U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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
September 30, 1999, or
[ ] Transition report pursuant to section 13 or 15(d) of the
Securities Exchange act of 1934 for the transition period from
to
Commission File No. 000-26017
GOURMET GIFTS, INC.
(Name of Small Business Issuer as specified in its charter)
Nevada 880375818
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
253 D'Emerald, Sparks, Nevada 89434
(Address of Principal Executive Offices and Zip Code)
Issuer's Telephone Number: (702) 254-5069
Securities registered under Section 12(b) of the Act: None
Securities registered under Section 12(g) of the Act: common
stock, $.001 par value.
Check whether the issuer (1) filed all reports required to be
filed by sections 13 or 15(d) of the Exchange Act during the past
12 months (or 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 [ ] No [X]
Check if there is no disclosure of delinquent filers in response
to Item 405 of Regulation S-B in this form, and no disclosure
will be contained, to the best of registrant'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. [ ]
The Registrant's revenues for its most recent fiscal year:
$6,015
The aggregate market value of voting stock held by non-
affiliates: $26,500
As of December 20, 2000, the Registrant had outstanding 896,000
shares of common stock, par value $0.001.
Documents incorporated by reference: None.
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TABLE OF CONTENTS
ITEM NUMBER AND CAPTION Page
Part I
1. Description of Business 3
2. Description of Property 7
3. Legal Proceedings 7
4. Submission of Matters to a Vote of Security Holders 7
Part II
5. Market for Common Equity and Related Stockholder 7
Matters
6. Management's Discussion and Analysis and Plan of 8
Operation
7. Financial Statements 9
8. Changes in and Disagreements with Accountants 9
on Accounting and Financial Disclosure
Part III
9. Directors, Executive Officers, Promoters and Control 10
Persons; Compliance with Section 16(a) of the
Exchange Act
10. Executive Compensation 11
11. Security Ownership of Certain Beneficial Owners and 11
Management
12. Certain Relationships and Related Transactions 13
13. Exhibits and Reports on Form 8-K 13
Signatures 14
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FORWARD-LOOKING STATEMENT NOTICE
When used in this report, the words "may," "will," "expect,"
"anticipate," "continue," "estimate," "project," "intend," and
similar expressions are intended to identify forward-looking
statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of
1934 regarding events, conditions, and financial trends that may
affect the Company's future plans of operations, business
strategy, operating results, and financial position. Persons
reviewing this report are cautioned that any forward-looking
statements are not guarantees of future performance and are
subject to risks and uncertainties and that actual results may
differ materially from those included within the forward-looking
statements as a result of various factors. Such factors are
discussed under the headings "Item 1. Description of Business,"
and "Item 6. Management's Discussion and Analysis of Financial
Condition and Results of Operations," and also include general
economic factors and conditions that may directly or indirectly
impact the Company's financial condition or results of
operations.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
History
Gourmet Gifts, Inc., (the "Company") was incorporated in the
State of Nevada on September 24, 1997. The purpose of the
Company was to engage in the catalogue retail gift business. The
Company's principal product entailed the packaging, sale and
delivery of seasonal gourmet food and beverage items. Such items
included fruits, pastries, steaks, candies, nuts, wines,
champagnes, coffees and other seasonal items targeting the
respective holiday.
In September of 1998, the Company registered with the
Securities Division of the Nevada Secretary of State and sold its
common stock under the federal exemption of Rule 504 of
Regulation D, and successfully raised $32,300 in cash. With
these funds, the Company marketed its product through the 1998
holiday season by mailing brochures and flyers to personal
contacts of the Company's officers and directors, and to certain
professionals like realtors and insurance agents who had a
potential need for the Company's product. The marketing campaign
targeted the Las Vegas and Reno-Tahoe areas of Nevada. However,
the Company's venture did not prove successful. In August of
1999, the Company abandoned the gourmet gift catalogue business,
sold the related inventory, and decided to pursue other business
opportunities. Since that date, the Company has been dormant
with no activity other than seeking to acquire an interest in a
business with long-term growth potential.
The Company currently has no commitment or arrangement to
participate in a business and cannot now predict what type of
business it may enter into or acquire. It is emphasized that the
business objectives discussed herein are extremely general and
are not intended to be restrictive on the discretion of the
Company's management.
Selection of a Business
The Company anticipates that businesses for possible
acquisition will be referred by various sources, including its
officers and directors, professional advisors, securities broker-
dealers, venture capitalists, members of the financial community,
and others who may present unsolicited proposals. The Company
will not engage in any general solicitation or advertising for a
business opportunity, and will rely on personal contacts of its
officers and directors and their affiliates, as well as indirect
associations between them and other business and professional
people. By relying on "word of mouth", the Company may be
limited in the number of potential acquisitions it can identify.
While it is not presently anticipated
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that the Company will engage unaffiliated professional firms
specializing in business acquisitions or reorganizations, such
firms may be retained if management deems it in the best interest
of the Company.
