Pre-Effective Amendment 2
As filed with the Securities and Exchange Commission on April 3, 1997.
REGISTRATION NO. 333-16031
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
LITIGATION ECONOMICS, INC.
(Name of Small Business Issuer in its Charter)
Nevada 7392 86-0793960
(State or Other Jurisdiction (Primary Standard (I.R.S. Employer
of Incorporation or Industrial Indentification
Organization) Classification Code Number) No.)
227 South Ninth Avenue, Pocatello, Idaho 83201, (208) 233-8001
(Address and Telephone Number of Registrant's Principal Place of
Business)
Cornelius A. Hofman II, 227 South Ninth Avenue Pocatello, Idaho
83201, (208) 233-8001
(Name, Address and Telephone Number of Agent for Service)
Copies to:
Cletha A. Walstrand, Esq., Poulton & Yordan, 4 Triad Center,
Suite 500-A
Salt Lake City, Utah 84180 (801) 355-1341
Approximate Date of Proposed Sale to the Public: As soon as
practicable from time to time after this registration statement
becomes effective.
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, check
the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415
under the Securities Act of 1933 check the following box.
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box.
<PAGE>
CALCULATION OF REGISTRATION FEE
Title of each Proposed Proposed
Class of Maximum Minimum
Securities Dollar Amount Offering Aggregate
to be to be Price Offering Amount of
Registered Registered Per Unit Price Registration
Fee
Common $100,000 $1.00 $50,000 $100
The registrant hereby amends this registration statement on such
date or dates as may be necessary to delay its effective date
until the registrant shall file a further amendment which
specifically states that this registration statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this registration statement
shall become effective on such date as the Commission, acting
pursuant to said Section 8(a) may determine.
<PAGE>
Litigation Economics, Inc.
CROSS-REFERENCE SHEET
Pursuant to Rule 404(a)
Item Number and Heading Heading in Prospectus
1. Front of the Registration Statement and
Outside Front Cover Page of Prospectus . . Facing pages;
Front Cover Page
2. Inside Front and Outside Back Cover Pages
of Prospectus . . . . . . . . . . . . . . Inside Front and Outside
Back Cover Pages of
Prospectus
3. Summary Information and Risk Factors . . Prospectus Summary; Risk
Factors
4. Use of Proceeds . . . . . . . . . . . . . Prospectus Summary; Use of
Proceeds; Description of
Business;
5. Determination of Offering Price . . . . . Cover Page; Prospectus
Summary; Risk Factors;
Determination of
Offering Price
6. Dilution . . . . . . . . . . . . . . . . Dilution; Comparative Data
7. Selling Security Holders . . . . . . . . Not applicable
8. Plan of Distribution . . . . . . . . . . Front Cover Page; Plan of
Distribution
9. Legal Proceedings . . . . . . . . . . . Legal Matters
10.Directors, Executive Officers, Promoters
and Control Persons . . . . . . . . . . Directors, Executive
Officers, Promoters
and Control Persons
11.Security Ownership of Certain Beneficial
Owners and Management . . . . . . . . . Security Ownership of
Certain Beneficial
Owners and Management
12.Description of the Securities . . . . . Description of Securities
13.Interest of Named Experts and Counsel . Not Applicable
<PAGE>
14.Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities . . . . . . . . . . . . . . Disclosure of Commission
Position on Indemnification
for Securities Act
Liabilities
15.Organization Within Last Five Years . . Organization Within Last
Five Years
16.Description of Business . . . . . . . . Description of Business
17.Management's Discussion and Analysis or
Plan Of Operation . . . . . . . . . . . Plan of Operations
18.Description of Property . . . . . . . . Description of Property
19.Certain Relationships and Related
Transactions . . . . . . . . . . . . . Not Applicable
20.Market for Common Equity and Related
Stockholder Matters . . . . . . . . . . Front Cover Page; Risk
Factors; Shares Eligible
for Future Sale
21.Executive Compensation . . . . . . . . Executive Compensation
22.Financial Statements . . . . . . . . . Financial Statements
23.Changes In and Disagreements with
Accountants on Accounting and Financial
Disclosure . . . . . . . . . . . . . . Not Applicable
<PAGE>
50,000 Minimum / 100,000 Maximum Shares
Litigation Economics, Inc.
Common Stock
Litigation Economics, Inc. (the "Company") is offering
50,000 Minimum and 100,000 Maximum shares of its $.001 par value
common stock, (the "Common Stock" or the "Shares") to the public
at a price of $1.00 per Share.
Prior to this offering, there has been no public market for
the Shares of Common Stock, and there can be no assurance that a
market will develop upon completion of this offering or, if a
market should develop, that it will continue. The initial public
offering price has been arbitrarily determined by the Company and
bears no necessary relationship to assets, shareholders equity or
any other recognized criteria of value.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. INVESTORS SHOULD
EXPECT IMMEDIATE SUBSTANTIAL DILUTION. (SEE "THE COMPANY -
DILUTION") EVEN IF THE COMPANY SUCCEEDS IN RAISING THE MAXIMUM
AMOUNT IN THE OFFERING, THE AMOUNT OF CAPITAL AVAILABLE TO THE
COMPANY WILL BE EXTREMELY LIMITED AND MAY NOT BE SUFFICIENT TO
ENABLE THE COMPANY TO FULLY COMMENCE ITS PROPOSED BUSINESS
OPERATIONS WITHOUT ADDITIONAL FUND RAISING. (SEE "RISK
FACTORS," PAGE 5) THE SECURITIES OFFERED HEREIN SHOULD NOT BE
PURCHASED BY ANY INVESTOR WHO CANNOT AFFORD TO SUSTAIN THE TOTAL
LOSS OF THEIR INVESTMENT.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES AGENCY
NOR HAS THE COMMISSION OR ANY AGENCY PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
Price to Underwriting Discounts Proceeds to
Public(1)(3) and Commissions(1)(3) Company(2)(3)
Per Share $1.00 $.00 $1.00
Total Minimum $50,000 $.00 $50,000
Total Maximum $100,000 $.00 $100,000
(1) The offering will be managed by the Company and the
Shares will be offered and sold by officers of the
Company, without any discounts or other commissions.
See "Plan of Distribution."
(2) Proceeds to the Company are shown before deducting
offering expenses payable by the Company estimated at
$20,000, including legal and accounting fees and
printing costs.
(3) The offering is being conducted by the Company on a
"best efforts" basis. If the Company is unable to sell
at least the Minimum Offering, all of the funds
received by the Company will be returned to the
investors. Proceeds will be deposited no later than
noon of the next business day after receipt into an
escrow account number 1882 with Mr. Ron Bitton,
Professional Escrow Services, P. O. Box 2466, 920 Deon
Drive, Suite B, Pocatello, Idaho 83206, pending
receipt of subscriptions totalling $50,000 (the minimum
offering). If subscriptions for all 50,000 Shares of
the Minimum Offering have not been received within 120
days from the effective date as set forth below, the
Offering will terminate (unless extended by the Company
for up to 30 additional days) and all proceeds will be
promptly refunded to subscribers without interest
thereon or deduction therefrom. Subscribers will have
no right to return or use of their funds during the
offering period, which may last up to 150 days.
The Shares are being offered by the Company subject to prior
sale, receipt and acceptance by the Company, approval of certain
matters by counsel, and certain other conditions. The Company
reserves the right to withdraw or cancel such offer and reject
any order, in whole or in part.
The date of this Prospectus is March ____, 1997.
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the United States Securities and
Exchange Commission (the "Commission") a Registration Statement
on Form SB-2, under the Securities Act of 1933, as amended (the
"Securities Act), with respect to the securities offered hereby.
As permitted by the rules and regulations of the Commission, this
Prospectus does not contain all of the information contained in
the Registration Statement. For further information regarding
both the Company and the Securities offered hereby, reference is
made to the Registration Statement, including all exhibits and
schedules thereto, which may be inspected without charge at the
public reference facilities of the Commission's Washington, D.C.
office, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies
may be obtained from the Washington, D.C. office upon request and
payment of the prescribed fee.
The Company will not file a Form 8-A or other Registration
Statement under the Securities Exchange Act and will only be
subject to Section 15(d) following the effective date, therefore
the proxy rules, short-swing profits regulations, beneficial
ownership reporting regulations and the bulk of the tender offer
regulations will not be applicable to the Company.
The Company intends to furnish its stockholders with annual
reports containing consolidated financial statements audited and
reported upon by its independent accounting firm and such other
periodic reports as the Company may determine to be appropriate
or as may be required by law.
The Company is an electronic filer. The Commission
maintains a Web site that contains reports, proxy and information
statements and other information regarding issuers that file
electronically with the Commission. The Commission's Web site
address is (http:/www.sec.gov).
As of the date of this Prospectus, the Company became
subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and, in
accordance therewith, will file reports and other information
with the Commission. Reports and other information filed by the
Company with the Commission pursuant to the informational
requirements of the Exchange Act will be available for inspection
and copying at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the following regional offices of the Commission:
New York Regional Office, Seven World Trade Center, 13th Floor,
New York, New York 10048; Chicago Regional Office, 500 West
Madison Street, Chicago, Illinois 60661. Copies of such material
may be obtained from the public reference section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates.
Copies of the Company's Annual, Quarterly and other Reports
which will be filed by the Company with the Commission commencing
with the Quarterly Report for the first quarter ended after the
date of this Prospectus (due 45 days after the end of such
quarter) will also be available upon request, without charge, by
writing Litigation Economics, Inc., 227 South Ninth Avenue,
Pocatello, Idaho 83201.
UNTIL (90 DAYS AFTER THE EFFECTIVE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES,
WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE
REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE
OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
<PAGE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY ANY
STATE SECURITIES COMMISSION OR OTHER STATE REGULATORY AUTHORITY,
AND NO SUCH REGULATORY AUTHORITY HAS PASSED UPON THE TERMS OF
THIS OFFERING OR APPROVED THE MERITS THEREOF. INVESTORS MUST
RELY ON THEIR OWN EXAMINATION OF THE COMPANY AND THE TERMS OF
THIS OFFERING IN EVALUATING THE MERITS AND RISKS OF THE OFFERING
AND MAKING AN INVESTMENT DECISION.
THIS PROSPECTUS SHOULD BE READ IN ITS ENTIRETY BY ANY PROSPECTIVE
INVESTOR PRIOR TO HIS OR HER INVESTMENT.
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by
reference to the detailed information and consolidated
financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. Each prospective investor is
urged to read this Prospectus in its entirety, and
particularly the information set forth in "RISK FACTORS."
The Company
Litigation Economics, Inc. (the Company ) through its
wholly owned subsidiary, G.E.C., Inc., ("GEC") intends to
engage in the business of marketing and providing economic
damage consulting services to attorneys involved in
litigation and to engage in and perform any and all
activities customary in connection therewith throughout the
United States. The Company intends to provide economic,
financial, statistical, and other types of analysis and
services necessary to litigation involving disputes
regarding economic damages. The Company intends to use the
proceeds of this Offering to market and advertise the
Company s services, buy computer equipment and other assets
and lease properties so that the Company can begin marketing
and providing services by early 1997.
To date, the Company has not received any revenues from
its intended operations nor has the Company otherwise
engaged in any business. Further, the Company does not
currently have any customers for its services.
The Offering
Securities Offered: Minimum of 50,000 Shares, Maximum of
100,000 Shares of Common Stock, $.001
par value ("Common Stock") of the Company.
See "Description of Securities".
Offering Price: $1.00 per Share
Plan of Distribution: The offering will be managed by the Company
and the Shares will be offered and sold by
officers of the Company, without any discounts
or other commissions. Offering proceeds will
be placed in escrow pending completion or
termination of the offering. The offering
will terminate 120 days from the date hereof
(or 150 days if extended by the Company for an
additional 30 days), and funds held in escrow
will be promptly returned to subscribers, unless
the offering minimum is completed on or before
that date upon receipt of subscriptions for the
minimum offering amount. See "Plan of Distribution."
