KINGSGATE ACQUISITIONS INC
424B1, 2000-07-31
BLANK CHECKS
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                                                    This filing is made pursuant
                                                    to Rule 424(b)(1) under
                                                    the Securities Act of
                                                    1933 in connection with
                                                    Registration No. 333-91485

PROSPECTUS

Initial Public Offering


                          KINGSGATE ACQUISITIONS, INC.
                            (A Delaware Corporation)
                    1,000,000 Units Offered at $0.10 per Unit

     Kingsgate  Acquisitions,   Inc.  offers  for  sale  1,000,000  units,  each
consisting of one share of common stock,  and five  two-year  redeemable  common
stock purchase  warrants,  at a purchase price of $0.10 per unit. We are selling
the units on a  "best-efforts,  all or none  basis" for a period of 90 days from
the date of the prospectus or all escrowed funds will be returned with interest.
We will not use an underwriter or securities dealer.  Prior to the offering,  no
public market has existed in our securities.  We cannot guarantee that a trading
market  in the  units  or in the  shares  of  common  stock  or  warrants  which
constitute the units will ever develop.

     These  securities  have not been approved or  disapproved by the Securities
     ---------------------------------------------------------------------------
and  Exchange  Commission  nor has the  Commission  passed upon the  accuracy or
--------------------------------------------------------------------------------
adequacy of the  prospectus.  Any  representation  to the contrary is a criminal
--------------------------------------------------------------------------------
offense.
---------

     These securities are highly speculative,  involve a high degree of risk and
     ---------------------------------------------------------------------------
should  be  purchased  only by  persons  who can  afford  to lose  their  entire
--------------------------------------------------------------------------------
investment (see "Risk Factors" commencing page 5 for special risks concerning us
--------------------------------------------------------------------------------
and the offering).
------------------

                                    Underwriting
                   Price to         Discounts and            Proceeds to the
                   Public           Commissions              the Company
                 ---------------------------------------------------------------
Per Unit         $        0.10          $      0               $        0.10

TOTAL            $  100,000.00          $      0               $  100,000.00





The date of the Prospectus is June 7, 2000.

<PAGE>


                             TABLE OF CONTENTS


                                                                   Page
                                                                   ----

Prospectus Summary.............................................      3

Summary Financial Information..................................      4

Risk Factors...................................................      5

Dilution.......................................................      9

Use of Proceeds................................................     10

Capitalization.................................................     11

Proposed Business..............................................     12

Management.....................................................     17

Statement as to Indemnification................................     18

Market for our Common Stock....................................     19

Certain Transactions...........................................     19

Principal Stockholders.........................................     20

Description of Securities......................................     22

Plan of Distribution...........................................     24

Where You Can Find More Information............................     25

Legal Proceedings..............................................     26

Legal Matters..................................................     26

Financial Statements...........................................     26


                                     3
<PAGE>

                             PROSPECTUS SUMMARY

   The Company
   -----------

     We were organized  under the laws of the State of Delaware on September 28,
1999 as a vehicle to acquire or merge with a business.

     We are making the offering in  compliance  with Rule 419 of Regulation C to
the Securities  Act of 1933.  Pursuant to Rule 419, the proceeds of the offering
as well as the securities purchased will be placed in an escrow account. None of
the  securities  and only 10% of the funds may be removed  from  escrow  until a
business  combination has been negotiated and our stockholders  have reconfirmed
the offering,  including the terms and  conditions of the business  combination.
Our officers,  directors,  current  stockholders  and any of their affiliates or
associates may purchase up to 50% of the offering including units, if needed, to
close the offering.

     Since our  organization,  our  activities  have been limited to the initial
sale of shares of our common stock in connection with our  organization  and the
preparation  of the  registration  statement and the  prospectus for our initial
public  offering.  We will not  engage in any  substantive  commercial  business
following the offering.

     We maintain our office at 950 11th Street, West Vancouver, British Columbia
V7T 2M3 Canada. Our phone number is (604) 926-6775.

The Offering

Units offered....................................................   1,000,000
                                                                     units

Common Stock outstanding
prior to the offering............................................   2,000,000
                                                                     shares
Common Stock to be
outstanding after the offering...................................   3,000,000
                                                                     shares
Warrants outstanding
prior to the offering............................................           0
                                                                     warrants
Warrants to be
outstanding after the offering...................................   5,000,000
                                                                     warrants

Common Stock to be outstanding after the offering
and assuming exercise of all warrants............................   8,000,000
                                                                     warrants

     We will  realize  net  proceeds  of $1.00 per  warrant or an  aggregate  of
$5,000,000  from the exercise of all the warrants.  These proceeds will be added
to the working capital of the target company.

                                     3
<PAGE>

Offering Conducted in Compliance with Rule 419
----------------------------------------------

    We are a blank check company  which is a development stage company. Our sole
business purpose is to merge with or acquire a presently unidentified company or
business.  Consequently, the offering is being conducted in compliance with Rule
419.  The  securities  purchased  by  investors  and the funds  received  in the
offering will be deposited and  held in an escrow account, except for 10% of the
funds which we may  withdraw, until an acquisition  meeting specific criteria is
completed. Before the  acquisition can be completed and before the remainder of
the investors'  funds can be released to us and  certificates  representing  the
securities  can be  released  to the  investors,  we are  required to update the
registration  statement with a  post-effective  amendment,  and, within the five
days after its  effective  date,  we are  required to furnish  investors  with a
prospectus. The prospectus,  which is part of the post-effective amendment, will
contain  the terms of a  reconfirmation  offer  and  information  regarding  the
acquisition  candidate and its business,  including the terms and  conditions of
the acquisition  agreement and audited  financial  statements of the acquisition
candidate.  Investors  must have no fewer  than 20 and no more than 45  business
days  from the  effective  date of the  post-effective  amendment  to  decide to
reconfirm their  investment and remain an investor or,  alternately,  to require
the return of their funds,  including  interest,  from escrow.  Any investor not
making a decision  within 45 days will  automatically  have his or her  escrowed
funds  returned,  plus interest.  If we do not complete an  acquisition  meeting
specified  criteria within 18 months of the date of the  prospectus,  all of the
funds in the escrow account must be returned to investors,  plus interest. Thus,
if the offering  period is extended to its limit, we will have only 15 months in
which to consummate a merger or acquisition.

                         SUMMARY FINANCIAL INFORMATION

     The following is a summary of our financial information and is qualified in
its entirety by our audited financial statements.

     Upon the sale of all the units in the  offering,  we will receive  funds of
$100,000,  all of which must be deposited in an escrow account.  We may withdraw
from  escrow  and use  $10,000  as  working  capital  in  order to seek a target
company. Our management intends to request release of these funds from escrow.


                                       From September 28, 1999
                                        to December 31, 1999
                                       -----------------------

Statement of Income Data:
 Net Sales                                  $          0
 Net Gain (Loss)                            $       (163)
 Net Loss Per Share                         $          0.00
 Shares Outstanding at 12/31/99                2,000,000


                                       4

<PAGE>


                                                           Pro-Forma
                                        As of              After
                                   December 31, 1999       Offering
                                   -----------------    ---------------

Balance Sheet Data
 Working Capital                       $    8,052       $  107,552 (1)
 Total Assets                          $   20,337       $  108,052 (2)
 Long Term Debt                        $        0       $        0
 Total Liabilities                     $      500       $        0
 Common stock                          $    2,000       $    3,000
 Additional paid in capital            $   18,000       $  105,215 (2)
 Deficit accumulated during
  development stage                    $     (163)            (163)
 Total Shareholders' Equity            $   19,837       $  108,052

-------------------------

(1)  Assumes payment of net proceeds of $100,000 less the payment of the $500 in
     liabilities.

(2)  Assumes net proceeds of $100,000 less allocation of dferred  offering costs
     of $11,785.


                                  RISK FACTORS

     The securities we are offering are highly speculative in nature and involve
an extremely  high degree of risk.  They should be purchased only by persons who
can afford to lose their entire investment.

After the offering, investors must rely on our current management who will be
-----------------------------------------------------------------------------
able to make all decisions including the choice of a target company.
--------------------------------------------------------------------

     Current  stockholders will continue to own a controlling  interest and will
able  to  elect  all  our  directors.  If the  offering  is  sold,  our  current
stockholders  will own two-thirds of our common stock and can choose, if they so
desire,  to continue present  management to find a target company.  There are no
voting agreements between current management and our remaining stockholders that
will insure  management  control.  Upon the successful  completion of a business
combination,  we  anticipate  that we will  have to issue to the  owners  of the
acquired company authorized but unissued common stock representing a majority of
the issued and outstanding shares of our common stock.  Therefore, we anticipate
that the  consummation  of a  business  combination  will  result in a change of
control and the resignation or removal of our present officers and directors. If
our  management  changes,  we can  provide no  assurance  of the  experience  or
qualification of the new management in the operation of the acquired business.

                                       5
<PAGE>

Investors will not have access to their funds after the consummation of the
---------------------------------------------------------------------------
offering for a period of up to 18 months.
-----------------------------------------

     Commencing upon the sale of the units, the investor' funds,  reduced by 10%
for expenses as permitted by Rule 419,  will remain in escrow,  in an interest -
bearing  account.

     Investors may exercise  their warrants  during the escrow period.  However,
both the cash  exercise  price and the  shares of common  stock  underlying  the
warrants must be kept in escrow until reconfirmation.

     Investors  will have no right to the return of or the use of their funds or
the  securities  purchased  for a period of up to 18 months from the date of the
prospectus.  No transfer or other disposition of the escrowed  securities can be
permitted  other  than by  will or the  laws of  descent  and  distribution,  or
pursuant to a qualified  domestic  relations  order, or pursuant to the Employee
Retirement Income Security Act.

     We have not entered into or negotiated any arrangements to acquire a target
business.  We can give no  assurance  that we will succeed in finding a suitable
target or entering into an agreement to acquire a business. We cannot consummate
a business  combination  with a target business unless investors owning at least
80% of the units elect to reconfirm their investments.