Compensation to a finder or business acquisition firm may
take various forms, including one-time cash payments, payments
based on a percentage of revenues or product sales volume,
payments involving issuance of securities (including those of the
Company), or any combination of these or other compensation
arrangements. Consequently, the Company is currently unable to
predict the cost of utilizing such services.
The Company will not restrict its search to any particular
business, industry, or geographical location, and management
reserves the right to evaluate and enter into any type of
business in any location. The Company may participate in a newly
organized business venture or a more established company entering
a new phase of growth or in need of additional capital to
overcome existing financial problems. Participation in a new
business venture entails greater risks since in many instances
management of such a venture will not have proved its ability,
the eventual market of such venture's product or services will
likely not be established, and the profitability of the venture
will be unproved and cannot be predicted accurately. If the
Company participates in a more established firm with existing
financial problems, it may be subjected to risk because the
financial resources of the Company may not be adequate to
eliminate or reverse the circumstances leading to such financial
problems.
In seeking a business venture, the decision of management
will not be controlled by an attempt to capitalize on any
anticipated or perceived appeal of a specific industry,
management group, product, or industry, but will be based on the
business objective of seeking long-term capital appreciation in
the real value of the Company.
The analysis of new businesses will be undertaken by or
under the supervision of the officers and directors. In
analyzing prospective businesses, management will consider, to
the extent applicable, the available technical, financial, and
managerial resources; working capital and other prospects for the
future; the nature of present and expected competition; the
quality and experience of management services which may be
available and the depth of that management; the potential for
further research, development, or exploration; the potential for
growth and expansion; the potential for profit; the perceived
public recognition or acceptance of products, services, or trade
or service marks; name identification; and other relevant
factors.
The decision to participate in a specific business may be
based on management's analysis of the quality of the other firm's
management and personnel, the anticipated acceptability of new
products or marketing concepts, the merit of technological
changes, and other factors which are difficult, if not
impossible, to analyze through any objective criteria. It is
anticipated that the results of operations of a specific firm may
not necessarily be indicative of the potential for the future
because of the requirement to substantially shift marketing
approaches, expand significantly, change product emphasis, change
or substantially augment management, and other factors.
The Company will analyze all available factors and make a
determination based on a composite of available facts, without
reliance on any single factor. The period within which the
Company may participate in a business cannot be predicted and
will depend on circumstances beyond the Company's control,
including the availability of businesses, the time required for
the Company to complete its investigation and analysis of
prospective businesses, the time required to prepare appropriate
documents and agreements providing for the Company's
participation, and other circumstances.
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Acquisition of a Business
In implementing a structure for a particular business
acquisition, the Company may become a party to a merger,
consolidation, or other reorganization with another corporation
or entity; joint venture; license; purchase and sale of assets;
or purchase and sale of stock, the exact nature of which cannot
now be predicted. Notwithstanding the above, the Company does
not intend to participate in a business through the purchase of
minority stock positions. On the consummation of a transaction,
it is likely that the present management and shareholders of the
Company will not be in control of the Company. In addition, a
majority or all of the Company's directors may, as part of the
terms of the acquisition transaction, resign and be replaced by
new directors without a vote of the Company's shareholders.
In connection with the Company's acquisition of a business,
the present shareholders of the Company, including officers and
directors, may, as a negotiated element of the acquisition, sell
a portion or all of the Company's common stock held by them at a
significant premium over their original investment in the
Company. It is not unusual for affiliates of the entity
participating in the reorganization to negotiate to purchase
shares held by the present shareholders in order to reduce the
number of "restricted securities" held by persons no longer
affiliated with the Company and thereby reduce the potential
adverse impact on the public market in the Company's common stock
that could result from substantial sales of such shares after the
restrictions no longer apply. As a result of such sales,
affiliates of the entity participating in the business
reorganization with the Company would acquire a higher percentage
of equity ownership in the Company. Public investors will not
receive any portion of the premium that may be paid in the
foregoing circumstances. Furthermore, the Company's shareholders
may not be afforded an opportunity to approve or consent to any
particular stock buy-out transaction.
In the event sales of shares by present shareholders of the
Company, including officers and directors, is a negotiated
element of a future acquisition, a conflict of interest may arise
because directors will be negotiating for the acquisition on
behalf of the Company and for sale of their shares for their own
respective accounts. Where a business opportunity is well suited
for acquisition by the Company, but affiliates of the business
opportunity impose a condition that management sell their shares
at a price which is unacceptable to them, management may not
sacrifice their financial interest for the Company to complete
the transaction. Where the business opportunity is not well
suited, but the price offered management for their shares is
high, management will be tempted to effect the acquisition to
realize a substantial gain on their shares in the Company.
Management has not adopted any policy for resolving the foregoing
potential conflicts, should they arise, and does not intend to
obtain an independent appraisal to determine whether any price
that may be offered for their shares is fair. Stockholders must
rely, instead, on the obligation of management to fulfill its
fiduciary duty under state law to act in the best interests of
the Company and its stockholders.
