As filed with the Securities and Exchange Commission on September 30, 1999
Registration No. 333-83125
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
(Amendment No. 3)
FIRST GROWTH INVESTORS, INC.
(Name of small business issuer in its charter)
Nevada 87-0569467
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
2508 South 1300 East, Salt Lake City, Utah 84106
(801) 466-7808
(Address and telephone number of principal executive offices and place of
business)
Glen Ulmer
2508 South 1300 East, Salt Lake City, Utah 84106
(801) 466-7808
(Name, address and telephone number of agent for service)
Copies to:
Thomas G. Kimble & Van L. Butler
THOMAS G. KIMBLE & ASSOCIATES
311 South State Street, #440
Salt Lake City, Utah 84111
(801) 531-0066
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after
the effective date of this registration statement.
CALCULATION OF REGISTRATION FEE
(previously submitted)
<TABLE>
<S> <C> <C> <C> <C>
Title of Each Class Amount to be Proposed Maximum Proposed Maximum Amount
of Securities to be Registered Offering Price/Unit Aggregate Price of fee
Registered
Warrants; underlying 1,000,000 $ 1.00 $ 1,000,000 $278.00
Common Stock
TOTALS 278.00
</TABLE>
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said section
8(a), may determine.
<PAGE>
FIRST GROWTH INVESTORS, INC.
1,000,000 SHARES OF COMMON STOCK
UNDERLYING COMMON STOCK PURCHASE WARRANTS
Our company, First Growth Investors, Inc., has registered:
bullet 1,000,000 warrants, to be distributed as soon as practicable after
the date of this prospectus to common stockholders of record as of
September 30, 1999.
bullet 1,000,000 shares of common stock, to be issued upon exercise of the
warrants, at $1.00 per share underlying warrants.
Each warrant allows you to purchase one share of our common stock, at
any time until June 30, 2002, if this prospectus is still current or has been
updated. Whether a current prospectus is effective or not, we can call and
redeem the warrants for $.01 per warrant, on 30 days notice, at any time after
the date of this prospectus.
Our common stock is quoted on the NASD Electronic Bulletin Board under
the Symbol "FGIV". The current bid price quotation is $.40.
YOU SHOULD NOT PURCHASE THESE SECURITIES IF YOU CANNOT AFFORD TO RISK THE LOSS
OF YOUR ENTIRE INVESTMENT. INVESTING IN OUR COMMON STOCK INVOLVES SUBSTANTIAL
RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE 5.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE
SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The 1,000,000 warrants will be distributed without cash consideration. The
1,000,000 shares of common stock will be offered only to holders of the
warrants at $1.00 per share, or $1,000,000 in the aggregate if all warrants
are exercised, and will be sold by First Growth Investors without any
underwriting discounts or other commissions. The offering price is payable in
cash upon exercise of the warrants. No minimum number of warrants must be
exercised, and no assurance exists that any warrants will be exercised.
The date of this prospectus is , 1999
<PAGE>
TABLE OF CONTENTS Page
PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . 3
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
DILUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
COMPARATIVE DATA . . . . . . . . . . . . . . . . . . . . . . . . . . 6
USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
MARKET INFORMATION & DIVIDEND POLICY . . . . . . . . . . . . . . . . 7
MANAGEMENT'S DISCUSSION AND ANALYSIS . . . . . . . . . . . . . . . . 7
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
AVAILABLE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . .11
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
CERTAIN TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . .12
PRINCIPAL SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . .13
DESCRIPTION OF SECURITIES. . . . . . . . . . . . . . . . . . . . . .14
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . .17
LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . .17
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . F-1
<PAGE>
PROSPECTUS SUMMARY
First Growth Investors is in the business of buying and reselling
fine wines, and holding the wines for investment appreciation and
eventual resale. Our address is 2508 South 1300 East, Salt Lake City,
Utah 84106. Our phone number is (801) 466-7808.
THE OFFERING
Securities 1,000,000 shares of our common stock.
offered
Offering Prices $1.00 per share underlying the
warrants.
Plan of DistributionShares will be offered and sold without
discounts or other
commissions, to holders of the
warrants, upon exercise.
Use of Proceeds We could receive as much as $1,000,000
from sale of the
1,000,000 shares of common stock to be
issued upon
exercise of the warrants, if all
warrants are exercised. Any
proceeds will be used generally to
provide additional
working capital, but have not been
specifically allocated,
since we do not know if any warrants
will be exercised.
Transfer Agent Interwest Transfer Company, Inc., 1981
East 4800 South,
Suite 100, Salt Lake City, Utah 84117,
(801) 272-9294.
Securities OutstandingWe are authorized to issue up to
24,000,000 shares of
common stock and presently have
2,000,000 shares of
common stock issued and outstanding. We
have reserved
from our authorized capital 1,000,000
shares of common
stock for issuance upon exercise of the
warrants. We are
also authorized to issue up to
1,000,000 shares of preferred
stock in one or more series with rights
and preferences as the
board of directors may designate. The
board of directors has
not designated any series of preferred stock.
Warrants Each warrant allows you to purchase one
share of common
stock at any time until June 30, 2002,
if this prospectus is
still current or has been updated. The
exercise price is $1.00
per share, with adjustment in certain
events. The warrants
are callable and can be redeemed by us
for $.01 per warrant
on 30 days notice at any time after the
date of this
prospectus.
<PAGE>
RISK FACTORS
The securities involve a high degree of risk. You should carefully
consider the following risk factors and all other information in this
prospectus before investing in First Growth Investors.
WE MAY NOT BE ABLE TO SELECT WINES TO PURCHASE AND HOLD FOR INVESTMENT
THAT WILL APPRECIATE IN VALUE ENOUGH TO GENERATE A PROFIT UPON SALE.
Management has no prior experience with or knowledge of the wine industry and
will have to rely on advice from others on the selection of wines to purchase
for investment and the timing of purchase and sale.
YOU ARE NOT ASSURED THAT ANY PROCEEDS WILL BE RECEIVED FROM EXERCISE OF
WARRANTS. This increases your risk if you do exercise your warrants, because
you are not assured that any additional warrants will be exercised or that we
will receive further funding. Proceeds may not be sufficient to defray
offering expenses. Because no minimum number of warrants must be exercised
there is no escrow of funds. Any proceeds received will immediately be
retained by us to be used in our business. The amount of capital currently
available to us is limited. In the event any proceeds from this offering and
our existing capital are not sufficient to enable us to develop and expand our
business and generate a profit, we may need additional financing, for which we
have no commitments or arrangements from commercial lenders or other sources.
YOU MAY NOT BE ABLE TO EXERCISE YOUR WARRANTS. You can exercise your
warrants only if the exercise is permitted under the securities laws of your
state, and only while this prospectus is current and effective. We intend to
update the prospectus as necessary to keep it current and maintain federal and
state registration or qualification for the exercise, but may not always do
so. Whether a current prospectus is effective or not, the warrants are
redeemable for $.01 per warrant at any time. If redeemed when no current
prospectus is effective, you will have no opportunity to exercise the
warrants, but will be compelled to accept the nominal redemption price.
