Sandy Farms LLC - Prospectus

SANDY FARMS LLC

Contact:

Mark Boyd Global Ventures, Inc. 4721 354th Ave SE Fall City, WA 98024 | 206.292.1428 | www.globalventuresinc.com

DISCLAIMER Global Ventures, Inc. is the exclusive representative of SANDY FARMS LLC and has been asked to sell the business in whole or in part to interested outside parties. The information contained herein was provided by the owners and management of SANDY FARMS LLC. Although the material is believed to be correct, Global Ventures, Inc. assumes no responsibility for errors or omissions. The prospective buyer is urged to thoroughly review and inspect the records of the company, verify the correctness of all information, and representations herein before committing funds.

Table of Contents

Executive Summary

4

History

5

Ownership

5

Receivership Status

6

Business Opportunity

7

Products & Market Overview

7

Sales by Channel

8

Property Rights & Locations

8

Water Rights Overview

10

Physical Plant

11

Financial Information

12

Expansion Opportunities

12

Personnel

12

Conclusion Appendices 2012, 2016, 2017, 2018 Financial Documents (Included)

Appendix 1

Parcel Information (Included)

Appendix 2

Water Rights Report (Summary)

Appendix 3

Appraisal Tract I, II, IV

Appendix 4

Appraisal Tract III

Appendix 5

Receiver’s Reports – March, April, May, June

Appendix 6

Lease Documents – Transpacific Processing

Appendix 7

DEQ Permit – Plant Wastewater Dispersal

Appendix 8

Lease Documents – Ulrich Ruegger (Wheat Land)

Appendix 9

Executive Summary: Business:

Sandy Farms is a well-known 966-acre operating cane berry and blueberry farm located on Highway 211 in Boring, Oregon. Its total operations include 4 separate tracts of land and a processing facility all within a 5-mile radius of its main location. The farm is planted in blocks including blueberries, blackberries, Marionberries, black-cap raspberries, rhubarb, and forested and undeveloped land.

Age:

72 years in business beginning on May 1, 1947.

Opportunity:

Strategic investment in a business and land acquisition opportunity in a desirable location for both farming and long-term urban development potential.

Market Served:

Fresh, Individually Quick-Frozen (IQF), and processed grade fruit for consumption through sales to processing facilities throughout the Pacific Northwest.

Financials:

2018 Financial Overview Net Sales

$322,784

COGS

$637,784

Gross Profit

$-314,999

Gross Profit %

-50.61%

Adjusted EDITDA

$-538,241.19

Employees:

Sandy Farms has a non-union workforce including one farm supervisor and currently is contracting with Willamette Farm Labor Contracting, LLC for all general farm labor and harvesting.

Location:

The business is located at 34500 SE Highway 211 in Boring, Oregon. In an easyto-access location, the main facility is on highway 211, a major corridor to the Willamette valley and is only 3 miles from Highway 26 with direct access to Portland, Oregon.

Facilities:

Sandy Farms’ main operation facilities are located on Highway 211 and consist of a farm office, processing facility (buildings and equipment currently subject to lease – See Appendix 7), maintenance shop, cold and dry storage (currently subject to lease – See Appendix 7), covered storage for farm equipment and a single-family residence with a detached garage. The main facility is fenced and gated.

Beyond the main operating facility, there are two separate single-family residences, a large shop, a smaller storage area, a barn, and two other equipment pole barns. There are also 4 mobile home residences on the property to house year-round farm laborers

History: Sandy Farms has a 72-year history that all began with the original owner, F.T. Rowell. In the late 1930’s a joint venture between F.T. Rowell and Robert Hudson of Hudson-Duncan Food Processing, began purchasing blocks of land in Boring, Oregon. By 1947, they had purchased 512 acres of land. On May 1, 1947, the company was incorporated under the name Sandy Farms with F.T. Rowell as the majority stock owner and president and HudsonDuncan as a minority partner.

In 1951, John and Marilyn Rowell, the son of F.T. Rowell, took over the management of the farm. Throughout the next 20 years they purchased shares of the company from Hudson-Duncan. During that same period, the farm also continued to purchase more acreage in close proximity to the main farm and grew to over 800 acres by 1987.

Sandy Farms also leased another 160 acres. In 1981, the Rowell family purchased the remaining stock from Hudson-Duncan.

The ownership remained the same until 1993 when Bob Underwood, the new manager of Sandy Farms, entered into a stock purchase option agreement. In 1996, the final addition to Sandy Farms was purchased bringing the total farm to over 960 acres. It was also around that time that Bob Underwood began purchasing ownership shares in the corporation.

In 1996, John Rowell began to experience some health issues. In 1999, John Rowell passed away and his shares were put in a trust managed by Marilyn Rowell, his wife. In 2005, the farm was taken out of the trust and Doug Rowell (John and Marilyn’s son) and Bob Underwood took ownership of the farm.

In 2000, the primary purchaser of Sandy Farm’s fruit lost a large account limiting the amount of fruit they were able to purchase from Sandy Farms. Doug Rowell and Bob Underwood realized that an opportunity to expand operations at Sandy Farms and vertically integrate the farm by adding a puree line and entering the berry sales market for pureed product was at hand. Together they formed Transpacific Foods and began construction of the existing processing plant, which is now leased and managed by Transpacific Processing.

Vertically integrating with a processing facility allowed for the fruit grown at Sandy Farms to be sold directly to the market. The farm could now profit from year-round processing capacities with the availability of frozen/pureegrade fruit from not only Sandy Farms, but producers throughout the world.

This allowed the processing plant to process fruit both in the summer and winter creating an opportunity for the farm to be profitable year-round. The fruit from Sandy Farms and the processing plant was sold to purchasers like Dole Frozen Foods, Nestle, Island Oasis, Con-Agra, Sentient Flavors, Unilever, Carriage House Foods, and more.

In 2010, Doug Rowell exited his joint-venture with Bob Underwood and sold his shares in Transpacific Foods as well as his active role in Sandy Farms’ fruit processing facilities to Bob Underwood.

In 2015, due to some hardships with employment and farm mismanagement, a series of weed killers were applied to the roots of a large block of fruit. This had a drastic impact on the canes and their ability to produce fruit, resulting in a major decline in the farm’s total fruit production. Research and experience show that it takes up to three seasons for the vines to recover.

In 2016, the processing plant activities were transitioned from Sandy Farms to a new company, Transpacific Processing. A new lease was put in place which includes a monthly lease of the processing facilities, two barns, and a few other pieces of equipment as well as a profit-sharing clause based on the performance of the processing facility. This lease has not produced substantial returns to Sandy Farms and is currently at a lease rate that is below market value.

In October of 2018, Sandy Farms defaulted on a loan taken out in 2016 with Northwest Farm Credit Services. In late September, the farm became unable to pay its debts. In February of 2019, Global Ventures, Inc. was appointed as the receiver of Sandy Farms and its assets.

Global Ventures is currently managing the day-to-day operations of the farm. This year, the farm has just over 450 acres of planted fruit. However, due to historical poor farming practices and crop mismanagement, this year the

farm will only be able to actively farm up to 260 acres of fruit. Harvesting will be managed on a field-by-field basis based on projected market prices at the time of harvest.

Variety Blueberry Evergreen Kotata Marionberry Siskiyou Rhubarb

Planted Acres 108 188 43 89 10 16

Possible 2019 Harvest 60+ 80+ 25-50 40-70 None 6

Last Year’s Yield 3,520 lbs. (Per Acre) 1,000 lbs. (Per Acre) 1,449 lbs. (Per Acre) 2,267 lbs. (Per Acre) 1,603 lbs. (Per Acre) 1,892 lbs. (Per Acre)

2018 Total 380,000 lbs.

113,000 lbs.

62,000 lbs.

200,000 lbs.

16,000 lbs.

30,000 lbs.

Ownership: Sandy Farms, an Oregon LLC, is owned by Robert Underwood (51%) and Doug Rowell (49%) and is currently being managed, by a court appointed receiver, Global Ventures, Inc. Receivership Status: Sandy Farms currently is in default with Northwest Farm Credit Services. In February of 2019 the minority partner, Doug Rowell, placed the company into a general receivership and the farm is currently being managed by the receiver, Global Ventures, Inc. Business Opportunity: To purchase a business and land acquisition opportunity in a desirable location for both farming and long-term urban development potential. This opportunity presents an excellent opportunity to purchase a large-acreage farm with multiple contiguous tracts of land in Boring, Oregon on the edge of Portland’s ever-growing urban growth path.

