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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
UNDER SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
THE LIONSHARE GROUP, INC.
(Name of Small Business Issuer in its charter)
Delaware 59-2634889
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification Number)
20 S.E. 14th Street 204
Boca Raton, Florida 33432
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (561) 741-0410
Securities to be registered under Section 12(b) of the Act:
None
Securities to be registered under Section 12(g) of the Act:
Common Stock, $.0001 par value per share
(Title or class)
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TABLE OF CONTENTS
Page
PART I
ITEM 1. DESCRIPTION OF BUSINESS.................................... 1
ITEM 2. PLAN OF OPERATION.......................................... 4
ITEM 3. DESCRIPTION OF PROPERTY.................................... 8
ITEM 4. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT........................... 9
ITEM 5. MANAGEMENT................................................. 9
ITEM 6. EXECUTIVE COMPENSATION..................................... 10
ITEM 7. CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS....................................... 11
ITEM 8. DESCRIPTION OF SECURITIES.................................. 11
PART II
ITEM 1. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.................................................... 12
ITEM 2. LEGAL PROCEEDINGS.......................................... 13
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE..................... 13
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.................... 13
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.................. 13
PART F/S
ITEM 1. FINANCIAL STATEMENTS AND EXHIBITS.......................... F-1
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PART I
ITEM 1. DESCRIPTION OF BUSINESS.
BUSINESS DEVELOPMENT
The Lionshare Group, Inc., referred to in this registration statement as
Lionshare, the company, we or us, organized as a corporation under the laws of
the state of Delaware on June 15, 1984 under the name Resnick World Wide, Inc.
Lionshare has had no operations since June 1997. On June 16, 1995, Resnick
acquired all of issued and outstanding shares of Standard Brands of America,
Inc., a privately-held corporation organized under the laws of the state of
Florida engaged in the business of distributing home electronics and appliances.
On May 19, 1999 the company recorded in Broward County, Florida a filing of an
assignment for the benefit of creditors, due to its insolvency. On May 1, 1998,
the company changed its name to The Lionshare Group, in anticipation of a merger
with the company and a privately-held Florida corporation. This merger was never
consummated.
We are authorized to issue 1,000,000,000 shares of common stock, $0.0001 par
value, of which 1,327,539 shares were issued and outstanding as of February 28,
2000. Each holder of common stock is entitled to one vote per share of common
stock held. We are also authorized to issue 5,000,000 shares of preferred stock,
no par value, none of which shares are issued and outstanding. Information in
this registration statement gives effect to a one-for-ten reverse split executed
in September 1998.
We have been in the developmental stage since June 1997 and have no operations
to date. Other than issuing shares to stockholders, we have not commenced any
operational activities. As such, we can be defined as a "shell" company, whose
sole purpose at this time is to locate and consummate a merger or acquisition
with a private entity. Our directors have elected to commence implementation of
our principal business purpose.
We are filing this registration statement on a voluntary basis because the
primary attraction of us as a merger partner or acquisition vehicle will be our
status as a reporting public company. Any business combination or transaction
could result in a significant issuance of shares and substantial dilution to our
current stockholders.
The proposed business activities described in this registration statement
classify us as a blank check company. Many states have enacted statutes, rules
and regulations limiting the sale of securities of blank check companies in
their respective jurisdictions. We do not intend to undertake any other offering
of our securities, either debt or equity, until such time as we have
successfully implemented our business plan described later in this registration
statement. Our majority stockholders have expressed their intention not to sell
their shares of common stock until such time as we have successfully consummated
a merger or acquisition and are no longer classified as a blank check company.
In addition, our majority stockholders have also expressed their intention not
to sell their shares unless the shares are subsequently registered or if an
exemption from registration is available.
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RISK FACTORS
No Operating History, Revenue and Assets. We have no operating history or any
revenues or earnings from operations. We have little or no tangible assets or
financial resources. We will, in all likelihood, continue to sustain operating
expenses without corresponding revenues, at least until the consummation of a
business combination. This may result in our incurring a net operating loss
which will increase continually until we consummate a business combination with
a profitable business opportunity. There is no assurance that we can identify
such a business opportunity and consummate such a business combination.
Speculative Nature of Company's Proposed Operations. The success of our proposed
plan of operation will depend to a great extent on the operations, financial
condition and management of the identified business opportunity. While we intend
to seek business combination(s) with entities having established operating
histories, there can be no assurance that we will be successful in locating
candidates meeting these criteria. In the event that we complete a business
combination, our success may be dependent upon management of the successor firm
or venture partner firm and numerous other factors beyond our control.
State Blue Sky Registration; Restricted Resales of the Securities.
Transferability of our shares of common stock is limited because a significant
number of states have enacted securities or so-called "blue sky" laws and
regulations restricting or, in many instances, prohibiting, the initial sale and
subsequent resale within that state of securities of "blank check" companies
such as us. In addition, many states, while not specifically prohibiting or
restricting "blank check" companies, would not register our securities for sale
or resale in their states. Because of these regulations, we have no current plan
to register any securities with any state. To ensure that any state laws are not
violated through the resales of our securities, we will refuse to register the
transfer of any securities to residents of any state, which prohibit such resale
or if no exemption is available for such resale. It is not anticipated that a
secondary trading market for our securities will develop in any state until
consummation of a business combination.
Scarcity of and Competition for Business Opportunities and Combinations. We are
and will continue to be an insignificant participant in the business of seeking
mergers with, joint ventures with and acquisitions of small private and public
entities. A large number of established and well-financed entities, including
venture capital firms, are active in mergers and acquisitions of companies which
may be desirable target candidates for us. Nearly all of these entities have
significantly greater financial resources, technical expertise and managerial
capabilities than we, and, consequently, we will be at a competitive
disadvantage in identifying possible business opportunities and successfully
completing a business combination. In addition, we will also compete in seeking
merger or acquisition candidates with numerous other small public companies.
No Agreement for Business Combination or Other Transaction - No Standards For
Business Combination. We have no arrangement, agreement or understanding with
respect to engaging in a merger with, joint venture with or acquisition of, a
private or public entity. There can be no assurance that we will be successful
in identifying and evaluating suitable business opportunities or in concluding a
business combination. We have not identified any particular industry or specific
business within an industry for evaluation by us. We cannot assure you that we
will be able to negotiate a business combination on favorable terms. We have not
established a specific length of operating history or a specified level of
earnings, assets, net worth or other criteria which we will require a target
business opportunity to have achieved, and without which we would not consider a
business combination in any form with such business opportunity. Accordingly, we
may enter into a business combination with a business opportunity having no
significant operating history, losses, limited or no potential for earnings,
limited assets, negative net worth or other negative characteristics.
Continued Management Control, Limited Time Availability. While seeking a
business combination, William C. Barnett, our Secretary, anticipates devoting up
to 50 hours per month to the business of our company. Mr. Barnett will be the
only person responsible in conducting the day to day operations of the company
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including searches, evaluations, and negotiations with potential merger or
acquisition candidates. We have not entered into any written employment
agreement with Mr. Barnett and do not anticipate doing so in the foreseeable
future.
Conflicts Of Interest - General. Mr. Barnett may in the future participate in
business ventures that could be deemed to compete directly with us. Additional
conflicts of interest and non arms-length transactions may also arise in the
future in the event that our current and future officers or directors are
involved in the management of any firm with which we transact business.
Lack of Market Research or Marketing Organization. We have neither conducted,
nor have others made available to us, results of market research indicating that
market demand exists for the transactions contemplated by us. Moreover, we do
not have, and do not plan to establish, a marketing organization. Even in the
event demand is identified for a merger or acquisition contemplated by us, there
is no assurance that we will be successful in completing any such business
combination.
Lack of Diversification. Our proposed operations, even if successful, will in
all likelihood result in our engaging in a business combination with a business
opportunity. Consequently, our activities may be limited to those engaged in by
entities with which we merge or acquire. Our inability to diversify our
activities into a number of areas may subject us to economic fluctuations within
a particular business or industry and therefore increase the risks associated
with our operations.