It is anticipated that any securities issued in any such
reorganization would be issued in reliance on exemptions from
registration under applicable federal and state securities laws.
In some circumstances, however, as a negotiated element of the
transaction, the Company may agree to register such securities
either at the time the transaction is consummated, under certain
conditions, or at specified times thereafter. Although the terms
of such registration rights and the number of securities, if any,
which may be registered cannot be predicted, it may be expected
that registration of securities by the Company in these
circumstances would entail substantial expense to the Company.
The issuance of substantial additional securities and their
potential sale into any trading market that may develop in the
Company's securities may have a depressive effect on such market.
While the actual terms of a transaction to which the Company
may be a party cannot be predicted, it may be expected that the
parties to the business transaction will find it desirable to
structure the acquisition as a so-called "tax-free" event under
sections 351 or 368(a) of the Internal Revenue Code of
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1986, (the "Code"). In order to obtain tax-free treatment under
section 351 of the Code, it would be necessary for the owners of
the acquired business to own 80% or more of the voting stock of
the surviving entity. In such event, the shareholders of the
Company would retain less than 20% of the issued and outstanding
shares of the surviving entity. Section 368(a)(1) of the Code
provides for tax-free treatment of certain business
reorganizations between corporate entities where one corporation
is merged with or acquires the securities or assets of another
corporation. Generally, the Company will be the acquiring
corporation in such a business reorganization, and the tax-free
status of the transaction will not depend on the issuance of any
specific amount of the Company's voting securities. It is not
uncommon, however, that as a negotiated element of a transaction
completed in reliance on section 368, the acquiring corporation
issue securities in such an amount that the shareholders of the
acquired corporation hold 50% or more of the voting stock of the
surviving entity. Consequently, there is a substantial
possibility that the shareholders of the Company immediately
prior to the transaction would retain less than 50% of the issued
and outstanding shares of the surviving entity. Therefore,
regardless of the form of the business acquisition, it may be
anticipated that stockholders immediately prior to the
transaction will experience a significant reduction in their
percentage of ownership in the Company.
Notwithstanding the fact that the Company is technically the
acquiring entity in the foregoing circumstances, generally
accepted accounting principles ordinarily require that such a
transaction be accounted for as if the Company had been acquired
by the other entity owning the business and, therefore, will not
permit a write-up in the carrying value of the assets of the
other company.
The manner in which the Company participates in a business
will depend on the nature of the business, the respective needs
and desires of the Company and other parties, the management of
the business, and the relative negotiating strength of the
Company and such other management.
The Company will participate in a business only after the
negotiation and execution of appropriate written agreements.
Although the terms of such agreements cannot be predicted,
generally such agreements will require specific representations
and warranties by all of the parties thereto, will specify
certain events of default, will detail the terms of closing and
the conditions which must be satisfied by each of the parties
prior to such closing, will outline the manner of bearing costs
if the transaction is not closed, will set forth remedies on
default, and will include miscellaneous other terms.
Operation of Business After Acquisition
The Company's operation following its acquisition of a
business is dependent on the nature of the business and the
interest acquired. The Company's present management may or may
not have experience in the nature of the acquired business and is
unable to predict whether the Company will be in control of the
acquired business or whether the acquired business will be in
control of the Company. It may be additionally expected that the
acquired business will present and be subject to various risks
like governmental regulation, competition and other risks that
cannot be predicted at the present time.
Governmental Regulation
It is impossible to predict the government regulation, if
any, to which the Company may be subject until it has acquired an
interest in a business. The use of assets and/or conduct of
businesses that the Company may acquire could subject it to
environmental, public health and safety, land use, trade, or
other governmental regulations and state or local taxation. In
selecting a business in which to acquire an interest, management
will endeavor to ascertain, to the extent of the limited
resources of the Company, the effects of such government
regulation on the prospective business of the Company. In
certain circumstances, however, such as the acquisition of an
interest in a new or start-up business activity, it may not be
possible to predict with any degree of accuracy the impact of
government regulation. The inability
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to ascertain the effect of government regulation on a prospective
business activity will make the acquisition of an interest in
such business a higher risk.
Competition
The Company will be involved in intense competition with
other business entities, many of which will have a competitive
edge over the Company by virtue of their stronger financial
resources and prior experience in business. There is no
assurance that the Company will be successful in obtaining
suitable investments.
Employees
The Company is a development stage company and currently has
no employees. Executive officers will devote only such time to
the affairs of the Company as they deem appropriate, which is
estimated to be approximately 20 hours per month per person.
Management of the Company expects to use consultants, attorneys,
and accountants as necessary, and does not anticipate a need to
engage any full-time employees so long as it is seeking and
evaluating businesses. The need for employees and their
availability will be addressed in connection with a decision
whether or not to acquire or participate in a specific business
industry.
