As filed with the Securities and Exchange Commission on November 4, 1999
Registration No. 333-83375
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
(Amendment No. 2)
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
(previously submitted)
<TABLE>
<S> <C> <C> <C> <C>
Title of Each Class Amount to be Proposed Maximum Proposed Maximum Amount
of Securities to be Registered Offering Price/Unit Aggregate Price of fee
Registered
Warrants; underlying 800,000 $ 1.25 $ 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.
800,000 SHARES OF COMMON STOCK
UNDERLYING COMMON STOCK PURCHASE WARRANTS
Gourmet Herb Growers, Inc. has registered:
bullet 800,000 warrants, to be distributed as soon as practicable after
the date of this prospectus to common stockholders of record as of
November __, 1999.
bullet 800,000 shares of common stock, to be issued upon exercise of the
warrants, at $1.25 per share underlying warrants.
Each warrant allows you to purchase one share of our common stock, at
any time until June 30, 2002, if this prospectus is still current or has been
updated. Whether a current prospectus is 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.
Our common stock is quoted on the NASD Electronic Bulletin Board under
the Symbol "GMBH". The current bid price quotation is $.50.
YOU SHOULD NOT PURCHASE THESE SECURITIES IF YOU CANNOT AFFORD TO RISK THE LOSS
OF YOUR ENTIRE INVESTMENT. INVESTING IN OUR COMMON STOCK INVOLVES SUBSTANTIAL
RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE 4.
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.
800,000 warrants will be distributed without cash consideration. 800,000
shares of common stock will be offered only to holders of the warrants at
$1.25 per share, or $1,000,000 in the aggregate if all warrants are exercised,
and will be sold by Gourmet Herb Growers without any underwriting discounts or
other commissions. The offering price is payable in cash upon exercise of the
warrants. No minimum number of warrants must be exercised, and no assurance
exists that any warrants will be exercised.
The date of this prospectus is , 1999
<PAGE>
TABLE OF CONTENTS Page
PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . 3
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
DILUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
COMPARATIVE DATA . . . . . . . . . . . . . . . . . . . . . . . . . . 6
USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
MARKET INFORMATION & DIVIDEND POLICY . . . . . . . . . . . . . . . . 7
MANAGEMENT'S DISCUSSION AND ANALYSIS . . . . . . . . . . . . . . . . 7
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
AVAILABLE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . .10
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
CERTAIN TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . .12
PRINCIPAL SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . .13
DESCRIPTION OF SECURITIES. . . . . . . . . . . . . . . . . . . . . .14
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . .16
LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . .17
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . F-1
<PAGE>
PROSPECTUS SUMMARY
Gourmet Herb Growers, Inc. is in the business of growing gourmet
herbs and vegetables for sale to and use by restaurants and
delicatessens. Our address is 2302 Parley's Way, Salt Lake City, Utah
84109. Our telephone number is (801) 466-4614.
THE OFFERING
Securities 800,000 shares of our common stock.
offered
Offering Prices $1.25 per share underlying the
warrants.
Plan of DistributionShares will be offered and sold without
discounts or other
commissions, to holders of the
warrants, upon exercise.
Use of Proceeds We could receive as much as $1,000,000
from sale of the
800,000 shares of common stock to be
issued upon
exercise of the warrants, if all
warrants are exercised. Any
proceeds will be used generally to
provide more working
capital, but have not been specifically
allocated, since we do
not know if any warrants will be exercised.
Transfer Agent Interwest Transfer Company, Inc., 1981
East 4800 South,
Suite 100, Salt Lake City, Utah 84117,
(801) 272-9294.
Securities OutstandingWe are authorized to issue up to
24,000,000 shares of
common stock and presently have
1,600,000 shares of
common stock issued and outstanding. We
have reserved
from our authorized capital 800,000
shares of common
stock for issuance upon exercise of the
warrants. We are
also authorized to issue up to
1,000,000 shares of preferred
stock in one or more series with
rights and preferences as
the board of directors may designate.
The board of directors
has not designated any series of
preferred stock.
Warrants Each warrant allows you to purchase one
share of common
stock at any time until June 30, 2002,
if this prospectus is
still current or has been updated. The
exercise price is $1.25
per share, with adjustment in certain
events. The warrants
can be redeemed by us for $.01 per
warrant on 30 days
notice at any time after the date of
this prospectus.
<PAGE>
RISK FACTORS
The securities involve a high degree of risk. You should carefully
consider these risk factors and all other information in this prospectus
before investing in Gourmet Herb Growers.
WE HAVE INCURRED NET LOSSES SINCE INCEPTION AND HAVE AN ACCUMULATED
DEFICIT. We do not know if or when the business may become profitable.
WE DEPEND UPON THE PRESIDENT FOR ALL OPERATIONS, FROM PLANTING TO SALES,
AND THE AFFILIATED RELATIONSHIP BETWEEN OUR HERB GROWING AND HIS RESTAURANT.
We do not know how long this arrangement may continue, nor how long the
services of this individual will continue to be available.
YOU ARE NOT ASSURED THAT ANY PROCEEDS WILL BE RECEIVED FROM EXERCISE OF
WARRANTS. This increases your risk if you exercise your warrants, because you
are not assured that any more warrants will be exercised or that we will
receive further funding. Proceeds may not be sufficient to defray offering
expenses. Because no minimum number of warrants must be exercised there is no
escrow of funds. Any proceeds received will immediately be retained by us to
be used in our business. The amount of capital currently available to us is
limited. If any proceeds from this offering and our existing capital are not
sufficient to enable us to develop and expand our business and generate a
profit, we may need additional financing, for which we have no commitments or
arrangements from commercial lenders or other sources.
YOU MAY NOT BE ABLE TO EXERCISE YOUR WARRANTS. You can exercise your
warrants only if the exercise is permitted under the securities laws of your
state, and only while this prospectus is current and effective. We intend to
update the prospectus as necessary to keep it current and maintain federal and
state registration or qualification for the exercise, but may not always do
so. Whether or not a current prospectus is effective, the warrants are
redeemable for $.01 per warrant at any time. If redeemed when no current
prospectus is effective, you will have no opportunity to exercise the
warrants, but will be compelled to accept the nominal redemption price.