Sandy Farm sits at the base of Mt. Hood just 3 miles from Sandy, Oregon and Highway 26. The farm consists of approximately 966 acres with well-documented water rights. This property has historically produced over two million pounds of fruit and comes vertically integrated with a fruit processing facility capable of running up to 10 million pounds of puree and juice-grade fruit annually.

This opportunity also includes over 400 acres of planted fruit with over 100 acres of blueberries, just under 160 acres of Evergreen and Kotata blackberries, 90 acres of Marionberries, 10+ acres of black-cap raspberries, and 10 acres of planted Rhubarb. The farm also leases 161 acres of non-irrigated dryland to a local wheat farmer at $100 per acre on spring planted crop and $125 per acre on fall planted crop.

As mentioned above, in 2012 the farm produced an 8 year high of 2,100,000 pounds of fruit with a total annual sales volume of $2.01 million. The processing plant when operated by Sandy Farms was capable of running up to 10 million pounds of fruit annually with a total net return of up to $2.5 million.

In 2018, the farm produced over 800,000 pounds of fruit. This year, the farm has just over 260 acres of fruit that could potentially be harvested. Due to the late entry into the season, Global Ventures as the receiver is only planning to harvest the 60+ acres of blueberries with all blueberries being sold to Willamette Valley Fruit Company or a comparable fruit processor. There is a good fruit set and it is believed that we will harvest approximately 6,000 pounds/acre with a season total near 360,000 pounds of blueberry fruit at IQF grade.

Global Ventures is currently pursuing a market for the blackberry and Marionberry crops, but without a strong market for this fruit the price for processed grade fruit does not justify harvesting this year. The Rhubarb and Siskiyou blackberries will not be harvested this year due to previous crop mismanagement and its effects on the current crop yields.

The current business opportunity provides the ability to purchase a large acreage farm in a desirable location.

However, due to poor oversight and management, it is in need of additional capital expenditures to return the farm to full production or replace it with a more valuable crop.

Products & Market Overview: Sandy Farms is a large acreage blueberry and cane berry grower as well as a rhubarb grower located on the top edge of the Willamette Valley in Boring, Oregon. The company has a long history of fruit production and has access to a strong market of fruit purchasers throughout the Portland metro area, Willamette Valley, and Pacific Northwest.

Historically, the strongest market for Sandy Farms has been its production of Blueberry and Evergreen Blackberry crops. However, there is downward pressure on the “thorny” varieties of cane berry fruit. There have been efforts to diversify the farm’s crops by planting Blackcap Raspberries, a higher-dollar value varietal of berry, but this crop has yet to provide a meaningful return to the farm.

The berry industry presents business challenges due to its constant price fluctuations and grading scale. This scale is based on the fruit’s quality, size, consistency, and picking procedures. The highest producing fruit and varietals can be sold to the market as either organic or conventional fresh, individually quick-frozen (IQF), puree, or juice grade fruit. Currently, Sandy Farms’ production and harvesting practices target conventional IQF A & B grades with any excess fruit that does not make these grades being sold as puree or juice grade fruit.

The fresh fruit market presents a large opportunity for those willing to invest. It is believed that with minimal capital expenditures a fresh processing line could be added to the existing processing facility with a favorable ROI. Blueberry Market In 2018, the majority of blueberry crops were sold to Firestone Foods in total of $137,600. These blueberries were sold in an effort make IQF “Grade A”. There has been downward pressure on the price of blueberries over the last decade. Even with a strong sales volume in the U.S. and highlighted health benefits, the global production has doubled twice in the last twenty years effectively flooding the market with fruit. Even with this downward price pressure this is still one of Sandy Farms’ main revenue generating fruits.

Sandy Farms has 108 acres of blueberry crops planted with a mixture of blueberry varietals which include Blue Crop, Brigitta, Legacy, Ozark (Blue Mature, Blue Baby), Liberty, Rubel, Blue Cap, Toro, Blue Jay, and REKA. The maximum average yield over the last 6 years was 2.5 ton/acre. This is significantly lower than industry average and is due, in part, to poor agricultural practices.

It is believed that it would take minimal to intermediate capital expenditures to return the crop to its previous yields of 4-5 tons/acre. There are sections that will need to be replanted and wires that need to be replaced. But, most of the varietals are well-suited for IQF grade fruit and are just in need of nutrient replacement and general “best-practices” farming.

Marionberry Market The Marionberry market is not as strong as it once was in Oregon. There is still a demand for the fruit, but many of the processors are moving away from thorny varietals like the Marionberry. Over the last three years, Sandy Farms sold Marionberries mostly to the processed market at an average of $.49/pound. The total fruit volume was 1,465 pounds/acre planted.

It would take minimal to intermediate capital expenditures to return the crop to its previous yield targets. There are blocks that need to be mowed down then re-trellised next season. Most blocks set well this year and there are younger blocks that will mature well next year.

It is believed that with the right harvesting and management practices this fruit could be sold to the fresh market creating the opportunity for higher yields and profits. It is also possible these fields could be converted and sold as organic if the correct farming practices were implemented.

Evergreen Blackberry Market The market for Evergreen blackberries is also not as strong as it once was. It is largely considered a frozen or processed fruit. Properly managed blackberry fields can produce up to 10-12 tons/acre on alternating years, however the three-year average at Sandy Farms has only been 2,534 pounds/acre, substantially below market norms. The three-year average price was $0.45/pound, when selling to the processed market.

There would need to be significant investments into this crop to return it to its previous yield targets. The majority of blocks need to be mowed down and restarted. Two fields were mowed last season, one was placed back on the trellis system, the other was left on the ground, but should hit a more mature yield next year if placed back on the trellis system. The other blocks are trellised but are in need of significant attention and are good candidates for a crop rotation.

Kotata Blackberry Market The market for Kotata blackberries is also not as strong as it once was. There is less of a demand for the thorny varietals of fruit as more processors focus on blackberry varieties such as Columbia Star. Planted three seasons ago, the average yield was 1,412 pounds/acre and the average price paid was $0.43/pound, mostly to the processed market.

Of the 70 acres planted, there are 35 or so acres that will produce a decent yield this year. It is believed that this crop is a good candidate for a crop rotation or to be mowed and reset.

Rhubarb Market The rhubarb market is not as strong this year as it has been in previous years, however there is reason to believe that with the correct sales channels the rhubarb market could be profitable. The historical yields were over six tons/acre, but Sandy Farms only produced 30,000 pounds on 10 planted acres last year. The average price paid to Sandy Farms was $0.36/pound, but the market was paying as high as $.85/pound for IQF rhubarb last year.

Currently, the demand for Rhubarb is 2019 is low due to an oversupply in the frozen market.

In order to effectively manage the rhubarb field, the majority of the field blocks would need to be replanted and heavily fertilized. There is the presence of “red leaf” that has diminished the crop over the last few years.

Christmas Trees Sandy Farms has about 10 acres of planted Christmas Trees that have not been well managed. In 2018, a local company, harvested $10,000 worth of Christmas Tree limbs for the production of wreaths. In 2017, another similar firm purchased $8,000. This sales income is worth noting but is not recognized as a long-term sales channel. The vast majority of this acreage should be ripped out and planted in another crop.

Product and Market Overview Conclusion In conclusion, the neglect that the farm and its operations have seen have left the fields in disarray, leaving Sandy Farms in need of attention. Global Ventures is doing what is possible to help manage these needs but cannot put forth the necessary capital within its timeframe as the receiver to return the farm to its historic yields or replace the fields with a more valuable crop.

The majority of blueberry crop is believed to be in good enough condition to salvage. The black-cap raspberries have been placed in a one-year profit-sharing agreement and could have a reasonable return to the farm next season. The Marionberries seem to be in decent order, but are either young or overgrown, but salvageable. The Evergreen, Siskiyou, and Kotata blackberries could be salvaged, but would need significant resources and time. It has been suggested that these might be better off removed and replaced with a more valuable crop. It is also suggested that the rhubarb could be replanted or replaced with a move valuable crop.

With a reasonable capital expenditure, it is believed that the farm could produce a significant yield with its acreage and water rights. However, it will take time and capital to revitalize or replace the crops to return the business back to profitability.

