrotti has a long track record with various South Florida gourmet establishments as a chef in charge of designing healthy menus. His 25 years experience includes management positions in the area of restaurant design and operational implementation. From 1998 to 1999, he was Executive Chief for the North Broward Hospital District located in Fort Lauderdale, Florida. From 1995 to1998 he was Executive Chef for Natural Food Markets of South Florida. From 1989 to1995 he was Executive Chef for Whole Earth Market located in Boca Raton, Florida. The Company currently does not have any employees expected to make a significant contribution to the business. The Company has engaged Creative Connections of Pompano Beach, Florida, a professional marketing firm AS A CONSULTANT for their local and national campaign. THE AGREEMENT IS ON A MONTH-TO-MONTH BASIS AT A MONTHLY FEE OF $3,500. MANAGEMENT expects that some individuals who are currently working on a consulting basis may be retained as full time employees at the operational/managerial level in the future. The Company is currently reviewing several portfolios in order to add key personnel at the executive/directorship level. c) Directors of Other Reporting Companies: None of the Company's executive officers or directors is a director of any company that files reports with the Securities and Exchange Commission. 14 (d) Employees: The Company currently has four full time employees. MESSRS. D'Alonzo and Mr. Baker, the principal shareholders and officers and directors of the Company, have not yet formulated a formal compensation plan. DAVID Maltrotti is EMPLOYED PURSUANT TO THE TERMS OF an employment agreement with no stated monetary compensation package. Mr. Maltrotti has been issued 10,000 shares of restricted common stock as part of an incentive package. (e) Family Relationships: There are no family relationships between the directors, executive officers or any other person who may be selected as a director and executive officer of the Company. (f) Involvement in Certain Legal Proceedings: None of the officers, directors, promoters or control persons of the Company have been involved in the past five (5) years in any of the following: (1) Any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (2) Any conviction in a criminal proceedings or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) Being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, or any Court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or (4) Being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities laws or commodities law, and the judgment has not been reversed, suspended, or vacated. ITEM 6. EXECUTIVE COMPENSATION The Company did not compensate management in the year ended December 31, 1998. The Company has compensated Messrs. D'Alonzo and Baker $ 7,576 each in 1999. They have also each been granted certain stock options as additional monetary compensation in 1999. Mr. Maltrotti has received compensation in the amount of $ 15,170 and shares of common stock through an employment agreement. None of the Company's executive officers earned more than $100,000 during the years ended December 31, 1998. 15 Summary Compensation Table
Annual Restricted Under- Other Name and Compen- Stock lying LTIP Comp- Principal Position Year Salary Bonus Sation Awards Options Payouts Ensation - ------------------ ---- ------ ----- ------ ------ ------- ------- -------- Douglas Baker President, CEO and Director 1998 None None None None None None None 1997 None None None None None None None 1996 None None None None None None None Marco D'Alonzo, Secretary, CEO and Director 1998 None None None None None None None 1997 None None None None None None None 1996 None None None None None None None David Maltrotti, Executive Vice President 1998 None None None None None None None 1997 None None None None None None None 1996 None None None None None None None
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS During the past two (2) years, the Company has not entered into a transaction with a value in excess of $60,000 with a director, officer or beneficial owner of 5% or more of the Company's Common Stock, except as disclosed in the following paragraphs: On June 14, 1999 the Company's Board of Directors granted options to each of Mr. D'Alonzo and Baker to purchase 2,000,000 shares of common stock at a purchase price of $.035 per share. The options are exercisable in whole or in part at any time until the earlier to occur of (i) the exercise of all options; (ii) he is no longer employed by the Company; and (iii) the expiration of ten years from the date of grant. Mr. David Maltrotti, executive vice president of operations, is employed under a three-year employment agreement. He received 10,000 shares upon the execution of the agreement dated February 3, 1999. Under the agreement, he will receive 10,000 shares of common stock upon the opening of each Company owned restaurant. The agreement also grants Mr. Maltrotti options to acquire 200,000 shares of the Company's common stock.. The options are exercisable pursuant to the following schedule: 16 First Year: 50,000 shares exercise price = $.75 per share First Year: 50,000 shares exercise price = $1.00 per share - ----- Second Year: 50,000 shares exercise price = $1.25 per share - ------ Second Year: 50,000 shares exercise price = $1.50 per share - ------ The options are exercisable in whole or in part at any time until the earlier to occur of (i) the exercise of all options: (ii) he is no longer employed by the Company; and (iii) the expiration of three years from the date of the grant. ITEM 8. DESCRIPTION OF SECURITIES The Company's Articles of Incorporation authorizes the issuance of 50,000,000 shares of Common Stock, $.001 par value per share. Holders of shares of Common Stock are entitled to one vote for each share on all matters to be voted on by the stockholders. Holders of shares of Common Stock are entitled to share ratably in dividends, if any, as may be declared from time to time by the Board of Directors in its discretion from funds legally available therefore. In the event of a liquidation, dissolution or winding up of the Company, the holders of shares of Common Stock are entitled to share pro rata all assets remaining after payment in full of all liabilities. Holders of Common Stock have no preemptive or other subscription rights, and there are no conversion rights or redemption or sinking fund provisions with respect to such shares. All of the shares of Common Stock issued and outstanding are fully paid and non-assessable. The Company has authorized the issuance of 10,000,000 shares of preferred stock, $.01 par value per share of which no shares are currently issued and outstanding. The Company does not plan to offer the preferred stock to the public. PART II. ITEM 1. MARKET PRICE OF AND DIVIDENDS ON REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS Market Information: The Company's Common Stock currently trades on the Over-The-Counter Bulletin Board (OTC:BB) under the trading symbol "HEXS". As of January 1999 the Company began trading on the NASD Bulletin Board. Since such time, there has been a limited trading market for the Company's Common Stock. The following table sets forth the highest and lowest bid prices for the Common Stock for each calendar quarter and subsequent interim period since the Common Stock commenced actual trading, as reported by the National Quotation Bureau, and represent interdealer quotations, without retail markup, markdown or commission and may not be reflective of actual transactions: 17 HIGH BID LOW BID -------- ------- FISCAL 1999 - ------------ First Quarter 1.59 .13 Second Quarter 1.72 .75 Third Quarter 3.75 1.31 Fourth Quarter through 2.00 1.00 November 12, 1999 There can be no assurance that an active public market for the Common Stock will develop or be sustained. In addition, the shares of Common Stock are subject to various governmental or regulatory body rules, which affect the liquidity of the shares. Holders: There were approximately 31 holders of record of the Company's Common Stock as of November 15, 1999. Dividends: The Company has never paid cash dividends on its Common Stock and does not intend to do so in the foreseeable future. The Company currently intends to retain its earnings for the operation and expansion of its business. The Company's continued need to retain earnings for operations and expansion are likely to limit the Company's ability to pay dividends in the future. ITEM 2. LEGAL PROCEEDINGS The Company is not a party to, and none of the Company's property is subject to any pending or threatened legal, governmental, administrative or judicial proceedings. ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS On August 12, 1999 the Company's independent accounting firm of Sartori CPA, resigned. There were no disagreements with Sartori CPA and Sartori CPA issued an unqualified audit report for the period ended December 31, 1998. The Company's Board of Directors is in the process of interviewing qualified CPA firms to engage as the Company's independent auditor for its 1999 audit and on a going-forward basis. 18 ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES In September 1998, the Company sold 200,000 units at $ 0.10 per unit to residents in the states of Florida and Delaware in a private placement offering. Each unit consisted of one share of common stock and seven common stock purchase warrants. Each warrant entitled the holder to purchase one share of common stock of the Company at a purchase price of $ 0.70 per share. In June 1999 the exercise price was reduced to $.35 per share. The warrants will expire February 1, 2000. As of November 15, 1999, warrants to purchase 632,467 shares and options to purchase 317,000 shares of common stock were exercised, which together with the sale of all units, has resulted in total gross proceeds to the Company of approximately $525,000. The offering of units was conducted in reliance on an exemption from registration under Rule 504 of Regulation D of the Securities Act of 1933, as amended (the "Securities Act"). All certificates representing the shares of common stock comprising the units and the shares issued upon exercise of the warrants prior to April 7, 1999 do not bear a restrictive legend restricting transferability under the Securities Act. All shares of common stock issued upon exercise of warrants and options subsequent to April 7, 1999 bear a restrictive legend restricting transferability under the Securities Act. ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS Section 607.0850 of the Florida Business Corporation Act (the "FBCA") allows the Company to indemnify any person who was or is a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of the Company, by reason of the fact that such person is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust or other enterprise, against liability incurred in connection with such proceeding, including any appeal thereof, if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any proceeding by judgment, order, settlement, conviction or upon a plea of nolo contende or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in, or not opposed to, the best interests of the Company or, with respect to any criminal action or proceeding, such person had reasonable cause to believe that his or her conduct was unlawful. Section 607.0850 of the FBCA also allows the Company to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed proceeding by or in the right of the Company to procure a judgment in the Company's favor by reason of the fact that such person is or was a director, officer, employee or agent of the Company or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses and amounts paid in settlement not exceeding, in the judgment of the board of directors, the estimated expense of litigating the proceeding to conclusion, actually and reasonably incurred in connection with the defense or 19 settlement of such proceeding, including any appeal thereof. Such indemnification shall be authorized if such person acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the Company. Indemnification shall not be made for any claim, issue or matter as to which such a person has been adjudged by a court of competent jurisdiction determining, after exhaustion of all appeals there from, to be liable to the Company or for amount paid in settlement to the Company, unless and only to the extent that, the court in which the proceeding was brought, or any other court of competent jurisdiction, determines upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper. Section 607.0850 of the FBCA also provides that to the extent that a director, officer, employee or agent of the Company has been successful on the merits or otherwise in defense of any proceeding referred to in the paragraphs above, or in defense of any claim, issue or matter therein, he or she shall be indemnified against expenses actually and reasonably incurred by him or her in connection therewith. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Company pursuant to the foregoing provisions, or otherwise, the Company has been advised that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. The Company's Articles of Incorporation provide for similar indemnification as provided by the FBCA. PART F/S UNAUDITED FINANCIAL STATEMENTS September 30,1999
Financial Statements Balance Sheet F-1 Statement of Operations F-2 Statement of Stockholders' Equity F-3 Statement of Cash Flows F-4 Notes to Financial Statements F-5-9 20 AUDITED FINANCIAL STATEMENTS December 31, 1998 Accountant's Report F-10 Financial Statements F-11 Balance Sheet F-12 Statement of Operations F-13 Statement of Stockholders' Equity F-14 Statement of Cash Flows F-15-18 Notes to Financial Statements PART III. ITEM 1. Index to Exhibits The following exhibits are filed with this Form 10-SB: ASSIGNED NUMBER DESCRIPTION - --------------- ----------- (2) Articles of Incorporation, as amended (3)(ii) By-laws (10) Lease between Health Express USA, Inc. and Saul Strachman (27) Financial Data Schedule
- -------------------------------- 21 SIGNATURES Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the Registrant has duly caused this Amendment Number 1 to the registration statement to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: November 16, 1999. HEALTH EXPRESS USA, INC. By:/s/ Douglas Baker ------------------------- Douglas Baker, President 22 HEALTH EXPRESS USA, INC. (A Development Stage Company) BALANCE SHEET September 30, 1999 (unaudited) ASSETS Current Assets Cash $ 225,119 ----------- Total Current Assets 225,119 ----------- Property and Equipment Leasehold improvements 10,830 Construction in progress 24,404 Restaurant equipment 32,866 Office equipment 500 Sign 9,228 ----------- Total Property and Equipment 77,828 ----------- Other Assets Prepaid Rent 5,305 Rent deposit 4,350 ----------- Total Other Assets 9,655 ----------- TOTAL ASSETS $ 312,602 =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accrued Rent Expense $ 10,706 Notes payable to stockholders 1,000 Note payable 3,000 ----------- Total Current Liabilities 14,706 ----------- STOCKHOLDERS' EQUITY Common Stock, $0.001 par value, 50,000,000 authorized 5,472,967 shares issued and outstanding 5,473 Additional Paid-In Capital 4,365,692 Deficit Accumulated During the Development Stage (4,073,269) ----------- 297,896 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 312,602 =========== F-1 HEALTH EXPRESS USA, INC. (A Development Stage Company) STATEMENTS OF OPERATIONS (unaudited)
