UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Pursuant to Section 12(b) or (g) of the Securities and Exchange
Act of 1934
2
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 Rd., Suite A, Las Vegas, NV 89103
(Address of principal executive offices)
Registrant's telephone number, including area code (702) 873-7404
Securities to be registered pursuant to Section 12(b) of the Act:
None
Securities to be registered pursuant to Section 12(g) of the Act:
Common stock, par value $.001 per share
ITEM 1. DESCRIPTION OF BUSINESS
Background
HOLMES HERBS, INC. (the "Company") is a Nevada corporation formed
on December 3, 1998. Its principal place of business is located
at 3651 Lindell Rd., Suite A, Las Vegas, NV 89103.
Business of Issuer
The Company was organized to engage in any lawful corporate
business. Since its inception, the Company's main activity has
been organizational.
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.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR 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, in conjunction with those forward-looking statements
contained in this Statement.
The Company plans to engage in both wholesale and retail
distribution of herbal products based on natural remedies.
Additional funding through private placement will be necessary to
enable the Company to lease a suitable office warehouse facility
in Las Vegas and to enable the Company to complete its web page
and to secure contracts with suppliers and buyers of the
products.
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.
Risk Factors
The Company's business is subject to numerous risk factors,
including the following:
NO OPERATING HISTORY OR REVENUE AND MINIMAL ASSETS. The Company
has had no operating history and has received no revenues or
earnings from operations. The Company has no significant assets
or financial resources. The Company will, in all likelihood,
sustain operating expenses without corresponding revenues, at
least until it completes a business combination. This may result
in the Company incurring a net operating loss which will increase
continuously until the Company completes a business combination
with a profitable business opportunity. There is no assurance
that the Company will identify a business opportunity or complete
a business combination.
SPECULATIVE NATURE OF COMPANY'S PROPOSED OPERATIONS. The success
of the Company's proposed plan of operation will depend to a
great extent on the operations, financial condition, and
management of the identified business opportunity. While
management intends to seek business combinations with entities
having established operating histories, it cannot assure that the
Company will successfully locate candidates meeting such
criteria. In the event the Company completes a business
combination, the success of the Company's operations may be
dependent upon management of the successor firm or venture
partner firm together with numerous other factors beyond the
Company's control.
COMPETITION FOR BUSINESS OPPORTUNITIES AND COMBINATIONS. 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.
NO AGREEMENT FOR BUSINESS COMBINATION OR OTHER TRANSACTION - NO
STANDARDS FOR BUSINESS COMBINATION. The Company has no
arrangement, agreement, or understanding with respect to engaging
in a business combination with any private entity. There can be
no assurance the Company will successfully identify and evaluate
suitable business opportunities or conclude a business
combination. Management has not identified any particular
industry or specific business within an industry for evaluations.
The Company has been in the developmental stage since inception
and has no operations to date. Other than issuing shares to its
original shareholders, the Company never commenced any
operational activities. There is no assurance the Company will be
able to negotiate a business combination on terms favorable to
the Company. The Company has not established a specific length of
operating history or a specified level of earnings, assets, net
worth or other criteria which it will require a target business
opportunity to have achieved, and without which the Company would
not consider a business combination in any form with such
business opportunity. Accordingly, the Company may enter into a
business combination with a business opportunity having no
significant operating history, losses, limited or no potential
for earnings, limited assets, negative net worth, or other
negative characteristics.
CONTINUED MANAGEMENT CONTROL, LIMITED TIME AVAILABILITY. While
seeking a business combination, management anticipates devoting
up to twenty hours per month to the business of the Company. The
Company's officers have not entered into written employment
agreements with the Company and are not expected to do so in the
foreseeable future. The Company has not obtained key man life
insurance on its officers or directors. Notwithstanding the
combined limited experience and time commitment of management,
loss of the services of any of these individuals would adversely
affect development of the Company's business and its likelihood
of continuing operations. See "MANAGEMENT."