ISSUANCE OF MORE STOCK IN THE FUTURE WILL REDUCE YOUR PROPORTIONATE
OWNERSHIP AND VOTING POWER AND/OR CREATE SECURITIES WITH DIVIDEND AND
LIQUIDATION PREFERENCES OVER COMMON STOCK. Directors can issue more common
and/or preferred stock without shareholder approval to the extent authorized.
We are authorized to issue 24,000,000 shares of common stock and 1,000,000
shares of preferred stock, the rights and preferences of which may be
designated in series by our board of directors. The board of directors has
not designated any series or issued any shares of preferred stock.
ANTI-TAKEOVER MEASURES MAY RESULT IN YOU RECEIVING LESS FOR YOUR STOCK
THAN YOU OTHERWISE MIGHT. The ability of directors, without stockholder
approval, to issue more shares of common stock and/or preferred stock could be
used as anti-takeover measures. These provisions could prevent, discourage or
delay a takeover attempt.
<PAGE>
YOU ARE NOT ASSURED YOU WILL BE ABLE TO SELL YOUR COMMON STOCK IN THE
FUTURE AT A PRICE WHICH EQUALS OR EXCEEDS THE EXERCISE PRICE. The exercise
price of the warrants was arbitrarily determined by us and set at a level
substantially in excess of prices recently paid for securities of the same
class. The price bears no relationship to our assets, book value, net worth
or other economic or recognized criteria of value. In no event should the
exercise price be regarded as an indicator of any future market price of our
securities.
YOU MAY NOT BE ABLE TO LIQUIDATE YOUR INVESTMENT READILY OR AT ALL WHEN
YOU NEED OR DESIRE TO SELL. Although our common stock is eligible for
quotation on the Electronic Bulletin Board maintained by the NASD, there has
been no active public trading market. You are not assured that an active
trading market will develop, or if a market does develop, that it will
continue. As a result, an investment in our common stock may be totally
illiquid.
SALES OF SUBSTANTIAL AMOUNTS OF COMMON STOCK IN THE PUBLIC MARKET COULD
DEPRESS THE MARKET PRICE. 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.
DILUTION
You will suffer substantial dilution in the purchase price of your stock
compared to the net tangible book value per share immediately after the
purchase. The exact amount of dilution will vary depending upon the number of
warrants exercised.
Dilution is the difference between the warrant exercise price of $1.25
per share, and the net tangible book value per share of common stock
immediately after its purchase. Net tangible book value per share is
calculated by subtracting total liabilities from total assets less intangible
assets, and then dividing by the number of shares of common stock then
outstanding. Based on the June 30, 1999, financial statements of Gourmet Herb
Growers, net tangible book value was $22,184 or about $.014 per common share.
Before exercise of any warrants, 1,600,000 shares of common stock are
outstanding.
If all the warrants get exercised, which is not assured, we would then
have 2,400,000 shares of common stock outstanding. The estimated pro forma
net tangible book value (which gives effect to receipt of the net proceeds
from the exercise and issuance of the underlying shares of common stock, but
does not take into consideration any other changes in net tangible book value
after June 30, 1999), would then be $1,002,184 or about $.42 per share. This
would result in dilution to persons exercising warrants of $.83 per share, or
66% of the exercise price of $1.25 per share. Net tangible book value per
share would increase to the benefit of present stockholders from $.014 before
the offering to $.42 after the offering, or an increase of $.406 per share
from exercise of the warrants.
The following table shows the estimated net tangible book value ("NTBV")
per share after exercise of the warrants and dilution to persons purchasing
the underlying common stock.
<PAGE>
<TABLE>
<S> <C> <C>
Exercise of all warrants:
Warrant exercise price/share $1.25
NTBV/share before exercise $.014
Increase from warrant exercise .406
Pro forma NTBV/share after exercise .42
Dilution $ .83
</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 on the warrants that are exercised.
COMPARATIVE DATA
The following chart shows prices paid for, and proportionate ownership
in Gourmet Herb Growers represented by, common stock purchased since inception
by initial shareholders and other present shareholders, compared to the price
that will be paid and proportionate ownership represented by common stock that
will be acquired by exercising warrant holders, assuming all warrants are
exercised.
<TABLE>
<S> <C> <C> <C> <C> <C>
Shares Owned Percent Cash Paid Percent Price/share
Initial 1,450,000 60.42% $ 4,350 .4% $.003
Shareholders
Other Shareholders 150,000 6.25% $ 37,500 3.6% $ .25
Warrant Holders 800,000 33.33% $1,000,000 96% $1.25
</TABLE>
USE OF PROCEEDS
The net proceeds from sale of the shares of common stock underlying the
warrants at the exercise price of $1.25 per share will vary depending upon the
total number of warrants exercised. If all warrants get exercised, we would
receive gross proceeds of $1,000,000. We do not know if all or any warrants
will be exercised. Regardless of the number of warrants exercised, we expect
to incur offering expenses estimated at $20,000 for legal, printing and other
costs in connection with the offering. Since we do not know that any warrants
will be exercised and there is no requirement that any minimum number of the
warrants be exercised, there are no escrow provisions. Any proceeds that are
received will be immediately available to provide more working capital to be
used for general corporate purposes. Proceeds have not been specifically
allocated, and the exact uses of the proceeds will depend on the amounts
received and the timing of receipt. Management's general intent is to use
whatever additional funds may be generated from warrant exercise to finance
further development and expansion of our business.
<PAGE>
MARKET INFORMATION & DIVIDEND POLICY
Our common stock 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 October 5,
1999, there were about 47 record holders of our common stock.
