As filed with the Securities and Exchange Commission on February 2, 2000
Registration No. 333-________
United States Securities and Exchange Commission
Washington, D.C.
--------------
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
PEGASUS INVESTMENT CORP.
(Name of small business issuer as specified in its charter)
Texas 6770 75-2695622
(State of (Primary Standard Industrial (I.R.S. Employer
Incorporation) Classification Code Number) Identification No.)
14160 Dallas Parkway, Suite 950, Dallas, Texas 75240 (972) 233-0300
(Address and telephone number of principal executive offices and principal place
of business)
Timothy P. Halter, 14160 Dallas Parkway, Suite 950, Dallas, Texas 75240,
(972) 233-0300
(Name, address and telephone number of agent for service)
Copies to:
George L. Diamond, Esq.
Souter & Diamond, P.C.
14160 Dallas Parkway, Suite 950
Dallas, Texas 75240
(972) 233-0300
Approximate date of proposed sale to the public: As soon as practicable
after the effective date of this Registration Statement.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ----------------------------------------- ----------- -------------------- ------------------ ---------------
Title of Each Class Amount Proposed Maximum Proposed Maximum
of Securities to be Offering Price Aggregate Amount of
to be Registered Registered Per Share (1) Offering Price Registration
(1) Fee
<S> <C> <C> <C> <C>
- ----------------------------------------- ----------- -------------------- ------------------ ---------------
- ----------------------------------------- ----------- -------------------- ------------------ ---------------
Common Stock, par value $0.0001 600,000 $.01 $6,000 $1.58
- ----------------------------------------- ----------- -------------------- ------------------ ---------------
</TABLE>
Note: (1) Estimated solely for the purpose of calculating the registration fee.
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
PRELIMINARY PROSPECTUS
(subject to completion)
PEGASUS INVESTMENT CORP.
600,000 SHARES OF COMMON STOCK
This prospectus relates to the offer and sale from time to time of up
to 600,000 shares of Pegasus Investment Corp., a Texas corporation (herein
"Pegasus") by two current shareholders. Pegasus is registering the shares to
provide these two shareholders with freely tradable securities, but the
registration does not necessarily mean that any or all of the shares will, in
fact, be sold. Pegasus will not receive any of the proceeds from the sale of the
shares. Pegasus will pay all of the expenses related to this registration.
There is currently no public market for the shares. Pegasus expects
that its common stock will be traded on the over-the-counter market maintained
by members of the National Association of Securities Dealers, Inc. after this
registration statement is declared effective.
After the shares are registered these two shareholders may, from time
to time, offer and sell the shares directly or through agents or broker-dealers
on such terms as they in their individual discretion determine to be
appropriate. Each of these two shareholders reserves the right to accept or
reject, in whole or in part, any proposed purchase of the shares.
------------------------------
This Investment Involves A High Degree of Risk. You Should Read "Risk
Factors", Beginning On Page 3, Which Describes Certain Factors Which Should Be
Carefully Considered Before You Purchase Any Shares.
-------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful and complete. Any representation to the contrary is a
criminal offense.
__________ __, 2000
<PAGE>
PROSPECTUS SUMMARY
You should read the following summary together with the more detailed
information regarding Pegasus and the shares of common stock covered by this
registration and Pegasus' financial statements and notes thereto appearing
elsewhere in this Prospectus. Unless otherwise indicated, all share information
takes into account the 100 for one (1) forward stock split effective January 18,
2000 and the corresponding reduction in the par value of Pegasus' common stock
from $0.01 to $0.0001 per share.
The Company. Pegasus is a Texas corporation that does not conduct any type of
business at this time. Pegasus was formed in 1997 for the purpose of acquiring
or merging into a privately owned business that has a history of profitable
operations. Pegasus' only office is located at 14160 Dallas Parkway, Suite 950,
Dallas, Texas 75240 and its telephone number is (972) 233-0300.
Securities To Be Registered. 600,000 shares of Pegasus' common stock, including
300,000 shares that are owned by Timothy P. Halter, Pegasus' sole officer and
director and principal shareholder, and 300,000 shares that are owned by an
unaffiliated individual, are being registered and may be offered for sale, from
time to time, in the future. The 600,000 shares represent six percent (6%) of
the number of issued and outstanding shares of the common stock as of the date
of this Prospectus.
AVAILABLE INFORMATION
Pegasus is not currently subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended. Upon the effectiveness of the
registration statement, of which this Prospectus is a part, Pegasus will be
obligated to file periodic reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). You may read and copy
any of these reports at the following public reference rooms maintained by the
Commission :
In Washington, DC In New York , New York In Chicago, Illinois
450 Fifth Street, N.W. 7 World Trade Center 500 West Madison Street
Room 1024 Madison Street, Suite 1300 Suite 1400
Washington, D.C. 20549 New York, NY 10048 Chicago, IL 60661-2511
You may obtain information on the operation of the public reference
rooms by calling the Commission at 1-800-SEC-0330. You may also obtain copies of
this information by mail from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C., 20549. The Commission also maintains
an internet website that contains these reports and information about issuers,
like Pegasus, who file electronically with the Commission. The address of that
site is http://www.sec.gov.