Sales by Channel: At present, Sandy Farms serves the following Market Channels: Market Channel Blueberry Marionberry Blackberry Rhubarb Christmas Trees Blackcap Raspberries Hazelnuts Plant Packing Sales Total

Sales 2018 46% 25% 23% 3% 3% 0% 0% 0% $301,000

Sales 2017 45% 16% 39% 0% 0% 0% 0% 0% $725,000

Sales 2016 60% 8% 32% 0% 0% 0% 0% 0% $373,000

Sales 2012 22% 6% 21% 1% 0% 12% 2% 36% $3,082,000

Property Rights: Property rights for property owned by Sandy Farms consist of all rights, title, and interest in and to approximately 966.37 acres according to Clackamas County Assessor tax records. This acreage is located across 20 different parcel blocks with another 5 individually parceled structures. For the purpose of this prospectus and to clarify locations, we have split the properties into four tracts.

Tract I has significant and highly visible easements for Bonneville Power Administration transmission lines, as shown on the assessor's map. These run through Tract I and are in favor of Portland General Electric Company.

There are multiple other easements on the property that include the access to power lines, access roads, well access, and pond access. There are a few other road easements located on other tracts, but none as prominent as the BPA easement on Tract I. These easements can all be seen in the preliminary title reports that can be provided upon request.

Water rights would convey with the property; however, additional research must be done to determine what additional reserved rights may be on the property. These can be looked into further by reviewing the water rights report completed earlier this spring which is included as Appendix 3.

Sandy Farms Locations: The main operations of Sandy Farms are located at 34500 SE Highway 211 Boring, Oregon. The farm sits at the base of Mt. Hood just 3 miles from Sandy, Oregon and Highway 26. It includes four tracts of land. These tracts are located within a 5-mile radius and contain a mixture of planted farm land, forested property, a main operations plant, farm housing, and farm storage pole barns.

Tract Tract I Tract II Tract III Tract IV

Acreage 660.93 46.25 164.25 94.94

Address 34500 SE HWY 211 Boring, Oregon 97009 32096 SE Judd Rd, Eagle Creek, OR 22500 SE Howlett Rd, Eagle Creek, OR 35915 SE Wildcat Mountain Drive, Eagle Creek, OR

Tract I contains the main farm operations which include a 576 square foot farm office, a 7,522 square foot processing facility, a 2,606 square foot maintenance shop, two storage barns with 13,970 square foot of cold and dry storage, a 1,992 square foot 4-bedroom farm house in fair condition with two garages including a 280 square foot studio apartment space, and multiple covered pole barns for vehicle and tractor storage. There is also an electronically operated gated entrance leading to both paved and unpaved roadways with additional parking. This tract also contains the largest contiguous tract of land at 660 acres. Planted on this acreage is a combination of blueberries, Evergreen blackberries, Marionberries, Blackcap raspberries, forested property that may be harvested, and three separate blocks of leased non-irrigated farmland.

Tract II contains a 46-acre Marionberry field about a mile and a half to the west of Tract I. This location has two structures, an enclosed pole barn, and a mobile home.

Tract III contains 164 acres of mixed-use land with one single-family residence including a large shop and planted acreage including Kotata blackberries, Marionberries, rhubarb and another two blocks of leased non-irrigated farmland.

Tract IV contains 94 acres of filbert hazelnut trees. This tract also contains a pole barn to store farm equipment.

Water Rights Overview: According to the information attained from a report by Water Right Services, LLC. All water rights authorize up to 2.5 acre-feet of water/year at 5.6 gallons per minute/acre. Currently, Tract IV on Wildcat Mountain Road and about 40 acres of Tract I have land without water rights that are planted in crops that do not require consistent irrigation.

Though the water right portfolio is well documented, actual water sources and priority dates likely restrict full season, full rate & duty irrigation. The water rights allow access to the sources, but the wells and systems in place are not able to draw the total flow volume necessary. Extra capital expenditures will be needed to drill new wells and improve pump capacities. These improvements are noted in the water rights report by Water Rights Services, LLC. Alternate Parcel Number Track Acres of Land Acres Irrigated 24E21 00200 1 40.00 34.40 24E21 00300 1 156.31 140.20 24E21 00400 1 38.84 38.40 24E22 00900 1 29.20 24.70 24E22 02200 1 41.95 22.00 24E22 02300 1 62.05 51.20 24E22 02400 1 23.82 23.40 24E22 02700 1 38.30 37.60 24E23 02300 1 37.77 37.80 24E26 00700 1 38.30 5.70 24E27 00100 1 80.00 47.00 24E27 00200 1 74.39 24.40 24E29A 01600 2 46.25 44.00 24E28 02800 3 38.97 15.00 24E28 02801 3 38.05 37.80 24E28 02900 3 2.07 1.20 24E33 00102 3 63.10 58.70 24E33 0200 3 0.01 0.00 24E33 00104 3 22.05 22.30 34E03 00400 4 94.94 0.00 Total 966.37 665.80

23022

29327

29814

34208

* 24.00

52956 2 116.2 38.4 0.7 22 40.6

53128

67733

85388 32.4

89668 GR 3892 24

10.6

23.4 37.6 37.8 5.7 47 24.4 15.5

28.5

15 37.8 1.2 58.7 22.3 24.00

135.00

0.00

47.80

219.90

128.10

15.50

32.40

34.60

28.50

Tract I has 480 acres of multi-use water rights. The sources include a well, a spring fed large reservoir, the South Fork of Tickle Creek and an unnamed tributary to Deep Creek. One neighbor shares the water rights to the large spring fed reservoir. On this location are fourteen certified water rights. Current water right coverage allows excellent flexibility, i.e. any given field can justifiably use water from any of the four reservoirs, either stream, or the well. However, it is mentioned in the report that there may not be enough “actual water” and there are recommendations to fully realize the water rights of Tract I. Tract I recommendations include: 1. Applying for additional water rights for roughly 40 acres of currently non-irrigated developed land near the sandy farm’s office.

2. Drilling a new well to pull from the more permeable Columbia River Basalt layer to increase farm gallon per minute capacity.

3. Clear brush from reservoir #1 spill way and outlet.

Tract II has 44 acres of water rights from a single source well authorizing 350 gallons per minute from a well that currently produces 100 gallons per minute. The report also contains a suggestion to improve this water source to its full water rights potential.

Tract II recommendations include: 1. Drilling a replacement well to fully realize the 350 gallon per minute water right.

Tract III has 136.5 acres of water rights from a single source at Deep Creek. The report also contains a suggestion to improve this water source to its full water rights potential.

Tract III recommendations include: 1. Apply for supplemental groundwater irrigation to strengthen or replace the existing one.

Tract IV does not currently have water rights but is suggested that water rights could be applied for.

Tract IV recommendations include: 1. Apply for groundwater irrigation water rights and drill and install a new well.

Physical Plant: Sandy Farms built a berry puree and juice processing facility starting in the early 2000. It was originally operated by the farm and generated revenue by charging a tolling/hauling fee. The plant has an Oregon Department of Environmental Quality approved water disbursement facility at the rear of the property that settles used berry wastewater and allows it to be reused to irrigate acreage located behind the processing plant.

The plant is in average condition and contains 3,472 square feet of processing area, 2,496 square feet of cooler space, a foreman’s office, break room, and mechanical housing. There is also ample paved areas and access doors for day-to-day operations and paved bin storage.

Financial Performance: Sandy Farms has seen net income losses for the last 7 years. The last year that Sandy Farms recorded a positive net income was 2011 totaling a mere $43,000. This is largely due to mismanagement and lack of oversight, difficulties hiring a consistent and knowledgeable labor force, improper farming practices, diminishing returns on planted crops, and sales to unprofitable channels.

Mismanagement & Lack of Oversight In 2010, Doug Rowell exited as managing owner of Transpacific Foods. That year, Robert (Bob) Underwood became the sole owner of Transpacific Foods as well as the managing partner of Sandy Farms. Bob’s focus was now split between the farm and Transpacific foods as he hired a team to supervise the farm and a team to supervise the plant.

From 2013-2018, a combination of poor fertilizing and chemical treatments, improper crop rotation, as well as poor care and maintenance of farm equipment lead to diminishing crop yields. In 2012, the farm produced one of its largest yields ever at 2.1 million pounds of fruit that sold for $1.95 million. However, by 2018, the farm produced only 800,000 pounds of fruit that sold for $300,000, in part due to significant hail damage.

The largest oversight occurred in 2015 when a large amount of Roundup was sprayed directly on the plants which cut the yields in half.