CONFLICTS OF INTEREST - GENERAL. The Company's officers and
directors participate in other business ventures which compete
directly with the Company. Additional conflicts of interest and
non "arms-length" transactions may also arise in the event the
Company's officers or directors are involved in the management of
any firm with which the Company transacts business. The Company's
Board of Directors has adopted a resolution which prohibits the
Company from completing a combination with any entity in which
management serve as officers, directors or partners, or in which
they or their family members own or hold any ownership interest.
Management is not aware of any circumstances under which this
policy could be changed while current management is in control of
the Company. See "Item 5". DIRECTORS, EXECUTIVE OFFICERS,
PROMOTERS AND CONTROL PERSONS - CONFLICTS OF INTEREST."
REPORTING REQUIREMENTS MAY DELAY OR PRECLUDE ACQUISITION.
Companies subject to Section 13 of the Securities Exchange Act of
1934 (the "Exchange Act") must provide certain information about
significant acquisitions, including certified financial
statements for the company acquired, covering one or two years,
depending on the relative size of the acquisition. The time and
additional costs that may be incurred by some target entities to
prepare such statements may significantly delay or even preclude
the Company from completing an otherwise desirable acquisition.
Acquisition prospects that do not have or are unable to obtain
the required audited statements may not be appropriate for
acquisition so long as the reporting requirements of the 1934 Act
are applicable.
LACK OF MARKET RESEARCH OR MARKETING ORGANIZATION. The Company
has not conducted or received results of market research
indicating that market demand exists for the transactions
contemplated by the Company. Moreover, the Company does not have,
and does not plan to establish, a marketing organization. If
there is demand for a business combination as contemplated by the
Company, there is no assurance the Company will successfully
complete such transaction.
LACK OF DIVERSIFICATION. In all likelihood, the Company's
proposed operations, even if successful, will result in a
business combination with only one entity. Consequently, the
resulting activities will be limited to that entity's business.
The Company's inability to diversify its activities into a number
of areas may subject the Company to economic fluctuations within
a particular business or industry, thereby increasing the risks
associated with the Company's operations.
REGULATION. Although the Company will be subject to regulation
under the Securities Exchange Act of 1934, management believes
the Company will not be subject to regulation under the
Investment Company Act of 1940, insofar as the Company will not
be engaged in the business of investing or trading in securities.
In the event the Company engages in business combinations which
result in the Company holding passive investment interests in a
number of entities, the Company could be subject to regulation
under the Investment Company Act of 1940. In such event, the
Company would be required to register as an investment company
and could be expected to incur significant registration and
compliance costs. The Company has obtained no formal
determination from the Securities and Exchange Commission as to
the status of the Company under the Investment Company Act of
1940 and, consequently, any violation of such Act would subject
the Company to material adverse consequences.
PROBABLE CHANGE IN CONTROL AND MANAGEMENT. A business combination
involving the issuance of the Company's common stock will, in all
likelihood, result in shareholders of a private company obtaining
a controlling interest in the Company. Any such business
combination may require management of the Company to sell or
transfer all or a portion of the Company's common stock held by
them, or resign as members of the Board of Directors of the
Company. The resulting change in control of the Company could
result in removal of one or more present officers and directors
of the Company and a corresponding reduction in or elimination of
their participation in the future affairs of the Company.
REDUCTION OF PERCENTAGE SHARE OWNERSHIP FOLLOWING BUSINESS
COMBINATION. The Company's primary plan of operation is based
upon a business combination with a private concern which, in all
likelihood, would result in the Company issuing securities to
shareholders of such private company. Issuing previously
authorized and unissued common stock of the Company will reduce
the percentage of shares owned by present and prospective
shareholders, and a change in the Company's control and/or
management.
TAXATION. Federal and state tax consequences will, in all
likelihood, be major considerations in any business combination
the Company may undertake. Typically, these transactions may be
structured to result in tax-free treatment to both companies,
pursuant to various federal and state tax provisions. The Company
intends to structure any business combination so as to minimize
the federal and state tax consequences to both the Company and
the target entity. Management cannot assure that a business
combination will meet the statutory requirements for a tax-free
reorganization, or that the parties will obtain the intended tax-
free treatment upon a transfer of stock or assets. A non-
qualifying reorganization could result in the imposition of both
federal and state taxes, which may have an adverse effect on both
parties to the transaction.