Escrow Agent: Mr. Ron Bitton, Professional Escrow Services,
P. O. Box 2466, 920 Deon Drive, Suite B, Pocatello,
Idaho 83206 will serve as escrow agent for receipt
of the proceeds from this offering.
Use of Proceeds: Management intends to use the net proceeds from
this offering primarily for the purposes of
acquiring supplies and equipment, marketing and
advertising the Company's services, covering the
initial operating expenses and providing the Company
with working capital.
<PAGE>
Transfer Agent: Interwest Transfer Company, Inc., 1981 East Murray-
Holladay Road, Salt Lake City, Utah 84117, Telephone
(801) 272-9294, has agreed to serve as transfer
agent upon completion of this offering.
Securities
Outstanding: The Company presently has 1,500,000 shares of
Common Stock issued and outstanding. Upon completion
of this offering, at least 1,550,000 shares will
be issued and outstanding if the minimum offering
is achieved and 1,600,000 shares will be issued and
outstanding if the maximum offering is achieved.
In addition, the Company has adopted a Stock Option
Plan pursuant to which up to 500,000 shares of
Common Stock may be issued upon the exercise of
options which the Board of Directors has the
authority to grant to officers, directors and
employees. See "1996 Stock Option Plan." The
Company is also authorized to issue up to 5,000,000
shares of preferred stock, the rights and
preferences of which may be designated in series
by the Board of Directors. To the extent of such
authorization, such designations may be made without
shareholder approval. The Board of Directors
has not designated any series or issued any shares
of preferred stock. The designation and issuance
of series of preferred stock in the future would
create additional securities which would have
dividend and liquidation preferences over the
Common Stock offered hereby.
Risk Factors: The Company is a start up company with no operating
history; consequently, an investment in the Company
is highly speculative. Investors will suffer
substantial dilution in the book value per share of
the Common Stock compared to the purchase price. In
seeking to implement its proposed business, the
Company could incur substantial losses during the
development stage, and require additional funding
for which it has no commitments. Management has
other interest which may conflict with the
interests of the Company. Until such time, if
ever, that the Company generates sufficient revenue
to pay management salaries, members of management
will not be employed full time and will only devote
a minimal amount of time to the affairs of the
Company. No person should invest in the Company
who cannot afford to risk loss of the entire
investment. See "Risk Factors."
Summary Selected
Financial Data: The Company is a development stage company and has
no revenues or earnings from operations. As of
August 31, 1996:
Total Assets $ 5,492
Total Liabilities $ 2,188
Shareholder Equity $ 3,304
Net Tangible Book Value $ 3,304
Net Tangible Book Value per Share $ 0.022
<PAGE>
RISK FACTORS
An investment in the securities offered hereby involves
a high degree of risk. Prospective investors should
carefully consider the following risk factors, in addition
to the other information set forth elsewhere in this
Prospectus, including the Consolidated Financial Statements
and Notes, prior to making an investment in the Company.
Risks Inherent in a New Start Up Company
1. No Operating History/Doubts as to Going Concern.
The Company will not commence operations until the proceeds
of this Offering are available, therefore, the Company has
no operating history. Businesses which are starting up or
in their initial stages of development present substantial
business and financial risks and may suffer significant
losses from which they can not recover. The Company will
face all of the challenges of a new business enterprise,
including but not limited to, locating suitable office
space, engaging the services of qualified support personnel
and consultants, establishing budgets, implementing
appropriate financial controls and internal operating
policies and procedures. However, the Company does not have
significant cash and has not had significant operations
since the inception of its development stage. As noted in
the Independent accountants opinion, there is substantial
doubt about the Company's ability to continue as a going
concern without the realization of additional adequate
financing.
2. Limited Capital/Need for Additional Capital. The
Company presently has no significant operating capital and
is totally dependent upon receipt of the proceeds of the
Offering, to continue production and marketing of its
product. Start-up costs include purchase of capital
equipment such as computers, office equipment, office
leasing, supplies and travel. If the minimum offering is
raised, the Company will recognize a net amount of $30,000.
The Company believes this amount will enable it to initiate
operations and conduct business in three locations for a
period of twelve months. If only the minimum is raised, the
Company will reduce expenses by limiting its advertising and
marketing costs. Following in depth research, the Company
believes it can obtain the necessary computing equipment and
office equipment for approximately $7,500 and lease office
space in three locations for one year at a cost of
approximately $10,000. Working capital of $5,000 should be
sufficient to cover operating costs of the three offices for
a period of one year. The Company plans on expending $7,500
for marketing and advertising the Company's services.
Should the Company raise the maximum offering, it will
recognize a net amount of $80,000. This would enable the
Company to operate from six locations for a period of one
year at an estimated cost of $20,000 for rents and allow the
Company to expend an additional $20,000 for capital
equipment and supplies. The Company would also increase its
marketing and advertising efforts and has estimated $25,000.
Finally, operating expenses and working capital for six
locations would increase to $15,000. Upon completion of the
Offering, even if the entire Offering amount is raised, the
amount of capital available to the Company will be extremely
limited, and may not be sufficient to enable the Company to
fully commence its proposed business operations without
additional fund raising. The Company has no commitments for
additional cash funding beyond the proceeds expected to be
received from this Offering.
<PAGE>
3. Dependence on the Efforts of Management. The
success of the Company will depend in large measure on the
efforts and assistance of its management. The officers and
directors have experience in financial analysis and
economics which will be important to the Company's success.
However, as compared to many other public companies, the
Company lacks a depth of managerial and technical personnel.
Accordingly, there is a greater likelihood that the loss of
their services would impair the ability of the Company to
effectively carry out its operations. The Company has no
plans to obtain Key Man insurance for any of its officers
and directors. In view of the fact that the Company's
proprietary product is already fully developed and
operational, Key Man insurance is not required. The
Company's focus is on providing services utilizing its
proprietary product. It is the belief of the Company that
an experienced service provider would be able to carry on
the Company's business should any of the current officers or
directors resign or terminate their relationship with the
Company. Further, all but one of the directors will
maintain part to full time employment outside the Company
and may not be able to devote sufficient attention to the
Company to ensure its success until earnings justify
additional time be devoted to the Company. Such outside
employment may also create conflicts of interest. There is
no assurance such conflicts could be resolved favorably for
the Company, however, Nevada corporate law requires all
officers and directors of the Company to act according to
their fiduciary duties to the stockholders.
4. Payment of Dividends. The Company has not paid
dividends on its common stock and does not anticipate paying
dividends on its common stock in the foreseeable future.
There is no assurance that the Company's operation will
generate net profits from which to pay cash dividends.
Investors who anticipate the need of immediate income from
an investment should not purchase the shares being offered
hereby.
5. Limited Liability of Officers and Directors. The
Nevada Revised Statutes provides that the Company shall
provide indemnification of officers and directors and
certain employees under certain circumstances and payment of
expenses outlined in the statute. The Bylaws of the Company
provide that the officers and directors of the Company shall
be indemnified to the fullest extent allowable under the
statute.
Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors,
officers and controlling persons of the Company pursuant to
the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by the Company of expenses incurred or paid by a
director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being offered, the Company
will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed
in the Securities Act and will be governed by the final
adjudication of such issue.
<PAGE>
Risks Related to the Nature of the Proposed Business
6. Uncertain Market Acceptance. The Company s
proposed business is based on the Company's belief of the
need for a cost effective, accurate method of determining
the economic damages of an injured party during the pre-
trial settlement phase of litigation. Currently, attorneys
involved in litigation practice typically use their own
economic analysis of damages during the pre-trial settlement
phase of litigation and resort to hiring economists,
statisticians and other financial experts when it becomes
apparent settlement cannot be reached. Based on the cost of
hiring outside experts, the Company believes its business
may be a solution for litigation attorneys. There is no
assurance of market acceptance of this concept, and the
Company s business will be subject to all the risks
associated with introducing a new marketing concept. The
Company has undertaken no independent market study to
determine the feasibility of this concept.
7. Competition. The Company will operate in a highly
competitive environment. Competition ranges from a large
number of sole practitioners to a variety of large, national
consulting firms. Many of the Company s competitors are
larger and have significantly greater financial resources,
operating experiences, management experience, and other
capabilities than the Company. The Company's major
competition is attorneys who presently perform economic
damage analyses themselves for settlement. The Company
also faces competition from consulting firms who offer
economic damage analyses for litigation attorneys.
8. Reliance on Short Term Terminable Leases for
Office Space. The Company intends to lease office space.
So as not to incur excessive long term liabilities, the
Company intends to lease space on a short term, terminable
basis. These leases may be terminable as frequently as each
month. The Company has no assurance that it will be able to
negotiate leases on these terms. Further, if the Company is
able to negotiate short term terminable leases, it is
foreseeable that these leases would be terminated by the
lessors as soon as the lessor found someone willing to lease
the property on a longer term basis. Should this be the
case, the Company will likely incur significant expense in
searching for and configuring new office space to meet its
needs. Also, the Company could incur significant
inconvenience, loss of time and income, disruption of
marketing and customer service as well as loss of customer
confidence if it is required to change office space on a
frequent basis.
9. Proprietary Information. PreVal(TM) is a
proprietary computer aided damage analysis system designed
by Cornelius A. Hofman, II and used exclusively by the
Company. The Company anticipates registering the trademark
PreValTM under federal trademark law. However, until such
registration is complete, the Company will take appropriate
internal and external safeguards to ensure proprietary
information is adequately protected, nevertheless, there are
no guarantees information will not leak out. The Company
does not intend to copyright the PreVal(TM) system as it does
not intend to market the system but instead will market
services using the system in-house. By keeping the PreValTM
system in-house, the Company will be better able to protects
its proprietary system. However, by not obtaining a
copyright on the system, there are no barriers to others
substantially copying or using the PreVal(TM) system.
<PAGE>
10. Potential for Indirect Government Regulation.
Over the last decade, state and federal legislatures have
begun imposing legal limitations on the recovery of certain
types of non-economic damages, this tort reform trend has
picked up steam over the last several years. To date, the
changes to the legal system proposed as a part of the tort
reform movement have been limited to the recovery of
nonpecuniary damages (those not capable of monetary
calculation). While the Company s services do not fall
under the limitations of the current tort reform movement,
there is no guarantee that the legislative structure of tort
reform will not change. If legislation were passed placing
caps on pecuniary damages, such legislation may materially
adversely affect the Company.
11. Potential for Conflict of Interest with General
Economic Consulting, Inc. General Economic Consulting, Inc.
provides consulting services similar to the Company s. The
Company intends to subcontract some consulting work to
General Economic Consulting. The Company does not intend to
subcontract any PreValTM work to General Economic Consulting
or to any other company. PreValTM is a computer aided
service developed by one of the officers of the Company and
was created for analyzing economic damages. The PreValTM
service will only be offered by the Company and will not be
subcontracted to General Economic Consulting, Inc. One of
the Company s directors is also a director of General
Economic Consulting. It is contemplated that the Company
may enter into non-arms length transactions with members of
the Company s management, members of General Economic
Consulting s management, and the management of other
potential subcontractors, including but not limited to, the
leasing or use of facilities and the possible purchase of
various assets. Management intends that such transactions
be entered into on a fair and reasonable basis to the
Company; however, due to the non-arms length nature of such
transactions there is no assurance of this. Nevada law
requires all officers and directors of the Company to act
according to their fiduciary duties to the shareholders.
Risks Related to the Offering
12. Best Efforts Offering/No Firm Commitment. The
Shares are offered by the Company on a "best efforts" basis.
There is no underwriter and no firm commitment from anyone
to purchase all or any of the Shares offered. No assurance
can be given that all of the Shares will be sold. If the
Company is unable to sell at least the Minimum Offering, all
of the funds received by the Company will have to be
returned to the investors and the Company will have no funds
available for operations.
13. Uncertain Public Market for Shares/Shares not
Listed on Any Exchange or NASDAQ. At present, the Company's
shares are not traded publicly. There is no assurance that
a trading market will develop, or, if developed, that it
will be sustained. The Company will not list the securities
on any exchange or NASDAQ because it will not be able to
meet the financial criteria for any such listing.