Labor Force During the time period between 2010 and 2018, Sandy Farms employed multiple farm managers as well as hundreds of general farm laborers, mostly during the harvest season. The farm had trouble keeping a consistent farm supervisor staffed. Proper training was needed year in and year out but was not executed well leaving the farm without proper systems to manage the farm’s day-to-day operations.

Improper Farming Practices Industry practices of crop rotation and chemical spray and fertilization regimes were not followed by Sandy Farms. Blackberry canes have been left season after season without proper trimming and trellising inhibiting the production high-quality and high-quantity fruit. Blackberries are considered “alternate year crops” and should be managed accordingly. At Sandy Farms, old canes were left on the wiring systems and

the fruiting prima-canes were tossed on top of previous year’s dead and old growth. Past year’s crop management does not conform to “alternate year farming” best practices.

Also, Sandy Farms did not follow the suggestions of local chemical and fertilizer experts when given soil sample results. This has left the majority of the fields with nutrient deficiencies and stressed plants.

Diminishing Returns on Planted Crops The berry industry is beginning to both become a global business as well as becoming vertically integrated.

The IQF and puree markets have been flooded with fruit from foreign markets. This has caused the fruit prices to continue to fluctuate with more supply entering the market.

There has also been a shift in the region away from the once coveted Marionberry and high-yielding Evergreen. Many processing plants easily fill their seasonal quotas of “thorny” varietals and have moved toward easier to process “thornless” fruit types when looking for IQF grade fruit.

Fresh market blueberries and blackberries are still profitable types of fruit, but with the higher labor costs in today’s market, it is a more expensive type of operation that Sandy Farms has not yet figured out how to capture. With strategic investments in technology, many of these fresh markets could be accessed without significantly increasing labor requirements.

Net Worth At present, Sandy Farms has received a third-party appraised value of $14,753,000. This includes a $300,000 write down to the cumulative cost to cure the current condition of the land.

Tract I Tract II Tract III Tract IV Total

$ 10,290,000 $ 700,000 $ 2,618,000 $ 1,435,000 $15,043,000

Summary of Annual Financial Results Year 2012 2016 2017 2018

$ $ $ $

Net Income -532,000 -754,000 -922,000 -1,188,000

$ $ $ $

EBITDA -327,000 -500,000 -672,000 -840,000

Adjusted EBIDTA* $ -227,000 $ -400,000 $ -572,000 $ -740,000

*EBIDTA is an acronym for Earned Before Interest, Taxes, Depreciation, & Amortization and is an approximation of cash flow used by financial investors.

Adjusted EBITDA is used for unusual one-time adjustments which when adjusted show a more normalized EBITDA for future comparison purposes.

EBITDA Adjustments Guaranteed Payments – Salary 2012 - 2018: The only adjustment made to the EBITDA was the guaranteed payments to the farm owner Robert Underwood of $100,000.

Asset Summary Actual Actual Actual Actual 12/31/2012 12/31/2016 12/31/2017 12/31/2018 Accounts Receivable* $ 285,000 $ 24,000 $ 36,000 $ 129,000 Inventory $ 87,000 $ 37,000 $ 4,000 $ 4,000 PP&E $ 3,486,000 $ 3,440,000 $ 3,311,000 $ 3,196,000 Total $ 3,858,000 $ 3,501,000 $ 3,351,000 $ 3,329,000 *Year end account receivables are normal in the industry as installment payments are received in October, November, and January of the following year.

Inventory Sandy Farms currently does not have an inventory of any product on hand other than fuel in the on-site fuel tanks.

In the past, inventory was booked for berries stored by the plant. The processing plant is no longer managed by Sandy Farms. The plant and its equipment are leased to Transpacific Processing. The plant and its equipment are however owned assets of Sandy Farms.

There are approximately 450+ acres planted with fruit growing, but there has not been value attributed to the crop as an asset of the farm.

A/P Analysis Accounts Payable for Sandy Farms are current for all post-receivership expenses. Pre-receivership debts incurred prior to February 28th total $70,845.49. This pre-receivership debt will be paid in full and settled by the receiver before the closing as part of the receiver’s duties.

A/R Analysis Accounts Receivable for Sandy Farms are up to date.

Potential Payroll Related Liabilities Payroll As of 6/1/2019 the payroll and taxes had zero liability and are current.

Accrued Vacation & Sick Leave As of 6/1/2019 the accrued vacation time of workers is at $-12.85 with the supervisor having taken an early vacation before the growing season. The supervisors position accrues vacation time at 2.87 hours per pay period on the 1st and 15th of each month.

Accrued Commissions Payable As of 6/1/2019 there were no commissions payable, a total of $0.00.

Systems Sandy Farms has used QuickBooks to manage its sales receipts, invoicing, and general accounting. Due to a shift in bookkeepers throughout the years, there are some inconsistencies in the way transactions were recorded. Global Ventures has worked to keep this system intact but has not made any changes to historic accounting records.

Pick tickets have been used as a record of field harvesting. These pick tickets also have inconsistencies that make the historical data hard to follow. The harvest tracking system is in need of an update. Global Ventures will be looking at ways to improve upon this tracking system during the harvest season but is unable to invest in a new system at this time.

SG&A Analysis Selling, General, & Administrative costs at Sandy Farms have historically been around $300,000 per year. In 2018, there was a large expense for for accounting and legal fees of $129,000 incurred due to a lawsuit between the owners of the company. This is drastically above the normal $38,000 – $40,000 seen in previous years. The farm has also paid large management payrolls throughout the years. It has decreased drastically since 2012, but still equates to around $130,000 per year. The management expenses decreased between 2012 and 2016 due to the management expense of the processing facility being transferred from Sandy Farms to Transpacific Foods/Transpacific Processing. The current farm supervisor makes $50,000 per year plus housing, which should result in a lower management cost than in previous years. Overall, the farm needs a manager who understands proper agronomy and has experience in the berry industry if Sandy Farms is to continue operating as a berry farm.

Cost Savings Historically, the farm has operated on a shoestring budget with minimal planning. This resulted in labor being thrown at problems rather than analyzing costs and figuring out ways to improve operations. For example, the farm had always been mown with 5-foot mowers between the rows, requiring two passes on each row. With a minimal capital expenditure, the receiver purchased two six-foot brush mowers that required a single pass down

each row. The ROI on this capital investment was less than 30 days when considering labor, fuel, and maintenance savings. With new farm management and a similar proactive approach to problems, the farm could find drastic savings in labor, workman’s compensation insurance, hourly wages, and overall fruit yield. With new management, there is also a large potential to decrease the legal and accounting line item. This should be roughly $60,000-80,000 less expenses seen in 2018.

With proper management, the correct fertilization regime, and crop rotations, there should also be significant improvement in yield as well as size and quality of fruit. This is not an inherent, cost savings, but would reduce the amount of labor needed to manage the field and would decrease the cost of the harvest.

Lastly, setting up the farm with the correct equipment would provide a better utilization of general farm labor and would cut down on the number of employees needed to manage a farm. In 2018, there was $356,000 spent on labor. That is roughly 11 full time year-round employees at $15.00/hour. This expense could be cut down drastically with the correct equipment and managers.

Estimated 2018 Cost Reduction Opportunities SG&A Costs Yield Improvements General Farm Labor

$100,000+ Unknown $100,000+

Expansion Opportunities: Blackcap Raspberry Farming — In 2018, 10 acres blackcap raspberries were planted on Tract I in field 17. This year, Sandy Farms entered into a one-year crop sharing agreement with Liepold Farms. The field has been placed on a trellis system and is now being tended to. This year they expect a small to medium harvest, however next year there is the possibility to further expand upon this opportunity.

The blackcap raspberry market has held strong with even the puree stock going at $1.75 per pound in 2018. This lower yielding but higher priced fruit could be an opportunity to expand upon the current fruit varieties with reasonable capital expenditures.

Vertical Integration with the Plant— In 2016, the processing plant on site was leased to Transpacific Processing.

Prior to this, the plant operated under the management of Sandy Farms. It produced between $1 million and $2.5 million dollars a year in tolling/hauling revenue for Sandy Farms from the early 2000’s until 2015.

In 2016 a lease was put in place that charges a flat rental fee and all processing equipment was leased at 10% of gross revenue generated by Transpacific from its operation of the processing equipment. Since that time, no revenue has been recorded from the lease of the processing equipment.

