United States

Securities and Exchange Commission

Washington, D.C. 20549

 

FORM 10

 

GENERAL REGISTRATION FORM FOR REGISTRATION OF SECURITIES

Pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934

 

Ford – Spoleti Holdings Inc.

(Exact name of registrant as specified in its charter)

 

 

NEVADA

201144153

 

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification Number)

 

248 Route 25A, East Setauket, New York 11733

(Address of principal Executive Offices) (Zip Code)

 

Registrant’s telephone number, including area code

(631) 246-8184

 

Securities to be registered pursuant to Section 12(b) of the Act:

 

 

Title of each class

Name of exchange on which

 

to be registered

each class is to be registered

 

 

None

NA

_____________________________

_______________________

 

Securities to be registered under Section 12(g) of the Act:

 

 

Common Stock, Par Value $0.001 per share

 

Title of Class

 

Indicate by check mark whether the registrant is a large accelerated filer, and accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer”, “non-accelerated filer”, and “smaller reporting company is Rule 12b-2 of the Exchange Act.

 

Large accelerated filer o

Accelerated Filer

o

 

Non-accelerated filer o (Do not check if a smaller reporting company)

 

Smaller reporting company x

 


Item 1. Business.

 

FORWARD LOOKING STATEMENT INFORMATION

 

Certain statements made in this Registration Statement on Form 10 are “forward-looking statements” (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. Our plans and objectives are based, in part, on assumptions involving judgments with respect to, among other things, future economic, competitive and market conditions, technological developments related to the real estate market and related activities, and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control.

 

Although we believe that our assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this prospectus will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein particularly in view of the current state of our operations, the inclusion of such information should not be regarded as a statement by us or any other person that our objectives and plans will be achieved. Factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to, the factors set forth herein under the headings “Business,” “Risk Factors” and “Plan of Operations.”

 

General

 

We were organized under the laws of the State of Nevada in April 2004. In April 2004 we also formed our wholly owned subsidiary, Spoleti Development, LLC, a New York LLC. We are engaged in acquiring, developing, operating and selling real estate on Long Island, in New York State. We acquired our first property a 20,000 square foot office building in April 2005.  We renovated the building, filed for its use as a medical office rather than a light industrial building and began rental operations in 2006. The building was acquired for $2,520,000. In 2005 we transferred an aggregate of 60% of the ownership of the building to an unrelated party for an aggregate of $904,177 of which $200,00 was received by us and the balance was contributed to the joint venture operating the building. We retained a 40% interest in the joint venture that operated the building. The building is located at 140 North Belle Mead Road, Setauket, New York remodeled the building to be an office building. There are currently two tenants and the building is approximately 60% occupied. In 2007 we sold our interest remaining in 140 North Belle Mead Road, Setauket, New York to our partner at a loss of approximately $(160,810) but received a $250,000 cash payment at the time of the sale and are entitled to an additional

 

2

 

 


payment of $450,000 (for a total of $725,00) which we anticipate receiving during the 2008 calendar year. After selling our interest in 140 North Belle Mead Road, we executed a purchase contract for a second parcel of land, 125 Second Avenue, Bay Shore, New York. The purchase price is $1,250,000 and we will own the property without any partners. 125 Second Avenue, Bay Shore, New York is zoned for residential use and consists of three building lots , one of which currently has a house on it and totals approximately 1.5 acres. Management believes that the existing house can be upgraded for approximately $30,000 and thereafter be sold for net proceeds of $600,000 to $650,000. We intend act as project manager and use subcontractors to complete houses of approximately 1800 square feet on the other two building lots. Management estimates that the cost of completing each house will be approximately $220,000. This cost estimate is based on a $120 per square foot building cost in the area which has been cited to management by various contractors. We believe we can complete the project of acquiring the 125 Second Avenue property, building two additional houses and selling them within a year. Our plan would be to also sell the two houses that we will build for approximately $600,000 to $650,000. If we are successful in implementing our development as planned the project will be profitable. However, construction projects frequently encounter delays. Also costs of construction are estimates and our ability to sell houses at the prices we project in our uncertain economic times cannot be assured. The closing under the contract for 125 Second Avenue is dependant upon our obtaining financing for the project. The contract for the purchase of 125 Second Avenue provided for a closing on May 31, 2008 and we have obtained an extension through July 31, 2008. If we require a further extension to obtain financing, such extension will be at the discretion of the seller of the property. We believe that we can obtain financing for approximately 80% of both our acquisition costs of the property and our construction costs. While our belief that we can obtain financing at these ratios is consistent with financing generally afforded in the real estate industry in our region, we do not have any financing commitments and can not give any assurance that we will obtain financing on acceptable terms. Upon completion or prior to the completion of the 125 Second Avenue project, we will seek other properties to develop as residential or commercial properties.

 

We are filing this registration statement of Form 10 because we believe that it will be beneficial for our shareholders if our common shares, which are currently traded on the pink sheets, can be included in the Over the Counter Bulletin Board (“OTCBB”). A company’s stock’s registration under the Exchange Act of 1934, as amended, is a precondition to trading on the OTCBB. After the registration process is complete, we intend to request that a broker-dealer apply for the inclusion of our stock on the OTCBB. We can not give any assurance that we will be able to complete the registration process. We can not give any assurance that a broker-dealer will agree to apply for the inclusion of include on the OTCBB or that the Financial Industry Regulatory Authority (“FINRA”) which passes on such applications will approve the application for inclusion of our stock. Furthermore, even if our stock is included on the OTCBB, we may not be able to raise any additional funding as a result and our shareholders may not realize any benefit in the price of their stock or in its liquidity.

 

 

3

 

 


Government Regulation

 

As we begin hiring subcontractors to construct the additional houses on our property, we will be required to obtain building permits and otherwise comply with zoning and other laws including those regulating the environment. While these compliance requirements will add to the costs of our project, they have been included in the estimated costs we have given, are also incurred by our competitors, and are not considered by management to be an undue burden to our proposed operations.

 

Employees

 

We do not currently have any employees and our operations, including the proposed 125 Second Avenue project, are of a scope and size that we do not believe that we will require full time employees. Our officer currently serves us on a part time basis and we anticipate that this will continue for the foreseeable future.

 

Competition

 

The residential housing development industry, which we have recently entered, is a large industry with large publicly held participants such as Toll Brothers and Hovanian that have significantly greater resources than we do and hundreds if not thousand regional and smaller developers. We will compete with all industry participants, and to some extent other industries, for properties to build houses on, for contractors to build our houses, and for customers when we sell our houses. We do not have any particular advantages in any regard against our competitors but will compete by relying on our acumen in selecting properties to develop, the general availability of subcontractors and our knowledge, direct or indirect, regarding their competence as well as our ability to produce attractive competitively priced houses.

 

ITEM 1A Risk Factors .

 

Risks Related to Our Business

 

We have a history of operating losses and our independent auditors have included a “going concern” qualification in their report on our financial statements . During our year ended April 30, 2007 and April 30, 2006, we incurred a Net Loss of ($709,398) and ($483,342), respectively. Accordingly, we received a report on our financial statements for those periods from our independent registered public accounting firm that includes an explanatory paragraph stating that there is substantial doubt about our ability to continue as a going concern due to our continuing losses. We can offer no assurance that the actions we plan to take to address these conditions will be successful. Inclusion of a “going concern qualification” in the report of our independent accountants may have a negative impact on our ability to obtain financing and may adversely impact our stock price in any market that may develop.

 

4

 

 


 

We acquired  the 140 North Belle Meade property in 2005 with the intent to upgrade the property to be modern office space, lease the same and sell the property at a profit. We had difficulty leasing the space in the property and took on a partner who became a 60% owner in early 2005 and now has a contract to buy our interest in the building from us. We were unable to fully lease the property while we owned it. During much of the period less than 20% of the square footage was leased. While an additional tenant was obtained in 2008 and approximately 60% of the property was leased, we were only able to dispose of our interest in that property at a loss of approximately $(160,810). Our difficulties in developing the 140 North Bell Mead property may cast doubt upon our ability to be a successful real property developer.

 

Our president/CEO serves us on a part time basis and conflicts may arise . Ms Ford-Spoleti devotes only a small portion of her time to our operations. Since she also has other outside commitments, it is inevitable that conflicts will arise in her allocation of time and effort. While she will seek to give us sufficient time to allow us to operate on a basis that is beneficial to our shareholders, this goal may not be accomplished and our operating results may be negatively impacted by the unavailability of our key personnel at critical times.

 

The ability of our president to control our business will limit minority shareholders' ability to influence corporate affairs . Our president, Ann Ford Spoleti, owns, directly or indirectly, shares that are convertible into and vote as 20,000,000 shares or approximately 38.9% of our 51,475,000 issued and outstanding shares and share equivalents. Because of her stock ownership, our president will be in a position to continue to elect our board of directors, decide all matters requiring stockholder approval and determine our policies. The interests of our president may differ from the interests of other shareholders with respect to the issuance of shares, business transactions with or sales to other companies, selection of officers and directors and other business decisions. The minority shareholders would have no way of overriding decisions made by our president. This level of control may also have an adverse impact on the market value of our shares because she may institute or undertake transactions, policies or programs that result in losses, may not take any steps to increase our visibility in the financial community and/ or may sell sufficient numbers of shares to significantly decrease our price per share.

 

If we do not receive additional financing we will not become operational. We anticipate receiving approximately $1,320,000 in acquisition and construction financing to enable us to complete the 125 Second Avenue project. Our management believes that it will be able to raise funds for us and their ability to do so will be enhanced by our becoming a reporting company subject to the requirements of the Exchange Act and traded on the Over the Counter Bulletin Board (“OTCBB”). However, we cannot be certain that we will accomplish these goals or that, even if we do, that additional funds will be raised. No one has committed to invest or lend to us the money we need to complete the 125 Second Avenue project. If we cannot raise or borrow required financing, we will eventually be required to abandon our plans and, unless we can find a suitable acquisition or merger

 

5

 

 


partner our shareholders will lose their investment. We have not located any suitable potential merger partner because we intend to proceed with our business.

 

The real estate industry is cyclical and subject to general pressures related to general economic conditions. We are currently engaged in the residential real estate development business. Our industry has been adversely affected by economic events over which we will have no control. Economic problems in the sub-prime residential mortgage market have adversely affected the housing industry generally. Even if we are successful financing our operations and building houses on the 125 Second Avenue project, we may be unable to sell the houses at prices, which allow us to be profitable, or at any price. As a result we may not be able to repay our financing and our business may fail causing our stockholders to lose all of heir investment.

 

We may be exposed to potential risks resulting from new requirements under Section 404 of the Sarbanes-Oxley Act of 2002 . Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, we will be required, beginning with our fiscal year ending December 31, 2008, to include in our annual report our assessment of the effectiveness of our internal control over financial reporting as of the end of 2008. Furthermore, our independent registered public accounting firm will be required to attest to whether our assessment of the effectiveness of our internal control over financial reporting is fairly stated in all material respects and separately report on whether it believes we have maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009. We have not yet completed our assessment of the effectiveness of our internal control over financial reporting. We expect to incur additional expenses and diversion of management's time as a result of performing the system and process evaluation, testing and remediation required in order to comply with the management certification and auditor attestation requirements.

 

We may not have a sufficient number of employees to segregate responsibilities and may be unable to afford increasing our staff or engaging outside consultants or professionals to overcome our lack of employees. During the course of our internal control testing, we may identify other deficiencies that we may not be able to remediate in time to meet the deadline imposed by the Sarbanes-Oxley Act for compliance with the requirements of Section 404. In addition, if we fail to achieve and maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. Moreover, effective internal controls, particularly those related to revenue recognition, are necessary for us to produce reliable financial reports and are important to help prevent financial fraud. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our common stock, if a market ever develops, could drop significantly.

 

We have not conducted market studies. We have not conducted any market studies to determine whether our residential real estate development operations will fill an actual need or would be accepted in the market and, if it would be accepted, at what price point.

 

6

 

 


We are relying on the general expertise of our management to build houses on speculation in a difficult market and this may prove to be an unwise venture to undertake.

 

Risks Related to Our Common Stock

 

Currently, there is no public market for our securities, and there can be no assurances that any public market will ever develop or that our common stock will be quoted for trading and, even if quoted, it is likely to be subject to significant price fluctuations. Although our stock has been approved for inclusion on the pink sheets under the symbol “FSPL”, we have requested that the market maker not submit any trades in our stock and there has been no trading in our stock. Accordingly, there is currently no public market whatsoever for our securities. We have not obtained a market maker to file an application with the FINRA on our behalf so as to be able to quote the shares of our common stock on the OTC Bulletin Board ("OTCBB") maintained by the FINRA commencing upon the completion of the Form 10 registration process. There can be no assurance as to whether such market maker's application will be accepted by the FINRA. We are not permitted to file such application on our own behalf. If the application is accepted, there can be no assurances as to whether any market for our shares will develop or the prices at which our common stock will trade. If the application is accepted, we cannot predict the extent to which investor interest in us will lead to the development of an active, liquid trading market. Active trading markets generally result in lower price volatility and more efficient execution of buy and sell orders for investors.

 

In addition, our common stock is unlikely to be followed by any market analysts, and there may be few institutions acting as market makers for the common stock. Either of these factors could adversely affect the liquidity and trading price of our common stock. Until our common stock is fully distributed and an orderly market develops in our common stock, if ever, the price at which it trades is likely to fluctuate significantly. Prices for our common stock will be determined in the marketplace and may be influenced by many factors, including the depth and liquidity of the market for shares of our common stock, developments affecting our business, including the impact of the factors referred to elsewhere in these Risk Factors, investor perception, and general economic and market conditions. No assurances can be given that an orderly or liquid market will ever develop for the shares of our common stock.

 

Because of the anticipated low price of the securities, many brokerage firms may not be willing to effect transactions in these securities. See "Plan of Distribution" subsection entitled "Selling Shareholders and any purchasers of our securities should be aware that any market that develops in our stock will be subject to the penny stock restrictions."

 

Our board of directors is authorized to issue shares of preferred stock, which may have rights and preferences detrimental to the rights of the holders of our common shares. We are authorized to issue up to 10,000,000 shares of preferred stock, $0.001 par value. As of the date of this registration statement, we have issued shares of 2,000,000 shares of Class B preferred stock. Our previously issued Series A Preferred Stock has been exchanged for common stock and is available for re-issuance. Accordingly, we have 8,000,000 shares of

 

7

 

 


un-issued preferred stock potentially available for issuance. Our preferred stock may bear such rights and preferences, including dividend and liquidation preferences, as the Board of Directors may fix and determine from time to time. Any such preferences may operate to the detriment of the rights of the holders of the common stock being offered hereby.

 

Our articles of incorporation provide for indemnification of officers and directors at our expense and limit their liability that may result in a major cost to us and hurt the interests of our shareholders because corporate resources may be expended for the benefit of officers and/or directors . Our articles of incorporation and applicable Nevada law provide for the indemnification of our directors, officers, employees, and agents, under certain circumstances, against attorney's fees and other expenses incurred by them in any litigation to which they become a party arising from their association with or activities on our behalf. We will also bear the expenses of such litigation for any of our directors, officers, employees, or agents, upon such person's promise to repay us, therefore if it is ultimately determined that any such person shall not have been entitled to indemnification. This indemnification policy could result in substantial expenditures by us, which we will be unable to recoup.

 

We have been advised that, in the opinion of the SEC, indemnification for liabilities arising under federal securities laws is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against these types of liabilities, other than the payment by us of expenses incurred or paid by a director, officer or controlling person in the successful defense of any action, suit or proceeding, is asserted by a director, officer or controlling person in connection with the securities being registered, we will (unless in the opinion of our counsel, the matter has been settled by controlling precedent) submit to a court of appropriate jurisdiction, the question whether indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The legal process relating to this matter if it were to occur is likely to be very costly and may result in us receiving negative publicity, either of which factors is are likely to materially reduce the market and price for our shares, if such a market ever develops.

 

Any market that develops in shares of our common stock will be subject to the penny stock restrictions that are likely to create a lack of liquidity and make trading difficult or impossible. Until our shares of common stock qualify for inclusion in the NASDAQ system, if ever, the trading of our securities, if any, will be in the over-the-counter market which is commonly referred to as the OTCBB as maintained by FINRA. As a result, an investor may find it difficult to dispose of, or to obtain accurate quotations as to the price of our securities.