Pegasus has filed with the Commission a registration statement
(including exhibits and information which the Commission permits the registrant
to omit from this prospectus) on Form SB-2 under the Securities Act of 1933, as
amended, with respect to the common stock covered by this Prospectus. Statements
contained in this Prospectus as to the contents of any contract, agreement or
other document referred to are not necessarily complete and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to the registration statement. You may obtain copies of the registration
statement, including exhibits and other information about Pegasus, by contacting
the Commission in the manner and at the addresses referenced above.
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<PAGE>
RISK FACTORS
In addition to the other information in this Prospectus, the following
risk factors should be considered by prospective investors in evaluating Pegasus
and its business and future prospects before purchasing any shares of common
stock.
No History of Operations
Pegasus has never operated any business and has never generated any
income; thus, Pegasus has no history of successfully operating any form of
business and generating any profits.
Pegasus Needs Additional Capital
In the past Pegasus' expenses have always been paid by one or more of
its principal shareholders. Currently it has no cash and no assets with which to
pay any expenses. Unless one or more of its shareholders provides cash to pay
Pegasus' expenses as they are incurred, Pegasus may be forced to cease its
efforts to find an acceptable merger or acquisition partner. There are no known
sources from which Pegasus can obtain loans or debt financing.
Risks Related to Pegasus' Acquisition Strategy
Pegasus intends to grow by acquiring a business or a corporation that
is privately owned and has a viable business operation or prospects. The
management of Pegasus has no specific target in mind and it is impossible to
predict when, or if, it will find a merger or acquisition candidate that it
deems desirable and that is interested in affiliating with Pegasus. There can be
no assurance that Pegasus will be able to identify, acquire or manage such a
business or to integrate successfully such a business into Pegasus without
substantial and unanticipated costs, delays or other problems. A business
acquired by Pegasus may have liabilities that Pegasus does not discover or may
not be able to discover during its pre-acquisition investigations and for which
Pegasus, as legal successor or owner, may be responsible. Pegasus currently has
no agreement with any party to effect a merger or make an acquisition.
Taxation
In the course of any acquisition or merger we may undertake, a
substantial amount of attention will be focused upon federal and state tax
consequences to both us and the acquisition candidate. Presently, under the
provisions of federal and various state tax laws, a qualified organization
between business entities will generally result in tax-free treatment to the
parties to the reorganization. While we expect to undertake any merger or
acquisition so as to minimize federal and state tax consequences to both us and
the acquisition candidate, such business combination might not meet the
statutory requirements of a reorganization or the parties might not obtain the
intended tax-free treatment upon a transfer of stock or assets. A non-qualifying
reorganization could result in the imposition of both federal and state taxes
that may have a substantial adverse effect on us.
Control of Pegasus by its Executive Officers and Directors
Timothy P. Halter, Pegasus' sole officer and director, currently owns
97% of the issued and outstanding shares of common stock. As a result, Mr.
Halter controls all decisions that will be made by the shareholders, including
the election of directors, approval or rejection of any proposed acquisition or
merger, and possible recapitalizations of Pegasus. The voting power of Mr.
Halter could, under certain circumstances, delay or prevent a change in control
of Pegasus.
Benefits of this Offering for Two Shareholders
The two selling shareholders currently, directly or indirectly, own
10,000,000 shares of common stock, which amount represents all of the currently
issued and outstanding shares of common stock. Of this number, 600,000 shares
are covered by this registration. After this registration statement is declared
effective by the Commission, the selling shareholders will be able to sell any
or all of the shares and will not be subject to volume restrictions of SEC Rule
144 that would otherwise apply if this registration statement had not been
filed. There can be no assurances that these two selling shareholders will, in
fact, sell or retain all or any part of the shares, or, if so, when.
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<PAGE>
There is No Active Market for Pegasus' Common Stock Now
Until this time there has not been a public market for Pegasus' stock.
There can be no assurance that an active public market will develop or be
sustained for the common stock even though Pegasus intends to file an
application with the National Association of Securities Dealers, Inc. (herein "
NASD") to list the common stock on the OTC Bulletin Board. If there is little
demand on the part of potential purchasers of the stock, sellers will have
difficulty selling any of Pegasus' stock.
Limitations on Share Resale
The common stock has not been registered for resale in any state. No
assurance can be given that the shares will be able to be resold until such time
as Pegasus has taken the necessary steps to establish a secondary market for its
securities.