It is believed that if the processing plant’s management was returned to Sandy Farms or an arm’s length lease was put in place that a large portion of this income could be recaptured. This would include the ability to vertically integrate the berries farmed with their processing, allowing the owner to sell the fruit to the market at a higheryielding price point.

Currently, the processing plant is set up to process puree and juice grade fruit. With some capital expenditures, there could be expansion opportunities to place an IQF tunnel or fresh pack operation in close proximity to the existing plant. This expansion would allow the plant to capture larger margins on the fruit harvested at the farm.

Berry Variety Expansion— The current berry varietals planted at Sandy Farms are no longer attractive or up to market standards, mostly the Evergreen blackberries, Kotata blackberries, Siskiyou blackberries, and Marionberries. These thorny varietals are harder for processing facilities to keep clean and many no longer accept them in the fresh or IQF markets. It has been suggested that with a substantial capital expenditure, the farm could be replanted with thornless varietals or a different crop with higher yields. The puree market does not provide

enough return to justify conversion without a significant price increase. At present, it is best to maintain the crops in their current varieties unless fresh markets are located to accept new varieties.

The blueberries planted have the potential to produce valuable IQF fruit with certain varietals having the potential to sell to the fresh market. These plants need to be trimmed and, in some places, re-trained to the wiring systems.

With reasonable capital expenditures, the blueberries planted could return to industry average yields per acre.

U-Pick — Historically, the farm operated a U-Pick section of crops in front of the farm. There is significant interest from the community. With reasonable capital expenditures, this offers another area to capture sales during the harvest season as well as a connection to the surrounding community and Portland Metro area. In 2012, U-Pick generated over $30,000 in sales.

Land Sales — The farm’s highest value is the land that it has acquired over the last 80 years. There are 4 separate tracts of land that could be sold or subdivided into smaller farm plots and sold individually. Currently, the sites need to be a minimum of 80 or 120 acres and are zoned as exclusive farm use (EFU). This opportunity does reduce the overall value of the farm as a whole but could produce the needed cash flows to rejuvenate the remaining acres.

Personnel: The company has one full time farm supervisor and one part-time bookkeeper and accounts payable clerk whose duties have been reduced to running payroll one hour every other week.

The receiver, Global Ventures, Inc. has employed contract labor through Willamette Farm Labor Contracting, LLC. This currently includes one seasonal irrigation specialist and two general laborers. All three contractors have worked for Sandy Farms in the past and have knowledge of its innerworkings and crops. The receiver also plans to employ seasonal labor once harvest begins.

Ulises Godoy – Farm Supervisor Ulises joined Sandy Farms as a mechanic in 2016 and has served as Farm Supervisor since 2018. While he has extensive farm operations experience, his cane-berry production experience is limited. He is a good equipment operator and is capable of farm equipment repair and general farm operations. He has almost no management experience but shows promise in his ability to problem solve and communicate with farm contractors.

Conclusion: Sandy Farms presents a beneficial opportunity to an individual, investment group, or company with a vision. In its current state, it is in need of considerable capital expenditures to produce a return on investment. It has been suggested by the appraiser that the majority of crops be removed and replaced.

The receiver Global Ventures is diligently working to keep the farm and its assets secure and operational, while working to clean up the years of neglect seen on its crops and equipment. At the time of sale there will only be limited farm operations and minimal equipment assets beyond the processing plant and its leased items.

The land, soil, and water rights of Sandy Farms do present a large opportunity for new ownership to fully realize the potential of this farm. With unspoiled views of Mt. Hood, ease of access from Highway 211 and Highway 26 in conjunction with large contiguous tracts of land, this farm has the potential to be a gem in the Pacific Northwest.

Appendix 1 Sandy Farms Financials – 2012 (for historic reference), 2016, 2017, 2018

Sandy Farms Income Statement - 2012 Jan - Dec 12 Ordinary Income/Expense Income 4010 · Sales - Blackcaps

$

362,891

4020 · Sales - Blueberries

$

679,599

4035 · Sales - Evergreens

$

612,116

4040 · Sales - Filberts

$

65,024

4050 · Sales - Loganberry

$

21,503

4055 · Sales - Marionberries

$

172,134

4065 · Sales - Rhubarb

$

22,888

4070 · Sales - Siskiyou

$

37,570

4100 · Sales - U-Pick

$

32,417

4150 · Sales - Hauling

$

26,584

4200P · Sales-Packing

$

1,103,547

4200 · Sales - Fresh Market Packing - Other

$

4200 · Sales - Fresh Market Packing (1,080)

Total 4200 · Sales - Fresh Market Packing

$

4900 · Miscellaneous Income

$

16,635

$

3,151,828

5110 · Berry Farm - General

$

705,921

5115 · Christmas Trees

$

347

5150 · Orchard

$

24,753

5155 · Piece Work

$

216,243

5100 · Payroll - Farm Wages - Other

$

162

$

947,426

5210 · Fruit Packing

$

336,982

5220 · Fruit Packing OT

$

66,319

Total 5200 · Payroll - Plant Wages

$

403,300

5310 · Chemicals & Fertilizers

$

146,844

5320 · Fuel Expense

$

135,211

5350 · Operating Expense

$

5360 · Propane

$

2,452

5460 · Repairs & Maintenance

$

137,267

Total Income

1,102,467

Cost of Goods Sold 5100 · Payroll - Farm Wages

Total 5100 · Payroll - Farm Wages 5200 · Payroll - Plant Wages

93,929

5500 · Supplies 5500P · Supplies

$

6,124

5500 · Supplies - Other

$

516,522

$

522,646

$

2,389,074

$

762,753

Total 5500 · Supplies Total COGS Gross Profit Expense 6000 · Advertising

$

7,833

6070 · Consulting Fees

$

44,780

6120 · Dues & Subscriptions

$

6,354

6150 · Employee Charges

$

-

6160 · Equipment Rental

$

46,281

6180 · Freight & Delivery

$

13,739

6240 · Insurance - General Liability

$

132,120

6245 · Insurance - W/C Salaried

$

76,380

6250 · Insurance - Medical

$

(30,709)

6290 · Licences & Permits

$

4,989

6350 · Miscellaneous Expense

$

6380 · Outside Services

$

10,771

6400 · Payroll - Management

$

284,482

6402 · Payroll Tax Expense - Admin

$

6410 · Payroll Tax Exp - Mgmt

$

6490 · Seminars & Education

$

1,470

6560 · Utilities & Garbage

$

111,374

6570 · Vacation Pay

$

Total Expense

$

Net Ordinary Income

$

1,006

171,449

(30,614) 851,707 (88,953)

Other Income/Expense Other Income 7010 · Interest Income

$

72

7020 · Gain/Loss on Sale of Assets

$

(904)

$

(832)

Total Other Income Other Expense 5300 · Line of Credit Payment

$

-

8040 · Bank Fees

$

592

8080 · Depreciation Exp - Farm Assets

$

129,873

8150 · Employee Benefits

$

1,275

8200 · Guaranteed Pmts - Salary

$

100,000

8210 · Guaranteed Pmts - Health Ins

$

14,543

8260 · Interest Expense

$

34,742

8280 · Legal and Accounting

$

44,883

8330 · Meals & Entertainment - Admin

$

4,006

8350 · Office Expense

$

4,216

8400 · Office Payroll

$

40,184

8440 · Rent & Royalties

$

8,500

8510 · Travel Expense - Admin

$

1,609

8520 · Taxes - Real Property

$

27,855

8540 · Taxes & Licenses

$

12,114

8910 · Embezzeled Funds

$

8920 · Life Insurance Premiums

$

8930 · Penalties & Fines

$

12,158

$

441,859

Total Other Expense Net Other Income

(150) 5,459

$

(442,691)

Net Income

$

(531,644)

EBITDA

$

(327,061)

Adjusted EBITDA

$

(227,061)

Sandy Farms

Balance Sheet - 2012 Dec 31, 12 ASSETS Current Assets Checking/Savings Clackamas County Bank 1010 · General Account

$

1020 · Money Market

$

3,243

1030 · Payroll Account

$

(10,468)

$

(18,360)

$

(18,360)

Total Clackamas County Bank Total Checking/Savings

(11,135)

Accounts Receivable 1200 · Accounts Receivable

$

284,915

$

284,915

1400 · Inventory - Supplies

$

81,369

1410 · Inventory - Fuel

$

5,172

Total Other Current Assets

$

86,541

$

353,095

1500 · Land

$

2,087,487

1505 · Farm Buildings

$

1,010,176

1510 · Land Improvements

$

307,540

1520 · Farm Machinery & Equipment

$

704,027

1530 · Farm Vehicles & Trans Equip

$

126,257

1599 · Accum Depreciation - Farm

$

(749,491)