 

SEC Rule 15g-9 (as most recently amended and effective on September 12, 2005) establishes the definition of a "penny stock," for purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to a limited number of exceptions. It is likely that our shares will be considered to be penny stocks for the immediately foreseeable future. This classification severely and adversely affects the market liquidity for our common stock. For

 

8

 

 


any transaction involving a penny stock, unless exempt, the penny stock rules require that a broker or dealer approve a person's account for transactions in penny stocks and the broker or dealer receive from the investor a written agreement to the transaction setting forth the identity and quantity of the penny stock to be purchased.

 

In order to approve a person's account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience and objectives of the person and make a reasonable determination that the transactions in penny stocks are suitable for that person and that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

 

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, which, in highlight form, sets forth:

the basis on which the broker or dealer made the suitability determination, and

•          that the broker or dealer received a signed, written agreement from the investor prior to the transaction.

Disclosure also has to be made about the risks of investing in penny stock in both public offerings and in secondary trading and commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

 

Because of these regulations, broker-dealers may not wish to engage in the above-referenced necessary paperwork and disclosures and/or may encounter difficulties in their attempt to sell shares of our common stock, which may affect the ability of selling shareholders or other holders to sell their shares in the secondary market and have the effect of reducing the level of trading activity in the secondary market. These additional sales practice and disclosure requirements could impede the sale of our securities, if and when our securities become publicly traded. In addition, the liquidity for our securities may decrease, with a corresponding decrease in the price of our securities. Our shares in all probability will be subject to such penny stock rules for the foreseeable future and our shareholders will, in all likelihood, find it difficult to sell their securities.

 

We do not intend to pay dividends on our common stock. We have not paid any dividends on our common stock to date and there are no plans for paying dividends on the common stock in the foreseeable future. We intend to retain earnings, if any, to provide funds for the implementation of our business plan. We do not intend to declare or pay any dividends in the foreseeable future. Therefore, there can be no assurance that holders of our common stock will receive any additional cash, stock or other dividends on their shares of our common stock until we have funds which the Board of Directors determines can be allocated to dividends.

 

If a market develops for our shares, sales of our shares relying upon rule 144 may depress prices in that market by a material amount. All of the outstanding shares of our

 

9

 

 


common stock are "restricted securities" within the meaning of Rule 144 under the Securities Act of 1933, as amended. As restricted shares, these shares may be resold only pursuant to an effective registration statement or under the requirements of Rule 144 or other applicable exemptions from registration under the Act and as required under applicable state securities laws. Rule 144 provides in essence that a person who has held restricted securities for a prescribed period may, under certain conditions, sell their shares. As a result of revisions to Rule 144 which became effective on or about February 15, 2008, there is no limit on the amount of restricted securities that may be sold by a non-affiliate (i.e., a stockholder who has not been an officer, director or control person for at least 90 consecutive days) after the restricted securities have been held by the owner for a period of one year. A sale under Rule 144 or under any other exemption from the Act, if available, or pursuant to registration of shares of common stock of present stockholders, may have a depressive effect upon the price of the common stock in any market that may develop.

 

Any trading market that may develop may be restricted by virtue of state securities "Blue Sky" laws to the extent they prohibit trading absent compliance with individual state laws. These restrictions may make it difficult or impossible to sell shares in those states. There is no public market for our common stock, and there can be no assurance that any public market will develop in the foreseeable future. Transfer of our common stock may also be restricted under the securities or securities regulations laws promulgated by various states and foreign jurisdictions, commonly referred to as "Blue Sky" laws. Absent compliance with such individual state laws, our common stock may not be traded in such jurisdictions. Because the securities registered hereunder have not been registered for resale under the “Blue Sky” laws of any state, the holders of such shares and persons who desire to purchase them in any trading market that might develop in the future, should be aware that there may be significant state “Blue Sky” law restrictions upon the ability of investors to sell the securities and of purchasers to purchase the securities. These restrictions prohibit the secondary trading of our common stock. We currently do not intend and may not be able to qualify securities for resale in approximately 17 states that do not offer manual exemptions and require shares to be qualified before they can be resold by our shareholders.

 

Accordingly, investors should consider the secondary market for our securities to be a limited one. See also "Plan of Distribution-State Securities-Blue Sky Laws."

 

Item 2. Financial Information

 

See Financial Information starting on page F-1.

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

 

Management’s Discussion and Analysis contains statements that are forward-looking. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors discussed in “Factors That May Affect Future Results and Financial Condition.”

 

10

 

 


OVERVIEW

 

We consider ourselves to be in a developmental stage in that our prior operations were discontinued by virtue of our sale of our interest in the 140 North Belle Meade property and our initiation of a new project. Implementing our planned business operation is dependant on the effectiveness of this registration statement and our ability to raise between the required financing of approximately $1,320,000 for the 125 Second Avenue project.

 

We will seek financing of approximately $1,000,000 in connection with the acquisition of the 125 Second Avenue property and approximately $320,000 in construction loans. To the extent we are able to quickly upgrade and sell the existing house, we may be able to reduce our needs for financing. In addition, if our stock is included on the OTCBB, we believe that our ability to meet our financing needs through the sale of stock in private placement transactions might be enhanced. In any event there is substantial uncertainty with respect to our ability to meet our financial and liquidity needs. The contract for the purchase of 125 Second Avenue has been amended to provide for a July 31, 2008 closing. However, we will not be able to close on such date unless we receive financing and if we do not, then we will be required to request a further extension of the closing date from the seller which may not be granted or to terminate the contract.

 

INFLATION

 

Inflation can be expected to have an impact on our operating costs. A prolonged period of inflation could cause a general economic downturn and negatively impact our results. However, the effect of inflation has been minimal over the past three years.

 

SEASONALITY

 

We believe that our business will be seasonal in that construction activity can be limited by winter weather and home sales decrease during winter months.

 

Item 3. Properties.

 

We currently operate out of space within the residence of our president Ann T. Ford-Spoleti without any cost to us. We maintain a mailing address at 248 Route 25A, East Setauket, New York 11733 at nominal cost. Our property under development as part of the 125 Second Avenue project, consisting of approximately 1.5 acres is more fully described under Item 1 Business.

 

ITEM 4. Security Ownership of Certain Beneficial Owners and Management.

 

The information in the following table sets forth the beneficial ownership of our shares of common stock as of July 9, 2008 by: (i) each of the three highest paid persons who are our officers and directors (or in the alternative, each officer and director); (ii) all officers and

 

11

 

 


directors as a group; (iii) each shareholder who beneficially owns more than 5% of any class of our securities, including those shares subject to outstanding options.

 

Name and address

 

Amount owned

 

Percent of class

of owner (1)

 

 

 

 

 

 

 

 

 

Ann T. Ford Spoleti

 

20,000,000 (2)

 

38.9%

 

 

 

 

 

Peter Spoleti

 

9,000,000 (3)

 

17.5%

 

 

 

 

 

Serendipitous Miracles, LLC

 

9,000,000 (4)

 

17.5%

 

 

 

 

 

Sam Manicozzi

 

50,000

 

*

 

 

 

 

 

All officers and directors

 

 

 

 

as a group (2 persons)

 

20,05000,0500(2)

 

39.0%

 

 

 

 

 

* Less than 0.1%

 

 

 

 

 

 

(1)

The address of all of these persons is 248 Route 25A, East Setauket, New York 11733.

 

(2)

Includes 1,100 shares of Class B Stock Held by Mrs. Ford-Spoleti and 9,000,000 shares of Class B Stock held by Serendipitous Miracles, LLC. Mrs. Ford-Spoleti and her husband, Peter Spoleti, are the managers and sole equity holders of Serendipitous Miracles, LLC.

 

(3)

Represents 9,000000 Class B Shares held by Serendipitous Miracles, LLC. Mrs. Ford-Spoleti and her husband, Peter Spoleti, are the managers and sole equity holders of Serendipitous Miracles, LLC.

 

(4)

Represents 9,000,000 Class B Shares. Mrs. Ford-Spoleti and her husband, Peter Spoleti, are the managers and sole equity holders of Serendipitous Miracles, LLC.

 

 

12

 

 


ITEM 5. Directors and Executive Officers.

 

Our directors and officers are as follows:

 

Name

 

Age

 

Position(s)

 

 

 

 

 

Ann T. Ford-Spoleti

 

44

 

President, Chief Executive Officer and a Director

 

 

 

 

 

Sam Manicozzi

 

71

 

Director

 

 

Term and Family Relationships

 

Our directors currently have terms which will end at our next annual meeting of the stockholders or until successors are elected and qualify, subject to their prior death, resignation or removal. Officers serve at the discretion of the Board of Directors. There are no family relationships among our officers and directors.

 

Legal Proceedings

 

No officer, director, or persons nominated for these positions, and no promoter or significant employee of our corporation has been involved in legal proceedings that would be material to an evaluation of our management.

 

Business Experience

 

Ann T Ford Spoleti , was elected president and a director upon our organization in 2004. For more than ten years she has been the CEO of Phoenix Business Resources, a management consultant company. From 1989 to 1999 she was COO of Interactive Property Management, a real estate management firm in Melville, New York with approximately 10 employees. She holds an associate’s degree from Suffolk Community College.

 

Sam Manicozzi , was elected a director upon our organization in 2004. Mr. Manicozzi is the president and founder of Pamco Industries, a commercial builder in Long Island, New York. He has held this position for more than the last five years.

 

We have determined that due to our early stage of development and our small size, the present adoption of a code of ethics is not appropriate. If we grow we will adopt a suitable code of ethics.

 

 

 

13

 

 


 

Item 6. Executive Compensation .

 

 

SUMMARY COMPENSATION TABLE

The following table sets forth the cash and non-cash annual remuneration of each of the three highest paid persons who are officers or directors as a group during our last fiscal year:

 

Name of individual or identity of group

Capacities in which remuneration was received

Salary

Bonus

Stock Awards

All Other Compensation

Aggregate remuneration

Ann T Ford-Spoleti

CEO

$0

$0

$0

$128,345 (1)

$0

Sam Manicozzi

Director

$0

$0

$0

$0

$0

 

 

(1) represents accrued, unpaid salary at the rate of $72,000 per annum since September 2005.

 

The Company has not paid any compensation in cash to its officer/ directors and does not intend to do so until such time as its capital resources are sufficient in the judgment of its Board of Directors. The Company has not paid and has no present plan to give any compensation other than cash. The Company does not have any Stock Option Plan or other equity compensation plans.

 

Item 7. Certain Relationships and Related Transactions, and Director Independence.

 

Upon our organization we issued 1,100,000 Class B Preferred Shares to Ann T. Ford-Spoleti for their par value of $0.001 per share or $1,100. Upon our organization we issued 9,000,000 Class B Shares Preferred to Serendipitous Miracles, LLC. Mrs. Ford-Spoleti and her husband, Peter Spoleti, are the managers and sole equity holders of Serendipitous Miracles, LLC. Upon our organization we issued 50,000 shares of common stock to Sam Manicozzi, a director, for $5. The prices paid represent the par value of the shares. Mrs. Ford-Spoleti. Phoenix Business Management, a company controlled by Mrs. Ford-Spoleti has performed consulting work for the company in connection with its real estate acquisitions and has been paid $120,000.

 

Mr. Manicozzi, by virtue of his limited equity interest in the Company, may be considered to be an independent director. Stockholders wishing to communicate with Mr. Manicozzi may write to him at the Company’s address.

 

 

14

 

 


 

Item 8. Legal Proceedings.

 

On April 28, 2008, an action entitled Eyal Waldman and Alla Waldman v. Ford Spoleti Holdings, Inc., Spoleti Development, LLC and Spoleti Development Corp. Index No 16135108 was filed in Supreme Court, Nassau County. The Company has not been served in this matter but has been advised of the initiation of the matter by plaintiffs’ counsel. The matter relates to a $50,000 indebtedness to plaintiff relating to their investment in the Company in 2005. The Company is seeking to resolve this matter on an amicable basis and believes that since the Company’s indebtedness to plaintiffs is reflected on its balance sheet the outcome of this matter will not have a material adverse effect on the Company.

 

Item 9. Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters.

 

In November 2006, Spartan Securities Group Ltd. filed a Form 211 on our behalf and in February 2007 our common stock was approved for inclusion on the pink sheets quotation system maintained by the National Quotation Bureau. However, we requested that Spartan Securities Group Ltd not initiate quotations in our stock so that we could pursue the inclusion of our stock in the OTCBB. As a result there has been no market for and no trading activity in our common stock.

 

Our common stock is held by approximately 150 shareholders.

 

We have never paid a cash dividend on our common stock, and we do not anticipate paying cash dividends in the foreseeable future. Moreover, any future credit facilities might contain restrictions on our ability to declare and pay dividends on our common stock. We plan to retain all earnings, if any, for the foreseeable future for use in the operation of our business and to fund the pursuit of future growth. Future dividends, if any, will depend on, among other things, our results of operations, capital requirements and on such other factors as our board of directors, in its discretion, may consider relevant.

 

Item 10. Recent Sales of Unregistered Securities.

 

No unregistered securities were sold by the registrant in the last three years.

 

Item 12. Description of Registrant’s Securities to be Registered.

 

The Company's authorized capital stock consists of 300,000,000 shares of common stock, $.001 par value per share and 10,000,000 shares of preferred stock, $.001 par value per share. As of April 30, 2008, there were 31,475,000 shares of common stock and common stock equivalents issued and outstanding, including 2,000,000 shares of Class B Common preferred stock and no shares of preferred stock were issued and outstanding.

 

 

15

 

 


 

COMMON STOCK

 

The holders of common stock are entitled to one vote for each share on all matters voted on by stockholders, including elections of directors, and, except as otherwise required by law or provided in any resolution adopted by the Company's board of directors with respect to any series of preferred stock, the holders of common stock possess all voting power. Our articles of incorporation do not provide for cumulative voting in the election of directors. Subject to any preferential rights of any outstanding series of preferred stock created by our board of directors from time to time, the holders of common stock are entitled to dividends, if any, as may be declared from time to time by our board of directors from funds available therefore and upon liquidation are entitled to receive pro rata all assets available for distribution to such holders. For a more complete discussion of our dividend policy, please see " Item 9. Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters. "

 

The holders of our common stock have no preemptive rights. The rights, preferences and privileges of holders of common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock which our board of Directors may designate and issue in the future.

 

PREFERRED STOCK

 

Our Articles of Incorporation vest our Board of Directors with authority to divide the authorized Preferred Shares into series and to fix and determine the relative rights and preferences of the shares of any such series so established to the full extent permitted by the laws of the State of Nevada and the Articles of Incorporation in respect of, among other things: (a) the number of Preferred Shares to constitute such series and the distinctive designations thereof, (b) the rate and preference of dividends, if any, the time of payment of dividends, whether dividends are cumulative and the date from which any dividend shall accrue, (c) whether Preferred Shares may be redeemed and, if so, the redemption price and the terms and conditions of redemption, (d) the liquidation preferences payable on Preferred Shares in the event of involuntary or voluntary liquidation, (e) sinking fund or other provisions, if any, for redemption or purchase of Preferred Shares, (f) the terms and conditions by which Preferred Shares may be converted, if the Preferred Shares of any series are issued with the privilege of conversion, and (g) voting rights, if any. As of the date of this Form 10, there are no Preferred Shares issued or outstanding. We currently have one class of preferred stock designated, Class B Preferred Stock. Class B Preferred Stock is identical in respects to the common stock and votes with the common stock, except that each share of Class B Preferred Stock is entitled to 10 votes on all matters and is to be treated as ten shares of common stock with respect to any dividends and distributions. All of the 2,000,000 shares of Class B Preferred Stock is held by our CEO and President and by an entity she controls thus giving her effective control of our affairs.

 

 

16

 

 


TRANSFER AGENT AND REGISTRAR

 

The transfer agent for our common stock is Manhattan Transfer Register & Company, One West Street – Suite 3402, New York, New York 10004 Telephone (212) 425-2750.

 

ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS

 

Under the Company's Articles of Incorporation and By-Laws, the Company may indemnify an officer or director who is made a party to any proceeding, including a lawsuit, because of his position, if he acted in good faith and in a manner he reasonably believed to be in the Company's best interest. No officer or director may be indemnified, however, where the officer or director committed intentional misconduct, fraud, or an intentional violation of the law.

 

The Company may advance expenses incurred in defending a proceeding. To the extent that the officer or director is successful on the merits in a proceeding as to which he is to be indemnified, the Company must indemnify him against all expenses incurred, including attorney's fees. With respect to a derivative action, indemnity may be made only for expenses actually and reasonably incurred in defending the proceeding, and if the officer or director is judged liable, only by a court order. The indemnification is intended to be to the fullest extent permitted by the laws of the State of Nevada.