Our common stock is considered a low priced security under rules
promulgated by the Securities and Exchange Commission. Under these rules,
broker-dealers participating in transactions in these securities must first
deliver a risk disclosure document which describes risks associated with these
stocks, broker-dealers' duties, customers' rights and remedies, market and
other information, and make suitability determinations approving the customers
for these stock transactions based on financial situation, investment
experience and objectives. Broker-dealers must also disclose these
restrictions in writing, provide monthly account statements to customers, and
obtain specific written consent of each customer. With these restrictions,
the likely effect of designation as a low priced stock is to decrease the
willingness of broker-dealers to make a market for the stock, to decrease the
liquidity of the stock and increase the transaction cost of sales and
purchases of these stocks compared to other securities.
DIVIDEND POLICY
Gourmet Herb Growers has not previously paid any cash dividends on
common stock and does not anticipate or contemplate paying dividends on common
stock in the foreseeable future. Our present intention is to utilize all
available funds for the development of our business. The only restrictions
that limit the ability to pay dividends on common equity or that are likely to
do so in the future, are those restrictions imposed by law. Under Nevada
corporate law, no dividends or other distributions may be made which would
render a company insolvent or reduce assets to less than the sum of
liabilities plus the amount needed to satisfy outstanding liquidation
preferences.
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion and analysis should be read in conjunction with
our financial statements and the notes associated with them contained
elsewhere in this prospectus. This discussion should not be construed to
imply that the results discussed in this prospectus will necessarily continue
into the future or that any conclusion reached in this prospectus will
necessarily be indicative of actual operating results in the future. The
discussion represents only the best present assessment of management.
PLAN OF OPERATIONS.
Gourmet Herb Growers was only recently incorporated on January 22, 1998.
<PAGE>
Gourmet Herb Growers commenced planned principal operations and began to
generate revenues from sales of its produce during the first year of
operations in amounts sufficient to generate a gross profit, so it is not
still considered a development stage company for accounting and financial
reporting purposes. Gross profit of $4,090 was generated for the year ended
December 31, 1998, and $286 for the six months ended June 30, 1999. However,
revenues have not yet been generated in sufficient amounts to offset operating
costs. Operating activities have not provided any net cash flows to date, but
used net cash of $7,985 during the year ended December 31, 1998, and $4,896
during the six months ended June 30, 1999. General and administrative
expenses were $14,893 for the year ended December 31, 1998, resulting in a net
loss of $10,893; and $7,148 for the six months ended June 30, 1999, resulting
in a net loss of $6,862. 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. Capital commitments consist principally of management
compensation of $500 per month throughout the year, and the costs of seed,
fertilizer, equipment, etc. during the growing season. Management believes
existing funds will be sufficient to sustain Gourmet Herb Growers for at least
another year or growing season, during which time management hopes to increase
production and generate sufficient revenues to operate profitably, and
internally generate sufficient cash flows to fund operations on an ongoing
basis, but this is not assured. At this time, we do not know how long it will
be necessary to fund operations from existing capital.
BUSINESS
HISTORY AND DEVELOPMENT OF GOURMET HERB GROWERS
Gourmet Herb Growers, Inc. was recently incorporated under the laws of
the State of Nevada on January 22, 1998. In connection with its organization,
the founders contributed $4,350 cash to initially capitalize it in exchange
for 1,450,000 shares of common stock.
On April 2, 1998, Gourmet Herb Growers 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. Gourmet Herb
Growers 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.
BUSINESS OF GOURMET HERB GROWERS
Gourmet Herb Growers 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 Gourmet Herb Growers, 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.
<PAGE>
In addition to providing a source of vine ripened, fresh produce, the
president has engaged in these 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, like 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. Gourmet Herb Growers will typically be
involved in growing herbs and specialty vegetables from about May through
November. However, with funding, management believes that the volume of
business can be increased through various measures that can be taken;
including, among other things, effectively lengthening the local growing
season through green housing. During the winter months Gourmet Herb Growers
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 a facility, and believes that this will enable Gourmet Herb Growers
to achieve a 2-3 month head start in the spring on the local growing season.
In addition, another measure Gourmet Herb Growers has taken 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.
Gourmet Herb Growers relies and will continue to rely heavily upon the
president, Mr. Di Meo, for all operations, from planting to sales, in the
operation of this business. Gourmet Herb Growers also relies and will
continue to rely heavily upon the affiliated nature of its herb growing
business with the restaurant owned by the president, to sell most of its
produce. There is no assurance that it 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 Gourmet Herb Growers. We do not know if we will
be able to overcome competitive disadvantages we face as a small, start up
company with limited capital. If we cannot compete effectively, we will not
succeed.
FACILITIES AND EMPLOYEES
Gourmet Herb Growers's principal business address is located at the
<PAGE>
address of the president's restaurant in Salt Lake City, Utah. However,
Gourmet Herb Growers bases its gardening operations at the location of the
president's home in West Bountiful, Utah. At that location, the president has
about 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 Gourmet Herb Growers 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. Gourmet Herb Growers does not anticipate the need to hire more
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. Gourmet
Herb Growers may hire more employees and/or lease more ground or other
commercial facilities at such time in the future as our operations develop to
the point where the facilities and employees are needed, but the Company has
no commitments or arrangements for any facilities. We do not know about the
future availability of commercial facilities or terms on which Gourmet Herb
Growers may be able to lease these facilities in the future, nor do we know
how long the present arrangement may continue.
AVAILABLE INFORMATION
We filed a registration statement on Form SB-2 with the United States
Securities and Exchange Commission, under the Securities Act of 1933, covering
the securities in this offering. As permitted by rules and regulations of the
Commission, this prospectus does not contain all of the information in the
registration statement. For further information regarding both Gourmet Herb
Growers and the securities in this offering, we refer you to the registration
statement, including all exhibits and schedules, which may be inspected
without charge at the public reference facilities of the Commission's
Washington, D.C. office, 450 Fifth Street, N.W., Washington, D.C. 20549.
Copies may be obtained upon request and payment of prescribed fees.