Anticipated Volatility of the Price of Pegasus' Stock
If traded, the market price of Pegasus' stock is likely to be highly
volatile. The market for Pegasus' stock will likely be volatile because of
general market conditions as well as factors related to Pegasus' historical
performance and its ability to meet market expectations. Such factors as
investor perceptions of Pegasus, variations in Pegasus' financial results,
announcements regarding Pegasus' plans and other developments affecting Pegasus'
future could cause significant fluctuations in the market price of the stock. In
addition, the stock market in general has recently experienced price and volume
fluctuations which appear to be unrelated to the operating performance of
individual companies. Broad market fluctuations may adversely affect the market
price of the stock.
Potential Anti-takeover Provisions of Pegasus' Articles of Incorporation and
Bylaws, as well as Texas Law, Could Adversely Affect the Stock's Price
Certain provisions of Texas law and certain provisions of Pegasus'
Articles of Incorporation and Bylaws could delay or impede the removal of
incumbent directors and could make it more difficult for a third party to
acquire, or could discourage third parties from attempting to acquire, control
of Pegasus. Such provisions could limit the price that certain investors might
be willing to pay in the future for shares of Pegasus' Common Stock. The
Articles of Incorporation and Bylaws impose various procedural requirements that
could make it more difficult for shareholders to effect certain corporate
actions. Pegasus' Articles give the Board of Directors (without any additional
authorization from the shareholders) authority to issue more than up to
10,000,000 shares of preferred stock for various corporate purposes. Issuance of
a substantial number of shares of either common stock or preferred stock would
dilute the existing shareholders' percentage ownership of Pegasus.
DESCRIPTION OF PEGAUS' COMMON STOCK
General
Pegasus' Articles of Incorporation authorize the issuance of 40,000,000
shares of common stock. Holders of common stock are entitled to one vote for
each share owned on each matter submitted to a vote of the shareholders.
Currently there are 10,000,000 shares of common stock issued and outstanding.
Pegasus' Board of Directors has the legal authority to issue the remaining
unissued authorized shares, without shareholder approval, for any purpose deemed
to be in the best interest of Pegasus. Shares could be issued to deter or delay
a takeover or other change of control of Pegasus.
All the shares of the common stock which are now outstanding are fully
paid, validly issued and nonassessable and the holders of the common stock have
no preemptive rights to subscribe for or to purchase any additional securities
issued by Pegasus. Upon liquidation, dissolution or winding up of Pegasus, the
holders of common stock are entitled to share ratably in the distribution of
assets after payment of debts and expenses. There are no conversion, sinking
fund or redemption provisions, or similar restrictions with respect to the
common stock.
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<PAGE>
Holders of the common stock are entitled to receive dividends, when and
if declared by the Board of Directors, out of funds legally available therefore.
Dividend Policy
Pegasus has never paid or declared a cash dividend on its common stock
and does not intend to pay cash dividends in the foreseeable future. The payment
by Pegasus of dividends, if any, on its common stock in the future is subject to
the discretion of the Board of Directors and will depend on Pegasus' earnings,
financial condition, capital requirements and other relevant factors.
USE OF PROCEEDS
Pegasus will not receive any proceeds from the registration or sale of
the shares of common stock covered by this prospectus.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
The following discussion and analysis should be read in conjunction
with Pegasus' financial statements and the notes associated with them as found
elsewhere in this document. This discussion should not be construed to imply
that the results discussed herein will necessarily continue into the future or
that any conclusion reached herein will necessarily be indicative of actual
operating results in the future. This discussion represents only the best
present assessment by the management of Pegasus.
Caution Regarding Forward-Looking Information
This registration statement contains certain forward-looking statements
and information relating to Pegasus that are based on the beliefs of Pegasus or
its management as well as assumptions made by and information currently
available to Pegasus or its management. When used in this document, the words
"anticipate", "believe", "estimate", "expect" and "intend" and similar
expressions, as they relate to Pegasus or its management, are intended to
identify forward-looking statements. Such statements reflect the current view of
Pegasus or its management regarding future events and are subject to certain
risks, uncertainties and assumptions, including the risks and uncertainties
noted. Should one or more of these risks or uncertainties materialize, or should
the underlying assumptions prove incorrect, actual results may vary materially
from those described herein as anticipated, believed, estimated, expected or
intended. In each instance, the forward-looking information should be considered
in light of the accompanying meaningful cautionary statements herein.
Company's History
Pegasus was incorporated on March 3, 1997 under the laws of the State
of Texas. On January 14, 2000 the shareholders unanimously approved a 100 for
one (1) forward split for the common stock. This action was filed of record with
the Secretary of State of Texas on January 18, 2000 and increased the number of
outstanding shares of Common Stock from 100,000 to 10,000,000 and reduced the
par value from $.01 to $.0001 per share.
Discussion of Financial Condition
Pegasus currently has no revenues, no operations and owns no assets.
Pegasus will remain illiquid until such time as a business combination
transaction occurs, if ever. No prediction of the future financial condition of
Pegasus can be made.