     Investors will be offered the return, with interest, of their funds held in
escrow only if

     +    they  vote  against  reconfirmation  in  the  reconfirmation  offering
          required to be conducted  after execution of an agreement to acquire a
          suitable target business; or

     +    if we are  unable to locate a target  business  meeting  the  mandated
          acquisition  criteria.  However, in that event,  investors may have to
          wait 18  months  from  the  date of the  prospectus  before a pro rata
          portion of their funds, plus interest is returned to them.

     +    if investors do not reconfirm  their  investment  within 45 days after
          receipt of the post-effective amendment to the registration statement,
          their funds will be returned with interest.

Conflicts of interest may adversely affect investors.
-----------------------------------------------------

     A  conflict  of  interest  may  arise  between  our  management's  personal
pecuniary  interest  and  its  fiduciary  duty  to  our  stockholders.   Present
stockholders  will own  two-thirds  of our  outstanding  common  stock after the
offering  is  completed  and would  therefore  continue  to retain  control.  In
addition,  present  stockholders  may  purchase  up to 50% of the  units  in the
offering.  Barney  Magnusson,  President  and  Treasurer,  and his wife,  Leslie
McGuffin,  Secretary,  own a total of  250,000  shares  comprising  12.5% of the
outstanding shares before the offering and 8.3% after the offering. Further, our
management's  own pecuniary  interest may at some point compromise its fiduciary
duty  to our  stockholders.  No  proceeds  from  the  offering  will  be used to
purchase,  directly or  indirectly,  any shares of our common stock owned by our
management or any present stockholder, director or promoter.

     Our  directors  and  officers  are  or  may  become,  in  their  individual
capacities,  officers,  directors,  controlling  stockholders and/or partners of
other  entities  engaged in a variety of  businesses.  Each of our  officers and
directors is engaged in outside business activities, and the amount of time they
will devote to our business is anticipated to be only about five to twenty hours
each per week.  Although our management is not involved in any other blank check
offerings,  conflicts in the pursuit of business  combinations  with other blank
check  companies with which members of our  management may become  affiliated in
the future may arise. To aid the resolution of such conflicts, we have adopted a
procedure  whereby in the confirmation  offer to our stockholders to vote upon a
business  combination  with an  affiliated  entity,  stockholders  who also hold
securities of the affiliated entity will be required to vote their

                                       6
<PAGE>


shares of our stock in the same proportion as non-affiliated stockholders.  Such
procedure has been orally agreed to with our management and will be incorporated
in  any  acquisition  agreement  with  a  target  company  in  which  any of our
shareholders has an interest.

     Our   certificate  of   incorporation,   by-laws  and  minutes  contain  no
requirement that our officers and directors disclose potential target businesses
which come to their  attention.  Our officers and directors do, however,  have a
fiduciary duty of loyalty to disclose to us any target  businesses which come to
their  attention  in their  capacity  as an officer or  director  or  otherwise.
Through an oral  understanding  with our  management,  we will not  acquire  any
company in which more than a majority of its capital stock is beneficially owned
by any of our  officers,  directors,  promoters,  affiliates  or associates or a
combination thereof.

We anticipate making one acquisition and investors will take the risk of the
----------------------------------------------------------------------------
quality of the new management and to economic fluctuations in the chosen
------------------------------------------------------------------------
industry.
---------

     In the event we are successful in acquiring a suitable  business,  we will,
in all  likelihood,  be required to issue our common stock in an  acquisition or
merger  transaction  so that the  owners of the  acquired  business  would own a
majority of our common  stock.  Thus,  we do not believe that we will be able to
negotiate more than one business  combination.  Our lack of diversification will
subject us to the  quality of the new  management  and to  economic  fluctuation
within a particular industry in which the target company conducts business.

We may redeem our warrants for nominal consideration and warrantholders who
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live in states in which our common stock has not be  qualified  may be unable to
--------------------------------------------------------------------------------
sell or exercise them.
----------------------

     Each  warrant  enables the holder to purchase one share of our common stock
at an exercise price of $1.00 for the two year period commencing the date of the
prospectus.  We may  redeem  the  warrants  for $.001  each upon 30 days'  prior
notice,  if the closing bid price of our common  stock,  as reported by the Over
the Counter  Bulletin  Board or other market on which our common  stock  trades,
exceeds $1.25 per share, for any twenty  consecutive  trading days ending within
ten days of the notice of redemption.

We must file a post-effective amendment under the Securities Act:
-----------------------------------------------------------------

     +    after nine months  subsequent to the date of the  prospectus  when any
          information contained in the prospectus is over sixteen months old;

     +    when facts or events  have  occurred  which  represent  a  fundamental
          change in the information contained in the registration statement; or

     +    when any material  change  occurs in the  information  relating to the
          plan or distribution of the securities registered by such registration
          statement.

We will be able to issue shares of our common stock upon the exercise of the
----------------------------------------------------------------------------
warrants only if:
-----------------

     +    there is a current  prospectus  relating  to the  shares of our common
          stock underlying the warrants as part and

     +    the shares of stock are qualified for sale or exempt under  applicable
          state  securities  laws  of the  jurisdictions  in  which  holders  of
          warrants reside.  We can offer no assurance that we will be successful
          in maintaining a current registration statement.


                                       7
<PAGE>

     In addition,  we will be prevented  from issuing shares of our common stock
upon exercise of the warrants in those states where  exemptions are  unavailable
and we have failed to qualify our shares of common stock  issuable upon exercise
of  the  warrants.  We may  decide  not  to  seek  or  not  be  able  to  obtain
qualification of the issuance of such common stock in all of the states in which
the ultimate  purchasers of the warrants reside. In such a case, the warrants of
those  purchasers  will expire and have no value if warrants cannot be exercised
or sold. Accordingly,  the market for the warrants may be limited because of our
obligation to fulfill both of the foregoing requirements.

               ----------------------------------------------

     Pursuant to the terms of an escrow agreement,  we will immediately  deposit
investors' funds in an escrow account  maintained by Capital Suisse  Securities,
Inc, San Rafael,  California.  All  investors'  checks or money orders should be
made  payable  to  "Capital  Suisse  Securities  as Escrow  Agent for  Kingsgate
Acquisitions,  Inc." Unless all 1,000,000 units have been sold, and $100,000 has
been  placed in escrow  within  90 days from the date of the  prospectus,  funds
remaining in escrow will be returned to investors in full with interest.

     Upon our sale of all  1,000,000  units  within the offering  period,  other
terms of the escrow agreement, which have been included to comply with Rule 419,
will govern the treatment of the funds  tendered by investors and the securities
purchased by investors.  Certificates  in the  investors'  names  evidencing the
shares and warrants which  constitute the units will be promptly  deposited into
the escrow account upon issuance.  Rule 419 permits 10% of the offering proceeds
to be  disbursed  to us from the  escrow  account  prior to our  consummating  a
business  combination.  We intend to  request  release of these  funds.  We will
receive the  remainder of the escrowed  funds only when we consummate a business
combination.

     We have filed with the Commission  under the Securities Act, a registration
statement relating to the units, the shares and warrants  constituting the units
and the shares  underlying the warrants.  We have not included in the prospectus
all of the information in the registration  statement and the attached exhibits.
Statements of the contents of any document are not necessarily complete.  Copies
of these documents are contained as exhibits to the registration  statement.  We
will provide to you a copy of any of any  referenced  information if you contact
us at 950  11th  Street,  West  Vancouver,  British  Columbia  V7T  2M3  Canada,
Attention: Chief Financial Officer, telephone (604) 926-6775.

     As of the  effective  date  of the  registration  statement,  we  will be a
reporting  company  and will be subject  to the  reporting  requirements  of the
Securities  Exchange Act. We will file periodic reports voluntarily in the event
that our obligation to file such reports is suspended under Section 15(d) of the
Securities  Exchange Act. Our filings may be inspected and copied without charge
at  the  Commission,  Room  1024,  Judiciary  Plaza,  450  Fifth  Street,  N.W.,
Washington,  D.C. 20549 and at the following regional offices: Seven World Trade
Center,  13th Floor, New York, New York 10048, and Northwest Atrium Center,  500
West Madison Street, Suite 1400, Chicago,  Illinois 60661. Copies of our filings
can be obtained from the Public Reference Section of the Commission,  Room 1024,
Judiciary Plaza, 450 Fifth Street,  N.W.,  Washington,  D.C. 20549 at prescribed
rates.  We have  filed  this  registration  statement  and will file all  future
registration  statements and other documents and reports  electronically through
EDGAR,  the Electronic  Data  Gathering,  Analysis and Retrieval  System.  These
documents are publicly  available  through the Commission's  Internet World Wide
Web site at http://www.sec.gov.

     We intend to furnish to our  stockholders,  after the close of each  fiscal
year, an annual report relating to our operations  containing  audited financial
statements  examined  and  reported  upon  by an  independent  certified  public
accountant. In addition, we may furnish to our stockholders,  from time to time,
such other reports as may be  authorized  by our board of directors.  Our year -
end is December 31.


                                       8
<PAGE>


     Until 90 days  after the date  when the  escrowed  funds  and  certificates
representing the common stock and warrants are released from escrow, all dealers
effecting  transactions  in the units,  the shares or warrants  contained in the
units,  or the shares  underlying  the  warrants  may be  required  to deliver a
prospectus.

                                    DILUTION

     Our net  tangible  book value as of December  31, 1999 was $7,552.  Our net
tangible book value per share was $0.00.  Net tangible book value represents our
net tangible  assets which are our total assets less our total  liabilities  and
intangible  assets. The public offering price per unit (each unit containing one
share of common stock) is $0.10 represents both gross and net proceeds per share
as all expenses of the offering are being paid from funds in our  treasury.  The
pro forma net tangible book value after the offering  will be $107,552.  The pro
forma net  tangible  book value per share after the  offering  will be $0.04 per
share.  The  shares  (contained  in the units)  purchased  by  investors  in the
offering  will be diluted $0.6 or 60.0%.  As of December  31,  1999,  there were
2,000,000  shares of our  common  stock  outstanding.  Dilution  represents  the
difference between the public offering price and the net pro forma tangible book
value per share immediately following the completion of the public offering.