 

Regarding the indemnification for liabilities arising under the Securities Act of 1933, which may be permitted to officers and directors under Nevada law, the Company is informed that, in the opinion of the Securities and Exchange Commission, indemnification is against public policy, as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities is asserted by the Company's officer(s), director(s),or controlling person(s) in connection with the securities being registered, it will, unless in the opinion of the Company's legal counsel the matter has been settled by controlling precedent, submit the question of whether such indemnification is against public policy to a court of appropriate jurisdiction. The Company will then be governed by the court's decision.

 

ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See Financial Statements beginning on Page F-1

 

ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING ANDFINANCIAL DISCLOSURE

 

Not applicable.

 

ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS

 

(a)

 

Audited financial statements for April 30, 2006 and 2007

 

Unaudited financial statements for January 31, 2008

 

(b) EXHIBIT

 

 

No. 3.1

Articles of Incorporation *

 

No. 3.2

Certificate of Designation - Class B Preferred Stock *

 

No. 3.3

Certificate of Correction to Articles of Incorporation clarifying par value is $0.001 **

 

    No. 3.4

By - Laws *

 

No. 4.1

Form of Common Stock **

 

No. 4.2

Form of Class B Preferred Stock **

 

No. 10.1

Contract for purchase and contract for sale of interest in North Mead property *

 

No. 10.2

Contract for purchase of Second Street Property**

 

No. 10.3

Amendment to Contract for purchase of Second Street Property **

 

 

 

 

 

*Filed herewith

** To Be Filed By Amendment

 

17

 

 


FORD-SPOLETI HOLDINGS, INC.

 

APRIL 30, 2007 and 2006

 

INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

Contents

 

Page(s)

 

 

 

Report of Independent Registered Public Accounting Firm

 

F-2

 

 

 

Consolidated Balance Sheets at April 30, 2007 and 2006

 

F-3

 

 

 

Consolidated Statements of Operations for the Fiscal Years Ended

 

 

April 30, 2007 and 2006

 

F-4

 

 

 

Statement of Stockholders’ Deficit for the Fiscal Years Ended

 

 

April 30, 2007 and 2006

 

F-5

 

 

 

Consolidate Statements of Cash Flows for the Fiscal Years Ended April 30, 2007 and 2006

 

F-6

 

 

 

Notes to the Consolidated Financial Statements

 

F-7 to F-12

 

 

 

Unaudited Interim Financial Statements

 

F-13

 

F-1

 

 


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors

Ford-Spoleti Holdings, Inc.

East Setauket, New York

 

We have audited the accompanying consolidated balance sheets of Ford-Spoleti Holdings, Inc. as of April 30, 2007 and 2006 and the related consolidated statements of operations, stockholders’ deficit and cash flows for the fiscal years ended April 30, 2007 and 2006. These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.  Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Ford-Spoleti Holdings, Inc., as of April 30, 2007 and the results of its operations and its cash flows for the fiscal years ended April 30, 2007 and 2006 in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying financial statements have been prepared assuming that Ford-Spoleti Holdings, Inc. will continue as a going concern. As discussed in Note 3 to the financial statements, Ford-Spoleti Holdings, Inc. has an accumulated deficit of $1,274,174 as of April 30, 2007 and had a net loss of $709,398 for the year ended April 30, 2007. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regards to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/ Li & Company, PC

Li & Company, PC

 

Skillman, New Jersey

June 12, 2008

 

F-2

 

 


FORD-SPOLETI HOLDINGS, INC.

Consolidated Balance Sheets

April 30, 2007 and 2006

 

ASSETS

2007

2006

CURRENT ASSETS:

 

 

 

 

Cash

$

10,167

$

4,830

Receivables

 

5,500

 

-

Due from related party

 

991

 

-

Total Current Assets

 

16,658

 

4,830

 

 

 

 

 

Other assets

 

50

 

4,395

 

 

 

 

 

Investment in joint venture

 

202,295

 

632,827

TOTAL ASSETS

$

219,003

$

642,052

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

CURRENT LIABILITIES:

 

 

 

 

Accounts payable and accrued expenses

$

468,256

$

246,483

Notes payable

 

110,000

 

30,000

Notes payable - officer

 

525,147

 

400,000

Total Current Liabilities

 

1,103,403

 

676,483

 

 

 

 

 

Notes payable

 

-

 

50,000

Notes payable - officer

 

-

 

128,345

Minority interest

 

37,774

 

-

Total Liabilities

 

1,141,177

 

854,828

 

 

 

 

 

STOCKHOLDERS’ DEFICIT:

 

 

 

 

Preferred stock at $0.0001 par value; 10,000,000 shares authorized

 

 

 

 

Series A Preferred stock at $0.0001 par value; 2,000,000 shares designated; none issued or outstanding

 

 

-

 

 

-

Series B Convertible Preferred stock at $0.001 par value; 2,000,000 shares issued and outstanding

 

 

2,000

 

 

2,000

Common stock at $0.001 par value; 300,000,000 shares authorized; 31,450,000 shares issued and outstanding

 

 

31,450

 

 

31,450

Additional paid-in capital

 

318,828

 

318,828

Accumulated deficit

 

(1,274,174)

 

(564,776)

Less treasury stock, 278,420 shares at par

 

(278)

 

(278)

Total Stockholders’ Deficit

 

(922,174)

 

(212,776)

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

$

 

219,003

 

$

 

642,052

 

 

 

 

 

See accompanying notes to the consolidated financial statements.

 

 

 

 

F-3

 

 


FORD-SPOLETI HOLDINGS, INC.

 

Consolidated Statements of Operations

For the Fiscal Years Ended April 30, 2007 and 2006

 

 

 

2007

 

2006

Operating expenses:

 

 

 

 

Officers’ compensation

$ 72,000

 

$ 72,000

Selling, general and administrative

119,268

 

34,542

Loss from operations

(191,268)

 

(106,542)

 

 

 

 

Other income (expense):

 

 

 

Interest expense, net

(74,924)

 

(45,698)

Equity in gain (loss) of joint venture

(450,032)

 

77,883

Loss on formation of joint venture

-

 

(408,985)

Total other income (expense)

(524,956)

 

(376,800)

 

 

 

 

Loss before minority interest

(716,224)

 

(483,342)

 

 

 

 

Minority interest

6,826

 

-

 

 

 

 

Net loss

$ (709,398)

 

$ (483,342)

Net loss per common share – basic and diluted

                          $ (0.02)

 

$ (0.02)

 

 

 

 

Weighted average number of common shares outstanding – basic and diluted

 

31,450,000

 

 

31,450,000

 

 

 

 

 

 

 

See accompanying notes to the consolidated financial statements.

 

 

 

 

 

F-4

 

 


FORD-SPOLETI HOLDINGS, INC.

 

Consolidated Statement of Stockholders’ Deficit

For the Fiscal Years Ended April 30, 2007 and 2006

 

 

 

 

Class B

Preferred

Shares

 

 

 

Amount

 

 

Common

Shares

 

 

 

Amount

 

Additional

Paid-in

Capital

 

 

Treasury

Stock

 

 

 

Amount

 

 

Accumulated

Deficit

 

 

 

Total

Balance, May 1, 2005

2,000,000

$ 2,000

31,450,000

$31,450

$318,828

278,420

$ (278)

$ (81,434)

$ 270,566

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

(483,342)

(483,342)

 

 

 

 

 

 

 

 

 

 

Balance, April 30, 2006

 

2,000,000

 

2,000

 

31,450,000

 

31,450

 

318,828

 

278,420

 

(278)

 

(564,776)

 

(212,776)

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

(709,398)

(709,398)

 

 

 

 

 

 

 

 

 

 

Balance, November 30, 2007

 

2,000,000

 

2,000

 

31,450,000

 

$31,450

 

$318,828

 

278,420

 

$ (278)

 

$(1,274,175)

 

$ (922,174)

 

 

 

 

 

 

 

 

 

 

See accompanying notes to the consolidated financial statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

F-5

 

 


FORD-SPOLETI HOLDINGS, INC.

 

Consolidated Statements of Cash Flows

For the Fiscal Years Ended April 30, 2007 and 2006

 

 

 

2007

 

2006

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

Net loss

$ (709,398)

 

$ (483,342)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

(Income) loss from joint venture

430,532

 

(77,883)

Loss on formation of joint venture

-

 

408,985

Minority interest in loss of joint venture

(6,826)

 

 

Changes in assets and liabilities:

 

 

 

Increase in receivables

(5,500)

 

-

Increase in due from related party

(991)

 

-

Decrease in other assets

4,345

 

1,441

Increase in accounts payable and accrued expenses

221,773

 

153,016

Decrease in unearned revenues

-

 

(24,750)

Decrease in rent security payable

-

 

(49,500)

Net Cash Used in Operating Activities

(66,065)

 

(72,033)

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

Loans from officer

11,791

 

20,143

Repayments to officer

(14,989)

 

(43,860)

Proceeds from loans

30,000

 

220,000

Repayments of loans

-

 

(180,000)

Receipt of bank loans

-

 

59,880

Minority interest

44,600

 

-

Net Cash Provided by Financing Activities

71,402

 

76,163

 

 

 

 

INCREASE IN CASH

5,337

 

4,130

 

 

 

 

CASH AT BEGINNING OF YEAR

4,830

 

700

CASH AT END OF YEAR

$ 10,167

 

$ 4,830

 

 

 

 

SUPPLEMENTAL SCHEDULE OF CASH FLOW ACTIVITIES:

 

 

 

Cash Paid For:

 

 

 

Interest

$ 2,000

 

$ 4,000

See accompanying notes to the consolidated financial statements.

 

 

F-6

 

 


Ford-Spoleti Holdings, Inc. and Subsidiaries

 

Notes to the Consolidated Financial Statements

April 30, 2007 and 2006

 

Note 1 - ORGANIZATION AND OPERATIONS

 

Ford-Spoleti Holdings Inc. (“FSH”) was incorporated under the laws of the State of Nevada on April 12, 2004, for the purpose of among other things acquiring and renovating real estate property.

 

On March 19, 2004, Spoleti Development, LLC (SD) was incorporated under the laws of the State of New York. On April 12, 2004 SD became a 100% subsidiary of the Company.

 

Ford-Spoleti Holdings, Inc. entered into a co-ownership, joint venture and management agreement on October 20, 2005, with 140 Belle Mead LLC (LLC).

 

140 Belle Mead Joint Venture (“BMJV”) was formed by this agreement for the purpose of acquiring and renovating an office building located at 140 North Belle Mead Road, Setauket, New York (the “Property”). BMJV has a December 31, calendar year end.

 

In February, 2007, Ford-Spoleti Holdings, Inc. (“FSH”) entered into a joint venture agreement with Future Five Inc. (“FFI”) as co-owners and tenants in common and gave FFI a 5% interest in FSH’s interest in BMJV. The brother of the president of the Company owns 100% of FFI.

 

On February 6, 2007, Ford-Spoleti Holdings, Inc. (“FSH”) incorporated Annie’s Enchanted Gardens, Inc. (“AEG”); a 100% owned New York State Corporation, for the purpose of acquiring an existing business. At this time, AGE has not found a business that to acquire.

 

Note 2 - SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Consolidation

 

The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

 

The consolidated financial statements include the accounts of Ford-Spoleti Holdings, Inc. and all of its controlled subsidiaries. All significant inter-company transactions and balances have been eliminated in consolidation.

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

 

Construction Cost

 

Costs of renovating the property are significantly expanding the rental capacity of existing property. Costs are capitalized and amortized using the straight line method over the life of the property. The projected completion date for tenant renovations was scheduled for November 1, 2006, but was delayed. Depreciation was started on November 1, 2006.

 

Construction Interest

 

Interest costs during renovating the property are capitalized and amortized using the straight line method over the life of the new projected permanent mortgage starting November 1, 2006.

 

 

F-7

 

 


 

Impairment of long-lived assets

 

The Company follows Statement of Financial Accounting Standards No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS No. 144”) for its long-lived assets. The Company’s long-lived assets, included in discontinued operations, includes property and equipment, and deferred construction interest, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

 

Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives. The Company determined that there were no impairments of long-lived assets as of April 30, 2007.

 

Assets and Liabilities of Business Held for Sale

 

In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” the Company classifies the assets and liabilities of a business as held for sale when management approves and commits to a formal plan of sale and it is probable that the sale will be completed. The carrying value of the net assets of the business held for sale are then recorded at the lower of their carrying value or fair market value, less costs to sell. As of April 30, 2007, the assets and liabilities associated with the Company’s Joint Venture were classified as held for sale.

 

Income Taxes

 

The Company follows Statement of Financial Accounting Standards No. 109 “Accounting for Income Taxes” (“SFAS No. 109”), which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Consolidated Statements of Operations in the period that includes the enactment date.

 

Fair Value of Financial Instruments

 

The Company follows Statement of Financial Accounting Standards No. 107 “Disclosures about Fair Value of Financial Instruments” (“SFAS No. 107”) for its financial instruments. The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties.  The carrying amounts of financial assets and liabilities, such as cash, accounts payable and accrued expenses and short-term borrowings approximate their fair values because of the short maturity of these instruments.

 

Net Loss Per Common Share

 

Net loss per common share is computed pursuant to Statement of Financial Accounting Standards No. 128 “Earnings Per Share” (“SFAS No. 128”). Basic and diluted net loss per common share has been calculated by dividing the net loss for the period by the basic and diluted weighted average number of common shares outstanding. There were no dilutive shares outstanding as of April 30, 2007 and 2006.

 

Revenue Recognition

 

The Company recognizes revenue from its customers on a monthly basis, when per the lease it supplies space in the property and the passage of time expires on a monthly basis.

 

Recently Issued Accounting Pronouncements

 

In June 2003, the Securities and Exchange Commission (“SEC”) adopted final rules under Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”) ”), as amended by SEC Release No. 33-8889 on February 1, 2008. Commencing with the Company’s Annual Report for the year ending April 30, 2009, the Company is required to include a report of management on the Company’s internal

 

 

F-8

 

 


control over financial reporting. The internal control report must include a statement of management’s responsibility for establishing and maintaining adequate internal control over financial reporting for the Company; of management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of year end; of the framework used by management to evaluate the effectiveness of the Company’s internal control over financial reporting. Furthermore, in the following fiscal year, it is required to file the auditor’s attestation report separately on the Company’s internal control over financial reporting on whether it believes that the Company has maintained, in all material respects, effective internal control over financial reporting.

 

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157 “ Fair Value Measurement” ("SFAS No. 157"). This Statement defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosure related to the use of fair value measures in financial statements. The Statement is to be effective for the Company's financial statements issued in 2008; however, earlier application is encouraged. The Company is currently evaluating the timing of adoption and the impact that adoption might have on its financial position or results of operations.

 

In February 2007, the FASB issued SFAS No. 159 “ The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS No. 159”). SFAS No. 159 permits entities to choose to measure, on an item-by-item basis, specified financial instruments and certain other items at fair value. Unrealized gains and losses on items for which the fair value option has been elected are required to be reported in earnings at each reporting date. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007, the provisions of which are required to be applied prospectively.

 

In June 2007, the Emerging Issues Task Force of the FASB issued EITF Issue No. 07-3 “Accounting for Nonrefundable Advance Payments for Goods or Services to be Used in Future Research and Development Activities” (“EITF Issue No. 07-3”) which is effective for fiscal years beginning after December 15, 2007.  EITF Issue No. 07-3 requires that nonrefundable advance payments for future research and development activities be deferred and capitalized.  Such amounts will be recognized as an expense as the goods are delivered or the related services are performed.  The Company does not expect the adoption of EITF Issue No. 07-3 to have a material impact on the financial results of the Company.

 

In December 2007, the FASB issued FASB Statement No. 141 (Revised 2007) “Business Combinations” (“SFAS No. 141(R)”), which requires the Company to record fair value estimates of contingent consideration and certain other potential liabilities during the original purchase price allocation, expense acquisition costs as incurred and does not permit certain restructuring activities previously allowed under Emerging Issues Task Force Issue No. 95-3 to be recorded as a component of purchase accounting.  SFAS No. 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008, except for the presentation and disclosure requirements, which shall be applied retrospectively for all periods presented. The Company will adopt this standard at the beginning of the Company’s fiscal year ending June 30, 2009 for all prospective business acquisitions. The Company has not determined the effect that the adoption of SFAS No. 141(R) will have on its financial statements.

 

In December 2007, the FASB issued FASB Statement No. 160 “No-ncontrolling Interests in Consolidated Financial Statements - an amendment of ARB No. 51” (“SFAS No. 160”), which causes non-controlling interests in subsidiaries to be included in the equity section of the balance sheet.  SFAS No. 160 applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008, except for the presentation and disclosure requirements, which shall be applied retrospectively for all periods presented. The Company will adopt this standard at the beginning of the Company’s fiscal year ending June 30, 2009 for all prospective business acquisitions.  The Company has not determined the effect that the adoption of SFAS No. 160 will have on its consolidated financial statements.