Due to the lack of sustaining operations from inception, Pegasus is
considered in the development stage and, as such, has generated no significant
operating revenues and has incurred cumulative operating losses of approximately
$995. Accordingly, Pegasus is dependent upon its current management and/or
significant shareholders to provide sufficient working capital to preserve the
integrity of the corporation during this phase. Pegasus' independent auditor,
S.W. Hatfield, CPA, expressed, in its opinion on Pegasus' audited financial
statements, doubt about Pegasus' ability to continue as a going concern.
Reference is made to Note A to the financial statements of Pegasus included
elsewhere in this Prospectus.
5
<PAGE>
Plan of Business
Pegasus intends to locate and combine with an existing, privately held
company which, in management's view, has growth potential, irrespective of the
industry in which it is engaged. However, Pegasus does not intend to combine
with a private company that may be deemed to be an investment company subject to
the Investment Company Act of 1940. A combination may be structured as a merger,
consolidation, exchange of Pegasus' common stock for stock or assets, or any
other form that will result in the combined enterprises potentially becoming a
publicly held corporation.
BUSINESS
General
Pegasus was incorporated on March 3,1997 under the laws of the State of
Texas. The business purpose of Pegasus is to seek out and obtain an acquisition,
merger or outright sale transaction, whereby its shareholders would benefit.
Accordingly, Pegasus has never had any substantial operations or substantial
assets since its inception.
Proposed Business
Pegasus intends to locate and combine with an existing, privately held
company, which, in management's view, has growth potential, irrespective of the
industry in which it is engaged. However, Pegasus does not intend to combine
with a private company that may be deemed to be an investment company subject to
the Investment Company Act of 1940. A combination may be structured as a merger,
consolidation, exchange of Pegasus' common stock for stock or assets or any
other form that will result in the combined enterprise's potentially becoming a
publicly held corporation.
Pending negotiation and consummation of a combination, Pegasus
anticipates that it will have, aside from carrying on its search for a
combination partner, no business activities, and, thus, will have no source of
revenue. Should Pegasus incur any significant liabilities prior to a combination
with a private company, it may not be able to satisfy such liabilities as they
are incurred.
If Pegasus' management pursues one or more combination opportunities
beyond the preliminary negotiations stage and those negotiations are
subsequently terminated, it is foreseeable that such efforts will exhaust
Pegasus' ability to continue to seek such combination opportunities before any
successful combination can be consummated. In that event, Pegasus' common stock
will become worthless and holders will receive a nominal distribution, if any,
upon the Company's liquidation and dissolution.
Combination Suitability Standards
In its pursuit for a combination partner, Pegasus' management intends
to consider only combination candidates which, in management's view, have growth
potential. Pegasus' management does not intend to pursue any combination
proposal beyond the preliminary negotiation stage with any combination candidate
that does not furnish Pegasus with audited or auditable financial statements for
at least its most recent fiscal year and unaudited financial statements for
interim periods subsequent to the date of such financial statements, or is in a
position to provide such financial statements in a timely manner. Furthermore,
to the knowledge of Pegasus' officers and directors, neither the candidate nor
any of its directors, executive officers, principal shareholders or general
partners:
(i) will have been convicted of securities fraud, mail fraud, tax
fraud, embezzlement, bribery, or a similar criminal offense involving
misappropriation or theft of funds, or be the subject of a pending
investigation or indictment involving any of those offenses;
(ii) will have been subject to a temporary or permanent injunction or
restraining order arising from unlawful transactions in securities,
whether as issuer, underwriter, broker, dealer, or investment advisor,
may be the subject of any pending investigation or a defendant in a
pending lawsuit arising from or based upon allegations of unlawful
transactions in securities; or
6
<PAGE>
(iii) will have been a defendant in a civi1 action which resulted in a
final judgment against it or him awarding damages or rescission based
upon unlawful practices or sales of securities.
Pegasus' officers and directors will make these determinations by
asking pertinent questions of the management and/or owners of prospective
combination candidates. Such persons will also ask pertinent questions of others
who may be involved in the combination proceedings. However, the officers and
directors of Pegasus will not generally take other steps to verify independently
information obtained in this manner which is favorable. Unless something comes
to their attention that puts them on notice of a possible disqualification that
is being concealed from them, such persons will rely on information received
from the management of the prospective combination candidate and from others who
may be involved in the combination proceedings.
Properties
Pegasus has no properties or assets of any kind.
Legal Proceedings
Pegasus is not a party to any pending litigation nor is it aware of any
threatened legal proceeding.
Employees
Pegasus has no employees.
MANAGEMENT
Directors and Officers
The directors and officers of Pegasus are as follows:
Name Age Position
Timothy P. Halter 33 President, Secretary and Sole
Director
Timothy P. Halter has served as President, Secretary and sole director
of Pegasus since the company's inception in March 1997. Since 1995, Mr. Halter
has served as Chairman of the Board and President of Halter Financial Group, a
privately held investment and consulting company. Mr. Halter serves as Chairman
of the Board and Secretary of Karts International Incorporated, a publicly held
corporation traded on the over-the-counter market maintained by the NASD.