REQUIREMENT OF AUDITED FINANCIAL STATEMENTS MAY DISQUALIFY
BUSINESS OPPORTUNITIES. Management believes that any potential
target company must provide audited financial statements for
review, and for the protection of all parties to the business
combination. One or more attractive business opportunities may
forego a business combination with the Company, rather than incur
the expenses associated with preparing audited financial
statements.
BLUE SKY CONSIDERATIONS. Because the securities registered
hereunder have not been registered for resale under the blue sky
laws of any state, and the Company has no current plans to
register or qualify its shares in any state, holders of these
shares and persons who desire to purchase them in any trading
market that might develop in the future, should be aware that
there may be significant state blue sky restrictions upon the
ability of new investors to purchase the securities. These
restrictions could reduce the size of any potential market. As a
result of recent changes in federal law, non-issuer trading or
resale of the Company's securities is exempt from state
registration or qualification requirements in most states.
Accordingly, investors should consider any potential secondary
market for the Company's securities to be a limited one.
ITEM 3. DESCRIPTION OF PROPERTY.
The Company's principal executive and administrative offices are
temporarily located at 886 Calverhill Street, North Vancouver,
BC, Canada V7L 1X9, which is provided by the President at no
charge to the Company. The Company also uses shared office space
with secretarial services located at 3651 Lindell Rd., Suite A,
Las Vegas, Nevada 89103 at no cost to the Company, and Management
expects this arrangement to continue. The Company pays its own
charges for long distance telephone calls and other miscellaneous
secretarial, photocopying, and similar expenses. This is a verbal
agreement between Vegas Commerce Center and the Board of
Directors.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
None of the officers or directors own any of the Company's Common
Stock. There are no individuals who own five percent (5%) of the
Company's Common Stock.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL
PERSONS
The members of the Board of Directors of the Company serve until
the next annual meeting of the stockholders, or until their
successors have been elected. The officers serve at the pleasure
of the Board of Directors.
There are no agreements for any officer or director to resign at
the request of any other person, and none of the officers or
directors named below are acting on behalf of, or at the
direction of, any other person.
The Company's officers and directors will devote their time to
the business on an "as-needed" basis, which is expected to
require 5-10 hours per month.
Information as to the directors and executive officers of the
Company is as follows:
<TABLE>
<S> <C> <C>
Name/Address Age Position
Patricia Wiate 46 President, Secretary,
Treasurer and
Director
</TABLE>
Patricia Wiate; President, Secretary, Treasurer and Director
Ms. Wiate has been the President, Secretary, Treasurer and
Director of the Company since incorporation on December 3, 1998.
Ms. Wiate has been involved in retail sales and marketing
including pottery from 1989 through 1996 and wine from 1997
through 1999. Prior to that time she studied wine in Europe
while her husband was in the military.
There are no promoters of the Company. The Company's Board of
Directors has not established any committees.
Conflicts of Interest
Certain conflicts of interest now exist and will continue to
exist between the Company and its officers and directors due to
the fact that Ms. Wiate has other business interests to which she
devotes her primary attention. Ms. Wiate may continue to do so,
notwithstanding the fact that management time should be devoted
to the business of the Company. Ms. Wiate may in the future
become a shareholder, officer or director of other companies
which may be formed for the purpose of engaging in business
activities similar to those conducted by the Company. The Company
does not currently have a right of first refusal pertaining to
opportunities that come to management's attention insofar as such
opportunities may relate to the Company's proposed business
operations.
Ms. Wiate so long as she remains an officer or director of the
Company, is subject to the restriction that all opportunities
contemplated by the Company's plan of operation which come to her
attention, either in the performance of her duties or in any
other manner, will be considered opportunities of, and be made
available to the Company and the companies that she is affiliated
with on an equal basis. A breach of this requirement will be a
breach of the fiduciary duties of the officer or director.