ISSUANCE OF ADDITIONAL STOCK IN THE FUTURE WILL REDUCE YOUR
PROPORTIONATE OWNERSHIP AND VOTING POWER AND/OR CREATE ADDITIONAL SECURITIES
WITH DIVIDEND AND LIQUIDATION PREFERENCES OVER COMMON STOCK. Directors can
issue additional common or preferred stock without shareholder approval to the
extent authorized. We are authorized to issue 24,000,000 shares of common
stock and 1,000,000 shares of preferred stock, the rights and preferences of
which may be designated in series by our board of directors. The board of
directors has not designated any series or issued any shares of preferred
stock.
ANTI-TAKEOVER MEASURES MAY RESULT IN YOU RECEIVING LESS FOR YOUR STOCK
THAN YOU OTHERWISE MIGHT. The ability of directors, without stockholder
approval, to issue additional shares of common stock and/or preferred stock
could be used as anti-takeover measures. These provisions could prevent,
discourage or delay a takeover attempt.
YOU ARE NOT ASSURED YOU WILL BE ABLE TO SELL YOUR COMMON STOCK IN THE
FUTURE AT A PRICE WHICH EQUALS OR EXCEEDS THE EXERCISE PRICE. The exercise
<PAGE>
price of the warrants was arbitrarily determined by us and set at a level
substantially in excess of prices recently paid for securities of the same
class. The price bears no relationship to our assets, book value, net worth
or other economic or recognized criteria of value. In no event should the
exercise price be regarded as an indicator of any future market price of our
securities.
YOU MAY NOT BE ABLE TO LIQUIDATE YOUR INVESTMENT READILY OR AT ALL WHEN
YOU NEED OR DESIRE TO SELL. Although our common stock is eligible for
quotation on the Electronic Bulletin Board maintained by the NASD, there has
been no active public trading market. You are not assured that an active
trading market will develop, or if a market does develop, that it will
continue. As a result, an investment in our common stock may be totally
illiquid.
SALES OF SUBSTANTIAL AMOUNTS OF COMMON STOCK IN THE PUBLIC MARKET COULD
DEPRESS THE MARKET PRICE. 250,000 of the 2,000,000 shares of our common stock
presently outstanding are freely tradeable, and all of the remaining shares
are eligible for public resale under Rule 144 promulgated under the Securities
Act of 1933.
DILUTION
You will suffer substantial dilution in the purchase price of your stock
compared to the net tangible book value per share immediately after the
purchase. The exact amount of dilution will vary depending upon the number of
warrants exercised.
Dilution is the difference between the warrant exercise price of $1.00
per share, and the net tangible book value per share of common stock
immediately after its purchase. Net tangible book value per share is
calculated by subtracting total liabilities from total assets less intangible
assets, and then dividing by the number of shares of common stock then
outstanding. Based on the June 30, 1999, financial statements of First Growth
Investors, net tangible book value was $61,607 or about $.03 per common share.
Before exercise of any warrants, 2,000,000 shares of common stock are
outstanding.
If all warrants get exercised, which is not assured, 3,000,000 shares of
common stock would then be outstanding. The estimated pro forma net tangible
book value (which gives effect to receipt of the net proceeds from exercise
and issuance of the underlying shares of common stock, but does not take into
consideration any other changes in net tangible book value after June 30,
1999), would then be $1,041,607 or about $.35 per share. This would result in
dilution to persons exercising warrants of $.65 per share, or 65% of the
exercise price of $1.00 per share. Net tangible book value per share would
increase to the benefit of present stockholders from $.03 before the offering
to $.35 after the offering, or an increase of $.32 per share attributable to
exercise of the warrants.
The following table shows the estimated net tangible book value ("NTBV")
per share after exercise of the warrants and dilution to persons purchasing
the underlying common stock.
<PAGE>
<TABLE>
<S> <C> <C>
Exercise of all warrants:
Warrant exercise price/share $1.00
NTBV/share before exercise $.03
Increase attributable to warrant exercise .32
Pro forma NTBV/share after exercise .35
Dilution $ .65
</TABLE>
If less than all the warrants get exercised, dilution to the exercising
warrant holders will be greater than the amount shown. The fewer warrants
exercised, the greater dilution will be on the warrants that are exercised.
COMPARATIVE DATA
The following chart shows prices paid for, and proportionate ownership
in First Growth Investors represented by, common stock purchased since
inception by initial shareholders and other present shareholders, compared to
the price that will be paid and proportionate ownership represented by common
stock that will be acquired by exercising warrant holders, assuming all
warrants are exercised.
<TABLE>
<S> <C> <C> <C> <C> <C>
Shares Percent Cash Paid Percent Price/share
Owned
Initial 1,750,000 58.3% $ 5,050 .5% $.0029
Shareholders
Other Shareholders 250,000 8.3% $ 50,000 4.7% $ .20
Warrant Holders 1,000,000 33.3% $1,000,000 94.8% $1.00
</TABLE>
USE OF PROCEEDS
The net proceeds from the sale of the shares of common stock underlying
the warrants at the exercise price of $1.00 per share will vary depending upon
the total number of warrants exercised. If all warrants get exercised, we
would receive gross proceeds of $1,000,000. We do not know if all or any
warrants will be exercised. Regardless of the number of warrants exercised, we
expect to incur offering expenses estimated at $20,000 for legal, accounting,
printing and other costs in connection with the offering. Since there is no
assurance that all or any warrants will be exercised nor any requirement that
any minimum number of the warrants be exercised, there are no escrow
provisions. Any proceeds that are received will be immediately available to
provide additional working capital to be used for general corporate purposes.
Proceeds have not been specifically allocated, and the exact uses of the
proceeds will depend on the amounts received and the timing of receipt.
Management's general intent is to use whatever additional funds may be
generated from warrant exercise to finance further development and expansion
of our business by investing all available proceeds in additional vintages of
select wines.
<PAGE>
MARKET INFORMATION & DIVIDEND POLICY
Our common stock is quoted on the National Association of Securities
Dealers, Inc. Electronic Bulletin Board under the symbol FGIV, but has not
been traded in the over-the-counter market except on a very limited and
sporadic basis. The only bid quotation has been $.40. The above price
represents interdealer quotations, without retail markup, markdown or
commissions, and may not represent actual transactions. As of September 8,
1999, there were about 44 record holders of our common stock.
Our common stock is considered a low priced security under rules
promulgated by the Securities and Exchange Commission. Under these rules,
broker-dealers participating in transactions in these securities must first
deliver a risk disclosure document which describes risks associated with these
stocks, broker-dealers' duties, customers' rights and remedies, market and
other information, and make suitability determinations approving the customers
for these stock transactions based on financial situation, investment
experience and objectives. Broker-dealers must also disclose these
restrictions in writing, provide monthly account statements to customers, and
obtain specific written consent of each customer. With these restrictions,
the likely effect of designation as a low priced stock is to decrease the
willingness of broker-dealers to make a market for the stock, to decrease the
liquidity of the stock and increase the transaction cost of sales and
purchases of these stocks compared to other securities.
DIVIDEND POLICY
First Growth Investors has not previously paid any cash dividends on
common stock and does not anticipate or contemplate paying dividends on common
stock in the foreseeable future. Our present intention is to utilize all
available funds for the development of our business. The only restrictions
that limit the ability to pay dividends on common equity or that are likely to
do so in the future, are those restrictions imposed by law. Under Nevada
corporate law, no dividends or other distributions may be made which would
render a company insolvent or reduce assets to less than the sum of
liabilities plus the amount needed to satisfy outstanding liquidation
preferences.