Executive Compensation
Mr. Halter was not compensated in any way for his services to Pegasus
during the fiscal years ended December 31, 1997, 1998 or 1999.
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<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information as of January 24,
2000 with regard to the beneficial ownership of the common stock by (i) each
person known to Pegasus to be the beneficial owner of 5% or more of its
outstanding shares; (ii) by the officers and directors of Pegasus individually
and (iii) by the officers and directors as a group.
Name and Address of Beneficial Owner Amount Owned Percent
Timothy P. Halter 9,700,000 97%
14160 Dallas Parkway, Suite 950
Dallas, Texas 75240
All Officers and Directors as a Group 9,700,000 97%
(One Person)
SELLING SHAREHOLDERS
The 600,000 shares offered hereby are bong sold pursuant to this
Prospectus by the selling shareholders identified below. Pegasus will not
receive any proceeds from the sale of the shares by the selling shareholders.
The table below sets forth the beneficial ownership of Pegasus' common
stock by the selling shareholders at January 24, 2000 and the sale of the shares
offered hereby.
<TABLE>
Beneficial Ownership Percent of Class
Ownership Prior Shares To After Before After
Selling Shareholder (1) to Offering Be Sold Offering Offering Offering
----------------------- ----------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Timothy P. Halter 9,700,000 300,000 9,400,000 97 94
Dawn Michelle Titus 300,000 300,000 -0- .03 -0-
</TABLE>
(1) The persons named in the table have sole voting and investment powers with
respect to the shares of common stock shown as beneficially owned by them.
PLAN OF DISTRIBUTION
This Prospectus relates to the offer and sale from time to time of up
to 600,000 shares of common stock by the selling shareholders. Pegasus has
registered the shares for sale to provide the selling shareholders with freely
tradeable securities, but registration of such securities does not necessarily
mean that any of such shares will be offered or sold by the selling
shareholders. Pegasus will not receive any proceeds from the sale of these
shares by the selling shareholders.
The shares may be sold from time to time directly by any of the selling
shareholders. Alternatively, the selling shareholders may from time to time
offer the shares through agents or dealers, who may receive compensation in the
form of commissions from the selling shareholders and/or the purchasers for whom
they may act as agent. The selling shareholders and any agents or dealers that
participate in the distribution may be deemed to be "underwriters" within the
meaning of the Securities Act and any profit on the sale of the shares by them
and any commissions received by any such agents or dealers may be deemed to be
underwriting commissions under the Securities Act.
At the time a particular offering of shares is made, a Prospectus
Supplement, if required, will be distributed that will set forth the names of
any agents or dealers and any commissions or other terms constituting
compensation from the selling shareholders and any other required information.
The shares may be sold from time to time at varying prices determined at the
time of sale or at negotiated prices.
In order to comply with the securities laws of certain states, if
applicable, the shares may be sold only through registered or licensed brokers
or dealers. In addition, in certain states, the shares may not be sold unless
they have been registered or qualified for sale in such state or an exemption
from such registration or qualification is available and is complied with.
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<PAGE>
LEGAL MATTERS
The validity of the common stock covered by this prospectus has been
passed upon for Pegasus by Souter & Diamond, P.C., Dallas, Texas.
EXPERTS
The financial statements of Pegasus included in this Prospectus have
been audited by S.W. Hatfield, CPA, as indicated in their report with respect
thereto, and are included herein in reliance upon the authority of said firm in
giving said reports.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
DISCLOSURE OF COMMISSION'S POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Pegasus' Bylaws provide that Pegasus will indemnify its directors and
officers to the full extent authorized or permitted under Texas law.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of Pegasus
pursuant to the foregoing provisions, or otherwise, Pegasus has been advised
that in the opinion of the Commission, such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
payment by Pegasus of expenses incurred or paid by a director, officer or
controlling person in connection with the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, Pegasus will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
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<PAGE>
PEGASUS INVESTMENT
CORP.
Financial Statements
and
Auditor's Report
December 31, 1999. 1998 and 1997
S. W. HATFIELD, CPA
certified public accountants
Use our past to assist your future sm
F-1
<PAGE>
PEGASUS INVESTMENT CORP.
CONTENTS
Page
Report of Independent Certified Public Accountants F-3
Financial Statements
Balance Sheets
as of December 31, 1999, 1998 and 1997 F-4
Statements of Operations and Comprehensive Income
for the years ended December 31, 1999 and 1998
and the period from March 3, 1997 (date of inception)
through December 31, 1997 F-5
Statement of Changes in Shareholders' Equity
for the years ended December 31, 1999 and 1998
and the period from March 3, 1997 (date of inception)
through December 31, 1997 F-6
Statements of Cash Flows
for the years ended December 31, 1999 and 1998
and the period from March 3, 1997 (date of inception)
through December 31, 1997 F-7
Notes to Financial Statements F-8
F-2
<PAGE>
S. W. HATFIELD, CPA
certified public accountants
Member: American Institute of Certified Public Accountants
SEC Practice Section
Information Technology Section
Texas Society of Certified Public Accountants
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
--------------------------------------------------
Board of Directors and Shareholders
Pegasus Investment Corp.