As of the date of this prospectus, we became subject to the information
requirements of the Securities Exchange Act of 1934. Accordingly, we will
file reports and other information with the Commission. These materials will
be available for inspection and copying at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the following regional offices of the Commission: New York
Regional Office, 75 Park Place, New York, New York 10007; Chicago Regional
Office, 500 West Madison Street, Chicago, Illinois 60661. Copies of the
material may be obtained from the public reference section of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The
Commission maintains an Internet Web site located at http://www.sec.gov that
contains reports, proxy and information statements and other information
regarding issuers that file reports electronically with the Commission. The
site is accessible by the public through any Internet access service provider.
Copies of our Annual, Quarterly and other Reports filed with the
Commission, starting with the Quarterly Report for the first quarter ended
after the date of this prospectus (due 45 days after the end of the quarter)
will also be available upon request, without charge, by writing Gourmet Herb
Growers, Inc., 2302 Parley's Way, Salt Lake City, Utah 84109.
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table shows directors, executive officers and other
significant employees, their ages, and all offices and positions with Gourmet
Herb Growers. 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
Since inception
Rino Di Meo 54 President, Secretary-
Treasurer & Director
</TABLE>
This individual serves as the sole officer and director of Gourmet Herb
Growers. A brief description of his positions, background and business
experience follows:
RINO DI MEO serves as the sole officer and director. 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 how long a
director is to serve in that capacity.
EXECUTIVE COMPENSATION
The following table summarizes executive compensation paid or accrued
during the past year (the first year of operation) for our Chief Executive
Officer.
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
Gourmet Herb Growers has no written employment agreement with nor key
man life insurance on management. Management is entitled to reimbursement of
any out of pocket expenses reasonably and actually incurred on behalf of
Gourmet Herb Growers.
<PAGE>
CERTAIN TRANSACTIONS
In connection with the organization of Gourmet Herb Growers, its sole
officer/director and other stockholders paid an aggregate of $4,350 cash to
purchase 1,450,000 shares of common stock at a price of $.003 per share.
In May, 1998, Gourmet Herb Growers 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.
Gourmet Herb Growers relies and will continue to rely heavily upon its
president for all operations, from planting to sales. Also, because of the
affiliated nature of the herb growing with the restaurant owned by the
president, Gourmet Herb Growers has and will continue to sell most of its
produce to this restaurant. During 1998, the first year of operation, Gourmet
Herb Growers built a greenhouse on property owned by its president. The
property is used by Gourmet Herb Growers for gardening and green housing, at
no expense to it. Gourmet Herb Growers 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, and $2,500 during the six months ended
June 30, 1999. During 1998, Gourmet Herb Growers sold $3,475 (about 63% of
total sales) of its production of herbs and vegetables to the restaurant owned
by the president. During the six months ended June 30, 1999, Gourmet Herb
Growers sold $1,021 (about 75% of total sales) of its production of herbs and
vegetables to the restaurant owned by the president.
CONFLICTS OF INTEREST
Other than as described in this prospectus Gourmet Herb Growers is not
expected to have significant further dealings with affiliates. However, if
there are these 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 Gourmet Herb Growers, aside from the
matters described in this prospectus.
Management will attempt to resolve any conflicts of interest that may
arise in favor of Gourmet Herb Growers. Failure to do so could result in
fiduciary liability to management.
INDEMNIFICATION AND LIMITATION OF LIABILITY OF MANAGEMENT
The General Corporation Law of Nevada permits provisions in the
articles, by-laws or resolutions approved by shareholders which limit
liability of directors and officers for breach of fiduciary duty to certain
specified circumstances, namely, acts or omissions which involve intentional
misconduct, fraud or knowing violation of law, or unlawful stock purchases,
redemptions or payment of dividends. Our articles limit liability of officers
and directors to the full extent permitted by Nevada law. With these
exceptions this eliminates personal liability of a director or officer, to
<PAGE>
Gourmet Herb Growers or its shareholders, for monetary damages for breach of
fiduciary duty. Therefore a director or officer cannot be held liable for
damages to Gourmet Herb Growers or its shareholders for gross negligence or
lack of due care in carrying out his fiduciary duties as a director or
officer. Nevada law permits indemnification if a director or officer acts in
good faith in a manner reasonably believed to be in, or not opposed to, the
best interests of the corporation. A director or officer must be indemnified
as to any matter in which he defends himself successfully. Indemnification is
prohibited as to any matter in which the director or officer is adjudged
liable to the corporation.
This will limit your ability as shareholders to hold officers and
directors liable and collect monetary damages for breaches of fiduciary duty,
and requires us to indemnify officers and directors to the full extent
permitted by law. Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to directors, officers, and controlling
persons under these provisions or otherwise, we have been advised that in the
opinion of the Securities and Exchange Commission, indemnification is against
public policy as expressed in the Act and is unenforceable.
PRINCIPAL SHAREHOLDERS
The following table shows stock ownership information of officers,
directors and any others who we know to be beneficial owners of more than 5%
of our stock. Any person who has or shares the power to decide how to vote or
whether to dispose of stock is a beneficial owner.
<TABLE>
<S> <C> <C> <C>
Title of Amount & Nature of % of
Name and Address Class Beneficial Ownership Class
1,000,000 shares
Rino Di Meo Common 63%
2302 Parley's Way
SLC, UT 84109
Lynn Dixon 150,000 shares
311 S. State, #460 Common 9%
SLC, UT 84111
Melissa Epperson 150,000 shares
1533 S. 1220 W. Common 9%
Woods Cross, UT 84087
Brenda White 150,000 shares
1359 N. General Dr. Common 9%
SLC, UT 84116
All officers and 1,000,000 shares
directors as a group Common 63%
(1person)
</TABLE>
<PAGE>
The foregoing amounts include all shares these persons are deemed to
beneficially own regardless of the form of ownership.
DESCRIPTION OF SECURITIES
The following statements do not purport to be complete and are qualified
in their entirety by reference to the detailed provisions of our articles of
incorporation and bylaws, copies of which will be furnished to an investor
upon written request.
COMMON STOCK
We are authorized to issue 24,000,000 shares of common stock. 2,000,000
shares are presently issued and outstanding. We have reserved from authorized
but unissued shares a sufficient number of shares of common stock for issuance
of the shares in this offering. The shares of common stock to be issued on
completion of the offering, when issued according to the terms of the
offering, will be fully paid and non-assessable.