Nine Months Ended Six Months Ended 7/2/98 September 30, June 30, (Inception) 1999 1998 1999 1998 to 9/30/99 ----------- ----------- ----------- ----------- ------------ Revenues $ 0 $ 0 $ 0 $ 0 $ 0 ----------- ----------- ----------- ----------- ----------- 0 0 0 0 0 Expenses General and Administrative 219,279 5,255 142,038 0 224,569 Officers compensatory stock options 3,800,000 0 3,800,000 0 3,800,000 Employee compensatory stock options 32,500 0 32,500 0 32,500 Compensatory stock issued 16,200 0 16,200 0 16,200 ----------- ----------- ----------- ----------- ----------- 4,067,979 5,255 3,990,738 0 4,073,269 Net loss before income taxes (4,067,979) (5,255) (3,990,738) 0 (4,073,269) ----------- ----------- ----------- ----------- ----------- Income tax expense 0 0 0 0 0 ----------- ----------- ----------- ----------- ----------- Net Loss $(4,067,979) $ (5,255) $(3,990,738) $ 0 $(4,073,269) =========== =========== =========== =========== =========== Loss per weighted average share Basic and diluted $ (0.865) $ (0.002) $ (0.900) $ 0 $ (0.967) =========== =========== =========== =========== =========== Weighted average number of shares outstanding 4,701,950 2,587,330 4,433,366 0 4,214,001 =========== =========== =========== =========== ===========
F-2
HEALTH EXPRESS USA, INC. (A Development Stage Company) STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY Period from July 2, 1998 (Inception) to September 30, 1999 (unaudited) Additional 0.001 Paid-In Shares Par Value Capital Deficit Total Issuance of 20,000 shares for services 20,000 $ 20 $ 0 -- $ 20 Issuance of 4,000,000 shares 4,000,000 4,000 -- -- 4,000 Issuance of 200,000 shares 200,000 200 19,800 -- 20,000 Issuance of 91,000 shares 91,000 91 63,609 -- 63,700 Net Loss ( 5,290) (5,290) ---------------------------------------------------------------------------- Balance December 31, 1998 4,311,000 $ 4,311 $ 83,409 ($ 5,290) $ 82,430 ---------------------------------------------------------------------------- Issuance of 13,500 shares for services 13,500 14 16,186 -- 16,200 Issuance of 116,333 shares 116,333 116 79,333 -- 79,449 Issuance of 254,800 shares 254,800 255 86,783 -- 87,038 Options granted for 100,000 shares -- -- 32,500 -- 32,500 Options granted for 3,683,000 shares -- -- 3,498,850 -- 3,498,850 Exercise of options for 317,000 shares 317,000 317 411,783 -- 412,100 Issuance of 460,334 shares 460,334 460 156,848 -- 157,308 Net Loss -- -- -- (4,067,979) (4,067,979) ---------------------------------------------------------------------------- Balance September 30, 1999 5,472,967 $ 5,473 $ 4,365,692 ($4,073,269) $ 297,896 ============================================================================
F-3
HEALTH EXPRESS USA, INC. (A Development Stage Company) STATEMENT OF CASH FLOWS (unaudited) Nine Months Ended Six Months Ended July 2, 1998 September 30, June 30, (inception) to 1999 1998 1999 9/30/99 ------------- ----------- ----------- ------------ OPERATING ACTIVITIES Net Loss $(4,067,979) $ (5,255) $(3,990,738) $(4,073,269) Adjustments to reconcile net loss to net cash used by operating activities Options granted-market over price 3,832,500 3,832,500 3,832,500 Common stock issued for services 16,200 16,200 16,200 Changes in assets and liabilities Increase in deposits (4,350) -- (4,350) (4,350) Increase in prepaid expenses (5,305) -- (9,550) (5,305) Increase in accrued expenses 10,706 9,680 10,706 ----------- ----------- ----------- ----------- Net cash utilized by operating activities (218,228) (5,255) (146,258) (223,518) INVESTING ACTIVITIES Increase in property and equipment (77,828) -- (33,472) (77,828) ----------- ----------- ----------- ----------- Net cash utilized by investing activities (77,828) (33,472) (77,828) FINANCING ACTIVITIES New borrowings - notes payable to shareholders -- 1,000 -- 1,000 New borrowings - note payable -- 3,000 -- 3,000 Net proceeds from issuance of common stock 442,680 80,164 281,563 522,465 ----------- ----------- ----------- ----------- Net cash provided by financing activities 442,680 84,164 281,563 526,465 Net increase in cash and cash equivalents 146,624 78,909 101,833 225,119 ----------- ----------- ----------- ----------- Cash - Beginning of Period 78,495 0 78,495 0 ----------- ----------- ----------- ----------- Cash - End of Period $ 225,119 $ 78,909 $ 180,328 $ 225,119 =========== =========== =========== =========== Supplemental Schedule of Noncash Financing Activities 20,000 shares were issued to counsel as incentive to provide services. These shares were valued at par which management believed to be the fair value of services. These shares were issued when there was no market for the Company's stock Supplemental Disclosures of Cash Flow Information Cash Paid During the Period for: Interest $ 0 $ 0 $ 0 $ 0 ----------- ----------- ----------- ----------- Income Taxes $ 0 $ 0 $ 0 $ 0 ----------- ----------- ----------- -----------
F-4 HEALTH EXPRESS USA, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1999 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: UNAUDITED INTERIM FINANCIAL STATEMENTS The accompanying financial statements of the company for the nine months ended September 30, 1999 are unaudited, but, in the opinion of management, reflect the adjustments, all of which are of normal recurring nature, necessary for a fair presentation of such financial statements in accordance with generally accepted accounting principles. The results of operations for an interim period are not necessarily indicative of the results for a full year. GENERAL Health Express USA, Inc. (the "Company") is a Florida corporation, formed on July 2, 1998. The Company is in development stage and has raised capital for a gourmet, fast-food health and nutrition restaurant. DEVELOPMENT STAGE OPERATIONS The Company has raised sufficient capital from a Rule 504 Private Placement Offering to develop its initial flagship restaurant, which will serve healthy food in a fast food format, with drive-in and sit down consumption . The Company has begun construction and expects the opening of its first restaurant in December of 1999. The Company is planning to enter into franchise agreements as well as developing additional Company owned restaurants. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts and disclosures. Accordingly, actual results could differ from those estimates. PROPERTY AND EQUIPMENT Property and equipment are valued at cost. Maintenance and repair costs are charged to expense as incurred. Gain and losses on the disposition of property and equipment are reflected in income. Depreciation is computed on a straight-line basis for financial reporting purposes, based on the estimated useful lives of the assets, which, in the opinion of management will commence upon the start of restaurant operations. F-5 HEALTH EXPRESS USA, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1999 LEASES The Company leases property for its restaurant operations from February 1, 1999. The lease calls for scheduled yearly increases. Total rental payments are being amortized over the life of the lease on a straight line basis in accordance with SFAS 13. INCOME TAXES Deferred income taxes are provided for temporary differences between the basis of the Company's assets and liabilities for financial reporting and income taxes under the provisions of Statement of Financial Accounting Standards No. 109 "Accounting for Income Taxes". NET LOSS PER SHARE The Company adopted SFAS No. 128, "Earnings Per Share", which established new standards for computing and presenting earnings per share. SFAS No. 128 replaced the calculation of primary and fully diluted earnings per share with basis and diluted earnings per share 2. NOTES PAYABLE - SHAREHOLDERS As of September 30, 1999 notes payable to shareholders consisted of the following: Due to majority shareholder, dated August 7, 1998. The note is due on demand and carries no interest rate. $ 500 Due to majority shareholder, dated August 7, 1998. The note is due on demand and carries no interest rate. 500 ----- Total notes payable to shareholders $1,000 ===== 3. NOTE PAYABLE As of September 30, 1999 the note payable consisted of the following: Due to corporation owned by majority shareholders. The note is dated August 31, 1998, is due on demand and carries no interest $3,000 ===== F-6 HEALTH EXPRESS USA, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1999 4. STOCKHOLDERS' EQUITY On June 10, 1999 the Board of Directors increased the authorized shares of the Company' common stock from 15,000,000 shares to 50,000,000 shares, having a par value of $0.001 per share and 10,000,000 shares of "blank check" preferred stock. As of September 30, 1999 the Company has issued 5,472,967 shares of common stock. No preferred stock has been issued. The Company's private placement represented the issuance of 200,000 Units, each unit consisting of one share of common stock at a price of $ 0.10 and warrants for the purchase of seven (7) shares at $ 0.70 per share. The expiration date for the exercise of the warrants was August 31,1999. On June 3, 1999, the Company reduced the exercise price of warrants to $ 0.35 per share. On July 28, 1999, the Board of Directors of the Company voted to extend the expiration date for the exercise of the outstanding warrants to November 1, 1999. On October 28, 1999, the Board of Directors of the Company voted to extend the expiration date for the exercise of the outstanding warrants to February 1, 2000. STOCK COMPENSATION AND OPTIONS The Company issued 13,500 shares of common stock for consultation services, including 10,000 shares to an officer/employee. The amount of compensation was valued at the then market price of $ 1.20 per share, which management believed to be the fair value of services provided. Management granted options for 100,000 shares of the Company's common stock to an officer/employee. The amount of compensation was valued at the then market price of $ 1.20 per share over the option price, which management believed to be the fair value of services provided. The Company granted stock options to its officer/directors for 4,000,000 shares. Options for 317,000 shares were exercised. Management has valued compensation as the excess of the market value of the stock, $ 1.30, over the exercise price, $ 0.35, which management believed to be the fair value of services provided. F-7 HEALTH EXPRESS USA, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1999 5. INCOME TAXES The Company has a net operating loss carryforward of approximately $ 570,000 for federal and state income tax purposes, respectively, that expires in the year 2018. Deferred income taxes (benefits) are provided for certain income and expenses which are recognized in different periods for tax and financial reporting purposes. Sources of temporary differences and the resulting tax assets and liabilities are as follows: Deferred Tax Assets Net Operating Loss Carryforward Federal and State 570,000 Applicable tax rates (34% Federal, 5% State) 37.63 % ------- 215,000 Valuation allowance (215,000) ------- Provision for income taxes 0 ======= 6. LEASE COMMITMENTS The Company is obligated under a lease agreement on its restaurant location. The rental expense for the period ending September 30, 1999 was $ 36,530. Lease expense represents total lease payments amortized over the life of the lease on a straight line basis. The lease is for a five year period ending January 31, 2004. The future annual minimum rental payments as of September 30, 1999 were as follows: 1999 $ 12,735 2000 52,212 2001 53,484 2002 60,480 2003 63,660 F-8 HEALTH EXPRESS USA, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1999 7. AGREEMENTS The Company signed an agreement with Data Central USA, Inc. for data base management services for customer sales tracking. The agreement calls for services to be provided upon the start of restaurant operations. There is no commitment for the use of the services and price negotiations will be entered into prior to the commencement of the services. The Company entered into a contract with Standard Coffee Services to carry their line of Barnie's Coffee. The contract is on a COD, 30 day payment basis. No purchase commitments have been entered into. The Company is also establishing supplier relationships with various food and supplies distributors. No contracts or commitments have been entered into and purchases are on a COD basis. There were no purchase commitments as of September 30, 1999 F-9 SARTORI CPA, P.A. ACCOUNTING & CONSULTING 275 Commercial Boulevard, Suite 260 Phone (954) 351-1154 Lauderdale by the Sea, Florida 33308 Fax (954) 351-7760 - -------------------------------------------------------------------------------- INDEPENDENT AUDITORS' REPORT To the Board of Directors and Stockholders Health Express USA, Inc. Fort Lauderdale, Florida I have audited the accompanying balance sheet of Health Express USA, Inc. (a Florida development stage company) as of December 31, 1998 and the related statement of operations, stockholders' equity, and cash flows for the period July 2, 1998 (inception) to December 31, 1998. These financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with generally accepted auditing standards. Those standards require that I plan the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Health Express USA, Inc. as of December 31, 1998 and the results of its operations and cash flows for the initial period then ended in conformity with generally accepted accounting principles. Sartori CPA, P.A. May 21, 1999 F-10 HEALTH EXPRESS USA, INC. (A Development Stage Company) BALANCE SHEET December 31, 1998 ASSETS Current Assets Cash $ 78,495 -------- Other Assets Deferred offering costs 7,935 -------- TOTAL ASSETS $ 86,430 ======== LIABILITIES AND STOCKHOLDERS' EQUITY Notes payable to shareholders $ 1,000 Note payable 3,000 -------- -------- 4,000 -------- STOCKHOLDERS' EQUITY Common Stock,$0.001 par value, 15,000,000 shares authorized, 4,311,000 shares issued and outstanding 4,311 Additional Paid-In Capital 83,409 Deficit Accumulated During the Development Stage (5,290) -------- 82,430 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 86,430 ======== See accompanying notes F-11 HEALTH EXPRESS USA, INC. (A Development Stage Company) STATEMENT OF OPERATIONS Period from July 2, 1998 (Inception) to December 31, 1998 Revenues $ 0 ----------- Expenses Officer's Compensation 1,500 Bank fees 109 Accounting 1,000 Licenses 89 Office expense 1,342 Contract labor 1,250 ----------- Total Expenses 5,290 ----------- Net Loss $ (5,290) =========== Loss per weighted average share-Basic and diluted $ (0.0015) =========== Weighted average number of shares outstanding 3,477,577 =========== See accompanying notes F-12 HEALTH EXPRESS USA, INC. (A Development Stage Company) STATEMENT OF STOCKHOLDERS' EQUITY Period from July 2, 1998 (Inception) to December 31, 1998
