As filed with the Securities and Exchange Commission on July 21, 1999
Registration No. 333-
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
GOURMET HERB GROWERS, INC.
(Name of small business issuer in its charter)
Nevada 87-0575571
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
2302 Parley's Way, Salt Lake City, Utah 84109
(801) 466-4614
(Address & telephone number of principal executive offices & place of business)
Rino Di Meo
2302 Parley's Way, Salt Lake City, Utah 84109
(801) 466-4614
(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
<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>
GOURMET HERB GROWERS, INC.
1,000,000 SHARES OF COMMON STOCK
UNDERLYING COMMON STOCK PURCHASE WARRANTS
Gourmet Herb Growers, Inc. (the "Company"), 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
__________, 1999.
bullet 1,000,000 shares of $.001 par value common stock, issuable upon
exercise of the Warrants, at $1.00 per share underlying Warrants.
Each Warrant you hold entitles you to purchase one share of our common
stock, at any time up until June 30, 2002, provided this Prospectus is still
current or has been updated. Whether a current prospectus is in effect 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.
Prior to this offering, only a limited public market has existed for our
common stock. You are not assured that any market will continue in the future.
Our common stock is quoted on the NASD Electronic Bulletin Board under the
Symbol "GMBH". The current bid price quotation is $.50. We arbitrarily
determined the exercise and redemption prices of the Warrants, which bear no
relationship to assets, shareholders equity or any other objective criteria of
value.
We are a new company formed to engage in the business of growing gourmet
herbs and vegetables for sale to and use by restaurants and delicatessens.
See "Business."
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, SUCH AS THOSE DESCRIBED UNDER "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.
Warrants are being distributed without cash consideration. Shares of our
common stock are being offered by the Company only to the holders of the
Warrants, and will be sold by the Company 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
DILUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
COMPARATIVE DATA . . . . . . . . . . . . . . . . . . . . . . . . . . 9
USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
MARKET INFORMATION & DIVIDEND POLICY . . . . . . . . . . . . . . . . 9
MANAGEMENT'S DISCUSSION AND ANALYSIS . . . . . . . . . . . . . . . .10
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
AVAILABLE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . .12
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
CERTAIN TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . .14
DESCRIPTION OF SECURITIES. . . . . . . . . . . . . . . . . . . . . .16
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . .19
LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . .20
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . F-1
<PAGE>
PROSPECTUS SUMMARY
This summary highlights important information. As a summary, it is
necessarily incomplete and does not contain all the information you
should consider before investing. You should read the entire Prospectus
carefully.
OUR COMPANY
Gourmet Herb Growers, Inc. (the "Company") was recently
incorporated under the laws of the State of Nevada on January 22, 1998,
to engage in the business of growing gourmet herbs and vegetables for
sale to and use by restaurants and delicatessens. See "Business."
The address of our principal executive offices is 2302 Parley's
Way, Salt Lake City, Utah 84109. Our telephone number is (801) 466-4614.
THE OFFERING
Securities 1,000,000 shares of our common stock, $.001 par
offered value, underlying Warrants. See "Description of
Securities".
Offering Prices $1.00 per share underlying the Warrants.
Plan of Distribution Shares will be offered and sold without any discounts or
other commissions, to holders of the Warrants,
when they exercise them. See"Plan of Distribution."
Use of Proceeds We could potentially receive gross proceeds of
as much as $1,000,000 from sale of the 1,000,000 shares
of common stock issuable 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, inasmuch as there is no
assurance any of the 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 Outstanding We 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
<PAGE>
are also authorized to issue up to 1,000,000 shares of
Preferred Stock in one or more series with such 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 you hold entitles you to purchase one share
of common stock at any time up until June 30, 2002,
provided this Prospectus is still current or has been
updated. The exercise price is $1.00 per share,
subject to adjustment in certain events. Each of the
Warrants is callable and can be redeemed by us for
$.01 per Warrant on 30 days notice at any time after
the date of this Prospectus. See "Description
of Securities - Warrants."
Risk Factors An investment in the Company is highly speculative.
You will suffer substantial dilution in the book value
per share of the common stock compared to the purchase
price. If substantial funds are not received from
exercise of the Warrants, of which there is no
assurance, the Company may require additional
funding for which it has no commitments.
No person should invest who cannot afford to risk loss
of the entire investment. See "Risk Factors."
<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 the Company.
RISKS INHERENT IN A NEW START UP COMPANY
Limited Operating History/Lack of Profitability. Our Company was only
recently incorporated and has no significant history of operations. We have
incurred net losses since inception, have an accumulated deficit, and no
assurance of future profitability. See financial statements.
Limited Capital/Need for Additional Capital. We presently have very
limited operating capital and depend upon receipt of additional capital to
expand our business. We have no assurance of receiving any proceeds from
exercise of Warrants and no commitments for additional cash funding if no
proceeds are received from Warrant exercise. See "Business".
No Dividends. We do not currently intend to pay cash dividends on our
common stock and do not anticipate paying such dividends at any time in the
foreseeable future. At present, we will follow a policy of retaining all of
our earnings, if any, to finance development and expansion of our business.
See "Dividend Policy."
Limited Liability of Management. Provisions in our Articles of
Incorporation and Bylaws limit the liability of officers and directors and
require us to indemnify officers and directors to the full extent permitted by
law. Nevada law provides that officers and directors have no personal
liability to a company or its stockholders for monetary damages for breach of
their fiduciary duties, except for a breach of their duty of loyalty, acts or
omissions not in good faith or which involve intentional misconduct or knowing
violation of law, unlawful payment of dividends or unlawful stock purchases or
redemptions, or any transaction from which a director derives an improper
personal benefit. Such provisions substantially limit the shareholders'
ability to hold officers and directors liable for breaches of fiduciary duty,
and may require us to indemnify our officers and directors. See "Certain
Transactions - Conflicts of Interest".
RISKS RELATED TO THE NATURE OF THE PROPOSED BUSINESS
Dependence on Restaurant Industry. The success of the Company's
business depends, to a great degree on, the level of activity in the
restaurant and food service industry in the areas in which the Company will
conduct its operations. Although management believes the areas in which the
Company intends to operate are currently experiencing a high level of
activity, there is no assurance with respect to the continuation of this level
of activity in the future, and the industry is subject to substantial
fluctuation in the level of economic activity.
Competition. The business of growing gourmet herbs and vegetables for
<PAGE>
sale to and use by restaurants and delicatessens is intensely competitive,
with many providers who have greater technical expertise, financial resources
and marketing capabilities than we do. 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.
RISKS RELATED TO THE OFFERING
No Assurance of Warrant Exercise and No Escrow of Funds. You have no
assurance that any proceeds will be received from exercise of Warrants in this
offering. Proceeds may not be sufficient to defray offering expenses. There
is no escrow of funds received upon exercise because no minimum number of
Warrants must be exercised. Any proceeds received will immediately be retained
by us to be used in our business. The amount of capital currently available
to us is very 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.
This creates an increased risk if you do exercise your Warrants, because you
have no assurance that additional Warrants will be exercised or that we will
receive any further funding.
Risks of Warrant Exercise. Exercising Warrant holders are not assured
they will be able to sell their common stock in the future at a price which
equals or exceeds the exercise price.
Current Prospectus and Registration Required for Exercise. You will be
able to exercise your warrants to acquire the underlying common stock only if
a current prospectus relating to the common stock is then in effect and such
exercise is registered or exempt from registration under applicable securities
laws of the state in which you reside. We intend to update the prospectus as
necessary to maintain a current prospectus and federal and state registration
or qualification for such exercise, but may not be able to do so at such time
as you may wish to exercise. Whether a current prospectus is in effect or
not, the Warrants are redeemable for nominal consideration at any time. If
redeemed when no current prospectus is in effect, you will have no opportunity
to exercise the Warrants, but will be compelled to accept the nominal
redemption price.
Dilution. If you exercise your Warrants to purchase the underlying
shares of common stock, you will suffer substantial dilution in the purchase
price of the 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. The fewer Warrants
exercised, the greater dilution will be with respect to the Warrants that are
exercised. See "Dilution."
Potential Issuance of Additional Common and Preferred Stock. We are
authorized to issue up to 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. Directors have the ability,
without further shareholder approval, to issue additional shares of common
and/or preferred stock to the extent of such authorization, for such
consideration as they consider sufficient. The issuance of additional common
<PAGE>
stock in the future will reduce the proportionate ownership and voting power
of the common stock offered hereby. The designation and issuance of series of
preferred stock in the future would create additional securities with dividend
and liquidation preferences over the common stock offered hereby. The Board
of Directors has not designated any series or issued any shares of preferred
stock. See "Description of Securities."
Anti-Takeover Provisions. The foregoing provisions in our articles of
incorporation (namely the ability, without further stockholder approval, to
issue additional shares of common stock and/or preferred stock with rights and
preferences determined by the board of directors) could be used as anti-
takeover measures. These provisions could prevent, discourage or delay a non-
negotiated change in control and result in stockholders receiving less for
their stock than they otherwise might in the event of a takeover attempt. See
"Description of Securities".
Arbitrary Determination of Offering Price. The exercise 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.
No Assurance of a Liquid Public Market for Securities. 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
have no assurance that an active trading market will develop or that if such a
market does develop, that it will continue. As a result, an investment in our
common stock may be totally illiquid and you may not be able to liquidate your
investment readily or at all when you need or desire to sell.
Volatility of Stock Prices. In the event that an established public
market does develop for the shares, market prices will be influenced by many
factors, and will be subject to significant fluctuation in response to
variations in operating results of the Company and other factors such as
investor perceptions of the Company, supply and demand, interest rates,
general economic conditions and those specific to the industry, international
political conditions, developments with regard to our activities, future
financial condition and management. See "Plan of Distribution."
Shares Eligible for Future Sale. 150,000 of the 1,600,000 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, as amended (the "Securities Act"). Sales of
substantial amounts of common stock in the public market could adversely
affect the market price of the common stock. See "Shares Eligible for Future
Sale".
Applicability of Low Priced Stock Risk Disclosure Requirements. Our
common stock is considered a low priced security under rules promulgated under
the Securities Exchange Act of 1934 (The "Exchange Act"). Under these rules,
broker-dealers participating in transactions in low priced securities must
first deliver a risk disclosure document which describes risks associated with
such stocks, the broker-dealer's duties, the customer's rights and remedies,
certain market and other information, and make a suitability determination
<PAGE>
approving the customer for low priced stock transactions based on financial
situation, investment experience and objectives. Broker-dealers must also
disclose these restrictions in writing, provide monthly account statements to
the customer, and obtain specific written consent of the 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 such stocks compared to other securities.
DILUTION
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 March 31, 1999, financial statements of the Company,
net tangible book value of the Company was $24,226 or approximately $.015 per
common share. Prior to the exercise of any Warrants, the Company has
1,600,000 shares of common stock outstanding.
If all the Warrants were to be exercised (of which there is no
assurance), we would then have 2,600,000 shares of common stock outstanding.
The estimated pro forma net tangible book value of the Company (which gives
effect to receipt of the net proceeds from such exercise and issuance of the
underlying shares of common stock, but does not take into consideration any
other changes in net tangible book value subsequent to March 31, 1999), would
then be $1,004,226 or approximately $.39 per share. This would result in
dilution to persons exercising Warrants of $.61 per share, or 61% of the
exercise price of $1.00 per share. Net tangible book value per share would
increase to the benefit of present stockholders from $.015 prior to the
offering to $.39 after the offering, or an increase of $.375 per share
attributable to exercise of the Warrants. The following table sets forth the
estimated net tangible book value ("NTBV") per share after exercise of the
Warrants and dilution to persons purchasing the underlying common stock.
<TABLE>
<S> <C> <C>
Exercise of all Warrants:
Warrant exercise price/share $1.00
NTBV/share prior to exercise $.015
Increase attributable to Warrant exercise .375
Pro forma NTBV/share after exercise .39
Dilution $ .61
</TABLE>
If less than all the Warrants are exercised, dilution to the exercising
Warrant holders will be greater than the amount shown. The fewer Warrants
exercised, the greater dilution will be.
<PAGE>
COMPARATIVE DATA
The following chart compares the prices paid for, and proportionate
ownership in the Company represented by, common stock purchased since
inception of the Company by initial shareholders and other present
shareholders, to the price that will be paid and proportionate ownership in
the Company 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 Owned Percent Cash Paid Percent Price/share
Initial 1,450,000 45% $ 4,350 .5% $.003
Shareholders
Other Shareholders 150,000 5% $ 37,500 3.4% $ .25
Warrant Holders 1,000,000 50% $1,000,000 96.1% $1.00
</TABLE>
USE OF PROCEEDS
The net proceeds to the Company 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
were to be exercised (of which there is absolutely no assurance, nor any
assurance that any Warrants will be exercised), we would receive gross
proceeds of $1,000,000. Regardless of the number of Warrants exercised, we
expect to incur offering expenses estimated at $20,000 for legal, printing and
other costs in connection with the offering. Inasmuch as there is no
assurance that 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 the Company 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 additional artwork (i.e.
sculptures).
MARKET INFORMATION & DIVIDEND POLICY
The common stock of the Company is quoted on the National Association
of Securities Dealers, Inc. Electronic Bulletin Board under the symbol "GMBH",
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 $.50. The above
price represents interdealer quotations, without retail markup, markdown or
commissions, and may not represent actual transactions. As of July 19, 1999,
there were approximately 47 record holders of the Company's common stock.