ITEM 2. DESCRIPTION OF PROPERTY
The Company utilizes office space at 253 D'Emerald, Sparks,
Nevada 99434, provided by Johne Phelps, an officer and director
of the Company. The Company does not pay rent for this office
space.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any legal proceedings, and to
the best of its knowledge, no such proceedings by or against the
Company have been threatened.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a shareholder vote for the fourth
the quarter of the 1999 fiscal year.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
There has not been a public trading market for the Company's
common stock since the Company's inception, nor is there any
assurance that a trading market for the common stock will be
established in the future.
At December 18, 2000, there are approximately 45 holders of
the Company's 896,000 issued and outstanding shares of common
stock, $0.001 par value. Of the 896,000 shares, 624,000 are free
trading.
The Company has never declared a dividend on its Common
Stock. The Company has not paid, nor declared, any dividends
since its inception and does not intend to declare any such
dividends in the foreseeable future. The Company's ability to pay
dividends is subject to limitations imposed by Nevada law. Under
Nevada law, dividends may be paid to the extent that the
corporation's assets exceed its liabilities and it is able to pay
its debts as they become due in the usual course of business.
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Recent Sales of Unregistered Securities.
The following is a detailed list of securities sold within
the past three years without registering under the Securities
Act.
In September of 1997, the Company (in connection with its
formation) issued 100,000 shares of restricted common stock to
Kim Farran, an officer and director of the Company, in exchange
for $2,000 in cash. The shares were issued in a private
transaction, not involving any public solicitation or
commissions, and without registration in reliance on the
exemption provided by Section 4(2) of the Securities Act.
In September of 1997, the Company (in connection with its
formation) issued 100,000 shares of common stock to Robert Deller
in exchange for $2,000 in cash. The shares were issued in a
private transaction, not involving any public solicitation or
commissions, and without registration in reliance on the
exemption provided by Section 4(2) of the Securities Act.
In September of 1997, the Company (in connection with its
formation) issued 50,000 shares of common stock to a Johne Phelps
in exchange for $1,000 in cash. The shares were issued in a
private transaction, not involving any public solicitation or
commissions, and without registration in reliance on the
exemption provided by Section 4(2) of the Securities Act.
In September of 1998, the Company issued 646,000 shares of
common stock to approximately 42 persons in exchange for $32,300
in cash. The shares were issued under Rule 504 of Regulation D
promulgated under the Securities Act of 1933. The Company filed
a registration statement with the State of Nevada, which was
declared effective on August 25, 1998, and closed on September
30, 1998. All sales were made in the State of Nevada. Kim
Farran acted as the Company's sales agent and was paid $1,615 in
commissions. The Southwest Escrow Company was paid $250 for
services rendered.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF
OPERATION
Years Ended September 30, 1999 and 1998
The Company's revenues from operations for the years ended
September 30, 1999 and 1998, were $6,015 and $0, respectively.
This increase is due to the Company commencing operations in the
retail catalogue business, where the Company targeted the Las
Vegas and Reno areas of Nevada. Cost of goods sold for those
same periods were $2,543 and $0, respectively. This increase is
due to those costs associated with the purchasing, packaging and
delivery of the gourmet food items.
The Company had expenses of $30,197 for the year ended
September 30, 1999, compared to $1,320 for the year ended
September 30, 1998. The increase in expenses is due to the
Company commencing operations in the retail catalogue business.
Such expenses consisted of consulting fees, professional
services, advertising, spoilage, and $1,942 in losses on the
disposal of packaging inventory sold to a shareholder.
Consequently, the Company realized a net loss of $26,725 for
year ended September 30, 1999, compared to a net loss of $1,320
for the year ended September 30, 1998. The increase in losses
are attributable to the Company's expenses associated with
commencing operations in the retail catalogue business without
generating the same or greater amount of revenue from such
operations.
In August of 1999, because it was unable to operate at a
profit, the Company abandoned operations in the retail catalogue
business, liquidated (at a loss) left over packaging inventory to
a
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shareholder, and became inactive. The Company does not
expect to generate additional revenue from operations until it
acquires another business opportunity.
Liquidity and Capital Resources
At September 30, 1999, the Company had cash on hand in the
amount of $2,112, and a $50 receivable from a stockholder, giving
the Company a working capital of approximately $2,162.
Currently, the Company has no material commitments for
capital expenditures, and Management believes that it has
sufficient cash to meet its operational needs for the next twelve
months. If required, Management may attempt to raise additional
capital for its current operational needs through debt financing,
equity financing or a combination of financing options. However,
there are no existing understandings, commitments or agreements
for such an infusion; nor can there be assurances to that effect.
Moreover, the Company's need for capital may change dramatically
if and during that period it acquires an interest in a business
opportunity.
The Company has been unprofitable since its inception in
1977, and unless the Company can obtain additional financing or a
business opportunity, its ability to continue as a going concern
beyond the next twelve-month period is doubtful.
The Company's current operating plan is to (i) handle the
administrative and reporting requirements of a public company,
and (ii) search for potential businesses, products, technologies
and companies for acquisition. At present, the Company has no
understandings, commitments or agreements with respect to the
acquisition of any business venture, and there can be no
assurance that the Company will identify a business venture
suitable for acquisition in the future. Further, there can be no
assurance that the Company would be successful in consummating
any acquisition on favorable terms or that it will be able to
profitably manage any business venture it acquires.