Regulation. Although we will be subject to regulation under the Securities
Exchange Act of 1934, we believe that we will not be subject to regulation under
the Investment Company Act of 1940, insofar as we will not be engaged in the
business of investing or trading in securities. In the event that we engage in
business combinations which result in our holding passive investment interests
in a number of entities, we could become subject to regulation under the
Investment Company Act of 1940. In this event, we would be required to register
as an investment company and could be expected to incur significant registration
and compliance costs. We have not obtained formal determination from the
Securities and Exchange Commission regarding our status under the Investment
Company Act of 1940 and, consequently, any violation of this Act could cause
material adverse consequences to our business.
Probable Change in Control and Management. A business combination involving the
issuance of our common stock will, in all likelihood, result in stockholders of
a private company obtaining a controlling interest in us. Any similar business
combination may require our management to sell or transfer all or a portion of
our common shares held by them, or resign as members of the board of directors
of the Company. The resulting change in control could result in the removal of
Mr. Barnett and a corresponding reduction in or elimination of his participation
in our future affairs.
Potential Reduction of Percentage Share Ownership Following Business
Combination. Our primary plan of operation is based upon a business combination
with a private concern which, depending on the terms of merger or acquisition,
may result in our issuing securities to stockholders of a private company. The
issuance of previously authorized and unissued common stock would result in
reduction in percentage of shares owned by our present and prospective
stockholders and may result in a change in control or change in our management.
Disadvantages of Blank Check Offering. We may enter into a business combination
with an entity that desires to establish a public trading market for its shares.
A business opportunity may attempt to avoid what it deems to be adverse
consequences of undertaking its own public offering by seeking a business
combination with us. These consequences may include, but are not limited to,
o time delays of the registration process;
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o significant expenses to be incurred in such an offering;
o loss of voting control to public stockholders; and
o the inability or unwillingness to comply with various federal
and state laws enacted for the protection of investors.
Taxation. Federal and state tax consequences will, in all likelihood, be major
considerations in any business combination we may undertake. Currently, these
transactions may be structured so as to result in tax-free treatment to both
companies, pursuant to various federal and state tax provisions. We intend to
structure any business combination so as to minimize the federal and state tax
consequences to both us and the target entity; however, we cannot assure you
that such business combination will meet the statutory requirements of a
tax-free reorganization or that the parties will obtain the intended tax-free
treatment upon a transfer of stock or assets. A non-qualifying reorganization
could result in the imposition of both federal and state taxes which may have an
adverse effect on both parties to the transaction.
Requirement of Audited Financial Statements May Disqualify Business
Opportunities. Sections 13 and 15(d) of the Securities Exchange Act of 1934
require companies to provide information about significant acquisitions,
including certified financial statements for the company acquired, covering one,
two or three years, depending on the relative size of the acquisition. The time
and additional costs that may be incurred by some target entities to prepare
such statements may preclude consummation of an otherwise desirable acquisition.
Acquisition prospects that do not have or are unable to obtain the required
audited financial statements may not be appropriate for acquisition so long as
the reporting requirements of the 1934 Act are applicable.
ITEM 2. PLAN OF OPERATION.
We intend to seek to acquire assets or shares of an entity actively engaged in
business which generates revenues, in exchange for our securities. We have no
particular acquisitions in mind and have not entered into any negotiations
regarding such an acquisition. None of our officers, directors, employees or
affiliates has engaged in any preliminary contact or discussions with any
representative of any other company regarding the possibility of an acquisition
or merger between us and any other company as of the date of this registration
statement.
EMPLOYEES
We have no full time or part time employees. Mr. Barnett has agreed to allocate
a portion of his time to our business activities, without compensation. We
anticipate that our business plan can be implemented through the efforts of Mr.
Barnett's devoting up to 50 hours per month to our business affairs.
Consequently, conflicts of interest may arise with respect to the limited time
commitment by him.
Mr. Barnett has been and is currently involved with other blank check companies,
and may, in the future, become involved with other companies who have a business
purpose similar to ours. As a result, additional potential conflicts of interest
may arise in the future. If this type of conflict does arise and an officer or
director is presented with business opportunities under circumstances where
there may be a doubt as to whether the opportunity should belong to us or to
another blank check company he or she is affiliated with, he or she will
disclose the opportunity to all such companies. If a situation arises in which
more than one company desires to merge with or acquire that target company and
the principals of the proposed target company has no preference as to which
company will merger or acquire such target company, the company which first
filed a registration statement with the Securities and Exchange Commission will
be entitled to proceed with the proposed transaction.
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INDEMNIFICATION
We shall indemnify to the fullest extent permitted by, and in the manner
permissible under the laws of Wyoming, any person made, or threatened to be
made, a party to an action or proceeding, whether criminal, civil,
administrative or investigative, by reason of the fact that he is or was a
director or officer, or served any other enterprise as director, officer or
employee at our request. The board of directors, in its discretion, shall have
the power on our behalf to indemnify any person, other than a director or
officer, made a party to any action, suit or proceeding by reason of the fact
that he or she is or was an employee of us.
BUSINESS PLAN
Our purpose is to seek, investigate and, if such investigation warrants, acquire
an interest in business opportunities presented to us by persons or firms who or
which desire to seek the perceived advantages of an Exchange Act-registered
corporation. We will not restrict our search to any specific business, industry,
or geographical location and we may participate in a business venture of
virtually any kind or nature. This discussion of the proposed business is
purposefully general and is not meant to be restrictive of our virtually
unlimited discretion to search for and enter into potential business
opportunities. Management anticipates that it may be able to participate in only
one potential business venture because we have nominal assets and limited
financial resources. This lack of diversification should be considered a
substantial risk to our stockholders because it will not permit us to offset
potential losses from one venture against gains from another.
We may seek a business opportunity with entities which have recently commenced
operations, or which wish to utilize the public marketplace in order to raise
additional capital in order to expand into new products or markets, to develop a
new product or service, or for other corporate purposes. We may acquire assets
and establish wholly-owned subsidiaries in various businesses or acquire
existing businesses as subsidiaries.
We may advertise and promote ourselves in newspaper, magazines and on the
Internet. We have not yet prepared any notices or advertisement.
We anticipate that the selection of a business opportunity in which to
participate will be complex and extremely risky. Due to general economic
conditions, rapid technological advances being made in some industries and
shortages of available capital, management believes that there are numerous
firms seeking the perceived benefits of a publicly-registered corporation. These
perceived benefits may include facilitating or improving the terms on which
additional equity financing may be sought, providing liquidity for incentive
stock options or similar benefits to key employees, providing liquidity (subject
to restrictions of applicable statutes), for all stockholders and other factors.
Potentially, available business opportunities may occur in many different
industries and at various stages of development, all of which will make the task
of comparative investigation and analysis of such business opportunities
extremely difficult and complex.
We have, and will continue to have, no capital with which to provide the owners
of business opportunities with any significant cash or other assets. However, we
believe that we will be able to offer owners of acquisition candidates the
opportunity to acquire a controlling ownership interest in a publicly-registered
company without incurring the cost and time required to conduct an initial
public offering. The owners of the business opportunities will, however, incur
significant legal and accounting costs in connection with their acquisition of a
business opportunity, including the costs of preparing reports such as Form
8-K's, 10-K's or 10-KSB's, agreements and related reports and documents. The
Securities Exchange Act of 1934 specifically requires that any merger or
acquisition candidate comply with all applicable reporting requirements, which
include providing audited financial statements to be included within the
numerous filings relevant to complying with the Exchange Act. Nevertheless, our
officers and directors have not conducted market research and are not aware of
statistical data which would support the perceived benefits of a merger or
acquisition transaction for the owners of a business opportunity.