DIVIDEND POLICY
The Company has not previously paid any cash dividends on common stock
and does not anticipate or contemplate paying dividends on common stock in the
<PAGE>
foreseeable future. It is the present intention of management to utilize all
available funds for the development of the Company's 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 the Company insolvent or reduce assets to less than the sum
of our 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
the Company's 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 herein will necessarily continue
into the future or that any conclusion reached herein will necessarily be
indicative of actual operating results in the future. Such discussion
represents only the best present assessment of management of the Company.
PLAN OF OPERATIONS.
The Company was only recently incorporated on January 22, 1998. The
Company has begun to generate revenues from operations and is not still
considered a development stage company, however revenues have not yet been
generated in sufficient amounts to offset all operating costs. Management's
plan of operation for the next twelve months is to continue using existing
capital and any funds from exercise of warrants in this offering to provide
general working capital during the next twelve months. Management believes
existing funds will be sufficient to sustain the Company for at least another
year or growing season, during which time management hopes to increase
production and generate sufficient revenues to operate profitably. At this
time, no assurances can be given with respect to the length of time that it
will be necessary to fund operations from existing capital.
BUSINESS
HISTORY AND DEVELOPMENT OF THE COMPANY
Gourmet Herb Growers, Inc. (the "Company") was recently incorporated
under the laws of the State of Nevada on January 22, 1998. In connection with
the organization of the Company, the founders of the Company contributed
$4,350 cash to initially capitalize the Company in exchange for 1,450,000
shares of common stock.
On April 2, 1998, the Company commenced a public offering of up to
150,000 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 May, 1998. Pursuant thereto, the Company
sold 150,000 shares of common stock, at $.25 per share, and raised gross
proceeds of $37,500. This increased the total issued and outstanding common
stock to 1,600,000 shares.
<PAGE>
BUSINESS OF THE COMPANY
The Company was formed to engage in the business of growing gourmet
herbs and specialty vegetables for sale to and use by restaurants and
delicatessens. The President of the Company, Rino Di Meo, is himself a
restauranteur, operating and managing his own restaurant, Rino's Italian
Restaurant, featuring Italian cuisine from his native Italy. In connection
with the operation of the restaurant and as a sideline hobby, for many years
the President has also done a significant amount of gardening, principally for
the purpose of growing fresh produce for use in the restaurant.
In addition to providing a source of vine ripened, fresh produce, the
President has engaged in such gardening efforts in order to grow herbs and
vegetables which are prominently used in traditional Italian cuisine, but are
not commonly grown or readily available on a fresh basis, locally. This
includes a variety of plant foodstuffs being grown and developed, originally
from starts and seedlings brought over here from Mr. Di Meo's father's farm in
Italy, during Mr. Di Meo's youth, such as arugula, basil, certain varieties of
zucchini, eggplant, etc.
The President's gardening activities have developed to the point where,
during the past few years, in addition to providing produce to his own
restaurant, he has already done some business supplying herbs and vegetables
to a number of other restaurants and delicatessens, through his contacts in
the industry and acquaintance with other local restaurants and chefs.
The business of growing herbs, vegetables and other fresh produce is
necessarily dependent upon the length of the local growing season and the
business is therefore quite seasonal. The Company will typically be involved
in growing herbs and specialty vegetables from approximately May through
November. However, with funding, management believes that the volume of
business can be increased through a various measures that can be taken;
including, among other things, effectively lengthening the local growing
season through green housing. During the winter months the Company operates a
small green house used mostly for seedlings and arugula growing. Management
used a portion of the proceeds from a prior offering to purchase and build
such a facility, and believes that this will enable the Company to achieve a
2-3 month head start in the spring on the local growing season. In addition,
another measure the Company intends to take to improve both the quality and
quantity of produce is to bring in several loads of topsoil to improve the
fertility of the ground being used for gardening, which will also raise the
level of the ground by several inches, in order to lower the water level and
improve drainage. There is absolutely no assurance that the Company will be
successful in this venture.
COMPETITION
The businesses of growing gourmet herbs and vegetables for sale to and
use by restaurants and delicatessens is intensely competitive, with many
providers who have greater technical expertise, financial resources and
marketing capabilities than the Company. There is no assurance the Company
will be able to overcome competitive disadvantages it faces as a small, start
up company with limited capital. If the Company cannot compete effectively,
it will not succeed.
<PAGE>
FACILITIES AND EMPLOYEES
The Company's principal business address is located at the address of
the President's restaurant in Salt Lake City, Utah. However, the Company
bases its gardening operations at the location of the President's home in West
Bountiful, Utah. At that location, the President has approximately 7-8 acres
of ground available for cultivation, and is presently using only of portion of
the acreage for gardening. The President is employed part time by the Company
to do the gardening work at that location, and is reimbursed for out-of-pocket
costs and compensated for his time and the use of the ground. The Company does
not anticipate the need to hire additional employees or lease other ground,
but for the time being will continue to use the excess acreage available at
the home address of its President. The Company may hire more employees and/or
lease additional ground or other commercial facilities at such time in the
future as the Company's operations develop to the point where such facilities
and employees are needed, but the Company has no commitments or arrangements
for any such facilities, and there is no assurance with respect to the future
availability of commercial facilities or terms on which the Company may be
able to lease such facilities in the future, nor any assurance with respect to
length of time the present arrangement may continue.
AVAILABLE INFORMATION
The Company has filed with the United States Securities and Exchange
Commission (the "Commission") a Registration Statement on Form SB-2, under the
Securities Act of 1933, as amended (the "Securities Act), with respect to the
securities offered hereby. As permitted by the rules and regulations of the
Commission, this Prospectus does not contain all of the information contained
in the Registration Statement. For further information regarding both the
Company and the Securities offered hereby, reference is made to the
Registration Statement, including all exhibits and schedules thereto, 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 from the Washington, D.C. office upon request
and payment of the prescribed fee.
As of the date of this Prospectus, the Company became subject to the
informational requirements of the Exchange Act and, in accordance therewith,
will electronically file reports and other information with the Commission.
Reports and other information filed by the Company with the Commission
pursuant to the informational requirements of the Exchange Act 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 such
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 that contains reports, proxy and
information statements and other information regarding issuers that file such
<PAGE>
reports electronically with the Commission. Such site is accessible by the
public through any Internet access service provider and is located at
http://www.sec.gov.
Copies of the Company's Annual, Quarterly and other Reports which will
be filed by the Company with the Commission commencing with the Quarterly
Report for the first quarter ended after the date of this Prospectus (due 45
days after the end of such quarter) will also be available upon request,
without charge, by writing Gourmet Herb Growers, Inc., 2302 Parley's Way, Salt
Lake City, Utah 84109.
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth the directors, executive officers and
other significant employees of the Company, their ages, and all offices and
positions with the Company. Each director is elected for a period of one year
and thereafter serves until 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 Director Age Director/Officer With Company
Rino Di Meo 54 Since inception President, Secretary-
Treasurer & Director
</TABLE>
This individual will serve as the sole officer and director of the
Company. A brief description of his positions, proposed duties, background
and business experience follows:
RINO DI MEO will serve as the sole officer and director to the Company.
Mr. Di Meo has lived in Salt Lake City for the last 22 years. His principal
business is operating and managing his own restaurant, Rino's Italian
Restaurant. In connection with the operation of that business, he has several
years of experience gardening to grow gourmet herbs and specialty vegetables.
There are no arrangements or understandings regarding the length of time
a director of the Company is to serve in such a capacity.
EXECUTIVE COMPENSATION
The following table summarizes executive compensation paid or accrued
during the past year (the first year of operation) for the Company's Chief
Executive Officer.
<PAGE>
SUMMARY COMPENSATION TABLE
Name Other
And Annual All Other
Principal Compen- Compen-
Position Year Salary($) Bonus($) sation($) sation($)
Rino Di Meo
CEO 1998 5,019
The Company has no written employment agreement with nor key man life
insurance with respect to management. Management is entitled to reimbursement
of any out of pocket expenses reasonably and actually incurred on behalf of
the Company.
CERTAIN TRANSACTIONS
In connection with the organization of the Company, its officers,
directors and other stockholders paid an aggregate of $4,350 cash to purchase
1,450,000 shares of Common Stock of the Company at a price of $.003 per share.
See "Principal Shareholders."
In May, 1998, the Company completed an offering under Regulation D, Rule
504 as promulgated by the Securities and Exchange Commission and sold 150,000
shares of common stock, at $.25 per share, and raised gross proceeds of
$37,500. These are free-trading shares.
During 1998, the first year of operation, the Company built a greenhouse
on property owned by its President. The property is used by the Company for
gardening and green housing, at no expense to the Company. The Company also
uses the business address of the President as its mailing address at no
expense, but paid $5,019 in salary to the President during the year 1998.
Also, the Company has sold $3,595 (approximately 63% of total sales) of its
production of herbs and vegetables to a restaurant owned by the President.
CONFLICTS OF INTEREST
Other than as described herein the Company is not expected to have
significant further dealings with affiliates. However, if there are such
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 the Company, aside from the matters described
herein.
Management will attempt to resolve any conflicts of interest that may
arise in favor of the Company. Failure to do so could result in fiduciary
liability to management.
<PAGE>
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 for breach of fiduciary duty to certain specified
circumstances, namely, breaches of their duties of loyalty, acts or omissions
not in good faith or which involve intentional misconduct or knowing violation
of law, acts involving unlawful payment of dividends or unlawful stock
purchases or redemptions, or any transaction from which a director derives an
improper personal benefit. The Company's by-laws indemnify its Officers and
Directors to the full extent permitted by Nevada law. The by-laws with these
exceptions eliminate any personal liability of a Director to the Company or
its shareholders for monetary damages for the breach of a Director's fiduciary
duty. Therefore a Director cannot be held liable for damages to the Company or
its shareholders for gross negligence or lack of due care in carrying out his
fiduciary duties as a Director. The Company's Articles provide for
indemnification to the full extent permitted under law which includes all
liability, damages and costs or expenses arising from or in connection with
service for, employment by, or other affiliation with the Company to the
maximum extent and under all circumstances permitted by law. 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 interest's of
the corporation. A director or officer must be indemnified as to any matter
in which he successfully defends himself. Indemnification is prohibited as to
any matter in which the director or officer is adjudged liable to the
corporation. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, and controlling
persons of the Company pursuant to the foregoing provisions or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of the Company's common stock by each director of the
Company, each beneficial owner of more than five percent (5%) of said
securities, and all directors and executive officers of the Company as a
group:
<PAGE>
<TABLE>
<S> <C> <C> <C>
Title of Amount & Nature of % of
Name and Address Class Beneficial Ownership Class
Rino Di Meo Common 1,000,000 shares 63%
2302 Parley's Way
Salt Lake City, UT 84109
Lynn Dixon
311 S. State, #460 Common 150,000 shares 9%
SLC, UT 84111
Melissa Epperson
1533 S. 1220 W. Common 150,000 shares 9%
Woods Cross, UT 84087
Brenda White
1359 N. General Dr. Common 150,000 shares 9%
SLC, UT 84116
All officers and
directors as a group (1person) Common 1,000,000 shares 63%
</TABLE>
The foregoing amounts include all shares these persons are deemed to
beneficially own regardless of the form of ownership. 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 the Company's
Articles of Incorporation and Bylaws, copies of which will be furnished to an
investor upon written request therefor. See "Additional Information."
COMMON STOCK
The Company is presently authorized to issue 24,000,000 shares of $.001
par value common stock. The Company presently has 1,600,000 shares of common
stock outstanding. The Company has reserved from its authorized but unissued
shares a sufficient number of shares of common stock for issuance of the
shares offered hereby. The shares of common stock issuable on completion of
the offering will be, when issued in accordance with the terms of the
offering, fully paid and non-assessable.
The holders of common stock, including the shares offered hereby, are
entitled to equal dividends and distributions, per share, with respect to the
<PAGE>
common stock when, as and if declared by the Board of Directors from funds
legally available therefor. No holder of any shares of common stock has a
pre-emptive right to subscribe for any securities of the Company nor are any
common shares subject to redemption or convertible into other securities of
the Company. Upon liquidation, dissolution or winding up of the Company, 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 with respect to the election of any director or any other matter upon
which shareholders are required or permitted to vote. Holders of the
Company's 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
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
The Company is also presently authorized to issue 1,000,000 shares of
$.001 par value Preferred Stock. Under the Company's Articles of
Incorporation, as amended, 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 such 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 of the Company 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 such series. Documents so filed are matters of public
record and may be examined in accordance with procedures of the Nevada
Secretary of State, or copies thereof may be obtained from the Company.
WARRANTS
The Company has declared a distribution of 1,000,000 common stock
purchase warrants (the "Warrants") to shareholders of record as of __________,
1999. The Warrants are exercisable at $1.00 per share, prior to June 30,
2002, subject to effectiveness of registration of the Warrants and underlying
shares.
(a) The Company 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 in effect with respect thereto. Any warrant
holder who does not exercise his Warrants prior to the Redemption Date,
as set forth on the Company's Notice of Redemption, will forfeit his
<PAGE>
right to purchase the shares of common stock underlying such Warrants,
and after such Redemption Date any outstanding Warrants referred to in
such Notice will become void and be canceled. If we do not redeem the
warrants, they will expire at the conclusion of the exercise period
unless extended by the Company.