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion and analysis should be read in conjunction with
our financial statements and the notes associated with them contained
elsewhere in this prospectus. This discussion should not be construed to
imply that the results discussed in this prospectus will necessarily continue
into the future or that any conclusion reached in this prospectus will
necessarily be indicative of actual operating results in the future. The
discussion represents only the best present assessment of management .
PLAN OF OPERATIONS.
Management's plan of operation for the next twelve months is to continue
<PAGE>
using existing capital and any funds from exercise of warrants in this
offering to acquire another inventory of select wines to hold for investment
and resale, and also to provide general working capital during the next twelve
months. Under this plan of operations First Growth Investors has no specific
capital commitments and the timing of capital expenditures will depend upon
the receipt of additional funds from warrant exercise or elsewhere, none of
which is assured. Cash flows will also depend upon the timing of sale of the
wines, which is also not assured, and receipt of the proceeds from these
sales. We have not determined how long existing capital can satisfy any cash
requirements, but we do not presently anticipate that we will have to raise
additional funds within the next twelve months. While we do not anticipate
any need to raise additional capital, we believe First Growth Investors will
have the opportunity to invest whatever additional funds may be received from
the exercise of warrants in purchasing additional vintages of investment grade
wines. We do not anticipate any capital commitments for product research and
development or significant purchases of plant or equipment, or any change in
the number of employees.
Initially, we purchased eleven different vintages of investment grade
wines at a cost of $54,588. During the first quarter of 1999, we sold these
wines for $76,138. We made these purchases, and all purchases to date, from
non affiliated third parties. We did not purchase any of the inventory from,
or sell any of the inventory to, persons affiliated with First Growth
Investors.
BUSINESS
HISTORY AND DEVELOPMENT OF FIRST GROWTH INVESTORS
First Growth Investors, Inc. was recently incorporated under the laws of
the State of Nevada on September 9, 1997. In connection with the
organization, the founders contributed $5,050 cash to initially capitalize
First Growth Investors in exchange for 1,750,000 shares of common stock.
On October 15, 1997, First Growth Investors commenced a public offering
of up to 250,000 shares of its common stock, in reliance upon Rule 504 of
Regulation D, promulgated by the U.S. Securities & Exchange Commission under
the Securities Act of 1933. The offering closed in November, 1997. We sold
250,000 shares of common stock, at $.20 per share, and raised gross proceeds
of $50,000 increasing the total issued and outstanding common stock to
2,000,000 shares.
INDUSTRY BACKGROUND
First Growth Investors was formed to take advantage of what management
believes is a money making opportunity that can be realized through buying,
selling and investing in select vintages of wines. The philosophy is simple;
buy California's and France's premier red wines when they are first released
and hold them for investment, appreciation and later resale, then sell the
wines after a 12 to 24 month period. It is anticipated, but we cannot assure,
that the appreciation of the wines will be greatest within this period. We
will then take any proceeds from investment, roll it over, and reinvest in the
next release of the wines.
<PAGE>
First Growth Investors purchases the actual wines directly from
suppliers rather than purchasing futures contracts, and will not be purchasing
futures contracts. Management is aware of companies that supply wines for
various purposes including investment, from which First Growth Investors
acquires the wines it holds for investment. These companies conduct research
regarding the world's top wines and will provide educated recommendations to
management about the specific wines that can be purchased for investment and
are likely to appreciate in value over time. These companies buy and sell
wines held for investment from collectors and charge a commission of 10% to
15% for the services. They also typically provide for a fee suitable
temperature controlled storage facilities in which to keep the wines while
they age.
To date, First Growth Investors has purchased and sold all its wine
investments through Nevada Wine Company, using the brokerage and other
services provided by that company. Nevada Wine Company is not affiliated with
First Growth Investors or its principals. Nevada Wine Company is a six year
old Las Vegas based company that supplies wine for many large and small
businesses and also sells many of the world's finest wines to collectors or to
others who just want a good bottle of wine to drink. These wines range from
good inexpensive wine to wines worth hundreds of dollars.
In November, 1997, First Growth Investors used the proceeds of its
recently completed offering to purchase several vintages of investment grade
wines. These were all sold during the first quarter of 1999. In July and
August of 1999, First Growth Investors reinvested the amounts received or to
be received from the initial sales in other vintages of investment grade
wines, which it is still holding.
The following table shows the wine investments First Growth Investors
has purchased and sold so far.
Qty Description Price Sale Price Profit
198 1994 Opus One 17,014.14 25,740.00 8,725.86
60 1994 Caymus Special Select 6,330.00 9,540.00 3,210.00
48 1994 Joseph Phelps Insignia 3,036.00 4,320.00 1,284.00
1 1994 Dalle Valle Maya 287.50 400.00 112.50
84 1994 Caymus Special Select 9,240.00 13,356.00 4,116.00
3 1993 Beringer Reserve 3.0 1 1,035.00 1,200.00 165.00
10 Turley Zinfandel & Petite 920.00 1,350.00 430.00
24 1994 Silverado Cabernet 1,440.00 1,728.00 288.00
126 1994 Robert Mondavi Res. Ca 7,560.00 10,080.00 2,520.00
36 1994 Opus One 3,105.00 4,680.00 1,575.00
24 1994 Hartwell 3,120.00 3,744.00 624.00
276 1990 Dom Perignon 35,880.00 Holding
174 1990 Dom Perignon 22,620.00 Holding
Wine investing, or using wines as an investment vehicle, is based on the
<PAGE>
principle of aging. Some wines are believed by professional connoisseurs to
benefit from the aging process. As a result, these wines have the potential
to become more valuable with the passage of time. Most investment grade wines
are red wines, because white wines generally do not benefit from aging. Aging
allows a fine red wine, on the other hand, to develop distinctive traits which
are highly valued by connoisseurs. As a result of this aging process, the
vintages of wines that are sought after as investment grade wines may increase
several times in value as they are aged over a period of years, especially if
the wines achieve a "First Growth" or top ranked classification as they are
aged.
There is absolutely no assurance that First Growth Investors will be
successful in this venture. Management has no prior experience in this
business or industry and will have to rely on the advice of others. However,
the initial purchase of wines, an investment costing about $50,000.00, was
subsequently sold for an amount which generated a gross profit in excess of
$20,000. Management believes that any additional funds that may be received
from exercise of warrants can similarly be used to increase the amounts of
purchases or investments First Growth Investors can make.
COMPETITION
The business of buying, selling and investing in fine wines is intensely
competitive, with many companies who have greater technical expertise,
financial resources and marketing capabilities than First Growth Investors.
We are aware of a number of competitors which will compete directly with us.
There is no assurance we will be able to overcome competitive disadvantages we
face as a small, start up company with limited capital. If we cannot compete
effectively, regardless of the success of this offering, we will not succeed.
EMPLOYEES
As of the date hereof, First Growth Investors has no full-time
employees. Because we are using the services provided by Nevada Wine Company,
only a minimal amount of management time is needed. No full-time employees
are presently needed.
FACILITIES
First Growth Investors has no office facilities and does not presently
anticipate the need to lease commercial office space or facilities, but for
the time being uses the address of the President as the business address. We
may lease commercial office facilities at such time in the future as our
operations have developed to the point where the facilities are needed, but we
have no commitments or arrangements for any facilities, and there is no
assurance regarding the future availability of commercial office facilities or
terms on which we may be able to lease facilities in the future, nor any
assurance regarding length of time the present arrangement may continue. In
connection with the purchase of an inventory of wines to hold for investment
and resale, First Growth Investors has leased from third parties or otherwise
paid for the use of temperature controlled or otherwise suitable storage
facilities for the wines.