ITEM 7. FINANCIAL STATEMENTS
The financial statements of the Company appear at the end of
this report beginning with the Index to Financial Statements on
page 15.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
The Company's independent auditor for the years ended
September 30, 1998 and 1997, was Albright, Persing & Associates,
Ltd. In December of 2000, the Company terminated the engagement
of Albright, Persing & Associates as its independent auditor.
The Board of Directors have approved the accounting firm of David
E. Coffey to serve as independent auditor of the Company for the
years ended September 30, 1999 and 1998. The Company has been
advised that neither Mr. Coffey nor any of his members or
associates has any relationship with the Company or any of its
affiliates, except in the firm's proposed capacity as the
Company's independent auditor.
During the fiscal years ended September 30, 1998 and 1997,
the financial statements of the Company did not contain any
adverse opinion or disclaimer of opinion from the Company's
former independent auditor, and were not modified as to
uncertainty, audit scope, or accounting principles, except the
reports issued by Albright, Persing & Associates contained a
statement expressing doubt about the ability of the Company to
continue as a going concern due to its status as a development
stage company with no significant operating results. During the
year ended September 30, 1999, and from that date to the present,
there were no disagreements with the former independent auditor
on any matter of
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accounting principles, financial statement disclosure, or
auditing scope or procedure which, if not resolved to the former
independent auditor's satisfaction, would have caused it to make
reference to the subject matter of the disagreement in connection
with its audit report.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; AND COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Directors and Officers
The following table sets forth the names, ages, and
positions with the Company for each of the officers and directors
of the Company.
Name Age Positions Since
Johne Phelps 52 President and Director December, 1997
Lorrie A. Miller 30 Secretary/ Treasurer and July, 1998
Director
All directors hold office until the next annual meeting of
stockholders or until their successors are duly elected and
qualify. Officers serve at the discretion of the Board of
Directors.
The following is information on the business experience of
each director and officer.
Johne Phelps attended Utah State University from 1966 to
1973 where he majored in Natural Resource Management. In 1986,
Mr. Phelps attended the Hopkins Institute in Phoenix, Arizona
where he specialized in both Marketing and Sales. Since 1997,
Mr. Phelps has contracted himself out as a consultant for start-
up businesses in the resort, club and restaurant sector with a
focus on marketing, personnel, policy and compliance. Also in
1997, Mr. Phelps managed The Men's Club of Reno. From 1995 to
1997, Mr. Phelps was the general manager of The Brasserie, a
restaurant in Reno, Nevada. From 1989 to 1995, Mr. Phelps was
the Chief Executive Officer of Meridian Resort Development in
Reno, Nevada.
Lorrie A. Miller graduated from the Truckee Meadows
Community College with a Certificate of Office Administration in
1990. While attending Truckee, Ms. Miller received both the Niel
J. Redfield Scholarship and the Reno Business Women's
Scholarship. Since 1997, Ms. Miller has been employed as the
office manager of Network Investor Communications. From 1996 to
1997, Ms. Miller managed the office of Stephen E. Wilson
Financial, an insurance agency. From 1992 to 1995, Ms. Miller
was employed with the Casmyn Vestor Group. In addition, Ms.
Miller operates a home-based custom floral and wedding
consultation business.
Involvement in certain legal proceedings.
No director, executive officer, promoter or control person of
the Company has been involved in any of the following events
during the past five years:
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a. Any bankruptcy petition filed by or against any business of
which such person was a general partner or executive officer
either at the time of the bankruptcy or within two years prior to
that time;
b. Any conviction in a criminal proceeding or being subject to
a pending criminal proceeding (excluding traffic violations and
other minor offenses);
c. Being subject to any order, judgment, or decree, not
subsequently reversed, suspended or vacated, of any court of
competent jurisdiction, permanently or temporarily enjoining,
barring, suspending or otherwise limiting his involvement in any
type of business, securities or banking activities; and
d. Being found by a court of competent jurisdiction (in a civil
action), the Commission or the Commodity Futures Trading
Commission to have violated a federal or state securities or
commodities law, and the judgment has not been reversed,
suspended, or vacated.
Section 16(a) Beneficial Owner Reporting Compliance.
The officers and directors of the Company, Lorrie A. Miller
and Johne Phelps, have yet to file a Form 3 with the SEC, and are
considered to be delinquent in such filing. The beneficial
owners of more than ten percent of the Company's outstanding
common stock, Robert Deller, Kim Farran, Stanley K. Stilwell and
Leisa C. Stilwell have yet to file a Form 3 with the SEC, and are
also considered to be delinquent in such filing.
All of the above parties have been informed of their filing
responsibilities under Section 16(a) of the Securities Exchange
Act of 1934 and will be filing the required forms in the
immediate future.