     The following  table  illustrates the dilution which will be experienced by
investors in the offering:

Public offering price per unit (containing one share) ...........      $ 0.10
Net tangible book value per share before offering................      $ 0.00
Pro-forma net tangible book value per share after offering.......      $ 0.04
Pro-forma increase per share attributable to offered shares......      $ 0.04
Pro-forma dilution to public investors...........................      $ 0.06

     The  following  table sets  forth,  as of the date of the  prospectus,  the
percentage  of equity to be  purchased by the public  investors  compared to the
percentage  of  equity  to  be  owned  by  the  present  stockholders,  and  the
comparative  amounts paid for the units (each unit  containing one share) by the
public  investors  as  compared to the total  consideration  paid by our present
stockholders.

                              Approximate                        Approximate
                              Percentage                         Percentage
Public          Shares        Total Shares         Total            Total
Stockholder     Purchased      Outstanding      Consideration    Consideration
-------------------------------------------------------------------------------

New Investors   1,000,000          33.3%         $ 100,000          83.3%

Existing
Shareholders    2,000,000 (1)      66.7%        $   20,000          16.7%

-------------
(1)  We sold  2,000,000 shares of common stock prior to the offering at $.01 per
    share. These shares are not being registered. (See "Certain Transactions")


                                       9
<PAGE>



                                 USE OF PROCEEDS

     Both gross and net proceeds of the  offering  will be $100,000 as all costs
associated  with the offering have been or will be paid from funds  presently in
our treasury. Pursuant to Rule 15c2-4 under the Securities Exchange Act of 1934,
all of  offering  proceeds  must be placed in escrow  until all of the units are
sold.  Pursuant to Rule 419,  after all of the units are sold, we may and intend
to have $10,000,  representing  10% of the escrowed  funds,  released to us. All
funds held in escrow at the time a business  combination is consummated  will be
released.  The combined  entity will have full  discretion  as to the use of the
funds.

     Since we are a "blank  check"  company,  the purpose of the  offering is to
raise funds to enable us to merge with or acquire an operating company. Upon the
consummation of a business combination,  the reconfirmation offering and the any
portion  disbursed  to us and  any  amount  returned  to  investors  who did not
reconfirm their investment) will be released to us.

                                                           Percentage
                                                         of net proceeds
                                       Amount            of the offering
                                     ------------------------------------
Escrowed funds pending
  business combination                $90,000                 90%

     While we presently anticipate that we will be able to locate and consummate
suitable a business  combination,  if we determine  that a business  combination
requires  additional  funds,  we may seek  additional  financing  through loans,
issuance of additional  securities or through other financing  arrangements.  We
have  not  negotiated  any  such  financial  arrangement,  and  we can  give  no
assurances  that such  additional  financing will be available or, if available,
that such additional financing will be on acceptable terms.

     We do not intend to  advertise or promote  ourselves  to  potential  target
businesses.  Instead,  our management  intends  actively to search for potential
target  businesses  among its business  associates.  In the  unlikely  event our
management  decides to advertise in a business  publication  to attract a target
business, our management will assume the cost of such advertising.

     Upon the  consummation  of a business  combination,  we anticipate that our
management will change.  Our present  management  anticipates  that the escrowed
funds will be used by the post-merger  management at its sole  discretion.  $500
per month will be paid to our President  from the closing of the offering  until
the  consummation  of a business  combination.  In addition,  our President will
receive  $500 per month  during this period for  providing  office  space.  This
policy is based upon an oral  agreement with our  management.  Our management is
unaware of any circumstances  under which such policy through its own initiative
may be changed. We are not presently considering any individual as a consultant.
However,  we cannot rule out the need for outside  consultants in the future. We
have not made any decision  regarding payment of these  consultants,  if any are
hired.

     Our present management will not make any loans from the $10,000 (10% of the
escrowed funds),  nor will our present  management borrow funds using either our
working capital or escrowed funds as security. This policy is based upon an oral
agreement with our  management.  Our management is unaware of any  circumstances
under which such policy  through its own  initiative,  may be changed.  Once the
escrowed  funds are released,  our management at that time can loan the proceeds
or borrow funds and use the  proceeds as security for a loan,  on terms it deems
appropriate.

                                       10
<PAGE>


     Offering  proceeds will be placed in escrow at Capital  Suisse  Securities,
Inc. a  broker-dealer  registered  with the National  Association  of Securities
Dealers, Inc., pending consummation of a business combination and reconfirmation
by  investors,  in either a certificate  of deposit,  interest  bearing  savings
account or in short term government securities.

                                 CAPITALIZATION

     The following table sets forth our  capitalization as of December 31, 1999,
and pro forma as adjusted to give  effect to the net  proceeds  from the sale of
1,000,000 units in the offering.

                                               December 31, 1999
                                         ----------------------------
                                                          Pro-forma
                                            Actual        As Adjusted


Long-term debt                          $      0           $        0

Stockholders' equity:
Common stock, $.001 par value;
authorized 50,000,000 shares,
issued and outstanding
2,000,000 shares;                       $   2,000          $    3,000
Preferred stock, $.001 par value;
authorized 5,000,000 shares,
issued and outstanding -0-.

Additional paid-in capital              $  18,000          $  105,215(1)

Deficit accumulated during
 the development period                 $    (163)         $     (163)
                                        ----------         -----------
Total stockholders' equity              $  19,837          $  108,052
                                        ----------         -----------
Total capitalization                    $  19,837          $  108,052
                                        ==========         ===========

-------------------------
(1) Assumes net proceeds of $100,000 less $11,785 in deferred offering expense.

                                       11
<PAGE>



                                PROPOSED BUSINESS

History and Organization
------------------------

     We were organized  under the laws of the State of Delaware on September 28,
1999. Since our inception,  we have been engaged in  organizational  efforts and
obtaining  initial  financing.  We were formed as a vehicle to pursue a business
combination. We have made no efforts to identify a possible business combination
and, as a result, have neither conducted negotiations, nor entered into a letter
of intent concerning any target business.

Plan of Operation
-----------------

     We  were  organized  as  a  vehicle  to  seek,  investigate  and,  if  such
investigation warrants, to acquire a target company or business which desires to
employ our funds and the  potential  funds from the  exercise of our warrants in
its business or to seek the perceived advantages of a publicly-held corporation.
Our principal  business  objective  will be to seek long-term  growth  potential
through  the  acquisition  of  a  business  rather  than  immediate,  short-term
earnings. We will not restrict our search to any specific business,  industry or
geographical location and, thus, may acquire any type of business.

     We do not currently  engage in any business  activities  which provide cash
flow.  The  costs  of   identifying,   investigating   and  analyzing   business
combinations will be paid with money in our treasury.  Persons  purchasing units
in the offering and other stockholders will most likely not have the opportunity
to  participate  in any of these  decisions.  We are sometimes  referred to as a
"blank check" company because  investors will entrust their investment monies to
our  management  without  having a chance to analyze the  ultimate  use to which
their  money  may be put.  Although  substantially  all of the  proceeds  of the
offering are intended to be utilized generally to effect a business combination,
the proceeds are not otherwise  designated for any specific purposes.  Investors
will have an  opportunity  to evaluate the specific  merits or risks of only the
business combination our management decides to enter into. Cost overruns will be
funded through our founding stockholders' voluntary contribution of capital.

     We may seek a  business  which  has  recently  commenced  operations,  is a
developing  company in need of additional  funds for expansion into new products
or markets,  is seeking to develop a new product or service,  or is  established
business which may be experiencing financial or operating difficulties and is in
need of additional  capital.  In the  alternative,  a business  combination  may
involve  the  acquisition  of, or merger  with,  a company  which  does not need
substantial  additional capital, but which desires to establish a public trading
market for its shares, while avoiding the time delays, significant expense, loss
of voting control and compliance with various Federal and State  securities laws
which would occur in a public offering.

     Under Rule 419, we cannot acquire a target  business  unless its fair value
represents 80% of the offering  proceeds.  For this purpose,  offering  proceeds
includes the  aggregate  exercise  price of the  warrants  which are part of the
units. To determine the fair market value of a target  business,  our management
will examine the audited  financial  statements,  including  balance  sheets and
statements of cash flow and  stockholders'  equity,  of any candidate,  focusing
attention on its assets,  liabilities,  sales and net worth.  In  addition,  our
management  will  participate in a personal  inspection of any potential  target
business.  If we determine  that the financial  statements of a proposed  target
business  do not  clearly  indicate  that its fair value  represents  80% of the
offering  proceeds,  we will obtain an opinion from an  investment  banking firm
which is a member of the National  Association of Securities Dealers,  Inc. with
respect to the satisfaction of such criteria.

                                       12
<PAGE>

     None of our  officers  or  directors  have had any  preliminary  contact or
discussions  with any  representative  of any other entity  regarding a business
combination.  Accordingly,  any  target  business  that  is  selected  may  be a
financially  unstable  company or an entity in its early stage of development or
growth,  including entities without established records of sales or earnings. In
that event,  we will be subject to numerous  risks  inherent in the business and
operations of financially  unstable and early stage or potential emerging growth
companies.  In addition,  we may affect a business combination with an entity in
an industry  characterized by a high level of risk, and, although our management
will endeavor to evaluate the risks  inherent in a particular  target  business,
there  can be no  assurance  that we  will  properly  ascertain  or  assess  all
significant risks.

     Our management  anticipates that it may be able to effect only one business
combination,  due  primarily  to our  limited  financing,  and the  dilution  of
interest for present and prospective stockholders, which is likely to occur as a
result of our  management's  plan to offer a  controlling  interest  to a target
business  in  order  to  achieve  a  tax free   reorganization.   This  lack  of
diversification  should be  considered  a  substantial  risk in  investing in us
because  it will not  permit  us to offset  potential  losses  from one  venture
against gains from another.

