U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the fiscal year ended December 31, 1999 Commission File No. 333-83375
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to .
GOURMET HERB GROWERS, INC.
(Name of small business issuer in its charter)
Nevada 87-0575571
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
2302 Parley's Way, Salt Lake City, Utah 84109
(Address of principal executive offices) (zip code)
Issuer's telephone number, including area code: (801) 466-4614
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Act: None
Check whether the Issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Issuer was required
to file such reports) and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
Check if no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is contained in this form, and no disclosure will be contained,
to the best of the Issuer's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. (Not applicable) [ ]
The Issuer's revenues for its most recent fiscal year. $ 8,614.00
As of April 5, 2000, the aggregate market value of voting stock held by
non-affiliates was approximately $112,500.
The number of shares outstanding of the Issuer's common stock at December 31,
1999: 1,600,000
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
(A) BUSINESS DEVELOPMENT.
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.
The Company then registered a public offering of its securities. Gourmet
Herb Growers declared a distribution of 800,000 common stock purchase warrants
to shareholders of record as of November 5, 1999. The Company filed with the
Securities and Exchange Commission a registration statement on Form SB-2,
Commission File No. 333-83375, which became effective November 5, 1999.
Pursuant thereto the Company then distributed 800,000 warrants. The warrants
are exercisable at $1.25 per share, on or before June 30, 2002.
(B) BUSINESS OF COMPANY.
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.
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
<PAGE>
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.
ITEM 2. PROPERTIES
Gourmet Herb Growers's principal business address is located at the
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 a portion of the acreage for gardening.
ITEM 3. LEGAL PROCEEDINGS.
The Company is not a party to any material pending legal proceedings
and, to the best of its knowledge, no action has been threatened by or against
the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matter was submitted to a vote of security holders through the
solicitation of proxies or otherwise during the fourth quarter of the fiscal
year covered by this report.
<PAGE>
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
(A) MARKET INFORMATION.
The Company's initial public offering was not closed until May, 1998.
The Common Stock of the Company was not quoted on the Electronic Bulletin
Board maintained by the National Association of Securities Dealers, Inc. until
October, 1998. The common stock is quoted under the symbol "GMBH", but has
not been traded in the over-the-counter market except on a very limited and
sporadic basis. The following sets forth high and low bid price quotations for
each calendar quarter during the last two fiscal years that trading occurred
or quotations were available. Such quotations reflect inter-dealer prices,
without retail mark-up, mark-down or commission and may not represent actual
transactions.
Quarter Ended High Low
March 31, 1998 (No shares traded)
June 30, 1998
September 30, 1998
December 31, 1998 .54 .50
March 31, 1999 .50 .50
June 30, 1999 .50 .50
September 30, 1999 .69 .50
December 31, 1999 .75 .69
(B) HOLDERS.
As of April 5, 2000, there were about 47 record holders of the Company's
Common Stock.
(C) DIVIDENDS.
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.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
PLAN OF OPERATIONS.
<PAGE>
Gourmet Herb Growers was only recently incorporated on January 22, 1998.
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 $7,163 for the year ended December 31, 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 $20,577
during the year ended December 31, 1999. General and administrative expenses
were $14,893 for the year ended December 31, 1998, resulting in a net loss of
$10,893; and $33,473 for the year ended December 31, 1999, resulting in a net
loss of $26,310. 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.
ITEM 7. FINANCIAL STATEMENTS.
See attached Financial Statements and Schedules.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
There are not and have not been any disagreements between the Company
and their accountants on any matter of accounting principles or practices or
financial statement disclosure.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
(A) IDENTIFY DIRECTORS AND EXECUTIVE OFFICERS.
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.
<PAGE>
<TABLE>
<S> <C> <C>
Term Served As Positions
Name of Director Age Director/Officer With Company
Rino Di Meo 54 Since inception President, Secretary-Treasurer
& Director
</TABLE>
This individual 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. The director holds no directorships in
any other company subject to the reporting requirements of the Securities
Exchange Act of 1934.