Investment Company Act of 1940
Although the Company will be subject to regulation under the
Securities Act of 1933 and the Securities Exchange Act of 1934,
management believes the Company will not be subject to regulation
under the Investment Company Act of 1940 insofar as the Company
will not be engaged in the business of investing or trading in
securities. In the event the Company engages in business
combinations which result in the Company holding passive
investment interests in a number of entities, the Company could
be subject to regulation under the Investment Company Act of
1940. In such event, the Company would be required to register as
an investment company and could be expected to incur significant
registration and compliance costs. The Company has obtained no
formal determination from the Securities and Exchange Commission
as to the status of the Company under the Investment Company Act
of 1940 and, consequently, any violation of such Act would
subject the Company to material adverse consequences.
ITEM 6. EXECUTIVE COMPENSATION
The Company's officer and/or director has not received any
compensation for her services rendered to the Company, nor has
she received such compensation in the past. She has agreed to act
without compensation until authorized by the Board of Directors,
which is not expected to occur until the Registrant has generated
revenues from operations. As of the date of this registration
statement, the Company has no funds available to pay Ms. Wiate
and she is not accruing any compensation pursuant to any
agreement with the Company.
No retirement, pension, profit sharing, stock option or insurance
programs or other similar programs have been adopted by the
Registrant for the benefit of its employees.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
ITEM 8. LEGAL PROCEEDINGS
The Company is not a party to any material pending legal
proceedings and, to the best of its knowledge, no such action by
or against the Company has been threatened.
ITEM 9. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The Company's common stock is not yet quoted on any market or
quotation system in the United States. Management has not
undertaken any discussions, preliminary or otherwise, with any
prospective market maker concerning the participation of such
market maker in the after-market for the Company's securities.
Market Price
The Registrant's Common Stock is not quoted at the present time.
Effective August 11, 1993, the Securities and Exchange Commission
adopted Rule 15g-9, which established the definition of a "penny
stock," for purposes relevant to the Company, as any equity
security that has a market price of less than $5.00 per share or
with an exercise price of less than $5.00 per share, subject to
certain exceptions. For any transaction involving a penny stock,
unless exempt, the rules require: (i) that a broker or dealer
approve a person's account for transactions in penny stocks; and
(ii) the broker or dealer receive from the investor a written
agreement to the transaction, setting forth the identity and
quantity of the penny stock to be purchased. In order to approve
a person's account for transactions in penny stocks, the broker
or dealer must (i) obtain financial information and investment
experience and objectives of the person; and (ii) make a
reasonable determination that the transactions in penny stocks
are suitable for that person and that person has sufficient
knowledge and experience in financial matters to be capable of
evaluating the risks of transactions in penny stocks. The broker
or dealer must also deliver, prior to any transaction in a penny
stock, a disclosure schedule prepared by the Commission relating
to the penny stock market, which, in highlight form, (i) sets
forth the basis on which the broker or dealer made the
suitability determination; and (ii) that the broker or dealer
received a signed, written agreement from the investor prior to
the transaction. Disclosure also has to be made about the risks
of investing in penny stocks in both public offerings and in
secondary trading, and about commissions payable to both the
broker-dealer and the registered representative, current
quotations for the securities and the rights and remedies
available to an investor in cases of fraud in penny stock
transactions. Finally, monthly statements have to be sent
disclosing recent price information for the penny stock held in
the account and information on the limited market in penny
stocks.
The National Association of Securities Dealers, Inc. (the
"NASD"), which administers NASDAQ, has recently made changes in
the criteria for initial listing on the NASDAQ Small Cap market
and for continued listing. For initial listing, a company must
have net tangible assets of $4 million, market capitalization of
$50 million or net income of $750,000 in the most recently
completed fiscal year or in two of the last three fiscal years.
For initial listing, the common stock must also have a minimum
bid price of $4 per share. In order to continue to be included on
NASDAQ, a company must maintain $2,000,000 in net tangible assets
and a $1,000,000 market value of its publicly-traded securities.