Therefore, any investment in the shares will be very non-
liquid. However, the Company does intend to apply for
listing on the Over-the-Counter Bulletin Board ( OTCBB ). A
purchaser of shares may, therefore, find it difficult to
resell the securities offered herein should he or she desire
to do so. Furthermore, the shares are not marginable and
it is unlikely that a lending institution would accept the
Company's common stock as collateral for a loan.
14. Arbitrary Offering Price. The offering price of
the shares was arbitrarily determined by the Company. There
is no relationship between the offering price of the shares
and the Company's assets, earnings, book value, net worth or
other economic or recognized criteria or future value of the
Company's shares.
<PAGE>
15. Volatility of Stock Price. If a public market
develops for the Shares, many factors will influence the
market prices. The Shares will be subject to significant
fluctuation in response to variations in operating results
of the Company, investor perceptions of the Company, supply
and demand, interest rates, general economic conditions and
those specific to the industry, developments with regard to
the Company's activities, future financial condition and
management.
16. Uncertain Sufficiency of Funds. The Company
believes that the net proceeds from the sale of the Shares
offered hereby (assuming that all Shares offered hereby are
sold) will provide the Company with sufficient capital to
fund the initial marketing and operating costs of the
Company. If the minimum offering is raised, the Company
believes it will have sufficient resources to commence and
continue limited operations for twelve months. With
proceeds from a minimum raise, the Company will limit its
initial operations to three offices rather than the six
offices anticipated should the maximum offering be raised.
Many factors may, however, affect the Company's cash needs,
including the Company's possible failure to generate
revenues from the sale of its services.
17. Broad Discretion as to Use of Proceeds. The
Company s Management shall have wide discretion as to the
exact allocation and priority and timing of the allocation
of funds raised from the Offering. The allocation of the
Proceeds of the Offering may vary significantly depending
upon numerous factors, including the success that the
Company has marketing its services. Accordingly, management
will have broad discretion with respect to the expenditure
of the net proceeds of the Offering. Investors purchasing
the shares of the Common Stock offered hereby will be
entrusting their funds to the Company s management, upon
whose judgement the Subscribers must depend. See "Use of
Proceeds."
18. Continuation of Management Control. The Company's
present officers, directors and principal shareholders own a
majority of the Company's outstanding common stock and they
may purchase shares in the Offering. However, even if the
officers, directors and principal shareholders do not
purchase any of the securities offered hereby, such persons
will still own a majority of the outstanding voting stock.
Therefore, the Company's present management and principal
stockholders will continue to be able to elect all the
directors and otherwise absolutely control the Company and
investors in the Offering will have no ability to remove,
control or direct such management. See "Principal
Stockholders."
19. Applicability of Low Priced Stock Risk Disclosure
Requirements. The securities of the Company will be
considered low priced securities under rules promulgated
under the Exchange Act. Under these rules, broker-dealers
participating in transactions in low priced securities must
first deliver a risk disclosure document which describes the
risks associated with such stocks, the broker-dealer's
duties, the customer's rights and remedies, and certain
market and other information, and make a suitability
determination approving the customer for low priced stock
transactions based on the customer's financial situation,
investment experience and objectives. Broker-dealers must
also disclose these restrictions in writing to the customer
and obtain specific written consent of the customer, and
provide monthly account statements to the customer. The
likely effect of these restrictions will be a decrease in
the willingness of broker-dealers to make a market in the
stock, decreased liquidity of the stock and increased
transaction costs for sales and purchases of the stock as
compared to other securities.
<PAGE>
20. Limited Reporting Requirements. Because the
Company is only subject to Section 15(d) of the Securities
Exchange Act, it will not be subject to the proxy rules,
short-swing profits regulations, beneficial ownership report
regulations and the bulk of the tender offer regulations.
Therefore, the Company may only be required to file periodic
reports for a limited period of time. The Company does
intend to provide its shareholders with annual reports
containing audited financial statements from their
independent accountants and other periodic reports as the
Company feels necessary. However, in view of the fact that
the Company may have limited reporting requirements, the
investor will have less information available with which to
assess the status of the Company.
21. Benefits to Present Stockholders/Disproportionate
Risks. Collectively the existing shareholders own 1,500,000
shares of the Company's presently outstanding Common Stock,
for which they paid $6,000 cash. If the minimum number of
Shares offered hereby are sold, upon completion of the
Offering present stockholders will own 97% of the then
outstanding Common Stock, and investors in the Offering will
own the other 3%, for which they will have paid $50,000
cash. If the maximum number of Shares offered hereby are
sold, upon completion of the Offering present stockholders
will own 94% of the then outstanding Common Stock, and
investors in the Offering will own the other 7%, for which
they will have paid $100,000 cash. Thus, investors in the
Offering will contribute to the capital of the Company a
disproportionately greater percentage than the ownership
they receive. Present stockholders will benefit from a
greater share of the Company if successful, while investors
in the Offering risk a greater loss of cash invested if the
Company is not successful. See "Comparative Data."
22. Dilution. Investors who purchase the shares will
experience immediate dilution in the book value of the
common stock which they acquire. The present shareholders
of the Company acquired their common stock at an average
cost of $0.004 per share, substantially less than the $1.00
per Share to be paid by investors in this Offering.
Dilution may also occur if the Company issues additional
shares at a price lower than the offering price stated
herein. A substantial portion of the 50,000,000 authorized
shares of common stock of the Company will remain unissued
if all shares offered hereby are sold. The Board of
Directors has, however, the power to issue such shares
without shareholder approval. Following the Offering, any
additional issuances of shares by the Company from its
authorized but unissued shares would have the effect of
further diluting the book value of shares and the percentage
ownership interest of investors in this Offering.
23. Potential Issuance of Additional Common and
Preferred Stock. The Company is authorized to issue up to
50,000,000 shares of Common Stock, of which no more than
1,600,000 shares will be issued and outstanding upon
completion of the Offering. To the extent of such
authorization, the Board of Directors of the Company will
have the ability, without seeking shareholder approval, to
issue additional shares of Common Stock in the future for
such consideration as the Board of Directors may consider
sufficient. The issuance of additional Common Stock in the
future will reduce the proportionate ownership and voting
power of the Common Stock offered hereby. The Company is
also authorized to issue up to 5,000,000 shares of preferred
stock, the rights and preferences of which may be designated
in series by the Board of Directors. To the extent of such
authorization, such designations may be made without
shareholder approval. The Board of Directors has not
designated any series or issued any shares of preferred
stock. The designation and issuance of series of preferred
stock in the future would create additional securities which
would have dividend and liquidation preferences over the
Common Stock offered hereby. See "Description of
Securities."
<PAGE>
24. Shares Eligible for Future Sale. Of the 1,500,000
Common Shares presently outstanding, 500,000 Shares were
acquired by David N. Nemelka in a private placement. Also,
1,000,000 Common Shares were acquired by Cornelius A. Hofman
II and Stacey A. Hofman pursuant to an Agreement and Share
of Plan Exchange, in which Mr. and Mrs. Hofman exchanged all
of the issued and outstanding shares of G.E.C., Inc. These
shares are subject to any of the resale limitations imposed
by Rule 144. While these shares are not being offered for
sale presently, they may at some time in the future be sold,
pursuant to Rule 144, into any public market that may
develop for the Common Stock. Future sales by current
shareholders could depress the market prices of the Common
Stock in any such market.
25. Cumulative Voting and Pre-emptive Rights. There
are no pre-emptive rights in connection with the Company's
common stock. Cumulative voting in the election of
directors is not permitted. Accordingly, the holders of a
majority of the shares of common stock, present in person or
by proxy, will be able to elect all of the Company's Board
of Directors. Even if all the Shares are sold the current
shareholders will own a majority interest in the Company.
Accordingly, the present shareholders will continue to elect
all of the Company's directors and generally control the
affairs of the Company. (See "Description of Securities.")
USE OF PROCEEDS
The following table sets forth management s present
estimate of the allocation of net proceeds expected to be
received from this offering. Actual expenditures may vary
from these estimates. Pending such uses, the Company will
invest the net proceeds in investment-grade, short-term,
interest bearing securities.
If Minimum If Maximum
Amount Sold Amount Sold
Total Proceeds $50,000 $100,000
Less:
Offering Expenses 17,000 17,000
Filing Fees 3,000 3,000
Net Proceeds from
Offering Available $30,000 $80,000
<PAGE>
Use of Net Proceeds
Acquisition of Supplies $7,500 $20,000
and Equipment(1)
Marketing and
Advertising(2) 7,500 25,000
Initial Operating
Expenses and 5,000 15,000
Working Capital(3)
Office Rents for
12 Months
3 offices 10,000
6 offices 20,000
Total Use of Net Proceeds $30,000 $80,000
DETERMINATION OF OFFERING PRICE
The offering price of the shares was arbitrarily
determined by the Company. There is no relationship between
the offering price of the shares and the Company's assets,
earnings, book value, net worth or other economic or
recognized criteria or future value of the Company's shares.
DILUTION
As of the date of this Offering, the Company has
1,500,000 common shares issued and outstanding and a net
tangible book value of $3,304 or $ .0022 per share.
The proceeds from the sale of shares will vary
depending on the total number of shares sold.
Assuming only a minimum of 50,000 shares offered are
sold there would be a total of 1,550,000 common shares
issued and outstanding. If only the minimum of 50,000
shares are sold, the net proceeds to the Company after
deducting offering costs of $20,000 would be $30,000.
Adding the net proceeds to the net tangible book value, the
total net tangible book value of the Company would be
$33,304. Dividing the net worth of the Company by the
number of shares outstanding discloses a per share book
value of approximately $ .021 per share. Therefore, the
shareholders who purchased pursuant to the Offering will
suffer an immediate dilution in the book value of their
shares of approximately $ .98 or approximately 98% and the
present shareholders will receive an immediate book value
increase of approximately $ .019 per share.
___________________
(1) This is the approximate amount of net proceeds of the
Offering which the Company estimates will be used to purchase
the equipment and supplies necessary to operate the Company.
(2) This represents the amount the Company estimates it will
expend producing marketing literature, contacting potential
clients, including the placement of advertising materials in
direct mail.
(3) The Company intends to use a significant portion of the
net proceeds to cover operating expenses and provide working
capital during the initial development phase of operations.
The Company believes this amount is sufficient to provide
the operating capital necessary to operate the business for
the first twelve months.
<PAGE>
If all 100,000 common shares offered hereunder are
sold, there would be a total of 1,600,000 common shares
issued and outstanding. If the maximum 100,000 shares are
sold the net proceeds to the Company after deducting the
offering costs of $20,000 will be $80,000. Adding the net
offering proceeds to the net tangible book value of the
Company would be $83,304. Dividing the total book value of
the Company by the number of shares outstanding discloses a
per share book value of approximately $ .052. Therefore,
the shareholders who purchased pursuant to the Offering will
suffer an immediate dilution in the book value of their
shares of approximately $.95 or approximately 95% and the
present shareholders will receive and immediate book value
increase of $ .050 per share.
"Dilution" means the difference between the price of
the Shares purchased by purchasers in the offering from the
pro forma net tangible per share after giving effect to the
offering.
"Net tangible book value" is obtained by subtracting
the total liabilities from the total tangible assets (total
assets less intangible assets and offering expenses). Net
tangible book value per share is determined by dividing the
number of shares outstanding into the net tangible book
value of shares immediately after the offering.
COMPARATIVE DATA
The following chart illustrates the pro forma
proportionate ownership in the Company, upon completion of
the Offering, of present stockholders and of investors in
the Offering, compared to the relative amounts paid and
contributed to capital of the Company by present
stockholders and by investors in this Offering, assuming no
changes in net tangible book value other than those
resulting from the Offering.
Shares Percent Cash Percent Average
Owned Paid Price/share
Present
Shareholders 1,500,000 97(4)%/94(5)% $6,000 11%/6% $0.004
New Investors 50,000 3% $50,000 89% $1.00
(Minimum)
New Investors 100,000 6% $100,000 94% $1.00
(Maximum)
PLAN OF DISTRIBUTION
The Offering will not be sold through selling agents.