(B) IDENTIFY SIGNIFICANT EMPLOYEES.
None other than the person previously identified.
(C) FAMILY RELATIONSHIPS.
None
(D) INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS.
Except as described herein, no present officer or director of the
Company; 1) has had any petition filed, within the past five years, in Federal
Bankruptcy or state insolvency proceedings on such person's behalf or on
behalf of any entity of which such person was an officer or general partner
within two years of filing; or 2) has been convicted in a criminal proceeding
within the past five years or is currently a named subject of a pending
criminal proceeding; or 3) has been the subject, within the past five years,
of any order, judgment, decree or finding (not subsequently reversed,
suspended or vacated) of any court or regulatory authority involving violation
of securities or commodities laws, or barring, suspending, enjoining or
limiting any activity relating to securities, commodities or other business
practice.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
The Issuer is not subject to Section 16(a).
ITEM 10. EXECUTIVE COMPENSATION.
<PAGE>
The president is employed part time by Gourmet Herb Growers to do the
gardening work
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 1999 6,000
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.
COMPENSATION OF DIRECTORS.
None
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The Company has not entered into any contracts or arrangements with any
named executive officer which would provide such individual with a form of
compensation resulting from such individual's resignation, retirement or any
other termination of such executive officer's employment with the Company or
its subsidiary, or from a change-in-control of the Company or a change in the
named executive officer's responsibilities following a change-in-control.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
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.
<PAGE>
<TABLE>
<S> <C> <C> <C>
Title of Amount & Nature of % of
Name and Address Class Beneficial Ownership Class
Rino Di Meo Common 1,000,000 shares 63%
2302 Parley's Way
SLC, UT 84109
Lynn Dixon Common 150,000 shares 9%
311 S. State, #460
SLC, UT 84111
Melissa Epperson Common 150,000 shares 9%
1533 S. 1220 W.
Woods Cross, UT 84087
Brenda White Common 150,000 shares 9%
1359 N. General Dr.
SLC, UT 84116
All officers and Common 1,000,000 shares 63%
directors as a
group (1 person)
</TABLE>
The foregoing amounts include all shares these persons are deemed to
beneficially own regardless of the form of ownership.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company has entered into certain transactions with officers,
directors or affiliates of the Company which include the following:
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
<PAGE>
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 ended December 31, 1998, and $6,000 during the
year ended December 31, 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 1999, Gourmet Herb Growers sold
$2,070 (about 24% of total sales) of its production of herbs and vegetables to
the restaurant owned by the president.
Except as disclosed in this item, in notes to the financial statements
or elsewhere in this report, the Company is not aware of any indebtedness or
other transaction in which the amount involved exceeds $60,000 between the
Company and any officer, director, nominee for director, or 5% or greater
beneficial owner of the Company or an immediate family member of such person;
nor is the Company aware of any relationship in which a director or nominee
for director of the Company was also an officer, director, nominee for
director, greater than 10% equity owner, partner, or member of any firm or
other entity which received from or paid the Company, for property or
services, amounts exceeding 5% of the gross annual revenues or total assets of
the Company or such other firm or entity.
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
(A) EXHIBITS to this report are all documents previously filed which
are incorporated herein as exhibits to this report by reference to
registration statements and other reports previously filed by the Company
pursuant to the Securities Act of 1933 and the Securities Exchange Act of
1934.
(B) REPORTS ON FORM 8-K have not been filed during the last quarter of
the fiscal year ended December 31, 1999.
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
GOURMET HERB GROWERS, INC.
By: /s/ Rino Di Meo Date: April 5, 2000
Rino Di Meo, President and Secretary/Treasurer
Chief Executive Officer and
Chief Financial Officer
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and the
dates indicated.