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The analysis of new business opportunities will be undertaken by, or under the
supervision of, Mr. Barnett, who may not be considered a professional business
analyst. Mr. Barnett will be the key person in the search, review and
negotiation with potential acquisition or merger candidates. We intend to
concentrate on identifying preliminary prospective business opportunities which
may be brought to our attention through present associations of our officers and
directors, or by our stockholders. In analyzing prospective business
opportunities, we will consider such matters as the available technical,
financial and managerial resources; working capital and other financial
requirements:
o history of operations, if any;
o prospects for the future;
o nature of present and expected competition;
o the quality and experience of management services which may be
available and the depth of that management;
o the potential for further research, development, or
exploration;
o the potential for growth or expansion;
o the potential for profit;
o the perceived public recognition of acceptance of products,
services, or trades; and
o name identification.
Our officers and directors do not necessarily expect to meet personally with
management and key personnel of the business opportunity as part of their
investigation due to lack of capital. To the extent possible, we intend to
utilize written reports and other investigations to evaluate the above factors.
We will not acquire or merge with any company for which audited financial
statements cannot be obtained within a reasonable period of time after closing
of the proposed transaction.
Mr. Barnett has limited experience in managing companies similar to us and will
rely upon his own efforts and, to a much lesser extent, the efforts of our
stockholders, in accomplishing our business purpose. We do not anticipate using
any outside consultants or advisors to effectuate our business purpose. However,
if we do retain such an outside consultant or advisor, any cash fee earned by
such party will need to be paid by the prospective merger/acquisition candidate,
as we have no cash assets with which to pay such obligation. There have been no
contracts or agreements with any outside consultants and none are anticipated in
the future.
We will not restrict our search for any specific kind of firm, but may acquire a
venture which is in its preliminary or development stage, which is already in
operation, or in essentially any stage of its corporate life. It is impossible
to predict at this time the status of any business in which we may become
engaged, in that such business may need to seek additional capital, may desire
to have its shares publicly traded, or may seek other perceived advantages which
we may offer. However, we do not intend to obtain funds in one or more private
placements to finance the operation of any acquired business opportunity until
such time as we have successfully consummated such a merger or acquisition.
We anticipate that we will incur nominal expenses in the implementation of our
business plan described herein. Because we have no capital with which to pay
these anticipated expenses, Mr. Barnett agreed to pay these charges with his
personal funds, as interest-free loans. However, the only opportunity which
management has to have these loans repaid will be from a prospective merger or
acquisition candidate. Repayment of any loans made on our behalf will not
impede, or be made conditional in any manner, to consummation of a proposed
transaction.
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ACQUISITION OF OPPORTUNITIES
In implementing a structure for a particular business acquisition, we may become
a party to a merger, consolidation, reorganization, joint venture, or licensing
agreement with another corporation or entity. We may also acquire stock or
assets of an existing business. On the consummation of a transaction, it is
probable that our present management and stockholders will no longer be in
control of us. In addition, our directors may, as part of the terms of the
acquisition transaction, resign and be replaced by new directors without a vote
of our stockholders or may sell their stock. Any terms of sale of the shares
presently held by officers and/or directors will be also afforded to all other
stockholders on similar terms and conditions. Any and all such sales will only
be made in compliance with federal and applicable state securities laws.
We anticipate that any securities issued in any such reorganization would be
issued in reliance upon exemption from registration under applicable federal and
state securities laws. In some circumstances, however, as a negotiated element
of its transaction, we may agree to register all or a part of such securities
immediately after the transaction is consummated or at specified times
thereafter. If such registration occurs, of which there can be no assurance, it
will be undertaken by the surviving entity after we have successfully
consummated a merger or acquisition and we are no longer considered a "shell"
company. Until such time as this occurs, we will not attempt to register any
additional securities. The issuance of substantial additional securities and
their potential sale into any trading market which may develop in our securities
may have a depressive effect on the value of our securities in the future, if
such a market develops, of which there is no assurance.
While the actual terms of a transaction to which we may be a party cannot be
predicted, it may be expected that the parties to the business transaction will
find it desirable to avoid the creation of a taxable event and thereby structure
the acquisition in a so-called "tax-free" reorganization under Sections
368(a)(1) or 351 of the Internal Revenue Code. In order to obtain tax-free
treatment, it may be necessary for the owners of the acquired business to own
80% or more of the voting stock of the surviving entity. In such event, our
stockholders, would retain less than 20% of the issued and outstanding shares of
the surviving entity, which would result in significant dilution in the equity
of such stockholders.
As part of our investigation, our officers and directors may meet with
management and key personnel, may visit and inspect material facilities, obtain
analysis of verification of certain information provided, check references of
management and key personnel, and take other reasonable investigative measures,
to the extent of our limited financial resources and management expertise. The
manner in which we participate in an opportunity will depend on the nature of
the opportunity, our respective needs and desires and other parties, our
management of the opportunity and relative negotiation strength.
With respect to any merger or acquisition, negotiations with target company
management are expected to focus on the percentage of Lionshare which the target
company stockholders would acquire in exchange for all of their holdings in the
target company. Depending upon, among other things, the target company's assets
and liabilities, our stockholders will in all likelihood hold a substantially
lesser percentage ownership interest in Lionshare following any merger or
acquisition. The percentage ownership may be subject to significant reduction in
the event we acquire a target company with substantial assets. Any merger or
acquisition effected by us can be expected to have a significant dilutive effect
on the percentage of shares held by Lionshare's stockholders at that time.
Lionshare will participate in a business opportunity only after the negotiation
and execution of appropriate written agreements. Although the terms of such
agreements cannot be predicted, generally such agreements will require some
specific representations and warranties by all of the parties thereto, will
specify certain events of default, will detail the terms of closing and the
conditions which must be satisfied by each of the parties prior to and after
such closing, will outline the manner of bearing costs, including costs
associated with Lionshare's attorneys and accountants, will set forth remedies
on default and will include miscellaneous other terms.
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As previously stated, we will not acquire or merge with any entity which cannot
provide independently audited financial statements within a reasonable period of
time after closing of the proposed transaction. We will be subject to all of the
reporting requirements included in the 1934 Act. Included in these requirements
is the affirmative duty to file independent audited financial statements as part
of our Form 8-K to be filed with the Securities and Exchange Commission upon
consummation of a merger or acquisition, as well as our audited financial
statements included in its annual report on Form 10-K (or 10-KSB, as
applicable). If such audited financial statements are not available at closing,
or within time parameters necessary to insure our compliance with the
requirements of the 1934 Act, or if the audited financial statements provided do
not conform to the representations made by the candidate to be acquired in the
closing documents, the closing documents will provide that the proposed
transaction will be voidable, at the discretion of our present management. If
this transaction is voided, the agreement will also contain a provision
providing for the acquisition entity to reimburse us for all costs associated
with the proposed transaction.
We do not intend to make any loans to any prospective acquisition or merger
candidates or to unaffiliated third parties. We may make loans only to
prospective acquisition or merger candidates only when such fund is available,
we have entered into an acquisition or merger agreement and making a loan to the
acquisition or merger candidate is beneficial to us. The considerations to be
used in determining whether to make loans includes the availability and the need
of cash by the acquisition or merger candidate in order to complete the
acquisition or merger. The loan may be either secured or non-secured depending
on the result of negotiation and there is no limitations as to the amounts that
may be loaned.
We do not intend to provide our stockholders with any complete disclosure
documents, including audited financial statements, concerning an acquisition or
merger candidate and its business prior to the consummation of any acquisition
or merger transaction.
COMPETITION
We will remain an insignificant participant among the marketplace of firms that
engage in the acquisition of business opportunities. There are many established
venture capital and financial concerns which have significantly greater
financial and personnel resources and technical expertise than we. In view of
our limited financial resources and limited management availability, we will
continue to be at a significant competitive disadvantage to our competitors.