Total Accounts Receivable Other Current Assets

Total Current Assets Fixed Assets

Total Fixed Assets TOTAL ASSETS

$

3,485,997

$

3,839,092

$

179,741

$

179,741

LIABILITIES & EQUITY Liabilities Current Liabilities Accounts Payable 2000 · Accounts Payable Total Accounts Payable Other Current Liabilities 2050 · Chase Credit Card

$

130

2100 · Payroll Tax Federal Withholding

$

3,071

2103 · Payroll Taxes Social Security

$

3,737

2105 · Payroll Taxes Medicare

$

1,042

2115 · Payroll Taxes SUTA

$

907

2120 · Payroll Taxes WBF Assessment

$

663

2125 · Payroll Taxes WC Insurance Pay

$

1,542

2140 · Payroll Taxes FUTA

$

5,720

2150 · Accrued Payroll

$

25,182

2160 · Payroll Liabilities

$

2,922

2635 · Accrued Interest Payable

$

16,607

Total Other Current Liabilities Total Current Liabilities

$

61,523

$

241,265

Long Term Liabilities 2240 · NW Credit - Bertocchi Lease

$

45,633

2260 · NW Farm Credit Services

$

499,000

2310 · John Deere Credit (5325n Tract)

$

16,589

2600 · Loan from Member- D. Rowell

$

70,615

2620 · Loan from Member - R. Underwood

$

153,005

Total Long Term Liabilities

$

784,841

$

1,026,106

3000 · Member's Capital - B. Underwood

$

1,640,212

3010 · Member's Capital - D. Rowell

$

1,704,418

Net Income

$

Total Liabilities Equity

Total Equity TOTAL LIABILITIES & EQUITY

(531,644)

$

2,812,986

$

3,839,092

Sandy Farms Income Statement – 2016 Jan - Dec 16 Ordinary Income/Expense Income 4000 · Sales - Blackberries

$

4010 · Sales - Blackcaps

$

300

4020 · Sales - Blueberries

$

223,437

4040 · Sales - Filberts

$

8,537

4055 · Sales - Marionberries

$

29,008

4070 · Sales - Siskiyou

$

4,312

4300 · Returns & Allowances

$

4500 · Finance Charge Income

$

-

4900 · Miscellaneous Income

$

-

Total Income

116,209

30

$

381,833

5105 · Hourly Wages

$

373,040

5110 · Berry Farm - General

$

33

5100 · Payroll - Farm Wages - Other

$

176,218

$

549,291

Cost of Goods Sold 5100 · Payroll - Farm Wages

Total 5100 · Payroll - Farm Wages 5200 · Payroll - Plant Wages 5240 · Cannery Wages

$

-

5250 · Cannery Wages OT

$

-

5200 · Payroll - Plant Wages - Other

$

-

Total 5200 · Payroll - Plant Wages

$

-

5305 · Berry Taxes

$

2,949

5310 · Chemicals & Fertilizers

$

2,359

5320 · Fuel Expense

$

15,794

5410 · Payroll Taxes - Hourly

$

-

5460 · Repairs & Maintenance

$

40,390

5500 · Supplies

$

20,548

$

631,331

$

(249,498)

Total COGS Gross Profit Expense 5355 · Quality and Sampling

$

6120 · Dues & Subscriptions

$

570

6160 · Equipment Rental

$

9,147

6180 · Freight & Delivery

$

120

6240 · Insurance - General Liability

$

25,027

6290 · Licences & Permits

$

1,163

6350 · Miscellaneous Expense

$

2,020

6380 · Outside Services

$

4,814

6400 · Payroll - Management

$

151,655

6460 · Repairs & Maint - Farm Housing

$

3,935

6490 · Seminars & Education

$

10

6500 · Taxes - Clackamas Real Property

$

29,606

6505 · Taxes - Personal Property

$

2,802

6510 · Travel Expense

$

511

6560 · Utilities & Garbage

$

27,147

6580 · SICK PAY

$

526

$

259,076

$

(508,574)

Total Expense Net Ordinary Income

25

Other Income/Expense Other Income 7010 · Interest Income

$

7020 · Gain/Loss on Sale of Assets

$

7050 · Other Miscellaneous Income

$

7085 · TPI REIMBURSEMENTS

$

7100 · Patronage Dividends

$

7,231

7900 · Processing Plant Operations

$

20,719

7950 · Processing Plant Rents

$

66,782

7960 · Processing Plant Labor Premiums

$

33,613

$

135,029

Total Other Income

950 (83) 5,818 -

Other Expense 8040 · Bank Fees

$

2,645

8080 · Depreciation Exp - Farm Assets

$

75,050

8085 · Depreciation Exp - Plant Assets

$

73,334

8200 · Guaranteed Pmts - Salary

$

100,000

8230 · Information Technology (IT)

$

406

8260 · Interest Expense

$

47,135

8265 · Interest Expense - Members

$

22,660

8270 · Late fees/Finance Charges

$

67

8280 · Legal and Accounting

$

39,454

8400 · Office Payroll

$

8510 · Travel Expense - Admin

$

29

8540 · Taxes & Licenses

$

677

8550 · State Excise Tax

$

150

8620 · Utilities - General Office

$

2,503

8700 · Legal Settlement

$

-

8800 · State Income Tax

$

-

8920 · Life Insurance Premiums

$

12,904

8930 · Penalties & Fines

$

3,489

Total Other Expense

-

$

380,502

$

(245,473)

Net Income

$

(754,047)

EBITDA

$

(500,362)

Adjusted EBITDA

$

(400,362)

Net Other Income

Sandy Farms Balance Sheet – 2016 Dec 31, 16 ASSETS Current Assets Checking/Savings Clackamas County Bank 1040 · General Checking Account

$

2,509

1050 · Payroll Checking Account

$

9,030

1060 · Money Market Checking

$

1,549

Total Clackamas County Bank

$

13,088

1005 · Checking - Plant

$

32,114

$

45,201

$

24,153

$

24,153

1100 · A/R - Plant

$

205,072

1400 · Inventory - Supplies

$

33,537

1410 · Inventory - Fuel

$

3,861

Total Other Current Assets

$

242,470

$

311,825

1500 · Land

$

2,087,487

1505 · Farm Buildings

$

678,522

1510 · Land Improvements

$

366,477

1520 · Farm Machinery & Equipment

$

301,731

1530 · Farm Vehicles & Trans Equip

$

119,297

1599 · Accum Depreciation - Farm

$

(719,138)

1605 · Plant Buildings & Improvements

$

463,119

1620 · Processing Plant Equipment

$

746,731

1630 · Plant Vehicles & Trans Equip

$

16,525

1699 · Accum Depreciation - Plant

$

(620,519)

Total Checking/Savings Accounts Receivable 1200 · Accounts Receivable Total Accounts Receivable Other Current Assets

Total Current Assets Fixed Assets

Total Fixed Assets

$

3,440,232

$

3,752,056

$

156,300

$

156,300

2005 · A/P - Plant

$

117,099

2150 · Accrued Payroll

$

75,726

2180 · State Excise Tax Payable

$

150

2230 · Unclaimed Property - Due to OR

$

2,188

2290 · Housing Deposits

$

1,100

2300 · Current Portion of LT Debt

$

9,507

2630 · Loan Payable - Bob (via TPI)

$

1,100,941

2632 · Due to TPI - Processing Plant

$

212,279

2635 · Accrued Interest Payable

$

17,406

$

1,536,394

$

1,692,694

2260 · NW Farm Credit Services

$

815,959

2320 · JOHN DEERE FINANCE 5093EN

$

42,935

2620 · Loan from Member - R. Underwood

$

655,474

2900 · Less Current Portion LT Debt

$

TOTAL ASSETS LIABILITIES & EQUITY Liabilities Current Liabilities Accounts Payable 2000 · Accounts Payable Total Accounts Payable Other Current Liabilities

Total Other Current Liabilities Total Current Liabilities Long Term Liabilities

Total Long Term Liabilities

(9,507)

$

1,504,862

$

3,197,556

3000 · Member's Capital - B. Underwood

$

611,016

3010 · Member's Capital - D. Rowell

$

715,583

3910 · Prior Period Adjustment

$

(18,051)

Net Income

$

(754,047)