By: /s/ Rino Di Meo Date: April 5, 2000
Rino Di Meo, President and Secretary/Treasurer
Chief Executive Officer and
Chief Financial Officer
<PAGE>
Supplemental Information to be Furnished With Reports Filed Pursuant to
Section 15(d) of the Exchange Act by Non Reporting Issuers
No annual report or proxy statement has been sent to security holders.
<PAGE>
GOURMET HERB GROWERS, INC.
FINANCIAL STATEMENTS
DECEMBER 31, 1999
<PAGE>
GOURMET HERB GROWERS, INC.
CONTENTS
PAGE
- Independent Auditors' Report 1
- Balance Sheet, December 31, 1999 2
- Statements of Operations, for the year ended
December 31, 1999 and from inception on
January 22, 1998 through December 31,
1998 and 1999 3
- Statement of Stockholders' Equity, from
inception on January 22, 1998 through
December 31, 1999 4
- Statements of Cash Flows, for the year ended
December 31, 1999 and from inception on
January 22, 1998 through December 31,
1998 and 1999 5
- Notes to Financial Statements 6 - 9
<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, 1999, and the related statements of
operations, stockholders' equity and cash flows for the year
ended December 31, 1999 and from inception on January 22, 1998
through December 31, 1998 and 1999. 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 audits 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 audits provide 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, 1999, and the
results of its operations and its cash flows for the year ended
December 31, 1999 and from inception on January 22, 1998 through
December 31, 1998 and 1999, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in
Note 7 to the financial statements, the Company has incurred
losses since its inception and has not yet been successful in
establishing profitable operations, raising substantial doubt
about its ability to continue as a going concern. Management's
plans in regards to these matters are also described in Note 7.
The financial statements do not include any adjustments that
might result from the outcome of these uncertainties.
/s/ Pritchett, Siler & Hardy, P.C.
PRITCHETT, SILER & HARDY, P.C.
February 2, 2000
Salt Lake City, Utah
<PAGE>
GOURMET HERB GROWERS, INC.
BALANCE SHEET
ASSETS
December 31,
1999
___________
CURRENT ASSETS:
Cash in bank $ 3,730
___________
Total Current Assets 3,730
PROPERTY, PLANT AND EQUIPMENT, net 3,267
___________
$ 6,997
___________
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 2,881
___________
Total Current Liabilities 2,881
___________
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 39,629
Deficit accumulated during the
development stage (37,113)
___________
Total Stockholders' Equity 4,116
___________
$ 6,997
___________
The accompanying notes are an integral part of this financial
statement.
<PAGE>
GOURMET HERB GROWERS, INC.
STATEMENTS OF OPERATIONS
From Inception
on January 22,
For the 1998 Through
Year Ended December 31
December 31, ____________________
1999 1998 1999
____________ _________ _________
REVENUE, net $ 8,614 $ 5,606 $ 14,220
COST OF SALES 1,451 1,516 2,967
____________ _________ _________
GROSS PROFIT 7,163 4,090 11,253
EXPENSES:
General and Administrative 33,473 14,893 48,366
____________ _________ _________
LOSS BEFORE INCOME TAXES (26,310) (10,803) (37,113)
CURRENT TAX EXPENSE - - -
DEFERRED TAX EXPENSE - - -
____________ _________ _________
NET LOSS $ (26,310) $(10,803) $(37,113)
____________ _________ _________
LOSS PER COMMON SHARE $ (.02) $ (.01) $ (.02)
____________ _________ _________
The accompanying notes are an integral part of these financial
statements.
<PAGE>
GOURMET HERB GROWERS, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
FROM THE DATE OF INCEPTION ON JANUARY 22, 1998
THROUGH DECEMBER 31, 1999
Deficit
Accumulated
Preferred Stock Common Stock 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 -
Rent-free use of
property from an
officer accounted for
as a contribution
to capital - - - - 2,300 -
Net loss for the
period ended
December 31, 1998 - - - - - (10,803)
________ _______ _________ _______ ___________ ___________
BALANCE, December
31, 1998 - - 1,600,000 1,600 36,869 (10,803)
Rent-free use of
property from
an officer
accounted for as
a contribution
to capital - - - - 2,760 -
Net loss for the
year ended
December 31, 1999 - - - - - (26,310)
________ ________ ________ ________ ___________ _________
BALANCE, December
31, 1999 - $ - 1,600,000 $ 1,600 $ 39,629 $ (37,113)
________ ________ ________ ________ ___________ _________
The accompanying notes are an integral part of this financial
statement.
