UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
QUARTERLY REPORT FOR SMALL BUSINESS ISSUERS SUBJECT TO THE 1934
ACT REPORTING REQUIREMENTS
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000 Commission File No.
000-31129
HOLMES HERBS, INC.
(Exact name of registrant as specified in its charter)
Nevada 88-0412635
(State of organization) (I.R.S. Employer Identification No.)
3651 Lindell Road, Suite A, Las Vegas, NV 89103
(Address of principal executive offices)
Registrant's telephone number, including area code (702) 873-7404
Check whether the issuer (1) filed all reports required to be
file by Section 13 or 15(d) of the Exchange Act during the past
12 months and (2) has been subject to such filing requirements
for the past 90 days. No X
There are 230,000 shares of common stock outstanding as of June
30, 2000.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The Audited financial statements for the period ending June 30,
2000.
INDEPENDENT ACCOUNTANT'S REPORT
To the Board of Directors and Stockholders
of Holmes Herbs, Inc.
Las Vegas, Nevada
I have audited the accompanying balance sheets of Holmes Herbs,
Inc. (a development stage company) as of June 30, 2000, and June
30, 1999, and the related statements of operations, cash flows,
and changes in stockholders' equity for the period from December
3, 1998 (date of inception) to June 30, 2000. These statements
are the responsibility of Holmes Herbs, 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
Holmes Herbs, Inc. as of June 30, 2000, and June 30, 1999, and
the results of operations, cash flows, and changes in
stockholders' equity for the periods then ended, as well as the
cumulative period from December 3, 1998, in conformity with
generally accepted accounting principles.
David Coffey, C. P. A.
Las Vegas, Nevada
August 24, 2000
TABLE OF CONTENTS
Page
Number
INDEPENDENT ACCOUNTANT'S REPORT 1
....................
FINANCIAL STATEMENT
Balance Sheets 2
Statements of Operations and
Deficit Accumulated During the Development
Stage 3
Statement of Changes in Stockholders' 4
Equity .....
Statements of Cash Flows 5
Notes to the Financial Statements 6
HOLMES HERBS, INC.
( A DEVELOPMENT STAGE COMPANY )
BALANCE SHEETS
<TABLE>
<S> <C> <C>
June 30, June 30,
2000 1999
ASSETS --------------- ---------------
Cash $ 41 $ 41
------------- --------------
Total Assets $ 41 $ 41
========== ==========
LIABILITIES & STOCKHOLDERS' EQUITY
Accounts payable $ 3,400 $ 400
-------------- ---------------
Total Liabilities 3,400 400
Stockholders' Equity
Common stock,
authorized
50,000,000 shares at .001 par value,
230,000 and 200,000 shares,
respectively,
issued and 230 200
outstanding
Additional paid-in capital 3,620 3,650
Deficit accumulated during the
development stage (7,209) (4,209)
-------------- ---------------
Total Stockholders' Equity (3,359) (359)
Total Liabilities and Stockholders' $ 41 $ 41
Equity
========== ==========
</TABLE>
The accompanying notes are an integral part of
these financial statements.
- 2 -
HOLMES HERBS, INC.
( A DEVELOPMENT STAGE COMPANY )
STATEMENTS OF OPERATIONS AND DEFICIT
ACCUMULATED DURING THE DEVELOPMENT STAGE
( With Cumulative Figures From Inception )
<TABLE>
<S> <C> <C> <C>
From Inception,
Jan. 1, 2000, Jan. 1, 1999, Dec. 3, 1998 To
to to
June 30, 2000 June 30, June 30, 2000
1999
----------- ------------ --------------
Income $ 0 $ $ 0
Expenses
Office and administrative 0 3,809 3,809
expenses
Professional fees 3,000 0 3,000
Organizational costs 0 0 400
------------- ------------- -------------
Total expenses 3,000 3,809 7,209
Net loss (3,000) (3,809) (7,209)
$ ========
Retained earnings, beginning of (4,209) (400)
period
------------- -------------
Deficit accumulated during the
development stage $ (7,209) $ (4,209)
======== ========
Earnings ( loss ) per share
assuming dilution:
Net loss $ (0.01) $ (0.02) $ (0.04)
======== ======== ========
Weighted average shares 230,000 166,667 186,316
outstanding
======== ======== ========
</TABLE>
The accompanying notes are an integral part of
these financial statements.
- 3 -
HOLMES HERBS, INC.