YEAR 2000 ISSUE
Year 2000 issues are not material to our business, operations or financial
condition, and we do not currently anticipate that it will incur any material
expenses to remediate Year 2000 problems we may encounter. However, Year 2000
issues may become material to us following our completion of a business
combination transaction. In that event, we will be required to adopt a plan and
a budget for addressing these issues.
ITEM 3. DESCRIPTION OF PROPERTY.
We currently maintain our offices at 20 S.E. 14th Street, Suite 204, Boca Raton,
Florida 33432, which is the business address of Mr. Barnett, our Secretary. We
pay no rent for the use of this office. We do not believe that we will need to
maintain an office at any time in the foreseeable future in order to carry out
our plan of operations described herein.
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ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information as of March 1, 2000 regarding
beneficial ownership of our common stock by (i) each stockholder known us to be
the beneficial owner of more than 5% of our common stock, (ii) by each director
and executive officer and (iii) by all executive officers and directors as a
group. Each of the persons named in the table has sole voting and investment
power with respect to common stock beneficially owned. The address of all
stockholders in this table is 20 S.E. 14th Street, Suite 204, Boca Raton,
Florida 33432.
Number of Percentage of
Name Shares Owned Shares Owned
- ---- ------------ -------------
Edward H. McCluskey 60,000 4.5
William C. Barnett 69,000 5.2
All officers and directors
as a group (2 people) 129,000 9.7
ITEM 5. MANAGEMENT.
OFFICERS AND DIRECTORS
The following table sets forth certain information concerning each of
Lionshare's directors and executive officers:
Name Age Position
- ---- --- --------
Edward H. McCluskey 60 Chief Executive Officer
William C. Barnett 60 Secretary
Edward H. McCluskey, Sr. has served as our Chairman and Chief Executive Officer
since September 1998. From July 1996 to the present, Mr. McCluskey served as
Vice President of Tropical Investments of South Florida, Inc., a real estate
developer. From 1976 to June 1998, Mr. McCluskey served as Chairman and Chief
Executive Officer of Standard Brands, Inc., a major appliance and electronics
retailer, which he co-founded. From 1960 to 1966, Mr. McCluskey served as
District Sales Manager of Kelly and Cohen, a major appliance and electronics
retailer. From 1967 to 1968, he was general manager for the electronics and
appliance division of Twin Fair, Inc., a discount retailer. In 1969 Mr.
McCluskey became Chairman and President of World Associates in Fort Lauderdale,
Florida, developing the marketing concepts and campaigns and negotiating
advertisement and leasing contracts. Mr. McCluskey holds a Bachelor of Science
degree in Business Administration from Duquesne University.
William C. Barnett has served as our secretary and director since September
1998. From 1984 to the present, Mr. Barnett served as Chief Executive Officer of
Barnett Financial Corp., a financial services consulting firm. From 1977 to
1983, Mr. Barnett served as chief executive officer of Continental Distributors,
Inc., a distributor of major appliances and televisions. From 1971 to 1976, Mr.
Barnett was employed as executive vice president of World Associates, Inc., a
major appliances and televisions retailer. From 1966 to 1970, Mr. Barnett was
employed as an Accounting Manager of Deloitte & Touche. Mr. Barnett received his
B.A. from the University of Nebraska and a fifth year Accounting Degree from
Florida Atlantic University, and is a licensed real estate broker.
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CONFLICTS OF INTEREST
Mr. McCluskey is associated with other firms involved in a range of business
activities. Consequently, there are potential inherent conflicts of interest in
his acting as our officer and director at the same time as his engagement in
other ventures. Insofar as the officer and director is engaged in other business
activities, Mr. McCluskey anticipates that he will devote only a minor amount of
time to our affairs.
INVESTMENT COMPANY ACT OF 1940
Although we will be subject to regulation under the Securities Act of 1933 and
the Securities Exchange Act of 1934, we believe that we will not be subject to
regulation under the Investment Company Act of 1940 insofar as we will not be
engaged in the business of investing or trading in securities. In the event that
we engage in business combinations which result in our holding passive
investment interests in a number of entities, we could be subject to regulation
under the Investment Company Act of 1940. In this event, we would be required to
register as an investment company and could be expected to incur significant
registration and compliance costs. We have obtained no formal determination from
the Securities and Exchange Commission as to our status under the Investment
Company Act of 1940 and, consequently, any violation of such Act would subject
us to material adverse consequences. We anticipate expect to be exempt from the
Investment Company Act of 1940 via Regulation 3a-2 thereto.
INVESTMENT ADVISER ACT OF 1940
Lionshare is not an "investment adviser" under the Federal Investment Adviser
Act of 1940, which classification would involve a number of negative
considerations. Accordingly, Lionshare will not furnish or distribute advice,
counsel, publications, writings, analysis or reports to anyone relating to the
purchase or sale of any securities within the language, meaning and intent of
Section 2(a)(11) of the Investment Adviser Act of 1940, 15 U.S.C.
ITEM 6. EXECUTIVE COMPENSATION.
None of our executive officers or directors received any form of compensation
from Lionshare in the past three fiscal years.
It is possible that, after Lionshare successfully consummates a merger or
acquisition with an unaffiliated entity, that entity may desire to employ or
retain one or a number of members of its management for the purposes of
providing services to the surviving entity, or otherwise provide other
compensation to such persons. However, Lionshare has adopted a policy whereby
the offer of any post-transaction remuneration to members of management will not
be a consideration in its decision to undertake any proposed transaction.
Members of Lionshare's board have agreed to disclose to the entire board of
directors any discussions concerning possible compensation to be paid to them by
any entity which proposes to undertake a transaction with Lionshare.
No retirement, pension, profit sharing, stock option or insurance programs or
other similar programs have been adopted by the Company for the benefit of its
employees.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
There have been no related party transactions, or any other transactions or
relationships required to be disclosed under Item 404 of Regulation S-B.
-10-
<PAGE> 13
ITEM 8. DESCRIPTION OF SECURITIES.
COMMON STOCK
Lionshare's articles of incorporation authorizes it to issue 1,000,000,000
shares of common stock at $.0001 par value. Each holder of common stock will be
entitled to one vote for each share of common stock held. As of January 31,
2000, there were 1,327,539 shares of common stock outstanding. Upon liquidation
of Lionshare, each stockholder is entitled to receive a proportionate share of
its assets available for distribution to stockholders after the payment of
liabilities and after distribution in full of preferential amounts, if any. All
shares of common stock issued and outstanding are fully-paid and nonassessable.
Holders of the common stock are entitled to share pro rata in dividends and
distributions with respect to the common stock, as may be declared by the board
of directors out of funds legally available therefor.
PREFERRED STOCK
Lionshare's articles of incorporation permit the issuance of 5,000,000 shares of
preferred stock, none of which are issued and outstanding.
-11-
<PAGE> 14
PART II
ITEM 1. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Lionshare's common stock trades on the over-the-counter Bulletin Board under the
symbol "LNSH." Over the past two fiscal years, its common stock has traded at
closing sales prices ranging between $0.25 and $2.85.
As of March 1, 2000, there were 384 holders of our common stock.
DIVIDEND POLICY
Lionshare has not paid any cash dividends on its common stock and presently
intends to continue a policy of retaining earnings, if any, for reinvestment in
its business.
PENNY STOCK
Until Lionshare's shares qualify for inclusion in the Nasdaq system, the trading
of its securities will continue to be in the over-the-counter markets, commonly
referred to as the pink sheets or on the OTC Bulletin Board. As a result, an
investor may find it more difficult to dispose of, or to obtain accurate
quotations as to the price of the securities offered.