     We anticipate that the selection of a business  combination will be complex
and extremely risky. Because of general economic conditions, rapid technological
advances being made in some industries and shortages of available  capital,  our
management  believes  that there are  numerous  firms  seeking  even the limited
additional  capital which we will have and/or the benefits of a publicly  traded
corporation.  Such  perceived  benefits  of a publicly  traded  corporation  may
include facilitating or improving the terms on which additional equity financing
may be obtained,  providing liquidity for the principals of a business, creating
a means for  providing  incentive  stock  options  or  similar  benefits  to key
employees,  providing liquidity (subject to restrictions of applicable statutes)
for  all  stockholders  and  other  benefits.   Potentially  available  business
combinations  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.

Evaluation of Business Combinations
-----------------------------------

     Our  officers  and  directors  will  analyze or  supervise  the analysis of
business  combinations.  None of our  officers and  directors is a  professional
business  analyst.   Our  management   intends  to  concentrate  on  identifying
preliminary  prospective  business  combinations  which  may be  brought  to its
attention  through  present  associations.  In  analyzing  prospective  business
combinations, our management will consider such matters as the following:

+    available technical, financial, and managerial resources,

+    working capital and other financial requirements,

+    history of operations, if any,

+    prospects for the future,

+    nature of present and expected competition,

+    the quality and  experience of management  services  which may be available
     and the depth of that management,

+    the potential for further research, development, or exploration,

+    specific risk factors not now foreseeable but which then may be anticipated
     to impact on our proposed activities,

+    the potential for growth or expansion,

                                       13
<PAGE>


+    the potential for profit,

+    the perceived public recognition or acceptance or products or services and

+    name identification and other relevant factors.

     As a part of the our  investigation,  our officers and directors  will meet
personally  with  management  and key  personnel,  visit  and  inspect  material
facilities,  obtain independent  analysis or 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.

     Since we will be subject to Section 13 or 15 (d) of the Securities Exchange
Act, we will be required to furnish information about significant  acquisitions,
including audited financial statements for the target company, covering one, two
or  three  years   depending   upon  the  relative  size  of  the   acquisition.
Consequently, acquisition prospects that do not have or are unable to obtain the
required  audited  statements may not be appropriate  for acquisition so long as
the reporting requirements of the Securities Exchange Act are applicable. In the
event our obligation to file periodic  reports is suspended  under Section 15(d)
of that act, we intend voluntarily to file such reports.

     We anticipate that any business  combination will present certain risks. We
may not be able  adequately  to identify many of these risks prior to selection.
Our  investors  must,  therefore,  depend on the  ability of our  management  to
identify and evaluate these risks.  We anticipate that the principals of some of
the  combinations  which will be  available to us were unable to develop a going
concern or that such  business  is in its  development  stage in that it has not
generated  significant  revenues from its principal business activity.  The risk
exists that even after the  consummation of such a business  combination and the
related  expenditure of our funds, and proceeds,  if any, from warrant exercise,
the  combined  enterprise  will  still be unable to  become a going  concern  or
advance  beyond  the  development   stage.   Many  of  the  potential   business
combinations  may  involve  new and  untested  products,  processes,  or  market
strategies.  We may assume such risks although they may adversely  impact on our
stockholders because we consider the potential rewards to outweigh them.

Business Combinations
---------------------

     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  alternatively
purchase stock or assets of an existing business.

     Any merger or  acquisition  can be expected to have a significant  dilutive
effect on the percentage of shares held by our existing stockholders,  including
purchasers  in the  offering.  The target  business  we  consider  will,  in all
probability,  have  significantly  more  assets  than we do.  Therefore,  in all
likelihood,  our management will offer a controlling  interest in our company to
the owners of the target  business.  While the actual terms of a transaction  to
which we may be a party cannot be  predicted,  we expect 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 under the Internal  Revenue Code, the

                                       14
<PAGE>

owners of the acquired  business may need to own 80% or more of the voting stock
of the surviving entity. As a result, our stockholders,  including  investors in
the offering,  would retain 20% or less of the issued and outstanding  shares of
the surviving entity,  which would result in significant  dilution in percentage
of the entity  after the  combination  and may also result in a reduction in the
net tangible book value per share of our investors.  In addition,  a majority or
all of our  directors and officers  will  probably,  as part of the terms of the
acquisition transaction, resign as directors and officers.

     Our  management  will not actively  negotiate  or otherwise  consent to the
purchase of any portion of their common stock as a condition to or in connection
with a proposed business combination,  unless such a purchase is demanded by the
principals of the target company as a condition to a merger or acquisition.  Our
officers and directors have agreed to this restriction which is based on an oral
understanding  between members of our management.  Members of our management are
unaware  of any  circumstances  under  which  such  policy,  through  their  own
initiative, may be changed.

     The issuance of substantial  additional securities and their potential sale
into any  trading  market  which  may  develop  in our  common  stock may have a
depressive effect on our trading market.

     The  structure  of the  business  combination  will depend on,  among other
factors:

+    the nature of the target business,

+    our  needs  and  desires  and  the  needs  and  desires  of  those  persons
     controlling of the target business,

+    the management of the target business and

+    our relative  negotiating  strength compared to the strength of the persons
     controlling the target business.

     If at  any  time  prior  to  the  completion  of  the  offering,  we  enter
negotiations  with a  possible  acquisition  candidate  and  such a  transaction
becomes  probable,  we will  suspend the  offering  and file an amendment to the
registration  statement  which  will  include  financial  statements,  including
balance  sheets,  statements  of cash  flow  and  stockholders'  equity,  of the
proposed target.

     We will not  purchase  the assets of any company of which a majority of the
outstanding  capital stock is beneficially owned by one or more or our officers,
directors,  promoters or affiliates  or  associates.  Furthermore,  we intend to
adopt a procedure  whereby a special meeting of our stockholders  will be called
to vote upon a business  combination with an affiliated entity, and stockholders
who also hold  securities  of such  affiliated  entity  will be required to vote
their shares of stock in the same  proportion  as our  publicly  held shares are
voted.  Our  officers  and  directors  have  not  approached  and  have not been
approached by any person or entity with regard to any proposed  business venture
which  desires to be  acquired by us. We will  evaluate  all  possible  business
combinations  brought to us. If at any time a business combination is brought to
us by any of our  promoters,  management,  or their  affiliates  or  associates,
disclosure as to this fact will be included in the  post-effective  amendment to
the   registration   statement,   thereby  allowing  the  public  investors  the
opportunity  to evaluate the  business  combination  before  voting to reconfirm
their investment.

     We have  adopted a policy that we will not pay a finder's fee to any member
of  management  for  locating a merger or  acquisition  candidate.  No member of
management  intends to or may seek and  negotiate  for the  payment of  finder's
fees.  In the event there is a finder's fee, it will be paid at the direction of
the successor  management after a change in management  control resulting from a
business

                                       15
<PAGE>

combination.  Our policy  regarding  finder's fees is based on an oral agreement
among  management.  Our management is unaware of any  circumstances  under which
such policy through their own initiative may be changed.

     We will remain an  insignificant  player  among the firms  which  engage in
business combinations.  There are many established venture capital and financial
concerns which have significantly  greater financial and personnel resources and
technical  expertise  than we will.  In view of our combined  limited  financial
resources  and  limited  management  availability,  we will  continue to be at a
significant competitive disadvantage compared to our competitors.  Also, we will
be  competing  with a number  of other  small,  blank  check  public  and  shell
companies.

Regulation
----------

     The  Investment  Company Act defines an  "investment  company" as an issuer
which is or holds  itself out as being  engaged  primarily  in the  business  of
investing,  reinvesting  or  trading  of  securities.  While we do not intend to
engage in such  activities,  we could become  subject to  regulations  under the
Investment  Company  Act in the event we obtain or  continue  to hold a minority
interest in a number of enterprises.  We could be expected to incur  significant
registration  and compliance  costs if required to register under the Investment
Company Act. Accordingly,  our management will continue to review our activities
from  time to time  with a view  toward  reducing  the  likelihood  we  could be
classified as an investment company.

Employees
---------

     We presently have no employees.  Our  President/Treasurer and Secretary are
engaged in outside  business  activities and they anticipate that they each will
devote to the our business only between five and twenty hours per week until the
acquisition of a successful business opportunity has been consummated.

Facilities
----------

     We are presently using the office of our President, Barney Magnusson, at no
cost,  as our  office,  an  arrangement  which we expect to  continue  until the
completion  of the  offering.  At the  completion  of the  offering  and until a
business  combination  is  consummated,  we  anticipate  paying rent of $500 per
month.  We presently do not own any equipment,  and do not intend to purchase or
lease any equipment prior to or upon completion of the offering.

Year 2000 Issues
----------------

     We currently have no operations and do not own or lease any equipment. As a
consequence,  we do not anticipate  incurring any expense or  difficulties  with
regard to Year 2000 issues.  Management-owned  computer  and  telecommunications
equipment  has  functioned  into  the year  2000  without  interruption  and our
management does not anticipate year 2000 problems in the future.

                                       16
<PAGE>

                                   MANAGEMENT

    Our officers and directors and further  information  concerning them are as
follows:

    Name                              Age                   Position
--------------------------------------------------------------------------------
Barney Magnusson(1)(2)                 48                 President, Treasurer
950 - 11th Street,                                        and a Director
West Vancouver,
British Columbia V7T 2M3

Leslie McGuffin(1)(2)                  47                  Secretary and a
950 - 11th Street,                                         Director
West Vancouver,
British Columbia V7T 2M3

--------------------
(1)  May be deemed our  "Promoters" as that term is defined under the Securities
     Act.

(2)  Barney Magnusson and Leslie McGuffin are husband and wife.

