File No. *
------------------------------------------------------------------
As filed with the Securities & Exchange Commission on April 25, 2000
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
LIONS GATE INVESTMENT LIMITED
(Name of small business issuer in its charter)
Nevada
(State or jurisdiction of Incorporation or organization)
6770
(Primary Standard Industrial Identification No.)
98-0222710
(I.R.S. Employer Classification No.)
Suite 2901, 1201 Marinaside Crescent
Vancouver, B.C.
V6Z 2V2 Canada
(Address of principal place of business or intended principal place of business)
Keith Ebert
Lions Gate Investment Limited
Suite 2901, 1201 Marinaside Crescent
Vancouver, B.C.
V6Z 2V2 Canada
(604)681-9588
(Name, address and telephone number of agent for service)
Copies to:
Gerald R. Tuskey, Personal Law Corporation
Suite 1000, 409 Granville Street
Vancouver, B.C.
V6C 1T2 Canada
(604)681-9588
Approximate date of proposed sale to the public: As soon as practicable after
this Registration Statement becomes effective.
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
TITLE OF EACH
CLASS OF PROPOSED PROPOSED AMOUNT OF
SECURITIES TO AMOUNT TO BE MAXIMUM OFFERING MAXIMUM AGGREGATE REGISTRATION
BE REGISTERED REGISTERED PRICE PER UNIT (1) OFFERING PRICE FEE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 100,000 $1.00 $100,000 $64.00
Par value
$0.0001
- --------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee and
pursuant to Rule 457.
The registrant will amend this registration statement on such dates as are
necessary to delay its effective date until the registrant files a further
amendment which specifically states that this registration statement will become
effective under Section 8(a) of the Securities Act of 1933 or until the
registration statement becomes effective on a date the Commission determines.
<PAGE>
PART I - INFORMATION REQUIRED IN PROSPECTUS
Cross Reference Sheet Showing the Location in Prospectus of Information Required
by Items of Form SB-2:
<TABLE>
<CAPTION>
ITEM NO. REQUIRED ITEM LOCATION OF CAPTION IN PROSPECTUS
- -------- ------------- ---------------------------------
<S> <C> <C>
1. Forepart of the Registration Statement and Cover Page; Outside Front Page of Prospectus
Outside Front Cover of Prospectus
2. Inside Front and Outside Back Cover Pages Inside Front and Outside Back Cover Pages of
of Prospectus Prospectus
3. Summary Information and Risk Factors Prospectus Summary; Risk Factors
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Prospectus Summary - Determination of
Offering Price; Risk Factors; Plan of
Distribution
6. Dilution Dilution
7. Selling Security Holders Selling Security Holders
8. Plan of Distribution Plan of Distribution
9. Legal Proceedings Legal Proceedings
10. Director, Executive Officer, Management and Management
Promoters and Control Persons
11. Security Ownership of Certain Beneficial Principal Shareholders
Owners and Management
12. Description of Securities Description of Securities
13. Interest of Named Experts and Counsel Not Applicable
14. Disclosure of Commission Position on Indemnification of Officers and Directors
Indemnification for Securities Act
Liabilities
15. Organization within Last Five Years Management, Certain Transactions
16. Description of Business Business
17. Management's Discussion and Analysis or Plan of Operation
Plan of Operation
18. Description of Property Description of Property
19. Certain Relationships and Related Certain Transactions
Transactions
20. Market for Common Equity and Related Prospectus Summary, Market for Our Common
Stockholder Matters Stock; Shares Eligible for Future Sale
21. Executive Compensation Executive Compensation
22. Financial Statements Financial Statements
23. Changes in and Disagreements with Not Applicable
Accountants on Accounting and Financial
Disclosure
PART II
24. Indemnification of Directors and Officers Indemnification of Directors and Officers
25. Other Expenses of Issuance and Distribution Other Expenses of Issuance and Distribution
26. Recent Sales of Unregistered Securities Recent Sales of Unregistered Securities
27. Exhibits Exhibits
* Undertakings Undertakings
</TABLE>
i
<PAGE>
Subject To Completion, Dated , 2000
INITIAL PUBLIC OFFERING
PROSPECTUS
LIONS GATE INVESTMENT LIMITED
100,000 SHARES OF COMMON STOCK
$1.00 PER SHARE
Lions Gate Investment Limited is a startup company organized in the State of
Nevada as a "blank check" company, whose sole purpose at this time is to locate
and consummate a merger or acquisition with a private entity.