In addition, continued inclusion requires two market-makers and a
minimum bid price of $1.00 per share.
Management intends to strongly consider undertaking a transaction
with any merger or acquisition candidate which will allow the
Company's securities to be traded without the aforesaid
limitations. However, there can be no assurances that, upon a
successful merger or acquisition, the Company will qualify its
securities for listing on NASDAQ or some other national exchange,
or be able to maintain the maintenance criteria necessary to
insure continued listing. The failure of the Company to qualify
its securities or to meet the relevant maintenance criteria after
such qualification in the future may result in the discontinuance
of the inclusion of the Company's securities on a national
exchange. In such events, trading, if any, in the Company's
securities may then continue in the non-NASDAQ over-the-counter
market. As a result, a shareholder may find it more difficult to
dispose of, or to obtain accurate quotations as to the market
value of, the Company's securities.
Holders
There are 47 holders of the Company's Common Stock. The company
issued 100,000 shares of Common Stock on December 31, 1998 and an
additional 30,000 shares of Common Stock on November 12, 1999.
The Company also issued and sold 100,000 shares on March 23,
1999, pursuant to a Rule 504 of Regulation D Offering promulgated
under the Securities Act. These shares were issued for a price
of $0.10 per share pursuant to an exemption from registration
provided by Section 4(2) of the Securities Act of 1933, as
amended (the "Securities Act").
On December 31, 1998, the Company issued the following shares:
5,000 to Maria Aguilar; 10,000 to Kim Chan; 10,000 to Roger
Farmer; 5,000 to Martin Kay; 7,500 to Sharon Kennedy; 5,000 to
John Lynch; 10,000 to William Miller; 5,000 to David Owens; 7,500
to Christine Roberts; 10,000 to Jesus Sanchez; 7,500 to Mary
Sullivan; 7,500 to Mark Ventura; and 10,000 to Chi Yang.
On March 23, 1999, pursuant to an executed Subscription Agreement
at the price of $.10 per share, the Company issued the following
shares: 2,000 to Sarah Adams; 3,000 to William Bruce; 5,000 to
David Cardenas; 4,000 to John Daniels; 3,000 to Shirley
Dickenson; 5,000 to James Elliott; 5,000 to Julia Evans; 2,000 to
Jesse Graham; 2,500 to Susan Hahn; 3,000 to Michael Hall; 5,000
to Dennis Harrison; 2,500 to Gary Lawson; 4,000 to John Lucas;
4,500 to Michelle Mahoney; 5,000 to Charles Mann; 3,000 to Anna
Marshall; 2,500 to Jose Martinez; 5,000 to Joseph Murphy; 3,000
to Nancy Nash; 2,000 to Heather Nelson; 3,000 to Diane Oliver;
2,000 to Juan Ortega; 3,000 to John Parker; 3,000 to William
Parks; 1,500 to John Richardson; 4,000 to Robert Rivera; 1,500 to
Robert Shannon; 2,500 to Patricia Smith; 1,500 to Antonio Torres;
2,000 to Charles Tucker; 1,500 to John Valentine; 3,000 to
Michael Ward and 2,000 to David Wright.
On November 12, 1999, the Company issued 30,000 shares to Bill
Aaron.
Dividends
The Registrant has not paid any dividends to date, and has no
plans to do so in the immediate future.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.
The Company has not agreed to register any shares of its common
stock for any shareholder. There are presently 230,000 shares of
common stock outstanding. Of these, a total of 130,000 shares
are restricted pursuant to Rule 144 promulgated under the
Securities Act.
On December 31, 1998, the Company issued the following shares:
5,000 to Maria Aguilar; 10,000 to Kim Chan; 10,000 to Roger
Farmer; 5,000 to Martin Kay; 7,500 to Sharon Kennedy; 5,000 to
John Lynch; 10,000 to William Miller; 5,000 to David Owens; 7,500
to Christine Roberts; 10,000 to Jesus Sanchez; 7,500 to Mary
Sullivan; 7,500 to Mark Ventura; and 10,000 to Chi Yang.