Total Liabilities Equity

Total Equity TOTAL LIABILITIES & EQUITY

$

554,500

$

3,752,056

Sandy Farms Income Statement – 2017 Jan - Dec 17 Ordinary Income/Expense Income 4010 · Sales - Blackcaps

$

191

4020 · Sales - Blueberries

$

215,822

4035 · Sales - Evergreens

$

155,170

4045 · Sales - Kotatas

$

30,484

4055 · Sales - Marionberries

$

74,120

4065 · Sales - Rhubarb

$

662

4500 · Finance Charge Income

$

-

4800 · Field Rental

$

3,300

4900 · Miscellaneous Income

$

54,955

$

534,703

Total Income Cost of Goods Sold 5100 · Payroll - Farm Wages 5105 · Hourly Wages

$

5100 · Payroll - Farm Wages - Other

$

689,943

Total 5100 · Payroll - Farm Wages

$

689,943

5200 · Payroll - Plant Wages

$

103,791

5305 · Berry Taxes

$

8,668

5310 · Chemicals & Fertilizers

$

67,058

5320 · Fuel Expense

$

38,028

5350 · Operating Expense

$

68

5460 · Repairs & Maintenance

$

64,642

5500 · Supplies

$

13,292

5600 · Workers Compensation

$

Total COGS Gross Profit

-

(29)

$

985,461

$

(450,758)

Expense 6120 · Dues & Subscriptions

$

2,321

6160 · Equipment Rental

$

1,938

6180 · Freight & Delivery

$

689

6240 · Insurance - General Liability

$

16,433

6290 · Licences & Permits

$

1,642

6380 · Outside Services

$

1,413

6400 · Payroll - Management

$

183,789

6500 · Taxes - Clackamas Real Property

$

-

6505 · Taxes - Personal Property

$

-

6510 · Travel Expense

$

70

6560 · Utilities & Garbage

$

47,862

8086 · Amortization Expense

$

1,092

$

257,247

$

(708,004)

Total Expense Net Ordinary Income Other Income/Expense Other Income 7010 · Interest Income

$

897

7020 · Gain/Loss on Sale of Assets

$

(911)

7050 · Other Miscellaneous Income

$

967

7085 · TPI REIMBURSEMENTS

$

177,688

7100 · Patronage Dividends

$

8,042

$

186,683

Total Other Income Other Expense 8040 · Bank Fees

$

92

8080 · Depreciation Exp - Farm Assets

$

72,090

8085 · Depreciation Exp - Plant Assets

$

77,482

8200 · Guaranteed Pmts - Salary

$

100,000

8260 · Interest Expense

$

65,562

8265 · Interest Expense - Members

$

-

8270 · Late fees/Finance Charges

$

74

8280 · Legal and Accounting

$

37,608

8480 · Safety

$

1,434

8520 · Taxes - Real Property

$

32,409

8540 · Taxes & Licenses

$

920

8620 · Utilities - General Office

$

-

8800 · State Income Tax

$

161

8920 · Life Insurance Premiums

$

12,904

$

400,737

Total Other Expense

$

(214,054)

Net Income

Net Other Income

$

(922,058)

EBITDA

$

(672,341)

Adjusted EBITDA

$

(572,341)

Sandy Farms Balance Sheet - 2017 Dec 31, 17 ASSETS Current Assets Checking/Savings Clackamas County Bank 1040 · General Checking Account

$

1050 · Payroll Checking Account

$

594

1060 · Money Market Checking

$

1,549

$

27,947

$

27,947

$

36,320

$

36,320

1100 · A/R - Plant

$

5,668

1310 · Employee Advances

$

1410 · Inventory - Fuel

$

3,861

1450 · Prepaid Insurance

$

31,818

Total Clackamas County Bank Total Checking/Savings

25,804

Accounts Receivable 1200 · Accounts Receivable Total Accounts Receivable Other Current Assets

Total Other Current Assets

(500)

$

40,847

$

105,114

1500 · Land

$

2,087,487

1505 · Farm Buildings

$

678,522

1510 · Land Improvements

$

385,227

1520 · Farm Machinery & Equipment

$

293,926

1530 · Farm Vehicles & Trans Equip

$

1599 · Accum Depreciation - Farm

$

1605 · Plant Buildings & Improvements

$

463,119

1620 · Processing Plant Equipment

$

746,731

1630 · Plant Vehicles & Trans Equip

$

16,525

$

3,311,186

1900 · Loan Fees

$

39,315

1909 · Accumulated Amortization

$

Total Current Assets Fixed Assets

Total Fixed Assets

119,297 (1,479,648)

Other Assets

Total Other Assets

(1,092)

$

38,223

$

3,454,523

$

202,175

$

202,175

2150 · Accrued Payroll

$

22,561

2180 · State Excise Tax Payable

$

150

2290 · Housing Deposits

$

2,821

2300 · Current Portion of LT Debt

$

9,507

2632 · Due to TPI - Processing Plant

$

138,796

$

173,835

$

376,010

2260 · NW Farm Credit Services

$

1,934,357

2320 · JOHN DEERE FINANCE 5093EN

$

34,228

2620 · Loan from Member - R. Underwood

$

1,498,461

2900 · Less Current Portion LT Debt

$

TOTAL ASSETS LIABILITIES & EQUITY Liabilities Current Liabilities Accounts Payable 2000 · Accounts Payable Total Accounts Payable Other Current Liabilities

Total Other Current Liabilities Total Current Liabilities Long Term Liabilities

Total Long Term Liabilities

(9,507)

$

3,457,540

$

3,833,550

3000 · Member's Capital - B. Underwood

$

211,397

3010 · Member's Capital - D. Rowell

$

331,635

Net Income

$

(922,058)

Total Liabilities Equity

Total Equity TOTAL LIABILITIES & EQUITY

$ $

(379,026) 3,454,523

Sandy Farms Income Statement – 2018 Jan - Dec 18 Ordinary Income/Expense Income 4010 · Sales - Blackcaps

$

4020 · Sales - Blueberries

$

145,314

4030 · Sales - Christmas Trees

$

10,000

4035 · Sales - Evergreens

$

39,634

4045 · Sales - Kotatas

$

26,789

4055 · Sales - Marionberries

$

78,640

4065 · Sales - Rhubarb

$

10,596

4070 · Sales - Siskiyou

$

5,611

4150 · Sales - Hauling

$

(5,793)

4800 · Field Rental

$

9,750

4900 · Miscellaneous Income

$

26,245

$

322,785

5105 · Hourly Wages

$

354,678

5100 · Payroll - Farm Wages - Other

$

174,192

Total 5100 · Payroll - Farm Wages

$

528,870

5305 · Berry Taxes

$

4,796

5310 · Chemicals & Fertilizers

$

65,502

5320 · Fuel Expense

$

64,605

5460 · Repairs & Maintenance

$

20,171

5500 · Supplies

$

10,141

5600 · Workers Compensation

$

112,800

Total Income

(24,000)

Cost of Goods Sold 5100 · Payroll - Farm Wages

Total COGS Gross Profit

$

806,885

$

(484,100)

Expense 6120 · Dues & Subscriptions

$

429

6160 · Equipment Rental

$

1,269

6180 · Freight & Delivery

$

27

6240 · Insurance - General Liability

$

23,866

6290 · Licences & Permits

$

2,991

6350 · Miscellaneous Expense

$

6380 · Outside Services

$

11,797

6400 · Payroll - Management

$

131,427

6490 · Seminars & Education

$

35

6500 · Taxes - Clackamas Real Property

$

31,234

6505 · Taxes - Personal Property

$

3,516

6560 · Utilities & Garbage

$

43,268

8086 · Amortization Expense

$

13,105

$

262,064

$

(746,164)

Total Expense Net Ordinary Income

(898)

Other Income/Expense Other Income 7010 · Interest Income

$

1

7085 · TPI REIMBURSEMENTS

$

82,558

7100 · Patronage Dividends

$

11,824

$

94,382

Total Other Income Other Expense 8040 · Bank Fees

$

353

8080 · Depreciation Exp - Farm Assets

$

52,096

8085 · Depreciation Exp - Plant Assets

$

70,199

8200 · Guaranteed Pmts - Salary

$

100,000

8260 · Interest Expense

$

176,783

8270 · Late fees/Finance Charges

$

554

8280 · Legal and Accounting

$

129,282

8480 · Safety

$

596

8540 · Taxes & Licenses

$

8620 · Utilities - General Office

$

8800 · State Income Tax

$

150

8920 · Life Insurance Premiums

$

11,911

8930 · Penalties & Fines

$

1,068

$

536,034

Total Other Expense Net Other Income

938 (7,896)