(b) The Company may at any time, and from time to time, extend
the exercise period of the Warrants provided that written notice of such
extension is given to the warrant holders prior to the expiration date
thereof. Also, the Company may, at any time, reduce the exercise price
thereof by written notification to the holders thereof. We do not
presently contemplate any extensions of the exercise period or reduction
in the exercise price of the Warrants.
(c) The Warrants contain anti-dilution provisions with respect to
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 of the Company, warrant holders will not be entitled to
participate in the assets of the Company. Warrant holders have no
voting, preemptive, liquidation or other rights of a stockholder of a
Company, and no dividends may be declared on the Warrants.
(d) The Warrants may be exercised by surrendering to the Company,
a Warrant certificate evidencing the Warrants to be exercised, with the
exercise form included therein duly completed and executed, and paying
to the Company the exercise price per share in cash or check payable to
the Company. 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 are nontransferable by their terms, cannot be
transferred without the consent of the Company and will be "restricted
securities" pursuant to the definition of that term used in Rule 144.
The Warrants will be stamped with a restrictive legend.
SHARES ELIGIBLE FOR FUTURE SALE
Of the 1,600,000 shares of the Company's common stock outstanding prior
to the exercise of any Warrants, 150,000 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 adversely affect 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, pursuant to Rule 144, into any public market that may
<PAGE>
exist for the common stock. Future sales by current shareholders could
depress the market prices of the common stock in any such market.
In general, under Rule 144 as currently in effect, a person (or group of
persons whose shares are aggregated), including affiliates of the Company, 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 Company or any
affiliate of the Company, 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 Company or an affiliate of the Company, a
person who has not been an affiliate of the Company for at least three months
can sell restricted shares under Rule 144 without regard to any limitations on
the amount.
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 of the
Company issuable upon the exercise of the Warrants at an exercise price of
$1.00 per share. The Warrants will be distributed as a dividend with respect
to the common stock of the Company to shareholders of record as of __________,
1999. The Warrants are exercisable until June 30, 2002, provided this
Prospectus is still current or has been updated.
The offering will be managed by the Company without an underwriter, and
the shares will be offered and sold by the Company, without any discount,
sales commissions or other compensation being paid to anyone in connection
with the offering. In connection therewith, the Company will pay the costs of
preparing, mailing and distributing this Prospectus to the holders of the
Warrants. Brokers, nominees, fiduciaries and other custodians will be
requested to forward copies of this Prospectus to the beneficial owners of
securities held of record by them, and such 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 to the Company for its 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 thereof filled
out and signed at the bottom thereof, 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
<PAGE>
order of "Gourmet Herb Growers, 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 the Company 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
To the knowledge of management, there is no material litigation pending
or threatened against the Company. The validity of the issuance of the shares
offered hereby will be passed upon for the Company by Thomas G. Kimble &
Associates, Salt Lake City, Utah.
EXPERTS
The financial statements of the Company, included in this
Prospectus have been examined by Pritchett, Siler & Hardy, P.C., independent
certified public accountants, as indicated in their report with respect
thereto, and are included herein in reliance on such report given upon the
authority of that firm as experts in accounting and auditing.
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
GOURMET HERB GROWERS, INC.
Salt Lake City, Utah
We have audited the accompanying balance sheet of Gourmet Herb Growers, Inc.
at December 31, 1998, and the related statements of operations, stockholders'
equity and cash flows from inception on January 22, 1998 through December 31,
1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements audited by us present fairly, in all
material respects, the financial position of Gourmet Herb Growers, Inc. as of
December 31, 1998, and the results of its operations and its cash flows from
inception on January 22, 1998 through December 31, 1998, in conformity with
generally accepted accounting principles.
PRITCHETT, SILER & HARDY, P.C.
March 15, 1999
Salt Lake City, Utah
<PAGE>
GOURMET HERB GROWERS, INC.
BALANCE SHEET
ASSETS
December 31,
1998
___________
CURRENT ASSETS:
Cash in bank $ 25,006
___________
Total Current Assets 25,006
___________
PROPERTY, PLANT AND EQUIPMENT:
Building, net 2,904
___________
$ 27,910
___________
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 244
___________
Total Current Liabilities 244
___________
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value,
1,000,000 shares authorized,
no shares issued and outstanding -
Common stock, $.001 par value,
24,000,000 shares authorized,
1,600,000 shares issued and
outstanding 1,600
Capital in excess of par value 34,569
Deficit accumulated during the
development stage (8,503)
___________
Total Stockholders' Equity 27,666
___________
$ 27,910
___________
The accompanying notes are an integral part of this financial statement.
-2-
<PAGE>
GOURMET HERB GROWERS, INC.
STATEMENT OF OPERATIONS
From Inception
on January 22,
1998 Through
December 31, 1998
_________________
REVENUE $ 5,606
COST OF SALES 1,516
_________________
GROSS PROFIT 4,090
EXPENSES:
General and Administrative 12,593
_________________
LOSS BEFORE INCOME TAXES (8,503)
CURRENT TAX EXPENSE -
DEFERRED TAX EXPENSE -
_________________
NET LOSS $ (8,503)
_________________
LOSS PER COMMON SHARE $ (.01)
_________________
The accompanying notes are an integral part of this financial statement.
-3-
<PAGE>
GOURMET HERB GROWERS, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
FROM THE DATE OF INCEPTION ON JANUARY 22, 1998
THROUGH DECEMBER 31, 1998
Capital Deficit
Preferred Stock Common Stock in Accumulated
_______________ ____________________ Excess During the
of Par Development
Shares Amount Shares Amount Value Stage
_______ _______ __________ _________ _______ ____________
BALANCE, January 22,
1998 - $ - - $ - $ - $ -
Issuance of 1,450,000
shares common stock
for cash, January 22,
1998 at $.003 per
share - - 1,450,000 1,450 2,900 -
Issuance of 150,000
shares common stock
for cash during April
and May, 1998 at $.25
per share, net of
stock offering costs
of $5,681 - - 150,000 150 31,669 -
Net loss for the period
ended December 31, 1998 - - - - - (8,503)
_______ _______ __________ _________ ________ ___________
BALANCE, December 31,
1998 - $ - 1,600,000 $ 1,600 $34,569 $ (8,503)
_______ _______ __________ _________ ________ ___________
The accompanying notes are an integral part of this financial statement.
-4-
<PAGE>
GOURMET HERB GROWERS, INC.
STATEMENT OF CASH FLOWS
From Inception
on January 22,
1998 Through
December 31, 1998
________________
Cash Flows from Operating Activities:
Net loss $ (8,503)
Adjustments to reconcile net
loss to net cash used by
operating activities:
Depreciation and amortization 274
Change in assets and liabilities:
Increase in accounts payable and
accrued expenses 244
________________
Net Cash (Used) by Operating Activities (7,985)
________________
Cash Flows from Investing Activities:
Payments for building and equipment (3,178)
________________
Net Cash (Used) by Investing Activities (3,178)
________________
Cash Flows from Financing Activities:
Proceeds from common stock issuance 41,850
Payments for stock offering costs (5,681)
________________
Net Cash Provided by Financing Activities 36,169
________________
Net Increase in Cash 25,006
Cash at Beginning of Period -
________________
Cash at End of Period $ 25,006
________________
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ -
Income taxes $ -
Supplemental Schedule of Noncash Investing and Financing Activities:
For the period ended December 31, 1998:
None
The accompanying notes are an integral part of this financial statement.
-5-
<PAGE>
GOURMET HERB GROWERS, INC.
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 January 22, 1998. The Company is growing gourmet herbs and vegetables for
restaurants and delicatessans. 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.
Organization Costs - During 1998, the Company expensed organization costs of
$1,000, which reflect amounts expended to organize the Company.
Loss Per Share - The computation of loss per share is based on the weighted
average number of shares outstanding during the period presented in accordance
with Statement of Financial Standards No. 128, "Earning Per Share" [See Note
6].
Statement of Cash Flows - For purposes of the statement of cash flows, the
Company considers all highly liquid debt investments purchased with a maturity
of three months or less to be cash equivalents.
Property, Plant and Equipment - Property, plant and equipment is stated at
cost. Expenditures for major renewals and betterments that extend the useful
lives of property and equipment are capitalized, upon being placed in service.
Expenditures for maintenance and repairs are charges to expense as incurred.
Depreciation is computed for financial statement purposes using the straight-
line method over the estimated useful life of the asset, which is 10 years.
Accounting 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, the disclosures of contingent assets and liabilities at the date
of the financial statements, and the reported amount of revenues and expenses
during the reported period. Actual results could differ from those estimated.
Recently Enacted Accounting Standards - SFAS No. 130, "Reporting Comprehensive
Income", SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information", SFAS No. 132, "Employer's Disclosure about Pensions and
Other Postretirement Benefits", SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", and SFAS No. 134, "Accounting for
Mortgage-Backed Securities." were recently issued. SFAS No. 130, 131, 132,
133 and 134 have no current applicability to the Company or their effect on
the financial statements would not have been significant.
-6-
<PAGE>
GOURMET HERB GROWERS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following at December 31, 1998:
December 31,
1998
____________
Greenhouse $ 3,178
Less accumulated depreciation (274)
____________
$ 2,904
____________
Depreciation expense for the period ended December 31, 1998 amounted to $274.
NOTE 3 - CAPITAL STOCK
Common Stock - During January, 1998, in connection with its organization, the
Company issued 1,450,000 shares of its previously authorized, but unissued
common stock. Total proceeds from the sale of stock amounted to $4,350 (or
$.003 per share).
During April and May, 1998 the Company issued 150,000 shares of its previously
authorized, but unissued common stock in a public offering. Total proceeds
from the sale of stock amounted to $37,500 (or $.25 per share). Offering
costs of $5,681 were offset to additional paid in capital.
Preferred Stock - The Company has authorized 1,000,000 shares of preferred
stock $.001 par value, with such rights, preferences and designations and to
be issued in such series as determined by the board of Directors. No shares
are issued and outstanding at December 31, 1998.
NOTE 4 - INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes". FASB
109 requires the Company to provide a net deferred tax asset/liability equal
to the expected future tax benefit/expense of temporary reporting differences
between book and tax accounting methods and any available operating loss or
tax credit carryforwards. At December 31, 1998, the Company has available
unused operating loss carryforwards of approximately $8,500, which may be
applied against future taxable income and which expire in 2018.
The amount of and ultimate realization of the benefits from the operating loss
carryforwards for income tax purposes is dependent, in part, upon the tax laws
in effect, the future earnings of the Company, and other future events, the
effects of which cannot be determined. Because of the uncertainty surrounding
the realization of the loss carryforwards the Company has established
a
valuation allowance equal to the tax effect of the loss carryforwards and,
therefore, no deferred tax asset has been recognized for the loss
carryforwards. The net deferred tax assets are approximately $2,900 as of
December 31, 1998, with an offsetting valuation allowance at December 31, 1998
of the same amount.
-7-
<PAGE>
GOURMET HERB GROWERS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 5 - RELATED PARTY TRANSACTIONS
Management Compensation - During the period ended December 31, 1998 the
Company paid $5,019 in salary to the Company's president.
Office Space - The Company has not had a need to rent office space. An
officer/shareholder of the Company is allowing the Company to use his home as
a mailing address, as needed, at no expense to the Company.
Greenhouse - During the period ended December 31, 1998 the Company built
a
greenhouse at the home of an officer/shareholder of the Company. The
officer/shareholder is allowing the Company to use his property at no expense
to the Company.
Sales - During the period ended December 31, 1998 the Company sold $3,475
(approximately 62% of total sales) of the Company's product to a restaurant
owned by the Company's president.
NOTE 6 - LOSS PER SHARE
The following data show the amounts used in computing loss per share for the
period from inception through December 31, 1998:
From Inception
on January 22,
1998 Through
December 31, 1998
________________
Loss from continuing operations
available to common shareholders
(numerator) $ (8,503)
________________
Weighted average number of
common shares outstanding
used to loss per share for the
period (denominator) 1,556,706
________________
-8-
<PAGE>
GOURMET HERB GROWERS, INC.
UNAUDITED BALANCE SHEETS
ASSETS
March 31, December 31,
1999 1998
___________ ___________
CURRENT ASSETS:
Cash in bank $ 21,996 $ 25,006
___________ ___________
Total Current Assets 21,996 25,006
___________ ___________
PROPERTY, PLANT AND EQUIPMENT:
Building, net 2,834 2,904
___________ ___________
$ 24,830 $ 27,910
___________ ___________
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 604 $ 244
___________ ___________
Total Current Liabilities 604 244
___________ ___________
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value,
1,000,000 shares authorized,
no shares issued and outstanding - -
Common stock, $.001 par value,
24,000,000 shares authorized,
1,600,000 shares issued and
outstanding 1,600 1,600
Capital in excess of par value 34,569 34,569
Deficit accumulated during the
development stage (11,943) (8,503)
___________ ___________
Total Stockholders' Equity 24,226 27,666
___________ ___________
$ 24,830 $ 27,910
___________ ___________
The accompanying notes are an integral part of these financial statements.
-2-
<PAGE>
GOURMET HERB GROWERS, INC.