On March 23, 1999, pursuant to an executed Subscription Agreement
at the price of $.10 per share, the Company issued the following
shares: 2,000 to Sarah Adams; 3,000 to William Bruce; 5,000 to
David Cardenas; 4,000 to John Daniels; 3,000 to Shirley
Dickenson; 5,000 to James Elliott; 5,000 to Julia Evans; 2,000 to
Jesse Graham; 2,500 to Susan Hahn; 3,000 to Michael Hall; 5,000
to Dennis Harrison; 2,500 to Gary Lawson; 4,000 to John Lucas;
4,500 to Michelle Mahoney; 5,000 to Charles Mann; 3,000 to Anna
Marshall; 2,500 to Jose Martinez; 5,000 to Joseph Murphy; 3,000
to Nancy Nash; 2,000 to Heather Nelson; 3,000 to Diane Oliver;
2,000 to Juan Ortega; 3,000 to John Parker; 3,000 to William
Parks; 1,500 to John Richardson; 4,000 to Robert Rivera; 1,500 to
Robert Shannon; 2,500 to Patricia Smith; 1,500 to Antonio Torres;
2,000 to Charles Tucker; 1,500 to John Valentine; 3,000 to
Michael Ward and 2,000 to David Wright.
On November 12, 1999, the Company issued 30,000 shares to Bill
Aaron.
In general, under Rule 144, a person (or persons whose shares are
aggregated) who has satisfied a one year holding period, under
certain circumstances, may sell within any three-month period a
number of shares which does not exceed the greater of one percent
of the then outstanding Common Stock or the average weekly
trading volume during the four calendar weeks prior to such sale.
Rule 144 also permits, under certain circumstances, the sale of
shares without any quantity limitation by a person who has
satisfied a two-year holding period and who is not, and has not
been for the preceding three months, an affiliate of the Company.
ITEM 11. DESCRIPTION OF SECURITIES.
Common Stock
The Company's Articles of Incorporation authorizes the issuance
of 50,000,000 shares of Common stock, par value $.001 per share,
of which 230,000 are issued and outstanding. The shares are non-
assessable, without pre-emptive rights, and do not carry
cumulative voting rights. Holders of common shares are entitled
to one vote for each share on all matters to be voted on by the
stockholders. The shares are fully paid, non-assessable, without
pre-emptive rights, and do not carry cumulative voting rights.
Holders of common shares are entitled to share ratably in
dividends, if any, as may be declared by the Company from time-to-
time, from funds legally available. In the event of a
liquidation, dissolution, or winding up of the Company, the
holders of shares of common stock are entitled to share on a pro-
rata basis all assets remaining after payment in full of all
liabilities.
Management is not aware of any circumstances in which additional
shares of any class or series of the Company's stock would be
issued to management or promoters, or affiliates or associates of
either.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company and its affiliates may not be liable to its
shareholders for errors in judgment or other acts or omissions
not amounting to intentional misconduct, fraud, or a knowing
violation of the law, since provisions have been made in the
Articles of Incorporation and By-laws limiting such liability.
The Articles of Incorporation and By-laws also provide for
indemnification of the officers and directors of the Company in
most cases for any liability suffered by them or arising from
their activities as officers and directors of the Company if they
were not engaged in intentional misconduct, fraud, or a knowing
violation of the law. Therefore, purchasers of these securities
may have a more limited right of action than they would have
except for this limitation in the Articles of Incorporation and
By-laws.
The officers and directors of the Company are accountable to the
Company as fiduciaries, which means such officers and directors
are required to exercise good faith and integrity in handling the
Company's affairs. A shareholder may be able to institute legal
action on behalf of himself and all others similarly stated
shareholders to recover damages where the Company has failed or
refused to observe the law.
Shareholders may, subject to applicable rules of civil procedure,
be able to bring a class action or derivative suit to enforce
their rights, including rights under certain federal and state
securities laws and regulations. Shareholders who have suffered
losses in connection with the purchase or sale of their interest
in the Company in connection with such sale or purchase,
including the misapplication by any such officer or director of
the proceeds from the sale of these securities, may be able to
recover such losses from the Company.
