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“BONSAI” is wonderful, challenging, complex, and very difficult! Most efforts lead to failure, a second try, another failure, then moving on to something else. We’ve made it easier and success is very possible if you understand there are three major forms of bonsai. “TRADITIONAL TEMPERATE CLIMATE BONSAI” means “OUTDOOR BONSAI!” Pines, junipers, maples and other traditional bonsai must be grown outdoors in temperate climates. These are the most difficult! They do not magically become houseplants when grown as bonsai and most quickly die because of the wrong care or being grown in the wrong places. That's why many fail! “TROPICAL BONSAI” is easier and best grown outdoors when night temperatures are above 50°F and protected indoors during cold seasons. Strong supplemental light makes it possible to grow them indoors year-around if you can provide the proper potting media, watering, fertilizer, air circulation and other aspects. We can assist and teach but will not sell these plants as they are far too difficult for most beginners. That's why others fail! FUKU-BONSAI’S “TRUE INDOOR BONSAI™” IS THE EASIEST AND MOST SUCCESSFUL FOR ANYONE, ANYWHERE WHO CAN GROW HOUSEPLANTS! FUKU-BONSAI’S HISTORICAL SUMMARY Fuku-Bonsai has roots in a Fukumoto family hobby since 1962, was the pioneer of “True Indoor Bonsai™,” and the first Hawaii certified export nursery in 1973. The sole proprietorship evolved into a corporation in 1985 to own and operate both the original 12-acre Kurtistown certified nursery and a new 17-acre Fuku-Bonsai Cultural Center in upper Keauhou-Kona with a 1990 soft opening and 1992 grand opening. Unfortunately, in 1989, Benlate contaminated with weed killers caused losses that exceeded $30 million and Fuku-Bonsai was one of over 5,000 lawsuits. The center closed and went into Chapter 11 Bankruptcy in 1994. DuPont agreed to settle and; when creditors approved, our choice was to accept or be liquidated. We paid creditors 100% + interest and canceled the bankruptcy. Later, we learned DuPont withheld and misrepresented information and initiated fraud litigation that took 10 years to settle. Total proceeds after taxes and legal costs of the 1994 product liability and 2007 DuPont fraud settlements were less than 10% of losses. But, we've survived! Rebuilding and recovering were difficult as residual contamination prevented growing profitable original crops. Developing a superior Dwarf Schefflera replacement crop was part of reinventing the corporation. We received several grants, including a 2010 USDA $90,000 Rural Business Enterprise Grant. We must restructure and recapitalize to complete our 23-year battle for survival. REFINANCING FUKU-BONSAI The first priority is to obtain $250,000 of interim working capital in any combination of loans or sale of corporate stock to complete restructuring, make needed repairs, and cover any shortfall until we move into consistent positive cashflow. The corporation’s 12-acre Kurtistown nursery with all improvements can be first mortgage collateral for loans. A common stock share price of $25 per share was established by dividing net hard assets (real property and nursery inventory) divided by outstanding shares. We did not include the following “soft asset values” in calculating the share price: ● “Bonsai” soft assets include Fuku-Bonsai goodwill, reputation, proprietary techniques, “Fuku-Bonsai” registered trade name, “True Indoor Bonsai” trademark. Fuku-Bonsai’s Introductory Workshop Package is the easiest and most successful way to learn (or teach) bonsai and ideal for “Create Your First Bonsai” workshops. We represent “Popular American Bonsai” and a “fast-track bonsai” concept that allows rapid progress via progressively more difficult and older bonsai workshop packages with email help! www.fukubonsai.com is the most respected bonsai website. ● “Micro-Lobster” soft assets include “The Amazing Hawaiian Micro-Lobsters!” trademark, proprietary information, the large reputable website, and being the professional pioneer with commercial units with consistent reproduction. ● The corporation has authorized the sale of up to 200,000 shares at $25 per share to qualifying private equity investors. THE TRANSFORMATIONAL PIONEER! ● In the 1970’s to 1990’s David Fukumoto was the youngest of the Hawaiian leadership group that led “International Bonsai,” is the sole survivor, and the “keeper of the flame.” He is recognized as an authority in Chinese penjing, Tropical bonsai, and Fuku-Bonsai’s True Indoor Bonsai™ and has over 100 published bonsai articles. ● “True Indoor Bonsai” is the easiest and most successful gift bonsai for anyone, anywhere who can grow houseplants. In contrast, traditional outdoor bonsai are difficult, area-specific, with a very high failure rate. Hawaii has the oldest English-speaking bonsai history. Fuku-Bonsai is a certified to ship throughout the U.S. and committed to education and customer success. “Create Your First Bonsai” workshops utilizing the Introductory Workshop Package is part of the project: “Making the Big Island of Hawaii an International Bonsai Mecca!” FUKU-BONSAI & 501(3)(C) MID-PACIFIC BONSAI FOUNDATION RELATIONSHIP ● The same individuals who incorporated Fuku-Bonsai formed the Foundation a year later. As co-sponsor of the Fuku-Bonsai Cultural Center & Hawaii State Bonsai Repository and public guardian of historical and memorial bonsai, the Foundation will be the largest stockholder due to gifts by the original stockholders and as a part of the post-Fukumoto succession plan. The directors of the Foundation will include Big Island community leaders to oversee career Fuku-Bonsai managers and staff. ● The Foundation is developing national and international memberships with a monthly email “Journal of Tropical and True Indoor Bonsai” as the primary benefit of membership. Its Donor and Corporate Sponsor Program and donations will improve the center