Holders of common stock, including shares in this offering, are entitled
to equal dividends and distributions, per share of common stock when, as and
if declared by the board of directors from funds legally available for that.
No holder of any shares of common stock has any pre-emptive right to subscribe
for any securities, nor are any common shares subject to redemption or
convertible into other securities of Gourmet Herb Growers. Upon liquidation,
dissolution or winding up of Gourmet Herb Growers, 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 common stock. All shares
of common stock now outstanding are fully paid, validly issued and non-
assessable. Each share of common stock is entitled to one vote on the
election of any director or any other matter upon which shareholders are
required or permitted to vote. Holders of common stock do not have cumulative
voting rights, so the holders of more than 50% of the shares voting for the
election of directors may elect all of the directors if they choose to, and in
that event, holders of the remaining shares will not be able to elect any
members to the board of directors.
PREFERRED STOCK
We are also presently authorized to issue 1,000,000 shares of preferred
stock. Under our articles of incorporation, the board of directors has the
power, without further action by the holders of the common stock, to designate
the relative rights and preferences of the preferred stock, and issue the
preferred stock in one or more series as designated by the board of directors.
The designation of rights and preferences could include preferences as to
liquidation, redemption and conversion rights, voting rights, dividends or
other preferences, any of which may be dilutive of the interest of the holders
of the common stock or the preferred stock of any other series. The issuance
of preferred stock may have the effect of delaying or preventing a change in
control without further shareholder action and may adversely effect the rights
and powers, including voting rights, of the holders of common stock. In
certain circumstances, the issuance of preferred stock could depress the
market price of the common stock. The board of directors effects a
<PAGE>
designation of each series of preferred stock by filing with the Nevada
Secretary of State a Certificate of Designation defining the rights and
preferences of each series. Documents so filed are matters of public record
and may be examined according to procedures of the Nevada Secretary of State,
or copies may be obtained from Gourmet Herb Growers.
WARRANTS
Gourmet Herb Growers has declared a distribution of 800,000 common
stock purchase warrants to shareholders of record as of November __, 1999. The
warrants are exercisable at $1.25 per share, on or before June 30, 2002, upon
effectiveness of registration of the warrants and underlying shares.
(a) Gourmet Herb Growers may redeem all or a portion of the
warrants, at $.01 per warrant, at any time upon 30 days' prior written
notice to the warrant holders. The warrants may be redeemed whether or
not a current registration statement is effective. Any warrant holder
who does not exercise his warrants before the Redemption Date, as set
forth on the Notice of Redemption, will forfeit his right to purchase
the shares of common stock underlying the warrants, and after the
Redemption Date any outstanding warrants referred to in the Notice will
become void and be canceled. If not redeemed, the warrants will expire
at the conclusion of the exercise period unless extended by us.
(b) Gourmet Herb Growers may at any time, and from time to time,
extend the exercise period of the warrants if written notice of the
extension is given to the warrant holders before the expiration date.
Also, Gourmet Herb Growers may, at any time, reduce the exercise price
by written notification to the holders. We do not presently contemplate
any extensions of the exercise period or reduction in the exercise price
of the warrants.
(c) The warrants contain anti-dilution provisions on the
occurrence of events like stock splits or stock dividends. The anti-
dilution provisions do not apply in a merger or acquisition. In
liquidation, dissolution or winding-up, warrant holders will not be
entitled to participate in the assets. Warrant holders have no voting,
preemptive, liquidation or other rights of a stockholder, and no
dividends may be declared on the warrants.
(d) The warrants may be exercised by surrendering to Gourmet Herb
Growers, a warrant certificate evidencing the warrants to be exercised,
together with the exercise form duly completed and executed, and paying
the exercise price per share in cash or check payable to Gourmet Herb
Growers. Stock certificates will be issued as soon thereafter as
practicable.
(e) The warrants will not be exercisable unless the warrants and
the underlying shares of common stock are registered or otherwise
qualified in applicable jurisdictions.
(f) The warrants will be nontransferable by their terms, cannot
be transferred without consent of Gourmet Herb Growers and will be
stamped with a restrictive legend.
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Of the 1,600,000 shares of our common stock outstanding before the
exercise of any warrants, 150,000 shares are currently freely tradeable. In
addition, the 800,000 shares of common stock underlying the warrants will
also be freely tradeable into the public market immediately upon issuance
or, to the extent held by affiliates, will be eligible for public resale
in the future under Rule 144. Sales of substantial amounts of this common
stock in the public market could depress the market price of the common stock.
Furthermore, all of the remaining shares of common stock presently outstanding
are restricted and/or affiliate securities which are not presently, but may in
the future be sold, under Rule 144, into any public market that may exist for
the common stock. Future sales by current shareholders could depress the
market prices of the common stock in any market.
In general, under Rule 144 as currently in effect, a person (or group of
persons whose shares are aggregated), including affiliates of an issuer, can
sell within any three-month period, an amount of restricted securities that
does not exceed the greater of 1% of the total number of outstanding shares of
the same class, or (if the Stock becomes quoted on NASDAQ or a stock
exchange), the reported average weekly trading volume during the four calendar
weeks preceding the sale; provided, that at least one year has elapsed since
the restricted securities being sold were acquired from the issuer or any
affiliate of the issuer, and provided further that certain other conditions
are also satisfied. If at least two years have elapsed since the restricted
securities were acquired from the issuer or an affiliate of the issuer, a
person who has not been an affiliate of the issuer for at least three months
can sell restricted shares under Rule 144 without regard to any limitations on
the amount.
PLAN OF DISTRIBUTION
This prospectus and the registration statement of which it is part
relate to the offer and sale of 800,000 shares of common stock to be issued
upon exercise of the warrants at an exercise price of $1.25 per share. The
warrants are being distributed as a dividend on the common stock to all the
shareholders of record as of November __, 1999. The warrants are exercisable
until June 30, 2002, if this prospectus is still current or has been updated.