Additional $0.001 Paid-In Shares Par Value Capital Deficit Total ------ --------- ------- ------- ----- Restricted stock Issuance of 20,000 shares for offering costs at par value 20,000 $20 $0 - 20 Restricted stock Issuance of 4,000,000 shares at par to officers and directors 4,000,000 4,000 - - 4000 Unrestricted stock Issuance of 200,000 shares at $ 0.10 per share 200,000 200.00 19,800.00 - 20,000.00 Unrestricted stock Issuance of 91,000 shares at $ 0.70 per shares 91,000 91 63,609 - 63,700 Net Loss (Development Stage) - - (5,290) (5,290) -------------------------------------------------------------------- Balance December 31, 1998 4,311,000 $4,311 $83,409 ($5,290) $82,430 ====================================================================
See accompanying notes F-13 HEALTH EXPRESS USA, INC. (A Development Stage Company) STATEMENT OF CASH FLOWS Period from July 2, 1998 (Inception) to December 31, 1998 Cash flows from operating activities Net Loss $ (5,290) -------- Net cash used by operating activities (5,290) -------- Cash flows from financing activities New borrowings - notes payable to shareholders 1,000 New borrowing - note payable 3,000 Net proceeds from issuance of common stock 87,700 Increase in deferred offering costs (7,935) Issuance of common stock for offering costs 20 -------- Net cash provided by financing activities 83,785 -------- Net Increase in Cash 78,495 -------- Cash-Beginning of Period 0 -------- Cash-End of Period $ 78,495 ======== Supplemental Schedule of Noncash Financing Activities During the period 20,000 shares at par value $0.001 totaling $ 20 were issued and charged to offering costs Supplemental Disclosures of Cash Flow Information Cash Paid During the Year For: Interest $ 0 -------- Income Taxes $ 0 -------- See accompanying notes F-14 HEALTH EXPRESS USA, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1998 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: GENERAL Health Express USA, Inc. (the "Company") is a Florida corporation, formed on July 2, 1998. The Company is a development stage enterprise engaged in raising capital for a gourmet, fast-food health and nutrition restaurant. The financial statements and notes are the representations of the Company's management, which is responsible for their integrity and objectivity. The accounting policies of the Company are in accordance with generally accepted accounting principles and conform to the standards applicable to development stage companies. INCOME TAXES Deferred income taxes are provided for temporary differences between the basis of the Company's assets and liabilities for financial reporting and income taxes under the provisions of Statement of Financial Accounting Standards No. 109 "Accounting for Income Taxes". USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principals requires management to makes estimates and assumptions that affect reported amounts and disclosures. Accordingly, actual results could differ from those estimates. NET LOSS PER SHARE The Company has adopted SFAS No. 128, "Earnings Per Share", which established new standards for computing and presenting earnings per share. SFAS No. 128 replaced the calculation of primary and fully diluted earnings per share with basic and diluted earnings per share 2. DEFERRED OFFERING COSTS Deferred offering costs represent costs deferred pending completion of a proposed public public offering. At the time the offering is completed such costs will be netted against the proceeds received. Should the offering be unsuccessful, these costs will be expensed. Deferred offering costs include stock compensation paid to legal counsel. As of December 31, 1998, all of the 200,000 Units (one unit represents one share of common stock with warrants for the right to purchase 7 additional shares of common stock) have been issued and the offering is closed. However, only 91,000 shares have been issued through the exercise of the warrants and 1,309,000 remain unexercised. As a result, deferred offering costs are not netted against proceeds because sufficient warrants have not been exercised to deem the offering successful. F-15 HEALTH EXPRESS USA, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1998 3. RELATED PARTY TRANSACTIONS As described in note 5, the Company is indebted to stockholders in the amount of $ 1,000. The loans carry no interest rate and are due on demand. The Company is also indebted to a corporation owned by the majority stockholders, in the amount of $ 3,000. The loan carries no interest and is payable on demand (note 6). 4. RELATED PARTY AGREEMENTS On July 15, 1998 the Company entered into an Attorney Fee Agreement which includes the issuance of 20,000 shares at par value toward offering costs. The shares were issued as an incentive to provide services. These shares were valued at par value which management believed to be fair value. These shares were issued when there was no market for the Company's stock. Counsel did not value the shares toward costs of services provided. 5. NOTES PAYABLE - SHAREHOLDERS As of August 31, 1998 notes payable to shareholders consisted of the following: Due to majority shareholder, dated August 7, 1998. The note is due on demand and carries no interest rate. $ 500 Due to majority shareholder, dated August 7, 1998. The note is due on demand and carries no interest rate. 500 ----- Total notes payable to shareholders $ 1,000 ===== 6. NOTE PAYABLE As of December 31, 1998 notes payable consisted of the following: Due to corporation owned by majority shareholders. The note is dated August 31, 1998, is due on demand and carries no interest. $ 3,000 ===== F-16 HEALTH EXPRESS USA, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1998 7. STOCKHOLDERS' EQUITY The Company is authorized to issue 15,000,000 shares of common stock having a par value of $0.001 per share. As of December 31, 1998 the Company has issued 4,311,000 shares to its shareholders.
0.001 Paid-in Shares Par Value Capital UNRESTRICTED STOCK 291,000 $ 291 $ 83,409 RESTRICTED STOCK Corporate Officers 4,000,000 4,000 Legal counsel-non cash 20,000 20 Total Restricted Stock 4,020,000 4,020 Total 4,311,000 $ 4,311 $ 83,409 ========= ========= =========
The value of the shares issued to the legal counsel is included at par in deferred offering costs. As disclosed in Note 4, since there was no market, this value represents what management believed to be the fair value of the services provided. Unrestricted stock represents the issuance of 200,000 Units, each unit consisting of one share of Common Stock at a price of $0.10 with Warrants, which entitle the record owner to purchase seven (7) shares of Common Stock at $ 0.70 per share. Total common stock to be issued through the exercise of the warrants is 1,600,000. As of December 31, 1998 the Company issued all of its Units at $0.10 per unit and 91,000 shares were issued through the exercise of warrants. The warrants expire August 31, 1999. On July 28, 1999, the Board of Directors voted to extend the expiration date of the warrants to November 1, 1999. $0.001 Paid-in Price Par Value Capital Issuance of 200,000 shares $ 0.10 $ 200 $19,800 Warrants for 91,000 shares $ 0.70 91 63,609 ------- ------- Total 291,000 shares $ 291 $83,409 ======= ======= F-17 HEALTH EXPRESS USA, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1998 8. INCOME TAXES The Company has a net operating loss carryforward of approximately $ 5,000 for federal and state income tax purposes, respectively, that expires in the year 2018. Deferred income taxes (benefits) are provided for certain income and expenses which are recognized in different periods for tax and financial reporting purposes. Sources of temporary differences and the resulting tax assets and liabilities are as follows: Deferred Tax Assets Net Operating Loss Carryforward Federal and State 5,000 Applicable tax rates (34% Federal, 5% State) 39 % 1,950 Valuation allowance (1,950) Provision for income taxes 0 ===== F-18 EX-2 2 ARTICLE OF INCORPORATION STATE OF FLORIDA DEPARTMENT OF STATE I certify the attached is a true and correct copy of the Articles of Amendment, filed on June 30,1999, to Articles of Incorporation for HEALTH EXPRESS USA, INC., a Florida corporation, as shown by the records of this office. The document number of this corporation is P98000058948. Given under my hand and the Great Seal of the State of Florida at Tallahassee, the Capitol, this the Sixth day of July, 1999 /s/Katherine Harris --------------------- Katherine Harris Secretary of State GREAT SEAL OF THE STATE OF FLORIDA FLORIDA DEPARTMENT OF STATE Katherine Harris Secretary of State July 6,1999 MICHELLE KRAMISH KAIN, P.A. 750 SE THIRD AVE., STE. 100 FORT LAUDERDALE, FL 33316 Re: Document Number P98000058948 The Articles of Amendment to the Articles of Incorporation for HEALTH EXPRESS USA, INC., a Florida corporation, were filed on June 30, 1999. The certification requested is enclosed. Should you have any question regarding this matter, please telephone (850) 487-6050, the Amendment Filing Section. Velma Shepard Corporate Specialist Division of Corporations Letter Number. 199AO0035087 Division of Corporations - P.O. BOX 6327 -Tallahassee, Florida 32314 ARTICLES OF AMENDMENT TO THE ARTICLES OF INCORPORATION OF HEALTH EXPRESS USA, INC. The Articles of Incorporation of Health Express USA, Inc., a Florida corporation (the "Corporation"), are hereby amended as follows: Article 7 is deleted in its entirety and substituted by the following: ARTICLE 7 - CAPITAL STOCK 7.1 The maximum number of shares that this Corporation shall be authorized to issue and have outstanding at any one time shall consist of 60,000,000 shares of Capital Stock as follows: (a) 50,000,000 shares of common stock, having a par value of $.001 per share; and (b) 10,000,000 shares shall be designated "blank check" preferred stock, having a par value of $.01 per share to be issued with such rights, designations, preferences and other terms and conditions as may be determined by the Corporation's Board of Directors, from time to time and at any time, in their sole discretion, without any further action by the shareholders of the corporation. 7.2 No holder of shares of stock of any class shall have any preemptive right to subscribe to or purchase any additional shares of any class, or any bonds or convertible securities of any nature; provided, however, that the Board of Director(s) may, in authorizing the issuance of shares of stock of any class, confer any preemptive right that the Board of Director(s) may deem advisable in connection with such issuance. 7.3 The Board of Director(s) of the Corporation may authorize the issuance from time to time of shares of its stock of any class, whether now or hereafter authorized, or securities convertible into shares of its stock of any class, whether now or hereafter authorized, for such consideration as the Board of Director(s) may deem advisable, subject to such restrictions or limitations, if any, as may be set forth in the bylaws of the Corporation. 7.4 The Board of Director(s) of the Corporation may, by Restated Articles of Incorporation, classify or reclassify any unissued stock from time to time by setting or changing the preferences, conversions or other rights, voting powers, restrictions, limitations as to dividends, qualifications, or term or conditions of redemption of the stock. Article 8 is deleted in its entirety and substituted by the following: ARTICLE 8 - AFFILIATED TRANSACTION The Corporation expressly elects not to be governed by Section 607.0901 of the Florida Business Corporation Act, as amended from time to time, relating to affiliated transactions. The following Article 18 shall be added: ARTICLE 18 - CONTROL SHARE-ACQUISITIONS The Corporation expressly elects not to be governed by Section 607.0901 of the Florida Business Corporation Act, as amended from time to time, relating to control share acquisitions. The foregoing was adopted by resolutions of the Board of Directors dated June 10, 1999 and by consent of the shareholders dated June 10, 1999 representing a majority of the Corporation's shares issued and outstanding which voted in favor thereof and which number of votes cast for the amendment by the shareholders was sufficient for approval pursuant to Sections 607.0704 and 607.0821. Dated as of June 11, 1999. Douglas Baker, President/Secretary STATE OF FLORIDA ) )SS: COUNTY OF BROWARD) The foregoing instrument was acknowledged before me this 21st day of June, 1999 by Douglas Baker as President and Secretary of Health Express USA, Inc., a Florida Corporation, on behalf of the Corporation. He or she is personally known to me or has produced Florida license- B260-176-62-426-0 as identification and did take an oath. Notary Public ANGELA CUSTODE State of Florida 2 State of Florida DEPARTMENT OF STATE I certify the attached is a true and correct copy of the Articles of Amendment, filed on July 24, 1998, to Articles of Incorporation for HEALTH EXPRESS USA, INC., a Florida corporation, as shown by the records of this office. The document number of this corporation is P98000058948. Given under my hand and the Great Seal of the State of Florida at Tallahassee, the Capitol, this the Twenty-eighth day of July, 1998 /S/Sandra B. Mortham Secretary of State GREAT SEAL OF THE STATE OF FLORIDA FLORIDA DEPARTMENT OF STATE Sandra B. Mortham Secretary of State July 28, 1998 LORI A. VAN DAELE 11801 N. TATUM BLVD., STE. 108 PHOENIX, AZ 85028-1612 Re: Document Number P98000058948 The Articles of Amendment to the Articles of Incorporation for HEALTH EXPRESS USA, INC., a Florida corporation, were filed on July 24, 1998. The certification requested is enclosed. Should you have any question regarding this matter, please telephone (850) 487- 6050, the Amendment Filing Section. Velma Shepard Corporate Specialist Division of Corporations Letter Number: 798AO0039720 08-01-98P01:01 RCVD Division of Corporations - P.O. BOX 6327 -Tallahassee, Florida 32314 ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION OF HEALTH EXPRESS U S A, INC. Pursuant to the provisions of section 607.1006, Florida Statutes, this Florida profit corporation adopts the following articles of amendment to its articles of incorporation: FIRST: Amendment(s) adopted: (indicate article number(s) being amended, added or deleted) Article 7 is amended to read as follows: 7.1 The maximum number of shares that this Corporation is authorized to have outstanding at any time is fifteen million (15,000,000) shares of common stock, each share having the par value of $0.001. 