<PAGE>
AVAILABLE INFORMATION
We filed a registration statement on Form SB-2 with the United States
Securities and Exchange Commission, under the Securities Act of 1933, covering
the securities in this offering. As permitted by rules and regulations of the
Commission, this prospectus does not contain all of the information in the
registration statement. For further information regarding both First Growth
Investors and the securities in this offering, we refer you to the
registration statement, including all exhibits and schedules, which may be
inspected without charge at the public reference facilities of the
Commission's Washington, D.C. office, 450 Fifth Street, N.W., Washington, D.C.
20549. Copies may be obtained upon request and payment of prescribed fees.
As of the date of this prospectus, we became subject to the information
requirements of the Securities Exchange Act of 1934. Accordingly, we will
file reports and other information with the Commission. These materials will
be available for inspection and copying at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the following regional offices of the Commission: New York
Regional Office, 75 Park Place, New York, New York 10007; Chicago Regional
Office, 500 West Madison Street, Chicago, Illinois 60661. Copies of the
material may be obtained from the public reference section of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The
Commission maintains an Internet Web site located at http://www.sec.gov that
contains reports, proxy and information statements and other information
regarding issuers that file reports electronically with the Commission. The
site is accessible by the public through any Internet access service provider.
Copies of our Annual, Quarterly and other Reports filed with the
Commission, starting with the Quarterly Report for the first quarter ended
after the date of this prospectus (due 45 days after the end of the quarter)
will also be available upon request, without charge, by writing First Growth
Investors, Inc., 2508 South 1300 East, Salt Lake City, Utah 84106.
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table shows directors, executive officers and other
significant employees, their ages, and all offices and positions with First
Growth Investors. Each director is elected for a period of one year and
thereafter serves until his successor is duly elected by the stockholders and
qualifies. Officers and other employees serve at the will of the board of
directors.
<TABLE>
<S> <C> <C>
Term Served As Positions
Name of DirectorAge Director/Officer With Company
Pam Jowett45 President & Director
Glen Ulmer55 Secretary-Treasurer &
Director
</TABLE>
<PAGE>
These individuals serve as the officers and directors. A brief
description of their positions, proposed duties, background and business
experience follows:
GLEN ULMER is a graduate of Utah Technical College in cosmetology and
the Utah College of Massage Therapy, and is nationally certified as a Sports
Massage Therapist. Mr. Ulmer has been self-employed since 1977. In the past,
Mr. Ulmer has served as an officer and director of numerous public companies
which were not engaged in any active business at the time of his involvement.
Mr. Ulmer has no prior experience in the business of buying, selling and
investing in wines, and will have to rely on the advice of other persons on
the purchase of suitable wines. Mr. Ulmer was recently diagnosed with cancer
and is undergoing treatment.
PAM JOWETT is the wife of Glen Ulmer and is joining Mr. Ulmer in
management of First Growth Investors. This will not result in any change in
management's plan of operations for the business. Ms. Jowett has no prior
experience in the business of buying, selling and investing in wines, and will
have to rely on the advice of other persons on the purchase of suitable wines.
Ms. Jowett has been self employed for many years as a nail technician in the
beauty industry.
There are no arrangements or understandings regarding the length of time
a director is to serve in a capacity.
EXECUTIVE COMPENSATION
First Growth Investors was only recently incorporated, and has not paid
any compensation to its executive officers and directors to date. We have no
employment agreement with nor key man life insurance on management. Management
is entitled to reimbursement of any out of pocket expenses reasonably and
actually incurred on our behalf. The officers do not devote full time or a
significant amount of time to the affairs of First Growth Investors, are not
full time employees and do not receive any salary or wage. There is no
assurance regarding the length of time that this arrangement may continue, nor
any assurance that the services of the officers will continue to be available
for any specified length of time.
CERTAIN TRANSACTIONS
In connection with our organization, officers, directors and other
stockholders paid an aggregate of $5,050 cash to purchase 1,750,000 shares of
Common Stock at a price of $.0029 per share. See "Principal Shareholders."
In November 1997, we completed an offering under Regulation D, Rule 504
as promulgated by the Securities and Exchange Commission and sold 250,000
shares of common stock, at $.20 per share, and raised gross proceeds of
$50,000. These are free-trading shares.
<PAGE>
CONFLICTS OF INTEREST
Other than as described in this prospectus we do not expect to have
significant further dealings with affiliates. However, if there are dealings
the parties will attempt to deal on terms competitive in the market and on the
same terms that either party would deal with a third person. Presently none
of the officers and directors have any transactions which they contemplate
entering into with First Growth Investors, aside from the matters described in
this prospectus.
Management will attempt to resolve any conflicts of interest that may
arise in favor of First Growth Investors. Failure to do so could result in
fiduciary liability to management.
INDEMNIFICATION AND LIMITATION OF LIABILITY OF MANAGEMENT
The General Corporation Law of Nevada permits provisions in the
articles, by-laws or resolutions approved by shareholders which limit
liability of directors and officers for breach of fiduciary duty to certain
specified circumstances, namely, acts or omissions which involve intentional
misconduct, fraud or knowing violation of law, or unlawful stock purchases,
redemptions or payment of dividends. Our articles limit liability of officers
and directors to the full extent permitted by Nevada law. With these
exceptions this eliminates personal liability of a director or officer, to
First Growth Investors or its shareholders, for monetary damages for breach of
fiduciary duty. Therefore a director or officer cannot be held liable for
damages to First Growth Investors or its shareholders for gross negligence or
lack of due care in carrying out his fiduciary duties as a director or
officer. Nevada law permits indemnification if a director or officer acts in
good faith in a manner reasonably believed to be in, or not opposed to, the
best interests of the corporation. A director or officer must be indemnified
as to any matter in which he defends himself successfully. Indemnification is
prohibited as to any matter in which the director or officer is adjudged
liable to the corporation.
This will limit your ability as shareholders to hold officers and
directors liable and collect monetary damages for breaches of fiduciary duty,
and requires us to indemnify officers and directors to the full extent
permitted by law. Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to directors, officers, and controlling
persons under these provisions or otherwise, we have been advised that in the
opinion of the Securities and Exchange Commission, indemnification is against
public policy as expressed in the Act and is unenforceable.
PRINCIPAL SHAREHOLDERS
The following table contains stock ownership information about officers
or directors, and other stockholders who we know to be beneficial owners of
more that 5% of our stock. A beneficial owner of stock is any person who has
or shares the power to decide how to vote or whether to dispose of the stock.
<PAGE>
<TABLE>
<S> <C> <C> <C>
Title of Amount & Nature of % of
Name and Address Class Beneficial Ownership Class
Glen Ulmer & Pam Jowett Common 1,575,000 shares 79%
2508 S. 1300 E.
SLC, UT 84106
Lynn Dixon
311 S. State, #460 Common 175,000 shares 9%
SLC, UT 84111
All officers and
directors as a group Common 1,575,000 shares 79%
(1 person)
</TABLE>
The foregoing amounts include all shares these persons are deemed to
beneficially own regardless of the form of ownership. Glen Ulmer & Pam Jowett
are husband and wife. Each is considered a beneficial owner of stock held by
the other. See "Certain Transactions."