     Barney Magnusson  recently became Chief Financial  Officer and Secretary of
CST Coldswitch Technologies Inc., a Vancouver - based private technology company
developing  platform photonic fiber optic technology.  From 1996 to 1998, he was
Vice-President,  Corporate Development,  Chief Financial Officer and Director of
Patricia Mines Inc., a Toronto - based mining  company,  listed on the Vancouver
Stock  Exchange,  the major asset of which was the Island Gold  Project  located
near Hemlo,  Ontario.  From 1994 to 1995,  Mr.  Magnusson was a Principal of ADX
Trading  Group,  a  financial  derivative  and stock  trading  enterprise.  That
company's activities included trading futures, options on futures and stocks and
stock trading together with system design,  testing and implementation for other
parties. From 1985 to 1993, he was Chief Financial Officer,  Secretary/Treasurer
and  Director of Dayton Mines Inc.,  based in  Vancouver,  British  Columbia and
listed on both the Toronto Stock  Exchange and American Stock  Exchange.  Dayton
Mines  operated a mine in Chile that produced  140,000  ounces of gold per year.
From 1986 to 1988, Mr. Magnusson was Vice-President Finance and Director of High
River Gold Mines Ltd., a Vancouver  based mining  company  listed on the Toronto
Stock  Exchange,  with a 50%  interest  in the  Brittania  Mine,  Manitoba  that
produced  80,000  ounces  of gold per  year.  From  1982 to 1985,  he was  Chief
Financial  Officer and Director of Brohm  Resources  Inc.,  based in  Vancouver,
British  Columbia,  and  listed on the  Toronto  Stock  Exchange,  which was the
predecessor  to Dakota Mining Inc.,  headquartered  in Denver,  Colorado.  Brohm
operated  the Gilt Edge  Mine in South  Dakota.  In 1981,  he was  Principal  of
Venture Capital Associates,  a Vancouver based venture capital firm that focused
on start-up  companies.  In 1981, he was  Controller of First City  Developments
Inc., a Vancouver  based  international  real estate company owned by First City
Trust. Mr. Magnusson received his Bachelor of Arts from Simon Fraser University,
Vancouver,  British Columbia in 1978. He is a Chartered  Accountant and a Member
of  the  Canadian  Institute  of  Chartered  Accountants  and  Institute  of the
Chartered Accountants of British Columbia.

     Leslie  McGuffin  has been  President  of  Western  Legal  Publications,  a
Vancouver - based law publishing company, since 1995. From 1991 to 1995, she was
Legal  Information  Systems   Coordinator  for  Ladner  Downs,   Barristers  and
Solicitors in  Vancouver,  British  Columbia.  Ms.  McGuffin  served as Managing
Director  of  British  Columbia  International  Commercial  Arbitration  Centre,
located in

                                       17
<PAGE>

Vancouver,  British  Columbia,  from 1988 to 1989.  From  1981 to 1988,  she was
Managing  Editor of Carswell Legal  Publications,  Vancouver,  B.C. Ms. McGuffin
received her  Bachelor of Laws from the  University  of Alberta,  Canada and her
Bachelor  of Arts with  Honors  from  Trinity  College,  University  of Toronto,
Canada.

Conflicts of Interest
---------------------

     No member of our management is currently  affiliated or associated with any
blank check company.  Our management does not currently  intend to promote other
blank check  entities.  However,  our  management  may become  involved with the
promotion of other blank check companies in the future. A potential  conflict of
interest may occur in the event of such involvement.  Additionally,  a member of
our  management  may be a stockholder  in an acquired  business.  In this event,
pursuant to an oral agreement with the members of our management,  the shares of
the  affiliate,  if any,  purchased  in the  offering  will be voted in the same
proportion as shares of non-affiliated investors.

Remuneration
------------

     None of our officers or directors has received any cash remuneration  since
our inception.  Our President will receive $500 per month upon completion of the
offering until the consummation of an acquisition. No remuneration of any nature
has been paid for or on  account of  services  rendered  by a  director  in such
capacity.  Neither of the officers and directors  intends to devote more than 20
hours a week of his or her time to our affairs.

Management Involvement
----------------------

     We have conducted no business as of yet, aside from raising initial funding
associated with our offering.  After the closing of the offering, our management
intends to contact  business  associates and  acquaintances to search for target
businesses and then will consider and negotiate with target  businesses until an
acquisition  agreement is entered  into.  Our  management  has not divided these
duties among its members.  No member of  management  has any distinct  influence
over the other in connection with his or her participation in our affairs.

Management Control
------------------

     Our  management  may not divest  themselves  of  ownership of our shares of
common stock prior to the consummation of an acquisition or merger  transaction.
This policy is based on an unwritten  agreement among management.  Management is
not aware of any  circumstances  under  which  such  policy,  through  their own
initiative, may be changed.

                         STATEMENT AS TO INDEMNIFICATION

     Section  145  of  the  Delaware   General   Corporation  Law  provides  for
indemnification of our officers, directors,  employees and agents. Under Article
XI of our by-laws,  we will  indemnify and hold  harmless to the fullest  extent
authorized  by the  Delaware  General  Corporation  Law,  any of our  directors,
officers,  agents  or  employees,   against  all  expense,  liability  and  loss
reasonably  incurred or suffered by such person in connection with activities on
our behalf.  Complete  disclosure  of relevant  sections of our  certificate  of
incorporation and by-laws is provided in Part II of the registration  statement.
This information can also be examined as described in "Further Information."

                                       18
<PAGE>


     We have been informed that in the opinion of the Commission indemnification
for liabilities  arising under the Securities Act, which may be permitted to our
directors,   officers  or  control  persons   pursuant  to  our  certificate  of
incorporation  and  by-laws is against  the public  policy as  expressed  in the
Securities Act and is, therefore, unenforceable.

                         MARKET FOR THE OUR COMMON STOCK

     Prior to the date of the  prospectus,  no trading market for the our common
stock has existed.  Pursuant to the requirements of Rule 15g-8 of the Securities
Exchange  Act,  a  trading  market  will  not  develop  prior  to or  after  the
effectiveness of the registration statement while certificates  representing the
shares of common stock and warrants which constitute the units remain in escrow.
Stock and warrant certificates must remain in escrow until the consummation of a
business combination and its confirmation by our investors pursuant to Rule 419.
There are currently  thirteen holders of our outstanding  common stock which was
purchased in reliance upon an exemption from  registration  contained in Section
4(2) of the Securities Act. All purchasers are sophisticated investors.  Current
stockholders  will  own at  least  two-thirds  of the  outstanding  shares  upon
completion of the offering and will own a greater  percentage of the outstanding
shares if they purchase units in the offering.  We can offer no assurance that a
trading market will develop upon the consummation of a business  combination and
the subsequent  release of the stock and warrant  certificates  from escrow.  To
date, neither we nor anyone acting on our behalf has taken any affirmative steps
to retain or encourage any broker-dealer to act as a market maker for our common
stock.  Further,  we have not entered into any discussions,  or  understandings,
preliminary or otherwise, through our management or through anyone acting on our
behalf and any market maker  concerning the  participation  of a market maker in
the future trading market, if any, for our common stock.

     Present  management  does not  anticipate  that it will  undertake  or will
employ  consultants  or advisers to undertake any  negotiations  or  discussions
prior to the execution of an acquisition agreement.  Our management expects that
discussions  in this area will  ultimately  be initiated by the party or parties
controlling the entity or assets which we may acquire who may employ consultants
or advisors to obtain market makers,

     We have not issued any  options or  warrants  to  purchase,  or  securities
convertible  into, our common equity.  The 2,000,000  shares of our common stock
currently outstanding are "restricted securities" as that term is defined in the
Securities  Act.  Pursuant to Rule 144 of the Securities Act, the holders of the
restricted  securities  may each  sell  during  any  three  month  period  after
September  30, 2000 an amount  equal to the greater of one percent of our issued
and outstanding common stock or one week's trading volume. Therefore, if we sell
all the units  being  offered,  those  holders may each sell no less than 30,000
shares (1% of 3,000,000 shares) during any three month period.

                              CERTAIN TRANSACTIONS

     We were  incorporated  in the State of  Delaware  on  September  28,  1999.
Between  September 28, 1999 and September 30, 1999, we sold 2,000,000  shares of
our  common  stock to  thirteen  persons  at $.01 per  share,  for a total  cash
consideration of $20,000.

                                       19
<PAGE>


                             PRINCIPAL STOCKHOLDERS

     The table on the following  page sets forth certain  information  regarding
the beneficial  ownership of our common stock as of the date of the  prospectus,
and as adjusted to reflect  the sale of the units in the  offering,  by

     +    each person who is known by us to own beneficially more than 5% of our
          outstanding Common Stock;

     +    each of our officers and directors; and

     +    all of our directors and officers as a group.


   Name/Address                  Shares of         Percent of        Percent of
   Beneficial                    Common Stock      Class Owned       Class Owned
   Owner                         Beneficially      Before            After
   Offering                      Owned             Offering          Offering
--------------------------------------------------------------------------------
Barney Magnusson(1)(2)            200,000              10.0%           6.7%
950 11th Street
West Vancouver
British Columbia
V7T 2M3 Canada

Leslie McGuffin(1)(2)              50,000               2.5%           1.7%
950 11th Street
West Vancouver
British Columbia
V7T 2M3 Canada

Tradewinds Investments Ltd.       190,000               9.5%           6.3%
Shirley House
50 Shirley Street
Nassau, Bahamas

Turf Holding Ltd.                 190,000               9.5%           6.3%
Oakridge House
5 West Hill Street
Nassau, Bahamas

CCD Consulting,                   190,000               9.5%           6.3%
Commerce Distribution AG
Glockengasse 4
Postfach 1220
4001 Basel
Switzerland

The Pembridge
Capital Establishment             180,000               9.0%           6.0%
P. O. Box 1617
Meierhofstrasse 5
Vadus FL-9490
Liechtenstein

                                       20
<PAGE>


Seloz Gestion & Finance SA        190,000               9.5%           6.3%
Boulevard St. Georges 71
1211 Geneva 4
Switzerland

HAPI Handels und
Beteiligungsqesellschaft mbh      110,000               5.5%           3.7%
Easlinggasse 2
1010 Vienna
Austria

Partner Marketing AG              190,000               9.5%           6.3%
Landweg 1
6052 Hergiswil
Switzerland

U. K. Menon                       190,000               9.5%           6.3%
28, Jalar 17/21 C
Peteling Jaya
Selangor
Malaysia

Otto Zimmerli                     190,000               9.5%           6.3%
Poststrasse 2
9050 Appenzil
Switzerland

Noreldin Siam                     110,000               5.5%           3.7%
Sandyport Drive 49
Nassau
Bahamas

Total Officers                    250,000              12.5%           8.3%
and Directors
(2 Persons)
--------------------------

(1)  May be deemed  "Promoters" as that term is defined under the Securities Act
     and are our only officers and directors.