We are offering these shares through our president, Mr. Keith Ebert, without the
use of a professional underwriter. We will not pay commissions on stock sales.
This is our initial public offering, and no public market currently exists for
our shares. The offering price may not reflect the market price of our shares
after the offering.
This investment involves a high degree of Risk. You should purchase shares only
if you can afford a complete loss. See "Risk Factors" beginning on page 12.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
Offering Information
<TABLE>
<CAPTION>
PER SHARE TOTAL
--------- -----
<S> <C> <C>
Initial public offering price $1.00 $100,000.00
Underwriting discounts/commissions (1) $0.00 $0.00
Estimated offering expenses (1) $0.00 $0.00
Net offering proceeds to Lions Gate Investment $1.00 $100,000.00(1)
Limited
</TABLE>
(1) Does not include offering costs, including filing, printing, legal,
accounting, transfer agent and escrow agent fees estimated at $10,000.00.
We will pay these expenses.
In addition to the 100,000 shares offered for sale by the Company, the persons
named in this Prospectus under the caption "Selling Stockholders" are offering a
total of 4,700,000 shares of our common stock for sale to the public.
We will receive no part of the proceeds of any sales by the Selling
Stockholders. All selling and other expenses incurred by the Selling
Stockholders will be paid by the Selling Stockholders.
The date of this Prospectus is April 25, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
PROSPECTUS SUMMARY.............................................................................3
LIMITED STATE REGISTRATION.....................................................................3
SUMMARY FINANCIAL INFORMATION..................................................................4
RISK FACTORS...................................................................................6
No Operating History or Revenue and Minimal Assets..........................................6
No access to your funds while held in escrow................................................6
Failure of sufficient number of investors to reconfirm investment...........................6
Extremely limited capitalization............................................................6
No transfer of escrowed securities..........................................................7
Speculative Nature of Company's Operations..................................................7
Scarcity of and Competition for Business Opportunities and Combinations.....................7
No Agreement for Business Combination or Other Transaction..................................7
No Standards for Business Combination.......................................................7
Continued Management Control, Limited Time Availability.....................................8
Conflicts of Interest - General.............................................................8
Affiliation With Other "Blank Check" Companies..............................................8
Reporting Requirements May Delay or Preclude Acquisition....................................8
Lack of Market Research or Marketing Organization...........................................8
Lack of Diversification.....................................................................8
International Business Risk.................................................................8
Probable Change in Control and Management...................................................9
Reduction of Percentage Share Ownership Following a Business Combination....................9
Disadvantages of Blank Check Offering.......................................................9
Absence of Trading Market...................................................................9
Limitations on Share Resale.................................................................9
No Underwriter..............................................................................9
"Penny" Stock Regulation of Broker-Dealer Sales of Company Securities.......................9
Taxation...................................................................................10
Requirement of Audited Financial Statements May Disqualify Business Opportunities..........10
YOUR RIGHTS AND SUBSTANTIVE PROTECTION UNDER RULE 419.........................................10
DILUTION......................................................................................12
USE OF PROCEEDS...............................................................................13
CAPITALIZATION................................................................................14
DESCRIPTION OF BUSINESS.......................................................................14
PLAN OF OPERATION.............................................................................15
DESCRIPTION OF PROPERTY.......................................................................20
PRINCIPAL SHAREHOLDERS........................................................................20
MANAGEMENT....................................................................................21
EXECUTIVE COMPENSATION........................................................................22
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................................................23
LEGAL PROCEEDINGS.............................................................................23
MARKET FOR OUR COMMON STOCK...................................................................23
DESCRIPTION OF SECURITIES.....................................................................25
SHARES ELIGIBLE FOR FUTURE RESALE.............................................................26
WHERE CAN YOU FIND MORE INFORMATION?..........................................................26
REPORTS TO STOCKHOLDERS.......................................................................27
PLAN OF DISTRIBUTION..........................................................................27
LEGAL MATTERS.................................................................................29
EXPERTS.......................................................................................30
INDEMNIFICATION OF OFFICERS AND DIRECTORS.....................................................30
FINANCIAL STATEMENTS..........................................................................30
</TABLE>
Until 90 days after the date when the funds and securities are released from the
escrow account, all dealers effecting transactions in the shares, whether or not
participating in this distribution, may be required to deliver a prospectus.