DESCRIPTION OF SECURITIES
The following statements do not purport to be complete and are qualified
in their entirety by reference to the detailed provisions of our articles of
incorporation and bylaws, copies of which will be furnished to an investor
upon written request. See "Additional Information."
COMMON STOCK
We are presently authorized to issue 24,000,000 shares of common stock.
First Growth Investors presently has 2,000,000 shares of common stock
outstanding and has reserved from its authorized but unissued shares a
sufficient number of shares of common stock for issuance of the shares offered
in this offering. The shares of common stock to be issued on completion of
the offering will be, when issued according to the terms of the offering,
fully paid and non-assessable.
The holders of common stock, including the shares offered in this
offering, are entitled to equal dividends and distributions, per share, on the
common stock when, as and if declared by the board of directors from funds
legally available for that. No holder of any shares of common stock has a
pre-emptive right to subscribe for any securities nor are any common shares
subject to redemption or convertible into other securities. Upon liquidation,
dissolution or winding up, and after payment of creditors and preferred
stockholders, if any, the assets will be divided pro-rata on a share-for-share
basis among the holders of the shares of common stock. All shares of common
stock now outstanding are fully paid, validly issued and non-assessable. Each
share of common stock is entitled to one vote on the election of any director
or any other matter upon which shareholders are required or permitted to vote.
Holders of our common stock do not have cumulative voting rights, so that the
holders of more than 50% of the combined shares voting for the election of
<PAGE>
directors may elect all of the directors, if they choose to do so and, in that
event, the holders of the remaining shares will not be able to elect any
members to the board of directors.
PREFERRED STOCK
We are also presently authorized to issue 1,000,000 shares of preferred
stock. Under our articles of incorporation, the board of directors has the
power, without further action by the holders of the common stock, to designate
the relative rights and preferences of the preferred stock, and issue the
preferred stock in one or more series as designated by the board of directors.
The designation of rights and preferences could include preferences as to
liquidation, redemption and conversion rights, voting rights, dividends or
other preferences, any of which may be dilutive of the interest of the holders
of the common stock or the preferred stock of any other series. The issuance
of preferred stock may have the effect of delaying or preventing a change in
control without further shareholder action and may adversely effect the rights
and powers, including voting rights, of the holders of common stock. In
certain circumstances, the issuance of preferred stock could depress the
market price of the common stock. The board of directors effects a
designation of each series of preferred stock by filing with the Nevada
Secretary of State a Certificate of Designation defining the rights and
preferences of each series. Documents so filed are matters of public record
and may be examined according to procedures of the Nevada Secretary of State,
or copies may be obtained from First Growth Investors.
WARRANTS
First Growth Investors has declared a distribution of 1,000,000 common
stock purchase warrants to shareholders of record as of September 30, 1999.
The warrants are exercisable at $1.00 per share, on or before June 30, 2002,
upon effectiveness of registration of the warrants and underlying shares.
(a) First Growth Investors may redeem all or a portion of the
warrants, at $.01 per warrant, at any time upon 30 days' prior written
notice to the warrant holders. The warrants may be redeemed whether or
not a current registration statement is effective. Any warrant holder
who does not exercise his warrants before the Redemption Date, as set
forth on the Notice of Redemption, will forfeit his right to purchase
the shares of common stock underlying the warrants, and after the
Redemption Date any outstanding warrants referred to in the Notice will
become void and be canceled. If not redeemed, the warrants will expire
at the conclusion of the exercise period unless extended by us.
(b) First Growth Investors may at any time, and from time to
time, extend the exercise period of the warrants provided that written
notice of the extension is given to the warrant holders before the
expiration date. Also, First Growth Investors may, at any time, reduce
the exercise price by written notification to the holders. We do not
presently contemplate any extensions of the exercise period or reduction
in the exercise price of the warrants.
<PAGE>
(c) The warrants contain anti-dilution provisions on the
occurrence of certain events, such as stock splits or stock dividends.
The anti-dilution provisions do not apply in the event of a merger or
acquisition. In the event of liquidation, dissolution or winding-up,
warrant holders will not be entitled to participate in the assets.
Warrant holders have no voting, preemptive, liquidation or other rights
of a stockholder, and no dividends may be declared on the warrants.
(d) The warrants may be exercised by surrendering to First Growth
Investors, a warrant certificate evidencing the warrants to be
exercised, together with the exercise form duly completed and executed,
and paying the exercise price per share in cash or check payable to
First Growth Investors. Stock certificates will be issued as soon
thereafter as practicable.
(e) The warrants will not be exercisable unless the warrants and
the shares of common stock underlying the warrants are registered or
otherwise qualified in applicable jurisdictions.
(f) The warrants will be nontransferable by their terms, cannot
be transferred without the consent of First Growth Investors and will be
stamped with a restrictive legend.
SHARES ELIGIBLE FOR FUTURE SALE
Of the 2,000,000 shares of our common stock outstanding before the
exercise of any warrants, 250,000 shares are currently freely tradeable. In
addition, the 1,000,000 shares of common stock underlying the warrants will
also be freely tradeable into the public market immediately upon issuance.
Sales of substantial amounts of this common stock in the public market could
depress the market price of the common stock. Furthermore, all of the
remaining shares of common stock presently outstanding are restricted and/or
affiliate securities which are not presently, but may in the future be sold,
under Rule 144, into any public market that may exist for the common stock.
Future sales by current shareholders could depress the market prices of the
common stock in any market.
In general, under Rule 144 as currently in effect, a person (or group of
persons whose shares are aggregated), including affiliates of an issuer, can
sell within any three-month period, an amount of restricted securities that
does not exceed the greater of 1% of the total number of outstanding shares of
the same class, or (if the Stock becomes quoted on NASDAQ or a stock
exchange), the reported average weekly trading volume during the four calendar
weeks preceding the sale; provided, that at least one year has elapsed since
the restricted securities being sold were acquired from the issuer or any
affiliate of the issuer, and provided further that certain other conditions
are also satisfied. If at least two years have elapsed since the restricted
securities were acquired from the issuer or an affiliate of the issuer, a
person who has not been an affiliate of the issuer for at least three months
can sell restricted shares under Rule 144 without regard to any limitations on
the amount.
<PAGE>
PLAN OF DISTRIBUTION
This prospectus and the registration statement of which it is part
relate to the offer and sale of 1,000,000 shares of common stock to be issued
upon the exercise of the warrants at an exercise price of $1.00 per share.
The warrants are being distributed as a dividend on the common stock to all
the shareholders of record as of September 30, 1999. The warrants are
exercisable until June 30, 2002, if this prospectus is still current or has
been updated.
The offering will be managed by First Growth Investors without an
underwriter, and the shares are being offered and sold without any discount,
sales commissions or other compensation being paid to anyone in connection
with the offering. First Growth Investors will pay the costs of preparing,
mailing and distributing this prospectus to the holders of the warrants.
Brokers, nominees, fiduciaries and other custodians are requested to forward
copies of this prospectus to the beneficial owners of securities held of
record by them, and the custodians will be reimbursed for their expenses.
There is no assurance that all or any shares will be sold, nor any
requirement, or escrow provisions to assure that, any minimum amount of
warrants will be exercised. All funds received upon the exercise of any
warrants will be immediately available for our use.