<PAGE>
GOURMET HERB GROWERS, INC.
STATEMENTS OF CASH FLOWS
From Inception
on January 22,
For the 1998 Through
Year Ended December 31,
December 31, ________________
1999 1998 1999
____________ ________ ________
Cash Flows from Operating Activities:
Net loss $ (26,310) $(10,803) $ (37,113)
Adjustments to reconcile net
loss to net cash used by
operating activities:
Non-cash expense 2,760 2,300 5,060
Depreciation and amortization 336 274 610
Change in assets and liabilities:
Increase in accounts payable
and accrued expenses 2,637 244 2,881
____________ _________ _________
Net Cash (Used) by
Operating Activities (20,577) (7,985) (28,562)
____________ _________ _________
Cash Flows from Investing Activities:
Payments for building and equipment (699) (3,178) (3,877)
____________ _________ _________
Net Cash (Used) by
Investing Activities (699) (3,178) (3,877)
____________ _________ _________
Cash Flows from Financing Activities:
Proceeds from common stock issuance - 41,850 41,850
Payments for stock offering costs - (5,681) (5,681)
____________ _________ _________
Net Cash Provided by
Financing Activities - 36,169 36,169
____________ _________ _________
Net Increase (Decrease) in Cash (21,276) 25,006 3,730
Cash at Beginning of Period 25,006 - -
____________ _________ _________
Cash at End of Period $ 3,730 $ 25,006 $ 3,730
____________ _________ _________
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 year ended December 31, 1999:
An officer/shareholder is allowing the Company to use his
property for a greenhouse and to grow crops rent-free. The
value of the rent-free use of the property was estimated at
$2,760 for 1999 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 and to grow crops rent-free. The
value of the rent-free use of the property was estimated at
$2,300 for 1998 and was accounted for as a contribution to
capital.
The accompanying notes are an integral part of these financial
statements.
<PAGE>
GOURMET HERB GROWERS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Gourmet Herb Growers, Inc. (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.
Organization Costs - During 1998, the Company expensed
organization costs of $1,000, which reflect amounts expended to
organize the Company, in accordance with Statement of Position 98-
5.
Loss Per Share - The computation of loss per share is based on
the weighted average number of shares outstanding during the
periods presented in accordance with Statement of Financial
Accounting Standards (SFAS) No. 128, "Earning Per Share" [See
Note 6].
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.
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 charged to expense as incurred.
Depreciation is computed for financial statement purposes using
the straight-line method over the estimated useful lives of the
assets, which range from five to ten 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 - Statement of Financial
Accounting Standards (SFAS) No. 132, "Employer's Disclosure about
Pensions and Other Postretirement Benefits", SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities",
SFAS No. 134, "Accounting for Mortgage-Backed Securities." and
SFAS No. 135, "Rescission of FASB Statement No. 75 and Technical
Corrections" were recently issued. SFAS No. 132, 133, 134 and
135 have no current applicability to the Company or their effect
on the financial statements would not have been significant.
Revenue Recognition - The Company recognizes revenue upon
delivery of the product. Direct costs including fertilizer,
chemicals, seeds and soil are charged to cost of goods sold.
Indirect costs are included in general and administrative.
<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, 1999:
December 31,
1999
____________
Greenhouse and equipment $ 3,877
Less accumulated depreciation (610)
____________
$ 3,267
____________
Depreciation expense for the periods ended December 31, 1999 and
1998 amounted to $336 and $274, respectively.