7.2 No holder of shares of stock of any class shall have any preemptive right to subscribe to or purchase any additional shares of any class, or any bonds or convertible securities of any nature; provided, however, that the Board of Director(s) may, in authorizing the issuance of shares of stock of any class, confer any preemptive right that the Board of Director(s) may deem advisable in connection with such issuance. 7. 3 The Board of Director(s) of the Corporation may authorize the issuance from time to time of shares of its stock of any class, whether now or hereafter authorized, or securities convertible into shares of its stock of any class, whether now or hereafter authorized, for such consideration as the Board of Director(s) may deem advisable, subject to such restrictions or limitations, if any, as may be set forth in the bylaws of the Corporation. 7.4 The Board of Director(s) of the Corporation may, by Restated Articles of Incorporation, classify or reclassify any unissued stock from time to time by setting or changing the preferences, conversions or other rights, voting powers, restrictions, limitations as to dividends, qualifications, or term or conditions of redemption of the stock. SECOND: If an amendment provides for an exchange, reclassification or cancellation of issued shares, provisions for implementing the amendment if not contained in the amendment itself, are as follows: THIRD: The date of each amendment's adoption: July 21, 1998 FOURTH: Adoption of Amendment(s) (CHECK ONE) [X] The amendment(s) was/were approved by the shareholders. The number of votes cast for the amendment(s) was/were sufficient for approval. [ ] The amendment(s) was/were approved by the shareholders through voting groups. The following statement must be separately provided for each voting group entitled to vote separately on the amendment(s): "The number of votes cast for the amendment(s) was/were sufficient for approval by____________________________." voting group [ ] The amendment(s) was/were adopted by the board of directors without shareholder action and shareholder action was not required. [ ] The amendment(s) was/were adopted by the incorporators without shareholder action and shareholder action was not required. Signed this 21 day of July 1998, Signature /s/ Douglas Baker --------------------------------------------------------------------- By the Chairman or Vice Chairman of the Board of Directors, President or other officer if adopted by the shareholders) OR (By a director if adopted by the directors) OR (By an incorporator if adopted by the incorporators) Douglas Baker ------------- Typed or printed name President --------- Title FLORIDA DEPARTMENT OF STATE Sandra B. Mortham Secretary of State July 2, 1998 AMERILAWYER 343 ALMERIA AVENUE CORAL GABLES, FL 33134 The Articles of Incorporation for HEALTH EXPRESS USA, INC. were filed on July 2, 1998 and assigned document number P98000058948. Please refer to this number whenever corresponding with this office regarding the above corporation. PLEASE NOTE: COMPLIANCE WITH THE FOLLOWING PROCEDURES IS ESSENTIAL TO MAINTAINING YOUR CORPORATE STATUS. FAILURE TO DO SO MAY RESULT IN DISSOLUTION OF YOUR CORPORATION. A CORPORATION ANNUAL REPORT MUST BE FILED WITH THIS OFFICE BETWEEN JANUARY 1 AND MAY 1 OF EACH YEAR BEGINNING WITH THE CALENDAR YEAR FOLLOWING THE YEAR OF THE FILING DATE NOTED ABOVE AND EACH YEAR THEREAFTER. FAILURE TO FILE THE ANNUAL REPORT ON TIME MAY RESULT IN ADMINISTRATIVE DISSOLUTION OF YOUR CORPORATION. A FEDERAL EMPLOYER IDENTIFICATION (FEI) NUMBER MUST BE SHOWN ON THE ANNUAL REPORT FORM PRIOR TO ITS FILING WITH THIS OFFICE. CONTACT THE INTERNAL REVENUE SERVICE TO INSURE THAT YOU RECEIVE THE FEI NUMBER IN TIME TO FILE THE ANNUAL REPORT. TO OBTAIN A FEI NUMBER, CONTACT THE IRS AT 1-800-829-3676 AND REQUEST FORM SS-4. SHOULD YOUR CORPORATE MAILING ADDRESS CHANGE, YOU MUST NOTIFY THIS OFFICE IN WRITING, TO INSURE IMPORTANT MAILINGS SUCH AS THE ANNUAL REPORT NOTICES REACH YOU. Should you have any questions regarding corporations, please contact this office at the address given below. Loria Poole, Corporate Specialist New Filings Section Letter Number: 998AO0035899 Division of Corporations - P.O. BOX 6327 -Tallahassee, Florida 32314 ARTICLES OF INCORPORATION OF HEALTH EXPRESS USA, INC. The undersigned subscriber to these Articles of Incorporation is a natural person competent to contract and hereby form a Corporation for profit under Chapter 607 of the Florida Statutes. ARTICLE 1 - NAME ---------------- The name of the Corporation is HEALTH EXPRESS USA, INC., (hereinafter, "Corporation"). ARTICLE 2 - PURPOSE OF CORPORATION ---------------------------------- The Corporation shall engage in any activity or business permitted under the laws of the United States and of the State of Florida. ARTICLE 3 - PRINCIPAL OFFICE ---------------------------- The address of the principal office of this Corporation is 1901 West Cypress Creek Road, Suite 100, Fort Lauderdale, Florida 33309 and the mailing address is the same. ARTICLE 4 - INCORPORATOR ------------------------ The name and street address of the incorporator of this Corporation is: Elsie Sanchez 343 Almeria Avenue Coral Gables, Florida 33134 ARTICLE 5 - OFFICERS -------------------- The officers of the Corporation shall be: President: Marco D'Alonzo Secretary: Marco D'Alonzo Treasurer: Marco D'Alonzo whose addresses shall be the same as the principal office of the Corporation. AMERILAWYER 343 ALMERIA AVENUE CORAL GABLES, FL 33134 - (305) 445-2700 - (800) 603-3900 - FACSIMILE (305) 447-8900 MAILING ADDRESS - POST OFFICE Box 144479, CORAL GABLES, FL 33114-4479 http://www.ameri1awyer.com HEALTH EXPRESS USA, INC. Page 2 ARTICLE 6 - DIRECTOR(S) ----------------------- The Director(s) of the Corporation shall be: Marco D'Alonzo whose addresses shall be the same as the principal office of the Corporation. ARTICLE 7 - CORPORATE CAPITALIZATION ------------------------------------ 7.1 The maximum number of shares that this Corporation is authorized to have outstanding at any time is SEVEN THOUSAND FIVE HUNDRED (7,500) shares of common stock, each share having the par value of ONE DOLLAR ($1.00). 7.2 No holder of shares of stock of any class shall have any preemptive right to subscribe to or purchase any additional shares of any class, or any bonds or convertible securities of any nature; provided, however, that the Board of Director(s) may, in authorizing the issuance of shares of stock of any class, confer any preemptive right that the Board of Director(s) may deem advisable in connection with such issuance. 7.3 The Board of Director(s) of the Corporation may authorize the issuance from time to time of shares of its stock of any class, whether now or hereafter authorized, or securities convertible into shares of its stock of any class, whether now or hereafter authorized, for such consideration as the Board of Director(s) may deem advisable, subject to such restrictions or limitations, if any, as may be set forth in the bylaws of the Corporation. 7.4 The Board of Director(s) of the Corporation may, by Restated Articles of Incorporation, classify or reclassify any unissued stock from time to time by setting or changing the preferences, conversions or other rights, voting powers, restrictions, limitations as to dividends, qualifications, or term or conditions of redemption of the stock. ARTICLE 8 - SUB-CHAPTER S CORPORATION ------------------------------------- The Corporation may elect to be an S Corporation, as provided in Sub-Chapter S of the Internal Revenue Code of 1986, as amended. AMERILAWYER 343 ALMERIA AVENUE CORAL GABLES, FL 33134 - (305) 445-2700 - (800) 603-3900 - FACSIMILE (305) 447-8900 MAILING ADDRESS - POST OFFICE Box 144479, CORAL GABLES, FL 33114-4479 http://www.ameri1awyer.com HEALTH EXPRESS USA, INC. Page 3 8.1 The shareholders of this Corporation may elect and, if elected, shall continue such election to be an S Corporation as provided in Sub-Chapter S of the Internal Revenue Code of 1986, as amended, unless the shareholders of the Corporation unanimously agree otherwise in writing. 8.2 After this Corporation has elected to be an S Corporation, none of the shareholders of this Corporation, without the written consent of all the shareholders of this Corporation shall take any action, or make any transfer or other disposition of the shareholders' shares of stock in the Corporation, which will result in the termination or revocation of such election to be an S Corporation, as provided in Subchapter S of the Internal Revenue Code of 1986, as amended. 8.3 Once the Corporation has elected to be an S Corporation, each share of stock issued by this Corporation shall contain the following legend: "The shares of stock represented by this certificate cannot be transferred if such transfer would void the election of the Corporation to be taxed under Sub-Chapter S of the Internal Revenue Code of 1986, as amended." ARTICLE 9 - SHAREHOLDERS' RESTRICTIVE AGREEMENT ----------------------------------------------- All of the shares of stock of this Corporation may be subject to a Shareholders' Restrictive Agreement containing numerous restrictions on the rights of shareholders of the Corporation and transferability of the shares of stock of the Corporation. A copy of the Shareholders' Restrictive Agreement, if any, is on file at the principal office of the Corporation. ARTICLE 10 - POWERS OF CORPORATION ---------------------------------- The Corporation shall have the same powers as an individual to do all things necessary or convenient to carry out its business and affairs, subject to any limitations or restrictions imposed by applicable law or these Articles of Incorporation. ARTICLE 11 - TERM OF EXISTENCE ------------------------------ This Corporation shall have perpetual existence. AMERILAWYER 343 ALMERIA AVENUE CORAL GABLES, FL 33134 - (305) 445-2700 - (800) 603-3900 - FACSIMILE (305) 447-8900 MAILING ADDRESS - POST OFFICE Box 144479, CORAL GABLES, FL 33114-4479 http://www.ameri1awyer.com HEALTH EXPRESS USA, INC. Page 4 ARTICLE 12 - REGISTERED OWNER(S) -------------------------------- The Corporation, to the extent permitted by law, shall be entitled to treat the person in whose name any share or right is registered on the books of the Corporation as the owner thereto, for all purposes, and except as may be agreed in writing by the Corporation, the Corporation shall not be bound to recognize any equitable or other claim to, or interest in, such share or right on the part of any other person, whether or not the Corporation shall have notice thereof. ARTICLE 13 - REGISTERED OFFICE AND REGISTERED AGENT --------------------------------------------------- The initial address of registered office of this Corporation is Amerilawyer, located at 343 Almeria Avenue, Coral Gables, Florida 33134. The name and address of the registered agent of this Corporation is Amerilawyer, 343 Almeria Avenue, Coral Gables, Florida 33134. ARTICLE 14 - BYLAWS ------------------- The Board of Director(s) of the Corporation shall have power, without the assent or vote of the shareholders, to make, alter, amend or repeal the Bylaws of the Corporation, but the affirmative vote of a number of Directors equal to a majority of the number who would constitute a full Board of Director(s) at the time of such action shall be necessary to take any action for the making, alteration, amendment or repeal of the Bylaws. ARTICLE 15 - EFFECTIVE DATE --------------------------- These Articles of Incorporation shall be effective immediately upon approval of the Secretary of State, State of Florida. ARTICLE 16 - AMENDMENT ---------------------- The Corporation reserves the right to amend, alter, change or repeal any provision contained in these Articles of Incorporation, or in any amendment hereto, or to add any provision to these Articles of Incorporation or to any amendment hereto, in any manner now or hereafter prescribed or permitted by the provisions of any applicable statute of the State of Florida, and all rights conferred upon shareholders in these Articles of Incorporation or any amendment hereto are granted subject to this reservation. AMERILAWYER 343 ALMERIA AVENUE CORAL GABLES, FL 33134 - (305) 445-2700 - (800) 603-3900 - FACSIMILE (305) 447-8900 MAILING ADDRESS - POST OFFICE Box 144479, CORAL GABLES, FL 33114-4479 http://www.ameri1awyer.com HEALTH EXPRESS USA, INC. Page 5 ARTICLE 17 - INDEMNIFICATION ---------------------------- The Corporation shall indemnify a director or officer of the Corporation who was wholly successful, on the merits or otherwise, in the defense of any proceeding to which the director or officer was a party because the director or officer is or was a director or officer of the Corporation against reasonable attorney fees and expenses incurred by the director or officer in connection with the proceeding. The Corporation may indemnify an individual made a party to a proceeding because the individual is or was a director, officer, employee or agent of the Corporation against liability if authorized in the specific case after determination, in the manner required by the board of directors, that indemnification of the director, officer, employee or agent, as the case may be, is permissible in the circumstances because the director, officer, employee or agent has met the standard of conduct set forth by the board of directors. The indemnification and advancement of attorney fees and expenses for directors, officers, employees and agents of the Corporation shall apply when such persons are serving at the Corporation's request while a director, officer, employee or agent of the Corporation, as the case may be, as a director, officer, partner, trustee, employee or agent of another foreign or domestic Corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, whether or not for profit, as well as in their official capacity with the Corporation. The Corporation also may pay for or reimburse the reasonable attorney fees and expenses incurred by a director, officer, employee or agent of the Corporation who is a party to a proceeding in advance of final disposition of the proceeding. The Corporation also may purchase and maintain insurance on behalf of an individual arising from the individual's status as a director, officer, employee or agent of the Corporation, whether or not the Corporation would have power to indemnify the individual against the same liability under the law. All references in these Articles of Incorporation are deemed to include any amendment or successor thereto. Nothing contained in these Articles of Incorporation shall limit or preclude the exercise of any right relating to indemnification or advance of attorney fees and expenses to any person who is or was a director, officer, employee or agent of the Corporation or the ability of the Corporation otherwise to indemnify or advance expenses to any such person by contract or in any other manner. If any word, clause or sentence of the foregoing provisions regarding indemnification or advancement of the attorney fees or expenses shall be held invalid as contrary to law or public policy, it shall be severable and the provisions remaining shall not be otherwise affected. All references in these Articles of Incorporation to "director", "officer", "employee" and "agent" shall include the heirs, estates, executors, administrators and personal representatives of such persons. AMERILAWYER 343 ALMERIA AVENUE CORAL GABLES, FL 33134 - (305) 445-2700 - (800) 603-3900 - FACSIMILE (305) 447-8900 MAILING ADDRESS - POST OFFICE Box 144479, CORAL GABLES, FL 33114-4479 http://www.ameri1awyer.com IN WITNESS WHEREOF, I have hereunto set my hand and seal, acknowledged and filed the foregoing Articles of Incorporation under the laws of the State of Florida, this July 02 1998 /s/ Elsie Sanchez ----------------- Elsie Sanchez, Incorporator ACCEPTANCE OF REGISTERED AGENT DESIGNATED IN ARTICLES OF INCORPORATION AmeriLawyer, having a business office identical with the registered office of the Corporation name above, and having been designated as the Registered Agent in the above and foregoing Articles of Incorporation, is familiar with and accepts the obligations of the position of Registered Agent under the applicable provisions of the Florida Statutes. AmeriLawyer(R) By: /s/ Natalia Utrera ---------------------- Natalia Utrera, Vice President AMERILAWYER 343 ALMERIA AVENUE CORAL GABLES, FL 33134 - (305) 445-2700 - (800) 603-3900 - FACSIMILE (305) 447-8900 MAILING ADDRESS - POST OFFICE Box 144479, CORAL GABLES, FL 33114-4479 http://www.ameri1awyer.com EX-3.