EXERCISE PROCEDURES
The warrants may be exercised in whole or in part by presentation of the
Warrant Certificate, with the Purchase Form on the reverse side filled out and
signed at the bottom, together with payment of the Exercise Price and any
applicable taxes at the principal office of Interwest Stock Transfer Co., 1981
East 4800 South, Suite 100, Salt Lake City, Utah 84117. Payment of the
Exercise Price shall be made in lawful money of the United States of America
in cash or by cashier's or certified check payable to the order of "First
Growth Investors, Inc., Warrant Exercise Account."
All holders of warrants will be given an independent right to exercise
their purchase rights. If, as and when properly completed and duly executed
notices of exercise are received by the Transfer Agent and/or Warrant Agent,
together with the Certificates being surrendered and full payment of the
Exercise Price in cleared funds, the checks or other funds will be delivered
to First Growth Investors and the Transfer Agent and/or Warrant Agent will
promptly issue certificates for the underlying common stock. It is presently
estimated that certificates for the shares of common stock will be available
for delivery in Salt Lake City, Utah at the close of business on the tenth
business day after the receipt of all required documents and funds.
LEGAL MATTERS
Management knows of no material litigation that is pending or threatened
against First Growth Investors. The validity of the issuance of the shares
offered in this offering will be passed upon for First Growth Investors by
Thomas G. Kimble & Associates, Salt Lake City, Utah.
<PAGE>
EXPERTS
The financial statements of First Growth Investors for the years ended
December 31, 1998 and 1997 which are included in this prospectus have been
examined by David T. Thomson, P.C., independent certified public accountants,
as indicated in their report, and are included in this prospectus in reliance
on the report given upon the authority of that firm as experts in accounting
and auditing.
<PAGE>
FIRST GROWTH INVESTORS, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
WITH
INDEPENDENT AUDITOR'S REPORT
<PAGE>
FIRST GROWTH INVESTORS, INC.
(A Development Stage Company)
CONTENTS
PAGE
Independent Auditor's Report 1
Balance Sheets 2
Statements of Operations 3
Statement of Stockholders' Equity 4
Statements of Cash Flows 5
Notes to Financial Statements 6-8
<PAGE>
Independent Auditor's Report
Board of Directors
FIRST GROWTH INVESTORS, INC.
Salt Lake City, Utah
I have audited the accompanying balance sheets of First Growth
Investors, Inc. (A development stage company) as of December 31, 1998
and 1997 and the related statements of operations, stockholders' equity
and cash flows for the year ended December 31, 1998 and from inception
(September 9, 1997) to December 31, 1997 and 1998. These financial
statements are the responsibility of the Company's management. My
responsibility is to express an opinion on the financial statements
based on my audits.
I conducted my audits in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatements. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. I believe that my audits
provide a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of First Growth
Investors, Inc. (A development stage company) as of December 31, 1998
and 1997, and the results of its operations and its cash flows for the
year ended December 31, 1998 and from Inception (September 9, 1997) to
December 31, 1997 and 1998 in conformity with generally accepted
accounting principles.
/s/ David T. Thomson, P.C.
Salt Lake City, Utah
April 19, 1998
<PAGE>
FIRST GROWTH INVESTORS, INC.
(A Development Stage Company)
BALANCE SHEETS
ASSETS
June 30 December 31 December 31,
1999 1998 1997
(Unaudited)
CURRENT ASSETS:
Cash in bank $ 18,834 $ 1,234 $ 6,240
Accounts receivable 45,718 0 0
Inventory 0 54,588 54,588
Prepaid expenses 0 0 500
Total Current Assets 64,552 55,822 61,328
OTHER ASSETS:
Organization costs, net of amortization of
$350, $250 and $50, 650 750 950
Total Other Assets 650 750 950
TOTAL ASSETS $ 65,202 $ 56,572 $ 62,278
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 0 $ 0 $ 4,886
Accrued interest payable 0 0 130
Estimated income tax payable 2,945 0 0
Note payable 0 0 10,250
Short term advance 0 11,000 0
Total Current Liabilities 2,945 11,000 15,266
STOCKHOLDERS' EQUITY:
Preferred stock; $.001 par value, 1,000,000
shares authorized, no shares issued and
outstanding all periods shown 0 0 0
Common Stock; $.001 par value, 24,000,000
shares authorized 2,000,000 shares issued
and outstanding all periods shown 2,000 2,000 2,000
Capital in excess of par value 47,362 47,362 47,362
Earnings (deficit) accumulated during the
development stage 12,895 (3,790) (2,350)
Total Stockholders' Equity 62,257 45,572 47,012
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 65,202 $ 56,572 $ 62,278
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
FIRST GROWTH INVESTORS, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
From Inception Earnings
For The (September 9 (Deficit)
Six Months For The 1997) Accumulated
Ended Year Ended to During The
June 30 December 31 December 31 Development
1999 1998 1997 Stage
(Unaudited) (Unaudited)
REVENUE:
Sales $ 76,138 $ 0 $ 0 $ 76,138
Cost of goods sold (54,588) 0 0 (54,588)
Gross profit 21,550 0 0 21,550
EXPENSES:
Professional fees 1,805 975 1,000 3,780
Fees and licenses 15 221 1,170 1,406
Interest expense 0 1,044 130 1,174
Amortization expense 100 200 50 350
Total expenses 1,920 2,440 2,350 6,710
INCOME (LOSS) FROM OPERATIONS 19,630 (2,440) (2,350) 14,840
OTHER INCOME AND (EXPENSE)
Other income 0 1,000 0 1,000
NET INCOME BEFORE TAXES 19,630 (1,440) 0 15,840
Provision for income taxes (2,945) 0 0 (2,945)
NET INCOME (LOSS) $ 16,685 $ (1,440) $ (2,350) $ 12,895
EARNINGS (LOSS) PER SHARE $ 0 $ 0 $ 0 $ 0
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
FIRST GROWTH INVESTORS, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
Earnings
(Deficit)
Accumulated
Common Stock Capital in During the
Excess of Development
Shares Amount Par Value Stage
BALANCE, September 9, 1997 (inception) 0 $ 0 $ 0 $ 0
Shares issued to initial stockholders
for cash, September 18, 1997 at
approximately $.0029 per share 1,750,000 1,750 3,300 0
Shares issued upon completion of
offering of stock to the public at
$.20 per share, November 1997 250,000 250 49,750 0
Direct costs of the offering of
common stock to the public 0 0 (5,688) 0
Net income(loss)from September 9, 1997
(inception)to December 31, 1997 0 0 0 (2,350)
BALANCE, December 31, 1997 2,000,000 2,000 47,362 (2,350)
Net income(loss)for the year ended
December 31, 1998 0 0 0 (1,440)
BALANCE, December 31, 1998 2,000,000 2,000 47,362 (3,790)
Net income(loss)for the six months
ended June 30, 1999 (Unaudited) 0 0 0 16,685
BALANCE, June 30, 1999 (Unaudited) 2,000,000 $ 2,000 $ 47,362 $ 12,895
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
FIRST GROWTH INVESTORS, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
From
Inception Earnings
For The (September9 (Deficit)
Six Months For The 1997) Accumulated
Ended Year Ended to During The
June 30 December31 December31 Development
1999 1998 1997 Stage
(Unaudited) (Unaudited)
INCREASE (DECREASE) IN CASH
CASH FLOWS FROM OPERATING ACTIVITIES:
Sale of inventory $ 30,420 $ 0 $ 0 $ 30,420
Organization costs 0 0 (1,000) (1,000)
Cash paid for inventory and related costs 0 0 (54,588) (54,588)
Cash paid to suppliers and others (1,820) (836) (1,540) (4,446)
Cash paid for interest 0 (914) 0 (914)
Cash Flows (Used) by Operating
Activities 28,600 (1,750) (57,128) (30,528)