Effective August 11, 1993, the Securities and Exchange Commission adopted Rule
15g-9, which established the definition of a penny stock, for purposes relevant
to Lionshare, as any equity security that has a market price of less than $5.00
per share or with an exercise price of less than $5.00 per share, subject to
certain exceptions. For any transaction involving a penny stock, unless exempt,
the rules require: (i) that a broker or dealer approve a person's account for
transactions in penny stocks; and (ii) the broker or dealer receive from the
investor a written agreement regarding the transaction, setting forth the
identity and quantity of the penny stock to be purchased. In order to approve a
person's account for transactions in penny stocks, the broker or dealer must (i)
obtain financial information and investment experience and objectives of the
person; and (ii) make a reasonable determination that the transactions in penny
stocks are suitable for that person and that person has sufficient knowledge and
experience in financial matters to be capable of evaluating the risks of
transactions in penny stocks. The broker or dealer must also deliver, prior to
any transaction in a penny stock, a disclosure schedule prepared by the
Commission relating to the penny stock market, which, in highlight form, (i)
sets forth the basis on which the broker or dealer made the suitability
determination; and (ii) that the broker or dealer received a signed, written
agreement from the investor prior to the transaction. Disclosure also has to be
made about the risks of investing in penny stock in both public offering and in
secondary trading, and about commissions payable to both the broker-dealer and
the registered representative, current quotations for the securities and the
rights and remedies available to an investor in cases of fraud in penny stock
transactions. Finally, monthly statements have to be sent disclosing recent
price information for the penny stock held in the account and information on the
limited market in penny stocks.
The NASD has recently made changes in the criteria for continued Nasdaq
eligibility. In order to continue to be included on Nasdaq, a company must
maintain $2,000,000 in net tangible assets or $35,000,000 in market
capitalization or $500,000 net income in latest fiscal year or two of the last
three fiscal years, a $1,000,000 market value of its publicly-traded securities
and 500,000 shares in public float. In addition, continued inclusion requires
two market-makers and a minimum bid price of $1.00 per share.
Lionshare intends to seriously consider undertaking a transaction with any
merger or acquisition candidate which will allow Lionshare's securities to be
traded without the above limitations. However, Lionshare cannot assure you that,
upon a successful merger or acquisition, it will qualify its securities for
listing on Nasdaq or some other national exchange, or be able to maintain the
maintenance criteria necessary to ensure continued
-12-
<PAGE> 15
listing. The failure of Lionshare to qualify its securities or to meet the
relevant maintenance criteria after such qualification in the future may result
in the discontinuance of the inclusion of Lionshare's securities on a national
exchange. In these events, trading, if any, in Lionshare's securities may then
continue in the over-the-counter market. As a result, a stockholder may find it
more difficult to dispose of, or to obtain accurate quotations as to the market
value of, Lionshare's securities.
ITEM 2. LEGAL PROCEEDINGS.
Lionshare is not a party to any legal proceedings.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Lionshare has not changed accountants since its formation and there are no
disagreements with the findings of said accountants.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
N/A
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Lionshare shall indemnify to the fullest extent permitted by, and in the manner
permissible under the laws of the State of Delaware, any person made, or
threatened to be made, a party to an action or proceeding, whether criminal,
civil, administrative or investigative, by reason of the fact that he is or was
a director or officer of Lionshare, or served any other enterprise as director,
officer or employee at the request of Lionshare. The board of directors, in its
discretion, shall have the power on behalf of Lionshare to indemnify any person,
other than a director or officer, made a party to any action, suit or proceeding
by reason of the fact that he/she is or was an employee of Lionshare.
Indemnification of officers or persons controlling Lionshare for liabilities
arising under the Securities Act of 1933 has been determined by the Commission
to be against public policy and unenforceable.
-13-
<PAGE> 16
PART F/S
ITEM 1. FINANCIAL STATEMENTS AND EXHIBITS.
(a) The following financial statements of the Company are filed as part of
this Report:
Audited balance sheets as of June 30, 1999 and 1998 and related statements of
operations, stockholders' equity and cash flows for the two years then ended.
(2) Exhibits:
3.1 Articles of Incorporation of The Lionshare Group, Inc.
27.1 Financial Data Schedule
-14-
<PAGE> 17
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
The Lionshare Group, Inc.
Date: March 28, 2000 By: /s/ William C. Barnett
------------------------------------
William C. Barnett, Secretary
-15-
<PAGE> 18
THE LIONSHARE GROUP, INC.
BALANCE SHEET
As of December 31, 1999
<TABLE>
<CAPTION>
Dec 31, '99
-----------
<S> <C>
ASSETS
Current Assets
Checking/Savings
CASH IN BANK $ 6,092.00
-----------
Total Checking/Savings 6,092.00
-----------
Total Current Assets 6,092.00
-----------
TOTAL ASSETS $ 6,092.00
===========
LIABILITIES & EQUITY
Liabilities
Current Liabilities
Accounts Payable
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
SHAREHOLDER'S $ 15,500.00
-----------
Total ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 15,500.00
-----------
Total Accounts Payable 15,500.00
-----------
Total Current Liabilities 15,500.00
-----------
Total Liabilities 15,500.00
Equity
Net Income (14,408.00)
STOCKHOLDER'S EQUITY
ACCUMULATED (DEFICIT) (513.00)
COMMON STOCK 133.00
PAID-IN CAPITAL 5,380.00
-----------
Total STOCKHOLDER'S EQUITY 5,000.00
-----------
Total Equity (9,408.00)
-----------
TOTAL LIABILITIES & EQUITY $ 6,092.00
===========
</TABLE>
<PAGE> 19
THE LIONSHARE GROUP, INC.
PROFIT AND LOSS
January through December 1999
<TABLE>
<CAPTION>
Jan-Dec '99
-----------
<S> <C>
Ordinary Income/Expense
Income
GROSS INCOME 0.00
-----------
Total Income 0.00
-----------
Gross Profit 0.00
Expense
OPERATING EXPENSES
OFFICE EXPENSE 375.00
LICENSES AND CORPORATE FEES 5,604.00
PROFESSIONAL FEES ACCOUNTING 7,750.00
-----------
Total PROFESSIONAL FEES 7,750.00
BANK SERVICE CHARGES 165.00
OPERATING EXPENSES - Other 514.00
-----------
Total OPERATING EXPENSES 14,408.00
-----------
Total Expense 14,408.00
-----------
Net Ordinary Income (14,408.00)
-----------
Net Income (14,408.00)
===========
</TABLE>
<PAGE> 20
THE LIONSHARE GROUP, INC.
AUDITED FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
<PAGE> 21
THE LIONSHARE GROUP, INC.
TABLE OF CONTENTS
JUNE 30, 1998 AND 1999
<TABLE>
<S> <C>
INDEPENDENT AUDITOR'S REPORT ............................................. Page 1
FINANCIAL STATEMENTS:
Balance Sheet ....................................................... Page 2
Statement of Income and Expenses .................................... Page 3
Statement of Stockholders' Equity ................................... Page 4
Statement of Cash Flows ............................................. Page 5
NOTES TO FINANCIAL STATEMENTS ............................................ Page 6
</TABLE>
<PAGE> 22
[LOGO] Sellers & Associates P.C.
-------------------------------------------------- (801) 621-8128
3785 Harrison Blvd., Suite 101 - Ogden, Utah 84403 Fax (801) 627-1639
INDEPENDENT AUDITOR'S REPORT
Board of Directors
The Lionshare Group, Inc.
We have audited the accompanying balance sheets of The Lionshare Group, Inc. as
of June 30, 1999 and 1998 and the related statements of operations,
stockholders' equity, and cash flows for the two years then ended. These
financial statements are the responsibility of the Company's Management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatements. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Lionshare Group, Inc. as
of June 30, 1999 and 1998 and the results of its operations and its cash flows
for the two years then ended in conformity with generally accepted accounting
principles.
The accompanying financial statements have been presented assuming the Company
will continue as a going concern. As discussed in Note 2 to the financial
statements, the Company disposed of all its assets and has not transacted any
business for some time, which raises substantial doubt about its ability to
continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Sellers & Associates P.C.
October 15, 1999
Ogden, Utah
<PAGE> 23
THE LIONSHARE GROUP, INC.