ITEM 13. FINANCIAL STATEMENTS.
The financial statements and supplemental data required by this
Item 13 follow the index of financial statements appearing at
Item 15 of this Form 10-SB.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
The Registrant has not changed accountants since its formation,
and Management has had no disagreements with the findings of its
accountants.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS.
FINANCIAL STATEMENTS
Report of Independent Auditors, dated June 2, 2000
Balance Sheet as of December 31, 1998, December 31,
1999 and
March 31, 2000
Statement of Operation for the years ended December 31,
1998 and December 31, 1999
Statement of Stockholders' Equity
Statement of Cash Flows for the years ended December
31, 1998 and December 31, 1999
Notes to Financial Statements
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 March 31, 2000,
and March 31, 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 March 31, 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 March 31, 2000, and March 31, 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
June 2, 2000
HOLMES HERBS, INC.
( A DEVELOPMENT STAGE COMPANY )
BALANCE SHEETS
<TABLE>
<S> < <C> < <C>
C C
> >
March 31, March
31,
2000 1999
ASSETS ------------ ---------
Cash $ 41 $ 71
------------ ---------
Total Assets $ 41 $ 71
========== =========
LIABILITIES &
STOCKHOLDERS' EQUITY
Accounts payable $ 1,400 $ 400
------------ ---------
Total Liabilities 1,400 400
Stockholders' Equity
Common stock, authorized
50,000,000 shares at .001
par value,
230,000 and 200,000
shares, respectively,
issued and outstanding 230 200
Additional paid-in 3,620 3,650
capital
Deficit accumulated
during the
development stage (5,209) (4,179)
------------ ---------
Total Stockholders' (1,359) (329)
Equity
Total Liabilities and $ 41 $ 71
Stockholders' 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>
C C C
> > >
From
Inception,
Jan. 1, 2000, Jan. 1, Dec. 3, 1998
to 1999, to To
Mar. 31, 2000 Mar. 31, Mar. 31,
1999 2000
------------- ------------ ------------
Income $ 0 $ $ 0
Expenses
Office and 0 3,779 3,809
administrative expenses
Professional fees 1,000 0 1,000
Organizational costs 0 0 400
---------- ---------- ----------
Total expenses 1,000 3,779 5,209
Net loss (1,000) (3,779) (5,209)
$ ========
Retained earnings, (4,209) (400)
beginning of period
---------- ----------
Deficit accumulated
during the
development stage $ (5,209) $ (4,179)
======== ========
Earnings ( loss ) per
share
assuming dilution:
Net loss $ 0.00 $ (0.03) $ (0.02)
======== ======== ========
Weighted average shares 230,000 133,333 178,125
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 MARCH 31, 2000
<TABLE>
<S> <C> < <C> < <C> <<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 30,000 30 2,970 3,000
Nov. 10, 1999
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 (1,000)
--------- --------- --------- ---------
Balance,
March 31, 2000 230,000 $ 230 $ 3,620 $ (1,359)
======== ======== ======== ========
</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>
C C C
> > >
From
Inception,
Jan. 1, 2000, Jan. 1, Dec. 3,
to 1999, to 1998
Mar. 31, 2000 Mar. 31, To Mar. 31,
1999 2000
----------- ------------ ------------
CASH FLOWS PROVIDED BY
OPERATING
ACTIVITIES
Net Loss $ (1,000) $ (3,779) $ (4,209)
Non-cash items included in
net loss
Adjustments to reconcile net
loss to
cash used by operating
activity
Accounts payable 1,000 0 400
---------- --------- ------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 0 (3,779) (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 (29) $ 41
==========
CASH AT BEGINNING OF PERIOD 41 100
----------- ---------
CASH AT END OF PERIOD $ 41 $ 71
======== ========
</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
MARCH 31, 2000, AND MARCH 31, 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.
- 6 -
EXHIBITS
3.1 Articles of Incorporation
3.2 By-Laws