CASH FLOW FROM INVESTING ACTIVITIES: 0 0 0 0
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of common stock 0 0 55,050 55,050
Direct costs of common stock sale 0 (4,006) (1,682) (5,688)
Proceeds from short term advance and loan 0 11,000 0 21,000
Loan payment (11,000) (10,250) 10,000 (21,000)
Cash Flows Provided (Used) by
Financing Activities (11,000) (3,256) 63,368 49,362
NET INCREASE (DECREASE) IN CASH 17,600 (5,006) 6,240 18,834
CASH - BEGINNING OF PERIOD 1,234 6,240 0 0
CASH - END OF PERIOD $ 18,834 $ 1,234 $ 6,240 $ 18,834
RECONCILIATION OF NET INCOME (LOSS)
TO NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES
NET INCOME (LOSS) $ 16,685 $ (1,440)$ (2,350) $ 12,895
Adjustment to reconcile net income
(loss) to net cash provided(used)
by operating activities
Amortization of organization costs 100 200 50 350
Changes in assets and liabilities
(Increase)in accounts receivable (45,718) 0 0 (45,718)
(Increase)decrease in inventory 54,588 0 (54,588) 0
(Increase)decrease in prepaid expenses 0 500 (500) 0
(Increase) in organization costs 0 0 (1,000) (1,000)
Increase(decrease) in accounts payable 0 (880) 880 0
Increase(decrease) in accrued interest 0 (130) 130 0
Increase in estimated income
tax payable 2,945 0 0 2,945
Increase in note payable 0 0 250 0
Total Adjustments 11,915 (310) (54,778) (43,423)
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES $ 28,600 $ (1,750) $ (57,128) $ (30,528)
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
FIRST GROWTH INVESTORS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - The Company was organized under the laws of the
State of Nevada on September 9, 1997 and has elected a fiscal year
end of December 31st. The Company was formed for the purpose of
engaging in any lawful business practice. The Company presently
has acquired an initial inventory of select wines to hold for
investment and resale. The Company has not commenced planned
principal operations and is considered a development stage company
as defined in SFAS No. 7. The Company, has at the present time,
not paid any dividends and any dividends that may be paid in the
future will depend upon the financial requirements of the Company
and other relevant factors.
Net Earnings Per Share - The computation of net income (loss)
per share of common stock is based on the weighted average number
of shares outstanding during the period presented.
Organization Costs - The Company is amortizing its organization
costs, which reflect amounts expended to organize the Company,
over sixty (60) months using the straight-line method.
Income Taxes - Due to operating losses at December 31, 1998 and
1997 no provisions for income taxes has been made. There are no
deferred income taxes resulting from income and expense items
being reported for financial accounting and tax reporting purposes
in different periods.
Cash and Cash Equivalents - For purposes of the statement of
cash flows, the Company considers all highly liquid debt
instruments purchased with a maturity of three months or less to
be cash equivalents. At December 31, 1998 and 1997 the Company did
not have non-cash investing and financing activities.
Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles 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.
Inventory - Inventory consists of finished product purchased
for resale and is stated at the lower of cost determined by the
FIFO Method or Market.
Unaudited Interim Information - In the opinion of management,
the unaudited financial statements reflect all adjustments,
consisting only of normal adjustments, necessary to present
fairly, the financial position of the Company at June 30, 1999 and
the results of operations and cash flows for the six months then
ended. The results of operations and cash flows for the six
months ended June 30, 1999 should not necessarily be taken as
indicative of the results of operations and cash flows for the
entire year ended December 31, 1999.
6
<PAGE>
FIRST GROWTH INVESTORS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - COMMON STOCK TRANSACTIONS
The Company on September 18, 1997 sold 1,750,000 shares of common
stock to initial stockholders at approximately $.0029 per share
for $5,050.
During November 1997, the Company completed an offering of its
common stock wherein it sold shares of the Company's common stock
to the public at $.20 per share for a total of $50,000. Direct
costs of the offering were $5,688.
NOTE 3 - RELATED PARTY TRANSACTIONS
An officer of the Company is providing a mailing address to the
Company without charge. This service has been determined by the
Company to have only nominal value. As of December 31, 1998 and
1997 no compensation has been paid or accrued to any officers or
directors of the Corporation. Any services provided by officers
or directors to date has been determined by the Company to have
only nominal value.
NOTE 4 - INCOME TAXES
At December 31, 1998 and 1997, the Company had net operating
losses (NOL) of $3,790 and $2,350 which can be carried forward to
offset operating income. The NOL will expire as shown below.
Valuation allowances of $569 and $353 for 1998 and 1997
respectively have been established for those tax credits which are
not expected to be realized. The change in the NOL for 1998 and
1997 was $216 and $353 respectively.
Year Amount
2012 $ 2,350
2018 $ 1,440
NOTE 5 - NOTE PAYABLE AND SHORT TERM ADVANCE
On November 19, 1997, the Company borrowed $10,250 from a bank at
11% interest. The loan principal amount of $10,250 plus unpaid
accrued interest was due on November 19, 1998. The Company paid
quarterly interest on the loan. The loan was secured by a
stockholder of the Company. The loan was paid November 1998.
On November 30, 1998, the Company borrowed $11,000 from a business
on a short term non interest bearing advance. The advance was
repaid January 22, 1999.
NOTE 6 - SUBSEQUENT EVENT
During the first quarter of 1999 all of the inventory was sold.
The total selling price of the inventory was $76,138. The Company
has received a payment of $30,420 towards the balance owing.
7
<PAGE>
FIRST GROWTH INVESTORS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 7 - WARRANTS
The Company has declared a distribution of 1,000,000 common stock
purchase Warrants to shareholders. The Warrants are exercisable
at $1.00 per share, prior to June 30, 2002, subject to
effectiveness of registration of Warrants and underlying shares.
8
<PAGE>
No dealer, salesman or other person is
authorized to give any information or to
make any representations other that those
contained in this prospectus in connection
with the offer made in this offering. If
given or made, the information or
representations must not be relied upon
as having been authorized by First
Growth Investors. This prospectus does
not constitute an offer to sell or a
solicitation of an offer to buy any of the
securities covered in this offering, in any
jurisdiction or to any person to whom it is
unlawful to make the offer or solicitation
in the jurisdiction. Neither the delivery
of this prospectus nor any sale made
hereunder shall, in any circumstances,
create any implication that there has been
no change in the affairs of First Growth
Investors since the date hereof.
Until [90 days after the date of this
prospectus], all dealers that effect
transactions in these securities,
whether or not participating in this
offering, may be required to deliver a
prospectus. This is in addition to the
dealers' obligation to deliver a
prospectus when acting as underwriters
and with respect to their unsold allotments
or subscriptions.
FIRST GROWTH INVESTORS, INC.