The officers and directors of the Company will sell the
Common Shares offered hereunder on a "best efforts" basis.
________________________
(4) If the Minimum Offering is sold.
(5) If the Maximum Offering is sold.
<PAGE>
LEGAL PROCEEDINGS
To the knowledge of the officers and directors of the
Company, neither the Company nor any of its officers or
directors is a party to any material legal proceeding or
litigation and such persons know of no material legal
proceeding or litigation contemplated or threatened. There
are no judgments against the Company or its officers or
directors. None of the officers or directors has been
convicted of a felony or misdemeanor relating to securities
or performance in corporate office.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
CONTROL PERSONS
The following table sets forth the directors, executive
officers promoters and control persons of the Company, their
ages, and all offices and positions held within the Company.
Directors are elected for a period of one year and
thereafter serve until their successor is duly elected by
the stockholders and qualified. Officers and other
employees serve at the will of the Board of Directors.
Name of Director Age Term Served as Position with
Director/Officer the Company
Cornelius A. Hofman II 29 --- Chief Executive
Officer, President
& Chairman
Edward B. Schow 29 --- Vice-president &
Director
Stacey A. Hofman 27 --- Secretary/Treasurer
& Director
Cornelius A. Hofman 64 --- Director
The above four individuals will serve as officers
and/or directors of the Company. Cornelius Hofman II and
Stacey Hofman are husband and wife, and Cornelius Hofman and
Cornelius Hofman II are father and son. A brief description
of their positions, proposed duties and their background and
business experience follows:
Cornelius A. Hofman II will serve, on a part-time basis
of approximately 20 hours per week, as CEO, President, and
Chairman of the Board of Directors of the Company. As such,
his duties will include primary responsibility for the
financing, marketing, computer systems, leasing, and general
management of the Company. He has experience working for
General Economic Consulting, Inc., an economic consulting
company providing economic valuation services to
governments, businesses, and attorneys. Since June 1995, he
has been working as an economist for General Economic
Consulting, Inc. From 1993 to 1995 he was an Economic
Consultant and Manager at Crowe Chizek & Company in South
Bend, Indiana From 1992 to 1994 he attended the Graduate
School of Business at the University of Chicago where he
earned a MBA in Economics. Mr. Hofman received a B.A. in
Asian Studies from Cornell University and an M.A. in
Japanese Studies from the University of Pennsylvania. After
graduating from Cornell and while attending the University
of Pennsylvania and the University of Chicago, during 1991
through 1993, Mr. Hofman worked as a Analyst on a full-time
and part-time basis for General Economic Consulting, Inc.
<PAGE>
Edward B. Schow will serve as Vice-President and a
Director of the Company on a full-time basis of at least 40
hours per week. As such, his duties will include marketing,
creating and maintaining client and potential client
databases, managing the production of the Company
newsletter, coordinating and managing the subcontracting of
consulting engagements, performing research and analysis on
economic consulting projects, and working with
subcontractors to maintain top quality service. Since June
1994, Mr. Schow has been working at First Security Bank were
he currently serves as a Manager. From September 1993 to
June 1994, he worked at Fidelity Investments. As a student,
Mr. Schow worked part-time as an inventory assistant for the
Idaho State University physical facilities from 1988 through
1993. Mr. Schow received his bachelor s degree in Finance
from Idaho State University.
Stacey A. Hofman will serve, on a part-time basis of
approximately 10 hours per week, as Secretary/Treasurer and
a Director of the Company. As such her duties will include
handling receipts and deposits and managing the books. Mrs.
Hofman attended Brigham Young University from 1987 to 1989.
She worked as a dental assistant in New York from 1989 to
1991. For the past year, Mrs. Hofman has performed various
book keeping and administrative functions for General
Economics Consulting, Inc.
Cornelius A. Hofman will serve as a Director of the
Company. As such his duties will include providing
consulting advice to the Company s management and other
employees. Mr. Hofman is currently Chairman of the
Department of Economics at Idaho State University. He
received his Ph.D. in Economics from the University of Utah
and since 1960 he has been teaching economics at the
university level. In 1970, he founded General Economic
Consulting, Inc., and has served as the President and CEO
from inception to the present time.
David N. Nemelka was the President, Secretary,
Treasurer and a director of the Company until he resigned
August 27, 1996. Mr. Nemelka is no longer an officer or
director of the Company, however he is a control person of
the Company. While Mr. Nemelka is no longer employed by the
Company, it will from time to time rely upon him to provide
the Company with business consulting services. Since April
1995, Mr. Nemelka has been an officer and director of H & N
Fly Tackle, Co., a public company that produces fishing
"flies" for sale on a wholesale basis. Since November 1994,
he has been the CEO of Wild Wings, Inc., a public company
which operates a hunting and sporting clays club in
Springville, Utah. Since July 1994, he has been self-
employed pursuing personal business projects, one of which
is managing McKinley Capital, a financial consulting company
located in Springville, Utah. From June 1993 to July 1994
he was an Assistant Brand Manager at Proctor & Gamble in
Cincinnati, Ohio. From September 1991 to May 1993, he
attended the Wharton Business School at the University of
Pennsylvania from which he earned an MBA. From January 1989
to July 1994, he served as President of Tri-Nem, Inc., a
public company that merged with Innovus Multimedia, Inc., (a
NASDAQ company) in July 1994. From August 1989 until August
of 1991, David served as Chief Executive Officer of
Northstar Adventures, an Alaskan fishing lodge, which he co-
founded. From August 1988 to August 1991 he served as
President and co-founder of Certified Share Transfer
Company, a stock transfer company. Mr. Nemelka received his
B.S. in business finance from Brigham Young University and
his MBA in finance from the Wharton Business School.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
Name and Address Amount & Nature of % of After Offering
Beneficial Ownership(6) Class Minimum/Maximum
Cornelius A. Hofman II 1,000,000(7) 67% 64.6%/62.6%
227 South Ninth Avenue
Pocatello, Idaho 83201
Stacey A. Hofman 1,000,000(8) 67% 64.6%/62.6%
227 South Ninth Avenue
Pocatello, Idaho 83201
Edward B. Schow -0- -0- -0-
1625 Juniper Drive
Idaho Falls, Idaho 83404
David N. Nemelka 500,000 33.3% 32.3%/31.3%
899 South Artistic Circle
Springville, Utah 84664
All officers and
directors 1,000,000 66.6% 64.5%/62.5%
as a group(3 persons)
TOTAL 1,500,000(9) 100.0% 96.8%/93.8%
DESCRIPTION OF THE SECURITIES
The following summary describes the material provisions
of the Company's Articles of Incorporation and Bylaws
relating to the securities, copies of which will be
furnished to an investor upon written request therefor.
_____________________
(6) The term "beneficial owner" refers to both the power of
investment (the right to buy and sell) and rights of ownership
(the right to receive distributions from the Company and
proceeds from the sales of shares). Inasmuch as these rights
may be held or shared by more than one person, each person who
has a beneficial ownership interest in shares is deemed to be
the beneficial owners of the same shares because there is shared
power of investment or shared rights of ownership.
(7) Cornelius Hofman and Stacey Hofman are married. Therefore,
each of them should be deemed to be the beneficial owner of not
only the shares held in their individual names, but also the shares
held by each other. Each is record owner of 500,000 shares,
however, each is consideredc to be the beneficial owner of
1,000,000 shares.
(8) See footnote 7 above.
(9) See footnote 7 above.
<PAGE>
Pursuant to Article XI of the Company's Articles of
Incorporation, no director or officer shall be personally
liable to the Corporation or its stockholders for monetary
damages for any breach of fiduciary duty by such person as a
director or officer. Notwithstanding the foregoing
sentence, a director or officer shall be liable to the
extent provided by applicable law, (I) for acts or omissions
which involve intentional misconduct, fraud or a knowing
violation of law, or (ii) for the payment of dividends in
violation of NRS 78.300.
The foregoing limitations do not affect the standards
to which directors must conform in discharging their duties
to stockholders or modify the availability of equitable
relief for breach of duty. Further, the foregoing
limitations do not affect the availability of relief under
causes of action based on Federal law, including the Federal
securities laws.
The Shares being registered pursuant to the
registration statement of which this prospectus is a part
are shares of Common Stock, all of the same class and
entitled to the same rights and privileges as all other
shares of Common Stock.
Description of Common Stock. The Company's authorized
capital stock consists of 50,000,000 shares of Common Stock
with a $.001 par value. As of the date of this Registration
Statement, the Company has outstanding 1,500,000 shares of
its Common Stock, all of which is validly issued, fully paid
and nonassessable. Holders of the Company's Common Stock
are entitled to receive dividends when declared by the Board
of Directors out of funds legally available therefore. Any
such dividends may be paid in cash, property or shares of
the Company's Common Stock. The Company has not paid any
dividends since its inception. All dividends will be
subject to the discretion of the Company's Board of
Directors, and will depend upon, among other things, the
operating and financial conditions of the Company, its
capital requirements and general business conditions.
Therefore, there can be no assurance that any dividends on
the Company's Common Stock will be paid in the future.
All shares of the Company's Common Stock have equal
voting rights and, when validly issued and outstanding will
have one vote per share on all matters to be voted upon by
the shareholders. Cumulative voting in the election of
directors is not allowed, and a quorum for shareholder
meetings shall result from a majority of the issued and
outstanding shares present in person or by proxy.
Accordingly, the holders of a majority of the shares of
Common Stock present, in person or by proxy at any legally
convened shareholders' meeting at which the Board of
Directors is to be elected, will be able to elect all
directors and the minority shareholders will not be able to
elect a representative to the Board of Directors.
Shares of the Company's Common Stock have no pre-
emptive or conversion rights, no redemption or sinking fund
provisions, and are not liable for further call or
assessment. Each share of the Company's Common Stock is
entitled to share pro rata any assets available for
distribution to holders of its equity securities upon
liquidation of the Company.
During the pendency of the offering, subscribers will
have no rights as stockholders of the Company until the
offering has been completed and the Shares have been issued
to them.
<PAGE>
Description of Preferred Stock. The Company is also
presently authorized to issue 5,000,000 shares of $.001 par
value Preferred Stock. Under the Company's Articles of
Incorporation, as amended, the Board of Directors has the
power, without further action by the holders of the Common
Stock, to designate the relative rights and preferences of
the preferred stock, and issue the Preferred Stock in such
one or more series as designated by the Board of Directors.
The designation of rights and preferences could include
preferences as to liquidation, redemption and conversion
rights, voting rights, dividends or other preferences, any
of which may be dilutive of the interest of the holders of
the Common Stock or the Preferred Stock of any other series.
The issuance of Preferred Stock may have the effect of
delaying or preventing a change in control of the Company
without further shareholder action and may adversely effect
the rights and powers, including voting rights, of the
holders of Common Stock. In certain circumstances, the
issuance of Preferred Stock could depress the market price
of the Common Stock. The Board of Directors effects a
designation of each series of Preferred Stock by filing with
the Nevada Secretary of State a Certificate of Designation
defining the rights and preferences of each such series.
Documents so filed are matters of public record and may be
examined in accordance with procedures of the Nevada
Secretary of State, or copies thereof may be obtained from
the Company.
Description of Stock Options. The Board of Directors
has adopted the Litigation Economics, Inc., 1996 Stock
Option Plan (the "Plan") allowing the Company to offer its
key employees, officers, directors, consultants and sales
representatives, an opportunity to acquire a proprietary
interest in the Company. The various types of incentive
awards which may be provided under the Stock Option Plan
will enable the Company to respond to changes in
compensation practices, tax laws, accounting regulations and
the size and diversity of its business. To date the Company
has not issued any Options pursuant to the Plan. No option
shares are being registered under this registration
statement.
The total number of shares reserved and available for
distribution under the Plan shall be 500,000 shares. These
shares will underlie the Options issued by the Company
pursuant to the Plan. The Option holders will not be
protected against dilution if the Company should issue
additional shares of Common Stock in the future. Neither
the Options, nor the shares underlying the Options have pre-
emptive rights.