The offering will be managed by Gourmet Herb Growers without an
underwriter, and the shares are being offered and sold without any discount,
sales commissions or other compensation being paid to anyone in connection
with the offering. Gourmet Herb Growers will pay the costs of preparing,
mailing and distributing this prospectus to the holders of the warrants.
Brokers, nominees, fiduciaries and other custodians are requested to forward
copies of this prospectus to the beneficial owners of securities held of
record by them, and the custodians will be reimbursed for their expenses.
We do not know that all or any shares will be sold, and there is no
requirement, or escrow provisions to assure that, any minimum amount of
warrants will be exercised. All funds received upon the exercise of any
warrants will be immediately available for our use.
<PAGE>
EXERCISE PROCEDURES
The warrants may be exercised in whole or in part by presentation of the
warrant certificate, with the purchase form on the reverse side filled out and
signed at the bottom, together with payment of the exercise price and any
applicable taxes at the principal office of Interwest Stock Transfer Co., 1981
East 4800 South, Suite 100, Salt Lake City, Utah 84117. Payment of the
exercise price shall be made in lawful money of the United States of America
in cash or by cashier's or certified check payable to the order of "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 Gourmet Herb Growers and the Transfer Agent and/or Warrant Agent will
promptly issue certificates for the underlying common stock. It is presently
estimated that certificates for the shares of common stock will be available
for delivery in Salt Lake City, Utah at the close of business on the tenth
business day after the receipt of all required documents and funds.
LEGAL MATTERS
Management knows of no material litigation that is pending or threatened
against Gourmet Herb Growers. The validity of the issuance of the shares in
this offering will be passed upon for Gourmet Herb Growers by Thomas G. Kimble
& Associates, Salt Lake City, Utah.
EXPERTS
The financial statements of Gourmet Herb Growers for the year ended
December 31, 1998, included in this prospectus have been examined by
Pritchett, Siler & Hardy, P.C., independent certified public accountants, as
indicated in their report, and are included in this prospectus in reliance on
the report given upon the authority of that firm as experts in accounting and
auditing.
<PAGE>
GOURMET HERB GROWERS, INC.
FINANCIAL STATEMENTS
DECEMBER 31, 1998
PRITCHETT, SILER & HARDY, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
<PAGE>
GOURMET HERB GROWERS, INC.
CONTENTS
PAGE
- Independent Auditors' Report 1
- Balance Sheet, December 31, 1998 2
- Statement of Operations, from inception on
January 22, 1998 through December 31, 1998 3
- Statement of Stockholders' Equity, from
inception on January 22, 1998 through
December 31, 1998 4
- Statement of Cash Flows, from inception on
January 22, 1998 through December 31, 1998 5
- Notes to Financial Statements 6 - 8
<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
1
<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 36,869
Deficit accumulated during the
development stage (10,803)
___________
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 14,893
_____________
LOSS BEFORE INCOME TAXES (10,803)
CURRENT TAX EXPENSE -
DEFERRED TAX EXPENSE -
_____________
NET LOSS $ (10,803)
_____________
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
Deficit
Preferred Stock Common Stock Accumulated
_______________ _____________________ Capital in During the
Excess of Development
Shares Amount Shares Amount Par 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 - - - - - (10,803)
_______ _______ ___________ _________ __________ ___________
BALANCE,
December 31, 1998 - $ - 1,600,000 $ 1,600 $34,569 $(10,803)
_______ _______ ___________ _________ __________ ___________
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 $ (10,803)
Adjustments to reconcile net
loss to net cash used by
operating activities:
Non-cash expense 2,300
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:
An officer/shareholder is allowing the Company to use his property for a
greenhouse rent-free. The value of the rent-free use of the property was
estimated at $2,300 and was accounted for as a contribution to capital.
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 $7,700, 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 $2,600 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 on the property of an officer/shareholder of the Company. The
officer/shareholder is allowing the Company to use his property at no expense
to the Company. However, the Company is recording rent expense of $230 per
month for the rent-free use of the property with an offsetting capital
contribution entry to capital in excess of par value of the same amount. Rent
expense for the year ended December 31, 1998 was $2,300.
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) $(10,803)
_________________
Weighted average number of
common shares outstanding
used to loss per share for the
period (denominator) 1,556,706
_________________
8
GOURMET HERB GROWERS, INC.
UNAUDITED BALANCE SHEETS
ASSETS
June 30, December 31,
1999 1998
___________ ___________
CURRENT ASSETS:
Cash in bank $ 20,110 $ 25,006
___________ ___________
Total Current Assets 20,110 25,006
___________ ___________
PROPERTY, PLANT AND EQUIPMENT:
Building, net 2,755 2,904
___________ ___________
$ 22,865 $ 27,910
___________ ___________
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 681 $ 244
___________ ___________
Total Current Liabilities 681 244
___________ ___________
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 38,249 36,869
Deficit accumulated during the
development stage (17,665) (10,803)
___________ ___________
Total Stockholders' Equity 22,184 27,666
___________ ___________
$ 22,865 $ 27,910
___________ ___________
The accompanying notes are an integral part of these financial statements.
1
<PAGE>
GOURMET HERB GROWERS, INC.
UNAUDITED STATEMENTS OF OPERATIONS
From Inception
For the Three on January 22,
Months Ended For the Six 1998 through
June 30, Months Ended June 30,
___________________ June 30, ___________________
1999 1998 1999 1998 1999
_________ _________ _____________ _________ _________
REVENUE $ 1,245 $ 693 $ 1,365 $ 693 $ 6,971
COST OF SALES 456 670 1,079 703 2,595
_________ _________ _____________ _________ _________
GROSS PROFIT (LOSS) 789 23 286 (10) 4,376
EXPENSES:
General and
administrative 3,981 9,148 7,148 10,633 22,041
_________ _________ _____________ _________ _________
LOSS BEFORE INCOME
TAXES (3,192) (9,125) (6,862) (10,623) (17,665)
CURRENT TAX EXPENSE - - - - -
DEFERRED TAX EXPENSE - - - - -
_________ _________ _____________ _________ _________
NET LOSS $ (3,192) $ (9,125) $ (6,862) $(10,623) $(17,665)
_________ _________ _____________ _________ _________
LOSS PER COMMON
SHARE $ (.00) $ (.01) $ (.00) $ (.01) $ (.01)
_________ _________ _____________ _________ _________
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
GOURMET HERB GROWERS, INC.