(II) 3 BY LAWS OF HEALTH EXPRESS USA, INC. BY LAWS OF HEALTH EXPRESS USA, INC. AMERILAWYER 343 ALMERIA AVENUE CORAL GABLES, FL 33134 - (305) 445-2700 - (800) 603-3900 - FACSIMILE (305) 447-8900 MAILING ADDRESS - POST OFFICE Box 144479, CORAL GABLES, FL 33114-4479 http://www.ameri1awyer.com ARTICLE I - OFFICES The principal office of the corporation shall be established and maintained as designated in the Articles of Incorporation. The corporation may also have offices at such places within or without the State of Florida as the Board of Directors (hereinafter, "Board") may from time to time establish. ARTICLE II - STOCKHOLDERS 1. PLACE OF MEETINGS. Meetings of the Stockholders shall be held at the principal office of the corporation or at such place within or without the State of Florida as the Board shall authorize. 2. ANNUAL MEETING. The annual meeting of Stockholders shall be held on the first Monday of each year in the month which this Corporation's initial Articles of Incorporation were first filed with the Secretary of State; however, if such day falls on a legal holiday, then on the next business day following at the same time, the Stockholders shall elect a Board and transact such other business as may properly come before the meeting. 3. SPECIAL MEETINGS. Special meetings of the Stockholders may be called by the Board or by the President or at the written request of Stockholders owning a majority of the stock entitled to vote at such meeting. A meeting requested by the Stockholders shall be called for a date not less than ten nor more than sixty days after a request is made. The Secretary shall issue the call for the meeting unless the President, the Board, or the Stockholders shall designate another to make said call. 4. NOTICE OF MEETINGS. Written Notice of each meeting of Stockholders shall state the purpose of the meeting and the time and place of the meeting. Notice shall be mailed to each Stockholder having the right and entitled to vote at such meetings, at his last address as it appears on the records of the corporation, not less than ten nor more than sixty days before the date set for such meeting. Such notice shall be sufficient for the meeting and any adjournment thereof. If any Stockholder shall transfer his stock after notice, it shall not be necessary to notify the transferee. Any Stockholder may waive notice of any meeting either before, during or after the meeting. 5. RECORD DATE. The Board may fix a record date not more than forty days prior to the date set for a meeting of Stockholders as the date of which the Stockholders of record who have the right to and are entitled to notice of and to vote at such meeting and any adjournment thereof shall be determined. Notice that such date has been fixed may be published in the city, town or county where the principal office of the corporation is located and in each city or town where a transfer agent of the stock of the corporation is located. 6. VOTING. Every Stockholder shall be entitled at each meeting and upon each proposal presented at each meeting to one vote for each share of voting stock recorded in his name on the books of the corporation on the record date as fixed by the Board. If no record date was fixed, on the date of the meeting the book of records of Stockholders shall be produced at the meeting upon the request of any Stockholder. Upon demand of any Stockholder, the vote for Directors and the vote upon any question before the meeting, shall be by ballot. All elections for Directors shall be decided by plurality vote; all other questions shall be decided by majority vote. 1 7. QUORUM. The presence, in person or by proxy, of Stockholders holding a majority of the stock of the corporation entitled to vote shall constitute a quorum at all meetings of the Stockholders. In case a quorum shall not be present at any meeting, a majority in interest of the Stockholders entitled to vote thereat present in person or by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until the requisite amount of stock entitled to vote shall be present. At any such adjourned meeting at which the requisite amount of stock entitled to vote be represented, any business may be transacted which might have been transacted at the meeting as originally noticed; but only those Stockholders entitled to vote at the meeting as originally noticed shall be entitled to vote at any adjournment or adjournments thereof. 8. PROXIES. At any Stockholders' meeting or any adjournment thereof, any Stockholder of record having the right and entitled to vote thereat may be represented and vote by proxy appointed in a written instrument. No such proxy shall be voted after three years from the date of the instrument unless the instrument provides for a longer period. In the event that any such instrument provides for two or more persons to act as proxies, a majority of such persons present at the meeting, or if only one be present, that one, shall have all the powers conferred by the instrument upon all persons so designated unless the instrument shall otherwise provide. 9. STOCKHOLDER LIST. After fixing a record date for a meeting, the corporation shall prepare an alphabetical list of the names of all its Stockholders who are entitled to notice of a Stockholders' meeting. Such list shall be arranged by voting group with the names and addresses of, and the number and class and series if any, of shares held by each. This list shall be available for inspection by any Stockholder for a period of ten days prior to the meeting. ARTICLE III - DIRECTORS 1. BOARD OF DIRECTORS. The business of the corporation shall be managed and its corporate powers exercised by a Board each of whom shall be of full age. It shall not be necessary for Directors to be Stockholders. The number of Director(s) shall be determined by the Stockholders at their annual meeting. 2. ELECTION AND TERM OF DIRECTORS. Directors shall be elected at the annual meeting of Stockholders and each Director elected shall hold office until his successor has been elected and qualified, or until the Director's prior resignation or removal. 3. VACANCIES. If the office of any Director, member of a committee or other office becomes vacant, the remaining Directors in office, by a majority vote, may appoint any qualified person to fill such vacancy, who shall hold office for the unexpired term and until a successor shall be duly chosen. 4. REMOVAL OF DIRECTORS. Any or all of the Directors may be removed with or without cause by vote of a majority of all the stock outstanding and entitled to vote at a special meeting of Stockholders called for that purpose. 5. NEWLY CREATED DIRECTORSHIPS. The number of Directors may be increased by amendment of these By-laws by the affirmative vote of a majority of the Directors, though less than a quorum, or, by the affirmative vote of a majority in interest of the Stockholders, at the annual meeting or at a 2 special meeting called for that purpose, and by like vote the additional Directors may be chosen at such meeting to hold office until the next annual election and until their successors are elected and qualify. 6. RESIGNATION. A Director may resign at any time by giving written notice to the Board, the President or the Secretary of the Corporation. Unless otherwise specified in the notice, the resignation shall take effect upon receipt thereof by the Board or such officer, and the acceptance of the resignation shall not be necessary to make it effective. 7. QUORUM OF DIRECTORS. A majority of the Directors shall constitute a quorum for the transaction of business. If at any meeting of the Board there shall be less than a quorum present, a majority of those present may adjourn the meeting until a quorum is obtained and no further notice thereof need be given other than by announcement at the meeting which shall be so adjourned. 8. PLACE AND TIME OF BOARD MEETINGS. The Board may hold its meetings at the office of the corporation or at such other places either within or without the State of Florida as it may from time to time determine. 9. REGULAR ANNUAL MEETING. A regular meeting of the Board shall be held immediately following the annual meeting of the Stockholders at the place of such annual meeting of Stockholders. 10. NOTICE OF MEETINGS OF THE BOARD. Regular meetings of the Board may be held without notice at such time and place as it shall from time to time determine. Special meetings of the Board shall be held upon notice to the Directors and may be called by the President upon three days notice to each Director either personally or by mail or by wire or by facsimile; special meetings shall be called by the President or by the Secretary in a like manner on written request by two Directors. Notice of a meeting need not be given to any Director who submits a Waiver of Notice whether before or after the meeting or who attends the meeting without protesting prior thereto or at its commencement, the lack of notice to him. 11. EXECUTIVE AND OTHER COMMITTEES. The Board, by resolution, may designate two or more of their number to one or more committees, which, to the extent provided in said resolution or these By-laws may exercise the powers of the Board in the management of the business of the corporation. 12. COMPENSATION. No compensation shall be paid to Directors, as such for their services, but by resolution of the Board a fixed sum and expenses for actual attendance, at each regular or special meeting of the Board may be authorized. Nothing herein contained shall be construed to preclude any Director from serving the corporation in any other capacity and receiving compensation therefor. ARTICLE IV - OFFICERS 1. OFFICERS, ELECTION AND TERM. 1.1 The Board may elect or appoint a Chairman, a President, one or more Vice Presidents, a Secretary, an Assistant Secretary, a Treasurer and an Assistant Treasurer and such other officers as it may determine who shall have duties and powers as hereinafter provided. 3 1.2 All officers shall be elected or appointed to hold office until the meeting of the Board following the next annual meeting of Stockholders and until their successors have been elected or appointed and qualified. 2. REMOVAL, RESIGNATION, SALARY, ETC.. 2.1 Any officer elected or appointed by the Board may be removed by the Board with or without cause. 2.2 In the event of the death, resignation or removal of an officer, the Board in its discretion. may elect or appoint a successor to fill the unexpired term. 2.3 Any two or more offices may be held by the same person. 2.4 The salaries of all officers shall be fixed by the Board. 2.5 The Directors may require any officer to give security for the faithful performance of his duties. 3. CHAIRMAN. The Chairman of the Board, if one be elected, shall preside at all meetings of the Board and shall have and perform such other duties from time to time as may be assigned to him by the Board or the executive committee. 4. PRESIDENT. The President may be the chief executive officer of the corporation and shall have the general powers and duties of supervision and management usually vested in the office of the President of the corporation. The President shall preside at all meetings of the Stockholders if present thereat, and in the absence or non-election of the Chairman of the Board, at all meetings of the Board, and shall have general supervision, direction and control of the business of the corporation. Except as the Board shall authorize the execution thereof in some other manner, the President shall execute bonds, mortgages and other contracts in behalf of the corporation and shall cause the seal to be affixed to any instrument requiring it and when so affixed, the seal shall be attested by the signature of the Secretary or the Treasurer or an Assistant Secretary or an Assistant Treasurer. 5. VICE PRESIDENTS. During the absence or disability of the President, the Vice-President, or if there be more than one, the executive Vice-President, shall have all the powers and functions of the President. Each Vice-President shall perform such other duties as the Board shall prescribe. 6. SECRETARY. The Secretary shall attend all meetings of the Board and of the Stockholders, record all votes and minutes of all proceedings in a book to kept for that purpose, give or cause to be given notice of all meetings of Stockholders and of meetings and special meetings of the Board, keep in safe custody the seal of the corporation and affix it to any instrument when authorized by the Board or the President, when required, prepare or cause to be prepared and available at each meeting of Stockholders a certified list in alphabetical order of the names of Stockholders entitled to vote thereat, indicating the number of shares of each respective class held by each, keep all the documents and records of the corporation as required by law or otherwise in a proper and safe manner, and perform such other duties as may be prescribed by the Board or assigned by the President. 