We have audited the accompanying balance sheets of Pegasus Investment Corp. (a
Texas corporation) as of December 31, 1999, 1998 and 1997 and the related
statements of operations and comprehensive income, changes in shareholders'
equity and cash flows for the years ended December 31, 1999 and 1998 and for the
period from March 3, 1997 (date of inception) through December 31, 1997,
respectively. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Pegasus Investment Corp. as of
December 31, 1999, 1998 and 1997, and the results of its operations and its cash
flows for the years ended December 31, 1999 and 1998 and for the period from
March 3, 1997 (date of inception) through December 31, 1997, respectively, in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note A to the
financial statements, the Company has no viable operations or significant assets
and is dependent upon significant shareholders to provide sufficient working
capital to maintain the integrity of the corporate entity. These circumstances
create substantial doubt about the Company's ability to continue as a going
concern and are discussed in Note A. The financial statements do not contain any
adjustments that might result from the outcome of these uncertainties.
/s/ S. W. HATFIELD, CPA
------------------------
S. W. HATFIELD, CPA
Dallas, Texas
January 18, 2000
Use our past to assist your future sm
P. O. Box 820395 9002 Green Oaks Circle, 2nd Floor
Dallas, Texas 75382-0395 Dallas, Texas 75243-7212
214-342-9635 (voice) (fax) 214-342-9601
800-244-0639 F-3 [email protected]
<PAGE>
<TABLE>
<CAPTION>
PEGASUS INVESTMENT CORP.
BALANCE SHEETS
December 31, 1999, 1998 and 1997
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
ASSETS
------
Current Assets
Cash on hand and in bank $ 5 $ 485 $ 925
------- ------- -------
Total Assets $ 5 $ 485 $ 925
======= ======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Liabilities $ -- $ -- $ --
------- ------- -------
Commitments and Contingencies
Shareholder's Equity
Preferred stock - $0.01 par value
10,000,000 shares authorized;
none issued and outstanding -- -- --
Common stock - $0.0001 par value
40,000,000 shares authorized
10,000,000 issued and outstanding 1,000 1,000 1,000
Accumulated deficit (995) (515) (75)
------- ------- -------
Total shareholders' equity 5 485 925
------- ------- -------
Total Liabilities and Shareholders' Equity $ 5 $ 485 $ 925
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
PEGASUS INVESTMENT CORP.
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Years ended December 31, 1999 and 1998 and
Period from March 3, 1997 (date of inception) through December 31, 1997
Period from
March 3, 1997
Year Year (date of inception)
ended ended through
December 31, December 31, December 31
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Revenues $ -- $ -- $ --
--------- --------- ---------
Expenses
Professional fees 300 275 --
General and administrative expenses 180 165 75
--------- --------- ---------
Net Loss 480 440 75
Other Comprehensive Income -- -- --
--------- --------- ---------
Comprehensive Income $ (480) $ (440) $ (75)
========= ========= =========
Net loss per weighted-average
share of common stock
outstanding, calculated on
Net Loss - basic and fully diluted nil nil nil
=== === ===
Weighted-average number of shares
of common stock outstanding 100,000 100,000 100,000
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
PEGASUS INVESTMENT CORP.
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Years ended December 31, 1999 and 1998 and
Period from March 3, 1997 (date of inception) through December 31, 1997
Additional
Common Stock paid-in Accumulated
Shares Amount capital deficit Total
---------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Stock issued at inception
at $0.01 par value 100,000 $ 1,000 $ -- $ -- $ 1,000
Effect of January 18, 2000
100 for 1 forward stock split
and change in par value to
$0.0001 par value 9,900,000 -- -- -- --
---------- ---------- --------- ---------- ----------
Stock issued at inception,
as restated, at $0.0001
par value 10,000,000 1,000 -- -- 1,000
Net loss for the period -- -- -- (75) (75)
---------- ---------- --------- ---------- ----------
Balances at
December 31, 1997 10,000,000 1,000 -- (75) 925
Net loss for the year -- -- -- (440) (440)
---------- ---------- --------- ---------- ----------
Balances at
December 31, 1998 10,000,000 1,000 -- (515) 485
Net loss for the year -- -- -- (480) (480)
---------- ---------- --------- ---------- ----------
Balances at
December 31, 1999 10,000,000 $ 1,000 $ -- $ (995) $ 5
========== ========== ========= ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
<TABLE>
<CAPTION>
PEGASUS INVESTMENT CORP.