UNAUDITED STATEMENTS OF OPERATIONS
From Inception
on January 22,
For the Three 1998 through
Months Ended March 31,
March 31, ___________________
1999 1998 1999
__________ _________ _________
REVENUE $ 120 $ - $ 5,726
COST OF SALES 623 - 2,575
__________ _________ _________
GROSS PROFIT (LOSS) (503) - 3,151
EXPENSES:
General and Administrative 2,937 1,542 15,094
__________ _________ _________
LOSS BEFORE INCOME TAXES (3,440) (1,542) (11,943)
CURRENT TAX EXPENSE - - -
DEFERRED TAX EXPENSE - - -
__________ _________ _________
NET LOSS $ (3,440) $ (1,542) $(11,943)
__________ _________ _________
LOSS PER COMMON SHARE $ (.00) $ (.00) $ (.01)
__________ _________ _________
The accompanying notes are an integral part of these financial statements.
-3-
<PAGE>
GOURMET HERB GROWERS, INC.
UNAUDITED STATEMENTS OF CASH FLOWS
From Inception
on January 22,
For the Three 1998 through
Months Ended March 31,
March 31, ___________________
1999 1998 1999
_____________ _________ _________
Cash Flows from Operating Activities:
Net loss $ (3,440) $ (1,542) $(11,943)
Adjustments to reconcile net
loss to net cash used by
operating activities:
Depreciation and amortization 70 - 344
Change in assets and liabilities:
Increase in accounts payable
and accrued expenses 360 300 604
_____________ _________ _________
Net Cash (Used) by Operating
Activities (3,010) (1,242) (10,995)
_____________ _________ _________
Cash Flows from Investing Activities:
Payments for building and equipment - (1,553) (3,178)
_____________ _________ _________
Net Cash (Used) by Investing
Activities - (1,553) (3,178)
_____________ _________ _________
Cash Flows from Financing Activities:
Proceeds from common stock issuance - 4,350 41,850
Payments for stock offering costs - - (5,681)
_____________ _________ _________
Net Cash Provided by Financing
Activities - 4,350 36,169
_____________ _________ _________
Net Increase in Cash (3,010) 1,555 21,996
Cash at Beginning of Period 25,006 - -
_____________ _________ _________
Cash at End of Period $ 21,996 $ 1,555 $ 21,996
_____________ _________ _________
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
Supplemental Schedule of Noncash Investing and Financing Activities:
For the period ended March 31, 1999:
None
For the period ended December 31, 1998:
None
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE>
GOURMET HERB GROWERS, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - The Company was organized under the laws of the State of Nevada
on January 22, 1998. The Company is growing gourmet herbs and vegetables for
restaurants and delicatessans. 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.
Interim Financial Statements - The accompanying interim financial statements
have been prepared by the Company without audit. In the opinion of
management, all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, results of operations and
cash flows at March 31, 1999 and for all the periods presented have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
condensed financial statements be read in conjunction with the financial
statements and notes thereto included in the Company's December 31, 1998
audited financial statements. The results of operations for the periods ended
March 31, 1999 and 1998 are not necessarily indicative of the operating
results for the full year.
Property, Plant and Equipment - Property, plant and equipment is stated at
cost. Expenditures for major renewals and betterments that extend the useful
lives of property and equipment are capitalized, upon being placed in service.
Expenditures for maintenance and repairs are charges to expense as incurred.
Depreciation is computed for financial statement purposes using the straight-
line method over the estimated useful life of the asset, which is 10 years.
Loss Per Share - The computation of loss per share is based on the weighted
average number of shares outstanding during the period presented in accordance
with Statement of Financial Standards No. 128, "Earning Per Share".
Statement of Cash Flows - For purposes of the statement of cash flows, the
Company considers all highly liquid debt investments purchased with a maturity
of three months or less to be cash equivalents.
Accounting 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, the disclosures of contingent assets and liabilities at the date
of the financial statements, and the reported amount of revenues and expenses
during the reported period. Actual results could differ from those estimated.
-5-
<PAGE>
GOURMET HERB GROWERS, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE 2 - PROPERTY, PLANT AND EQUIPMENT
The following is a summary of property, plant and equipment, at cost, less
accumulated depreciation:
March 31, December 31,
1999 1998
___________ ___________
Greenhouse $ 3,178 $ 3,178
Less accumulated depreciation (344) (274)
___________ ____________
$ 2,834 $ 2,904
___________ ____________
Depreciation expense for the three months ended March 31, 1999 and for the
periods from inception through March 31, 1998 and 1999 amounted to $70, $0 and
$344, respectively.
NOTE 3 - CAPITAL STOCK
Common Stock - During January, 1998, in connection with its organization, the
Company issued 1,450,000 shares of its previously authorized, but unissued
common stock. Total proceeds from the sale of stock amounted to $4,350 (or
$.003 per share).
During April and May, 1998 the Company issued 150,000 shares of its previously
authorized, but unissued common stock in a public offering. Total proceeds
from the sale of stock amounted to $37,500 (or $.25 per share). Offering
costs of $5,681 were offset to additional paid in capital.
Preferred Stock - The Company has authorized 1,000,000 shares of preferred
stock $.001 par value, with such rights, preferences and designations and to
be issued in such series as determined by the board of Directors. No shares
are issued and outstanding at March 31, 1999.
NOTE 4 - INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes". FASB
109 requires the Company to provide a net deferred tax asset/liability equal
to the expected future tax benefit/expense of temporary reporting differences
between book and tax accounting methods and any available operating loss or
tax credit carryforwards. At March 31, 1999, the Company has available unused
operating loss carryforwards of approximately $11,900, which may be applied
against future taxable income and which expire in 2019.
-6-
<PAGE>
GOURMET HERB GROWERS, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE 4 - INCOME TAXES [Continued]
The amount of and ultimate realization of the benefits from the operating loss
carryforwards for income tax purposes is dependent, in part, upon the tax laws
in effect, the future earnings of the Company, and other future events, the
effects of which cannot be determined. Because of the uncertainty surrounding
the realization of the loss carryforwards the Company has established
a
valuation allowance equal to the tax effect of the loss carryforwards and,
therefore, no deferred tax asset has been recognized for the loss
carryforwards. The net deferred tax assets are approximately $4,000 and
$2,900 as of March 31, 1999 and December 31, 1998, respectively, with an
offsetting valuation allowance at each period end of the same amount resulting
in a change in the valuation allowance of approximately $1,100 for the three
months ended March 31, 1999.
NOTE 5 - RELATED PARTY TRANSACTIONS
Management Compensation - During the three months ended March 31, 1999 the
Company paid $1,000 in salary to the Company's president.
Office Space - The Company has not had a need to rent office space. An
officer/shareholder of the Company is allowing the Company to use his home as
a mailing address, as needed, at no expense to the Company.
Greenhouse - During the period ended December 31, 1998 the Company built
a
greenhouse at the home of an officer/shareholder of the Company. The
officer/shareholder is allowing the Company to use his property at no expense
to the Company.
Sales - During the three months ended March 31, 1999 and the period from
inception through March 31, 1999 the Company sold $120 and $3,595,
respectively, (approximately 100% and 63% of total sales) of the Company's
product to a restaurant owned by the Company's president.
-7-
<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 hereby. If given or
made, such information or
representations must not be relied upon
as having been authorized by the
Company. This Prospectus does not
constitute an offer to sell or a solicitation
of an offer to buy any of the securities
covered hereby in any jurisdiction or to
any person to whom it is unlawful to
make such offer or solicitation in such
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 the Company since the
date hereof.
Until [90 days after the date of this
prospectus], all dealers effecting
transactions in the registered securities,
whether or not participating in this
distribution, may be required to deliver a
prospectus. This is in addition to the
obligation of dealers to deliver a
prospectus when acting as underwriters
with respect to their unsold allotments or
subscriptions.
GOURMET HERB GROWERS, 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 officers,
directors and other stockholders paid an aggregate of $4,350 cash to purchase
1,450,000 shares of Common Stock of the Company at a price of $.003 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 May, 1998, the Company completed an offering under Regulation D, Rule
504 as promulgated by the Securities and Exchange Commission and sold 150,000
shares of common stock, at $.25 per share, and raised gross proceeds of
$37,500. 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 3.2
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
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 July 20, 1999.
GOURMET HERB GROWERS, INC.
By: /s/Rino Di Meo
Rino Di Meo, Chairman (Chief Executive/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/Rino Di Meo Date: July 20, 1999
Rino Di Meo, Director
ARTICLES OF INCORPORATION
OF
GOURMET HERB GROWERS, INC.
THE UNDERSIGNED, acting as incorporator(s) of a corporation
under the Nevada Business Corporation Act, adopt(s) the following
Articles of Incorporation for such corporation.
ARTICLE I - NAME
The name of the Corporation is GOURMET HERB GROWERS, INC.
ARTICLE II - INITIAL OFFICE AND RESIDENT AGENT
The Corporation Trust Company of Nevada
One East First Street
Reno, Nevada 89501
ARTICLE III - STOCK
The aggregate number of shares which this corporation shall
have authority to issue is 24,000,000 shares of Common Stock having
a par value of $.001 per share and 1,000,000 shares of Preferred
Stock having a par value of $.001 per share. All Common Stock of
the corporation shall be of the same class, and shall have the same
rights and preferences. The corporation shall have authority to
issue the shares of Preferred Stock in one or more series with such
rights, preferences and designations as determined by the Board of
Directors of the corporation. Fully-paid stock of this corporation
shall not be liable to any further call or assessment.
ARTICLE IV - DIRECTORS
Members of the governing board of the Corporation are
directors and the number of directors constituting the initial
Board of Directors of this corporation is one. The name and
address of each person who will serve as director until the first
annual meeting of stockholders or until any successor is elected
and qualifies, is:
NAME ADDRESS
Rino Di Meo 2302 Parley's Way
Salt Lake City, Utah 84109
ARTICLE V - INCORPORATORS
The name and address of each incorporator is:
NAME ADDRESS
Van Butler 311 South State, Suite 440
Salt Lake City, UT 84111
ARTICLE VI
LIABILITY OF DIRECTORS AND OFFICERS
No director or officer shall be personally liable to the
Corporation or its stockholders for monetary damages for any breach
of fiduciary duty by such person as a director or officer, except
to the extent provided by applicable law.
ARTICLE VII - CONTROL SHARE ACQUISITIONS
The provisions of NRS 78.378 to 78.3793 regarding control
share acquisitions do not apply to the Corporation.
ARTICLE VIII - COMBINATIONS WITH INTERESTED STOCKHOLDERS
The provisions of NRS 78.411 to 78.444 regarding combinations
with interested stockholders do not apply to the Corporation.
ARTICLE IX - INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Corporation shall indemnify, and advance expenses as they
are incurred to, any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such person is or was a
director or officer of the Corporation, or who is serving at the
request or direction of the Corporation as a director or officer of
another corporation or other enterprise, against expenses including
attorneys' fees, judgments, fines and amounts paid in settlement,
actually and reasonably incurred by such person in connection with
the action, suit or proceeding, to the full extent permitted by
Nevada law.
Under penalties of perjury, I declare that these Articles of
Incorporation have been examined by me and are, to the best of my
knowledge and belief, true, correct and complete.
DATED this day of , 1998.
STATE OF UTAH )
: ss.
COUNTY OF SALT LAKE )
On the day of , 199 personally
appeared before me, Van Butler , who duly acknowledged to me
that he signed the foregoing Articles of Incorporation.
NOTARY PUBLIC
Residing at Salt Lake County
My Commission Expires:
CERTIFICATE OF ACCEPTANCE OF APPOINTMENT BY RESIDENT AGENT
The Corporation Trust Company of Nevada hereby accepts the
appointment as Resident Agent of the above named corporation.
The Corporation Trust Company of
Nevada
Dated: By:
articles.ghg
BY-LAWS
OF
GOURMET HERB GROWERS, INC.
ARTICLE I - OFFICES
The registered office of the corporation in the State of
Nevada shall be located in the City of Reno, County of Washoe.
The corporation may have its principal office and such other
offices, either within or without the State of incorporation
as the board of directors may designate or as the business of
the corporation may from time to time require.
ARTICLE II - STOCKHOLDERS
1. ANNUAL MEETING.
The annual meeting of the stockholders shall be held on
such date as is determined by the Board of Directors for the
purpose of electing directors and for the transaction of such
other business as may come before the meeting.
2. SPECIAL MEETINGS.
Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute, may be
called by the president or by the directors, and shall be
called by the president at the request of the holders of not
less than ten per cent of all the outstanding shares of the
corporation entitled to vote at the meeting.
3. PLACE OF MEETING.
The directors may designate any place, either within or
without the State unless otherwise prescribed by statute, as
the place of meeting for any annual meeting or for any special
meeting called by the directors. A waiver of notice signed by
all stockholders entitled to vote at a meeting may designate
any place, either within or without the state unless otherwise
prescribed by statute, as the place for holding such meeting.
If no designation is made, or if a special meeting be
otherwise called, the place of meeting shall be the principal
office of the corporation.