7. ASSISTANT SECRETARIES. During the absence or disability of the Secretary, the Assistant-Secretary, or if there are more than one, the one so designated by the Secretary or by the Board, shall have all the powers and functions of the Secretary. 4 8. TREASURER. The Treasurer shall have the custody of the corporate funds and securities, keep full and accurate accounts of receipts and disbursements in the corporate books, deposit all money and other valuables in the name and to the credit of the corporation in such depositories as may be designated by the Board, disburse the funds of the corporation as may be ordered or authorized by the Board and preserve proper vouchers for such disbursements, render to the President and Board at the regular meetings of the Board, or whenever they require it, an account of all the transactions made as Treasurer and of the financial condition of the corporation. The Treasurer shall also render a full financial report at the annual meeting of the Stockholders if so requested. The Treasurer may request and shall be furnished by all corporate officers and agents with such reports and statements as he may require as to all financial transactions of the corporation, and perform such other duties as are designated by these By-laws or as from time to time are assigned by the Board. 9. ASSISTANT TREASURERS. During the absence or disability of the Treasurer, the Assistant Treasurer, or if there be more than one, the one so designated by the Treasurer or the Board, shall have all the powers and functions of the Treasurer. 10. SURETIES AND BONDS. In case the Board shall so require, any officer or agent of the corporation shall execute to the corporation a bond in such sum and with such surety or sureties as the Board may direct, conditioned upon the faithful performance of duties to the corporation and including responsibility for negligence and for the accounting of all property, funds or securities of the corporation which the officer or agent may be responsible for. ARTICLE V - CERTIFICATES FOR SHARES 1. CERTIFICATES. The shares of the corporation shall be represented by certificates. They shall be numbered and entered in the books of the corporation as they are issued. They shall exhibit the holder's name, the number of shares and shall be signed by the President and Secretary and shall bear the corporate seal. When such certificates are signed by the transfer agent or an assistant transfer agent or by a transfer clerk acting on behalf of the corporation and a registrar, the signatures of such officers may be facsimiles. 2. LOST OR DESTROYED CERTIFICATES. The Board may direct a new certificate or certificates to be issued in place of any certificates theretofore issued by the corporation alleged to have been lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate to be lost or destroyed. When authorizing such issue of a new certificate or certificates, the Board may, in its discretion as a condition preceding the issuance thereof, require the owner of such lost or destroyed certificate or certificates, or the owner's legal representative, to advertise the same in such manner as it shall require and/or give the corporation a bond in such sum and with such surety or sureties as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost or destroyed. 3. TRANSFER OF SHARES. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, and cancel the old certificate; every such transfer shall be entered on the transfer book of the corporation which shall be kept at its principal office. Whenever a transfer shall be made for 5 collateral security, and not absolutely, it shall be so expressed in the entry of the transfer ledger. No transfer shall be made within ten days next preceding the annual meeting of the Stockholders. 4. CLOSING TRANSFER BOOKS. The Board shall have the power to close the share transfer books of the corporation for a period of not more than ten days during the thirty day period immediately proceeding 4.1 any Stockholder's meeting, or 4.2 any date upon which Stockholders shall be called upon to or have a right to take action without a meeting, or 4.3 any date fixed for the payment of a dividend or any other form of distribution, and only those Stockholders of record at the time the transfer books are closed, shall be recognized as such for the purpose of 4.3.1 receiving notice of or voting at such meeting or 4.3.2 allowing them to take appropriate action, or 4.3.3 entitling them to receive any dividend or other form of distribution. ARTICLE VI - DIVIDENDS The Board may out of funds legally available, at any regular or special meeting, declare dividends upon the capital stock of the corporation as and when it deems expedient. Before declaring any dividend there may be set apart out of any funds of the corporation available for dividends, such sum or sums as the Board from time to time in their discretion deem proper for working capital or as a reserve fund to meet contingencies or for equalizing dividends for such other purposes as the Board shall deem conducive to the interest of the corporation. ARTICLE VII - CORPORATE SEAL The seal of the corporation shall bear the name of the corporation, the year of its organization and the words "CORPORATE SEAL, FLORIDA" or "OFFICIAL CORPORATE SEAL, FLORIDA". The seal may be used by causing it to be impressed directly on the instrument or writing to be sealed, or upon adhesive substance affixed thereto. The seal on the certificates for shares or on any corporate obligation for the payment of money may be facsimile, engraved or printed. ARTICLE VIII - EXECUTION OF INSTRUMENTS All corporate instruments and documents shall be signed or countersigned, executed, verified or acknowledged by such officer or officers or other person or persons as the Board may from time to time designate. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation shall be signed by such officer or officers, agent or agents of the corporation, and in such manner as shall be determined from time to time by resolution of the Board. 6 ARTICLE IX - FISCAL YEAR The fiscal year shall begin on the first day of each year. ARTICLE X - NOTICE AND WAIVER OF NOTICE 1. SUFFICIENCY OF NOTICE. Whenever any notice is required by these By-laws to be given, personal notice is not meant unless expressly so stated, and any notice so required shall be deemed to be sufficient if given by depositing the same in a United States Postal Service post office mail collecting container in a sealed postage-paid wrapper, addressed to the person entitled thereto at the last known post office address, and such notice shall be deemed to have been given on the day of such mailing. Stockholders not entitled to vote shall not be entitled to receive notice of any meetings except as otherwise provided by Statute. 2. WAIVERS. Whenever any notice whatever is required to be given under the provisions of any law, or under the provisions of the Articles of incorporation of the corporation or these By-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE XI - CONSTRUCTION Whenever a conflict arises between the language of these By-laws and the Articles of Incorporation, the Articles of Incorporation shall govern. ARTICLE XII - CLOSE CORPORATION 1. CONDUCT OF BUSINESS WITHOUT MEETINGS. Any action of the Stockholders, Directors or committee may be taken without a meeting of consent in writing, setting forth the action so taken, shall be signed by all persons who would be entitled to vote on such action at a meeting and filed with the Secretary of the corporation as part of the proceedings of the Stockholders, Director or committees as the case may be. 2. MANAGEMENT BY STOCKHOLDERS. In the event the Stockholders are named in the Articles of Incorporation and are empowered therein to manage the affairs of the corporation in lieu of Directors, the Stockholders of the corporation shall be deemed Directors for the purposes of these By-laws and wherever the words "Directors", "Board of Directors" or "Board" appear in these By-laws those words shall be taken to mean Stockholders. 7 3. MANAGEMENT BY A BOARD. The Stockholders may, by majority vote, create a Board to manage the business of the corporation and exercise its corporate powers. ARTICLE XIII - AMENDMENTS These By-laws may be altered or repealed and By-laws may be made at any annual meeting of the Stockholders or at any special meeting thereof if notice of the proposed alteration or repeal to be made is contained in the notice of such special meeting, by the affirmative vote of a majority of the stock issued and outstanding and entitled to vote thereat, or by the affirmative vote of a majority of the Board if notice of the proposed alteration or repeal to be made is contained in the notice of such special meeting. ARTICLE XIV - EMERGENCY BY-LAWS 1. CONDUCT OF BUSINESS WITHOUT MEETINGS. Pursuant to Florida Statue 607.0207 the corporation adopts the following By-laws, which shall be effective only if a quorum of the Directors of the corporation cannot be readily assembled because of some catastrophic event. 2. CALLING A MEETING. In the event of such catastrophic event, any member of the Board shall be authorized to call a meeting of the Board. Such member calling an emergency meeting shall use any means of communication at their disposal to notify all other members of the Board of such meeting. 3. QUORUM. Any one member of the Board shall constitute a quorum of the Board. The members of the Board meeting during such an emergency may select any person or persons as additional Board members, officers or agents of the corporation. 4. INDEMNIFICATION. The members of such emergency Board are authorized to utilize any means at their disposal to preserve and protect the assets of the corporation. Any action taken in good faith and acted upon in accordance with these By-laws shall bind the corporation; and the corporation shall hold harmless any Director, officer, employee or agent who undertakes an action pursuant to these By-laws. 5. TERMINATION OF EMERGENCY BY-LAWS. These emergency By-laws shall not be effective at the end of the emergency period. 8 EX-10 4 BUSINESS PROPERTY LEASE BUSINESS PROPERTY LEASE This Lease, executed this 25th day of January, 1999 between SAUL STRACHMAN, 1261-98th Street, Bay Harbor Islands, FL 33154 (954) 722-5542 (305) 866-3747..........., the Lessor, and THE HEALTH EXPRESS GRILL, INC., 1901 W. Cypress Creek Road, Suite 100, Ft. Lauderdale, FL. 33309 (954) 776-5401, the LESSEE: WITNESSETH: The Lessor, for and in consideration of the rent herein reserved to be paid by the Lessee, and in consideration of the covenants herein to be kept and performed by the Lessee, does hereby lease and demise unto the said Lessee the following described premises, situated, lying and being in the City of Oakland Park, County of Broward, State of Florida: A building situated at the corner of N.E. 15th Terrace and E. Commercial Boulevard, Oakland Park, Florida. Said building having the street address of 1538-A East Commercial Boulevard, and as depicted on a rough sketch attached hereto and entitled Exhibit "A". Said building containing approximately 3,129 square feet of area, which includes the overhang areas also depicted on Exhibit "A". TO HAVE AND TO HOLD the said premises unto the said Lessee, from the 1st day of February A.D. 1999, to and including the 31st day of January, A.D. 2004 the Lessee yielding and paying to the Lessor the following rental: The entire rental for this period to be Two Hundred Six Thousand Six. Hundred Dollars $206,600, payable as follows: $7,500.00 upon the execution and delivery of the within Lease by all parties hereto, which said sum shall represent rents in advance in the amounts of $3,250.00 and $4,250.00, for the months of June 1999, and January 2004 respectively. (SEE PARAGRAPH NO. 25 HEREINAFTER FOR PROVISIONS CONCERNING FREE RENTAL); $3,250.00 on July 1,1999; and $3,250.00 on the lst day of each and every month thereafter, up to and including January 2000; $3,350.00 on February 1, 2000; and $3,350.00 on the 1st day of each and every month thereafter, up to and including January 2001; $3,450.00 on February 1, 2001 and $3,450.00 on the lst day of each and every month thereafter, up to and including January 2002; $4,000.00 on February 1,2002, and $4,000.00 on the lst day of each and every month thereafter, up to and including January 2003; $4,250.00 on February 1, 2003, and $4,250.00 on the lst day of each and every month thereafter, up to and including January 2004. The Lessee agrees to keep, conform to and abide by each and every of the following which are hereby made conditions of this lease. 1. To pay the rent herein reserved at the times and in the manner aforesaid, and should said rent herein provided at any time remain due and unpaid for a space of five (5) days after same shall become due, the Lessor may, at Lessor's option, consider the Lessee a tenant at sufferance and Lessor may immediately re-enter upon said premises and the entire rent for the remainder of the entire term sha11 at once become due and payable and may forthwith be collected by distress or otherwise. 2. To pay all charges for gas, electricity and other illuminant and power, and for water used upon and in connection with the said demised premises not more than ten (10) days after the same shall become due and payable. 3. That said Lessee may not assign Lessee's interest in this lease, nor underlet the whole or any part of said premises, nor shall the same be used for any other purpose than. See paragraph no. 24 hereinafter following re: provisions concerning uses permitted without first having obtained the written consent to such assignment or underletting, or to such change of purpose for the use of the premises from the Lessor and the said Lessee further covenants that the said premises will not be used for any purpose that will invalidate any policies of insurance now or hereafter written on the building on which said premises are located, or will increase the rate of premium thereof. Lessor's consent shall not be unreasonably withheld. 4. To use said premises in pursuance with all laws and ordinances now or hereinafter applicable; also to exercise all reasonable care in the use of halls, stairs, corridors, toilets and other fixtures and parts of said premises used in common with other tenants in said building which may be necessary for the preservation of the property and comfort of the other tenants. 5. Not to permit or suffer any noise, disturbance or nuisance whatsoever on said premises detrimental to same or annoying to the neighbors, and the Lessee acknowledges that the premises have been received in thoroughly good order, tenantable condition and repair, of which the execution of this lease, and taking possession thereunder shall be conclusive evidence; and that no representation as to the condition of said premises have been made by the Lessor, or Lessor's agents, and that no obligation as to the repairing, adding to, or improving said premises has been assumed by the Lessor, and that no oral arrangements have been entered into in consideration of making this lease and that said lease contains a full statement of the obligation of both parties hereto. 