 

Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements.

 

Note 3 - GOING CONCERN

 

As reflected in the accompanying consolidated financial statements, the Company had an accumulated deficit of $1,274,175 as of April 30, 2007 and had a net loss of $709,398 for the year ended April 30, 2007.

 

While the Company is attempting to increase revenues, the Company’s cash position may not be sufficient enough to support its daily operations. Management intends to raise additional funds by way of a public or private offering. Management believes that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to increase revenues and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon its ability to achieve profitable operations or obtain adequate financing. The consolidated financial statements do not

 

 

F-9

 

 


include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence.

 

Note 4 - RELATED PARTY TRANSACTIONS

 

The husband of the president of the Company has charged the Company administration fees for the fiscal years ended April 30, 2007 and 2006 in the sum of $38,750 and $ 17,109 respectively. Some of the administration fee has been charged to building improvements as they are for building permits to change the light industries classification to medical and office space use.

 

The brother of the president of the Company acquired a 5% interest in the Company’s 40% interest in a joint venture, in February, 2007 for $44,600.

 

Note 5 - NOTES

 

 

2007

2006

Notes Payable

 

 

$ 30,000, 10%, Secured Note Payable ( a )

$ 30,000

$ 30,000

$ 30,000, 14%/18%,Secured Note Payable( b )

30,000

-

$ 50,000, 9%, Convertible Senior

Secured Note ( c )

50,000

 

50,000

 

$ 110,000

$ 80,000

 

 

 

Notes payable - officer

 

 

Ann T. Ford-Spoleti Note Payable ( d )

125,147

$ 128,345

Ann T. Ford-Spoleti Note Payable ( d )

400,000

400,000

 

$ 525,147

$ 528,345

 

 

 

 

(a) The note is due on demand and has an interest rate of 18%, per annum. Subsequent to the year end, the Company has repaid $20,000 of the note.

 

(b) The loan was due on September 3, 2006 and had an interest rate of 14%, per annum. The note was extended to January 3, 2007 with interest increasing to 18%, per annum. The note is now payable on demand with $10,000 being paid subsequent to year end.

 

(c) The note was a two year note due on May 7, 2007. The note has an interest rate of 9%, per annum, payable in cash or common stock of the Company on a quarterly basis at the note holder’s option. The conversion rate is $ .50 per share for the life of the loan. The loan is secured by all the assets of the company.

 

The investor(s) shall receive one Class A warrant for every dollar invested exercisable at $ .25 for a one-year period. The lenders shall be afforded piggyback registration rights as to all stock underlying both the notes and the warrants.

 

(d) The notes are due on demand and have an interest rate of 10%, per annum.

 

Note 6 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

 

Accounts Payable and Accrued Expenses consisted of the following

 

 

 

 

 

 

 

 

 

April 30,

 

 

April 30,

 

 

 

 

 

 

 

2007

 

2006

 

 

Accounts

Payable

 

 

 

 

$140

 

 

$140

 

 

Accrued professional fees

 

56,113

 

-

 

 

Accrued officers salary payable

 

192,000

 

120,000

 

 

Accrued administrative expense

 

80,000

 

50,000

 

 

Accrued interest payable

 

140,003

 

76,343

 

 

 

F-10

 

 


 

 

 

 

Total Accounts Payable

 

 

$468,256

 

 

 

$246,483

 

 

 

 

 

 

 

 

 

 

 

 

 

Note 7 - STOCKHOLDERS’ DEFICIT

 

The Company is authorized to issue 300,000,000 shares of common stock and 10,000,000 shares of preferred stock both having a par value of $0.001 per share.

 

Preferred Stock

 

The terms of the Preferred Stock, or any series thereof, may be determined from time to time by the Board of Directors. Such shares may be convertible into Common Stock and may have rank superior to the Common Stock in the payment of dividends, liquidation rights, voting and other rights, preferences and privileges. Future shares of Preferred Stock may be issued by the Company without submitting a proposal regarding the issuance of such shares to a vote of holders of Common Stock. The Company in the future could issue Preferred Stock in a situation designed to discourage a tender offer. The Company has no present plans to issue any shares of Preferred Stock.

 

The Company is authorized to issue 10,000,000 shares of Preferred Stock, with a par value of $0.01 per share.

 

On April 29, 2004 the Company received a subscription for 2,000,000 shares of Series A Preferred Stock for a $ 2,000,000 membership’s interest in the Fund. On December 12, 2007, the Fund cancelled its subscription agreement in exchange for receiving 25,000 shares of common stock, which the Company valued at $2,500 and charged to operations.

 

Upon its organization the Company issued 1,100,000 Class B Preferred Shares to Ann T. Ford-Spoleti for their par value of $0.001 per share or $1,100and 900,000 Class B Shares Preferred to Serendipitous Miracles, LLC. Mrs. Ford-Spoleti and her husband, Peter Spoleti, are the managers and sole equity holders of Serendipitous Miracles, LLC.

 

The Class B Preferred Stock is identical in respects to the common stock and votes with the common stock, except that each share of Class B Preferred Stock is entitled to 10 votes on all matters and is to be treated as ten shares of common stock with respect to any dividends and distributions.

 

Note 8 - COMMON STOCK

 

Holders of Common Stock are entitled to one vote per share.

 

On April 12, 2004, inception, the Company issued 31,450,000 shares of Common Stock at par value; included in these shares were 278,420 shares issued to Spoleti Development LLC in exchange for becoming a 100% owned subsidiary. Par value has been assigned to these shares and is treated as outstanding and in the treasury.

 

STOCK OPTION / WARRANTS

 

On April 24, 2004 the Company issued 2,000,000 Class A Common Stock Warrants at an excise price of $.10 per share, for a two year period, which expired on April 24, 2006. The Warrants were valued at a diminished dollar value based on the Black Sholes method.

 

COMPENSATION BENEFIT PLAN

 

Pursuant to an April, 2004 Board of Directors approval and subsequent stockholder approval, the Company adopted its 2004 Compensation Benefit Plan (the “Plan”) whereby it reserved for issuance up to 2,500,000 shares of its common stock. The purpose of the Plan is to provide directors, officers and employees of, consultants, attorneys and advisors to the Company with additional incentives by increasing their ownership interest in the Company. Directors, officers and other employees of the Company are eligible to participate in the Plan.

 

The Board of Directors of the Company designated Committee (once established) will administer the Plan with the discretion generally to determine the terms of any option grant, including the number of option shares, exercise price, term, vesting schedule and the post-termination exercise period. Notwithstanding this discretion, the term of any option may not exceed 10 years

 

 

F-11

 

 


 

No options have been granted and outstanding under the Plan as of April 30, 2007.

 

Note 9 - JOINT VENTURE AGREEMENT

 

On October 20, 2005, Ford-Spoleti Holdings, Inc. (FSH) entered into a joint venture and co-ownership agreement with 140 Belle Mead LLC (LLC) for the property at 140 North Belle Mead Road in Setauket, New York.

 

The co-ownership will be owned 60% by 140 Belle Mead LLC (LLC) and 40% by Ford-Spoleti Holdings, Inc. (FSH).

 

Upon the execution of this agreement LLC received $70,000 for the construction management. LLC will be responsible for leasing the tenant spare and would be paid a leasing commission.

 

Note 10 - OPERATING AGREEMENT

 

On October 20, 2005, the Company entered into Management Agreement with Soundview Property Management, Inc. (“Managing Agent”) to provide the management and control of the day-to-day operations of the property, and the maintenance of the Property for a five (5) percent management fee.

 

Note 11 - JOINT VENTURE SHARE AGREEMENT

 

In February, 2007, Ford-Spoleti Holdings, Inc. (“FSH”) entered into a joint venture agreement with Future Five Inc. (“FFI”) as co-owners and tenants in common a 5% interest in FSH’s 40% interest in BMJV. The president of FFI is the brother of the president of the Company.

 

Note 12 - SUBSEQUENT EVENT

 

On September 28, 2007, the Company entered in to an agreement with 140 Belle Mead LLC for the sale of the Company’s equity interest in 140 Belle Mead Road to LLC for $725,000 and the assumption of all liabilities of the joint venture. LLC paid $250,000 upon the signing of the agreement and the balance of $475,000 remains unpaid.

 

On December 12, 2007, the Cross Capital Fund, LLC received 25,000 shares of common stock as payment for prior balances owed by the Company, which the Company valued at $2,500.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

F-12

 

 


FORD-SPOLETI HOLDINGS, INC.

Consolidated Balance Sheets

 

 

 

January 31,

April 30,

 

2008

2007

 

(Unaudited)

 

ASSETS

 

 

CURRENT ASSETS:

 

 

 

 

Cash

$

121,027

$

10,167

Receivables

 

476,500

 

5,500

Due from related party

 

991

 

991

Total Current Assets

 

598,518

 

16,658

 

 

 

 

 

Other assets

 

-

 

50

 

 

 

 

 

Investment in joint venture

 

-

 

202,295

TOTAL ASSETS

$

598,518

$

219,003

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

CURRENT LIABILITIES:

 

 

 

 

Accounts payable and accrued expenses

$

639,854

$

468,256

Notes payable

 

100,000

 

110,000

Notes payable - officer

 

454,097

 

525,147

Total Current Liabilities

 

1,193,951

 

1,103,403

 

 

 

 

 

Minority interest

 

66,905

 

37,774

Total Liabilities

 

1,260,856

 

1,141,177

 

 

 

 

 

STOCKHOLDERS’ DEFICIT:

 

 

 

 

Preferred stock at $0.001 par value; 10,000,000 shares authorized

 

 

 

 

Series A Preferred stock at $0.001 par value; 2,000,000 shares designated; none issued or outstanding

 

 

-

 

 

-

Series B Convertible Preferred stock at $0.001 par value; 2,000,000 shares issued and outstanding

 

 

2,000

 

 

2,000

Common stock at $0.001 par value; 300,000,000 shares authorized; 31,475,000 shares issued and outstanding

 

 

31,475

 

 

31,450

Additional paid-in capital

 

321,303

 

318,828

Accumulated deficit

 

(1,016,838)

 

(1,274,174)

Less treasury stock, 278,420 shares

 

(278)

 

(278)

Total Stockholders’ Deficit

 

(662,338)

 

(922,174)

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

$

 

598,518

 

$

 

219,003

 

 

 

 

 

See accompanying notes to the consolidated financial statements.

 

 

 

 

F-13

 

 


 

 

FORD-SPOLETI HOLDINGS, INC.

 

Consolidated Statements of Operations

For the Nine Months Ended January 31, 2008 and 2007

(Unaudited)

 

 

 

2008

 

2007

 

 

 

 

 

Operating expenses:

 

 

 

Officers’ compensation

$ 54,000

 

$ 54,000

Selling, general and administrative

182,598

 

36,298

Loss from operations

236,598

 

90,298

 

 

 

 

Other income (expense):

 

 

 

Interest expense, net

(59,564)

 

(50,478)

Equity in gain (loss) of joint venture

(123,100)

 

78,782

Gain on sale of joint venture

705,729

 

-

Total other income (expense)

523,065

 

28,304

 

 

 

 

Income (loss) before minority interest

286,467

 

(61,994)

 

 

 

 

Minority interest

(29,131)

 

-

Net income ( loss)

$ 257,336

 

$ (61,994)

Net income (loss) per common share – basic and diluted

$ (0.02)

 

$ (0.00)

 

 

 

 

Weighted average number of common shares outstanding – basic and diluted

 

31,450,136

 

 

31,450,000

 

See accompanying notes to the consolidated financial statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

F-14

 

 


FORD-SPOLETI HOLDINGS, INC.

 

Consolidated Statements of Cash Flows

For the Nine Months Ended January 31, 2008 and 2007

(Unaudited)

 

 

 

2008

 

2007

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

Net income (loss)

$ 257,336

 

$ (61,994)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

 

 

 

(Income) loss from joint venture

123,100

 

(78,782)

(Gain) on sale of joint venture

(238,729)

 

-

Minority interest in earnings of consolidated entities

29,131

 

-

Changes in assets and liabilities:

 

 

 

(Increase) decrease in receivables

4,000

 

(5,500)

Increase in due from related party

-

 

(991)

Decrease in other assets

50

 

4,345

Increase in accounts payable and accrued expenses

171,598

 

126,504

Net Cash Provided by (Used in) Operating Activities

346,486

 

(16,418)

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

Loans from officer

5,000

 

13,094

Repayments to officer

(76,050)

 

(10,596)

Proceeds from loans

-

 

50,000

Repayments of loans

(10,000)

 

(39,500)

Sale of joint venture

(154,576)

 

-

Net Cash Provided by (Used in) Financing Activities

(235,626)

 

12,998

 

 

 

 

INCREASE (DECREASE) IN CASH

110,860

 

(3,420)

 

 

 

 

CASH AT BEGINNING OF PERIOD

10,167

 

4,830

CASH AT END OF PERIOD

$ 121,027

 

1,410

 

 

 

 

SUPPLEMENTAL SCHEDULE OF CASH FLOW ACTIVITIES:

 

 

 

Cash Paid For:

 

 

 

Interest

$ -

 

$ 1,400

See accompanying notes to the consolidated financial statements.

 

 

 

 

 

 

 

F-15

 

 


Ford-Spoleti Holdings, Inc. and Subsidiaries

 

Notes to the Consolidated Financial Statements

January 31, 2008 and 2007

 

(Unaudited)

 

Note 1 - BASIS OF PRESENTATION

 

The accompanying interim financial statements for the nine-month periods ended January 31, 2008 and 2007 are unaudited and include all adjustments (consisting of normal recurring adjustments) considered necessary by management for a fair presentation. The results of operations realized during an interim period are not necessarily indicative of results to be expected for a full year. These financial statements should be read in conjunction with the information filed as part of the Company’s Registration Statement on Form 10, of which this Prospectus is a part.

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amount of revenues and expenses during the reporting period. Actual results could differ from these estimates.

 

Note 2 - GOING CONCERN

 

The accompanying financial statements have been prepared on a going concern basis which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. At January 31, 2008, the Company has limited financial resources, has not established a source of equity or debt financing, has negative working capital and a stockholders’ deficit. These factors, among others, indicate that the Company's continuation as a going concern is dependent upon its ability to achieve profitable operations or obtain adequate financing.

 

While the Company is attempting to increase revenues, the Company’s cash position may not be sufficient enough to support its daily operations. Management intends to raise additional funds by way of a public or private offering. Management believes that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to increase revenues and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon its ability to achieve profitable operations or obtain adequate financing. The consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence.

 

Note 3 - STOCKHOLDERS’ DEFICIT

 

On April 29, 2004 the Company received a subscription for 2,000,000 shares of Series A Preferred Stock for a $ 2,000,000 membership’s interest in the Fund. On December 12, 2007, the Fund cancelled its subscription agreement in exchange for receiving 25,000 shares of common stock, which the Company valued at $2,500 and charged to operations.

 

Note 4 - SALE OF JOINT VENTURE

 

On September 28, 2007, the Company entered in to an agreement with 140 Belle Mead LLC for the sale of the Company’s equity interest in 140 Belle Mead Road to LLC for $725,000 and the assumption of all liabilities of the joint venture. LLC paid $250,000 upon the signing of the agreement and the balance of $475,000 remains unpaid.

 

 

 

 

F-16

 

 


 

 

SIGNATURES

 

Pursuant tot the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Dated: June 13, 2008, Setauket, NY

 

Ford-Spoleti Holdings, Inc.

 

By: /s/ Ann T. Ford-Spoleti

 

Ann T. Ford-Spoleti, President

 

(Principal Executive, Financial and Accounting Officer

 

 

 

18

 

 

 

EXHIBIT 3.1

Articles of Incorporation

(Pursuant to NRS 78)

 

1.

Name of Corporation:

 

Ford - Spoleti Holdings, Inc.

 

 

 

 

2.

Resident Agent name and Street Address:

 

National Registered Agent Inc. of America

 

 

 

100 East William Street - Suite 204

 

 

 

Carson City, NV

 

 

 

 

3.

Shares:

 

310,000,000 shares, par value $.001

 

 

 

 

4.

Names and Addresses of the Board of Directors:

 

Ann T. Ford Spoleti

 

 

 

248 Route 25A

 

 

 

East Setauket,New York 11733

 

 

 

 

5.

Purpose:

 

Any Lawful Purpose

 

 

 

 

6.