In the case of any reclassification, change,
consolidation, merger, sale or conveyance of Common Stock of
the Company to another corporation, the Company will make
adequate provision whereby the registered holders of any
outstanding Option offered in this Offering will have right
thereafter to receive an exercise of the Options immediately
prior to the reclassification, change, consolidation,
merger, sale or conveyance of common stock by the Company.
Management intends to keep this Prospectus and
Registration Statement current, with respect to all material
changes in the business and financial conditions of the
Company, during the exercise period of the Stock Options.
Notwithstanding the stated exercise period, the exercise of
the Options will not be allowed unless a current Prospectus
is in effect.
Other provisions of the Options are set forth below.
This information is subject to the provisions of the Plan
and the Stock Option Certificates representing the Options.
The following information is a summary of the Litigation
Economics, Inc., 1996 Stock Option Plan and is qualified by
reference to the plan. (See the Litigation Economics,
Inc., 1996 Stock Option Plan attached hereto as Exhibit
29).
<PAGE>
1. The Common Stock underlying the Options offered
pursuant to the Plan are subject to the same rights and
restrictions as the Company s other shares of authorized
Common Stock. (See Description of Common Stock ).
2. Once an Option is granted, it may not be called by
the Company.
3. The Common Stock underlying the Options offered
pursuant to this Registration Statement are offered in
registered form. The Options may not be sold prior to six
months from the date of the grant of the related award
without prior approval of the Company.
4. Unless exercised within the time provided for
exercise, the Options will automatically expire.
5. The exercise price per share of Stock purchasable
under a Stock Option shall be determined by the Committee at
the time of grant and may not be less than 100% of Fair
Market Value of the Stock, provided however, that the
exercise price of an Incentive Stock Option granted to a 10%
Stockholder shall not be less that 110% of the Fair Market
Value of the Stock.
6. There is no minimum number of shares of equity
securities which must be purchased upon exercise of the
Option.
7. The Option holders, in certain instances, are
protected against dilution of their interest represented by
the underlying shares of Common Stock upon the occurrence of
stock dividends, stock splits, reclassifications and
mergers.
8. The holders of the Options shall have the right to
vote on any matter submitted to the holders of the Company s
equity securities and they are entitled to receive and
retain all regular cash dividends and other cash equivalent
distributions as the Board may in its sole discretion
designate, pay or distribute.
Transfer Agent. Interwest Transfer Company, Inc., 1981
East Murray-Holladay Road, Salt Lake City, Utah 84117,
Telephone (801) 272-9294, has agreed to serve as transfer
agent and registrar for the Company's outstanding securities
upon completion of this offering.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The statements under the heading "Certain Federal
Income Tax Considerations," to the extent such statements
refer to matters of tax law, are solely the opinions of
management. Management has not sought or obtained any
formal legal opinion as to such matters, and no conclusion
of counsel is binding on the Internal Revenue Service or the
courts in any event. There can be no assurance that the
<PAGE>
Internal Revenue Service or the courts will not reach
different conclusions regarding the transactions
contemplated hereby. This discussion does not address
certain Federal income tax consequences that are the result
of special rules, such as those that apply to life insurance
companies, tax exempt entities, foreign corporations, and
non-resident alien individuals. In addition, the discussion
does not address alternative minimum tax considerations and
is limited to investors who will hold Common Stock as
"capital assets" (generally, property held for investment)
within the meaning of Section 1221 of the Internal Revenue
Code of 1986, as amended (the "Code"). This discussion also
assumes that the Common Stock will be traded on an
established securities market. This discussion is based on
relevant provisions of the Code, the Treasury Regulations
promulgated thereunder (the "Regulation"), revenue rulings
published in the Internal Revenue Bulletin and judicial
decisions in effect at the date of this Prospectus. There
can be no assurance that future changes in applicable law or
administrative and judicial interpretations thereof will not
adversely affect the tax consequences discussed herein.
The tax treatment to a holder of Common Stock may vary
depending on such holder's particular situation. Potential
investors should consult their own tax advisors as to the
tax treatment that may be anticipated to result from the
ownership or disposition of common stock in their particular
circumstances, including the application of foreign, state
or local tax laws or estate and gift tax considerations.
State and Local Income Taxes. A holder of Common Stock
may be liable for state and local income taxes with respect
to dividends paid or gain from the sale, exchange or
redemption of Common Stock. Many states and localities do
not allow corporations a deduction analogous to the Federal
dividends received deduction. Prospective investors are
advised to consult their own tax advisors as to the state,
local and other tax consequences of acquiring, holding and
disposing of Common Stock.
INTEREST OF NAMED EXPERTS AND COUNSEL
None of the experts named herein was or is a promoter,
underwriter, voting trustee, director, officer or employee
of the Company. Further, none of the experts was hired on a
contingent basis and none of the experts named herein will
receive a direct or indirect interest in the Company.
Legal Matters
Certain legal matters will be passed upon for the
Company by Poulton & Yordan, of Salt Lake City, Utah.
Accounting Matters
The financial statements included in this Prospectus
and elsewhere in the Registration Statement have been
audited by Jones, Jensen & Co., Certified Independent Public
accountants, located in Salt Lake City, Utah, as indicated
in their report with respect thereto, and are included
herein in reliance upon the authority of said firm as
experts in accounting and auditing in giving said reports.
<PAGE>
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising
under the Securities Act of 1933 (the "act") may be
permitted to directors, officers and controlling persons for
the small business issuer pursuant to the foregoing
provisions, or otherwise, the small business issuer has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable.
In the event that any claim for indemnification against
such liabilities (other than the payment by the small
business issuer of expenses incurred or paid by a director,
officer or controlling person of the small business issuer
in the defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the small
business issuer will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the
final adjudication of such issue.
ORGANIZATION WITHIN LAST FIVE YEARS
The Company is a start-up company and has no operating
history. As soon as the money from this Offering is made
available, the Company expects to make all arrangements
necessary so that it can commence operations in early 1997.
DESCRIPTION OF BUSINESS
Company History
The Company was incorporated under the laws of the
state of Nevada on April 22, 1995 as Landmark Leasing,
Corp., ("Landmark") for the purpose of becoming a leasing
company of residential property, commercial property and/or
vehicles. Landmark's only transaction was to acquire a pick-
up truck for $2,000 which the Company was unsuccessful in
leasing. The Company later sold the truck to David N.
Nemelka for $2,000. Since Landmark was unsuccessful in
acquiring assets which it could lease, Landmark deemed it to
be in its best interest to focus its efforts in another
direction. After investigating various business
opportunities, Landmark determined there to be a need for
companies which could provide economic damage consulting to
attorneys involved in litigation. Steps taken by the
Company to determine the need for economic damage consulting
included an in depth market analysis, using accepted
analytical approaches and methods, of attorneys who
currently perform personal injury litigation. Also, through
previous employment, Mr. Hofman identified the recurring
need and desire of attorneys to have access to a service
such as that the Company anticipates providing. Upon
identifying the need, the Company performed additional
market analyses to determined potential attorney interest
and profitability. The market for such a service already
<PAGE>
exists and attorneys frequently employ litigation
economists. While the PreVal(TM) approach is new and unique,
for a lower cost and with a quicker response, the PreVal(TM)
system will provide information and services similar to
those already being purchased by attorneys. However, in
view of the fact PreVal(TM) services have not been available
in the past, there is no assurance attorneys currently using
traditional methods will consider using PreVal(TM) services.
Pursuant to its desire to enter into the economic
damage consulting industry, Landmark changed its name to
Litigation Economics, Inc., (the "Company") on August 22,
1996. The Company also entered into an Agreement and Plan
of Share Exchange dated August 22, 1996, whereby it acquired
G.E.C., Inc. ("GEC"), a privately held Idaho corporation,
formed for the purpose of providing economic damage
consulting to litigating attorneys. GEC was incorporated on
July 31, 1996. The Company acquired all of the one million
shares of GEC common stock in a one share per one share
exchange with the shareholders of GEC. Pursuant to the
Agreement and Plan of Share Exchange, the Company issued one
million shares of Litigation Economics common stock to the
shareholders of GEC in exchange for one million shares of
GEC common stock, which constituted all of the issued and
outstanding equity securities of GEC. Pursuant to the Plan
of Share Exchange, GEC will continue to operate as a wholly
owned subsidiary of the Company, and all of the Company's
damage consulting services will be provided through GEC.
Business of the Company
The Company, through its wholly owned subsidiary, GEC,
intends to engage in the business of providing economic,
financial and statistical analysis and other types of
services that are necessary for attorneys involved in
disputes regarding economic damages. The Company will
perform any activities customary in connection therewith.
Attorneys litigating cases that involve disputes regarding
economic damages will be the target market for the Company's
services. In the United States, there are more than 125,000
attorneys that specialize in litigation and over 50,000
specialize in wrongful job termination, wrongful death
and/or personal injury related litigation. To successfully
litigate such cases, attorneys often retain the expertise of
economists, statisticians and other financial experts.
Attorneys are compelled to expend substantial time and effort
in examining and proving economic damages.
The Company will provide its economic consulting
services based on a computer aided damage analysis system
designed by Cornelius A. Hofman II, called PreVal(TM). Mr.
Hofman is the President and a director of GEC, as well as
the President and a director of the Company, he paid $1,000
and assigned the rights to PreValTM to GEC in return for one
million shares of common stock of GEC(10). The Company,
through its wholly owned subsidiary GEC holds the exclusive
right to use PreVal(TM) which it intends to market to
attorneys involved in litigation, particularly to attorneys
engaged in the pre-trial, settlement phase of litigation.
__________________
(10) 500,000 shares of GEC Common Stock were issued to
Cornelius A. Hofman II, and 500,000 shares of GEC Common
Stock were issued to Stacey A. Hofman, Mr. Hofman's wife
in exchange for $1,000 and rights to PreVal(TM).
<PAGE>
Attorneys hire economists to assess economic damages
and to provide a report spelling out their opinion regarding
such damages, and to testify at trial. Attorneys usually
delay the hiring of economists until after it is clear a
settlement cannot be reached and the case will go to trial
because (1) the economist s report typically costs $2,000 to
$4,000; (2) many attorneys think they can satisfactorily
settle the case without substantiating economic losses; and
(3) the current litigation practice is to rely on the
services of economists as experts only at trial.
PreVal(TM) was developed as a cost effective alternative
to the current paradigm of economic damage analysis.
Generally, if an attorney needs to establish the loss
suffered by a client, the attorney will either employ the
services of an economist or if the attorney believes such
expense is unjustified, she will attempt to estimate the
value of the economic loss by herself. If an economist is
hired, the economist will perform extensive research and
evaluation based upon review of documents and forecasting of
economic variables. The economist will prepare an
independent economist's report outlining his findings and
the factors used to determine the damages suffered by the
injured party. The attorney will use the report as a basis
for settling damages or if the case can not be settled, the
economist's report can be used at trial to try to establish
the present value of the damages suffered by the injured
party. Generally, if a case goes to trial, an economist
will also be called upon to testify with regard to economic
issues. The cost for the services of a competent economists
vary from $4,000 to $6,000 depending upon the nature and
complexity of the case.
However, many personal injury, wrongful death and
wrongful termination cases are handled on a contingent fee
basis and since ninety-five percent of all cases are settled
before trial(11), the cost of hiring an economist, in most
cases may seem unjustified. Rather than incur that cost,
the attorney will attempt to estimate of the present value
of the economic loss suffered by the injured party and try
to settle the case based on that estimate along with the
attorney's own input on costs associated with experience
with juries, inherent emotional factors and other criteria.
Generally, an economist is brought in to perform the
appropriate analysis only after it is apparent that the case
can not be settled and litigation on the issue of damages is
imminent.