6. That the Lessee will keep in good condition during the continuation of the term herein described the interior of said demised premises, and every part thereof, including the plumbing, doors and windows, and awnings, if any (which said awnings, if any, the Lessor shall not be called upon to furnish or replace during the term of the lease), and will keep the same in good, sound, clean condition and repair, ordinary wear and tear, fire, hurricane or other act of God alone excepted, and will not suffer or permit any strip or waste of demised premises, and that the said Lessee shall within ten days after entry and occupancy of said premises cause to be written a policy of plate glass insurance in a company to be approved by the Lessor, insuring all of the plate glass in said premises, which said policy will bear an endorsement thereon, naming the Lessor as the party to whom all payments that may accrue from said policy of insurance shall be payable and should the Lessee fail and omit to cause said policy insurance to be written, and should the Lessor waive Lessor's option to cancel said lease for breach of this covenant, then, and in that event, said Lessee shall be responsible for any breakage that may occur from any cause whatsoever to the plate glass windows, and agrees to replace the same at Lessee's cost. If the Lessee desires to furnish awnings, he shall first obtain the written approval of the Lessor as to style, color and quality of material. Lessee shall also be responsible for damage to the demised premises caused by burglary or attempt thereat. 7. Not to make any alterations or changes in the demised premises without the written consent of the Lessor, and all additions, fixtures, or improvements, except only store and office furniture and fixtures which shall be readily removable without injury to the premises, shall be and remain a part of the premises at the expiration of this lease. 8. That the Lessor, or Lessor's agent, may at any reasonable time enter and view said premises, and make repairs, if Lessor should elect to do so. 9. That if the Lessee shall not pay the rents herein reserved at the time and in the manner stated, or shall fail to keep and perform any other condition, stipulation or agreement herein contained, on the part of the Lessee to be kept and performed, or if the Lessee shall suffer to be filed against Lessee an involuntary petition in bankruptcy or shall be adjudged voluntary or involuntary bankrupt or make an assignment for the benefit of creditors, or should there be appointed a Receiver to take charge of the premises either in the state courts, or in the Federal courts, then, in any of such events, the Lessor may, at lessor's option, terminate and end this lease and re-enter upon the property, whereupon the term hereby granted, and at the Lessor's option all right, title and interest under it, shall end and the Lessee become a tenant at sufferance: or else said Lessor may, at Lessor's option, elect to declare the entire rent for the balance of the term, or any part thereof, due and payable forthwith, and may proceed to collect the same by distress or otherwise, and thereupon said term shall terminate, at the option of the Lessor, or else the said Lessor may take possession of the premises and rent the same for the account of the Lessee, the exercise of any of which options herein contained shall not be deemed the exclusive Lessor's remedy; the expression "entire rent for the balance of the term" as used herein, shall mean all of this rent prescribed to be paid by the Lessee unto the Lessor for the full term of the lease, less, however, any payments that shall have been made on account of any pursuant to the terms of said lease. 10. If the Lessee shall abandon, vacate or remove the major portion of the goods, wares and merchandise usually kept at the option of the lessor said premises when the same is open for business and shall cease doing business in said premises, then and in such event, lease shall immediately become cancelled and null and void, and all payments made by said Lessee shall be retained by the Lessor as payment in full for the period of time the premises are occupied by the Lessee and Lessee shall not be entitled to any monies so paid by him, even though such payment is for time subsequent to such closing of the store and removal of the goods, wares and merchandise. 11. That the Lessee pledges with and assigns unto the Lessor all the furniture and fixtures, goods and chattels of the said Lessee, which may be brought or put on said premises as security for the payment of the rent herein reserved, and agrees that the Lessor's lien for the payment of said rent may be enforced by distress, foreclosure or otherwise, at the option of the said Lessor, and Lessee agrees that such lien is granted to the Lessor and vested in said Lessor, and the Lessee further agrees that, in case of the failure of the said Lessee to pay the rent herein reserved when the same shall become due, and it becomes necessary for the Lessor to collect said rent by suit or through an attorney, the Lessee will pay the Lessor a reasonable attorney's fee not to exceed 10% of the amount so collected or found due, together with all costs and charges thereof. 12. That upon the performance by the Lessee of all the covenants and agreements hereinabove set forth, in case the demised premises, or any part thereof, shall at any time be destroyed or so damaged by fire or other elements as to be unfit for occupancy or use by the Lessee, then and in that event, the Lessor shall have the option (1) to terminate this lease, (2) to repair and rebuild the said premises, remitting rents hereby reserved, or a fair and just proportion thereof, according to the damage sustained, until the said premises are reinstated and made fit for occupancy and use; and in the event the Lessor elects to exercise the option to repair and rebuild, the same shall be done and completed within a reasonable time. 13. That the Lessee takes all risk of any damage to Lessee's property that may occur by reason of water or the bursting or leaking of any pipes or waste water about said premises, or from any act of negligence of any co-tenant or occupants of the building, or of any other person, or fire, or hurricane, or other act of God, or from any cause whatsoever. 14. That the Lessee shall not attach any signs to the premises, or place any lettering on the plate glass windows, unless such signs, and such lettering, be of a type, kind, character and description to be approved by the Lessor, in the interests of having a uniform system of lettering and display signs on all of the stores in the building of which the demised premises are a part. 15. If the said Lessee shall occupy said premises with or without the consent of the lessor after the expiration of this lease, and the rent accepted from said Lessee, such occupancy and payment shall be construed as an extension of this lease for the term of one month only from the date of such expiration; and occupation thereafter shall operate to extend the lease from month to month only unless other terms of such extension are endorsed herein or hereon in writing and signed by the parties hereto. 16. That Lessee shall indemnify and save harmless the said Lessor from and against any and all claims, suits, actions, damages, and/or causes of action arising during the term of this lease for any personal injury, loss of life and/or damage to property sustained in or about the leased premises, by reason or as a result of the Lessee's occupancy thereof, and from and against any orders, judgments, and/or decrees which may be entered thereon, and from and against all costs, counsel fees, expenses and liabilities incurred in and about the defense of any such claim and the investigation thereof; provided, however, that before the Lessee shall become liable for all of said costs, counsel fees, expenses and liabilities, Lessee shall be given notice in writing that the same are about to be incurred and shall have the option itself to make the necessary investigation and employ counsel of Lessee's own selection but satisfactory to the Lessor, for the necessary defense of any claims. 17. It is further agreed and understood that the Lessee agrees that this lease shall be subject and subordinate to any mortgage or deed of trust now on premises, or which may hereafter be made on account of any proposed loan to be placed on said premises by the Lessor to the full extent of all debts and charges secured thereby; and to any renewals and extension of all or any part thereof, which said Lessor may hereafter at any time elect to place on said premises, and said Lessee agrees upon request to hereafter execute any paper or papers which the counsel for the Lessor deems necessary to accomplish that end, and in default of the Lessee's so doing, that the Lessor is hereby empowered to execute such paper or papers in the name of the Lessee and as the act and deed of said Lessee and this authority is declared to be coupled with an interest and not revocable. No estate for years is created by this lease. 2 18. At the expiration of said term, said Lessee shall quietly and peaceably deliver said premises to the Lessor in the same repair and condition in which they were received, ordinary wear and tear excepted. 19. The Lessor hereby covenants with the Lessee that, upon the performance of the Lessee of all the conditions hereinabove set forth on the part of the Lessee to be kept and performed, Lessee may quietly have, hold, occupy and use the above described premises without interruption by the Lessor; provided that, upon the breach of any of the covenants, conditions, and stipulations herein contained to be kept and performed by the Lessee, the Lessor may immediately without notice and without the necessity of legal process re-enter said premises, and, thereupon, at the Lessor's option, said lease shall forthwith be terminated and/or the Lessor may exercise any of the options hereinbefore provided for the Lessor's benefit in case of default on the part of the Lessee. 20. The Lessor further covenants that Lessor will keep the exterior of the building in which are situated the demised premises in good repair, and the portion of building intended to be designated as the exterior shall exclude those portions herein before covenanted and agreed by the Lessee to be kept in repair, but the Lessee shall give to the Lessor seven (7) days written notice of needed repairs and the Lessor shall have a reasonable time thereafter to make them. 21. The terms Lessor and Lessee as herein contained shall include singular and/or plural masculine, feminine, and/or neuter, heirs, successors, personal representatives and/or assigns wherever the context so requires or admits. 22. The failure of the Lessor in one or more instances to insist upon strict performance of observance of one or more of the covenants or conditions hereof or to exercise any remedy, privilege or option herein conferred upon or reserved to the Lessor, shall not operate or be construed as a relinquishment or waiver for the future of such covenant or condition or of the right to enforce the same or to exercise such privilege, option, or remedy, but the same shall continue in full force and effect. The receipt by the Lessor of rent, or additional rent or any other payment required to be made by the Lessee, or any part thereof, shall not be a waiver of any other additional rent or payment then due, nor shall such receipt, though with knowledge of the breach of any covenant or condition hereof, operate as or be deemed to be a waiver of such breach, and no waiver by the Lessor of any of the provisions hereof, or any of the Lessor's rights, remedies, privileges or options hereunder shall be deemed to have been made unless made by the Lessor in writing. If the Lessor shall consent to the assignment of this lease or to a subletting of all or a part of the demised premises, no further assignment or subletting shall be made without the written consent of the Lessor first obtained. No surrender of the demised premises for the remainder of the term hereof shall be valid unless accepted by the Lessor in writing. 23. Lessee shall pay to the Lessor, in addition to the rent, the present Florida sales tax of 6% of the rent, and any other future taxes, and/or fees, and/or charges which may be imposed upon the rent reserved hereunder by any governmental authority acting under present or future law. Such sales tax being payable to the Lessor when rent is payable. 24. A health food type restaurant, including the accessory retail sales of packaged health foods to Customers. It is understood and agreed that the demised premises is situated in the City of Oakland Park, and is subject to Oakland Park B-1 Zoning. To the best of the Lessor's knowledge and belief, the uses set forth herein are permissable under the existing zoning. 25. It is understood and agreed the Lessee shall be granted free rent for the months of February, March, April, and May, 1999. Therefore, the total rental of $206,600.00 for the initial term, as set forth on page 1 of the within Lease is an amount for 56 months, and allows for free rent for the said first four(4) months of the term. 26. Lessee shall carry public liability insurance covering for bodily injury and property damage in limits of at least $100,000 for 1 person, $300,000 for more than 1 person, and $50,000 for property damage. Lessee shall provide Lessor with a certificate of insurance, evidencing that said coverage is in force. 27. Lessee shall arrange for and pay for adequate removal of waste, in connection with Lessee's operation. At the present time there is a concrete block enclosure behind the demised premises at the back end of the lot. Lessee agrees to contract with the City of Oakland Park, or a private hauler, (if the City of Oakland Park permits), for placement of a dumpster inside the concrete enclosure, or other appropriate approved container for the temporary storage of waste. Lessee shall also contract for and arrange for the frequent required removal of the stored waste, by the City or a private hauler. Lessee agrees to keep the exterior of the demised premises clean, and not to permit the storage or discarding of waste or debris outside the demised premises. 