( A DEVELOPMENT STAGE COMPANY )
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM DECEMBER 3, 1998 ( Date of Inception )
TO JUNE 30, 2000
<TABLE>
<S> <C> <C> <C> <C>
Common Stock Additional Total
Shares Amount Paid-in
Capital
------------ ----------- ----------- ----------
$ $ $
Balance,
December 3, 1998 ----- ----- ----- -----
Issuance of
common
stock for cash
December 31, 1998 100,000 100 0 100
Less net loss 0 0 0 (400)
------------- ------------- ------------- -------------
Balance,
December 31, 1998 100,000 $ 100 $ 0 $ (300)
Issuance of
common
stock for cash
March 23, 1999 100,000 100 9,900 10,000
Issuance of
common
stock for cash
Nov. 10, 1999 30,000 30 2,970 3,000
Less offering 0 0 (9,250) (9,250)
costs
Less net loss 0 0 0 (3,809)
------------- ------------- ------------- -------------
Balance,
December 31, 1999 230,000 230 3,620 (359)
Less net loss 0 0 0 (3,000)
------------- ------------- ------------- -------------
Balance,
June 30, 2000 230,000 $ 230 $ 3,620 $ (3,359)
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of
these financial statements
- 4 -
HOLMES HERBS, INC.
( A DEVELOPMENT STAGE COMPANY )
STATEMENTS OF CASH FLOWS
( With Cumulative Figures From Inception )
<TABLE>
<S> <C> <C> <C>
From
Inception,
Jan. 1, 2000, Jan. 1, 1999, Dec. 3, 1998
to to to
June 30, 2000 June 30, 1999 June 30, 2000
----------- ----------- -----------
CASH FLOWS PROVIDED BY OPERATING
ACTIVITIES
Net Loss $ (3,000) $ (3,809) $ (7,209)
Non-cash items included in net
loss
Adjustments to reconcile net loss
to
cash used by operating activity
Accounts payable 3,000 0 3,400
-------- --------- -------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 0 (3,809) (3,809)
CASH FLOWS FROM INVESTING 0 0 0
ACTIVITIES
CASH FLOWS FROM FINANCING
ACTIVITIES
Sale of common stock 0 100 230
Paid-in capital 0 9,900 12,870
Less offering costs 0 (6,250) (9,250)
------------- ------------- ----------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 0 3,750 3,850
NET INCREASE IN CASH 0 (59) $ 41
==========
CASH AT BEGINNING OF PERIOD 41 100
------------- -------------
CASH AT END OF PERIOD $ 41 $ 41
======== ========
</TABLE>
The accompanying notes are an integral part of
these financial statements.
- 5 -
HOLMES HERBS, INC.
( A DEVELOPMENT STAGE COMPANY )
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2000, AND JUNE 30, 1999
NOTE A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company was incorporated on December 3, 1998, under
the laws of the State of Nevada. The business purpose of
the Company is to procure and resell herbal remedies.
The Company will adopt accounting policies and
procedures based upon the nature of future transactions.
NOTE B OFFERING COSTS
Offering costs were deducted from the proceeds of the
public offering.
NOTE C 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.
NOTE D COMMON STOCK ISSUES
On March 23, 1999, the Company completed the sale of
100,000 shares of it's common stock at $.10 per share for
total proceeds of $10,000. The net proceeds were to be
used for marketing of herbal remedies.
On November 10, 1999, the Company sold by private
placement 30,000 common shares at $.10 per share for a
total of $3,000. The proceeds were to be used for working
capital.
NOTE E SUBSEQUENT EVENTS
On August 24, 2000, the Company completed a private
placement offering and sold 20,000 shares of its common
stock at $1.00 per share for a total of $20,000. The
proceeds are to be used to purchase and resell herbal
remedies.
- 6 -
ITEM 2. MANAGEMENT'S PLAN OF OPERATION
NOTE REGARDING PROJECTIONS AND FORWARD LOOKING STATEMENTS
This statement includes projections of future results and
"forward-looking statements" as that term is defined in Section
27A of the Securities Act of 1933 as amended (the "Securities
Act"), and Section 21E of the Securities Exchange Act of 1934 as
amended (the "Exchange Act"). All statements that are included in
this Registration Statement, other than statements of historical
fact, are forward-looking statements. Although Management
believes that the expectations reflected in these forward-looking
statements are reasonable, it can give no assurance that such
expectations will prove to have been correct. Important factors
that could cause actual results to differ materially from the
expectations are disclosed in this Statement, including, without
limitation, those expectations reflected in forward-looking
statements contained in this Statement.
Plan of Operation
The Company plans to engage in both wholesale and retail
distribution of herbal products beginning in Las Vegas, Nevada.
The Company will rely on newspaper advertisements and later will
use e-commerce to implement its marketing objectives. The
Company also intends to utilize direct mailing and e-mail to
solicit manufacturers and retailers of products.
The company has not yet introduced any products, and has not
entered into agreements with any suppliers. Once the Company
begins offering products for sale, it will face competition from
existing suppliers. Competition in these products is primarily
centered on quality, price, brand recognition and service, with
an emphasis on the service. To be competitive in these
marketplaces, the Company must effectively maintain and promote
the quality of both the products and service among consumers and
establish strong marketing relationships with manufacturers and
distributors of the products. While the Company believes that it
will compete effectively, many of the competitors have
substantially greater resources and well recognized business
names. The Company believes it can take advantage of its smaller
size to attract customers seeking more personalized service. The
Company expects to attract customers via various internet search
engines upon completion of various web pages.