Name, Address and Signature

 

 

 

of Incorporator

 

/s/ Paul Goodman

 

 

 

Paul Goodman

 

 

 

420 Lexington Avenue - Suite 2020

 

 

 

New York, New York 10470

 

 

 

 

7.

Certificate of Acceptance

 

 

 

of Appointment of

 

 

 

Registered Agent

 

National Registered Agent Inc. of

 

 

 

America

 

 

 

 

 

 

 

 

 

 

 

By: Secretary

 

 

 

 

 

 

 

4/12/2004

 

 

 

 

 


 

ATTACHMENT TO

ARTICLES OF INCORPORATION

OF

FORD SPOLETI HOLDINGS, INC.

Additional Provisions

Eight; The total number of shares which the corporation shall have authority to issue is Three Hundred Ten Million (310,000,000) shares having a par value of $.0001 per share as follows:

Common, The aggregate number of common shares which this . Corporation shall have authority to issue is 300,000,000 shares of common stock, having a par value of $.0001 per share. All common stock of the Corporation shall be of the same class common and shall have the same rights and preferences. Fully paid common stock of this Corporation shall not be liable to any further call or assessment.

Preferred The Corporation shall be authorized to issue 10,000,000 shares of Preferred Stock having a par value of $.0001 per share and with such rights preferences and designations determined by the

NINE: Election of directors need not be by written ballot except and to the extent provided in the by-laws of the corporation. The number of directors of the corporation may be increased or decreased in the manner provided in the By-laws of the corporation provided, that the number of directors shall never be less than one. In the interim between elections of directors by stockholders entitled to vote all vacancies including vacancies caused by an increase in the number of directors and including vacancies resulting form the removal of directors by the stockholders entitled to vote which are not filled by said stockholders may be filled by the remaining directors, through less than a quorum.

TEN The personal liability of the directors of the corporation is hereby eliminated to the fullest extent permitted by the General Corporation Law of the State of Nevada, as the same may be amended and supplemented .

ELEVEN: The corporation shall to the fullest extent permitted by the General Corporation Law of the State of Nevada, as the same may be amended and supplemented indemnify any and all persons whom it

 


shall have power to indemnify under said Law from and against any and all of the expenses, liabilities , or other matters referred to in or covered by said Law, and the indemnification provided for herin shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any By-Law agreement, vote of stockholders or directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office and shall continue as to a person who has excepted to be director. Officer, employee or agent and shall insure to the benefit of the heirs, executives and administrators of such person

TWELVE: The corporation reserves the right to amend, alter, change or repeal any provision contained in these Articles of Incorporation in the manner nor or hereafter prescribed by the state, and all rights conferred upon stockholders herein are granted subject to this reservation.

THIRTEEN: No shareholder shall be entitled as matter of right to subscribe for or receive additional shares of any class of stock of the Corporation whether now or hereafter authorized, or any boards, debentures or securities convertible into stock may be issued or disposed of by the Board of Directors to such persons and on such as in its discretion it shall deem advisable.


 

 

 

EXHIBIT 3.2

 

CERTIFICATE OF DESIGNATION, NUMBER, VOTING POWER, PREFERENCES

AND RELATIVE, PARTICIPATING, OPTION OR OTHER SPECIAL RIGHTS, AND

THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS THEREOF, OF THE

SERIES OF PREFERRED STOCK TO BE DESIGNATED.

 

CLASS B

CONVERTIBLE STOCK

($.001 Par Value)

 

OF

FORD-SPOLETI HOLDINGS, INC.

Pursuant to Section NRS 78.1955

of the

Nevada Revised Statues

The undersigned DOES HEREBY CERTIFY that the following resolution was duly adopted on May 1, 2004, by the Board of Directors of Ford-Spoleti Holdings, Inc., a Nevada corporation (hereinafter referred to as the "Corporation"), pursuant to authority conferred upon the Board of Directors by the provisions of the Articles of Incorporation of the Corporation and in accordance with the provisions of the Nevada Revised Statues:

 

RESOLVED that pursuant to authority expressly granted to and vested in this Board of Directors of the Corporation in accordance with the Articles of Incorporation of the Corporation (the "Articles of Incorporation"), the issuance of a series of Convertible Series Class B Common Stock, par value $.001 per share, which shall consist of up to 10,000,000 of the 300,000,000 shares of Common Stock which the Corporation now has authority to issue be, and the same hereby is, authorized, and this Board of Directors hereby fixes the designations, number, voting powers, preferences and relative, participating, optional and other special rights, and the qualifications, limitations or restrictions thereof, of the shares of such series (in addition to the designations, voting powers, preferences and relative, participating, optional and other special rights, and the qualifications, limitations or restrictions thereof, set forth in the Certificate of Incorporation which are applicable to the Common Stock Class B) as follows:

 

1.      Designation. There shall be a series of Convertible Common Stock Class B designated as “ Class B ” and the number of shares constituting that series shall be 2,000,000.

2.     Voting. Except as may be otherwise provided in herein or by law, the Series Class B Stock shall have voting rights at the rate of ten (10) times the Class A common stock in actions to be taken by the stockholders of the Corporation.

 

3.    Liquidation. Upon any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the holders of the shares of Series Class B stock will share pro

 

1


rata with the holders of Common Stock.

 

5. Conversions. The holders of shares of Series Class B Stock shall have the following conversion rights:

 

(a)   Optional Conversion. Each share of Series Class B Stock shall be convertible at any time, at the option of the holder thereof, and at the office of the Corporation or any transfer agent for such stock, on a one for one ratio for Class A common stock. Any holder of Series B Stock desiring to convert its shares of Series Class B Stock may convert all or part of their shares of Series Class B Stock.

 

Before any holder of Series Class B Stock shall be entitled to optional conversion of such Series Class B Stock into shares of Class A Common Stock, such holder shall (i) surrender the certificate or certificates thereof, duly endorsed, at the office of the Corporation or of any transfer agent for such stock, or (ii) notify the Corporation or its transfer agent that such certificates have been lost, stolen or destroyed and execute an affidavit of lost certificate with respect to such certificate or certificates satisfactory to the Corporation, and give written notice to the Corporation at such office that such holder elects to convert the same and shall state therein the name or names in which such holder wishes the certificate or certificates for shares of Common Stock to be issued. The Corporation shall, as soon as practicable thereafter, issue and deliver at such office to such holder, or to such holder's nominee or nominees, a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled, and a check payable to the holder in the amount of any cash amounts payable as the result of a conversion into fractional shares of Common Stock, plus any declared and unpaid dividends on the converted Series Class B Stock. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of surrender of the shares of Series Class B Stock to be converted, and the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on such date. Any accrued but unpaid dividends on shares of the Series Class B Stock surrendered for conversion shall be paid in contemporaneously with the issuance of certificates evidencing shares of Common Stock upon the conversion.

 

 

(b)

Adjustments for Combinations or Consolidations of Common Stock or Preferred Stock.

 

(1) Adjustments for Subdivisions or Combinations of Common Stock. If the outstanding shares of Common Stock shall he subdivided (by reclassification, stock split, by payment of a stock dividend or otherwise), into a greater number of shares of Common Stock, the Conversion Ratio of the Series Class B Stock in effect immediately prior to such subdivision shall, concurrently with the effectiveness of such subdivision, be proportionately adjusted. If the outstanding shares of Common Stock shall be combined or consolidated, (by reclassification, stock split or otherwise), into a lesser number of shares of Common Stock, the Conversion Ratio of the Series Class B Stock shall remain the same.

 

2


(2) Adjustment for Mergers or Reorganization, etc. In case of any consolidation or merger of the Corporation with or into another Corporation or the conveyance of all or substantially all of the assets of the Corporation to another Corporation, each share of Series Class B Stock shall be convertible into the number of shares of stock or other securities or property to which a holder of the number of shares of Common Stock of the Corporation deliverable upon conversion of such Series Class B Stock would have been entitled upon such consolidation, merger or conveyance; and, in any such case, appropriate adjustment (as determined in good faith by the Board) shall be made in the application of the provisions herein set forth with respect to the rights and interests thereafter of the holders of the Series Class B Stock, to the end that the provisions set forth herein (including provisions with respect to changes in and other adjustments of the Conversion Ratio shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other property thereafter deliverable upon the conversion of the Series Class B Stock.

(c)     No Impairment. The Corporation shall not, through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Corporation, but will at all times in good faith assist in the carrying out of all the provisions of this Section 5 and in the trading of all such action as may be necessary or appropriate in order to protect the conversion rights of the holders of the Series Class B Stock against impairment.

(d)    Certificates as to Adjustments. Upon the occurrence of each adjustment or readjustment of a Conversion Ratio pursuant to this Section 5, the Corporation, at its expense, promptly shall compute such adjustment or readjustment in accordance with the terms hereof and, the Corporation shall, upon the written request at any time of any holder of Series Class B Stock, furnish or cause to be furnished to such holder a like certificate setting forth (i) such adjustments and readjustments, (ii) the Conversion Ratio at the time in effect, and (iii) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of Series Class B Stock.

 

 

(e)

Notice of Record Date. In the event that the Corporation shall propose at any time:

 

(i)         to declare any dividend or distribution upon its Common Stock, whether in cash, property, stock or other securities, whether or not out of earnings or earned surplus;

(ii)        to offer for subscription pro-rata to the holders of any class or series of its stock any additional shares of stock of any class or series or other rights;

 

(iii)       to effect any reclassification or recapitalization of its Common stock outstanding involving a change in the Common Stock; or

(iii) to merge or consolidate with or into any other Corporation, or sell, lease or convey all or substantially all of its property or business, or to liquidate, dissolve or wind up;

 

 

3

 

 


then in connection with each such event, the Corporation shall send a written notice to the holders of the Series Class B Stock:

 

(1)         at least twenty (20) days prior to the date on which a record shall be taken for such dividend, distribution or subscription rights (and specifying the date on which the holders of Common Stock shall be entitled thereto) or for determining rights to vote in respect of any of the matters referred to in subsection (iii) or (iv) above; and

 

(2)         at least twenty (20) days prior to the date when any of the matters referred to in subsections (iii) or (iv) above shall take place (and specifying the date on which the holders of Common Stock shall be entitled to exchange their Common Stock for securities or other property deliverable upon the occurrence of such event).

 

Each such written notice shall be given by first class mail, postage prepaid, addressed to the holders of Series Class B Stock at the address for each such holder as shown on the books of the Corporation. hi the event the notice requirements of this section are not complied with or waived, the Corporation shall forthwith either cause the closing of the transactions to be postponed until such requirements have been complied with, or cancel such transaction, in which event the rights, preferences and privileges of the holders of Series Class B Stock shall revert to and be the same as the rights, preferences and privileges existing immediately prior to the date of the first notice referred to in this section.

 

(f)   Issue Taxes. The Corporation shall pay any and all issue and other taxes that may be payable in respect of any issue or delivery of shares of Common Stock on conversion of shares of Series Class B Stock pursuant hereto; provided, however, that the Corporation shall not be obligated to pay any transfer taxes resulting from any transfer requested by any holder in connection with any such conversion.

 

(g)  Reservation of Stock Issuable Upon Conversion. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of the Series Class B Stock, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Series Class B Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of Series Class B Stock, the Corporation shall take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose.

 

(h)  Fractional Shares. No fractional share shall be issued upon the conversion of any share or shares of Series Class B Stock. All shares of Common Stock (including fractions thereof) issuable upon conversion of more than one share of Series Class B Stock by a holder thereof shall be aggregated for purposes of determining whether the conversion would result in the issuance of any fractional share. If, after the aforementioned aggregation, the conversion would result in the issuance of a fraction of a share of Common Stock, the Corporation shall, in lieu of issuing any fractional share, pay the holder otherwise entitled to such fraction a sum in

(f)  

cash equal to the fair market value of such fraction on the date of conversion (as determined in good faith by the Board).

 

6.    Amendments. No provision of these terms of the Series Class B Stock may be amended, modified or waived without the written consent or affirmative vote of the holders of a majority of the then-outstanding shares of Series Class B Stock.

IN WITNESS WHEREOF, Ford-Spoleti Holdings, Inc. has caused this certificate to be signed on its behalf by Ann T. Ford-Spoleti, its President, this 1st day of May, 2004.

FORD-SPOLETI HOLDINGS, INC.

By:/s/ Ann T Ford Spoleti  

Name: Ann T. Ford-Spoleti

Title: President

 

 

4

 

Exhibit 3.4

 

Ford Spoleti Holdings, Inc.

A Nevada Corporation

BY-LAWS

 

ARTICLE SHAREHOLDERS

 

Section 1.1 Annual Meeting

 

An annual meeting of shareholders for the purpose of electing directors and of transacting such other business as may come before it shall be held each year at such date, time and place, either within or without the Nevada, as may be specified by the Board of Directors.

 

Section 1.2 Special Meetings.

 

Special meetings of shareholders shall be held at such time and place, within or without the State of Delaware, as may be designated in the notice of meeting, whenever called by the President, the Secretary or a majority of the Board of Directors, subject to any special statutory previsions. A special meeting of shareholders shall be called by the President upon the written request, stating time, place and purpose or purposes of the meeting, of shareholders who together own of record a majority of the outstanding stock of any class entitled to vote at such meeting.

 

Section 1.3 Notice of Meeting.

 

Written notice of shareholder meetings, stating the place, date, hour and purpose thereof and, unless it is the annual meeting, indicating that it is being issued by or at the direction of the person or persons calling the meeting, shall be given by the President or the Secretary to each shareholder of record entitled to vote thereat not less than ten (10) nor more than fifty (50) days before the date of the meeting.

 

Section 1.4 Quorum.

 

Except as otherwise provided by law or in the cert[ficate of incorporation or these By Laws, at any meeting of shareholders, the holders of a majority of the outstanding shares the holders of which are entitled to vote thereat shall be present in person or represented by proxy in order to constitute a quorum for the transaction of any business.

 

 


Section 1.5 Organization.

The President shall call to order meetings of shareholders and shall act as chairman of such meetings. The Board of Directors or the shareholders may appoint any shareholder or any director or officer of the Corporation to act as chairman of any meeting in the absence of the President.

 

The Secretary of the Corporation shall act as secretary of all meetings of shareholders, but in the absence of the Corporation, the chairman of the meeting may appoint any other person to act as secretary of any meeting.

 

Section 1.6 Voting.

 

Except as otherwise provided by law, the certificate of incorporation or these By-Laws and except for the election of directors, at any meeting duly called and held at which a quorum is present, a majority of the votes cast at such meeting upon a given question by the holders of outstanding shares of stock of all classes of stock of the Corporation entitled to vote thereon who are present in person or by proxy shall decide such question. At any election of directors at which a quorum is present, the directors shall be elected by a plurality of the votes cast at such election.

ARTICLE 1

BOARD OF DIRECTORS

 

Section 2.1 Number and Term of Office.

 

The business, property and affairs of the Corporation shall be managed and controlled by a Board of one director; provided, however, that the Board, by resolution adopted by a vote of a majority of the then authorized number of directors, may increase and thereafter decrease the number of directors. The directors shall be elected at the annual meeting of shareholders and serve (subject to the provisions of Article IV) until the next succeeding annual meeting of shareholders and until the election and qualification of their respective successors.

 

Section 2.2 Chairman of the Beard.

 

The directors may elect one of their members to be Chairman of the Board of Directors. The Chairman shall be subject to the control of and may be removed by the Board of Directors, He shall perform such duties as may from time to time be assigned to him by the Board,

 

Section 2.3 Meetings

 

The annual meeting of the Board of Directors for the election of officers and the transaction of such other business as may come before the meeting shall be held at the same place as, and immediately following, the annual meeting of shareholders.

 


 

Regular meetings of the Board of Directors may be held without notice at such time and place as shall from time to time be determined by the Board. Special meetings of the Board of Directors shall be held at such time and place as shall be designated in the notice of meeting whenever called by the Chairman of the Board, the President or by a majority of the directors then in office.

 

Section 2.4 Notice of Special Meetings.

 

The Secretary, or in his absence any other officer of the Corporation, shall give each director notice of the time and place of holding of special meetings of the Board of Directors by mail at least two (2) days before the meeting, or by telegram, cable or radiogram or personal service at least one (I) day before the meeting. Unless otherwise stated in the notice thereof, any and all business may be transacted at any meeting without specification of such business in the notice.

 

Section 2.5Quorum and Organization of Meetings.

 

A majority of the entire Board of Directors as constituted from time to time shall constitute a quorum for the transaction of business, but if any meeting of the Board of Directors there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time, and the meeting may be held as adjourned without further notice or waiver. Except as otherwise provided by law or by these By-Laws, a majority of directors present at any meeting at which a quorum is present may decide any question brought before such meeting. Meetings shall be presided over by the Chairman of the Board or in his absence by the President, or in the absence of both by such other person as may be selected by the directors. The Secretary of the Corporation shall act as secretary of the meeting, but in his absence the chairman of the meeting may appoint any person to act as secretary of the meeting.