The Company believes that it is in the best interest of
both the attorney and the injured party to have an economic
damage analysis performed long before the case goes to
trial. However, the Company recognizes that the cost of an
economist's report may be unnecessary during the pre-trial
settlement phase of litigation. The Company believes that
its PreVal(TM) service provides a cost effective method for
determining the present value of the loss suffered by the
injured party. The service provides attorneys with an
accurate determination of economic loss during the pre-trial
settlement phase of litigation, and provides attorneys the
advantage of determining the losses suffered by the injured
party prior to trial so the attorney and the client have a
better understanding of the losses at issue. PreVal(TM) is
also beneficial to attorneys because it allows the attorney
to focus on economic damage issues early in the case, thus
allowing the attorney to better prepare for conflicts
regarding the economic disputes at issue should the case go
to trial. Through the use of PreVal(TM) the Company can
provide an accurate estimate of the economic loss suffered
_____________________
(11) The Company developed this estimate based on the 1995
"Statistical Abstract of the United States", Table 340 which
provides a summary of civil cases commenced in selected years
from 1980 to 1994, the percent of civil cases reaching trial
in 1994 was 3.4 percent. The average of the percent of civil
cases reaching trial from 1988 to 1994 (ie., all of the
consecutive years cited in the table) is 4 percent. Therefore,
less than 4 percent of cases make it to trial and the
assumption is that approximately 95% of all civil cases are
settled. The ultimate source for these tables is the
Administrative Office of the U.S. Courts, "Annual Report of
the Director".
<PAGE>
by the injured party at a fraction of the cost charged for a
traditional economic analysis. As stated, the cost for an
independent economist's report generally ranges from $2,000
to $4,000. The cost of preparing an independent economists
report utilizing the PreVal(TM) analysis typically ranges from
$400 to $600. The PreVal(TM) service incorporates the use of
computer modeling combined with specifically requested
information provided to the Company from the injured party's
attorney to determine the present value of the economic loss
suffered by the injured party. The Company is able to
provide an accurate estimate of the economic loss at a
greatly reduced cost because the Company relies on the
attorney to provide the information it uses in determining
the loss, thus eliminating the costs of the extensive
research associated with an economist's report. The
Company, after receiving the information from the attorney,
will use its PreVal(TM) program to prepare an independent
economist's report which the attorney can use as a basis for
negotiating a settlement.
In the event the case is not settled and the attorney
so desires, the Company will then perform the extensive
research and verification process necessary to prepare for
trial for an additional fee.
In addition to providing an independent economist's
report, the Company will provide economists to testify as
expert witnesses. Initially, Cornelius Hofman II will
handle all of the Company's expert witness needs for which
the Company will charge a fee. However, if the Company can
establish itself in the industry and develop a clientele for
its services, it will be difficult, if not impossible, for
Mr. Hofman to fulfill all of the client's expert witness
needs. Rather than hire more economists, the Company
intends to associate with a network of independent
litigation consultants to provide expert testimony for the
Company's clients when Mr. Hofman is unavailable.
Independent litigation consultants provide services similar
to those provided by the Company. The Company does not
intend to subcontract any PreValTM work to any network
affiliated consultants. Once a client is referred to an
economist affiliated with a network, the Company's
involvement with that client's legal matter will generally
be terminated and the Company will charge no fee for the
referral. The Company will likely receive no fee or
remuneration for referring clients to the network affiliated
economists.
Competition
Within the industry, the Company will face competition
from numerous competitors. The most common type of company
providing economic related services are sole practitioners
who concentrate on servicing small to mid-size law firms
handling wrongful job termination, wrongful death and/or
personal injury related cases. These consulting companies
are frequently operated by college professors looking to
supplement their teaching income. Service and quality are
not a major focus, rather answering the phone when they are
in the office and fitting their consulting practice around
their academic schedule is the standard approach. There are
also larger companies in the industry. These larger
companies usually have a dedicated litigation consulting
group and tend to focus on larger types of business
litigation that typically have voluminous documents. These
larger cases often require litigation support services
related to the handling of documents and usually require a
larger staff of consultants. There is cross-specialization
among both types of consulting firms, and the larger
consulting firms are beginning to offer a larger variety of
services to attorneys in an effort to satisfy more of the
attorney s litigation support needs.
<PAGE>
The market for the Company's services is very
competitive and competition is based on many factors
including price and quality of service. The Company
believes that it can compete in the industry because it
believes it offers high quality services at a fraction of
the cost of other providers of similar services. The
Company will have to compete with manufacturers of economic
loss analysis software. This software allows an attorney to
make a rough estimate of the damages suffered by the injured
party, but this software does not supply the attorney with
a signed independent economist's report. The Company will
dedicate its efforts solely on the business of economic
analyses whereas many competitors focus only a portion of
their efforts on economic analyses. The Company also
believes it can compete against the larger companies because
the PreValTM system allows the Company to provide its
economic analysis at a fraction of the cost charged by the
larger companies handling large cases. However, in the
event a case is not settled and goes to trial, the Company
likely will incur greater expenses, and the overall price
the Company would have to charge for providing trial related
services may not be less expensive than the price a person
could receive from any of the Company's competitors. For
the reasons described above, the Company believes its
services will appeal to litigation attorneys specializing in
wrongful job termination and personal injury related
litigation who need a variety of economic related litigation
consulting services.
Advertising and Marketing Strategy
The Company intends to market its services through a
variety of targeted marketing programs. The Company
anticipates utilizing the various lawyer association
meetings, forums, and conventions by dispensing information
and educating potential clients about the Company s services
and business practices. Direct mail and direct solicitation
will also be utilized to contact potential clients. The
Company intends to issue a bimonthly or quarterly newsletter
to targeted attorneys, advertising the Company s services
and providing other beneficial information to potential
clients. Additionally, the Company may utilize regional
and/or national legal publications to advertise.
Employees
The Company has no full-time employees at present and
it has no formal employment agreements or other contractual
arrangements with its officers or anyone else regarding the
commitment of time or the pay of salaries or other
compensation. However, the officers intend to devote such
time as may be necessary for the development of the Company
s business. Upon the completion of the Offering, it is
anticipated that Mr. Schow will terminate his other
employment to become a full-time employee of the Company
prior to commencement of operations in early 1997. It is
anticipated that the other officers will maintain outside
employment and devote only a portion of their time to the
affairs of the Company. They will not be employed full time
and will not receive a regular salary or wage unless and
until the Company s business operations have been developed
to a point where salaries can be paid. Each officer and
director will be entitled to reimbursement of any reasonable
out of pocket expenses actually incurred on behalf of the
Company. It is anticipated that Cornelius Hofman II will
eventually work full time for the Company. It is not
anticipated that Stacey Hofman will devote more than part-
time to the Company for the foreseeable future.
Furthermore, it is not anticipated that Cornelius Hofman
will ever be a full-time employee of the Company. The
Company intends to hire other full-time employees as needed,
but will not do so unless and until the Company s business
operations so justify. The Company also intends to hire
other part-time employees as needed, subject to its ability
to pay such persons. The exact amount of any compensation
to be paid has not been determined but management intends,
to the extent possible, to only pay compensation out of
revenues and to keep payments to a minimum until operations
have fully commenced.
<PAGE>
PLAN OF OPERATIONS
The Company s purpose is to engage in the business of
marketing and providing economic related litigation
consulting services to litigation attorneys throughout the
country. The Company initially intends to target the 25,000
plus litigation attorneys specializing in personal injury,
employment law, medical malpractice, and other related areas
in the market areas surrounding the following locations:
Idaho, Chicago, Salt Lake City, Los Angeles, Dallas and
Phoenix. The Company will provide its prospective clients a
place to retain the variety of economic consulting services
they may need to successfully litigate any given case.
Specifically, the Company intends to provide economic,
financial, statistical, and other types of analyses
necessary in litigation that involves a dispute regarding
economic damages. Furthermore, the Company will market
PreValTM, a new economic consulting service provided to
attorneys in the settlement-phase of litigation.
The Company's plan of operation for the next twelve
months is to raise funds through the Offering, secure office
space, purchase operating assets (i.e., computer equipment,
office supplies, marketing databases, etc.), market its
services, and commence active business operations. In
addition to providing capital to help defray various start
up expenditures, management believes that a principal use of
the offering proceeds will be to provide initial working
capital necessary upon commencement of operations until
sufficient revenues are generated to cover such operating
expenditures. In order to commence active business
operations by early 1997 management is engaging in a number
of planning stage and preliminary activities. These
activities include the following:
(i) Locating office space and negotiating agreements
to lease office space in Idaho, Chicago, Salt Lake
City, Los Angeles, Dallas and Phoenix;
(ii) Prepare brochures and other marketing literature
for use in the Company's marketing efforts;
(iii) Enter into litigation consulting service
contracts.
To date, the Company has not entered into any lease
agreement, printed any marketing literature or accepted any
litigation consulting services contracts.
The Company does not intend to staff offices in each of
the markets it intends to exploit. The Company will instead
maintain only one staffed office which will be the principal
executive office located in Pocatello, Idaho. The Company
intends to negotiate rental agreements with office share
complexes in each of the above mentioned markets.
Generally, an office share complex provides a small office,
a mailing location and a manager who, if instructed, will
forward the mail to wherever the renter indicates. This
arrangement also provides the Company with a local phone
number for customers to call. The phones will automatically
forward all calls to the Company's principal executive
<PAGE>
office in Pocatello, Idaho. The Company will inform its
customers that it is located in Idaho, to avoid potential
conflicts. In the event the customer needs to meet directly
with someone from the Company, Cornelius Hofman II will fly
to that location, at the Company's expense (this cost will
not be billed to the customer) to meet with the customer.
Mr. Hofman has done this in Chicago in connection with his
consulting efforts for General Economic Consulting, Inc.,
and has enjoyed a great deal of success operating in this
manner. The Company believes that this approach is the most
cost effective way it can reach a broad market for its
services.
Start-up costs include purchase of capital equipment
such as computers, office equipment, office leasing,
supplies and travel. If the minimum offering is raised, the
Company will recognize a net amount of $30,000. The Company
believes this amount will enable it to initiate operations
and conduct business in three locations for a period of
twelve months. If only the minimum is raised, the Company
will reduce expenses by limiting its advertising and
marketing costs. Following in depth research, the Company
believes it can obtain the necessary computing equipment and
office equipment for approximately $7,500 and lease office
space in three locations for one year at a cost of
approximately $10,000. Working capital of $5,000 should be
sufficient to cover operating costs of the three offices for
a period of one year. The Company plans on expending $7,500
for marketing and advertising the Company's services.
Should the Company raise the maximum offering, it will
recognize a net amount of $80,000. This would enable the
Company to operate from six locations for a period of one
year at an estimated cost of $20,000 for rents and allow the
Company to expend an additional $20,000 for capital
equipment and supplies. The Company would also increase its
marketing and advertising efforts and has estimated $25,000.
Finally, operating expenses and working capital for six
locations would increase to $15,000.
Inasmuch as there is no assurance that the Offering
will be successful or that the Company will receive any net
proceeds therefrom, to date, the Company has not entered
into any contracts or commitments for leasing of offices,
purchasing of equipment, and buying customer databases.
Therefore, there is no assurance the Company will be able,
with the proceeds of this offering, to lease sufficient
office space, acquire sufficient equipment, purchase
sufficient potential client databases to commence
operations. There is also no assurance that the Company
will be able to sell enough PreValTM orders or generate
enough business to operate profitably.
DESCRIPTION OF PROPERTY
The Company owns no real property. Further, the
Company does not currently lease any office space or
facilities. The Company will use the home office of Mr.
Cornelius A. Hofman II, its Chief Executive Officer &
President, in Pocatello, Idaho as its principal executive
offices until the Company s business requires more extensive
administrative facilities. At such time the Company
generates profits sufficient to cover all its expenses, rent
will be paid for the use of Mr. Hofman's home office. At
such time the Company determines profits justify payment to
Mr. Hofman, the rent paid will be based on fair market rates
for comparable space.
The Company intends to locate appropriate office space
and negotiate agreements to lease office space in Idaho,
Chicago, Salt Lake City, Los Angeles, Dallas and Phoenix.