STATEMENTS OF CASH FLOWS
Years ended December 31, 1999 and 1998 and
Period from March 3, 1997 (date of inception) through December 31, 1997
Period from
March 3, 1997
Year Year (date of inception)
ended ended through
December 31, December 31, December 31
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net loss for the period $ (480) $ (440) $ (75)
Adjustments to reconcile net loss to
net cash provided by operating activities -- -- --
------- ------- -------
Net cash used in operating activities (480) (440) (75)
------- ------- -------
Cash Flows from Investing Activities -- -- --
------- ------- -------
Cash Flows from Financing Activities
Cash received at initial capitalization -- -- 1,000
------- ------- -------
Net cash used in financing activities -- -- 1,000
------- ------- -------
Increase (Decrease) in Cash (480) (440) 925
Cash at beginning of period 485 925 --
------- ------- -------
Cash at end of period $ 5 $ 485 $ 925
======= ======= =======
Supplemental Disclosure of
Interest and Income Taxes Paid
Interest paid for the period $ -- $ -- $ --
======= ======= =======
Income taxes paid for the period $ -- $ -- $ --
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-7
<PAGE>
PEGASUS INVESTMENT CORP.
NOTES TO FINANCIAL STATEMENTS
NOTE A - Organization and Description of Business
Pegasus Investment Corp. (Company) was incorporated on March 3, 1997 under the
laws of the State of Texas. The Company has never had any operations or assets
since inception. The current business purpose of the Company is to seek out and
obtain a merger, acquisition or outright sale transaction whereby the Company's
shareholders will benefit. The Company is not engaged in any negotiations and
has not undertaken any steps to initiate the search for a merger or acquisition
candidate.
The Company is fully dependent upon its current management and/or significant
shareholders to provide sufficient working capital to preserve the integrity of
the corporate entity during this phase. It is the intent of management and
significant shareholders to provide sufficient working capital necessary to
support and preserve the integrity of the corporate entity.
The Company has a year end of December 31 and follows the accrual method of
accounting.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
NOTE B - Summary of Significant Accounting Policies
1. Cash and cash equivalents
-------------------------
The Company considers all cash on hand and in banks, including accounts in
book overdraft positions, certificates of deposit and other highly-liquid
investments with maturities of three months or less, when purchased, to be
cash and cash equivalents.
2. Income taxes
------------
The Company, with the consent of its shareholders, has elected under the
Internal Revenue Code to be taxed as an "Subchapter S corporation". In lieu
of corporate income taxes, the shareholder of a "Subchapter S corporation"
is taxed directly on the Company's taxable income. Accordingly, no
provision, benefit or liability for income taxes has been included in the
accompanying financial statements.
3. Loss per share
--------------
Basic earnings (loss) per share is computed by dividing the net income
(loss) by the weighted-average number of shares of common stock and common
stock equivalents (primarily outstanding options and warrants). Common
stock equivalents represent the dilutive effect of the assumed exercise of
the outstanding stock options and warrants, using the treasury stock
method. The calculation of fully diluted earnings (loss) per share assumes
the dilutive effect of the exercise of outstanding options and warrants at
either the beginning of the respective period presented or the date of
issuance, whichever is later. As of December 31, 1999, 1998 and 1997, the
Company has no warrants and/or options issued and outstanding.
F-8
<PAGE>
PEGASUS INVESTMENT CORP.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
NOTE C - Fair Value of Financial Instruments
The carrying amount of cash approximates fair value due to the short term nature
of this item.
NOTE D - Common Stock Transactions
On January 14, 2000, effective January 18, 2000, the Company's shareholders
approved a 100 for 1 forward stock split of the Company's issued and outstanding
common stock. Additionally, the Company changed the par value of its common
stock from $0.01 per share to $0.0001 per share. All amounts presented in the
accompanying financial statements reflect this action as of the first day of the
first period presented.
F-9
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
No dealer, salesperson, or other person has been authorized
to give any information or to make any representation in
connection with this Offering other than those contained in
this Prospectus and, if given or made, such information or
representation must not be relied upon as having been
authorized by the Company or the Underwriters. This
Prospectus does not constitute an offer to sell or a PEGASUS
solicitation of an offer to buy any of the Securities to INVESTMENT
which it relates in any state to any person whom it is CORP.
unlawful to make such offer or solicitation in such state.
Neither the delivery of this Prospectus nor any sale
hereunder shall, under any circumstances, create any
implication that there has not been any change in the
affairs of the Company since the date hereof or that the
information contained herein is correct as of any time
subsequent to its date.
600,000 Shares of Common Stock
TABLE OF CONTENTS
Page
----
Prospectus Summary............................... 2
Available Information............................ 2
Risk Factors..................................... 3
Description of Pegasus Common Stock.............. 4 PROSPECTUS
Use of Proceeds.................................. 5
Management Discussion and Analysis of
Financial Condition and Results of Operation... 5
Business......................................... 6
Management....................................... 7
Principal Shareholders........................... 8
Selling Shareholders............................. 8
Plan of Distribution............................. 8
Legal Matters.................................... 9
Experts.......................................... 9
Changes in and Disagreements with Accountants....
