In November 1997, prior to its acquisition by the Company, NBMDE entered into a share exchange agreement with MMG. The exchange was made whereby NBMDE issued 499,000 shares of its restricted common stock to the principals of DJH, including an issuance of 394,375 shares to Daniel Hoyng, the Company's President and CEO. The Company has an employment contract with Mr.Hoyng. This offering was conducted pursuant to Section 4(2) of the Act and Rule 506 and the Nevada Exemption. No Form D was filed with the Securities and Exchange Commission.
From November to December 1997, prior to its acquisition by the Company, NBMDE conducted a self-directed private placement offering its twelve percent (12%) convertible preferred Series A shares and three-year warrants exercisable at $2.50. NBMDE received proceeds of $25,000 from one (1) investor and granted warrants to purchase 10,000 shares of NBMDE's Common Stock. NMBDE used an Offering Memorandum in connection with this placement. This offering was conducted pursuant to Section 4(2) of the Act and Rule 506 and Section 25102(f) of the California Code. The facts relied upon for compliance with the California Code are as follows: The sale was made to less than 35 purchasers, including persons not in California; the purchaser either had a preexisting personal or business relationship with the Company or one of its officers, directors or controlling persons, or by reason of their business or financial experience or the business or financial experience of their professional advisors who were unaffiliated with and who were not compensated by the issuer or any affiliate or selling agent of the issuer, directly or indirectly and could be reasonably assumed to have the capacity to protect their own interests in connection with the transaction; each purchaser represented that the purchaser was purchasing for the purchaser's own account and not with a view to or for sale in connection with any distribution of the security; the sale was not accomplished by the publication of any advertisement. No filing was made with the California Department of Corporations as required by California Rule 260.102.14, although 25102(f) provides: the failure to file the notice within the time specified by the rule of the commissioner shall not affect the availability of this exemption. No Form D was filed with the SEC.
From December 1997 to June 1998, prior to its acquisition by the Company, NBMDE conducted a self-directed private placement offering shares of the NBMDE's 12% convertible bonds and three-year warrants exercisable at $1.25 per share. NBMDE received proceeds of $2,403,500 from thirty-five (35) investors and granted warrants to purchase 1,922,800 shares of NBMDE's Common Stock. NBMDE used an Offering Memorandum in connection with this placement. This offering was conducted pursuant to Section 4(2) of the Act and Rule 506 and Section 8-6-11 of the Alabama Code, Section 44-1844 of the Arizona Code, Section 517.061(11)(a) of the Florida Code, Section 10-5-5(e) of the Georgia Code; Section 130.293 of the Illinois Code, Section 710 I.A.C. 1-13-6(d) of the Indiana Code, Section 51:705 of the Louisiana Code, Section 80A.15(Subd. 2)(h) of the Minnesota Code, Section 30-54.210 of the Missouri Code, Section 359(f)(2)(d) of the New York Code, Section 18(b)(4)(D) of the North Carolina Code and Section 460-44A-506 of the Washington Code. See Part II, Item 4. "Recent Sales of Unregistered Securities."
From December 1997 to June 1998, prior to its acquisition by the Company, NBMDE conducted a self-directed private placement offering shares of the NBMDE's 12% convertible bonds and three-year warrants exercisable at $2.50 per share. NBMDE received proceeds of $1,105,000 from forty-seven (47) investors and granted warrants to purchase 392,000 shares of NBMDE's Common Stock. NDMDE used an Offering Memorandum in connection with this placement. This offering was conducted pursuant to Section 4(2) of the Act and Rule 506 and Section 8-6-11 of the Alabama Code, Section 25102(f) of the California Code, Section 517.061(11)(a) of the Florida Code, Section 10-5-5(e) of the Georgia Code; Section 130.293 of the Illinois Code, Section 710 I.A.C. 1-13-6(d) of the Indiana Code, Section 51:705 of the Louisiana Code, Section 402(b)(9) of the Massachusetts Code, Section 359(f)(2)(d) of the New York Code, Section 203(d) of the Pennsylvania Code, Section 35-1-320(9) of the South Carolina Code and Section 551.23 of the Wisconsin Code. See Part II, Item 4. "Recent Sales of Unregistered Securities."