<PAGE>
Management has not entered into any leasing arrangements for
office space, and there is no assurance that the Company
will be able, with the proceeds of this Offering, to lease
sufficient office space in these locations. However, based
on management s early stage activities and the negotiations
and discussions with the management of certain office
buildings, management believes that the Company will be able
to lease the necessary office space in or near the locations
mentioned above.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
At present, the Company's shares are not traded
publicly. There is no assurance that a trading market will
develop, or, if developed, that it will be sustained. A
purchaser of shares may, therefore, find it difficult to
resell the securities offered herein should he or she desire
to do so when eligible for public resales. Furthermore, the
shares are not marginable and it is unlikely that a lending
institution would accept the Company's common stock as
collateral for a loan.
The Company, pursuant to this Registration Statement,
proposes to publicly offer a minimum of 50,000 shares and a
maximum of 100,000 shares of the Company's Common Stock. To
date, no shares of Common Stock are subject to outstanding
options, warrants to purchase or securities convertible into
common stock. No shares of the Company's Common Stock have
been sold pursuant to Rule 144 of the Securities Act. The
Registrant has agreed to register no shares of Common Stock
held by existing security holders for resale.
EXECUTIVE COMPENSATION
To date, no compensation has been paid to any
person associated with the Company and the Company presently
has no formal employment agreements or other contractual arrangements
with the officers, directors or anyone else regarding the commitment
of time or the pay of salaries or other compensation.
FINANCIAL STATEMENTS
The audited financial statements of the Company
appearing in the Registration Statement have been examined
by Jones, Jensen & Co. Certified Public Accountants, as
indicated in its report contained herein. The financial
statements are included in the Registration Statement in
reliance upon the report of that firm as an expert in
auditing and accounting.
<PAGE>
No dealer, salesman or other person is authorized to give any
information or to make any representations other than those
contained in this Prospectus in connection with the offer made
hereby. If given or made, such information or representations
must not be relied upon as having been authorized by the Company.
This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities covered
hereby in any jurisdiction or to any person to whom it is
unlawful to make such offer or solicitation in such jurisdiction.
Neither the delivery of this Prospectus nor any sale made
hereunder shall, in any circumstances, create any implication
that there has been no change in the affairs of the Company since
the date hereof.
TABLE OF CONTENTS Page
AVAILABLE INFORMATION 2
PROSPECTUS SUMMARY 4
RISK FACTORS 6
SHARES ELIGIBLE FOR FUTURE
SALE 12
USE OF PROCEEDS 12
DETERMINATION OF
OFFERING PRICE 13
DILUTION 13
COMPARATIVE DATA 14
PLAN OF DISTRIBUTION 14
MANAGEMENT 15
PRINCIPAL SHAREHOLDERS 17
DESCRIPTION OF SECURITIES 17
CERTAIN FEDERAL INCOME
TAX CONSIDERATIONS 20
LEGAL MATTERS 21
EXPERTS 21
DESCRIPTION OF BUSINESS 22
MANAGEMENT'S PLAN OF
OPERATION 27
FINANCIAL STATEMENTS 29
LITIGATION ECONOMICS, INC.
50,000 Minimum / 100,000 Maximum
Shares of Common Stock
PROSPECTUS
Pre-Effective Amendment 2
April 3, 1997
<PAGE>
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. Indemnification of Directors and Officers
The statutes, charter provisions, bylaws, contracts or other
arrangements under which controlling persons, directors or
officers of the registrant are insured or indemnified in any
manner against any liability which they may incur in such
capacity are as follows:
(a) Section 78.751 of the Nevada Business Corporation Act
provides that each corporation shall have the following powers:
1. A corporation may indemnify any person who was or
is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative,
except an action by or in the right of the corporation, by
reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses,
including attorneys' fees, judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in
connection with the action, suit or proceeding if he acted
in good faith and in a manner which he reasonably believed
to be in or not opposed to the best interest of the
corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, does not,
or itself create a presumption that the person did not act
in good faith and in a manner which he reasonably believed
to be in or not opposed to the best interests of the
corporation, and that, with respect to any criminal action
or proceeding, he had reasonable cause to believe that his
conduct was unlawful.
2. A corporation may indemnify any person who was or
is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the
right of the corporation to procure a judgment in its favor
by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses,
including amounts paid in settlement and attorneys' fees
actually and reasonably incurred by him in connection with
the defense or settlement of the action or suit if he acted
in good faith and in a manner which he reasonably believed
to be in or not opposed to the best interests of the
corporation. Indemnification may not be made for any claim,
issue or matter as to which such a person has been adjudged
by a court of competent jurisdiction, after exhaustion of
all appeals therefrom, to be liable to the corporation or
<PAGE>
for amounts paid in settlement to the corporation, unless
and only to the extent that the court in which the action or
suit was brought or other court of competent jurisdiction,
determines upon application that in view of all the
circumstances of the case, the person is fairly and
reasonably entitled to indemnity for such expenses as the
court deems proper.
3. To the extent that a director, officer, employee
or agent of a corporation has been successful on the merits
or otherwise in defense of any action, suit or proceeding
refereed to in subsections 1 and 2, or in defense of any
claim, issue or matter therein, he must be indemnified by
the corporation against expenses, including attorneys' fees,
actually and reasonably incurred by him in connection with
the defense.
4. Any indemnification under subsections 1 and 2,
unless ordered by a court or advanced pursuant to subsection
5, must be made by the corporation only as authorized in the
specific case upon a determination that indemnification of
the director, officer, employee or agent is proper in the
circumstances. The determination must be made:
(a) By the stockholders;
(b) By the board of directors by majority vote of
a quorum consisting of directors who were not parties
to the act, suit or proceeding;
(c) If a majority vote of a quorum consisting
of directors who were not parties to the act, suit or
proceeding so orders, by independent legal counsel, in
a written opinion; or
(d) If a quorum consisting of directors two were
not parties to the act, suit or proceeding cannot be
obtained, by independent legal counsel in a written
opinion.
5. The certificate or articles of incorporation, the
bylaws or an agreement made by the corporation may provide
that the expenses of officers and directors incurred in
defending a civil or criminal action, suit or proceeding
must be paid by the corporation as they are incurred and in
advance of the final disposition of the action, suit or
proceeding, upon receipt of an undertaking by or on behalf
of the director or officer to repay the amount if it is
ultimately determined by a court of competent jurisdiction
that he is not entitled to be indemnified by the
corporation. The provisions of this subsection do not
affect any rights to advancement of expenses to which
corporate personnel other than directors or officers may be
entitled under any contract or otherwise by law.
6. The indemnification and advancement of expenses
authorized in or ordered by a court pursuant to this
section:
(a) Does not exclude any other rights to which a
person seeking indemnification or advancement of
<PAGE>
expenses may be entitled under the certificate or
articles of incorporation or any bylaw, agreement, vote
of stockholders of disinterested directors or
otherwise, for either an action in his official
capacity or an action in another capacity while holding
his office, except that indemnification, unless ordered
by a court pursuant to subsection 2 or for the
advancement of expenses made pursuant to subsection 5,
may not be made to or on behalf of any director or
officer if a final adjudication establishes that his
acts or omissions involved intentional misconduct,
fraud or a knowing violation of the law and was
material to the cause of action.
(b) Continues for a person who has ceased to be a
director, officer, employee or agent and inures to the
benefit of the heirs, executors and administrators of
such a person.
7. The registrant's Articles of Incorporation limit
liability of its Officers and Directors to the full extent
permitted by the Nevada Business Corporation Act.
ITEM 25. Other Expenses of Issuance and Distribution*
The following table sets forth the estimated costs and
expenses to be paid by the Company in connection with the
Offering described in the Registration Statement.
Amount
SEC registration fee $100
Blue sky fees and expenses $1,000
Printing and shipping expenses $2,500
Legal fees and expenses $12,000
Accounting fees and expenses $3,400
Transfer and Miscellaneous expenses $1,000
Total $20,000
* All expenses except SEC registration fee are estimated.
ITEM 26. Recent Sales of Unregistered Securities
On August 27, 1996, 500,000 shares of unregistered Company
common stock were issued to Mr. Cornelius Hofman II in exchange
for 500,000 shares of G.E.C., Inc., ("GEC") common stock, in a
one share per one share exchange pursuant to the Plan of Share
Exchange.
On August 27, 1996, 500,000 shares of unregistered Company
<PAGE>
common stock were issued to Mrs. Stacey Hofman, in exchange for
500,000 shares of GEC common stock in a one share per one share
exchange pursuant to an Agreement and Plan of Share Exchange.
On May 24, 1995, Mr. David Nemelka purchased 400,000 shares
for $4,000 in conjunction with foundation of the Company. On May
31, 1995, Mr. Joe Udall purchased 100,000 shares for $1,000 in
conjunction with foundation of the Company. On November 30,
1996, Mr. Nemelka purchased the 100,000 shares from Mr. Udall for
$2,600. As of this date, Mr. Nemelka owns 500,000 shares of
restricted common stock of the Company for which he paid a total
of $6,600.
ITEM 27. Exhibits Index
SEC
Reference Exhibit No. Document
3 3 Articles of Incorporation
3 3 By-Laws
4 4 Instruments defining the rights
of security holders, including indentures
5 5 Opinion on Legality
21 21 Subsidiaries of the small business issuer
23 23 Consents of Experts and Counsel
27 27 Financial Data Schedule
29 29 Litigation Economics, Inc.,
1996 Stock Option Plan.
29 29 Fund Impound Agreement
ITEM 28. Undertakings
Subject to the terms and conditions of Section 15(d) of the
Securities Exchange Act of 1934, the undersigned Registration
hereby undertakes to file with the Securities and Exchange
Commission such supplementary and periodic information,
documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted
pursuant to authority conferred to that section.
<PAGE>
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the Registrant pursuant to its
Articles of Incorporation or provisions of the Nevada Revised
Statutes, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the Registrant in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of counsel
the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question, whether or not
such indemnification by it is against public policy as expressed
in the Act and will be governed by the final adjudication of such
issue.
The Registrant hereby undertakes to:
(1) File, during any period in which it offers or sells
securities, a post-effective amendment to this registration
statement to:
(i) Include any prospectus required by section 10(a)(3)
of the Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would
not exceed that which was registered) and nay deviation from the
low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
and
(iii) Include any additional or changed material
information on the plan of distribution.
(2) For determining liability under the Securities Act treat
each post-effective amendment as a new registration statement of
the securities offered, and the offering of the securities at
that time to be the initial bona fide offering.
(3) File a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the
offering.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements of filing on Form
SB-2 and authorized this amendment to Registration Statement to
be signed on its behalf by the undersigned, in the City of Salt
Lake, State of Utah, on January ______, 1997..
LITIGATION ECONOMICS, INC.
By:/s/ Cornelius A. Hofman, II
Cornelius A. Hofman, II
Chairman (Chief Executive
Officer) Director and
President
<PAGE>
Pursuant to the requirements of the Securities Act of 1933,
this amendment to Registration Statement has been signed by the
following persons in the capacities and on the date indicated.
Signatures Title Date
/s/Cornelius A. Hofman, II Chairman January _____, 1997
Cornelius A. Hofman, II (Chief Executive
Officer) Director
and President
/s/Edward B. Schow Director January _____, 1997
Edward B. Schow Vice President
/s/Stacey A. Hofman Director January _____, 1997
Stacey A. Hofman Vice President/
Treasurer Principal
Financial/Accounting
Officer
/s/Cornelius A. Hofman Director January _____, 1997
Cornelius A. Hofman
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________________
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_____________________________________________
LITIGATION ECONOMICS, INC.