and bonsai exhibit collection. Besides dividends from Fuku-Bonsai shares, the Foundation will have other sources of income to teach and promote. COMMITTED & GROWING FOR THE FUTURE! Prior to Benlate, Fuku-Bonsai shipped over 3,000 units per month and production will exceed 6,000 units per month in the future. With the largest ethical potential market of any bonsai nursery due to its houseplant bonsai specialty, the corporation is expected to surpass its pre-Benlate profitability. The challenge is to maintain quality and lead the education and growth of what will become the most successful form of “Popular American Bonsai” that are very suitable as gifts. While there is potential for investment profitability, we especially invite those to join us who support our long-term vision, goals, and commitment! _________________________________________________________________ WE SEEK: 1. PRIVATE LOANS OF $2,500 AND UP with promissory note to provide short-term working capital until larger longer-term working capital loans obtained. These will be for 3-year terms to pay interest-only at "prime + 3%" (Currently 6.25%) with no prepayment penalty. Loans to be retired upon obtaining the interim working capital loan described below. 2. PRIVATE FUKUMOTO PRIVATE LOAN. $75,000; 3-year, interest only; no prepayment penalty. Points and interest rates negotiable. COLLATERAL: Recorded second mortgage on a 11.14 acre property with certified appraisal of $295,500 made February 6, 2011 by Reid Choate & Associates for a sale that fell through. A PDF copy of the appraisal is available. Title is held by David and Myrtle Fukumoto. The Bank of Hawaii first mortgage has 2-years remaining with loan balance of $168,539 that is current. PURPOSE OF THE LOAN: To provide working capital for the Fukumoto family to ease cashflow stresses. We will use some funds to improve the access road and property prior to putting it on the market. EXIT STRATEGY: Upon sale and escrow closing, this loan will be retired. 3. INTERIM FUKU-BONSAI WORKING CAPITAL LOAN. $250,000; 5-10 year; interest only; no prepayment penalty. Points and interest rate negotiable. COLLATERAL: Recorded first mortgage on the 12.11 acre Fuku-Bonsai nursery property with extensive improvements including: a) 3 bedroom/2 bath residence with 3-car port and improved downstairs with ½ bath and about 500 sq. ft. enclosed. b) 2 bedroom-1 bath cottage with 1-car port, c) Semi-enclosed and open nursery potting shed – 2,448 square feet. d) Enclosed office and nursery work building – 2,304 square feet. e) Plastic film greenhouse – 3,840 square feet. e) Paved nursery roads, shade house and certified nursery benches. (Note: prevailing market price of unimproved land is $25K to $30K/acre so this improved property with improvements represents substantial collateral value). PURPOSE OF LOAN: Provide interim working capital to complete recovery from $30+ million losses due to defective Benlate contaminated with weed killers sprayed in 1989. Total net recovery of the 1994 product liability and the 2007 DuPont fraud settlement after taxes and legal fees was less than 10% of our losses. The interim working capital loan will bring taxes and accounts current, will offset negative cashflow until we achieve positive cashflow (within a year) and be used for radio advertising, publishing promotional materials, hire our first management trainee to focus on operations and promotion/marketing. As we move toward positive cashflow, we will begin long delayed roof repairs and purchase of needed nursery supplies and equipment to continue expansion of production including hiring additional staff. EXIT STRATEGY: We will refinance with a traditional agricultural institutional lender after achieving a two year record of positive cashflow. 4. PURCHASE OF FUKU-BONSAI INC. STOCK. The stockholders have authorized the sale of 200,000 shares at $25.00 per share to raise up to $5,000,000. Minimum purchase is 200 shares ($5,000) with purchaser meeting several Hawaii State conditions governing sale of corporate stock including purchaser being a qualified buyer with a pre-existing relationship. To assure a due diligence opportunity and to meet the conditions, the purchase will be in the form of a private loan based upon a promissory note that will be converted to Fuku-Bonsai Inc. stock upon all conditions being met. 5. PURCHASE OF FUKU-BONSAI STOCK FOR DONATION TO THE MID-PACIFIC BONSAI FOUNDATION. Fuku-Bonsai stock has been purchased and donated to the 501(3)(c) Mid-Pacific Bonsai Foundation by the original stockholders. This has resulted in the Foundation being the largest stockholder behind the founding Fukumoto family. It is likely that the Foundation may become the largest stockholder in the future and take a larger role in overseeing career Fuku-Bonsai staff and managers. The shares of the Foundation are voted by Michael Imaino who joined Fuku-Bonsai in 1983 and currently Senior Plant Manager, Fuku-Bonsai corporate director, and president of the Foundation. Michael is also amongst the largest Fuku-Bonsai stockholders. To assure that the Foundation stock is voted in a manner that is fair to all employees, that the corporation conducts business in an exemplified manner to benefit bonsai, the local economy and the Big Island visitor industry, the directors will include outstanding community leaders. An extensive amount of PDF information and summaries is available for serious investors. For more information, please contact Fuku-Bonsai president and founder David W. Fukumoto at david.f@www.fukubonsai.com __________________________________________________________________ We acknowledge and humbly thank those who have joined the Mid-Pacific Bonsai Foundation with additional amounts toward the Corporate Sponsor and Donor Program. E KOMO MAI . . . come discover the serenity of nature, the beauty of bonsai, and the spirit of Hawaii!
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