BALANCE SHEET
JUNE 30 1999 AND JUNE 30, 1998
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS $ -- $ --
PROPERTY AND EQUIPMENT -- --
OTHER ASSETS -- --
---------- ----------
TOTAL ASSETS $ -- $ --
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES $ 4,500 $ --
---------- ----------
TOTAL CURRENT LIABILITIES 4,500 --
LONG-TERM LIABILITIES -- --
---------- ----------
TOTAL LIABILITIES 4,500 --
---------- ----------
CONTINGENCIES -- --
---------- ----------
SHAREHOLDERS' EQUITY (DEFICIT)
COMMON STOCK, $.0001 PAR VALUE, 1,000,000,000
SHARES AUTHORIZED, 1,327,539 AND 1,165,433
ISSUED AT JUNE 30, 1999 AND JUNE 30, 1998
RESPECTIVELY 133 117
PAID-IN CAPITAL 5,380 396
ACCUMULATED (DEFICIT) (10,013) (513)
---------- ----------
NET SHAREHOLDERS' EQUITY (DEFICIT) (4,500) --
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) $ -- $ --
========== ==========
</TABLE>
SEE NOTES TO THE FINANCIAL STATEMENTS
Page 2
<PAGE> 24
THE LIONSHARE GROUP, INC.
STATEMENT OF INCOME AND EXPENSE
FOR THE TWELVE MONTHS ENDING
JUNE 30, 1999 AND JUNE 30, 1998
<TABLE>
<CAPTION>
1999 1998
---------- ---------
<S> <C> <C>
REVENUES $ -- $ --
OPERATING EXPENSES 9,500 440
---------- ---------
NET INCOME (LOSS) FROM OPERATIONS (9,500) (440)
INCOME TAXES -- --
---------- ---------
NET INCOME (LOSS) $ (9,500) $ (440)
---------- ---------
NET INCOME (LOSS) PER COMMON SHARE $ (0.008) $ (0.001)
========== =========
WEIGHTED AVERAGE SHARES OUTSTANDING 1,178,942 798,406
========== =========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
Page 3
<PAGE> 25
THE LIONSHARE GROUP, INC.
STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
COMMON STOCK
------------------------- PAID-IN SUBSCRIPTIONS ACCUMULATED
SHARES AMOUNT CAPITAL RECEIVABLE (DEFICIT) TOTAL
---------- --------- -------- ------------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, JUNE 30, 1997 725,000 $ 73 $ -- $ -- $ (73) $ --
ISSUANCE OF COMMON STOCK
IN CONNECTION WITH PROPOSED
BUT FAILED MERGER 440,433 44 396 440
(LOSS) FOR YEAR-ENDED JUNE 30, 1998 -- -- -- -- (440) (440)
---------- --------- -------- -------- --------- --------
BALANCE, JUNE 30, 1998 1,165,433 117 396 -- (513) --
STOCK SUBSCRIBED UNDER A RULE 504
REGULATION D OFFERING 1,000,000 100 99,900 (100,000) -- --
STOCK SUBSCRIPTIONS RECEIVABLE
(SEE NOTE 4) (1,000,000) (100) (99,900) 100,000 -- --
STOCK FOR SERVICES 162,106 16 4,984 5,000
(LOSS) FOR YEAR-ENDED JUNE 30, 1999 -- -- -- -- (9,500) (9,500)
---------- --------- -------- -------- --------- --------
BALANCE, JUNE 30, 1999 1,327,539 $ 133 $ 5,380 $ -- $ (10,013) $ (4,500)
========== ========= ======== ======== ========= ========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
Page 4
<PAGE> 26
THE LIONSHARE GROUP, INC.
STATEMENT OF CASH FLOWS
FOR THE TWELVE MONTHS ENDING
JUNE 30, 1999 AND JUNE 30, 1998
<TABLE>
<CAPTION>
1999 1998
------------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
NET INCOME $ (9,500) $ (440)
------------- -----------
ADJUSTMENTS TO RECONCILE NET INCOME TO
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES
INCREASE IN ACCOUNTS PAYABLE 4,500
ISSUANCE OF COMMON STOCK FOR SERVICES 5,000 440
------------- -----------
TOTAL ADJUSTMENTS 9,500 440
------------- -----------
NET CASH FLOWS FROM OPERATING ACTIVITIES -- --
CASH FLOWS FROM FINANCING ACTIVITIES
PROCEEDS FROM STOCK SUBSCRIBED UNDER A RULE 504
REGULATION D OFFERING 100,000
(INCREASE) IN COMMON STOCK SUBSCRIPTION
RECEIVABLE FROM A RULE 504 REGULATION D OFFERING (100,000)
------------- -----------
NET CASH FLOWS FROM FINANCING ACTIVITIES -- --
NET INCREASE IN CASH -- --
CASH AT BEGINNING OF YEAR -- --
------------- -----------
CASH AT END OF YEAR $ -- $ --
============= ===========
</TABLE>
SEE NOTES TO THE FINANCIAL STATEMENTS
Page 5
<PAGE> 27
THE LIONSHARE GROUP, INC.
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION:
The Lionshare Group, Inc. (the "Company") is registered on the OTC-BB as
"LNSH". The Company was chartered as a corporation by the State of Delaware on
June 15, 1984, under the name of Resnick World Wide, Inc.
On June 16, 1995, Resnick World Wide, Inc. acquired 100% of the outstanding
shares of Standard Brands of America, Inc., a privately-held Florida
corporation. The Company's corporate name was changed to Standard Brands, Inc.
by a filing with the Secretary of State of Delaware on June 16, 1995. Standard
Brands of America, Inc. was a home electronics and appliance distributor. That
business became insolvent and filed an assignment for the benefit of creditors
that was finalized by a recording with the Circuit Court of Broward County,
Florida on May 19, 1999.
The Company later changed its corporate name to The Lionshare Group, Inc. by a
filing with the Secretary of State of Delaware on May 1, 1998. This name change
was the result of an anticipated merger between the Company and the private
Florida corporation, The Lionshare Group, Inc. ("Lionshare of Florida"), that
did not come about.
Lionshare of Florida owned and operated a few restaurant operations in the
Southern Florida area. The principal of that operation sought to utilize the
Company as a public vehicle through which funds could be raised and the
restaurant operations could then be expanded. It was intended that Lionshare of
Florida would become a subsidiary of the Company. However, the restaurant
operation could not sustain itself, and before the negotiations for this
anticipated merger were completed, Lionshare of Florida became insolvent.
Lionshare of Florida dissolved its incorporation with a filing with the Florida
Secretary of State, which became effective February 22, 1999. Lionshare of
Florida maintained its own books and records, accounting and reporting, federal
and state tax identity numbers and income tax return filings. (See also
"Contingent Liabilities")
BASIS OF PRESENTATION:
These financial statements have been prepared in conformity with accounting
principles generally accepted in the United States. All amounts included in
these financial statements are expressed in United States Dollars.
The Company prepares its books and records on the accrual basis for financial
reporting purposes as well as for income tax purposes. The accompanying
financial statements represent the transactions for the fiscal years ended June
30, 1998 and June 30, 1999.
Page 6
<PAGE> 28
THE LIONSHARE GROUP, INC.
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CAPITAL REORGANIZATION OF EQUITY
In June of 1997, the Company ceased operations. Management has since determined
there is no intrinsic value in retaining the assigned carryforward values of
the equity accounts. This has resulted in a capital restructuring of the
Company as of June 30, 1997. The capital reorganization was done retroactively
to June 30, 1997 so that the financial statements for both years ending June
30, 1999 and June 30, 1998 are comparative. To effect the capital
reorganization, all of the paid-in-capital balance of $1,035,927 was written
off against the accumulated (deficit) balance of ($1,036,000). This resulted in
an accumulated deficit balance of ($73) and common stock at par value of $.0001
per share, or $73.
The Company believes that to continue as a going concern, the Company will
experience either a significant change in ownership, or a significant change in
the emphasis of the business operations, or both. Consequently, the net
operating losses for income tax purposes will be lost going forward.