ITEM 10. EXECUTIVE COMPENSATION
The Company has no agreement or understanding, express or
implied, with any director, officer or principal stockholder, or
their affiliates or associates, regarding compensation in the
form of salary, bonuses, stocks, options, warrants or any other
form of remuneration, for services performed on behalf of the
Company. Nor are there compensatory plans or arrangements,
including payments to any officer in relation to resignation,
retirement, or other termination of employment with the Company,
or any change in control of the Company, or a change in the
officer's responsibilities following a change in control of the
Company. Notwithstanding the foregoing, the Company paid $10,000
to Johne Phelps and $2,214 to Lorrie A. Miller as compensation
for services performed on behalf of the Company in the fiscal
year of 1999.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth as of January 11, 2001, the
number and percentage of the 896,000 issued and outstanding
shares of the Company's common stock, par value $0.001, which
according to the information supplied to the Company, were
beneficially owned by (i) each person who is currently a director
of the Company, (ii) each executive officer, (iii) all current
directors and executive officers of the Company as a group and
(iv) each person who, to the knowledge of the Company, is the
beneficial owner of more than 5% of the outstanding common stock.
Except as otherwise indicated, the persons named in the table
have sole voting and dispositive power with respect to all shares
beneficially owned, subject to community property laws where
applicable.
11
<PAGE>
<TABLE>
<CAPTION>
<S>
Name and Address
of Beneficial Owner Common Shares Percent of Class
<C> <C> <C>
Robert Deller 100,000 11.16%
2017 Tremont Lane
Reno, NV 89509
David Dorton 60,000 6.69%
2441 Tech Center
Ct., #110
Las Vegas, NV 89129
Kim Farran 120,000 13.39%
3250 Platte River
Ct.
Reno, NV 89503
Justin Guidi 60,000 6.69%
355 Broadway #10
Reno, NV 89502
Jeff Holmes 50,000 5.58%
P.O. Box 11207
Zephyr Cove, NV
89448
Lorrie A. Miller (1) 2,000 0.22%
1530 Harvard Way
Reno, NV 89502
Stephen J. Nicolatus 60,000 6.69%
856 Peach Canyon
Circle
Las Vegas, NV 89134
Johne Phelps (1) 50,000 5.58%
253 D'Emerald
Sparks, NV 89434
Leisa C. Stilwell 94,000 10.49%
(2)
7604 Delaware Bay
Drive
Las Vegas, NV 89128
Stanley K. Stilwell 94,000 10.49%
(2)
7604 Delaware Bay
Drive
Las Vegas, NV 89128
All officers and 52,000 5.8%
directors as a
group: 2 persons
</TABLE>
(1) Officer and director of the Company.
12
<PAGE>
(2) Stanley Stilwell and Leisa Stilwell are husband and wife.
Mr. Stilwell holds 80,000 shares directly in his name and 10,000
shares indirectly under American Pension Services, an IRA. Mrs.
Stilwell holds 4,000 shares indirectly under American Pension
Services, an IRA.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In September of 1997, the Company, in connection with its
formation, issued 100,000 shares of common stock to Kim Farran
for $2,000 in cash. Kim Farran was the sole officer and director
of the Company.
In September of 1998, the Company issued 20,000 shares of
common stock to Kim Farran for $1,000 in cash. Mr. Farran is a
beneficial owner of more than 5% of the Company's outstanding
common stock. The shares were purchased in a Regulation D
offering.
In September of 1998, the Company issued 2,000 shares of
common stock to Lorrie A. Miller for $100 in cash. Ms. Miller is
an officer and director of the Company. The shares were
purchased in a Regulation D offering.
In September of 1998, the Company paid $1,615 in commissions
to Kim Farran for acting as the sales agent for Company shares
sold in a securities offering exempted under Rule 504 of
Regulation D of the Securities Act of 1933 and registered in the
State of Nevada. Mr. Farran is a beneficial owner of more than
5% of the Company's common stock.
In May of 1999, the Company paid $4,500 to Leisa Stilwell
for services performed on behalf of the Company. Mrs. Stilwell
was a beneficial owner of more than 5% of the Company's common
stock.
In August of 1999, the Company ended operations in the
catalogue business and sold certain inventory to Kim Farran for
$500 in cash. The Company reported a loss of $1,942 in the
transaction. Mr. Farran was also paid $85 in rent for storing
non-perishable inventory. Mr. Farran is a beneficial owner of
more than 5% of the Company's common stock.
In August of 2000, the Company received $3,000 in cash from
Kim Farran in exchange for a two-year 12% promissory note. Mr.
Farran is a beneficial owner of more than 5% of the Company's
common stock.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
Copies of the following documents are included as exhibits
to this report pursuant to Item 601 of Regulation S-B.
Exhibits.
<TABLE>
<CAPTION>
Exhibit SEC Ref. Title of Document Location
No. No. <C> <C>
<C> <C>
1 (10) Promissory Note Attached
2 (16) Letter on change in certifying Attached
accountant
3 (27) Financial Data Schedule Attached
</TABLE>
Form 8-K Filings.