 

Section 2.6 Committees.

 

The Board of Directors, by resolution adopted by a majority of the entire Boards, may designate from among its members one or more committees, each consisting of one or more directors, and each of which, to the extent provided in such resolution, shall have all the authority of the Board (except as otherwise provided by law, the certificate of incorporation, or these By-Laws). However, no such committee shall have the authority as to any of the following matters:

 

(a) the submission to shareholders of any action as to which shareholders' authorization or approval is required by law, the certificate of incorporation, or these By-Laws

 

The annual meeting of the Board of Directors for the election of officers

 


 

(b)

the filling of vacancies in the Board of Directors or in any committee.

 

(c)       the fixing of compensation of the directors for serving on the Board or on any committee.

 

(d)       the amendment or repeal of these By-Laws,' or adoption of new By-Laws.

 

(e)       the amendment or repeal of any resolution of the Board of Directors which by its term shall not so amendable or repealable.

 

The Board may designate one or more directors as alternative members of any such committee, who may replace any absent member or members at any meeting of such committee.

 

Each such committee shall serve at the pleasure of and be responsible to the Board. It shall keep minutes of its meetings and report the same to the Board.

 

Section 2.7 Action Without a Meeting.

 

Any action required or permitted to be taken by the Board or any committee thereof may be taken without a meeting, if all members of the Board or the committee consent in writing to the adoption of a resolution authorizing the action. The resolution and the written consents thereto by the members of the Board or committee shall be filed with the minutes of the proceedings of the Board or committee.

 

Section 2.8 Action by Conference Telephone.

 

Any one or more members of the Board of Directors or any committee thereof may participate in a meeting of the Board of Directors or committee by means of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at a meeting.

ARTICLE III OFFICERS

 

Section 3.1 Executive Officers

The executive officers of the Corporation shall be a president and a


Secretary, each of whom shall be elected by the Board of Directors. The Board of Directors may elect or appoint such other officers (including a Chairman of the Board, -one or more Vice Presidents, a Treasurer and one or more Assistant Treasurers and an Assistant Secretaries) as it may deem necessary or desirable, each of whom shall have such authority, shall perform such duties and shall hold office for such term as may be prescribed by the Board of Directors from time to time. Any person may hold at one time two or more offices, except if the stock of the Corporation is held by more than one person, no person may hold at one time the offices of President and Secretary. .

 

Section 3.2 Powers and Duties of Executive Officers.

 

The officers of the Corporation shall have such power and duties in the management of the Corporation as may be prescribed by the Board of Directors and, to the extent not so provided, as generally pertain to their respective offices, subject to the control of the Board of Directors.

 

ARTICLE IV

RESIGNATIONS, REMOVALS AND VACANCIES

 

Section 4.1 Resignations.

Any director or officer of the Corporation, or any member of any committee, may resign at any time by giving written notice to the Board of Directors, the President or the Secretary. Any such resignation shall take

effect at the time specified therein or, if the time be not specified therein, then upon receipt thereof. The acceptance of such resignation shall not be necessary to make it effective.

 

Section 4.2 Removals.

 

The Board of Directors, at any meeting thereof, or by written consent, may, to the extent permitted by law and by separate agreement between the shareholders, at any time, remove with or without cause from office or terminate the employment of any officer or member of any committee, and may remove with. cause any director.

 

The shareholders entitled to vote for the election of directors may, upon the concurrence of the holders of a majority of all shares then entitled to vote, remove any director with or without . cause.

 

Section 4.3 Vacancies.

 

Any vacancy occurring for any reason (including removal without cause) in the office of any director or officer, and any additional directorship resulting from increase in the number of directors, may be filled at any

 

 

 


time by a majority of the directors then in office (even though less than a quorum remains) or by the shareholders and, subject to the provisions of this Article, the person so chosen shall hold office until his successor shall have been chosen and qualifies; or if the person so chosen is a director elected to fill a vacancy, he shall hold office for the unexpired term of his predecessor.

 

ARTICLE V

CERTIFICATES REPRESENTING SHARES

 

Section 5.1 Form of Certificates.

 

The shares of the Corporation shall be represented by certificates which shall be in such form as prescribed by law and approved from time to time by the Board of Directors.

 

Section 5.2 Transfer of Shares.

 

Shares of capital stock of the Corporation may be transferred on the books of the Corporation only by the holder of such shares or by his duly authorized attorney, upon the surrender to the Corporation or its transfer agent of the certificates of such shares properly endorsed,

 

Section 5.3 Fixing Record Date.

 

For the purpose of determining the shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof or to express consent to or dissent from any proposal without a meeting, or for the purpose of determining the shareholders entitled to receive payment of any dividend or the allotment of any right, or for the purpose of any other action, the Board . of Directors may fix, in advance, a date as the record date for any such determination of shareholders. Such date shall not be more than fifty (50) or less than ten (10) days before the date of any meeting nor more than fifty (50) days prior to any action taken without a meeting, the payment of any dividend or the allotment of any right, or any other action.

 

Section 5.4 Lost Certificates.

 

The Board of Directors or any transfer agent of the Corporation may direct a new share certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation, alleged to have been lost, stolen or destroyed. When authorizing such issues of a new certificate or certificates, the Board of Directors may, in its discretion and as _a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to give the Corporation

 

 

 


 a bond in such sum as the Board of Directors shall direct to indemnify the Corporation against any claim that may be made against the Corporation with respect to the certificates alleged to have been lost, stolen or destroyed or the issuance of such new certificates, and such requirement may be general or confined to specific instances.

 

Section 5.5 Regulations.

 

The Board of Directors shall have the power and authority to make all such rules and regulations as it may deem expedient concerning the issue, transfer, registration, cancellation and replacement of certificates for shares of the stock of the Corporation.

ARTICLE VI

GENERAL PROVISIONS

 

Section 6.1 Corporate Seal

 

The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization and the words "Corporate Seal".

 

Section 6.2 Fecal Year.

 

The fiscal year of the Corporation shall be determined from time to time by resolution of the Board of Directors.

 

Section 6.3 Notices and Waivers Thereof.

 

Whenever any notice is required by these By-laws or by the certificate of incorporation, or by any law to be given to any shareholder, director or officer, such notice, except as otherwise provided by law, may be given personally, or by mail, or, in the case . of directors and officers, by telegram, cable or radiogram, addressed to such address as appears on the books of the Corporation. Any notice given by telegram, cable or radiogram shall be deemed to have been given when it shall have been delivered for transmission and any notice given by mail shall be deemed to have been given when it shall have been deposited in the United States mall with postage thereon prepaid.

 

.Whenever a notice is required to be given by any statute, the , certificate of incorporation or these By-Laws, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the meeting or the time stated therein, shall be deemed equivalent in all respects to such notice.

 

 


             Section 6.4 Securities of Other Corporation or Other Interests.

Unless otherwise ordered by the Board of Directors, the President, the Secretary and such attorneys or agents of the Corporation as may from time to time be authorized by the Board of Directors shall have the full power and authority on behalf of this Corporation to attend and to act and vote in person or by proxy at any meeting of the holders of securities of any corporation or other entity in which this Corporation may own or hold shares or other securities, and at such meetings shall possess and may exercise all the rights and powers incident to the ownership of such shares or other securities which this Corporation, as the owner or holder thereof, might have possessed and exercised if present. The President, the Secretary or such attorney or agents may also execute and deliver on behalf of the Corporation powers of attorneys, proxies, consents, waivers and other instruments relating to the shares or securities owned or held by this Corporation.

 

Section 6.5 Indemnification of Directors, Officers, Employees and Agents.

 

Any person made or threatened to be made a party to an action or proceeding, whether civil or criminal, by reason of the fact that he, his testator or intestate then is or was a director, officer, employee or agent of the Corporation, or then serves or has served any other Corporation, shall be indemnified by the Corporation against expenses, judgements, fines and amount paid in settlement to the full extent that officers and directors are permitted to be indemnified by the laws of the State of Nevada.

ARTICLE VII AMENDMENTS

 

The holders of shares entitled to vote for the election of directors shall have the power to adopt, alter, amend or repeal the By-Laws of the Corporation by vote of not less than a majority of the entire Board shall have power equal in all respects to that of the shareholders to adopt, alter, amend or repeal the By-Laws. However, any By-Law adopted by the Board may be amended or repealed by vote of the holders of a majority of the shares entitled at the time to vote for the election of directors.

 

If any By-Law regulating an impending election of directors is adopted, amended or repealed by the Board of Directors, there shall be set forth in the notice of the next meeting of shareholders for the election of directors the By-Laws so adopted, amended or repealed, together with a concise statement of the changes made.

 

 

 

 

 

EXHIBIT 10.1

 

140 BELLE MEAD LLC

CO-OWNERSHIP, JOINT VENTURE AND MANAGEMENT AGREEMENT

 

THIS AGREEMENT is made and entered into as of October 20, 2005 between 140 Belle Mead LLC ("the LLC"), and Ford-Spoleti Holdings, Inc. (FSH). The LLC and FSH are collectively referred to herein as "the Parties."

WHEREAS, the LLC and FSH has or is about to acquire, as co-owner and tenants in common, an office building located at 140 North Belle Mead Road, Setauket, New York 11785 (the "Premises"), and wherein the LLC and FSH shall own an undivided interest in the Premises as tenants in common, defined herein as their respective "Equity Interest" in the Premises, as follows;

 

(Initial) Equity Interest

 

140 Belle Mead LLC

 

60.00%

Ford-Spoleti Holdings, Inc.

 

40.00%

 

TOTAL:

100.00%

 

WHEREAS, the LLC and FSH are desirous of entering into this Agreement to set forth the respective rights, obligations and responsibilities of the LLC and FSH as to the co-ownership of the Premises as tenants in common and not a partnership;

 

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties hereto agree as follows:

1           JOINT VENTURE NAME. The Joint Venture shall be known as "140 Belle Mead Joint Venture", and shall be hereinafter be referred to as the "Joint Venture".

 

2 NATURE OF THE JOINT VENTURE. The Joint Venture is formed for the purpose of defining the respective rights, obligations and responsibilities of the Parties with respect to their co-ownership of the Premises as tenants in common, and the management and operation of the Premises. It is the specific intention of the parties not to form a partnership for the operation of the Premises, but that their relationship be merely of co-ownership, with their respective rights of ownership set forth herein, and that the operation, management, lease and sale of the Premises be conducted by the Managing Agent, except as expressly set forth in this agreement. The Joint Venture shall also engage in such other activities as may be necessary or incidental to the foregoing business activities.

3 PRINCIPAL PLACE OF BUSINESS. The principal office of the Joint Venture shall be located at do Soundview Property Management, Inc., 3235 Route 112, Suite 1, Medford, New York 11763, or at such other place as the parties may from time to time determine.

4           TERM. The Joint Venture shall continue for 99 years, unless earlier terminated or dissolved pursuant to applicable law or to any other provision of this Agreement.

 


5 ALLOCATION OF INCOME & EXPENSE. The income and expense (including interest and depreciation) attributable to the ownership and operation of the Premises shall be shared and allocated between the Parties as co-owners of the Premises, in proportion to their respective Equity Interest in the Premises.

 

6 NO OTHER OBLIGATIONS: FSH represents and warrants that there are no obligations other than those disclosed to the LLC and reflected in Exhibit B attached hereto. SPH hereby indemnifies and holds harmless the LLC against all fines, costs, liabilities, expenses, attorney's fees, losses and damages of whatever type or nature incurred or suffered by the LLC as a result of any misstatement, misrepresentation or nondisclosure contained herein.

 

7 BOOKS The Joint Venture book and records shall be maintained at the principal office of the Joint Venture, and all Parties shall have access thereto at all times. Moreover, any of the Parties can make copies of any and all Joint Venture books and records and can send in their own auditorslaccountants to inspect said books and records and LLC shall provide same with office space to conduct said audit. The books shall be kept on the accrual basis for each calendar year, and shall be closed and balanced at the end of each such year. Such books shall be separately kept and maintained for the parties by 140 Belle Mead LLC. The Parties respective shares of income and expense, interest and depreciation shall be computed and reported separately as co-owners by a certified accounting firm selected by the Parties.

 

8 INITIAL ACQUISITION CONTRIBUTIONS. The initial acquisition contributions of the Parties made or to be made prior to the Closing of the purchase of the Premises, in cash or credit, is set forth on Exhibit A annexed hereto.

 

9 ADDITIONAL CASH OR CAPITAL CONTRIBUTIONS. The Parties acknowledge that the Managing Agent has furnished each party with a projection of anticipated cash flow, rental income, net cash flow, and additional short term capital expenses that will be required to improve the Premises, all of which are good faith estimates, but do not constitute a representation or warranty of any kind by the Managing Agent as to their accuracy or reliability. If after the LLC's contribution provided for in Exhibit `A', in the judgment of the Parties, funds in excess of proceeds obtained for mortgage loans or other kinds of financing are required in order to pay actual or projected expenses, or to fund additional capital improvements for the Premises, then and in that event such additional funds shall be contributed by the Parties in proportion to their Equity Interest in the Premises. Such contributions shall be due and payable within the time specified by written notice to the Parties by the Managing Agent; provided, however, that the time specified for such contributions shall not be less than 30 days after written notice is given to the Parties.

 

To the extent that any Party shall fail to timely pay its proportionate share of any such required additional cash or capital contribution, the other Party shall be required to pay, within ten business days after such default, their pro rata share of the amount of such deficiency. The Parties who advance any such defaulted additional contribution shall each have the option to treat such additional contribution as either (i) a purchase of a portion of the Equity Interest of the defaulting Party in the Premises, or (ii) a loan to the defaulting party. Such option shall be exercised in a writing delivered to the other Parties and the Managing Agent at the time the additional contribution is made. If the contributing party elects to treat his contribution as a purchase, each party's Equity Interest in the Premises shall be adjusted accordingly based upon the aggregate contribution of the Parties to the Joint Venture since the inception of the Joint Venture. Such adjusted Equity Interest of each party shall supersede the Initial Equity Interest of such party as set forth in this Agreement,

 

2

 


notwithstanding anything to the contrary reflected in the deed to the Premises. The contributing party may require, as a condition that the deed be modified to reflect this adjustment in the Equity Interest of the Parties.

If the contributing party elects to treat its contribution as a loan to the defaulting party, then no adjustment shall be made to any Party's Equity Interest. However, the amount advanced by the party on behalf of the defaulting party shall be a debt of the defaulting party to the contributing party and shall bear interest at the rate of 5 percent plus the prime rate then being charged by Suffolk County National Bank per annum. Thereafter, all distributions of cash from the Joint Venture due to the defaulting party shall be paid to the party who has elected to treat a contribution as a loan, until such time as the principal and interest of the loan(s) are paid in full.

 

10 MANAGEMENT, DUTIES, AND RESTRICTIONS.

 

10.1 GENERAL MANAGEMENT. Except as otherwise expressly provided herein, the management and control of the day-to-day operations of the Premises and the maintenance of the Premises shall rest exclusively with Soundview Property Management, Inc. ("Managing Agent"), with a business address of 3235 Route 112, Suite 1, Medford, NY 11763 but shall be under the general direction and control of the Parties, subject only to the provisions of this Agreement.

10.2 DUTIES OF MANAGING AGENT. Subject to the control and direction of the Parties, the Managing Agent shall manage, or cause to be managed, the affairs of the Premises in a prudent and businesslike manner and shall devote such part of hislits time to such affairs as is reasonably necessary for the conduct of such affairs; provided, however, that it is expressly understood and agreed that neither the Managing Agent nor any Party shall be required to devote his/its entire time or attention to the business of the Joint Venture, and no Party shall be restricted in any manner from participating in other businesses or activities, provided that such activities shall not be competitive with the business or interests of the Joint Venture. Without limiting the generality of the foregoing, the Managing Agent's duties shall include the following:

10.2.1 to render quarterly progress reports to the parties with respect to the operations of the Premises;

10.2.2 to furnish, on an annual basis, financial statements, by certified public accountants;

10.2.3 to deposit all funds of the Joint Venture in one of two hank accounts with such bank or trust companies that the Parties agree to designate. Further, any checks in excess of the sum of One Thousand ($1,000.00) Dollars for expenditures outside the scope of the amounts budgeted therefore in the projected Joint Venture, shall be presented to the Joint Venture for its approval, prior to making such expenditure, except for normal operating expenses such as mortgage, LIPA bills, etc.