STOCKHOLDERS' EQUITY
On September 8, 1998, the Company's Board of Directors declared, and a majority
of the shareholders approved, a ten-for-one reverse split of the Company's
single class of common stock. Shareholders' of record as of September 8, 1998
received one share for every ten shares they owned. No shareholder received
less than one share in the event that they owned less than ten shares at that
time. As a result, no cash or stock dividends were incurred or accrued as a
result of the reverse split.
All share and per share data for all periods presented herein have been adjusted
to give effect to the stock split, and are presented in the accompanying
financial statements as if the ten-for-one reverse stock split had occurred at
June 30, 1997.
BUSINESS ACTIVITY:
The Company has no current business activity, and has not had any such activity
since the close of operations before June of 1997. See Note 2: Going Concern.
Page 7
<PAGE> 29
THE LIONSHARE GROUP, INC.
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
PRINCIPLES OF CONSOLIDATION:
At the present, the Company has no business operations or subsidiaries, nor is
it involved with any affiliates. Therefore, any assets or liabilities reported
in these financial statements are owned by the Company.
CASH AND CASH EQUIVALENTS:
The Company considers highly liquid investments with original maturities of
three months or less to be cash equivalents. There were no cash equivalents at
June 30, 1999 or June 30, 1998.
LOSS PER SHARE:
Under the Rule 504 Regulation D Offering in April of 1999, 1,000,000 shares of
free-trading common shares are to be issued. Even though it is anticipated that
these shares will be issued in the near future, the Company is not currently in
receipt of the associated funds, therefore the 1,000,000 shares is not reflected
in the computation for the loss per share calculation.
INCOME TAXES:
The Company has adopted the provisions of Statement of Accounting Standards No.
109, "Accounting for Income Taxes" which incorporates the use of asset and
liability approach of accounting for income taxes. The asset and liability
approach requires the recognition of deferred tax assets and liabilities for
future consequences of temporary differences between the financial reporting
basis and tax basis of assets and liabilities.
The Company changed its tax year end from June 30 to December 31, effective
December 31, 1998. The Company has income tax net operating loss carryovers of
$1,036,000 as of December 31, 1998. These loss carryforwards begin to expire in
2007. Should the Company undergo an ownership change as defined in Section 382
of the Internal Revenue Code, the Company's tax net operating loss
carryforwards generated prior to the ownership change will be subject to an
annual limitation which could reduce, eliminate or defer the utilization of
these losses.
Because there is the question as to going concern as discussed in Note 2, and
that it is management's current intention to enter into a possible merger,
which would likely result in a significant change of ownership, no value of a
possible net operating loss is recognized in the accompanying financial
statements.
Page 8
<PAGE> 30
THE LIONSHARE GROUP, INC.
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
NOTE 2: GOING CONCERN STATEMENT
The Company has been inactive and non-operating for years, and currently has no
business or operations that will generate any revenues. Consequently, it is
questionable as to whether or not it can remain a going concern. The Company
has had no income since 1996, and has utilized proceeds of loans from
shareholders and the issuance of capital stock for meeting its operating
capital requirements. The ability to enter into any new venture is dependent
upon the success of the Company to obtain financing through borrowing or
capital stock sales. It is management's intention to seek out a profitable
venture, but there can be guarantee that management will successful in finding
or acquiring such a venture.
The Company raised $100,000 under a Rule 504 Regulation D Offering in April of
1999. These funds were transferred to a prospective acquisition target. This
acquisition was not consummated, and the acquisition target returned the funds
directly to these investors. These funds are due back to the Company in
exchange for 1,000,000 free-trading shares to be issued under the Offering. It
is Management's intention to utilize these funds to support general and
administrative costs until such time as a new acquisition or venture can be
located and acquired. There is no guarantee that such a target will be located
or acquired. Furthermore, despite these investors' representations to
Management to do so, there is no guarantee that the investors will remit back to
the Company these funds. However, in the event any investor does not remit their
investment back to the Company, no stock will be issued to that investor.
Management believes all investors will remit their investment back to the
Company. Therefore, the $100,000 is described as a common stock subscription
receivable in the Statement of Shareholders' Equity section of the Financial
Statements.
NOTE 3: RELATED PARTY TRANSACTIONS
Three shareholders, including an officer, have each lent the Company $1,500
for a total of $4,500, to pay a prior account payable of the Company. This
$4,500 is reflected in the accounts payable section of the balance sheet. It is
management's assumption that this payable will be satisfied by a cash
restitution to these individuals at such time that a viable acquisition target
is obtained.
NOTE 4: STOCKHOLDERS' EQUITY
The Company was organized by the issuance of its common stock. Over the prior
years including 1998 and 1999, stock was issued for cash and non-cash
consideration. Non-cash consideration includes debt discharge and debt
assumption.
Page 9
<PAGE> 31
THE LIONSHARE GROUP, INC.
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
NOTE 4: STOCKHOLDERS' EQUITY (Continued)
As of June 30, 1999 the Company had 384 shareholders, with a single class of
common stock authorized of 100,000,000 shares having a par value of US$0.001.
1,327,539 shares are currently outstanding. Of this, 490,539 shares are
restricted and 837,000 are free trading. Under the recent 504 offering, one
million free-trading common shares are due to be issued to six investors. As a
result, there will be 390 shareholders and 2,327,539 shares outstanding, of
which 1,837,000 will be free trading. There have been no options or warrants
issued. There was a ten-for-one reverse split on September 8, 1998. This split
has been recognized in the financial statements retroactively to June 30, 1997.
In April of 1999, the Company raised $100,000 under a Rule 504 Regulation D
Offering. As a result of this registration, 1,000,000 shares of the Company's
free-trading common stock are due to be issued to six investors. The funds
raised were in connection with an anticipated merger. The funds were
transferred to the acquisition target in this anticipated merger. When the
merger event did not occur, the acquisition target mistakenly returned these
funds raised directly back to the original investors instead of to the Company.
However, these investors have indicated to management that they will be
remitting these funds back to the Company to satisfy the 504 subscription. The
Statement of Shareholders' Equity recognizes the $100,000 still owed by the
investors to the Company as "Stock Subscriptions Receivable", and the 1,000,000
shares committed by the Company to these investors after receipt of those funds
as "Stock Subscribed under a Rule 504 Regulation D Offering".
NOTE 5: CONTINGENT LIABILITIES
During April of 1998, the Company entered into preliminary negotiations with
the Florida Corporation, Lionshare Group, Inc. ("Lionshare of Florida").
Lionshare of Florida was to become a subsidiary of the Company, which was then
named Standard Brands of America, Inc. As a result of this anticipated
acquisition, the Company then changed its name to "The Lionshare Group, Inc."
However, the merger never came about because Lionshare of Florida went out of
business, and was legally dissolved, before negotiations were finalized.
Because the relationship between the Company was only anticipated and never
consummated, and due to the separate legal identities maintained by the Company
and Lionshare of Florida during these negotiations, which includes separate
Federal Identification Numbers, the Company assumes no responsibility for the
liabilities of Lionshare of Florida. Management believes vendors of Lionshare
of Florida would not prevail against the Company for debts of Lionshare of
Florida. As a result, no liability has been recognized in these financial
statements. The debts of Lionshare of Florida total $48,845, with the largest
being $15,143.
Page 10
<PAGE> 1
Exhibit 3.1
CERTIFICATE OF INCORPORATION
OF
RESNICK WORLDWIDE, INC.
FIRST: The name of the corporation is:
RESNICK WORLDWIDE, INC.
SECOND: Its registered office in the State of Delaware is located at
25 Greystone Manor, Lewes, Delaware 19958-9776, County of Sussex. The
registered agent in charge thereof is HARVARD BUSINESS SERVICES, INC.
THIRD: The purpose of the corporation is to engage in any lawful
activity for which corporations may be organized under the General Corporation
Law of Delaware.