No reports on Form 8-K were filed for the fourth quarter
year ended September 30, 1999.
13
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act,
the registrant caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
GOURMET GIFTS, INC.
Date: December 22, 2000
/S/Johne Phelps
Johne Phelps, President
In accordance with the Exchange Act, this report has been
signed by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
December 22, 2000 /S/Johne Phelps
Johne Phelps, President and
Director
December 22, 2000 /S/Lorrie A. Miller
Lorrie A. Miller,
Secretary/Treasurer and
Director
14
<PAGE>
PART F/S
GOURMET GIFTS, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
SEPTEMBER 30,1999, AND
SEPTEMBER 30, 1998
TABLE OF CONTENTS
Page Number
INDEPENDENT ACCOUNTANT'S REPORT 16
FINANCIAL STATEMENT
Balance Sheets 17
Statements of Operations and Deficit
Accumulated During the Development Stage 18
Statement of Changes in Stockholders' Equity 19
Statements of Cash Flows 20
Notes to the Financial Statements 21
15
<PAGE>
DAVID E. COFFEY 3651 LINDELL ROAD, SUITE A, LAS VEGAS, NEVADA 89103
CERTIFIED PUBLIC ACCOUNTANT (702) 871-3979
INDEPENDENT ACCOUNTANT'S REPORT
To the Board of Directors and Stockholders
of Gourmet Gifts, Inc.
Sparks, Nevada
I have audited the accompanying balance sheets of Gourmet Gifts,
Inc. (a development stage company) as of September 30, 1999, and
September 30, 1998, and the related statements of operations,
cash flows, and changes in stockholders' equity for the period
from September 24, 1997, (date of inception) to September 30,
1999. These statements are the responsibility of Gourmet Gifts,
Inc.'s management. My responsibility is to express an opinion on
these financial statements based on my audit.
I conducted my audit in accordance with generally accepted
auditing standards. Those standards require that I plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material 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. I believe that my
audit provides a reasonable basis for my opinion.
In my opinion, the accompanying financial statements present
fairly, in all material respects, the financial position of
Gourmet Gifts, Inc. as of September 30, 1999, and September 30,
1998, and the results of operations, cash flows, and changes in
stockholders' equity for the periods then ended, as well as the
cumulative period from September 24, 1997, in conformity with
generally accepted accounting principles.
David Coffey, C. P. A.
Las Vegas, Nevada
July 7, 2000
16
<PAGE>
GOURMET GIFTS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, September 30,
1999 1998
<C> <C>
<S>
ASSETS
Cash $ 2,112 $ 32,080
Receivable from stockholder 50 0
Total Assets $ 2,162 $ 32,080
LIABILITIES & STOCKHOLDERS' EQUITY
Accounts payable $ 0 $ 2,315
Total Liabilities 0 2,315
Stockholders' Equity
Common stock, authorized 25,000,000
shares at $.001 par value, issued and
outstanding 896,000 shares 896 896
Additional paid-in capital 29,311 30,189
Deficit accumulated during the
development stage (28,045) (1,320)
Total Stockholders' Equity 2,162 29,765
Total Liabilities and
Stockholders' Equity $ 2,162 32,080
</TABLE>
The accompanying notes are an integral part of these financial
statements.
17
<PAGE>
GOURMET GIFTS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS AND DEFICIT
ACCUMULATED DURING THE DEVELOPMENT STAGE
(With Cumulative Figures From Inception)
<TABLE>
<CAPTION>
From Inception,
Oct 1, 1998, to Oct. 1, 1997, to Sept. 24, 1997, to
Sept. 30, 1999 Sept. 30, 1998 Sept.30, 1999
<S> <C> <C> <C>
Net sales $ 6,015 $ 0 $ 6,015
Cost of goods sold 2,543 0 2,543
Gross profit 3,472 0 3,472
Expenses
Outside services 0 200 200
Consulting 16,715 0 16,715
Office expenses 147 0 147
Professional services 5,650 500 6,150
Bank charges 191 165 356
Taxes and licenses 375 455 830
Advertising 1,799 0 1,799
Spoilage 3,293 0 3,293
Loss on disposal
of packaging supplies 1,942 0 1,942
Rent 85 0 85
Total expenses 30,197 1,320 31,517
Net loss (26,725) (1,320) $ (28,045)
Retained earnings,
beginning of period (1,320) 0
Deficit accumulated during
the development stage $ (28,045) $(1,320)
Earnings ( loss ) per share
assuming dilution:
Net loss $ (0.03) $ (0.01) $ (0.05)
Weighted average shares
outstanding 896,000 251,770 599,917
</TABLE>
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
GOURMET GIFTS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM SEPTEMBER 24,1997, (Date of Inception)
TO SEPTEMBER 30,1999
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in
Shares Amount Capital Total
$ $ $
Balance, <C> <C> <C> <C>
September 24, 1997 --- --- --- ---
Issuance of common stock for cash
September, 1997 250,000 250 4,750 5,000
Balance,
September 30, 1997 250,000 250 4,750 5,000
Issuance of common stock for cash