28. Lessor shall turn over the demised premises to the Lessee with all existing equipment in good operating condition. Such existing equipment meaning basically to include water piping, toilet fixtures, drains, electric wiring, electric fixtures, (not including signs), air conditioning equipment, doors, windows, roof, and walls. Following such physical occupancy by the Lessee, should the Lessee find any of the foregoing malfunctioning, Lessee shall so notify Lessor, and Lessor shall, as soon as reasonably possible following such notification, make the necessary repairs, and/or replacement to correct such malfunctioning equipment. Lessor shall give the Lessee a "warranty period" of 30 days following the date upon which Lessee takes physical possession. Following this 30-day period, Lessee shall maintain the entire interior of the demised premises, (not including roof or exterior walls), at Lessee's sole cost and expense. Notwithstanding anything contained hereinabove, it is understood that the Lessor, at Lessor's expense, shall maintain the exterior walls, roof, sidewalks and parking lot, at all times during the term of the within Lease and any renewals of same. 3 29. Excepting for any required repairs by the Lessor, as set forth specifically in Paragraph No. 28 hereinbefore, Lessee shall accept the demised premises "as is". Lessor shall not be required to make any exterior or interior improvements of any kind neither during the initial term hereof, nor during and renewals of same. 30. Lessee shall make no major alterations to the demised premises, nor any structural changes, nor any penetrations of the exterior walls or roof without the prior written approval of the Lessor. (SEE PARAGRAPH NO. 36 HEREINAFTER) 31. In addition to the payment of rent and sales taxes, Lessee shall pay a monthly estimate of 1/12 of the total annual real estate taxes on the demised premises, plus 1/12 of the total annual hazard and liability insurance premiums on the demised premises, plus 1/12 of the total annual flood insurance premium on the demised premises. The real estate taxes for 1998 which have been paid was 8,066.70. 1/12 of this amount is $672.23. The annual hazard and liability insurance premium on the demised premises is projected to be $1,031.00 by Lessor's Insurance Company. 1/12 of this amount is $85.92. The projected annual flood insurance premium on the demised premises is $500.00. 1/12 of this amount is $41.67. The total of these three amounts is $799.82. Rounded off this would be $800.00 per month. It is agreed that, in addition to the base rent and sales taxes hereinbefore provided for, the Lessee shall also pay to the Lessor the real estate taxes and insurance covering the demised premises. The foregoing is an accounting of the amounts for these items at present. Accordingly, commencing with July 1, 1999, and continuing through the entire lease term, and all renewals of same, Lessee shall pay to the Lessor the estimated monthly amounts of these items. Same shall be paid for each month at the same time that rent is paid. Specifically, commencing with July 1, 1999, Lessee shall pay to the Lessor, in addition to the base rent and sales taxes, $800.00 each month during the first year of the within lease term. Within thirty days following the completion of the first year, Lessor shall provide Lessee with an accounting of the actual total paid by the Lessor for real estate taxes, and insurance for 1998/1999. If such accounting reveals that the total paid by the Lessor is greater than the total of the monthly payments made by the Lessee, such deficiency shall be added to the total actually paid by the Lessor for 1998/1999 and this total shall then be considered to be the new estimate for the next year (1999/2000) and 1/12 of this new total shall become the monthly Lessee contribution commencing with February 2000. If the accounting reveals that the Lessee overpaid the actual amount for 1998/1999, this overpayment shall be deducted from the total actually paid by the Lessee to the Lessor for the first year, and the resulting total shall become the new estimate for 1999/2000 and 1/12 of this sum shall become the monthly Lessee contribution commencing with February 2000. In like fashion, for each successive year of the within lease term, and all renewals of same the above method shall be utilized to develop the Lessee's monthly payment of real estate taxes and insurance. The only deviation from the foregoing will be at the end of the initial term hereof, in the event the Lessee does not exercise its renewal option(s), or at the end of any option period without further renewal. In such cases any annual overpayments or annual underpayments will be paid and/or reimbursed as the case may be following the accounting. 32. It is understood and agreed that the demised premises is part of an existing shopping center, and is situated on a corner lot. Lessee shall be permitted to utilize the parking spaces immediately surrounding the demised premises, and the existing parking spaces in the adjacent shopping center for parking for the Lessee's customers. Such parking privilege shall be in common with other tenants occupying the adjacent shopping center. It is understood that the Lessor provides all of the parking spaces for the benefit of all of the tenants in common, and no tenant has, or will have an exclusive use for any specific parking spaces. It is further understood and agreed that the Lessee herein shall use reasonably that number of spaces that normal business requires. The Lessor shall retain the right to control the number of spaces that all tenants utilize, so that no one tenant can unfairly consume an unreasonable number of spaces. It is further understood and agreed that the Lessee will direct its employees to park in the rear of the center, leaving closest spaces for the customers of all tenants of the shopping center. 4 33. Further to Paragraph No. 14 hereinbefore, resigns. At the present time there is an existing pylon sign at the northeast corner of the corner lot on which the demised premises is located. Lessor makes no representation concerning the condition of this sign, nor does the Lessor guarantee the proper operation and/or illumination of same. It is on an electric circuit from the panel in the demised premises. (Elsewhere in the within lease the Lessor does make representation concerning existing circuits and water lines etc). Further Lessor makes no representation about what copy of lettering or colors is required by City Sign Code. Lessee shall contact the City Building and Zoning Department and be guided by their regulations. Lessee shall have the exclusive use of this sign with the understanding that Lessee, at Lessee's expense shall maintain same. Further, as with any other signs which Lessee may desire to install or attach in or about the exterior of the demised premises, Lessee shall provide Lessor with a sketch of such changes or additions for Lessor's approval. Lessor shall not withhold approval unreasonably. 34. Lessee shall have three lease renewal options of three years each. All of the renewal options shall be on the same terms, conditions, and covenants as during the initial term hereof, except for the renewal period rents which are set forth hereinbelow. Lessee's right to exercise the renewal options shall be conditioned on the Lease being in good standing and that the options be exercised successively as follows: (a) The first renewal option - February 1, 2004 through January 31, 2007. If the Lessee shall desire to exercise this first renewal option, Lessee shall so notify Lessor in writing on or before November 1, 2003 and accompany such notice with a check in the amount of $250.00. Such sum will be added to the $4,250.00 security deposited hereunder, and the then $4,500.00 shall be held as a security deposit during the first renewal term. The total base rent for this first renewal term shall be $162,000.00 and shall be paid in monthly payments of $4,500.00 on the first day of each and every month commencing with February 2004 and continuing up to and including January, 2007. Lessee shall additionally pay with the base rent the sales taxes which may be then imposed on same, plus the monthly estimate for real estate taxes and insurance, as provided for in Paragraph No. 31 hereinbefore. (b) Second renewal option - February 1, 2007 through January 31, 2010. If the Lessee shall have exercised the first renewal option as set forth above, and Lessee shall desire to exercise this second renewal option, Lessee shall so notify Lessor in writing on or before November 1, 2006 and accompany such notice with a check in the amount of $500.00. Such sum will be added to the $4,500.00 security deposit then being held by the Lessor, and the then $5,000.00 shall be held as a security deposit during this second renewal term. The total base rent for this second renewal term shall be $180,000.00 and shall paid in monthly payments of $5,000.00 on the first day of each and every month commencing with February 2007 and continuing up to and including January 2010. Lessee shall additionally pay with the base rent the sales taxes which may be then imposed by Governmental Authority on same, plus the monthly estimate for real estate taxes and insurance, as set forth in Paragraph 31 hereinbefore. (c) Third renewal option- February 1,2010 through January 31, 2013. If the Lessee shall have exercised both the first and second renewal options as provided for above, and Lessee shall desire to exercise this third renewal option, Lessee shall so notify Lessor in writing on or before November 1, 2009 and accompany such notice with a check in the amount of $500.00. Such sum will be added to the $5,000.00 security deposit then being held by the Lessor, and the then $5,500.00 shall be held as a security deposit during this third renewal term. The total base rent for this third renewal term shall be $198,000.00 and shall be payable in monthly payments of $5,500.00 on the first day of each and every month commencing with February 2010 and continuing up to and including January 2013. Lessee shall additionally pay with the base rent the sales taxes which may be then imposed by Governmental Authority on same, plus the monthly estimate for real estate taxes, and insurance, as set forth in Paragraph No. 31 hereinbefore. 5 35. Lessor acknowledges receipt from the Lessee of a security deposit in the amount of $4,250.00. Said security deposit shall be held by the Lessor during the entire Lease term, and any renewals of same. Said security deposit shall be against the faithful performance by the Lessee of all the terms and conditions of the within Lease, and shall be in addition to all other lawful remedies available to the Lessor in the event of default by the Lessee of the terms and conditions of the within Lease. 36. Notwithstanding the provisions of paragraph no. 30, hereinbefore, it is understood and agreed that the Lessee shall be permitted to make certain interior improvements to the demised premises so as to construct their desired restaurant configuration. Such improvements shall not include any major structural changes in the roof, supporting beams, exterior walls, sidewalks, and surrounding drive. However, it is the intent of the parties that, to the extent permissable by local zoning laws and governmental regulations, Lessee shall be permitted to install additional air conditioning and/or venting systems, and remove and/or replace existing doors and windows, and/or make penetrations to the existing walls. Lessee shall also be permitted to make electrical and plumbing modifications to the interior. Prior to commencing such intended improvements, Lessee shall do and/or be responsible to the Lessor as follows: (a) Provide the Lessor with a complete copy of the same plans and specifications as will be required by City Code for the Lessor's approval, which approval shall not be unreasonably withheld. (b) Arrange for and secure and post on the premises, all necessary permits, notices, and other regulatory documents. (c) Employ licensed and insured contractors and other tradesmen, and provide Lessor with certificates of insurance, covering all who perform work and/or provide materials, evidencing coverage for public liability, including bodily injury and property damage with appropriate limits. Lessor shall also be provided with certificates of insurance evidencing workers compensation insurance carried by all who perform labor and/or deliver materials, and/or perform any type of services, in or about the demised premises, relating to the permitted improvements. (d) Lessee shall comply with all existing Florida statutory mechanics lien laws, and post the premises, prior to the first workmen delivering material or performing work, with a notice of commencement, as is required by law. (e) Lessee shall pay timely all architects, engineers, contractors, subcontractors, materialmen, and suppliers, and all who perform labor or services in connection with the improvements. Such timely payment to insure that all of the work and materials connected with the improvements have been paid, and to insure that no liens are placed upon the demised premises and/or claims are made against the Lessor. (f) It is understood and agreed that Lessee, at the Lessee's sole cost and expense, shall pay for all the improvements connected with the foregoing. IN WITNESS WHEREOF, the respective parties hereto have caused these presents to be signed, sealed, and delivered on the day and year first above written. Witnesses LESSOR: SAUL STRACHMAN /s/ illegible /s/ SAUL STRACHMAN ----------------------------------- ----------------------------------- /s/ illegible Lessee: Health Express Grill, Inc ----------------------------------- /s/ illegible ----------------------------------- /s/ illegible /s/ Douglas Baker ----------------------------------- ----------------------------------- Douglas Baker, President ----------------------------------- ----------------------------------- /s/ Marco D'Alonzo ----------------------------------- Marco D'Alonzo, Secretary-Treasurer 6 Addendum to paragraph 36 36. Notwithstanding the provisions of paragraph no. 30, hereinbefore, it is understood and agreed that the Lessee shall be permitted to make certain interior and exterior improvements to the demised premises. Lessee shall be permitted to upgrade exterior patio area, cosmetic improvements for customer service, painting interior and exterior of building, installing drive-thru intercom system in surrounding drive to the extent permissible by local zoning laws and governmental regulations. Lessor: SAUL STRACHMAN /s/ SAUL STRACHMAN ------------------------ Lessee THE HEALTH EXPRESS GRILL, INC. /s/ Douglas Baker ------------------------ Douglas Baker, President /s/ Marco D'Alonzo ------------------------ Marco D'Alonzo, Secretary-Treasurer EX-27 5 FDS-9 MONTHS
5 This schedule contains financial information extracted from Health express USA, Inc. September 30, 1999 financial statements is qualified in its entirety by reference to such financial statement. 9-MOS DEC-31-1999 SEP-30-1999 225,119 0 0 0 0 9,655 77,828 0 312,602 14,706 0 0 0 4,371,165 (4,073,269) 312,602 0 0 0 0 4,067,979 0 0 (4,067,979) 0 0 0 0 0 (4,067,979) (0.865) (0.865)
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