 

3

 


10.2.4 to maintain complete and accurate records of all assets, and books of account (containing such information as shall be necessary to record allocations and distributions pertaining to the Premises) and to make such records and books of account available for inspection and audit by any Party or his duly authorized representative (at the expense of such Party) during regular business hours at the principal office of the Joint Venture;

 

10.2.5 to prepare and distribute to all Parties all reasonable tax reporting information and monthly statements on or about the 20 1h of each succeeding month.

 

10.2.6 to prepare and distribute to all Parties, on or before the 20 th of each month the prior month's income and expense report, showing all income received as well as all checks issued and/or withdrawals made, to whom it was made payable, the amount, its purpose, and beginning and ending balance of all banking accounts.

 

10.2.7 As and when Soundview Property Management, Inc. is no longer able to be the Managing Agent, the Parties will retain the services of a new Managing Agent. Managing Agent shall not hire a company or do business with any entity that Managing Agent is related to by blood or management or has an interest in without prior written permission of the Parties.

 

10.3 COMPENSATION OF MANAGING AGENT. The terms and conditions pertaining to the services to be performed by the Managing Agent shall be established by a contract providing for a five (5) per cent management fee. (copy attached hereto)

 

11 MEETINGS AND VOTING

 

11.1 A meeting of the Parties may be called at any time by any of the Parties or the Managing Agent. Meetings of the Parties shall be held at the offices of Soundview Property Management, Inc., 3235 Route 112, Suite 1, Medford, New York, 11763. Not less than five (5) nor more than ten (10) days before each meeting, the Managing Agent or Parties calling the meeting shall give written notice of the meeting to each Party entitled to vote at the meeting. The notice shall state the date, hour and purpose of the meeting. Notwithstanding the foregoing provisions, each Party who is entitled to notice waives notice of it, if before or after the meeting the Party signs a waiver of the notice which is filed with the records of Parties meetings, or is present at the meeting in person or by proxy without objecting (in writing) to the lack of notice.

 

11.2 Quorum. Unless this Agreement provides otherwise, at a meeting of the Parties, the presence in person or by proxy of Parties holding not less than sixty (60 percent) of the aggregate Voting Percentages (as defined below) constitutes a quorum. A Party may vote either in person or by written proxy.

 

11.3 Voting. Except as otherwise provided in this Agreement, the affirmative vote of Individuals holding a sixty (60 percent) or more of the aggregate Voting

 

4

 


Percentages (as defined below) shall be required to approve any matter coming before the Parties at the meeting,

 

11.4 In lieu of holding a meeting, the Parties may vote or otherwise take action by a written instrument indicating the unanimous consent of the Parties.

 

11.5 Voting Percentages. Notwithstanding any provisions in this Agreement to the contrary, the Parties agree that for the purposes of voting any matter for which approval of the Parties is required under this Agreement, each of the Parties shall have the following Voting Percentage:

 

140 Belle Mead LLC

 

60.00%

Ford-Spoleti Holdings, Inc.

 

40,00%

 

TOTAL

100.00%

 

The Parties further agree that if and to the extent any adjustment is made in the Ownership Interest of a Party in the Premises or his LLC pursuant to the provisions of this Agreement, the Voting Percentage of the Parties shall be adjusted accordingly.

 

11.6 Major Decisions.

 

11.6.1 Decisions Requiring Unanimous Consent. Any amendment of this Agreement shall require the unanimous consent of the Parties.

 

11.6.2 Decisions Requiring Approval by a Super Majority. Notwithstanding any provision in this Agreement to the contrary, no Party may, without the approval of a Super Majority Vote, which is defined herein as the affirmative vote of two-thirds (66.67%) of the Voting Percentage:.

 

a.     cause or permit the sale, refinance or exchange of the Premises;

 

 

b.

incur indebtedness, or issue notes, bonds or other obligations or evidences of indebtedness, with respect to the Premises;

 

 

c.

file or consent to file any petition, with respect to the Premises, for relief in bankruptcy under any federal bankruptcy law or debtor relief law or any debtor relief law; or

 

 

d.

assign, pledge, compromise, settle or release any claim by or against any person with respect to the Premises.

to exceed two months projected expenses, If recommended by the Managing Agent and approved by the Parties, any such cash distribution shall be in proportion to the Parties Equity Interest in the Premises.

 

12 DISTRIBUTIONS. No less than quarterly, the Managing Agent shall evaluate and determine whether to recommend a cash distribution to the Parties of so much of the net cash flow from the operation of the Premises as the Managing Agent reasonably determines is not required for the operation of the Premises including any reserves reasonably required in connection therewith not

 

5

 


13 TRANSFER OF AN INTEREST IN THE PREMISES. 13.1 Permitted Transfer

 

12,1.01 Family Transfers During the lifetime of any Individual. A Party may transfer any or part of his interest in the Premises (or his interest in any LLC) to any member or members of his immediate family or a trust for the benefit of such family members, provided and upon the condition that (i) such family members or trust shall designate the transferring Party as his proxy coupled with an interest, for the maximum time allowed by law authorizing such transferring Individual to vote the interest being conveyed and (ii) such family members or trustee agree to execute and be bound by the terms and provisions of this Agreement.

 

12.1.02 Transfer on Death of a Party The interest of any Individual in the Premises maybe transferred by bequest or intestate succession to any legatee or heir provided that and on the condition that such legatees or heirs as the case may be shall (i) designate one person amongst them and grant such person a proxy coupled with an interest, for the maximum time allowed by law to such person to vote the entire interest being transferred, and (ii) such legatees or heirs agree to execute and be bound by the terms and provisions of this Agreement.

 

13.2 Except as provided in 12.1 above, no party shall sell, assign, transfer, mortgage, encumber or in any other manner dispose of all or part of its interest in the Premises (or his interest in any LLC) without first obtaining the prior written consent of all the Parties hereto; or, in the event that a party shall not have received the prior written consent of the other Individuals, without first offering to sell such interest to the other Individuals in the order and manner hereinafter provided (the Party desiring to make such transfer being hereinafter called the "Offering Party").

 

The Offering Party shall give to the other Parties a notice in writing, stating its intention to dispose of its interest in the Premises and setting forth the terms and conditions of such proposed disposition. The proposed disposition must be to a bona fide purchaser and verifiable, and the notice shall attach a true copy of a written agreement, signed by the proposed purchaser, offering to purchase the interest in the Premises. The other Parties shall have a period of 30 days, commencing with the date on which such notice is received, to give notice in writing to the Offering Party that he/it will purchase all or part of the offered interest.

 

Each Party other than the Offering Party shall have the right to Purchase a pro rata share of the Offered Interest commensurate with his interest in the Premises.

To the extent that the other Parties collectively do not timely exercise their option to purchase all of the offered interest, the Offering Party shall have the

 

6

 


right to sell the offered interest, subject to the restrictions imposed under this paragraph 12, to any other person, firm or corporation for a price not less than, and on terms not more favorable than, the price and terms offered to the other Parties, provided such sale occurs within 90 days following the Offer Notice to the Party.

 

13.3 All persons or entities acquiring an interest in the Premises pursuant to the terms of this paragraph 12 shall be and remain subject to all of the provisions of this Agreement, as the same may be amended from time to time; the transferee of any such interest shall be or remain, as the case maybe, a Party hereunder, and the Joint Venture shall continue with the remaining Parties on the same terms (except as the Parties' Equity Interest in the Premises may thereby be affected) as set forth in this Agreement. Notwithstanding any such consent or offer, such disposition shall in no manner relieve the transferring Party of any of its obligations under this Agreement and the Transferee shall accept such interest subject to all of the restrictions, terms and conditions of this Agreement as if he were a party hereto and shall become a signatory hereof, as a condition to any such transfer.

 

13.4 Notwithstanding anything contained herein to the contrary, the LLC may transfer its interest herein to one or more LLCs without further approval or permission from any of the Parties provided only that Soundview Property Management, Inc. remains the Managing Agent.

 

14

INVOLUNTARY WITHDRAWAL.

 

14.1 If any Party (hereinafter called the "Withdrawing Party") shall be adjudicated a bankrupt, be adjudged incompetent in any judicial proceedings, or initiate proceedings to partition or sell the Premises, or otherwise sell or offer to sell its interest in the Premises or a LLC to a third party without first offering to sell its or his interest pursuant to the terms of subparagraph 12 above (regardless of the applicable provisions of the laws of the State of New York now or hereafter in effect permitting judicial dissolution upon application by a party or permitting partition), or, in the event that the LLC is denied financing for its business or its property by reason of the financial condition of any Individual, or the failure of any Individual to comply with other obligations he may have to such lender, then in any such event, the Withdrawing Party, shall be deemed to have made an offer of sale of its/his interest in the Premises to the remaining Party or Parties, and such remaining Party or Parties shall have the right to purchase the Withdrawing Parties' interest in the Premises, in proportion to their respective interest in the Premises. Unless otherwise agreed, the sale shall be based upon the fair market value , determined as of such date by an independent appraiser selected by agreement of the Parties, discounted as follows. The purchase price of the withdrawing Parties interest in the Premises shall be based upon seventy (70%) percent of (the withdrawing Parties proportionate interest in) the appreciated fair market value over the original purchase price of the Premises, plus the Initial Capital Contribution made by the Withdrawing Party. If the Parties do not agree upon the selection of the appraiser, or the

 

7

 


valuation made by the appraiser, or the determination of purchase price, the matter shall be determined by arbitration as provided in Section 16 of this Agreement. The cost of the appraisal shall be born by the Parties pro rata with their interest in the Premises. The option to purchase the Withdrawing Parties interest shall expire 60 days after from the appraisers' report determining valuation, or the date of determination of the arbitration, whichever applies.

 

14.2 The purchase price of the Withdrawing Parties' interest in the Premises under the provisions of this paragraph, shall be paid as follows:

 

14.2.1 Twenty (20%) percent in cash at the time that the price shall become due pursuant to this section; and

 

14.2.2 The balance shall be paid in equal monthly installments over a five year period (including principal and interest; self amortizing), together with interest at the prime rate as published by the Suffolk County National Bank on the date of closing. Said balance shall be evidenced by a Promissory Note of like tenor in favor of the Withdrawing Party (or other person entitled to payment) and executed by the Purchasing Parties. Interest however, shall be adjusted on an annual basis, based upon the Suffolk County National Bank prime rate in effect on each anniversary date of the Promissory Note, and payments thereunder shall be adjusted accordingly.

 

15 TERMINATION OF JOINT VENTURE. Notwithstanding any other provision of this Agreement to the contrary, the Joint Venture shall not be dissolved upon death, incompetence, or bankruptcy of a Party, but shall continue until the expiration of the term specified in paragraph 4 above. Upon the termination of the Joint Venture, the Managing Agent shall proceed with the winding up of the Joint Venture, and its assets shall be applied and distributed as provided below.

 

Upon termination of the Joint Venture, the Premises shall be sold. The proceeds shall first be applied to the payment of the liabilities relating to the Premises and to the expenses of liquidation. A reasonable time shall be allowed of the orderly liquidation of the Joint Venture and for the discharge of liabilities to creditors, so as to enable the Managing Agent to minimize the normal losses attendant to a liquidation. The remaining proceeds shall next be applied to the repayment of any loans made by Parties to the Joint Venture. All proceeds and remaining assets then remaining shall be distributed to the Parties in proportion to their Equity Interest in the Premises. Notwithstanding any of the foregoing, for up to 6 months after the sale, the Managing Agent may retain a reserved sum deemed necessary by the Joint Venture as a reserve for any contingent liabilities or obligations relating to the Premises. The 1st day of the month after the end of the 6th month, the Managing Agent shall distribute the balance of the retained funds to the Parties. Upon the final distribution of assets to the Parties, each of the Parties shall be furnished with a statement, by the Joint Venture's accountants, which sets forth the assets and liabilities relating to the Premises as of the date of the complete liquidation. Upon compliance by the Managing Agent with the foregoing distribution plan, the Managing Agent shall execute and cause to be filed any and all other documents necessary with respect to termination and cancellation.

 

8

 


16 ARBITRATION. Each of the Parties agree that any dispute arising out of this Agreement, interpretation or enforcement thereof, shall be submitted to binding arbitration, to the American Arbitration Association located in Nassau or Suffolk County, New York, in accordance with the rules thereof. The parties to such any dispute shall share equally the cost of thereof. Provided, however, that the parties consent to the arbitrator determining, in his/her discretion based upon the equities of the case, whether the successful party shall be entitled to its reasonable attorneys' fees and costs incurred therewith.

 

17 LEGAL REPRESENTATION. Each of the parties acknowledge and agree that they have consulted their own attorney, and each Party should obtain independent legal counsel with respect to negotiation and execution of this agreement, including any legal, business or tax consequences pertaining thereto, or pertaining to the business of the Joint Venture.

 

18 INDEMNIFICATION. The parties hereby acknowledge to each other that one or more of the Parties may, from time to time, become obligated to pay, or provide personal guarantees with respect to loans obtained in connection with the acquisition, refinance or operation of the Premises. Therefore, each Party agrees that in the event that such persons become obligated for, or provide such personal guarantees, that, notwithstanding the terms and provisions of any loan documents, each Party shall be responsible to pay or guarantee said loan or loans in proportion only to its Equity Interest in the Premises. In the event that any such Person shall become liable to any creditor for any portion of any such obligation, beyond its rightful share based on its Equity Interest in the Premises, then, in that event, the other Parties shall promptly reimburse said Party for any amount in excess of its rightful share of said obligation, and that each Party shall indemnify the others and hold the other Party harmless for any obligation on such personal obligation, guarantee or guarantees beyond their rightful percentage thereof as set forth herein. In the event that any Party shall breach the terms and provisions of this Paragraph, then, in that event, in addition to such Party's obligations under this Paragraph, it shall be liable for the reasonable attorneys' fees of any Party or person damaged as a result of any such breach.

 

In the event that any Party shall have its interest in the Premises purchased pursuant to this Agreement, then, in that event, the remaining Party shall be deemed to have indemnified the Selling Party with respect to any obligations as set forth above.

 

19         GOVERNING LAWS. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.

 

20 AGREEMENT BINDING. This Agreement shall insure to the benefit of, and be binding upon, the parties hereto and their respective next-of-kin, legatees, administrators, executors, legal representatives, successors, and permitted assigns.

 

9

 


21 NOTICES. All notices under this Contract shall be in writing and shall be delivered personally or shall be sent by prepaid certified mail or by prepaid overnight courier with receipt acknowledged, addressed as set forth below, or as Seller or Purchaser shall otherwise have given notice. Notice will be deemed given 3 business days after it is mailed.

 

 

140 Nat& Belle Mead LLC

Ford-Spoleti

 

3235 Route 112, Suite 1

248 Rt. 25A, Suite 73

 

Medford, NY 11763

E. Setauket, NY 11733

 

Attorney

Sieratzki & Glassman LLP

 

Joseph A. Dempsey, Esq.

475 Park Avenue South, Suite 700

 

3235 Route 112, Suite 1

New York, NY 10016

Medford, NY 11763

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.

 

140 Belle,Mead LLC

 

 

By:

/s/_________

Paul Elliott, Member



 

 

 

 

10

 



EXEffB1r A

PARTNERSHIP STRUCTURE

 

 

Soundview

Capital

Opportunities,

LLC

FSH

Total

 

 

]Profit Loss 1 Sharin      O p erations

60%

40%

100%

 

 

Profit (Loss) Sharing - Capital Transactions

60%

40%

100%

 

 

Capital Investment

50%

50%

100%

 

 

Required capital investment (projected)

 

 

 

 

 

$904,176

$904,176

$1,808,352

 

 

Capital to be paid as follows:

FSH capital invested to date

 

$1,014,975

$1,014,975

 

 

LLC capital invested to date

42,689

 

42,689

 

 

Capital invested to date

42,689

1,014,975

1,057,664

 

 

Payment to satisfy Pine Barrens obligation

200,000

 

200,000

 

 

Payment from LLC to FSH

200,000

(200,000)

0

 

 

Additional cash requirements (projected)

461,487

89,201

550,688

 

 

 

84%

16%

100%

Total capital required

 

$904,177

$904,176

$1,808,353

 

 

50.0%

50.0%

too%

 

 

 

 

 

Allocation of debt (projected)

 

$1,674,000

$1,116,000

$2,790,000

 

 

60.00%

40.00%

 

Details of INITIAL CAPITAL

 

 

 

 

 

 

 

The required projected capital invesi.ent for both FSH and LLC will be $904,176. Upon execution of the joint venture agreement, a deed will be executed and recorded.

 

Capital requirements will then be paid as follows:

 

LLC will make a payment of $200,000 to pay the Pine Barrens obligation.