(Exact name of Issuer in its Charter)
227 South Ninth Avenue
Pocatello, Idaho 83201
(Address of Principal Executive Office)
_____________________________________________
EXHIBITS
<PAGE>
EXHIBIT INDEX
EXHIBIT #
(3) (i) Articles of Incorporation
(ii) By-laws
(4) Instruments defining the rights of security holders, incl.
indentures Incorporated by reference to By-laws, Exhibit 3(ii)
(5) Opinion on Legality
(21) Subsidiaries of the small business issuer
(23) Consents of Experts and Counsel
(27) Financial Data Schedule
(29) Additional exhibits
(i) Stock Option Plan
(ii) Fund Impound Agreement
<PAGE>
LITIGATION ECONOMICS, INC. AND SUBSIDIARY
(formerly Landmark Leasing, Corp.)
(Development Stage Companies)
CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996
<PAGE>
C O N T E N T S
Independent Auditors' Report 3
Consolidated Balance Sheet 4
Consolidated Statement of Operations 5
Consolidated Statement of Stockholders' Equity 6
Consolidated Statement of Cash Flows 7
Notes to the Consolidated Financial Statements 8
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Litigation Economics, Inc. and Subsidiary
(formerly Landmark Leasing, Corp.)
(Development Stage Companies)
Pocatello, Idaho
We have audited the accompanying consolidated balance sheet
of Litigation Economics, Inc. (formerly Landmark Leasing,
Corp.) and Subsidiary (development stage companies) as of
December 31, 1996, and the related consolidated statements
of operations, stockholders' equity and cash flows from
inception of the development stage on July 31, 1996 through
December 31, 1996. These consolidated financial statements
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these
consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan
and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free of
material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures
in the consolidated financial statements. An audit also
includes assessing the accounting principles used and
significant estimates made by management, as well as
evaluating the overall consolidated financial statement
presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects,
the financial position of Litigation Economics, Inc.
(formerly Landmark Leasing, Corp.) and Subsidiary
(development stage companies) as of December 31, 1996 and
the results of their operations and their cash flows from
inception of the development stage on July 31, 1996 through
December 31, 1996 in conformity with generally accepted
accounting principles.
The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going
concern. As discussed in Note 2 to the financial
statements, the Company is a development stage company with
no significant operating results to date, which raises
substantial doubt about its ability to continue as a going
concern. Management's plans in regard to these matters are
also described in the Note 2. The financial statements do
not include any adjustments that might result from the
outcome of this uncertainty.
/s/Jones, Jensen & Company
Jones, Jensen & Company
March 19, 1997
Salt Lake City, Utah
<PAGE>
LITIGATION ECONOMICS, INC. AND SUBSIDIARY
(formerly Landmark Leasing, Corp.)
(Development Stage Companies)
Consolidated Balance Sheet
ASSETS
December 31,
1996
CURRENT ASSETS
Cash $ 3,102
Total Current Assets 3,102
TOTAL ASSETS $ 3,102
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable $ 2,478
Total Liabilities 2,478
STOCKHOLDERS' EQUITY
Preferred stock authorized 5,000,000 shares
at $0.001 par value; no shares were
issued or outstanding -
Common stock authorized 50,000,000 shares
shares at $0.001 par value; 1,500,000
shares issued and outstanding 1,500
Additional paid-in capital 4,141
Deficit accumulated during the development stage (5,017)
Total Stockholders' Equity 624
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,102
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
LITIGATION ECONOMICS, INC. AND SUBSIDIARY
(formerly Landmark Leasing, Corp.)
(Development Stage Companies)
Consolidated Statement of Operations
From Inception
on July 31,
1996 Through
December 31,
1996
REVENUE $ -
GENERAL AND ADMINISTRATIVE EXPENSES 5,769
INCOME (LOSS) FROM OPERATIONS (5,769)
OTHER INCOME
Gain on sale of asset 720
Interest income 32
Total Other Income 752
NET LOSS $ (5,017)
NET LOSS PER SHARE $ Nil
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 483,871
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
LITIGATION ECONOMICS, INC. AND SUBSIDIARY
(formerly Landmark Leasing, Corp.)
(Development Stage Companies)
Consolidated Statement of Stockholders' Equity
Deficit
Accumulated
Additional During the
Common Stock Paid-in Development
Shares Amount Capital Stage
Balance,
July 31, 1996 - $ - $ - $ -
Common stock
issued for
cash at $0.001
per share 1,000,000 1,000 - -
Recapitalization
of G.E.C., Inc. 500,000 500 4,141 -
Net loss for the
period ended
December 31, 1996 - - - (5,017)
Balance,
December 31, 1996 1,500,000 $ 1,500 $ 4,141 $(5,017)
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
LITIGATION ECONOMICS, INC. AND SUBSIDIARY
(formerly Landmark Leasing, Corp.)
(Development Stage Companies)
Consolidated Statement of Cash Flows
From Inception
on July 31,
1996 Through
December 31,
1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (5,017)
Adjustments to reconcile net income
to net cash used by operating activities:
Changes in operating assets and liabilities:
Increase (decrease) in accounts payable 2,478
Net Cash (Used) by Operating Activities (2,539)
CASH FLOWS FROM INVESTING ACTIVITIES: -
Cash acquired in recapitalization of subsidiary 4,641
Net Cash Provided by Investing Activities 4,641
CASH FLOWS FROM FINANCING ACTIVITIES:
Common stock issued 1,000
Net Cash Provided by Financing Activities 1,000
NET INCREASE (DECREASE) IN CASH 3,102
CASH AT BEGINNING OF PERIOD -
CASH AT END OF PERIOD $ 3,102
Cash Paid for:
Interest $ -
Income taxes $ -
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
LITIGATION ECONOMICS, INC. AND SUBSIDIARY
(formerly Landmark Leasing, Corp.)
(Development Stage Companies)
Notes to the Consolidated Financial Statements
December 31, 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Operating History
The Company was incorporated in the State of Nevada on
April 27, 1995, under the name of Landmark Leasing, Corp.
The Company planned on operating as a leasing company of
residential property, commercial property, vehicles, and
related activities. The Company has discontinued
pursuing any of these activities and accordingly remains
a development stage company. The Company changed its
name to Litigation Economics, Inc. on December 22, 1996.
On December 22, 1996, the Company acquired all of the
outstanding stock of G.E.C., Inc., (the Subsidiary) for
1,000,000 shares of the Company's common stock valued at
$.001 per share or $1,000 which represented the capital
contributed to the subsidiary. The acquisition of the
Subsidiary was recorded as a recapitalization of the
Subsidiary, whereby the acquired company is treated as
the surviving entity for accounting purposes. The
Subsidiary was formed on July 31, 1996 in the State of
Idaho. The Subsidiary will engage in the field of
economic advising and consulting and has not commenced
principal business operations. Accordingly, the
subsidiary is also considered a development stage
company.
Summary of Significant Accounting Policies
a. Accounting Method
The Company's financial statements are prepared using the
accrual method of accounting. The Company has selected a
December 31, year end.
b. Net Loss Per Share
The computation of loss per share of common stock is
based on the weighted average number of shares
outstanding at the date of the consolidated financial
statements.
c. Provision for Taxes
At December 31, 1996, the Company has net operating loss
carryforwards of approximately $5,000 that may be offset
against future taxable income through 2011. No tax
benefit has been reported in the financial statements,
because the Company believes there is a 50% or greater
chance the carryforwards will expire unused.
Accordingly, the potential tax benefits of the loss
carryforward are offset by a valuation allowance of the
same amount.
<PAGE>
LITIGATION ECONOMICS, INC. AND SUBSIDIARY
(formerly Landmark Leasing, Corp.)
(Development Stage Companies)
Notes to the Consolidated Financial Statements
December 31, 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
d. Cash and Cash Equivalents
For purposes of financial statement presentation, the
Company considers all highly liquid investments with a
maturity of three months or less to be cash equivalents.
e. Use of Estimates
The preparation of financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts
of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
f. Principles of Consolidation
The consolidated financial statements include accounts of
Litigation Economics, Inc. and its wholly-owned
subsidiary, G.E.C., Inc. Intercompany transactions have
been eliminated.
g. Revenue Recognition
Revenue will be recognized upon the completion of
consulting and advising services.
h. Computer Software
Proprietary computer software is being developed by the
president of the Company to be used in the Company's
proposed economic advising and consulting activities.
The president of the Company has used his personal
computer and space in his home during the development of
this software. These facilities and equipment are used
primarily by the Company's president for his personal
affairs and the business usage would be immaterial. In
addition, the president of the Company has not received
any compensation from any source for his time in
developing this computer software. He is employed full-
time elsewhere and presently devotes approximately 10% of
his time to the development of the computer software and
operations of the Company. Accordingly, no costs
associated with the development of the computer software
have been reflected in the accompanying financial
statements.
<PAGE>
LITIGATION ECONOMICS, INC. AND SUBSIDIARY
(formerly Landmark Leasing, Corp.)
(Development Stage Companies)
Notes to the Consolidated Financial Statements
December 31, 1996
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using
generally accepted accounting principles applicable to a
going concern which contemplates the realization of
assets and liquidation of liabilities in the normal
course of business. However, the Company does not have
significant cash and has not had significant operations
since the inception of its development stage. Without
realization of additional adequate financing it would be
unlikely for the Company to pursue and realize its
objectives. The Company is in the process of obtaining
debt and or equity financing, principally through a
proposed public offering. Once sufficient financing is
obtained, the Company plans to commence business
operations and begin recognizing revenue as consulting
and advising services are performed. To date the Company
has been able to cover operating costs with existing
financial resources. Officers of the Company have
committed to make capital contributions or advances to
the Company should additional funds be needed to pay
operating expenses.
NOTE 3 - RELATED PARTY TRANSACTIONS
The Company sold a vehicle to a related party on July 15,
1996 for a gain of $720.
NOTE 4 - COMMON STOCK OPTIONS
In October of 1996, the Board of Directors adopted the
Litigation Economics, Inc., 1996 Stock Option Plan (the
"Plan"), allowing the Company to offer its key employees,
officers, directors, consultants, and sales
representatives an opportunity to acquire a proprietary
interest in the Company. The total number of shares
reserved and available for distribution under the Plan
shall be 500,000 shares. These shares will underlie the
Options issued by the Company pursuant to the Plan. The
Option holders will not be protected against dilution if
the Company should issue additional shares of common
stock in the future. Neither the Options, nor the shares
underlying the Options have pre-emptive rights. As of
December 31, 1996 no activity has transpired with regard
to the Plan.
<PAGE>
EXHIBIT 23
CONSENTS OF EXPERTS AND COUNSEL
October 24, 1996
<PAGE>
Board of Directors
Litigation Economics, Inc.
227 South Ninth Avenue
Pocatello, Idaho 83201
Re: Opinion and Consent of Counsel with respect to
Registration Statement on Form SB-2
Gentlemen:
You have requested the opinion and consent of this law
firm, as counsel, with respect to the proposed issuance and
public distribution of certain securities of the Company
pursuant to the filing of a registration statement on Form
SB-2 with the Securities and Exchange Commission.
The proposed offering and public distribution relates
to 100,000 shares of Common Stock, $.001 par value (the
"Common Stock"), to be offered and sold to the public at a
price of $1.00 per share. It is our opinion that the shares
of Common Stock will, when issued in accordance with the
terms and conditions set forth in the registration
statement, be duly authorized, validly issued, fully paid
and nonassessable shares of common stock of the Company in
accordance with the corporation laws of the State of Nevada.
We hereby consent to be named as counsel for the
Company in the registration statement and prospectus
included therein.
Very truly yours,
POULTON & YORDAN
Cletha A. Walstrand
CAW/jt
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the use in this Prospectus constituting
part of this Registration Statement on Form SB-2 for
Litigation Economics, Inc., of our report dated March 19,
1997, relating to the Consolidated Financial Statements
dated December 31, 1996 of Litigation Economics, Inc., which
appears in such Prospectus. We also consent to the
reference to us under the heading "Experts".
/s/Jones, Jensen & Company
Jones, Jensen & Company
April 2, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JUL-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 3,102
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,102
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,102
<CURRENT-LIABILITIES> 2,478
<BONDS> 0
0
0
<COMMON> 1,500
<OTHER-SE> (876)
<TOTAL-LIABILITY-AND-EQUITY> 3,102
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,769
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (5,017)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,017)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,017)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