4. NOTICE OF MEETING.
Written or printed notice stating the place, day and hour
of the meeting and, in case of a special meeting, the purpose
or purposes for which the meeting is called, shall be
delivered not less than ten nor more than thirty days before
the date of the meeting, either personally or by mail, by or
at the direction of the president, or the secretary, or the
officer or persons calling the meeting, to each stockholder of
record entitled to vote at such meeting. If mailed, such
notice shall be deemed to be delivered when deposited in the
United States mail, addressed to the stockholder at his
address as it appears on the stock transfer books of the
corporation, with postage thereon pre-paid.
5. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE.
For the purpose of determining stockholders entitled to
notice of or to vote at any meeting of stockholders or any
adjournment thereof, or stockholders entitled to receive
payment of any dividend, or in order to make a determination
of stockholders for any other proper purpose, the directors of
the corporation may provide that the stock transfer books
shall be closed for a stated period but not to exceed, in any
case, thirty days. If the stock transfer books shall be closed
for the purpose of determining stockholders entitled to notice
of or to vote at a meeting of stockholders, such books shall
be closed for at least ten days immediately preceding such
meeting. In lieu of closing the stock transfer books, the
directors may fix in advance a date as the record date for
any such determination of stockholders, such date in any case
to be not more than thirty days and, in case of a meeting of
stockholders, not less than ten days prior to the date on
which the particular action requiring such determination of
stockholders is to be taken. If the stock transfer books are
not closed and no record date is fixed for the determination
of stockholders entitled to notice of or to vote at a meeting
of stockholders, or stockholders entitled to receive payment
of a dividend, the date on which notice of the meeting is
mailed or the date on which the resolution of the directors
declaring such dividend is adopted, as the case may be, shall
be the record date for such determination of stockholders.
When a determination of stockholders entitled to vote at any
meeting of stockholders has been made as provided in this
section, such determination shall apply to any adjournment
thereof.
6. VOTING LISTS.
The officer or agent having charge of the stock transfer
books for shares of the corporation shall make, at least ten
days before each meeting of stockholders, a complete list of
the stockholders entitled to vote at such meeting, or any
adjournment thereof, arranged in alphabetical order, with the
address of and the number of shares held by each, which list,
for a period of ten days prior to such meeting, shall be kept
on file at the principal office of the corporation or transfer
agent and shall be subject to inspection by any stockholder at
any time during usual business hours. Such list shall also be
produced and kept open at the time and place of the meeting
and shall be subject to the inspection of any stockholder
during the whole time of the meeting. The original stock
transfer book shall be prima facie evidence as to who are the
stockholders entitled to examine such list or transfer books
or to vote at the meeting of stockholders.
7. QUORUM.
Unless otherwise provided by law, at any meeting of
stockholders one-third of the outstanding shares of the
corporation entitled to vote, represented in person or by
proxy, shall constitute a quorum at a meeting of stockholders.
If less than said number of the outstanding shares are
represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without
further notice. At such adjourned meeting at which a quorum
shall be present or represented, any business may be
transacted which might have been transacted at the meeting as
originally notified. The stockholders present at a duly
organized meeting may continue to transact business until
adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.
8. PROXIES.
At all meetings of stockholders, a stockholder may vote
by proxy executed in writing by the stockholder or by his duly
authorized attorney in fact. Such proxy shall be filed with
the secretary of the corporation before or at the time of the
meeting.
9. VOTING.
Each stockholder entitled to vote in accordance with the
terms and provisions of the certificate of incorporation and
these by-laws shall be entitled to one vote, in person or by
proxy, for each share of stock entitled to vote held by such
stockholders. Upon the demand of any stockholder, the vote for
directors and upon any question before the meeting shall be by
ballot. All elections for directors shall be decided by
plurality vote; all other questions shall be decided by
majority vote except as otherwise provided by the Certificate
of Incorporation or the laws of this State.
10. ORDER OF BUSINESS.
The order of business at all meetings of the
stockholders, shall be as follows:
1. Roll Call.
2. Proof of notice of meeting or waiver of notice.
3. Reading of minutes of preceding meeting.
4. Reports of Officers.
5. Reports of Committees.
6. Election of Directors.
7. Unfinished Business.
8. New Business.
11. INFORMAL ACTION BY STOCKHOLDERS.
Unless otherwise provided by law, any action required to
be taken at a meeting of the shareholders, or any other action
which may be taken at a meeting of the shareholders, may be
taken without a meeting if a consent in writing, setting forth
the action so taken, shall be signed by the same percentage of
all of the shareholders entitled to vote with respect to the
subject matter thereof as would be required to take such
action at a meeting.
ARTICLE III - BOARD OF DIRECTORS
1. GENERAL POWERS.
The business and affairs of the corporation shall be
managed by its board of directors. The directors shall in all
cases act as a board, and they may adopt such rules and
regulations for the conduct of their meetings and the
management of the corporation, as they may deem proper, not
inconsistent with these by-laws and the laws of this State.
2. NUMBER, TENURE AND QUALIFICATIONS.
The number of directors of the corporation shall be as
established by the board of directors, but shall be no less
than one. Each director shall hold office until the next
annual meeting of stockholders and until his successor shall
have been elected and qualified.
3. REGULAR MEETINGS.
A regular meeting of the directors, shall be held without
other notice than this by-law immediately after, and at the
same place as, the annual meeting of stockholders. The
directors may provide, by resolution, the time and place for
the holding of additional regular meetings without other
notice than such resolution.
4. SPECIAL MEETINGS.
Special meetings of the directors may be called by or at
the request of the president or any director. The person or
persons authorized to call special meetings of the directors
may fix the place for holding any special meeting of the
directors called by them. A director may attend any meeting
by telephonic participation at the meeting.
5. NOTICE.
Notice of any special meeting shall be given at least two
days previously thereto by written notice delivered
personally, or by telegram or mailed to each director at his
business address. If mailed, such notice shall be deemed to
be delivered when deposited in the United States mail so
addressed, with postage thereon prepaid. If notice be given
by telegram, such notice shall be deemed to be delivered when
the telegram is delivered to the telegraph company. The
attendance of a director at a meeting shall constitute a
waiver of notice of such meeting, except where a director
attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting is not
lawfully called or convened.
6. QUORUM.
At any meeting of the directors a majority shall
constitute a quorum for the transaction of business, but if
less than said number is present at a meeting, a majority of
the directors present may adjourn the meeting from time to
time without further notice.
7. MANNER OF ACTING.
The act of the majority of the directors present at a
meeting at which a quorum is present shall be the act of the
directors.
8. NEWLY CREATED DIRECTORSHIPS AND VACANCIES.
Newly created directorships resulting from an increase in
the number of directors and vacancies occurring in the board
for any reason except the removal of directors without cause
may be filled by a vote of a majority of the directors then in
office, although less than a quorum exists. Vacancies
occurring by reason of the removal of directors without cause
shall be filled by vote of the stockholders. A director
elected to fill a vacancy caused by resignation, death or
removal shall be elected to hold office for the unexpired term
of his predecessor.
9. REMOVAL OF DIRECTORS.
Any or all of the directors may be removed for cause by
vote of the stockholders or by action of the board. Directors
may be removed without cause only by vote of the stockholders.
10. RESIGNATION.
A director may resign at any time by giving written
notice to the board, the president or the secretary of the
corporation. Unless otherwise specified in the notice, the
resignation shall take effect upon receipt thereof by the
board or such officer, and the acceptance of the resignation
shall not be necessary to make it effective.
11. COMPENSATION.
No compensation shall be paid to directors, as such, for
their services, but by resolution of the board a fixed sum and
expenses for actual attendance at each regular or special
meeting of the board may be authorized. Nothing herein
contained shall be construed to preclude any director from
serving the corporation in any other capacity and receiving
compensation therefor.
12. PRESUMPTION OF ASSENT.
A director of the corporation who is present at a meeting
of the directors at which action on any corporate matter is
taken shall be presumed to have assented to the action taken
unless his dissent shall be entered in the minutes of the
meeting or unless he shall file his written dissent to such
action with the person acting as the secretary of the meeting
before the adjournment thereof or shall forward such dissent
by registered mail to the secretary of the corporation
immediately after the adjournment of the meeting. Such right
to dissent shall not apply to a director who voted in favor of
such action.
13. EXECUTIVE AND OTHER COMMITTEES.
The board, by resolution, may designate from among its
members an executive committee and other committees, each
consisting of three or more directors. Each such committee
shall serve at the pleasure of the board.
ARTICLE IV - OFFICERS
1. NUMBER.
The officers of the corporation shall be a president, a
secretary and a treasurer, each of whom shall be elected by
the directors. Such other officers and assistant officers as
may be deemed necessary may be elected or appointed by the
directors.
2. ELECTION AND TERM OF OFFICE.
The officers of the corporation to be elected by the
directors shall be elected annually at the first meeting of
the directors held after each annual meeting of the
stockholders. Each officer shall hold office until his
successor shall have been duly elected and shall have
qualified or until his death or until he shall resign or shall
have been removed in the manner hereinafter provided.
3. REMOVAL.
Any officer or agent elected or appointed by the
directors may be removed by the directors whenever in their
judgment the best interests of the corporation would be served
thereby, but such removal shall be without prejudice to the
contract rights, if any, of the person so removed.
4. VACANCIES.
A vacancy in any office because of death, resignation,
removal, disqualification or otherwise, may be filled by the
directors for the unexpired portion of the term.
5. PRESIDENT.
The president shall be the principal executive officer of
the corporation and, subject to the control of the directors,
shall in general supervise and control all of the business and
affairs of the corporation. He shall, when present, preside
at all meetings of the stockholders and of the directors. He
may sign, with the secretary or any other proper officer of
the corporation thereunto authorized by the directors,
certificates for shares of the corporation, any deeds,
mortgages, bonds, contracts, or other instruments which the
directors have authorized to be executed, except in cases
where the signing and execution thereof shall be expressly
delegated by the directors or by these by-laws to some other
officer or agent of the corporation, or shall be required by
law to be otherwise signed or executed; and in general shall
perform all duties incident to the office of president and
such other duties as may be prescribed by the directors from
time to time.
6. VICE-PRESIDENT.
In the absence of the president or in event of his death,
inability or refusal to act, a vice-president may perform the
duties of the president, and when so acting, shall have all
the powers of and be subject to all the restrictions upon the
president. A vice-president shall perform such other duties
as from time to time may be assigned to him by the President
or by the directors.
7. SECRETARY.
The secretary shall keep the minutes of the stockholders'
and of the directors' meetings in one or more books provided
for that purpose, see that all notices are duly given in
accordance with the provisions of these by-laws or as
required, be custodian of the corporate records and of the
seal of the corporation and keep a register of the post office
address of each stockholder which shall be furnished to the
secretary by such stockholder, have general charge of the
stock transfer books of the corporation and in general perform
all duties incident to the office of secretary and such other
duties as from time to time may be assigned to him by the
president or by the directors.
8. TREASURER.
If required by the directors, the treasurer shall give a
bond for the faithful discharge of his duties in such sum and
with such surety or sureties as the directors shall determine.
He shall have charge and custody of and be responsible for all
funds and securities of the corporation; receive and give
receipts for moneys due and payable to the corporation from
any source whatsoever, and deposit all such moneys in the name
of the corporation in such banks, trust companies or other
depositories as shall be selected in accordance with these
by-laws and in general perform all of the duties incident to
the office of treasurer and such other duties as from time to
time may be assigned to him by the president or by the
directors.
9. SALARIES.
The salaries of the officers shall be fixed from time to
time by the directors and no officer shall be prevented from
receiving such salary by reason of the fact that he is also a
director of the corporation.
ARTICLE V - CONTRACTS, LOANS, CHECKS AND DEPOSITS
1. CONTRACTS.
The directors may authorize any officer or officers,
agent or agents, to enter into any contract or execute and
deliver any instrument in the name of and on behalf of the
corporation, and such authority may be general or confined to
specific instances.
2. LOANS.
No loans shall be contracted on behalf of the corporation
and no evidences of indebtedness shall be issued in its name
unless authorized by a resolution of the directors. Such
authority may be general or confined to specific instances.
3. CHECKS, DRAFTS, ETC.
All checks, drafts or other orders for the payment of
money, notes or other evidences of indebtedness issued in the
name of the corporation, shall be signed by such officer or
officers, agent or agents of the corporation and in such
manner as shall from time to time be determined by resolution
of the directors.
4. DEPOSITS.
All funds of the corporation not otherwise employed shall
be deposited from time to time to the credit of the
corporation in such banks, trust companies or other
depositaries as the directors may select.
ARTICLE VI - CERTIFICATES FOR SHARES AND THEIR TRANSFER
1. CERTIFICATES FOR SHARES.
Certificates representing shares of the corporation shall
be in such form as shall be determined by the directors. Such
certificates shall be signed by the president and by the
secretary or by such other officers authorized by law and by
the directors. All certificates for shares shall be
consecutively numbered or otherwise identified. The name and
address of the stockholders, the number of shares and date of
issue, shall be entered on the stock transfer books of the
corporation. All certificates surrendered to the corporation
for transfer shall be canceled and no new certificate shall be
issued until the former certificate for a like number of
shares shall have been surrendered and canceled, except that
in case of a lost, destroyed or mutilated certificate a new
one may be issued therefor upon such terms and indemnity to
the corporation as the directors may prescribe.
2. TRANSFERS OF SHARES.
(a) Upon surrender to the corporation or the transfer
agent of the corporation of a certificate for shares duly
endorsed or accompanied by proper evidence of succession,
assignment or authority to transfer, it shall be the duty of
the corporation to issue a new certificate to the person
entitled thereto, and cancel the old certificate; every such
transfer shall be entered on the transfer book of the
corporation which shall be kept at its principal office.