UNAUDITED STATEMENTS OF CASH FLOWS
From Inception
on January 22,
For the Six 1998 through
Months Ended June 30,
June 30, ______________________
1999 1998 1999
__________ __________ __________
Cash Flows from Operating Activities:
Net loss $ (6,862) $(10,623) $(17,665)
Adjustments to reconcile net
loss to net cash used by
operating activities:
Non-cash expense 1,380 920 3,680
Depreciation 149 105 423
Change in assets and liabilities:
Increase in accounts payable
and accrued expenses 437 4,319 681
__________ __________ __________
Net Cash (Used) by Operating
Activities (4,896) (5,279) (12,881)
__________ __________ __________
Cash Flows from Investing Activities:
Payments for building and equipment - (3,178) (3,178)
__________ __________ __________
Net Cash (Used) by Investing
Activities - (3,178) (3,178)
__________ __________ __________
Cash Flows from Financing Activities:
Proceeds from common stock issuance - 41,850 41,850
Payments for stock offering costs - (1,362) (5,681)
__________ __________ __________
Net Cash Provided by Financing
Activities - 40,488 36,169
__________ __________ __________
Net Increase in Cash (4,896) 32,031 20,110
Cash at Beginning of Period 25,006 - -
__________ __________ __________
Cash at End of Period $ 20,110 $ 32,031 $ 20,110
__________ __________ __________
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 June 30, 1999:
An officer/shareholder is allowing the Company to use his property for a
greenhouse rent-free. The value of the rent-free use of the property was
estimated at $1,380 and was accounted for as a contribution to capital.
For the period ended December 31, 1998:
An officer/shareholder is allowing the Company to use his property for a
greenhouse rent-free. The value of the rent-free use of the property was
estimated at $2,300 and was accounted for as a contribution to capital.
The accompanying notes are an integral part of these financial statements.
3
<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 delicatessens. 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 June 30, 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
June 30, 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 Accounting Standards ("SFAS") No. 128, "Earning
Per Share" [See Note 2].
Cash and Cash Equivalents - For purposes of the financial statements, 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.
4
<PAGE>
GOURMET HERB GROWERS, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE 2 - LOSS PER SHARE
The following data show the amounts used in computing loss per share for the
periods ended June 30, 1999 and 1998:
From Inception
For the Three on January 22,
Months Ended For the Six 1998 through
June 30, Months Ended June 30,
___________________ June 30, ___________________
1999 1998 1999 1998 1999
_________ _________ ____________ _________ _________
Loss from continuing
operations available
to common shareholders
(numerator) $ (3,192) $ (9,125) $ (6,862) $(10,623) $(17,665)
_________ _________ ____________ _________ _________
Weighted average number
of common shares
outstanding used in loss
per share for the period
(denominator) 1,600,000 1,600,000 1,600,000 1,506,604 1,571,660
_________ _________ ____________ _________ _________
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 June 30, 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". SFAS
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 June 30, 1999, the Company has available unused
operating loss carryforwards of approximately $13,300, which may be applied
against future taxable income and which expire in 2019.
5
<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 $4,500 and
$2,900 as of June 30, 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 $2,300 for the six
months ended June 30, 1999.
NOTE 5 - RELATED PARTY TRANSACTIONS
Management Compensation - During the six months ended June 30, 1999 the
Company paid $2,500 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 on the property of an officer/shareholder of the Company. The
officer/shareholder is allowing the Company to use his property at no expense
to the Company. However, the Company is recording rent expense of $230 per
month for the rent-free use of the property with an offsetting capital
contribution to capital in excess of par value of the same amount. Rent
expense for the six months ended June 30, 1999 was $1,380.
Sales - During the six months ended June 30, 1999 the Company sold $1,021
(approximately 75% of total sales) of the Company's product to a restaurant
owned by the Company's president.
NOTE 6 - PROPERTY, PLANT AND EQUIPMENT
The following is a summary of property, plant and equipment, at cost, less
accumulated depreciation:
June 30, December 31,
1999 1998
___________ ___________
Greenhouse $ 3,178 $ 3,178
Less accumulated depreciation (423) (274)
___________ ___________
$ 2,755 $ 2,904
___________ ___________
Depreciation expense for the six months ended June 30, 1999 amounted to $149.
6
<PAGE>
GOURMET HERB GROWERS, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE 7 - SUBSEQUENT EVENTS
Proposed Common Stock Warrants Offering - In July 1999, the Company filed a
registration statement with the United States Securities and Exchange
Commission on Form SB-2 under the Securities Act of 1933. The Company
proposes to declare a dividend of 800,000 warrants to purchase common stock
("the warrants") to shareholders of record as of the date of the registration
statement. Each warrant allows the holder to acquire one share of common
stock at $1.25 per share. The warrants are exercisable at any time until June
30, 2002. 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. Direct offering costs are expected to be approximately $20,000. The
Company has not incurred any offering costs as of June 30, 1999, but any such
costs will be netted against the proceeds of the proposed offering.
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 in this offering. If
given or made, the information or
representations must not be relied upon
as having been authorized by Gourmet
Herb Growers. This prospectus does not
constitute an offer to sell or a solicitation
of an offer to buy any of the securities
covered in this offering in any jurisdiction
or to any person to whom it is unlawful to
make the offer or solicitation in the
jurisdiction. Neither the delivery of this
prospectus nor any sale made hereunder
shall, in any circumstances, create any
implication that there has been no change
in the affairs of Gourmet Herb Growers
since the date of this prospectus.
Until [90 days after the date of this
prospectus], all dealers that effect
transactions in these securities, whether
or not participating in this offering, may
be required to deliver a prospectus. This
is in addition to the dealers' obligation to
deliver a prospectus when acting as
underwriters and with respect to their
unsold allotments or subscriptions.