NOTE 3 - CAPITAL STOCK AND WARRANTS
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, 1999.
Common Stock Warrants Offering -. During 1999 the Company
declared a dividend of 800,000 warrants to purchase common stock
("the warrants") to shareholders of record as of November 5,
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 to register the shares of common stock
underlying the warrants. 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.
<PAGE>
GOURMET HERB GROWERS, INC.
NOTES TO FINANCIAL STATEMENTS
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 No. 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, 1999, the Company
has available unused operating loss carryforwards of
approximately $31,500, which may be applied against future
taxable income and which expire in 2018 and 2019.
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 $10,700 as of December 31, 1999, with an
offsetting valuation allowance at December 31, 1999 of the same
amount. The change in the valuation allowance for 1999 is
approximately $8,200.
NOTE 5 - RELATED PARTY TRANSACTIONS
Management Compensation - During the year and period ended
December 31, 1999 and 1998 the Company paid $6,000 and $5,019,
respectively, 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 and Property - 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 and period
ended December 31, 1999 and 1998 was $2,760 and $2,300,
respectively.
Sales - During the year and period ended December 31, 1999 and
1998 the Company sold $2,070 (approximately 24% of total sales)
and $3,475 (approximately 62% of total sales) of the Company's
product to a restaurant owned by the Company's president.
Operating Expenses - For the year ended December 31, 1999, the
president was reimbursed $480 for automobile expenses related to
delivery of products to customers and $800 for utilities expense
related to operation of the greenhouse.
<PAGE>
GOURMET HERB GROWERS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 6 - LOSS PER SHARE
The following data show the amounts used in computing loss per
share for the periods presented:
From Inception
on January 22,
For the 1998 Through
Year Ended December 31,
December 31, ____________________
1999 1998 1999
____________ _________ __________
Loss from continuing operations
available to common shareholders
(numerator) $ (26,310) $ (10,803) $ (37,113)
____________ _________ __________
Weighted average number of
common shares outstanding
used in loss per share for the
period (denominator) 1,600,000 1,556,706 1,579,025
____________ _________ __________
Dilutive earnings (loss) per share was not presented, as the
Company had no common equivalent shares for all periods presented
that would affect the computation of diluted earnings (loss) per
share.
At December 31, 1999 the Company had 800,000 outstanding warrants
which were not used in the computation of loss per share because
their effect would be anti-dilutive.
NOTE 7 - GOING CONCERN
The accompanying financial statements have been prepared in
conformity with generally accepted accounting principles, which
contemplate continuation of the Company as a going concern.
However, the Company has incurred losses since its inception, and
has not yet been successful in establishing profitable
operations. These factors raise substantial doubt about the
ability of the Company to continue as a going concern. In this
regard, management is proposing to raise any necessary additional
funds not provided by operations through loans and/or through
additional sales of its common stock. There is no assurance that
the Company will be successful in raising this additional capital
or in achieving profitable operations. The financial statements
do not include any adjustments that might result from the outcome
of these uncertainties.
NOTE 8 - SUBSEQUENT EVENTS
Subsequent to December 31, 1999 a shareholder of the Company
loaned the Company $1,000.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
financial statements for the year ended December 31, 1999 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 3,730
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,730
<PP&E> 3,877
<DEPRECIATION> 610
<TOTAL-ASSETS> 6,997
<CURRENT-LIABILITIES> 2,881
<BONDS> 0
0
0
<COMMON> 1,600
<OTHER-SE> 2,516
<TOTAL-LIABILITY-AND-EQUITY> 6,997
<SALES> 8,614
<TOTAL-REVENUES> 8,614
<CGS> 1,451
<TOTAL-COSTS> 1,451
<OTHER-EXPENSES> 33,473
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (26,310)
<INCOME-TAX> 0
<INCOME-CONTINUING> (26,310)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (26,310)
<EPS-BASIC> (.02)
<EPS-DILUTED> (.02)
</TABLE>