FOURTH: The total number of shares of stock which the corporation is
authorized to issue is 100,000,000 shares having a par value of $0.001 per
share.
FIFTH: The business and affairs of the corporation shall be managed by
or under the direction of the board of directors, and the directors need not be
elected by ballot unless required by the bylaws of the corporation.
SIXTH: This corporation shall be perpetual unless otherwise decided
by a majority of the Board of Directors.
SEVENTH: In furtherance and not in limitation of the powers conferred
by the laws of Delaware, the board of directors is authorized to amend or
repeal the bylaws.
EIGHTH: The corporation reserves the right to amend or repeal any
provision in this Certificate of Incorporation in the manner prescribed by the
laws of Delaware.
NINTH: The incorporator is Harvard Business Services, Inc., whose
mailing address is 25 Greystone Manor, Lewes, DE 19958. The powers of the
incorporator are to file this certificate of incorporation, approve the by-laws
of the corporation and elect the initial directors.
TENTH: To the fullest extent permitted by the Delaware General
Corporation Law a director of this corporation shall not be liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director.
ELEVENTH: This company will acquire the assets, liabilities and
previous shareholders subject to Directors approval of the previous corporation
of the same name incorporated April 19, 1988 and which went Void March 1, 1990.
I, Richard H. Bell, for the propose of forming a corporation under the
laws of the State of Delaware do make and file this certificate, and do certify
that the facts herein stated are true; and have accordingly signed below, this
19th day of October, 1994.
Signed and Attested to by: /s/ Richard H. Bell
---------------------------------------------
Richard H. Bell, President & Secretary
HARVARD BUSINESS SERVICES, INC.
<PAGE> 2
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
RESNICK WORLDWIDE, INC.
RESNICK WORLDWIDE, INC., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware, DOES
HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of RESNICK
WORLDWIDE, INC. resolutions were duly adopted setting forth a proposed
amendment of the Certificate of Incorporation of said corporation, declaring
said amendment to be advisable and calling a meeting of the stockholders of
said corporation for consideration thereof. The resolution setting forth the
proposed amendment is as follows:
RESOLVED, To authorize a reverse stock split of its common stock, one share for
each 100 shares, reducing the issued and outstanding shares from 100,000,000 to
1,000,000 shares. To authorize an increase of common shares authorized from
1,000,000 to 100,000,000 with a par value of $0.0001.
RESOLVED, that the Certificate of Incorporation of this corporation be amended
by changing the Articles thereof numbered "THE FIRST & THE FOURTH:" so that, as
amended said Article shall be and read as follows:
FIRST: "The name of the corporation is
STANDARD BRANDS OF AMERICA, INC.
FOURTH: "The total number of authorized shares which the corporation is
authorized to issue to 100,000,000 shares of common stock having a par value
of $0.0001 per share and 5,000,000 shares of cumulative convertible preferred
stock having a par value of $0.0001 per share."
All shares of common stock shall be identical and each share of common
stock shall be entitled to one vote on all matters.
The board of directors is authorized, subject to limitations
prescribed by law and the provisions of this Article Fourth, to provide by
resolution or resolutions for the issuance of the shares of preferred stock in
one or more series, and by filing a certificate pursuant to the applicable law
of the State of Delaware, to establish from time to time the number of shares
included in any such series, and to fix the designation, powers, preferences and
rights of the shares of any such series and the qualifications, limitations or
restrictions thereof.
<PAGE> 3
PAGE TWO
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, a special meeting of the stockholders of said corporation was duly
called and held, upon notice in accordance with Section 222 of the General
Corporation law of the State of Delaware at which meeting the necessary number
of shares as required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted by a quorum of
shareholders of the corporation on June 14, 1995. There are 40,000,000
outstanding shares, of which 22,167,220 shares voted for the amendment and 0
against in accordance with the provisions of Section 242 of the General
Corporation Law of the State of Delaware.
FOURTH: That the capital of said corporation shall not be reduced
under or by reason of said amendment.
FIFTH: That this amendment shall become effective at 9:00 a.m. on the
14th day of June, 1995.
IN WITNESS WHEREOF, said RESNICK WORLDWIDE, INC. has caused this
certificate to be signed by its Authorized Officer, this 16th day of June, 1995.
/s/ Paul L. Paskall
------------------------------
AUTHORIZED OFFICER
<PAGE> 4
CERTIFICATE OF RESIGNATION
OF
REGISTERED AGENT
ON
STANDARD BRANDS OF AMERICA, INC.
Harvard Business Services, Inc. does hereby resign as registered agent of
STANDARD BRANDS OF AMERICA, INC.
Written notice of the resignation was given to the corporation at least 30
days prior to the filing of the certificate by mail to the last known address
for the corporation. The letter was mailed on February 21, 1997.
I, Richard H. Bell, II, President of Harvard Business Services, Inc. do hereby
sign this document to resign as registered agent of the above corporation on
this April 16, 1997.
/s/ Richard H. Bell, II
------------------------------------------
Richard H. Bell, II
President, Harvard Business Services, Inc.
<PAGE> 5
STATE OF DELAWARE
CERTIFICATE FOR RENEWAL
AND REVIVAL OF CHARTER
STANDARD BRANDS OF AMERICA, INC., a corporation organized under the laws of
Delaware, the charter of which was forfeited for failure to obtain a registered
agent, now desires to procure a restoration, renewal and revival of its
charter, and hereby certifies as follows:
FIRST: The name of the corporation is STANDARD BRANDS OF AMERICA, INC.
SECOND: Its registered office in the State of Delaware is located at 25
Greystone Manor, Lewes, Delaware, 19958-9776, County of Sussex. The name and
address of the registered agent is Harvard Business Services, Inc., 25 Greystone
Manor, Lewes, Delaware, 19958-9776, County of Sussex.
THIRD: The date of filing of the original Certificate of Incorporation in
Delaware was October 19, 1994.
FOURTH: The date when restoration, renewal and revival of the charter of this
company is to commence is the fifteenth day May of 1997, same being prior to
the date of the expiration of the charter. This renewal and revival of the
charter of this corporation is to be perpetual.
FIFTH: This corporation was duly organized and carried on the business
authorized by its charter until the sixteenth day May of 1997, A.D., at which
time its charter became inoperative and forfeited for failure to obtain a
registered agent and this certificate for renewal and revival is filed by
authority of the duly elected directors of the corporation in accordance with
the laws of the State of Delaware.
IN TESTIMONY WHEREOF, and in compliance with the provisions of Section 312 of
the General Corporation Law of the State of Delaware, as amended, providing for
the renewal, extension and restoration of charters, the last acting authorized
officer hereunto set his hand to the certificate this July 17, 1999.
BY: /s/ Edward H. McCluskey
--------------------------------
NAME: Edward H. McCluskey
Title: President
<PAGE> 6
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
STANDARD BRANDS OF AMERICA, INC.
STANDARD BRANDS OF AMERICA, INC., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware.
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of STANDARD BRANDS
OF AMERICA, INC. resolutions were duly adopted setting forth a proposed
amendment of the Certificate of Incorporation of said corporation, declaring
said amendment to be advisable and calling a meeting of the stockholders of
said corporation for consideration thereof. The resolution setting forth the
proposed amendment is as follows:
RESOLVED, that the Certificate of Incorporation of this corporation be
amended by changing the Article thereof numbered "FIRST" so that, as amended
said Article shall be and read as follows:
FIRST: The name of the corporation is THE LIONSHARE GROUP INC.
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, a special meeting of the stockholders of said corporation was duly
called and held, upon notice in accordance with Section 222 of the General
Corporation law of the State of Delaware at which meeting the necessary number
of shares as required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, said STANDARD BRANDS OF AMERICA, INC. has caused
this certificate to be signed by its Authorized Officer this 16 day of April,
1998.
BY: /s/ J.E. Chentham
--------------------------------
Name: J.E. Chentham (please print)
Title: Chairman and Pres. (please print)
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