GOURMET HERB GROWERS, INC.
800,000 shares
Common Stock
PROSPECTUS
, 1999
<PAGE>
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. Indemnification of Directors and Officers
The statutes, charter provisions, bylaws, contracts or other arrangements
under which controlling persons, directors or officers of the registrant are
insured or indemnified in any manner against any liability which they may
incur in such capacity are as follows:
(a) Section 78.751 of the Nevada Business Corporation Act provides that each
corporation shall have the following powers:
1. A corporation may indemnify any person who was or is a party or is
threatened to be made party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
except an action by or in the right of the corporation, by reason of the fact
that he is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses, including attorneys' fees, judgments,
fines and amounts paid in settlement actually and reasonably incurred by him
in connection with the action, suit or proceeding if he acted in good faith
and in a manner which he reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, does not, of
itself create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and that, with respect to any criminal action or
proceeding, he had reasonable cause to believe that his conduct was unlawful.
2. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses,
including amounts paid in settlement and attorneys' fees actually and
reasonably incurred by him in connection with the defense or settlement of
the action or suit if he acted in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation. Indemnification may not be made for any claim, issue or matter
as to which such a person has been adjudged by a court of competent
jurisdiction, after exhaustion of all appeals therefrom, to be liable to the
corporation or for amounts paid in settlement to the corporation, unless and
only to the extent that the court in which the action or suit was brought or
other court of competent jurisdiction, determines upon application that in
view of all the circumstances of the case, the person is fairly and reasonably
entitled to indemnity for such expenses as the court deems proper.
3. To the extent that a director, officer, employee or agent of a corporation
has been successful on the merits or otherwise in defense of any action, suit
or proceeding referred to in subsections 1 and 2, or in defense of any claim,
issue or matter therein, he must be indemnified by the corporation against
<PAGE>
expenses, including attorneys' fees, actually and reasonably incurred by him
in connection with the defense.
4. Any indemnification under subsections 1 and 2, unless ordered by a court
or advanced pursuant to subsection 5, must be made by the corporation only as
authorized in the specific case upon a determination that indemnification of
the director, officer, employee or agent is proper in the circumstances. The
determination must be made:
(a) By the stockholders;
(b) By the board of directors by majority vote of a quorum consisting of
directors who were not parties to the act, suit or proceeding;
(c) If a majority vote of a quorum consisting of directors who were not
parties to the act, suit or proceeding so orders, by independent legal
counsel, in a written opinion; or
(d) If a quorum consisting of directors who were not parties to the act, suit
or proceeding cannot be obtained, by independent legal counsel in a written
opinion.
5. The certificate or articles of incorporation, the bylaws or an agreement
made by the corporation may provide that the expenses of officers and
directors incurred in defending a civil or criminal action, suit or proceeding
must be paid by the corporation as they are incurred and in advance of the
final disposition of the action, suit or proceeding, upon receipt of an
undertaking by or on behalf of the director or officer to repay the amount if
it is ultimately determined by a court of competent jurisdiction that he is
not entitled to be indemnified by the corporation. The provisions of this
subsection do not affect any rights to advancement of expenses to which
corporate personnel other than director of officers may be entitled under any
contract or otherwise by law.
6. The indemnification and advancement of expenses authorized in or ordered
by a court pursuant to this section:
(a) Does not exclude any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under the
certificate or articles of incorporation or any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, for either an action in
his official capacity or an action in another capacity while holding his
office, except that indemnification, unless ordered by a court pursuant to
subsection 2 or for the advancement of expenses made pursuant to subsection 5,
may not be made to or on behalf of any director or officer if a final
adjudication establishes that his acts or omissions involved intentional
misconduct, fraud or a knowing violation of the law and was material to the
cause of action.
(b) Continues for a person who has ceased to be a director, officer, employee
or agent and inures to the benefit of the heirs, executors and administrators
of such a person."
(b) The registrant's Articles of Incorporation limit liability of its
Officers and Directors to the full extent permitted by the Nevada Business
Corporation Act.
<PAGE>
ITEM 25. Other Expenses of Issuance and Distribution*
The following table sets forth all estimated costs and expenses, other than
underwriting discounts, commissions and expense allowances, payable by the
registrant in connection with the maximum offering for the securities included
in this registration statement:
Amount
SEC registration fee $ 278.00
Blue sky fees and expenses 1,500.00
Printing and shipping expenses 500.00
Legal fees and expenses 15,000.00
Accounting fees and expenses 1,000.00
Transfer and Miscellaneous expenses 2,000.00
-----------------
Total $ 20,000.00
* All expenses are estimated except the Commission filing fee.
ITEM 26. Recent Sales of Unregistered Securities
In connection with the organization of the Company, its sole
officer/director and three 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, to 56 investors 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 *
* exhibit previously filed
ITEM 28. Undertakings
The registrant hereby undertakes that it will:
(1) File, during any period in which it offers or sells securities, a post-
effective amendment to this Registration Statement to:
(i) Include any prospectus required by section 10(a)(3) of the Securities Act
of 1933;
(ii) Include any additional or changed material information on the plan of
distribution; and
(iii) Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the
Registration Statement.
(2) For determining any liability under the Securities Act, treat each post-
effective amendment as a new Registration Statement of the securities offered,
and the offering of the securities at that time to be the initial bona fide
offering.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements of filing on Form SB-2 and authorized this
Registration Statement to be signed on its behalf by the undersigned, in the
City of Salt Lake, State of Utah, on November 3, 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: November 3, 1999
Rino Di Meo, Director
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), 800,000 Common
Stock Purchase Warrants (the "Warrants");
WHEREAS, in conjunction with the potential exercise of the
Warrants, the Company anticipates the issuance of up to 800,000
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 $1.25 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
$1.25 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 permitted by the Company, this Warrant Certificate
and all rights hereunder are nontransferable. If and only if permitted
by the Company, a transfer by the registered holder hereof in person
or by its duly authorized attorney, may be made 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
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of
this Amendment No. 2 to the 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
November 3, 1999