On Accounting and Financial Disclosure......... 9
Disclosure of Commission's Position on
Indemnification For Securities Act Liabilities. 9
Index to Consolidated Financial Statements....... F-2
</TABLE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 24. Indemnification of Directors and Officers.
Pegasus has no contract or arrangement that insures or indemnifies a
controlling person, director or officer of the Company which affects his or her
liability in that capacity. Pegasus' bylaws provide for such indemnification,
subject to applicable law.
If available at a reasonable cost, the Company may purchase and
maintain insurance against any liability incurred by its officers and directors
in defense of any actions to which they are made parties by reason of their
positions as officers and directors.
Item 25. Other Expenses of Issuance and Distribution
Expenses in connection with the public offering of securities by the
selling shareholders pursuant to this registration statement are as follows:
Securities and Exchange Commission Filing Fee $ 1.58
Accounting Fees and Expense $ 2,500.00*
Legal Fees and Expenses $ 5,000.00*
Printing and Engraving $ 3,000.00*
Fees of Transfer Agent and Registrar $ 2,000.00*
Blue Sky Fees and Expenses $ 1,500.00*
Miscellaneous $ 500.00*
-----------
TOTAL $ 14,501.58*
===========
----------
* Estimated
Item 26. Recent Sales of Unregistered Securities
On June 9, 1997, Pegasus sold to Timothy P. Halter, its sole officer
and director and majority shareholder, 10,000,000 shares of common stock in
exchange for the payment of $1000.00 in cash. The transaction was effected in
reliance upon the exemption from registration afforded by Section 4(2) of the
Securities Act.
Item 27. Exhibits
The following documents are filed as exhibits to this registration
statement.
Exhibit
Number Description
-------- -----------
3.1* Articles of Incorporation
3.2* Articles of Amendment to Article of Incorporation
3.3* Articles of Correction
3.4* Bylaws of Pegasus
4.1 See Description of Common Stock in Prospectus
5.1* Opinion of Souter & Diamond, P.C. regarding the legality of the
securities being registered.
23.1* Consent of Souter & Diamond, P.C. (incorporated by reference into
Exhibit 5.1).
23.2 Consent of S.W. Hatfield, C.P.A.
27.1 Financial Data Schedule
-----------
* to be filed by amendment
II-1
<PAGE>
Item 28. Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any period in which it offers or sales are being made,
a post-effective amendment to the registration statement: (i) include
any prospectus required under Section 10(a)(3) of the Securities Act;
(ii) reflect in the prospectus any facts or events, which, individually
or together, represent a fundamental change in the information in the
registration statement; and (iii) include any additional or changed
material information on the plan of distribution. Notwithstanding the
foregoing, any increase or decrease in the volume of the securities
offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in
the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent
no more than a 20% change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the effective
registration statement.
(2) For determining liability under the Securities Act, to treat each such
post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time to
be the initial bona fide offering.
(3) To file a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
(4) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the
registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that, in the opinion of the Commission,
such indemnification is against public policy, as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the shares
of common stock being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(5) For determining any liability under the Securities Act, to treat the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 403A and contained in the
form of prospectus filed by the registrant pursuant to Rule 424(b)(1)
or (4) or 497 (h) under the Securities Act as part of this registration
statement as of the time the Commission declared it effective.
II-2
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of Dallas,
State of Texas, on the February 2, 2000.
PEGASUS INVESTMENT CORPORATION
/s/ Timothy P. Halter
-----------------------------
Timothy P. Halter, President
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the date stated.
/s/ Timothy P. Halter February 2, 2000
- --------------------------------------------
Timothy P. Halter, President and Secretary
(Principal Executive and Accounting Officer)
II-3
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the use in Form SB-2 Registration Statement under The Securities
Act of 1933 of Pegasus Investment Corp. (a Texas corporation) of our report
dated January 18, 2000 on the financial statements of Pegasus Investment Corp.
as of December 31, 1999, 1998 and 1997 and for the years ended December 31, 1999
and 1998 and for the period from March 3, 1997 (date of inception) through
December 31, 1997, accompanying the financial statements contained in such Form
SB-2 Registration Statement Under The Securities Act of 1933, and to the use of
our name and the statements with respect to us as appearing under the heading
"Experts".
/s/ S. W. HATFIELD
---------------------
S. W. HATFIELD, CPA
Dallas, Texas
January 31, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
</LEGEND>
<CIK> 0001104208
<NAME> Pegasus Investment Corp.
<MULTIPLIER> 1
<CURRENCY> US Dollars
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<CASH> 5
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 5
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 1000
<OTHER-SE> (995)
<TOTAL-LIABILITY-AND-EQUITY> 5
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 480
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (480)
<INCOME-TAX> 0
<INCOME-CONTINUING> (480)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (480)
<EPS-BASIC> 0.00
<EPS-DILUTED> 0.00
</TABLE>