(2)  Barney Magnusson, President, Treasurer and a Director, and Leslie McGuffin,
     Secretary and a Director,  are husband and wife. They disclaim ownership of
     each other's shares.

     None of the current stockholders have received or will receive any extra or
special  benefits  that were not shared  equally by all holders of shares of our
common stock.

Prior Blank Check Companies Involvement
---------------------------------------

     None  of  our  officers,   directors,   founders,  promoters  or  principal
stockholders has been involved as a principal of a blank check company.

                                       21
<PAGE>


                            DESCRIPTION OF SECURITIES
Common Stock
------------

     We are  authorized to issue 50 million  shares of common  stock,  $.001 par
value per share,  of which  2,000,000  shares are issued and  outstanding.  Each
outstanding  share of common stock is entitled to one vote,  either in person or
by proxy,  on all matters that may be voted upon by their holders at meetings of
the stockholders.

     Holders of our common stock

(i)  have  equal  ratable  rights to  dividends  from  funds  legally  available
     therefor, if declared by our board of directors;

(ii) are  entitled  to  share  ratably  in  all  of  our  assets  available  for
     distribution to holders of common stock upon our  liquidation,  dissolution
     or winding up;

(iii)do not have preemptive,  subscription or conversion  rights,  or redemption
     or sinking fund provisions; and

(iv) are entitled to one  non-cumulative  vote per share on all matters on which
     stockholders may vote at all meetings of our stockholders.

     All  shares  of our  common  stock  which are part of the  units,  or which
underlie the warrants,  will be fully paid for and  non-assessable  when issued,
with no personal liability attaching to ownership.  The holders of shares of our
common stock do not have cumulative voting rights,  which means that the holders
of more than 50% of outstanding  shares voting for the election of directors can
elect all of our directors if they so choose and, in such event,  the holders of
the  remaining  shares  will not be able to elect any of our  directors.  At the
completion  of the  offering,  the present  officers and  directors  and present
stockholders will  beneficially own at least 66.7% of the outstanding  shares of
common stock and a greater  percentage of shares if they  purchase  units in the
offering.   Accordingly,   after   completion  of  the  offering,   our  present
stockholders will be in a position to control all of our affairs.

Preferred Stock
---------------

     We may issue up to  5,000,000  shares of our  preferred  stock from time to
time in one or more  series.  As of the date of the  prospectus,  no  shares  of
preferred  stock  have been  issued.  Our board of  directors,  without  further
approval of our  stockholders,  is  authorized  to fix the  dividend  rights and
terms,  conversion  rights,  voting  rights,   redemption  rights,   liquidation
preferences and other rights and restrictions relating to any series.  Issuances
of  additional  shares  of  preferred  stock,  while  providing  flexibility  in
connection with possible financings,  acquisitions and other corporate purposes,
could,  among other things,  adversely affect the voting power of the holders of
other our securities and may,  under certain  circumstances,  have the effect of
deterring hostile takeovers or delaying changes in control or management.

Redeemable Common Stock Purchase Warrants
-----------------------------------------

     The warrants which are part of the units shall be exercisable  for a period
of two years  commencing the date of the prospectus.  Each warrant  entitles the
holder to purchase one share of our common stock at an exercise  price of $1.00.
The common stock underlying the warrants will, upon exercise of the warrants, be
validly issued,  fully paid and non-assessable.  The warrants will be subject to
redemption,  at any time,  for $0.001 per warrant,  upon 30 days' prior  written
notice,  if the closing bid

                                       22
<PAGE>



price of our common  stock,  as reported by the market on which the common stock
trades,  exceeds $1.25 per share for any twenty consecutive  trading days ending
within ten days prior to the date of the notice of redemption.

     The  warrants  can only be  exercised  when  there is a  current  effective
registration  statement covering the underlying shares of common stock. If we do
not obtain or are unable to maintain a current effective registration statement,
warrantholders  will be unable to exercise  them and they may become  valueless.
Moreover,  if the  shares  of  common  stock  underlying  the  warrants  are not
registered or qualified for sale in the state in which a warrantholder  resides,
such holder might not be permitted to exercise any warrants.

     We will deliver warrant  certificates  representing  five warrants for each
unit  purchased,  subject  to the escrow  provisions  under  which  certificates
representing  the  warrants  will be held  in  escrow  until  we  enter  into an
acquisition agreement with the owners of a target company, the effective date of
a  reconfirmation  offer and a favorable vote of our  stockholders.  Thereafter,
warrant  certificates  may  be  exchanged  for  new  certificates  of  different
denominations, and may be exercised or transferred. Holders of warrants may sell
them if a market  exists  rather than exercise  them.  However,  we can offer no
assurance  that a market will develop or continue as to the warrants.  If we are
unable to qualify our common stock  underlying  the warrants for sale in certain
states,  holders of the  warrants in those states will have no choice but either
to sell their warrants or allow them to expire.

     Warrants may be exercised by surrendering the warrant certificate, with the
form of  election  to  purchase  printed  on the  reverse  side  of the  warrant
certificate  properly  completed  and  executed,  together  with  payment of the
exercise price,  to us or the warrant agent.  Warrants may be exercised in whole
or from time to time in part.  If less than all of the  warrants  evidenced by a
warrant certificate are exercised,  a new warrant certificate will be issued for
the number of unexercised warrants.

     Warrantholders  are  protected  against  dilution  of the  equity  interest
represented  by the  underlying  shares of common stock upon the  occurrence  of
certain events,  including,  but not limited to, issuance of stock dividends. If
we merge, reorganize or are acquired in such a way as to terminate the warrants,
they  may be  exercised  immediately  prior  to such  action.  In the  event  of
liquidation, dissolution or winding up, holders of the warrants are not entitled
to participate in our assets.

     For the life of the warrants,  holders are given the  opportunity to profit
from a rise in the  market  price  of our  common  stock.  The  exercise  of the
warrants  will result in the dilution of the then book value of our common stock
and would  result in a dilution of the  percentage  ownership  of then  existing
stockholders.  The terms  upon  which we may obtain  additional  capital  may be
adversely affected through the period in which the warrants remain  exercisable.
Warrantholders  may be expected to exercise them at a time when we would, in all
likelihood,  be able to obtain equity  capital on terms more  favorable than the
exercise price of the warrants.

     In the event that we call the warrants for redemption,  warrantholders  may
not be able to exercise  their warrants if we have not updated the prospectus in
accordance with the  requirements of the Securities Act or the warrants have not
been  qualified  for sale  under the laws of the state  where the  warrantholder
resides.  In addition,  a call for redemption  could force the  warrantholder to
accept the redemption price,  which, in the event of an increase in the price of
the stock,  would be substantially less than the difference between the exercise
price and the market value at the time of redemption.

                                       23
<PAGE>


Future Financing
----------------

     In the event the proceeds of the offering are not  sufficient  to enable us
to successfully fund a business  combination,  we may seek additional financing.
At this time,  we believe that the proceeds of the offering  will be  sufficient
for such purpose and therefore do not expect to issue any additional  securities
before  the  consummation  of a  business  combination.  However,  we may  issue
additional securities, incur debt or procure other types of financing if needed.
We have not entered into any  agreements,  plans or proposals for such financing
and as of present have no plans to do so. We will not use the escrowed  funds as
collateral  or security  for any loan or debt  incurred.  Further,  the escrowed
funds  will not be used to pay back any  loan or  debts  incurred  by us.  If we
require additional financing,  there is no guarantee that such financing will be
available to us or if available that such financing will be on terms  acceptable
to us.

Reports to Stockholders
-----------------------

     We intend to  furnish  our  stockholders  with  annual  reports  containing
audited financial statements as soon as practicable after the end of each fiscal
year. Our fiscal year ends on December 31st.

Dividends
---------

     We have only been  recently  organized,  have no earnings  and have paid no
dividends to date.  Since we were formed as a blank check  company with our only
intended business being the search for an appropriate business  combination,  we
do not anticipate  having earnings or paying dividends at least until a business
combination  is  reconfirmed  by  our  stockholders.  However,  we can  give  no
assurance that after we consummate a business combination, we will have earnings
or issue dividends.

Transfer Agent
--------------

     We have  appointed  Olde Monmouth  Stock  Transfer  Co.,  Inc., 77 Memorial
Parkway,  Suite 101, Atlantic Highlands,  New Jersey 07716 as transfer agent for
our shares of common stock and warrants.

                              PLAN OF DISTRIBUTION

Conduct of the Offering
-----------------------

     We hereby offer the right to subscribe for 1,000,000 units at $.10 per unit
on an "best  efforts,  all or none basis." We will not  compensate any person in
connection with the offer and sale of the units.

     Our President,  Barney Magnusson,  shall distribute prospectuses related to
the  offering.  We  estimate  that he  will  distribute  approximately  40 to 50
prospectuses, limited to acquaintances, friends and business associates.

     Barney  Magnusson  shall  conduct the  offering of the units.  Although Mr.
Magnusson is an "associated  person" as that term is defined in Rule 3a4-1 under
the Securities Exchange Act, he will not be deemed to be a broker because:

(1)  he will not be  subject  to a  statutory  disqualification  as that term is
     defined in Section  3(a)(39) of the Securities  Exchange Act at the time of
     his participation in the sale of our securities;

(2)  he will not be compensated in connection with his participation in the sale
     of our securities by the payment of commission or other  remuneration based
     either directly or indirectly on transactions in securities;

(3)  he will be not an  associated  person  of a broker or dealer at the time of
     his participation in the sale of our securities; and

                                       24
<PAGE>


(4)  he shall restrict his participation to the following activities:

     (a)  preparing any written communication or delivering it through the mails
          or other  means  that  does not  involve  his oral  solicitation  of a
          potential purchaser;

     (b)  responding  to inquiries of a potential  purchaser in a  communication
          initiated  by the  potential  purchaser,  provided  however,  that the
          content of each  response  is limited to  information  contained  in a
          registration  statement  filed  under  the  Securities  Act  or  other
          offering document; or

     (c)  performing  ministerial  and clerical  work  involved in effecting any
          transaction.