1,000,000 Shares
Common Stock
PROSPECTUS
, 1999
<PAGE>
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The statutes, charter provisions, bylaws, contracts or other arrangements
under which controlling persons, directors or officers of the registrant are
insured or indemnified in any manner against any liability which they may
incur in such capacity are as follows:
(a) Section 78.751 of the Nevada Business Corporation Act provides that each
corporation shall have the following powers:
1. A corporation may indemnify any person who was or is a party or is
threatened to be made party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
except an action by or in the right of the corporation, by reason of the fact
that he is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses, including attorneys' fees, judgments,
fines and amounts paid in settlement actually and reasonably incurred by him
in connection with the action, suit or proceeding if he acted in good faith
and in a manner which he reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, does not, of
itself create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and that, with respect to any criminal action or
proceeding, he had reasonable cause to believe that his conduct was unlawful.
2. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses,
including amounts paid in settlement and attorneys' fees actually and
reasonably incurred by him in connection with the defense or settlement of
the action or suit if he acted in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation. Indemnification may not be made for any claim, issue or matter
as to which such a person has been adjudged by a court of competent
jurisdiction, after exhaustion of all appeals therefrom, to be liable to the
corporation or for amounts paid in settlement to the corporation, unless and
only to the extent that the court in which the action or suit was brought or
other court of competent jurisdiction, determines upon application that in
view of all the circumstances of the case, the person is fairly and reasonably
entitled to indemnity for such expenses as the court deems proper.
3. To the extent that a director, officer, employee or agent of a corporation
has been successful on the merits or otherwise in defense of any action, suit
or proceeding referred to in subsections 1 and 2, or in defense of any claim,
issue or matter therein, he must be indemnified by the corporation against
<PAGE>
expenses, including attorneys' fees, actually and reasonably incurred by him
in connection with the defense.
4. Any indemnification under subsections 1 and 2, unless ordered by a court
or advanced pursuant to subsection 5, must be made by the corporation only as
authorized in the specific case upon a determination that indemnification of
the director, officer, employee or agent is proper in the circumstances. The
determination must be made:
(a) By the stockholders;
(b) By the board of directors by majority vote of a quorum consisting of
directors who were not parties to the act, suit or proceeding;
(c) If a majority vote of a quorum consisting of directors who were not
parties to the act, suit or proceeding so orders, by independent legal
counsel, in a written opinion; or
(d) If a quorum consisting of directors who were not parties to the act, suit
or proceeding cannot be obtained, by independent legal counsel in a written
opinion.
5. The certificate or articles of incorporation, the bylaws or an agreement
made by the corporation may provide that the expenses of officers and
directors incurred in defending a civil or criminal action, suit or proceeding
must be paid by the corporation as they are incurred and in advance of the
final disposition of the action, suit or proceeding, upon receipt of an
undertaking by or on behalf of the director or officer to repay the amount if
it is ultimately determined by a court of competent jurisdiction that he is
not entitled to be indemnified by the corporation. The provisions of this
subsection do not affect any rights to advancement of expenses to which
corporate personnel other than director of officers may be entitled under any
contract or otherwise by law.
6. The indemnification and advancement of expenses authorized in or ordered
by a court pursuant to this section:
(a) Does not exclude any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under the
certificate or articles of incorporation or any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, for either an action in
his official capacity or an action in another capacity while holding his
office, except that indemnification, unless ordered by a court pursuant to
subsection 2 or for the advancement of expenses made pursuant to subsection 5,
may not be made to or on behalf of any director or officer if a final
adjudication establishes that his acts or omissions involved intentional
misconduct, fraud or a knowing violation of the law and was material to the
cause of action.
(b) Continues for a person who has ceased to be a director, officer, employee
or agent and inures to the benefit of the heirs, executors and administrators
of such a person."
(b) The registrant's Articles of Incorporation limit liability of its
Officers and Directors to the full extent permitted by the Nevada Business
Corporation Act.
<PAGE>
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION*
The following table sets forth all estimated costs and expenses, other than
underwriting discounts, commissions and expense allowances, payable by the
registrant in connection with the maximum offering for the securities included
in this registration statement:
Amount
SEC registration fee $ 278.00
Blue sky fees and expenses 1,500.00
Printing and shipping expenses 500.00
Legal fees and expenses 15,000.00
Accounting fees and expenses 1,000.00
Transfer and Miscellaneous expenses 2,000.00
-----------------
Total $ 20,000.00
* All expenses are estimated except the Commission filing fee.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
In connection with the organization of the Company, its sole
officer/director and one other stockholders paid an aggregate of $5,050 cash
to purchase 1,750,000 shares of Common Stock of the Company at a price of
$.0029 per share. This transaction was not registered under the Act in
reliance on the exemption from registration in Section 4(2) of the Act, as a
transaction not involving any public offering. These securities were issued
as restricted securities and the certificates were stamped with restrictive
legends to prevent any resale without registration under the Act or in
compliance with an exemption.
In November 1997, the Company completed an offering under Regulation D,
Rule 504 as promulgated by the Securities and Exchange Commission and sold
250,000 shares of common stock, at $.20 per share, to 46 investors and raised
gross proceeds of $50,000. These transactions were not registered under the
Act in reliance on the exemption from registration in Section 3(b) of the Act,
and Rule 504 of Regulation D promulgated thereunder. Form D was filed with
the Securities and Exchange Commission.
ITEM 27. EXHIBITS INDEX
SEC No. Document Exhibit No.
3 Articles of Incorporation 3.1*
3 By-Laws 3.4*
4 Common Stock Specimen Certificate 4.1*
<PAGE>
4 Form of Warrant Agreement 4.2*
4 Form of Warrant Certificate 4.3*
5,24 Opinion & Consent of Counsel 5.1 & 24.1*
23 Consent of Accountants 23.1*
27 Financial Data Schedules 27*
* exhibit previously filed
ITEM 28. UNDERTAKINGS
The registrant hereby undertakes that it will:
(1) File, during any period in which it offers or sells securities, a post-
effective amendment to this Registration Statement to:
(i) Include any prospectus required by section 10(a)(3) of the Securities Act
of 1933;
(ii) Include any additional or changed material information on the plan of
distribution; and
(iii) Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the
Registration Statement.
(2) For determining any liability under the Securities Act, treat each post-
effective amendment as a new Registration Statement of the securities offered,
and the offering of the securities at that time to be the initial bona fide
offering.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such 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 (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements of filing on Form SB-2 and authorized this
Registration Statement to be signed on its behalf by the undersigned, in the
City of Salt Lake , State of Utah , on September 29, 1999.
FIRST GROWTH INVESTORS, INC.
By: /s/Pam Jowett
Pam Jowett, President (Chief Executive Officer)
By: /s/Glen Ulmer
Glen Ulmer, Secretary-Treasurer (Chief Financial Officer)
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature appears
below constitutes and appoints Thomas G. Kimble or Van L. Butler, the
undersigned's true and lawful attorney-in-fact and agent with full power of
substitution and resubstitution, for the undersigned and in the undersigned's
name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration
Statement, and to file the same with all exhibits thereto, and all documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent, full power and authority to do and
perform each and every act and thing, requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitutes, may lawfully do or cause to be
done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
Signature: /s/Pam Jowett Date: September 29, 1999,
Pam Jowett, Director
Signature: /s/Glen Ulmer Date: September 29, 1999,
Glen Ulmer, Director