$

(441,651)

Net Income

$

(1,187,816)

EBITDA

$

(839,795)

Adjusted EBITDA

$

(739,795)

Sandy Farms Balance Sheet - 2018 Dec 31, 18 ASSETS Current Assets Checking/Savings Clackamas County Bank 1040 · General Checking Account

$

1050 · Payroll Checking Account

$

102

1060 · Money Market Checking

$

1,550

$

5,971

$

5,971

$

128,532

$

128,532

1100 · A/R - Plant

$

5,668

1410 · Inventory - Fuel

$

3,861

1450 · Prepaid Insurance

$

31,818

Total Clackamas County Bank Total Checking/Savings

4,319

Accounts Receivable 1200 · Accounts Receivable Total Accounts Receivable Other Current Assets

Total Other Current Assets

$

41,347

$

175,849

1500 · Land

$

2,087,487

1505 · Farm Buildings

$

678,522

1510 · Land Improvements

$

385,227

1520 · Farm Machinery & Equipment

$

300,777

1530 · Farm Vehicles & Trans Equip

$

1599 · Accum Depreciation - Farm

$

1605 · Plant Buildings & Improvements

$

463,119

1620 · Processing Plant Equipment

$

746,731

1630 · Plant Vehicles & Trans Equip

$

16,525

$

3,195,743

Total Current Assets Fixed Assets

Total Fixed Assets

119,297 (1,601,942)

Other Assets 1900 · Loan Fees

$

39,315

1909 · Accumulated Amortization

$

(14,197)

Total Other Assets

$

25,118

$

3,396,711

$

74,356

$

74,356

2150 · Accrued Payroll

$

22,561

2180 · State Excise Tax Payable

$

150

2290 · Housing Deposits

$

4,853

2300 · Current Portion of LT Debt

$

9,507

2632 · Due to TPI - Processing Plant

$

138,796

$

175,867

$

250,223

2260 · NW Farm Credit Services

$

2,880,197

2320 · JOHN DEERE FINANCE 5093EN

$

24,793

2620 · Loan from Member - R. Underwood

$

1,613,845

2900 · Less Current Portion LT Debt

$

TOTAL ASSETS LIABILITIES & EQUITY Liabilities Current Liabilities Accounts Payable 2000 · Accounts Payable Total Accounts Payable Other Current Liabilities

Total Other Current Liabilities Total Current Liabilities Long Term Liabilities

Total Long Term Liabilities

(9,507)

$

4,509,330

$

4,759,553

3000 · Member's Capital - B. Underwood

$

211,397

3010 · Member's Capital - D. Rowell

$

331,635

3040 · Capital Contrib - B. Underwood

$

204,000

3900 · Retained Earnings

$

(922,058)

Net Income

$

(1,187,816)

$

(1,362,842)

$

3,396,711

Total Liabilities Equity

Total Equity TOTAL LIABILITIES & EQUITY

Appendix 2 Sandy Farms Parcel Information

Account Number 00674363 00674372 00674381 00675148 00675380 00675399 00675406 00675460 00676272 00678476 00679126 00679135 00679411 00679420 00679439 00680141 00684209 00684218 00925583 01145148 01166133 01188529 01208767 01469226 01634397

Alternate Parcel Number Track Fruit 24E21 00200 1 Blueberry 24E21 00300 1 Blackberry/Leased 24E21 00400 1 Blueberry 24E22 00900 1 Blackberry 24E22 02200 1 Black Caps 24E22 02300 1 Blueberry/Not Planted 24E22 02400 1 Not Planted 24E22 02700 1 Marrion/Leased 24E23 02300 1 Marrion/Leased 24E26 00700 1 Timber 24E27 00100 1 Blueberry 24E27 00200 1 Blueberry/Filberts/Siskiyou 24E28 02800 3 Timber/Rhubarb 24E28 02801 3 Leased/Marrion 24E28 02900 3 House 24E29A 01600 2 Marrion 24E33 00102 3 Leased/Kotata 24E33 0200 3 Pole Barn 34E03 00400 4 Filberts X044155 X093564 X128614 X161154 X206685 24E33 00104 3 Leased/Kotata

TCA Acres 046-004 40.00 046-004 156.31 046-018 38.84 046-004 29.20 046-004 41.95 046-004 62.05 046-004 23.82 046-004 38.30 046-004 37.77 046-004 38.30 046-004 80.00 046-004 74.39 108-022 38.97 108-022 38.05 108-022 2.07 103-003 46.25 108-022 63.10 108-022 0.01 108-022 94.94 046-004 0.00 046-004 0.00 046-004 0.00 108-003 0.00 046-004 0.00 108-022 22.05

Total Acres 966.37

Location NO SITUS, ADDRESS, OR NO SITUS, ADDRESS, OR NO SITUS, ADDRESS, OR NO SITUS, ADDRESS, OR NO SITUS, ADDRESS, OR 34500 SE HWY 211 BORING, OR NO SITUS, ADDRESS, OR 34500 SE HWY 211 BORING, OR 36210 SE HWY 211, BORING, OR 20725 SE 367TH AVE, SANDY, OR NO SITUS, ADDRESS, OR 34500 SE HWY 211 BORING, OR NO SITUS, ADDRESS, OR NO SITUS, ADDRESS, OR 22500 SE HOWLETT RD, EAGLE CREEK, OR 32096 SE JUDD RD, EAGLE CREEK, OR 22504 SE HOWLETT RD, EAGLE CREEK, OR NO SITUS, ADDRESS, OR 35915 SE WILDCAT MOUNTAIN DR, EAGLE CREEK, OR 34500 SE HWY 211 BORING, OR 34500 SE HWY 211 BORING, OR 20725 SE 367TH AVE, SANDY, OR 32096 SE JUDD RD, EAGLE CREEK, OR 34500 SE HWY 211 BORING, OR NO SITUS, ADDRESS, OR

2018 Assessed Value Market Building Value $ 84,585.00 $ $ 215,628.00 $ $ 47,520.00 $ $ 32,090.00 $ $ 42,792.00 $ $ 182,879.00 $ 120,370.00 $ 40,620.00 $ $ 154,739.00 $ 145,670.00 $ 41,617.00 $ $ 156,874.00 $ 108,900.00 $ 77,237.00 $ $ 550,069.00 $ 583,570.00 $ 56,206.00 $ $ 31,270.00 $ $ 285,944.00 $ 282,480.00 $ 57,248.00 $ 8,080.00 $ 67,619.00 $ 34,240.00 $ 1,436.00 $ 850.00 $ 76,524.00 $ 3,540.00

Market Land Value $ 428,585.00 $ 974,011.00 $ 422,787.00 $ 342,266.00 $ 813,909.00 $ 1,681,599.00 $ 538,493.00 $ 880,972.00 $ 854,709.00 $ 432,264.00 $ 1,266,587.00 $ 1,500,123.00 $ 520,208.00 $ 454,628.00 $ 168,347.00 $ 734,021.00 $ 616,773.00 $ 1,242.00 $ 726,280.00

$

41,537.00

$

51,800.00

$

364,976.00

Total Value $

2,244,434.00

$

1,339,500.00

$

13,722,780.00

Total Market Value $ 428,585.00 $ 974,011.00 $ 422,787.00 $ 342,266.00 $ 813,909.00 $ 1,801,969.00 $ 538,493.00 $ 1,026,642.00 $ 854,709.00 $ 541,164.00 $ 1,266,587.00 $ 2,083,693.00 $ 520,208.00 $ 454,628.00 $ 450,827.00 $ 742,101.00 $ 651,013.00 $ 2,092.00 $ 729,820.00 $ $ $ $ $ $ 416,776.00 $

15,062,280.00

Appendix 3 Sandy Farms Water Rights Report – Water Right Services, LLC

Appendix 4 Sandy Farms Appraisal – Tract I, II, IV

Appendix 5 Sandy Farms Appraisal – Tract III

Appendix 6 Sandy Farms Receiver’s Reports – March, April

Appendix 7 Sandy Farms Sandy Farms Lease Agreement – Transpacific Processing

Appendix 8 Sandy Farms Oregon Department of Environmental Quality 1400 A

Appendix 9 Sandy Farms Sandy Farms Lease Agreement – Ulrich Ruegger