     As of the  date of the  prospectus,  we  have  not  retained  a  broker  in
connection  with the sale of the units.  In the event we retain a broker who may
be  deemed  an  underwriter,  we will  file  an  amendment  to the  registration
statement with the Commission.  However, we have no present intention of using a
broker.

     We will not approach nor permit  anyone  acting on our behalf to approach a
market  maker or take  any  steps  to  request  or  encourage  a  market  in our
securities prior to an acquisition of a business opportunity and confirmation by
our  stockholders  of the  acquisition.  We have not conducted  any  preliminary
discussions or entered into any understandings with any market maker regarding a
future trading market in our  securities,  nor do we have any plans to engage in
any discussions. We do not intend to use consultants to obtain market makers. No
member of our  management,  no promoter or anyone acting at their direction will
recommend,  encourage or advise  investors to open  brokerage  accounts with any
broker-dealer  which  makes a market  in the  units,  shares  or  warrants.  Our
investors shall make their own decisions regarding whether to hold or sell their
securities. We shall not exercise any influence over investors' decisions.

Method of Subscribing
---------------------

     Persons may subscribe for units by filling in and signing the  subscription
agreement and delivering it to us prior to the expiration date. Subscribers must
pay $0.10 per unit in cash or by check, bank draft or postal express money order
payable in United States dollars to "Capital  Suisse  Securities as Escrow Agent
for Kingsgate Acquisitions, Inc." The offering is being made on a "best efforts,
all or none basis."  Thus,  unless all  1,000,000  units are sold,  none will be
sold.

     Our officers,  directors,  current stockholders and any of their affiliates
or associates may purchase up to 50% of the units. Such purchases may be made in
order to close the "all or none" offering.  Units purchased by the our officers,
directors and principal  stockholders  will be acquired for investment  purposes
and not with a view toward distribution.

Expiration Date
---------------

     The  offering  will end the  earlier of the  receipt of  subscriptions  for
1,000,000 units or 90 days from the date of the prospectus.

                                       25
<PAGE>


                       WHERE YOU CAN FIND MORE INFORMATION

     We  have  not  previously  been  required  to  comply  with  the  reporting
requirements of the Securities Exchange Act. We have filed with the Commission a
registration  statement on Form SB-2 to register the units, the shares of common
stock  and  warrants  constituting  the units  and the  shares  of common  stock
underlying the warrants.  The prospectus is part of the registration  statement,
and,  as  permitted  by the  Commission's  rules,  does not  contain  all of the
information in the registration statement.  For further information about us and
the securities  offered under the prospectus,  you may refer to the registration
statement and to the exhibits and schedules filed as a part of this registration
statement.  You can review the registration statement and its exhibits at public
reference facilities maintained by the Commission at Judiciary Plaza, Room 1024,
450 Fifth Street,  N.W.,  Washington,  D.C. 20549 and at the regional offices of
the Commission at 7 World Trade Center, Suite 1300, New York, New York 10048 and
Citicorp Center, Suite 1400, 500 West Madison Street,  Chicago,  Illinois 60661.
You may call the  Commission at  1-800-SEC-0330  for further  information on the
public   reference   room.   The   registration   statement  is  also  available
electronically on the World Wide Web at http://www.sec.gov.

     You can also call or write us at any time with any  questions you may have.
We would be pleased to speak with you about any aspect of our  business  and the
offering.

                                LEGAL PROCEEDINGS

     We not a party to nor are we aware of any  existing,  pending or threatened
lawsuits or other legal actions.

                                  LEGAL MATTERS

     Roger L. Fidler,  Esq., 163 South Street,  Hackensack,  New Jersey 07601 is
passing  upon the  validity  of the  shares  of common  stock  and the  warrants
constituting  the units offered by the prospectus and the shares of common stock
underlying the warrants. Mr. Fidler owns 20,000 shares of our common stock.

                              FINANCIAL STATEMENTS

     The following  are our financial  statements,  with  independent  auditor's
report, for the period from inception, September 28, 1999, to December 31, 1999.


                                       26
<PAGE>



                          REPORT OF INDEPENDENT AUDITOR



To The Board of Directors and Shareholders
of Kingsgate Acquisitions, Inc. (a development stage company)

     I have audited the  accompanying  balance sheet of Kingsgate  Acquisitions,
Inc. (a  development  stage  company) as of December 31,  1999,  and the related
statements of operations,  changes in stockholders'  equity,  and cash flows for
the period from inception,  September 28, 1999, through December 31, 1999. These
financial  statements are the  responsibility  of the Company's  management.  My
responsibility  is to express an opinion on these financial  statements based on
my audit.

     I  conducted  my audit  in  accordance  with  generally  accepted  auditing
standards.  Those standards  require that I plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes  examining on a test basis evidence  supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing  the  accounting   principles  and   significant   estimates  made  by
management,  as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.

     In my opinion,  the financial  statements referred to above present fairly,
in all material respects, the financial position of Kingsgate Acquisitions, Inc.
(a  development  stage  company)  as of  December  31,  1999,  and  the  related
statements of operations,  changes in stockholders'  equity,  and cash flows for
the period from  inception,  September  28, 1999,  through  December 31, 1999 in
conformity with generally accepted accounting principles.

     The  accompanying  financial  statements  have been prepared  assuming that
Kingsgate  Acquisitions,  Inc. (a development  stage company) will continue as a
going concern.  As more fully  described in Note 2, the Company is a blank check
company  that is  dependent  upon the  success  of  management  to  successfully
complete a self underwriting and locate a potential  business to acquire and may
require  additional  capital  to enter  into  any  business  combination.  These
conditions raise  substantial doubt about the Company's ability to continue as a
going concern.  Management's  plans as to these matters are described in Note 2.
The financial  statements do not include any adjustments to reflect the possible
effects on the  recoverability  and  classification of assets or the amounts and
classifications  of liabilities  that may result from the possible  inability of
Kingsgate  Acquisitions,  Inc. (a  development  stage  company) to continue as a
going concern.



                                 /s/Thomas Monahan
                                 ----------------------------
                                 THOMAS MONAHAN
                                 Certified Public Accountant

Paterson, New Jersey
January 18, 2000



<PAGE>

                          KINGSGATE ACQUISITIONS, INC.
                          (A development stage company)
                                  BALANCE SHEET
                                December 31, 1999


ASSETS

Current assets
  Cash                                                 $    8,052


Other assets
  Deferred offering costs                                  11,785
  Organization costs, Net                                     500
                                                       ----------
Total other assets                                         12,285
                                                       ----------
     Total                                             $   20,337
                                                       ==========



LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
 Accrued liabilities                                   $     500
                                                       ---------
 Total current liabilities                             $     500



STOCKHOLDERS' EQUITY

  Preferred stock, $.001 par value;
   5,000,000 shares authorized;
   -0- shares issued and outstanding

  Common stock, $.001 par value;
  50,000,000 shares authorized;
  2,000,000 shares issued and outstanding              $   2,000

  Additional paid-in capital                              18,000

  Deficit accumulated during the
  development stage                                         (163)
                                                       ---------
     Total stockholders equity                         $  19,837
                                                       ---------
     TOTAL LIABILITIES AND
        STOCKHOLDERS' EQUITY                           $  22,337
                                                       =========






                      See notes to financial statements.

                                     F-2

<PAGE>


                          KINGSGATE ACQUISITIONS, INC.
                          (A development stage company)
                             STATEMENT OF OPERATIONS
     FOR THE PERIOD FROM INCEPTION, SEPTEMBER 28, 1999, TO DECEMBER 31, 1999





Income                                                  $-0-

Costs of goods sold                                      -0-
                                                       ------

Gross profit                                             -0-

Operations:
 General and administrative                              185
 Depreciation and Amortization                           -0-
                                                       ------

Total costs                                              185

Other income
  Interest income                                         22
                                                       ------
Total other income                                        22


Net profit (loss)                                     $ (163)
                                                      =======



PER SHARE AMOUNTS:
  Net profit (loss) per common
   share outstanding - basic                          $ 0.00
                                                      =======


SHARES OF COMMON STOCK OUTSTANDING                  2,000,000
                                                    =========







                       See notes to financial statements.


                                     F-3

<PAGE>


                          KINGSGATE ACQUISITIONS, INC.
                          (A development stage company)
                             STATEMENT OF CASH FLOWS
  FOR THE PERIOD FROM SEPTEMBER 28, 1999 (INCEPTION) THROUGH DECEMBER 31, 1999


CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                $   (163)
  Item not affecting cash flow from operations:
    Amortization                                                 0

    Accrued expenses                                           500
                                                          ---------
     NET CASH USED IN OPERATING ACTIVITIES                     337

CASH FLOWS FROM INVESTING ACTIVITY:
    Organization costs incurred                               (500)
    Deferred offering costs                                (11,785)
                                                          ---------
CASH USED IN INVESTING ACTIVITIES                          (12,285)

CASH FLOWS FROM FINANCING ACTIVITY:
  Sales of common stock                                     20,000
                                                          ---------
TOTAL CASH FLOWS FROM FINANCING ACTIVITIES                  20,000

Increase (decrease) in cash                                  8,052
Cash balance beginning of period                               -0-
                                                          ---------
CASH, end of period                                       $  8,052

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid for interest                                  $     -
  Cash paid for income taxes                              $     -




                      See notes to financial statements.