(b) The corporation shall be entitled to treat the
holder of record of any share as the holder in fact thereof,
and, accordingly, shall not be bound to recognize any
equitable or other claim to or interest in such share on the
part of any other person whether or not it shall have express
or other notice thereof, except as expressly provided by the
laws of this state.
ARTICLE VII - FISCAL YEAR
The fiscal year of the corporation shall end on the last
day of such month in each year as the directors may prescribe.
ARTICLE VIII - DIVIDENDS
The directors may from time to time declare, and the
corporation may pay, dividends on its outstanding shares in
the manner and upon the terms and conditions provided by law.
ARTICLE IX - SEAL
The directors may, in their discretion, provide a
corporate seal which shall have inscribed thereon the name of
the corporation, the state of incorporation, and the words,
"Corporate Seal".
ARTICLE X - WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is
required to be given to any stockholder or director of the
corporation under the provisions of these by-laws or under the
provisions of the articles of incorporation, a waiver thereof
in writing, signed by the person or persons entitled to such
notice, whether before or after the time stated therein, shall
be deemed equivalent to the giving of such notice.
ARTICLE XI - AMENDMENTS
These by-laws may be altered, amended or repealed and new
by-laws may be adopted by action of the Board of Directors.
Date Rino Di Meo, Secretary
bylaws.ghg
[Stock Certificate Border Graphics]
Not Valid Unless Countersigned by Transfer Agent
Incorporated Under the Laws of the State of Nevada
Number Shares
[No. of Cert] [No. of Shares]
GOURMET HERB GROWERS, INC.
Authorized Common Stock: 24,000,000 Shares
Par Value: $.001
THIS CERTIFIES THAT [Name of Shareholder]
IS THE RECORD HOLDER OF [Number of Shares]
Shares of GOURMET HERB GROWERS, INC. Common Stock
transferable on the books of the Corporation in person or by duly
authorized attorney upon surrender of this Certificate properly
endorsed. This Certificate is not valid until countersigned by
the Transfer Agent and registered by the Registrar.
Witness the facsimile seal of the Corporation and the
facsimile signatures of its duly authorized officers.
Dated: [date of Certificate]
/s/Rino Di Meo /s/Rino Di Meo
Secretary President
[Graphic of Corporate Seal]
[Border Graphics]
Interwest Transfer Co. Inc. P.O. Box 17136/Salt Lake City, Utah 84117
Countersigned & Registered ______________________________
WARRANT AGREEMENT
GOURMET HERB GROWERS, INC.
AND
INTERWEST TRANSFER CO., INC.
WARRANT AGENT
THIS WARRANT AGREEMENT (the "Agreement") is dated effective as
of , 1999, between Gourmet Herb Growers, Inc., a Nevada
Corporation (the "Company"), and Interwest Transfer Co., Inc., Salt
Lake City, Utah (the "Warrant Agent").
WHEREAS, the Company proposes to distribute as a dividend with
respect to its Common Stock, and issue to the shareholders of
record as of __________, 1999 (the record date), 1,000,000 Common
Stock Purchase Warrants (the "Warrants");
WHEREAS, in conjunction with the potential exercise of the
Warrants, the Company anticipates the issuance of up to 1,000,000
shares of its Common Stock (the "Warrant Shares");
WHEREAS, the Company desires the Warrant Agent to act on
behalf of the Company, and the Warrant Agent is willing so to act,
in connection with the issuance, registration, transfer and
exchange of Warrant Certificates and exercise of the Warrants.
NOW, THEREFORE, in consideration of the promises and the
mutual agreements hereinafter set forth, it is agreed that:
1. WARRANTS/WARRANT CERTIFICATES. Each Warrant will, in the
future during the period specified in the Warrant Certificate, upon
fulfillment of the conditions and subject to the terms set forth
therein, entitle the holder (the "Registered Holder" or, in the
aggregate, the "Registered Holders") in whose name the Warrant
Certificate shall be registered on the books maintained by the
Warrant Agent to purchase one share of Common Stock on exercise
thereof, subject to modification and adjustment as provided in
Section 8. Warrant Certificates representing the right to
purchase Warrant Shares shall be executed by the Company's
President and attested to by the Company's Secretary or Assistant
Secretary, or shall bear facsimile signatures of such officers, and
shall be delivered to the Warrant Agent upon execution of this
Agreement for distribution to the Company's shareholders pursuant
to written instructions from the Company to the Warrant Agent.
Subject to the provisions of Sections 3, 5, 6 and 8, the
Warrant Agent shall deliver Warrant Certificates in required whole
number denominations to Registered Holders in connection with any
transfer or exchange permitted under this Agreement. Except as
provided in Section 6 hereof, no Warrant Certificates shall be
issued except (i) Warrant Certificates initially issued hereunder,
(ii) Warrant Certificates issued on or after the initial issuance
date, upon the exercise of any Warrants, to evidence the unexer-
cised Warrants held by the exercising Registered holder, and (iii)
Warrant Certificates issued after the initial issuance date, upon
any transfer or exchange of Warrant Certificates or replacements of
lost or mutilated Warrant Certificates.
2. FORM AND EXECUTION OF WARRANT CERTIFICATES. The Warrant
Certificates shall be substantially in the form attached hereto as
Exhibit A. The Warrant Certificates shall be dated as of the date
of their issuance, whether on initial issuance, transfer or
exchange or in lieu of mutilated, lost, stolen or destroyed Warrant
Certificates.
Each Warrant Certificate shall be numbered serially with the
designation "A" appearing on each Warrant Certificate.
The Warrant Certificates shall be manually countersigned by
the Warrant Agent and shall not be valid for any purpose unless so
countersigned. In the event any officer of the Company who
executed the Warrant Certificates shall cease to be an officer of
the Company before the date of issuance of the Warrant Certificates
or before countersignature and delivery by the Warrant Agent, such
warrant Certificates may be countersigned, issued and delivered by
the Warrant Agent with the same force and effect as though the
person who signed such Warrant Certificates had not ceased to be an
officer of the Company.
3. EXERCISE. Subject to the provisions of Sections 4, 7 and
8, the Warrants, when evidenced by a Warrant Certificate, may be
exercised at a price (the "Exercise Price") of $1.00 per share, in
whole or in part, commencing on the date of issuance (the "Initial
Exercise Date") and terminating on June 30, 2002, unless extended
by the Company's Board of Directors (the "Exercise Period"), at any
time during such period that the Company's Registration Statement
with respect to the Warrant Shares is effective and current. The
Company shall promptly notify the Warrant Agent of the
effectiveness of such Registration Statement, any suspension of
effectiveness and of any such extension of the Exercise Periods.
A Warrant shall be deemed to have been exercised immediately prior
to the close of business on the date (the "Exercise Date") of the
surrender for exercise of the Warrant Certificate. The exercise
form shall be executed by the Registered Holder thereof or his
attorney duly authorized in writing and will be delivered together
with payment to the Warrant Agent at 1981 East 4800 South, Salt
Lake City, Utah 84117, (the "Corporate Office") or such other place
as designated by the Company, in cash or by official bank or
certified check, of an amount equal to the aggregate Exercise
Price, in lawful money of the United States of America.
Unless Warrant Shares may not be issued as provided herein,
the person entitled to receive the number of Warrant Shares
deliverable on such exercise shall be treated for all purposes as
the holder of such Warrant Shares as of the close of business on
the Exercise date. In addition, the Warrant Agent shall also, at
such time, verify that all of the conditions precedent to the
issuance of Warrant Shares set forth in Section 4 have been
satisfied as of the Exercise Date. If any one of the conditions
precedent set forth in Section 4 are not satisfied as of the
Exercise Date, the Warrant Agent shall request written instructions
from the Company as to whether to return the Warrant and pertinent
Exercise Price to the exercising Registered Holder or to hold the
same until all such conditions have been satisfied. The Company
shall not be obligated to issue any fractional share interests in
Warrant Shares issuable or deliverable on the exercise of any
Warrant or scrip or cash therefor and such fractional shares shall
be of no value whatsoever. If more than one Warrant shall be
exercised at one time by the same Registered Holder, the number of
full Shares which shall be issuable on exercise thereof shall be
computed on the basis of the aggregate number of full shares
issuable on such exercise.
Within thirty days after the Exercise Date and in any event
prior to the pertinent Expiration Date, the Warrant Agent shall
cause to be issued and delivered to the person or persons entitled
to receive the same, a certificate or certificates for the number
of Warrant Shares deliverable on such exercise. No adjustment
shall be made in respect of cash dividends on Warrant Shares
delivered on exercise of any Warrant. The Warrant Agent shall
promptly notify the Company in writing of any exercise and of the
number of Warrant Shares delivered and shall cause payment of an
amount in cash equal to the pertinent Exercise Price to be promptly
made to the order of the Company.
Upon the exercise of any Warrant, the Warrant Agent shall
promptly deposit the payment into a segregated account established
by mutual agreement of the Company and the Warrant Agent at a
federally insured commercial bank. All funds deposited in the
escrow account will be disbursed on a weekly basis to the Company
once they have been determined by the Warrant Agent to be collected
funds. Once the funds are determined to be collected the Warrant
Agent shall cause the share certificate(s) representing the
exercised Warrants to be issued.
Expenses incurred by the Warrant Agent while acting in the
capacity as Warrant Agent will be paid by the Company. These
expenses, including delivery of exercised share certificates to the
shareholder, will be deducted from the exercise fee submitted prior
to distribution of funds to the Company.
A detailed accounting statement relating to the number of
shares exercised and the net amount of exercised funds remitted
will be given to the Company with the payment of each exercise
amount. This will serve as an interim accounting for the
Company's use during the exercise periods. A complete accounting
will be made by the Warrant Agent to the Company concerning all
persons exercising Warrants, the number of shares issued and the
amounts paid at the completion of the Exercise Period.
The Company may deem and treat the Registered Holder of the
Warrants at any time as the absolute owner thereof for all
purposes, and the Company shall not be affected by any notice to
the contrary. The Warrants shall not entitle the holder thereof to
any of the rights of shareholders or to any dividend declared on
the Common Stock unless the holder shall have exercised the
Warrants and purchased the shares of Common Stock prior to the
record date fixed by the Board of Directors of the Company for the
determination of holders of Common Stock entitled to such dividend
or other right.
4. RESERVATION OF SHARES AND PAYMENT OF TAXES. The Company
covenants that it will at all times reserve and have available from
its authorized Common Stock such number of shares as shall then be
issuable on the exercise of all outstanding Warrants. The Company
covenants that all Warrant Shares which shall be so issuable shall
be duly and validly issued, fully paid and nonassessable, and free
from all taxes, liens and charges with respect to the issue
thereof.
The Company and the Warrant Agent acknowledge that the Company
will be required, pursuant to the Securities Act of 1933, as
amended (the "Act"), to deliver to each Registered Holder, upon the
exercise of Warrants and delivery of Warrant Shares, a prospectus
covering the issuance of the Warrant Shares which meets the
requirements of the Act, which prospectus must be a part of an
effective registration statement under the Act at the time that the
Warrant is exercised. No Warrants may be exercised nor may Warrant
shares be issued by the Company's transfer agent or delivered by
the Warrant Agent unless, on the Exercise Date: (i) the Company
has an effective registration statement covering the issuance of
the Warrant Shares under the Act; (ii) the Warrant Agent has copies
of the prospectus which is a part of such effective registration
statement and which the Warrant Agent hereby agrees to deliver with
the Warrant Shares; and (iii) the Warrant Shares may legally be
issued and delivered to the exercising Registered Holder under the
securities laws of the state in which such Registered Holder
resides.
The Company agrees to use its best efforts to maintain, to the
extent required by the Act, an effective registration statement
under the Act covering the issuance of the Warrant Shares during
the period the Warrants are exercisable, but there may be times
when no such registration statement will be currently effective.
The exercise of Warrants may be temporarily suspended without
liability to the Company during times when no such registration
statement is currently effective, or during times when, in the
reasonable opinion of the Board of Directors of the Company, such
suspension is necessary to preclude violation of any requirements
of applicable law of regulatory bodies having jurisdiction over the
Company. If any Warrant would expire during such a suspension,
then if exercise of such Warrant is duly tendered before its
expiration, such Warrant shall be exercisable and exercised (unless
the attempted exercise is withdrawn) as of the first day after the
end of such suspension. The Company further agrees, from time to
time, to furnish the Warrant Agent with copies of the Company's
prospectus to be delivered to exercising Registered Holders, as set
forth above.
If any shares of Common Stock to be reserved for the purpose
of exercise of Warrants hereunder require any other registration
with or approval of any government authority under any federal or
state law before such shares may be validly issued or delivered,
then the Company covenants that it will in good faith and as
expeditiously as possible endeavor to secure such registration or
approval, as the case may be. No Warrant Shares shall be issued
unless and until any such registration requirements have been
satisfied.
The Registered Holder shall pay all documentary, stamp or
similar taxes and other government charges that may be imposed with
respect to the issuance of the Warrants, or the issuance, transfer
or delivery of any Warrant Shares on exercise of the Warrants. In
the event the Warrant Shares are to be delivered in a name other
than the name of the Registered Holder of the Warrant Certificate,
no such delivery shall be made unless the person requesting the
same has paid to the Warrant Agent the amount of any such taxes or
charges incident thereto.