Marketing Strategy
The Company intends to engage in both the wholesale and retail
distribution of herbal products. The Company intends to
initially rely on newspaper advertisements and later on e-
commerce to implement the Company's marketing objectives. The
Company also intends to utilize direct mailing, and e-mail to
solicit manufacturers and Retailers of products which will be
sold by the Company.
The Company's marketing and licensing strategy is to (i)
establish and expand a clientele; (ii) expand the number of
advertisements; and (iii) acquire or establish relationships with
major manufacturers businesses, companies, properties or
technologies.
The Company will purchase most of its inventory from
manufacturers principally in North America and the Orient. To
date, no contracts have been executed and the Company does not
anticipate entering into any contracts due to lack of funding.
Upon funding, letters of credit may be sought.
The need for herbal products increases as the increasing
population has begun returning to nature (herbs) to heal any
ailments. The Company does not anticipate being dependent on one
major or a few major customers. The business will supply to
major herbal retailers and the general public. Also listing the
web page(s) throughout various search engines should provide the
Company with numerous business opportunities.
As of the date of this Registration Statement, the Company has
one part time employee, who to this date has not entered into an
employment arrangement with the Company. Due to the lack of
funding, the Company has no collective bargaining agreements
covering its only employee, has not experienced any material
labor disruption and is unaware of any efforts or plans to
organize its future employees. The Company considers relations
with its employee to be good.
Other than the early design stages of its website, the Company
has no intellectual property rights.
Liquidity
The Company will have to raise additional capital in the next
twelve months. As of December 31, 1999, the Company had nominal
working capital and results. In order to satisfy the liquidity
needs of the Company for the following twelve months, the Company
will be primarily dependent upon proceeds from the sale of the
Company's common and/or preferred stock and possible cash flow
from operations. Historically, revenues from existing operations
have not been adequate to fund the operations of the Company. If
the Company is unable to obtain adequate funds from the sale of
its stock in public offerings, private placements, or alternative
financing arrangements, it may be necessary to postpone any
additional acquisitions or the Company's ability to obtain
Letters of Credit. The Company, under such circumstances, would
resort to using cash flow for internal growth.
While the Company has raised capital to meet its working capital
and financing needs, additional financing is required in order to
complete the planned improvements necessary to the Company's
acquisitions. The Company is seeking financing, in the form of
equity and debt in order to make the necessary improvements and
provide working capital. There are no assurances the Company
will be successful in raising the funds required.
The Company has issued shares of its Common Stock from time to
time in the past to satisfy certain obligations and expects in
the future to also acquire certain services, satisfy indebtedness
and/or make acquisitions utilizing authorized shares of the
capital stock of the Company. If operations and cash flow can be
improved through these efforts, management believes that the
Company's liquidity problems will be resolved and that the
Company can continue to operate. However, no assurance can be
given that management's actions will result in profitable
operations.
The plan of the Company is to raise more financing as soon as the
Company's shares are approved for trading to enable the Company
to enter into purchase and supply contracts. An overall budget
of $650,000 for the first year should achieve the Company's
goals. The Company does not anticipate that there will be a need
to dramatically increase the number of employees over the next
twelve months.
Competition
The Company is an insignificant participant among firms which
engage in wholesale and retail distribution of herbal products.
In view of the Company's limited financial resources and
management availability, the Company will continue to be at
significant competitive disadvantage vis-a-vis the Company's
competitors.
Once the Company begins offering products for sale, it will face
competition from existing suppliers. Competition in these
products is primarily centered on quality, price, brand
recognition and service, with an emphasis on the service. To be
competitive in these marketplaces, the Company must effectively
maintain and promote the quality of both the products and service
among consumers and establish strong marketing relationships with
manufacturers and distributors of the products. While the
Company believes that it will compete effectively, many of the
competitors have substantially greater resources and well
recognized business names. The Company believes it can take
advantage of its smaller size to attract customers seeking more
personalized service., the Company expects to attract customers
via various internet search engines upon completion of various
web pages.
Employees
The Company's only employee at the present time is its sole
officer and director, who will devote as much time as the Board
of Directors determine is necessary to carry out the affairs of
the Company.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not a party to any material pending legal
proceedings and, to the best of its knowledge, no such action has
been threatened by or against the Company.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
No issues of securities and no changes in the existing securities
took place during the period covered by this report. At the end
of the quarter there were 230,000 shares of common stock issued
and outstanding.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No such matters were submitted during the most
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS
a) The exhibit consisting of the Company's Articles of
Incorporation is attached to the Company's Form 10-SB, filed on
July 24, 2000. This exhibit is incorporated by reference to that
Form.
b) The exhibit consisting of the Company's Bylaws is attached
to the Company's Form 10-SB, filed on July 24, 2000. This exhibit
is incorporated by reference to that Form.
Reports on Form 8-K: None
27 Financial Data Schedule
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the Registrant has duly caused this
registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
Holmes Herbs, Inc.
By: /s/ Patricia Wiate
Patricia Wiate,
President/Secretary/Treasurer
Date: August 29, 2000