 

LLC will make payments totaling $200,000 to FSH. $50,000 Paid on contract and the balance to be paid with in 30 days of signing the joint venture agreement and deed.

 

The next $550,688 of capital will be paid in at a ratio of 84% to 16%, for LLC and FSH respectively. ■ Upon execution of this agreement LLC will be responsible for construction management and its fee of $70,000 may be utilized as a credit against its capital requirements.

 

LLC will be responsible for leasing the tenant spaces and as lease commissions are earned, they may be credited against its capital requirements.

The total capital requirement of $1,808,353 is a budgeted number. To the extent that the total cash outlay of the project is less than the budget, the intent of the joint venture partners is that the actual total cash outlay by each will be in the ratio of 50% 150%.

In the event that the actual cash outlay is more than the budget, the amount required above the $1,808,353

will be borne by the joint venture partners in their respective equity interests.

 

 

11


EXHIBIT B

OTHER OBLIGATIONS

 

NAME:

ESTIMATED AMOUNT DUE:

1.

NELSON AND POPE ENGINEERS

$8,000

2.

MCDONALD GEOSCIENCE

400

3.

ADVANTAGE TITLE

250

4.

CARTIER, BERNSTEIN LLP

2,500

 

Due after completion of Health Dept. approvals

 

L John LaMura (legal)

$20,000

Retainage due Flagg Realty Partners

$18,265

(Retainage form Bank of Smithtown advances

from construction completed to date)

 

 

 

12

 


MANAGEMENT CONTRACT

THIS AGREEMENT, made this 20th day of October, 2005, by and between Soundview Property Management, Inc., 3235 Route 112, Suite 1, Medford, New York, 11763 hereinafter referred to as "AGENT" and 1 40 Belle Mead LLC and Ford-Spoleti Holdings, Inc., hereinafter referred to as "OWNER".

 

The OWNER hereby appoints AGENT and AGENT hereby accepts appointment on the terms and conditions hereinafter provided as sole and exclusive Managing AGENT for the office building at 140 North Belle Mead Road, Setauket, NY, hereinafter referred to as "The Property" or "Premises".

 

ARTICLE I

 

(1)    AGENT shall use its best efforts in the management of the property and in billing tenants, collecting the monthly rental payments, common area maintenance assessments, real estate tax assessments and other income therefrom.

 

(2)    AGENT may, in the name of and at the expense of the OWNER, institute any and all legal actions or assessments, real estate tax assessments or other income from the property or the ousting or dispossessing of tenants or other persons therefrom, and such expense may include the engaging of counsel for any such matter, with the written approval of the OWNER.

 

(3)    AGENT shall cause the property appurtenances and grounds to be maintained as may be deemed advisable to OWNER, including exterior cleaning and painting and decorating, in the name of and at the expenses of the OWNER, to make or cause to be made such ordinary repairs and/or incidental alterations to the premises as may be necessary in the course of ordinary repair or alteration and to purchase such supplies as may be necessary to maintain and operate the Property. The expense to be incurred for any one item of incidental alteration or routine repair shall not exceed the sum of $500.00, unless authorized by prior written approval of OWNER to perform such repair or alteration, except emergency repairs, ie those immediately necessary for the safety of the OWNER'S tenants or other persons or for the preservation of safety of the Premises.

 

AGENT, with prior written approval of OWNER, shall cause or supervise as OWNER may instruct non-routine and/or non-ordinary repairs and alterations.

 

AGENT shall credit to OWNER any rebate or discount which AGENT shall obtain.

 

(4)    AGENT is authorized, in the name of and at the expense of OWNER, to make contracts for electricity, gas, steam, telephone, window cleaning, vermin extermination, cleaning, landscaping, snow removal and other services or such of them as OWNER shall deem advisable. AGENT

 

 

13


(5)    AGENT agrees in behalf of OWNER to supervise the work of, and to hire and discharge employees necessary to be employed in order to maintain and operate the Property and cause to be discharged all employees unnecessary or undesirable. OWNER must be notified prior to any such action. AGENT agrees to use reasonable care in the hiring of such employees. It is expressly understood and agreed, however, that all employees are in the employ of the OWNER solely and not in the employ of the AGENT and that the AGENT is in no way liable to the employees for their wages or compensation. AGENT will execute and file such tax returns and related documents associated with such employees as OWNER would be required to file, including but not limited to, Federal, State and local tax documents.

(6)    AGENT shall maintain for the OWNER accurate and complete accounting records which are to be prepared and updated pursuant to generally accepted accounting principals by which AGENT shall enter fully and accurately each and every financial transaction with respect to the operation of the Premises, render to OWNER a monthly statement of financial transactions relevant to the Premises including receipts and disbursements for the preceding month and remit any balance shown to be due OWNER. The disbursements shall include the compensation of AGENT on the basis hereinafter provided. AGENT shall also maintain the checkbook or the OWNER'S bank account.

(7)    OWNER shall reimburse AGENT promptly for any monies, which AGENT may elect to advance for the account of OWNER. Nothing herein contained, however, shall be construed to obligate AGENT to make any such advances.

(8)    All monies received by AGENT for or on behalf of OWNER (less any sums properly deducted by AGENT pursuant to any of the provisions of this Agreement) shall be deposited in a bank in a special account maintained by AGENT for the deposit of monies of OWNER and not mingled with the funds of AGENT. AGENT shall also maintain books and records of account in the name of OWNER separate from its own.

(9)    AGENT'S employees who handle or are responsible for Association's monies shall be bonded by a fidelity bond of $1,000,000 at AGENT'S sole expense, insuring OWNER against any loss suffered as a result of acts by AGENT or his employees.

(10)  AGENT shall regularly review and punctually pay all appropriate bills on behalf of OWNER including interest or amortization on mortgages, taxes, assessments, water charges or premiums on insurance, unless OWNER in writing expressly directs AGENT not to do so.

 

(II) a. In connection with Unemployment Insurance and Social Security taxes, AGENT will not perform any services beyond furnishing a copy of the payroll, unless specifically instructed by OWNER to prepare additional reports.

b. If it becomes advisable or necessary to make extraordinary repairs or engage in extensive reconstruction or rehabilitation or the premises or any part thereof, or if AGENT is called upon to perform any extraordinary services not customarily a part of the usual services performed by a managing agent, it is agreed by the parties hereto that AGENT shall receive an additional fee

 

14

 


therefore in an amount agreed upon between the parties, but in each instance, where AGENT is to receive an additional fee therefore, AGENT shall give OWNER prior written notice thereof.

c. For the purposes of this agreement, "extraordinary repairs" shall be deemed to include those repairs necessary or required as a result of fire, hurricane, storm damage, earthquakes, explosion, and other natural catastrophes and acts of God.

 

(12) The AGENT shall each year prepare an operating budget of anticipated income and expenses for the property, subject to the approval of the OWNER. The budget shall be prepared for the fiscal year on or about January 15 and contain a comparison of said budget to the income and expenses of the preceding and current years.

 

AGENT shall cause to be prepared, filed and distributed, as required by law, the necessary forms for unemployment insurance, worker's compensation insurance, disability benefits, withholding and social security taxes and all of the taxes and other forms relating to employees of OWNER required by Federal, State or Municipal authority.

 

AGENT shall cooperate with the Parties accountants in regard to the audits of the books and records of accounts of the OWNER.

 

AGENT shall accept applications and references from all prospective tenants, obtain credit reports relating to prospective tenants of space leased by OWNER, if any, list offers for lease, and lease and renew existing leases for space in the Property on terms to be determined by OWNER. During the term of this Agreement, AGENT shall supervise the preparation of lease documents for all space in the Premises.

 

AGENT shall supervise the moving in and out of tenants and subtenants and arrange the dates thereof.

 

AGENT shall accept security deposits from tenants and comply with all applicable laws, statutes, regulations and ordinances concerning OWNER'S responsibility for security deposits and interest theron, if any.

 

AGENT will prepare purchase orders and sign off on the purchase order and invoice and forward with a transmittal sheet to AGENT'S accounts receivable staff for scheduling and subsequent payment. In addition, all delivery tickets, receipts and services performed are to be checked by the supervising manager who shall initial the aforementioned items and invoices that follow as proof of receipt of material andlor satisfaction of work performed.

 

AGENT shall check and compare all bills received for services, work and supplies against purchase orders in connection with maintenance and operation of the business.

 

AGENT shall maintain accurate, complete records and accounts. This will include the checkbook, rent charge records, insurance policies, leases, correspondence, receipted bills, vouchers and all other documents pertaining to the Premises.

 

15

 


All funds of OWNER in AGENT'S possession will be held by AGENT for the benefit of OWNER and will be deposited by AGENT only in the account especially established for OWNER.

 

ARTICLE II

 

(1)   OWNER agrees: (a) To hold and save AGENT free and harmless from damages or injuries to person or property by reason of any cause whatsoever either in and about the premises or elsewhere when AGENT is carrying out the provisions of this contract or acting under the AGENT upon express or implied directions of OWNER. The AGENT implements decisions of the OWNER. In the event any claim is made against the AGENT by reason of implementation of OWNER decisions or otherwise, in connection with the services it renders for the OWNER, the OWNER shall defend and hold the AGENT harmless from any such claim. AGENT shall cooperate in the defense of any such claim; (b) To reimburse AGENT upon demand for any reasonable monies which the latter is required to pay out, either in connection with, or as a reasonable expense in defense of, any claim, civil or criminal action, proceeding, charge or prosecution made, instituted or maintained against AGENT or OWNER and AGENT jointly or severally, affecting or due to the condition of use of the premises, or acts of omissions of AGENT or employees of OWNER or AGENT, or arising out of or based upon any law, regulation, requirement, contract or award relating to the hours of employment, working conditions, wages and or compensation of employees or former employees of OWNER, or otherwise; ( c) To defend promptly and diligently, at OWNER's sole expense, any claim, action or proceeding brought against AGENT or AGENT and OWNER jointly or severally arising out of or connected with any of the foregoing, and to hold harmless and fully indemnify AGENT from any judgement, loss of settlement on account thereof unless such claim, action or proceeding was filed due to neglect or previous knowledge to AGENT. It is expressly understood and agreed that the foregoing provisions of this article shall survive the termination of this Agreement, but this shall not be construed to mean that OWNER's liability does not survive as to other provisions of this Agreement. Nothing contained in Subdivision (1) and (2) of this article shall relieve AGENT from responsibility to OWNER for gross negligence.

 

(2)

If OWNER shall fail or refuse to comply with or abide by any rule, order, determination, ordinance or law of any Federal, State or Municipal Authority, AGENT upon giving twenty-four (24) hours' written notice mailed to OWNER at its address first hereinabove set forth, may terminate this Agreement.

 

3) OWNER agrees to carry public liability, workmen's compensation, and such other insurance as may be necessary for the protection of the interests of OWNER and AGENT. In each such policy of insurance OWNER agrees upon request to designate AGENT as a party insured with OWNER, the carrier and the amount of coverage in each policy shall be mutually agreed upon by OWNER and AGENT. OWNER shall deliver a certificate of each policy issued by the carrier promptly to AGENT. Such certificate of insurance shall name Soundview Property Management, Inc. as additional insured.

 

16

 



ARTICLE III

AGENT is clothed with such other general authority and powers as may be necessary or advisable to carry out the spirit and intent of this Agreement.

ARTICLE IV

(1) OWNER agrees to pay AGENT five (5) % of the Premises gross income in monthly payments for one year.

ARTICLE V

 

(1)

This agreement shall become effective on the 20th day of October, 2005, and shall continue in full force and effect until the 19th day October, 2006. OWNER reserves the right to cancel this management agreement with 60 days prior written notice by certified mail, return receipt requested.

(2) Either party may designate a different address for the service of notices pursuant to this Agreement by serving written notice to such effect upon the other by registered mail.

This Agreement shall be binding on the parties hereto, their heirs, executors, administrations, successors and assignees, and may not be changed orally but only in writing signed by the party to be charged thereby. Both parties, separately and severally, guarantee the obligations, terms and conditions of this contract for the full term of this contract.

AGREED:

 

Ford Spoleti Holdings, Inc.

 

Soundview Property Management, Inc.

 

 

 

 

 

17

 


CONTRACT FOR PURCHASE OF EQUITY (FEE)

INTEREST IN 140 BELLE MEAD

 

This Agreement is made and entered into as of September 28th , 2007 between Ford-Spoleti Holdings, Inc., having offices at 248 Route 25A, Suite 73, E. Setauket, New York 11733 (hereinafter "Seller") and 140 Belle Mead LLC, c/o Soundview Property Management, Inc., 3235 Route 112, Suite 1, Medford, New York 11763 (hereinafter "Purchaser").

 

WHEREAS, Seller and Purchaser purchased property at Setauket, New York on or about October 20, 2005; and

 

WHEREAS, the Purchaser is desirous of purchasing and the Seller is desirous of selling all of the Seller's equity interest; and

 

NOW, THEREFORE, in consideration of the mutual promises contained herein, the receipt and sufficiency of such consideration being acknowledged, the Parties hereto agree as follows:

 

 

1.

Sale of Equity Interests

 

Purchaser agrees to purchase and Seller agrees to sell equity interests in 140 Belle Mead Road, Setauket, New York as follows:

 

Ford-Spoleti Holdings, Inc.

100% of 40% equity interest

 

2.

Purchase Price

 

As full payment for the aforesaid equity interests, Purchaser shall pay Seller as follows:

 

 

Ford-Spoleti Holdings Inc.

$725,000.00

3.         Payment of Purchase Price The purchase price is payable as follows:

 

A.           $250,000.00 by Purchaser's good check upon execution of this Agreement.

 

 

B.

$475,000.00 at closing on or about January 31, 2008.

C.           All money payable at closing, unless otherwise specified, shall be paid by:     (1) Cash, but not over $1,000.00;

(2) Good certified check of Purchaser drawn on or official check issued by any bank, savings bank, trust company or savings and loan association having a banking office in the State of New York, unendorsed and payable to the order of Sellers, or as Sellers may otherwise direct (ie wire transfer) upon reasonable prior notice (by telephone or otherwise) to Purchaser.

 

 

4.

Required Transfer Interests

 

 

 

 

18


The closing shall take place at the office of Purchaser's attorney at 3235 Route 112, Suite 1, Medford, New York 11763 on or about January 31, 2008 at 10:00 AM.

Simultaneous with the payment of the full purchase price due to Seller, Seller shall deliver to Purchaser, or Purchaser's designees, such instruments of transfer as are necessary to transfer to Purchaser the interests referred to in Paragraph 1 in the format required by Purchaser. Seller shall pay the transfer taxes and Purchaser shall pay the recording fees.

 

Purchaser hereby has a lien on the interests until closing.

 

Seller will transfer such interests free of all liens except the Bank of Smithtown mortgage, which will be satisfied as soon as is practically possible by the Purchaser. From and after the date of this Agreement and until the closing date, Seller shall not, without the written consent of Purchaser, dispose of or encumber any of the interests to be conveyed under this Agreement. Seller shall indemnify Purchaser against any liability connected with Seller's non-compliance with the foregoing.

 

 

5.

Indemnification

 

The Purchaser shall hold the Seller harmless from any and all obligations of 140 Belle Mead LLC, current and future, except those created by Seller alone, including, but not limited to, New York State and Federal income tax obligations, legal and accounting fees, architectural survey and related fees.

 

 

6.

Assignment

 

This Agreement shall not be assignable by either Party without the written consent of the other. Nothing in this Agreement is intended to confer any benefits or rights on any person or persons not party to this Agreement.

 

Notices

 

Any notice required or permitted to be given under this Agreement will be deemed given if and when delivered personally or sent by registered or certified mail, postage prepaid, properly addressed to the Party to receive it or by overnight delivery service at the address set forth above.

 

 

8.

Integrated Agreement; Survival of Warranties

 

This Agreement constitutes the entire Agreement of the Parties, and there are no agreements, warranties, or representations, express or implied, other than those expressly set forth in this Agreement. All agreements, representations, and warranties contained in this Agreement shall apply as of the closing date, and shall survive the closing of this Agreement.

 

 

9.

Modification

 

This Agreement may not be amended or modified, except by written agreement of the parties.

 

10.

Applicable Law

York.

11.

This Agreement shall be governed by and construed under the laws of New

Binding Effect

This Agreement shall bind and inure to the benefit of the Parties and their heirs, legal representatives, successors, and assigns.

 

 

 

19


WHEREAS, the Parties have executed this Agreement on the date first above

written.

Ford Spoleti Holdings, Inc.

 

 

By:

 

 

Soundview Property Management, Inc.

 

By

 

 

 

 

 

20