In the event the Warrant Agent ceases to also serve as the
stock transfer agent for the Company, the Warrant Agent is
irrevocably authorized to requisition the Company's new transfer
agent from time to time for Certificates of Warrant Shares required
upon exercise of the Warrants, and the Company will authorize such
transfer agent to comply with all such requisitions. The Company
will file with the Warrant Agent a statement setting forth the name
and address of its new transfer agent, for shares of Common Stock
or other capital stock issuable upon exercise of the Warrants and
of each successor transfer agent.
5. REGISTRATION OF TRANSFER. The Warrants are
NONTRANSFERABLE and Warrant Certificates may not be transferred in
whole or in part unless permitted by the Company. In any permitted
transfer, the Warrant Certificates to be exchanged shall be
surrendered to the Warrant Agent at its Corporate Office. The
Company shall execute and the Warrant Agent shall countersign,
issue and deliver in exchange therefor the Warrant Certificate or
Certificates which the holder making the transfer shall be entitled
to receive.
The Warrant Agent shall keep transfer books at its Corporate
Office which shall register Warrant Certificates and the transfer
thereof. On due presentment for registration of transfer of any
Warrant Certificate at such office, the Company shall execute and
the Warrant Agent shall issue and deliver to the transferee or
transferees a new Warrant Certificate or Certificates representing
an equal aggregate number of Warrants. All Warrant Certificates
presented for registration of transfer or exercise shall be duly
endorsed or be accompanied by a written instrument or instruments
or transfer in form satisfactory to the Company and the Warrant
Agent. At the time of exercise, the transfer fee shall be paid by
the Company. The Company may require payment of a sum sufficient
to cover any tax or other government charge that may be imposed in
connection therewith.
All Warrant Certificates so surrendered, or surrendered for
exercise, or for exchange in case of mutilated Warrant
Certificates, shall be promptly canceled by the Warrant Agent and
thereafter retained by the Warrant Agent until termination of the
agency created by this Agreement. Prior to due presentment for
registration of transfer thereof, the Company and the Warrant Agent
may treat the Registered Holder of any Warrant Certificate as the
absolute owner thereof (notwithstanding any notations of ownership
or writing thereon made by anyone other than the Company or the
Warrant Agent), and the parties hereto shall not be affected by any
notice to the contrary.
6. LOSS OR MUTILATION. On receipt by the Company and the
Warrant Agent of evidence satisfactory as to the ownership of and
the loss, theft, destruction or mutilation of any Warrant
Certificate, the Company shall execute, and the Warrant Agent shall
countersign and deliver in lieu thereof, a new Warrant Certificate
representing an equal aggregate number of Warrants. In the case of
loss, theft or destruction of any Warrant Certificate, the
individual requesting issuance of a new Warrant Certificate shall
be required to indemnify the Company and Warrant Agent in an amount
satisfactory to each of them. In the event a Warrant Certificate
is mutilated, such certificate shall be surrendered and canceled by
the Warrant Agent prior to delivery of a new Warrant Certificate.
Applicants for a new Warrant Certificate shall also comply with
such other regulations and pay such other reasonable charges as the
Company may prescribe.
7. CALL OPTION. At any time, whether or not the Company's
Registration Statement with respect to the Warrant Shares is then
current and effective, the Company shall have the right and option
with respect to each of the Warrants, upon thirty (30) days written
notice to each Warrantholder (or such longer period as is required
under any applicable law), to call, redeem and acquire each of the
Warrants which remain outstanding and unexercised at the date
specified for such redemption in such notice (the "Redemption
Date"), which Redemption Date shall be 30 days after the date of
such notice, for an amount equal to $.01 per Warrant; provided,
however, that if the Company's Registration Statement is then
current and effective, the Warrantholders shall have the right
during the 30-day period immediately following the date of such
notice to exercise the Warrants in accordance with the provisions
of Section 3 hereof. In the event any Warrants are exercised
during such 30-day period, this call option shall be deemed not to
have been exercised by the Company as to the Warrants so exercised
by the holders thereof. Said notice of redemption shall require
each Warrantholder to surrender to the Company, on the Redemption
Date, at the Corporate Office of the Warrant Agent (or its
successor), his certificate or certificates representing the
Warrants to be redeemed. Notwithstanding the fact that any Warrants
called for redemption have not been surrendered for redemption and
cancellation on the Redemption Date, after the Redemption Date,
such Warrants shall be deemed to be expired and all rights of the
holders of such unsurrendered Warrants shall cease and terminate,
other than the right to receive the redemption price of $.01 per
Warrant for such Warrants, without interest provided, however, that
such right to receive the redemption price of $.01 per Warrant for
such Warrants shall itself expire on the Expiration Date of the
Warrants. The Company shall notify the Warrant Agent verbally,
with confirmation in writing, of the call of the Warrants and of
the Redemption Date and the Company shall instruct the Warrant
Agent accordingly as to the procedures to be followed by the
Warrant Agent in connection with the redemption of the Warrants.
8. ADJUSTMENT OF EXERCISE PRICE AND SHARES. After each
adjustment of the Exercise Price pursuant to this Section 8, the
number of shares of Common Stock purchasable on the exercise of
each Warrant shall be the number derived by dividing such adjusted
pertinent Exercise Price into the original pertinent Exercise
Price. The pertinent Exercise Price shall be subject to adjustment
as follows:
(a) In the event, prior to the expiration of the Warrants by
exercise or by their terms, the Company shall issue any shares of
its Common Stock as a share dividend or shall subdivide the number
of outstanding shares of Common Stock into a greater number of
shares, then, in either of such events, the Exercise Price per
share of Common Stock purchasable pursuant to the Warrants in
effect at the time of such action shall be reduced proportionately
and the number of shares purchasable pursuant to the Warrants shall
be increased proportionately. Conversely, in the event the Company
shall reduce the number of shares of its outstanding Common Stock
by combining such shares into a smaller number of shares, then, in
such event, the Exercise Price per share purchasable pursuant to
the Warrants in effect at the time of such action shall be
increased proportionately and the number of shares of Common Stock
at that time purchasable pursuant to the Warrants shall be
decreased proportionately. Any dividend paid or distributed on the
Common Stock in shares of any other class of the Company or
securities convertible into shares of Common Stock shall be treated
as a dividend paid in Common Stock to the extent that shares of
Common Stock are issuable on the conversion thereof.
(b) In the event the Company, at any time while the Warrants
shall remain unexpired and unexercised, shall sell all or
substantially all of its property, or dissolves, liquidates or
winds up its affairs, prompt, proportionate, equitable, lawful and
adequate provision shall be made as part of the terms of any such
sale, dissolution, liquidation or winding up such that the holder
of a Warrant may thereafter receive, on exercise thereof, in lieu
of each share of Common Stock of the Company which he would have
been entitled to receive, the same kind and amount of any share,
securities, or assets as may be issuable, distributable or payable
on any such sale, dissolution, liquidation or winding up with
respect to each share of Common Stock of the Company; provided,
however, that in the event of any such sale, dissolution,
liquidation or winding up, the right to exercise this Warrant
shall terminate on a date fixed by the Company, such date to be not
earlier than 4:00 p.m., Eastern Time, on the 10th day next
succeeding the date on which notice of such termination of the
right to exercise the Warrants has been given by mail to the
holders thereof at such addresses as may appear on the books of the
company.
(c) In the event, prior to the expiration of the Warrants by
exercise or by their terms, the Company shall determine to take a
record of the holders of its Common Stock for the purpose of
determining shareholders entitled to receive any share dividend or
other right which will cause any change or adjustment in the
number, amount, price or nature of the shares of Common Stock or
other securities or assets deliverable on exercise of the Warrants
pursuant to the foregoing provisions, the Company shall give to the
Registered Holders of the Warrants at the addresses as may appear
on the books of the Company at least 10 days prior written notice
to the effect that it intends to take such a record. Such notice
shall specify the date as of which such record is to be taken; the
purpose for which such record is to be taken; and the number,
amount, price and nature of the Common Shares or other shares,
securities or assets which will be deliverable on exercise of the
Warrants after the action for which such record will be taken has
been completed. Without limiting the obligation of the Company to
provide notice to the Registered Holders of the Warrant
Certificates of any corporate action hereunder, the failure of the
Company to give notice shall not invalidate such corporate action
of the Company.
(d) No adjustment of the Exercise Price shall be made as a
result of or in connection with (i) the issuance of Common Stock of
the Company pursuant to options, warrants and share purchase
agreements outstanding or in effect on the date hereof, (ii) the
establishment of additional option plans of the Company, the
modification, renewal or extension of any plan now in effect or
hereafter created, or the issuance of Common Stock, on exercise of
any options pursuant to such plans, in connection with
compensation arrangements for officers, employees or agents of the
Company or any subsidiary, and the like or (iii) the issuance of
Common Stock in connection with an acquisition or merger of any
type (therefore, the antidilution provisions of this Section 8 will
not apply in the event a merger or acquisition is undertaken by the
Company).
(e) This Agreement shall be incorporated by reference on the
Warrant Certificates.
Upon any adjustment of the exercise Price required to be made
pursuant to this Section 8, the Company within 30 days thereafter
shall (A) cause to be filed with the Warrant Agent a certificate
setting forth the pertinent Exercise Price after such adjustment
and setting forth in reasonable detail the method of calculation
and the facts upon which such calculation is based, and (B) cause
to be mailed to each of the Registered Holders of the Warrant
Certificates written notice of such adjustment.
9. REDUCTION IN EXERCISE PRICE AT COMPANY'S OPTION. In
addition to any adjustments made to the Exercise Price pursuant to
Section 8, the Company's Board of Directors may, at its sole
discretion, reduce the Exercise Price of the Warrants in effect at
any time either for the life of the Warrants or any shorter period
of time determined by the Company's Board of Directors. The
Company shall promptly notify the Warrant Agent and the Registered
Holders of any such reductions in the Exercise Price.
10. DUTIES. Compensation and Termination of Warrant Agent.
The Warrant Agent shall act hereunder as agent and in a ministerial
capacity for the Company, and its duties shall be determined solely
by the provisions hereof. The Warrant Agent shall not, by issuing
and delivering Warrant Certificates or by any other act hereunder,
be deemed to make any representation as to the validity, value or
authorization of the Warrant Certificates or the Warrants
represented thereby or of the Common Stock or other property
delivered on exercise of any Warrant. The Warrant Agent shall not
at any time be under any duty or responsibility to any holder of
the Warrant Certificates to make or cause to be made any adjustment
of the Exercise Price or to determine whether any fact exists which
may require any such adjustments.
The Warrant Agent shall not (i) be liable for any recital or
statement of fact contained herein or for any action taken or
omitted by it in reliance on any Warrant Certificate or other
document or instrument believed by it in good faith to be genuine
and to have been signed or presented by the proper party or
parties, (ii) be responsible for any failure on the part of the
Company to comply with any of its covenants and obligations
contained in this Agreement except for its own negligence or
willful misconduct, or (iii) be liable for any act or omission in
connection with this Agreement except for its own negligence or
willful misconduct.
The Company agrees to indemnify the Warrant Agent against any
and all losses, expenses and liabilities which the Warrant Agent
may incur in connection with the delivery of copies of the
Company's prospectus to exercising Registered Holders upon the
exercise of any Warrants as set forth in Section 4.
The Warrant Agent may at any time consult with counsel
satisfactory to it (which may be counsel for the Company) and shall
incur no liability or responsibility for any action taken or
omitted by it in good faith in accordance with the opinion or
advice of such counsel. Any notice, statement, instruction,
request, direction, order or demand of the Company shall be
sufficiently evidenced by an instrument signed by its President and
attested by its Secretary or Assistant Secretary. The Warrant
Agent shall not be liable for any action taken or omitted by it in
accordance with such notice, statement, instruction, request, order
or demand.
The Company agrees to pay the Warrant Agent reasonable
compensation for its services hereunder and to reimburse the
Warrant Agent for its reasonable expenses. The Company further
agrees to indemnify the Warrant Agent against any and all losses,
expenses and liabilities, including judgments, costs and counsel
fees, for any action taken or omitted by the Warrant Agent in the
execution of its duties and powers hereunder, excepting losses,
expenses and liabilities arising as a result of the Warrant Agent's
negligence or willful misconduct.
The Warrant Agent may resign its duties or the Company may
terminate the Warrant Agent and the Warrant Agent shall be
discharged from all further duties and liabilities hereunder
(except liabilities arising as a result of the Warrant Agent's own
negligence or willful misconduct), on 30 days' prior written notice
to the other party. At least 15 days prior to the date such
resignation is to become effective, the Warrant Agent shall cause
a copy of such notice of resignation to be mailed to the Registered
Holder of each Warrant Certificate. On such resignation or
termination the Company shall appoint a new warrant agent. If the
Company shall fail to make such appointment within a period of 30
days after it has been notified in writing of the resignation by
the Warrant Agent, then the registered holder of any Warrant
Certificate may apply to any court of competent jurisdiction for
the appointment of a new warrant agent.