NBMDE relied upon a South Carolina exemption from registration, although the Company failed to file with the state securities bureau as mandated by the state statute. Sec. 35-1- 320(9) states: any transaction pursuant to an offer directed by the offeror to not more than twenty-five persons, other than those designated in item (8) of this section, in this State during any period of twelve consecutive months, whether or not the offeror or any of the offerees is then present in this State, if (a) the seller reasonably believes that all the buyers in this State, other than those designated in item (8) of this section, are purchasing for investment and (b) no commission or other remuneration is paid or given directly or indirectly for soliciting any prospective buyer in this State, other than those designated in item (8) of this section; but the Securities Commissioner may by rule or order, as to any security or transaction or any type of security or transaction, withdraw or further condition this exemption, increase or decrease the number of offerees permitted or waive the conditions in clauses (a) and (b) with or without the substitution of a limitation on remuneration and the Securities Commissioner, further, may require persons claiming this exemption to notify him in writing of the claim of exemption, the number of offers extended and to whom made at any point during the offering process;
In late 1997, NBMDE entered into a Consulting Agreement with the DAG, for which NBMDE paid commissions in the form of cash and stock to DAG in connection with an offering of NBMDE's 12% bonds and warrants. The Agreement was declared null and void ab initio by the Company in June 1999, at which time the Company entered into agreements with DFL and ECG. No Form D was filed with the SEC.
In February 1998, prior to its acquisition by the Company, NBMDE entered into a Consulting Agreement with Equity to provide financial public relations consulting services in exchange for $60,000 annually and 1.5% of the issued and outstanding stock of the company, which at that time was estimated at 75,000 shares. The term of the contract was for a period of one (1) year. In December 1998, after its acquisition of NBMDE, the Company terminated this agreement. As part of a settlement agreement, the Company issued 175,000 shares of its unrestricted Common Stock valued at $7,000 to Equity and Equity executed a full and general release for all claims. NBMDE relied upon Section 3(b) of the Act and Rule 504 and Section 49:3-50(b)(9) of the New Jersey Code.
In February 1998, the Company's predecessor, Frozen Assets, entered into a share exchange agreement with Growth whereby Frozen Assets canceled 2,500,000 shares of its restricted common stock and exchanged 1,200,000 of its convertible preferred stock (which stock contained 10 to 1 conversion and voting rights) for all of the outstanding capital stock of Growth, which then became a wholly-owned subsidiary of Frozen Assets. The Company relied upon Section 4(2) of the Act and Rule 506 and the Nevada Exemption. Growth is currently inactive and its corporate charter has been revoked by the state of Nevada. No Form D was filed with the SEC.
On March 1, 1998, the Company executed the TK Note. In July 1998, TK converted $10,000 of principal plus the accrued interest on the Note into the Company's common stock at a price of $0.1216 per share for a total of 84,779 shares. The principals of the Company failed to disclose this outstanding liability to NBMDE at the time of their exchange agreement in October 8, 1998. The new principals of the Company honored the debt and on October 20, 1998 allowed TK to convert an additional $100,000 of principal plus the accrued interest on the Note into the Company's common stock at a price of at a price of $0.24 for 443,790 shares. On or about October 28, 1998 TK converted the $390,000 of principal plus accrued into 513,647 post split shares of the Company's Common Stock. While no offering memorandum was used in connection with this offering, the business plan of the Company, which was disclosed to the investor, then was for the provision of product development, sales and services for the fragrance, hand rolled cigar and Irish chocolate industries. The Company claimed an exemption from registration in connection with each of the issuances under Section 3(b) of the Act and Rule 504. No state exemption was required as TK is located in Canada. No Form D was filed with the SEC.
On March 24, 1998, the Company entered into a share exchange agreement with Fragrance Florida, whereby the Company exchanged 1,200,000 of its convertible preferred stock (which stock contained 10 to 1 conversion and voting rights) for all of the outstanding capital stock of Fragrance Florida, which then became a wholly-owned subsidiary of the Company. On June 4, 1998, the Company amended its Articles of Incorporation changing its name to Fragrance Express, Inc. Although the parent and its subsidiary Fragrance Florida bore the same name, they did not share the same state of incorporation, so no consent was necessary. The Company relied upon Section 4(2) of the Act and Rule 506 and the Florida Exemption. No Form D was filed with the SEC.
On May 21, 1998, NBMDE, prior to its acquisition by the Company, entered into a Consulting Agreement with Rothschild and Mayflower, whereby Rothschild and Mayflower agreed to provide a fully trading public company to the Company in exchange for issuance of 650,000 shares of NBMDE's Common Stock which were to be converted into 400,000 (200,000 each) restricted shares in the new public company and a commitment to issue an additional 225,000 (112,500 each) unrestricted shares in the new public company after acquisition. NBMDE relied upon Section 4(2) of the Act and Rule 506 and the Florida Exemption. No Form D was filed with the SEC.
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