                                     F-4

<PAGE>

                          KINGSGATE ACQUISITIONS, INC.
                          (A development stage company)
                        STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>

                                                                              Deficit
                                                                            accumulated
                                                          Additional           during
                    Preferred   Preferred    Common    Common    paid in    development
                      stock       stock       stock     stock    capital       stage         Total
                     (shares)      ($)      (shares)     ($)      ($)          ($)            ($)
- -----------------------------------------------------------------------------------------------------
<S>                     <C>      <C>        <C>         <C>         <C>         <C>        <C>


Sale of 2,000,000
shares of
common stock              0      $    0    2,000,000   $  2,000    $ 18,000               $ 20,000

Net profit (loss)                                                              $ (163)        (163)
- ------------------------------------------------------------------------------------------------------
Balance
December 31,1999          0      $    0    2,000,000   $  2,000    $ 18,000    $ (163)    $ 19,837

</TABLE>












                       See notes to financial statements.


                                     F-5
<PAGE>

                          KINGSGATE ACQUISITIONS, INC.
                          (A development stage company)
                          NOTES TO FINANCIAL STATEMENTS
  FOR THE PERIOD FROM SEPTEMBER 28, 1999 (INCEPTION) THROUGH DECEMBER 31, 1999


NOTE 1 - ORGANIZATION AND DESCRIPTION OF THE COMPANY

     Kingsgate Acquisitions,  Inc. (the "Company"), was organized in Delaware on
September 28, 1999 and is authorized to issue 50,000,000 shares of common stock,
$0.001 par value each and 5,000,000 shares of preferred stock,  $0.001 par value
each.

     The Company is a "blank check" company which plans to search for a suitable
business to merge with or acquire. Operations since incorporation have consisted
primarily  of  obtaining  capital  contributions  by the initial  investors  and
activities  regarding the  registration  of the offering with the Securities and
Exchange Commission.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

     The accompanying financial statements have been prepared on a going concern
basis which  contemplates  the  realization  of assets and the  satisfaction  of
liabilities  in the normal  course of  business.  The  Company is a blank  check
company  that is  dependent  upon the  success  of  management  to  successfully
complete a self underwriting and locate a potential  business to acquire and may
require  additional  capital  to enter  into  any  business  combination.  These
conditions raise  substantial doubt about the Company's ability to continue as a
going  concern.  The Company is dependent upon its ability to have positive cash
flows from  operations to sustain any business  activity.  The Company's  future
capital requirements will depend on numerous factors including,  but not limited
to, continued progress in completing its self underwritten  offering,  finding a
business to  acquire,  completing  the process of  acquiring  the  business  and
obtaining  the  needed  investment  capital  and  working  capital  to engage in
profitable operations.  The Company plans to engage in such financing efforts on
a continuing basis.

     The  financial  statements  presented  consist of the balance  sheet of the
Company as at December 31, 1999 and the related  statements  of operations  and
cash flows and  stockholders'  equity for period from  inception,  September 28,
1999, to December 31, 1999.

Deferred Offering Costs

     Deferred  offering costs,  incurred in anticipation of the Company filing a
registration statement pursuant to Rule 419 under the Securities Act of 1933, as
amended, are being deferred until the registration is complete.

Organization Costs, Net

     Organization  costs  are  being  amortized  over  a  period  of 60  months.
Accumulated amortization as of December 31, 1999, was $-0-.


                                     F-6
<PAGE>

Income Taxes

     The Company  accounts for income taxes in accordance  with the Statement of
Financial  Accounting  Standards No. 109,  "Accounting  for Income Taxes," which
requires the  recognition  of deferred tax  liabilities  and assets at currently
enacted tax rates for the expected  future tax  consequences of events that have
been included in the financial  statements or tax returns. A valuation allowance
is  recognized  to reduce the net  deferred  tax asset to an amount that is more
likely than not to be  realized.  The tax  provision  shown on the  accompanying
statement of operations is zero since the deferred tax asset  generated from the
net  operating  loss is offset in its entirety by a valuation  allowance.  State
minimum taxes will be expensed as incurred.

Cash and Cash Equivalents

     Cash  and  cash  equivalents,  if  any,  include  all  highly  liquid  debt
instruments  with an original  maturity  of three  months or less at the date of
purchase.

Fair Value of Financial Instruments

     Cash,  accounts  payable and other current  liabilities are recorded in the
financial  statements at cost, which  approximates  fair market value because of
the short-term maturity of those instruments.

Use of Estimates

     The  preparation  of financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  effect 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.

Significant Concentration of Credit Risk

     At December 31, 1999, the Company has a concentration of its credit risk by
maintaining deposits in one bank. The maximum loss that could have resulted from
this risk totaled $-0- which  represents  the excess of the deposit  liabilities
reported  by the banks over the  amounts  that  would  have been  covered by the
insurance.

NOTE 3 - STOCKHOLDERS' EQUITY

Common Stock

     For the period from  inception,  September  28, 1999, to December 31, 1999,
the Company sold an  aggregate  of 2,000,000  shares of common stock to thirteen
investors for an aggregate consideration of $20,000 or $0.01 per share.

Preferred Stock

     Up to 5,000,000  shares of preferred  stock may be issued from time to time
in one or more  series.  The  Company's  board  of  directors,  without  further
stockholder  approval,  is  authorized  to fix the  dividend  rights  and terms,
conversion rights, voting rights, redemption rights, liquidation preferences and
other  rights  and  restrictions  relating  to any  such  series.  Issuances  of
additional shares of preferred stock, while

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providing  flexibility in connection with possible financings,  acquisitions and
other corporate purposes,  could, among other things adversely affect the voting
power of the holders of other  securities and may, under certain  circumstances,
have the effect of deterring hostile takeovers or delaying changes in control or
management.

     The number of shares of preferred  stock  outstanding at December 31, 1999
is $-0-.


NOTE 4 - RULE 419 REQUIREMENTS

     Rule 419 requires  that  offering  proceeds be deposited  into an escrow or
trust account (the "Deposited Funds" and "Deposited  Securities",  respectively)
governed by an agreement which contains  certain terms and provisions  specified
by that rule.  The Company may  receive  10% of the  escrowed  funds for working
capital.  The remaining  Deposited  Funds and the Deposited  Securities  will be
released  to the  Company  and to the  investors,  respectively,  only after the
Company has met the following three basic  conditions.  First,  the Company must
execute an agreement for an acquisition  meeting  certain  prescribed  criteria.
Second,  the Company must file a  post-effective  amendment to its  registration
statement which includes the terms of a  reconfirmation  offer that must contain
conditions  prescribed  by Rule  419.  The  post-effective  amendment  must also
contain  information  regarding  the  acquisition  candidate  and its  business,
including  audited  financial  statements.  The  agreement  must  include,  as a
condition  precedent  to its  consummation,  a  requirement  that the  number of
investors who  contributed  at least 80% of the offering  proceeds must elect to
reconfirm their investments.  Third, the Company must conduct the reconfirmation
offer and satisfy all of the prescribed conditions. The post-effective amendment
must also include the terms of the  reconfirmation  offer  mandated by Rule 419.
After the Company submits a signed  representation  to the escrow agent that the
requirements of Rule 419 have been met and after the acquisition is consummated,
the escrow  agent can  release the  Deposited  Funds and  Deposited  Securities.
Investors who do not reconfirm  their  investments  will receive the return of a
pro rata portion thereof; and in the event investors  representing less than 80%
of the Deposited Funds reconfirm their investments,  the Deposited Funds will be
returned to all the investors on a pro rata basis.

NOTE 5 - GAIN (LOSS) PER SHARE OF COMMON STOCK

     Net gain  (loss)  per share of common  stock  outstanding,  as shown on the
statement of  operations,  is based on the number of shares  outstanding at each
balance sheet date.  Weighted average shares  outstanding was not computed since
it would not be meaningful in the circumstances, as all shares issued during the
period from  incorporation  through December 31, 1999 were for initial capital.
Therefore,  the total shares outstanding at the end of each period was deemed to
be the most relevant number of shares to use for purposes of this disclosure.

     For future periods,  the Company will utilize the treasury stock method for
computing  earnings  per share,  and will compute a weighted  average  number of
shares   outstanding  once  additional   shares  of  stock  are  issued  to  new
stockholders.   Under  the  treasury  stock  method,   the  dilutive  effect  of
outstanding  stock  options and other  convertible  securities  for  determining
primary earnings per share is computed using the average market price during the
fiscal  period,  whereas the dilutive  effect of  outstanding  stock options and
convertible  securities  for  determining  fully  diluted  earnings per share is
computed using the market price as of the end of the fiscal  period,  if greater
than the average market price.

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NOTE 6 - RELATED PARTY TRANSACTIONS

Office Facilities

     Rental of office space and use of office,  computer and  telecommunications
equipment are provided by the President of the Company on a month to month basis
at a monthly rental of $500 per month  commencing  with the sale of the units in
the proposed offering until consummation of an acquisition. From the period from
inception,  September  28, 1999,  to December 31, 1999,  the accrual for rent is
$-0-.

Officer Salaries

     For the period from inception, September 28, 1999, to December 31, 1999, no
officer has received a salary in excess of $100,000. A monthly fee of $500 is to
be charged to operations by the President as his minimal compensation commencing
with the sale of the units in the proposed  offering until a target business can
be acquired and the acquisition consummated.

NOTE 7 - PROPOSED OFFERING

     The Company  intends to prepare and file a registration  statement with the
Securities  and  Exchange  Commission  pursuant  to Rule 419 (see  Note 4).  The
offering,  on a "best efforts all-or-none basis" will consist of 1,000,000 units
at $.10 per unit or an  aggregate  offering  price of  $100,000.  Each unit will
consist of one share of common stock and five  redeemable  common stock purchase
warrants.  Each warrant is  exercisable  at $1.00 for a period of two years from
the effective date of a registration statement relating to the underlying shares
of common  stock.  The warrants are  redeemable  at any time,  upon thirty day's
written notice, in the event the average closing price of the common stock is at
least $1.25 for a period of twenty  consecutive  trading days ending  within ten
days prior to the notice of redemption.



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