After acceptance in writing of an appointment of a new warrant
agent is received by the Company, such new warrant agent shall be
vested with the same powers, rights, duties and responsibilities as
if it had been originally named herein as the Warrant Agent,
without any further assurance, conveyance, act or deed; provided,
however, if it shall be necessary or expedient to execute and
deliver any further assurance, conveyance, act or deed, the same
shall be done at the expense of the Company and shall be legally
and validly executed. The Company shall file a notice of
appointment of a new warrant agent with the resigning Warrant Agent
and shall forthwith cause a copy of such notice to be mailed to the
Registered Holder of each Warrant Certificate.
Any corporation into which the Warrant Agent or any new
warrant agent may be converted or merged, or any corporation
resulting from any consolidation to which the Warrant Agent or any
new warrant agent shall be a party, or any corporation succeeding
to the corporate trust business of the Warrant Agent shall be a
successor Warrant Agent under this Agreement, provided that such
corporation is eligible for appointment as a successor to the
Warrant Agent under the provisions of the preceding paragraph. Any
such successor Warrant Agent shall promptly cause notice of its
succession as Warrant Agent to be mailed to the Company and to the
Registered Holder of each Warrant Certificate. No further action
shall be required for establishment and authorization of such
successor warrant agent.
The Warrant Agent, its officers or directors and its
subsidiaries or affiliates may buy, hold or sell Warrants or other
securities of the Company and otherwise deal with the Company in
the same manner and to the same extent and with like effect as
though it were not Warrant Agent. Nothing herein shall preclude the
Warrant Agent from acting in any other capacity for the Company or
for any other legal entity.
11. MODIFICATION OF AGREEMENT. The Warrant Agent and the
Company may by supplemental agreement make any changes or
corrections in this Agreement (i) that they shall deem appropriate
to cure any ambiguity or to correct any defective or inconsistent
provision or mistake or error herein contained; or (ii) that they
may deem necessary or desirable and which shall not adversely
affect the interests of the holders of Warrant Certificates;
provided, however, this Agreement shall not otherwise be modified,
supplemented or altered in any other respect except with the
consent in writing of the registered holders of Warrant
Certificates representing not less than 51% of each class of
Warrants outstanding. Additionally, except as provided in Section
8, no change in the number or nature of the Warrant Shares
purchasable on exercise of a Warrant, increase the purchase price
therefor, or the acceleration of the Expiration Date of a Warrant
shall be made without the consent in writing of the Registered
Holder of the Warrant Certificate representing such Warrant, other
than such changes as are specifically prescribed or allowed by this
Agreement.
12. NOTICES. All notices, demands, elections, opinions or
requests (however characterized or described) required or
authorized hereunder shall be deemed given sufficiently if in
writing and sent by registered or certified mail, return receipt
requested and postage prepaid, or by tested telex, telegram or
cable to the last known address of the Company, the Warrant Agent
and if to the Registered Holder of a Purchase Warrant Certificate,
at the address of such holder as set forth on the books maintained
by the Warrant Agent.
13. BINDING AGREEMENT. This Agreement shall be binding upon
and inure to the benefit of the Company, the Warrant Agent and
their respective successors and assigns, and the holders from time
to time of Purchase Warrant Certificates. Nothing in this
Agreement is intended or shall be construed to confer upon any
other person any right, remedy or claim or to impose on any other
person any duty, liability or obligation.
14. FURTHER INSTRUMENTS. The parties shall execute and
deliver any and all such other instruments and shall take any and
all other actions as may be reasonably necessary to carry out the
intention of this Agreement.
15. SEVERABILITY. If any provision of this Agreement shall
be held, declared or pronounced void, voidable, invalid,
unenforceable, or inoperative for any reason by any court of
competent jurisdiction, government authority or otherwise, such
holding, declaration or pronouncement shall not affect adversely
any other provision of this Agreement, which shall otherwise remain
in full force and effect and be enforced in accordance with its
terms, and the effect of such holding, declaration or pronouncement
shall be limited to the territory or jurisdiction in which made.
16. WAIVER. All the rights and remedies of either party
under this Agreement are cumulative and not exclusive of any other
rights and remedies as provided by law. No delay or failure on the
part of either party in the exercise of any right or remedy arising
from a breach of this Agreement shall operate as a waiver of any
subsequent right or remedy arising from a subsequent breach of this
Agreement. The consent of any party where required hereunder to act
or occurrence shall not be deemed to be a consent to any other
action or occurrence.
17. GENERAL PROVISIONS. This Agreement shall be construed and
enforced in accordance with, and governed by, the laws of the State
of Nevada. Except as otherwise expressly stated herein, time is of
the essence in performing hereunder. This Agreement embodies the
entire agreement and understanding between the parties and
supersedes all prior agreements and understandings relating to the
subject matter hereof, and this Agreement may not be modified or
amended or any term or provisions hereof waived or discharged
except in writing signed by the party against whom such amendment,
modification, waiver or discharge is sought to be enforced. The
headings of this Agreement are for convenience in reference only
and shall not limit or otherwise affect the meaning hereof. This
Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which taken together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
GOURMET HERB GROWERS, INC.
By
Authorized Officer
THE WARRANT AGENT:
INTERWEST TRANSFER CO., INC.
By
Authorized Officer
WARRAGR1.wpd
Exhibit A to Warrant Agency Agreement
dated , 1999
NUMBER
W-A WARRANTS
VOID AFTER 5:00 P.M., UTAH TIME,
ON JUNE 30, 2002
CERTIFICATE FOR WARRANTS
FOR THE PURCHASE OF COMMON STOCK, $.001 PAR VALUE, OF
GOURMET HERB GROWERS, INC.
Incorporated Under The Laws Of The State of Nevada
CUSIP N
THIS WARRANT CERTIFICATE CERTIFIES THAT, for value received,
or its registered assigns ("Holder"), is the registered holder of
the number of warrants (Warrants) set forth above, issued by
Gourmet Herb Growers, Inc., a Nevada corporation ("Company").
This Warrant Certificate is issued under and subject to all of
the terms, provisions and conditions of the Warrant Agency
Agreement, dated as of , 1999 the ("Warrant
Agreement"), between the Company and Interwest Transfer Company,
Inc. (the "Warrant Agent"), to all of which terms, provisions and
conditions the holder of this Warrant consents by acceptance
hereof. The Warrant Agreement is incorporated herein by reference
and made a part hereof, and reference is made to the Warrant
Agreement for a full description of the rights, limitations of
rights, obligations, duties and immunities of the Warrant Agent,
the Company and the Holders of the Warrant Certificates. Copies of
the Warrant Agreement are available for inspection at the offices
of the Warrant Agent at 1981 East 4800 South, Suite 100, Salt Lake
City, Utah 84117, or may be obtained upon written request addressed
to the Company at 2302 Parley's Way, Salt Lake City, Utah 84109.
Each Warrant entitles the Holder thereof to purchase from the
Company, subject to the terms and conditions set forth hereinafter
and in the Warrant Agreement, one (1) fully paid and nonassessable
share of common stock, $.001 par value, of the Company ("Common
Stock") upon presentation and surrender of this Warrant Certificate
with the exercise form hereon duly completed and executed, at any
time prior to 5:00 p.m., Utah time, on June 30, 2002 ("Exercise
Period"), at the stock transfer office of the Warrant Agent or of
any successor warrant agent or, if there be no successor warrant
agent, at the corporate offices of the Company, and upon payment of
$1.00 per share of Common Stock ("Purchase Price") and any
applicable taxes paid either in cash, or by certified or official
bank check, payable in lawful money of the United States of America
to the order of the Company. The Holder may exercise all or any
whole number of Warrants evidenced hereby. The Purchase Price and
the number of shares of Common Stock issuable upon exercise of a
Warrant are subject to adjustment in certain events specified in
the Warrant Agreement.
The purchase rights represented by this Warrant Certificate
shall not be exercisable with respect to a fraction of a share of
Common Stock. As to any fractions of a share which would otherwise
be purchasable on the exercise of a Warrant, the Company shall pay
the cash value thereof determined as provided in the Warrant
Agreement. In case of the purchase of less than all the shares
purchasable under this Warrant Certificate, the Company shall
cancel this Warrant Certificate upon the surrender hereof and shall
execute and deliver a new Warrant Certificate of like tenor for the
balance of shares purchasable hereunder.
This Warrant Certificate shall not entitle the holder hereof
to any voting rights or other rights as a shareholder of the
Company, or to any other rights whatsoever except the rights herein
expressed and such as are set forth, and no dividends shall be
payable or shall accrue in respect of the Warrants represented by
this Warrant Certificate except to the extent that such Warrants
shall be exercised.
Upon 30 days' prior written notice, the Company may at any
time redeem all or any portion of the outstanding Warrants for
$0.01 per Warrant.
The Warrants are exercisable immediately, provided that a
current prospectus relating to the shares of Common Stock issuable
upon exercise hereof is in effect and that such shares are
qualified for sale or deemed to be exempt from qualification, under
applicable state securities laws. All Warrants not theretofore
exercised or redeemed shall expire at 5:00 p.m., Utah time on June
30, 2002, and any Warrant not exercised by such time shall become
void unless extended by the Company.
This Warrant Certificate, with or without other Certificates,
upon presentation and surrender to the Warrant Agent, any successor
warrant agent or, in the absence of any successor warrant agent, at
the corporate offices of the Company, may be exchanged for another
Warrant Certificate or Certificates evidencing in the aggregate the
same number of Warrants as the Warrant Certificate or Certificates
so surrendered, subject to such terms and conditions set forth in
the Warrant Agreement. If the Warrants evidenced by this Warrant
Certificate shall be exercised in part, the holder hereof shall be
entitled to receive upon surrender hereof another Warrant
Certificate or Certificates evidencing the number of Warrants not
so exercised.
The Company shall not be required to issue or deliver any
certificate for shares of Common Stock or other securities upon the
exercise of Warrants evidenced by this Warrant Certificate until
any tax which may be payable in respect thereof by the Holder
pursuant to the Warrant Agreement shall have been paid.
This Warrant Certificate shall not be valid or obligatory for
any purpose until countersigned by the Warrant Agent.
Except as otherwise above provided, this Warrant Certificate
and all rights hereunder are transferable by the registered holder
hereof in person or by its duly authorized attorney on the books of
the Warrant Agent upon surrender of this Warrant Certificate,
properly endorsed, to the Warrant Agent.
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be signed by its President and has caused a
facsimile of its corporate seal to be imprinted hereon.
GOURMET HERB GROWERS, INC.
Date of Issuance
By:
Rino Di Meo, President
COUNTERSIGNED:
( Corporate Seal ) Interwest Transfer Company, Inc.
As Warrant Agent
by:
Authorized Signature
WARCERTA.wpd
THOMAS G. KIMBLE & ASSOCIATES
311 South State Street, Suite 440
Salt Lake City, Utah 84111
(801) 531-0066
July 19, 1999
Board of Directors
Gourmet Herb Growers, Inc.
2302 Parley's Way
Salt Lake City, Utah 84109
Re: Opinion and Consent of Counsel with respect to
Registration Statement on Form SB-2
TO WHOM IT MAY CONCERN:
You have requested the opinion and consent of this law firm,
as counsel, with respect to the proposed issuance and public
distribution of certain securities of the Company pursuant to the
filing of a registration statement on Form SB-2 with the Securities
and Exchange Commission.
The proposed offering and public distribution relates to
1,000,000 shares of Common Stock, $.001 par value to be offered and
sold to the the holders of Warrants at a price of $1.00 per
share. The Warrants are being distributed as a dividend with respect
to the Common Stock of the Company to shareholders of record as of a
date to be determined prior to the effective date of the registration
statement. It is our opinion that the shares of Common Stock will,
when issued in accordance with the terms and conditions set forth in
the registration statement, be duly authorized, validly issued, fully
paid and nonassessable shares of common stock of the Company in
accordance with the corporation laws of the State of Nevada.
We hereby consent to be named as counsel for the Company in
the registration statement and prospectus included therein.
Sincerely yours,
THOMAS G. KIMBLE & ASSOCIATES
/s/Van L. Butler
Van L. Butler
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting
part of this Registration Statement on Form SB-2 for Gourmet
Herb Growers, Inc., of our report dated March 15, 1999,
relating to the December 31, 1998 financial statements of
Gourmet Herb Growers, Inc., which appears in such Prospectus.
We also consent to the reference to us under the heading
"Experts".
/s/ Pritchett, Siler & Hardy, P.C.
PRITCHETT, SILER & HARDY, P.C.
Salt Lake City, Utah
July 19, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF GOURMET HERB GROWERS, INC. AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998
<PERIOD-END> MAR-31-1999 DEC-31-1998
<CASH> 21,996 25,006
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 21,996 25,006
<PP&E> 2,834 2,904
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 24,830 27,910
<CURRENT-LIABILITIES> 604 244
<BONDS> 0 0
0 0
0 0
<COMMON> 1,600 1,600
<OTHER-SE> 22,626 26,066
<TOTAL-LIABILITY-AND-EQUITY> 24,830 27,910
<SALES> 120 5,606
<TOTAL-REVENUES> 120 5,606
<CGS> 623 1,516
<TOTAL-COSTS> 623 1,516
<OTHER-EXPENSES> 12,593 2,937
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (3,440) (8,503)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (3,440) (8,503)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (3,440) (8,503)
<EPS-BASIC> (.00) (.01)
<EPS-DILUTED> 0 0
</TABLE>