September, 1998 646,000 646 31,654 32,300
Less offering costs 0 0 (6,215) (6,215)
Less net loss 0 0 0 (1,320)
Balance,
September 30, 1998 896,000 896 30,189 29,765
Less offering costs 0 0 (878) (878)
Less net loss 0 0 0 (26,725)
Balance,
September 30, 1999 896,000 896 29,311 2,162
</TABLE>
The accompanying notes are an integral part of these financial statements
19
<PAGE>
GOURMET GIFTS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
With Cumulative Figures From Inception
<TABLE>
<CAPTION>
From Inception,
Oct. 1, 1993, to Oct. 1, 1997, to Sept. 24, 1997, to
Sept. 30, 1999 Sept. 30, 1998 Sept. 30, 1999
<S> <C> <C> <C>
CASH FLOWS PROVIDED BY
OPERATING ACTIVITIES
Net Loss $ (26,725) $ (1,320) $ (28,045)
Non-cash items included in
net loss 0 0 0
Adjustments to reconcile net loss to
cash used by operating activity
Receivable from stockholder (50) 0 (50)
Accounts payable (2,315) 2,315 0
NET CASH PROVIDED BY
OPERATING ACTIVITIES (29,090) 995 (28,095)
CASH FLOWS USED BY
INVESTING ACTIVITIES 0 0 0
NET CASH USED BY
INVESTING ACTIVITIES 0 0 0
CASH FLOWS FROM FINANCING
ACTIVITIES
Sale of common stock 0 646 896
Paid-in capital 0 31,654 36,404
Less offering costs (878) (6,215) (7,093)
NET CASH PROVIDED BY
FINANCING ACTIVITIES (878) 26,085 30,207
NET INCREASE IN CASH (29,968) 27,080 $ 2,112
CASH AT BEGINNING OF PERIOD 32,080 5,000
CASH AT END OF PERIOD $ 2,112 $ 32,080
</TABLE>
The accompanying notes are an integral part of these financial statements.
20
<PAGE>
GOURMET GIFTS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30,1999, AND SEPTEMBER 30,1998
NOTE A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company was incorporated on September 24, 1997,
under the laws of the State of Nevada. The business
purpose of the Company is the production and sale of
gourmet gift items. In August of 1999 the Company had
ceased operations and liquidated its inventories. The
Company will resume operations if additional financing
is obtained.
The Company will adopt accounting policies and
procedures based upon the nature of future
transactions.
NOTE B FISCAL YEAR
In October of 1998 the Company adopted the period
October 1 through September 30 as its fiscal year.
NOTE C CHANGE OF INDEPENDENT ACCOUNTANTS
Financial statements for the period ended September 30,
1998, were audited by Albright, Persing, & Associates,
Ltd., of Reno, Nevada. The Company named as its
independent auditor David E. Coffey, CPA for the audit
of September 30, 1999, financial statements.
NOTE D OFFERING COSTS
Offering costs are reported as a reduction in the
amount of paid-in capital received for sale of the
shares.
NOTE E EARNINGS (LOSS) PER SHARE
Basic EPS is determined using net income divided by the
weighted average shares outstanding during the period.
Diluted EPS is computed by dividing net income by the
weighted average shares outstanding, assuming all
dilutive potential common shares were issued. Since
the Company has no common shares that are potentially
issuable, such as stock options, convertible securities
or warrants, basic and diluted EPS are the same.
21
<PAGE>
GOURMET GIFTS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30,1999, AND SEPTEMBER 30,1998
(continued)
NOTE F STOCK OFFERINGS
In September of 1997, the Company completed the sale of
250,000 shares of its common stock at $.02 per share
for $5,000. Then in September of 1998 the Company
issued another 646,000 shares of its common stock at
$.05 per share for a total of $32,300. The proceeds
were to be used for the production and sale of gourmet
gift items.
NOTE G RELATED PARTY TRANSACTIONS
In September of 1997 the Company issued 250,000 shares
of its common stock to officers at $.02 per share for a
total of $5,000.
In May of 1999 the Company paid one of its shareholders
$4,500 for services performed to complete filing
requirements of the Securities & Exchange Commission.
Prior to ceasing operations in August of 1999 the
Company had paid two of its officers $10,000 and
$2,214, respectively, for consulting services performed
during start-up of operations.
In June of 1999 the Company sold the remainder of its
packaging inventory to a shareholder for $500, which
resulted in a loss of $1,942.
NOTE H LIQUIDATION OF INVENTORY
In June of 1999 the Company liquidated its inventory.
Spoiled perishable items at a cost of $3,293 were
discarded at a total loss. Packaging supplies at a
cost of $2,442 were sold to a shareholder for $500,
which resulted in a loss of $1,942. The Company will
resume operations if additional financing is obtained.
NOTE I SUSPENSION OF OPERATIONS
On August 8, 1999, the Board of Directors resolved to
suspend operations in the gift box business and to
pursue other opportunities which may become available.
22
<PAGE>