This is in addition to the obligation of dealers to deliver a prospectus when
acting as underwriters to their unsold allotments or subscriptions.
2
<PAGE>
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus.
Because this is a summary, it may not contain all of the information that you
should consider before receiving a distribution of our common stock. You should
read this entire prospectus carefully.
Lions Gate Investment Limited
We are a blank check company subject to Rule 419. We were organized as a vehicle
to acquire or merge with another business or company. We have no present plans,
proposals, agreements, arrangements or understandings to acquire or merge with
any specific business or company nor have we identified any specific business or
company for investigation and evaluation for a merger with us. Since our
organization, our activities have been limited to the sale of initial shares for
our organization and our preparation in producing a prospectus for our initial
public offering. We will not engage in any substantive commercial business
following the offering. We maintain our office at Suite 2901, 1201 Marinaside
Crescent, Vancouver, British Columbia, V6Z 2V2. Our phone number is
(604)681-9588.
The Offering
<TABLE>
<S> <C>
Securities offered by the Company: 100,000 shares of common stock, $0.001 par value,
being offered at $1.00 per share. (See "Description of
Capital Stock.")
Common stock outstanding prior to the offering: 4,700,000 shares
Common stock to be outstanding after the 4,800,000 shares
offering:
Shares Offered by Selling Stockholders: The 4,700,000 shares offered by the Selling Stockholders have
already been issued by us.
Use of proceeds from sales by Selling We will not receive any of the proceeds from the sale of shares
Stockholders: by Selling Stockholders.
</TABLE>
LIMITED STATE REGISTRATION
Initially, our securities may be sold in __________________________ only
(although we are considering registering the shares in other states) pursuant to
an exemption from registration provisions contained in Section _____, ________
Codes. See "Risk Factors" for a discussion of the resale limitations that result
from this limited state registration.
3
<PAGE>
SUMMARY FINANCIAL INFORMATION
The table below contains certain summary historical financial data. The
historical financial data for the four months fiscal period from inception to
February 29, 2000 have been derived from our audited financial statements which
are contained in this Prospectus.
February 29, 2000
INCOME STATEMENT:
<TABLE>
<CAPTION>
Four Month Period
from inception to
February 29, 2000
(Audited)
<S> <C>
Revenue $0.00
Expenses $3,713.00
Net Income (loss) $(3,713.00)
Basic Earnings (loss) per share $(0.01)
Basic Number of Common Shares Outstanding 4,700,000
BALANCE SHEET (at end of period)
Total Assets $2,487.00
Total Liabilities $1,500.00
Total Shareholders Equity (Net Assets) $987.00
Net Income per share on a fully diluted basis $(0.01)
</TABLE>
Expiration Date
This offering will expire 12 months from the date of this prospectus. There is
no minimum number of securities that must be sold in the offering. The offering
may be extended for an additional 90 days in our discretion.
Prescribed Acquisition Criteria
Rule 419 requires that, before the cash and shares can be released, the Company
must sign an agreement to acquire a business meeting certain specified criteria.
The agreement must provide for the acquisition of a business or assets for which
the fair value of the business represents at least 80% of the maximum offering
proceeds. The agreement must include a requirement that the number of investors
representing 80% of the maximum offering proceeds must elect to reconfirm their
investment. For purposes of the offering, the fair value of the business or
assets to be acquired must be at least $80,000 (80% of $100,000).
Post-Effective Amendment
Once the agreement governing the acquisition of a business meeting the required
criteria has been signed, Rule 419 requires us to update the registration
statement with a post-effective amendment. The post-effective amendment must
contain information about the business to be purchased including audited
financial statements, the results of this offering and the use of the money
disbursed from the escrow account. The post-effective amendment must also
include the terms of the reconfirmation offer required by Rule 419. The
reconfirmation offer must include
4
<PAGE>
certain prescribed conditions that must be satisfied before the cash and shares
can be released from escrow.
Reconfirmation Offering
The reconfirmation offer must start after the effective date of the
post-effective amendment. Under Rule 419, the terms of the reconfirmation offer
must include the following conditions:
The prospectus contained in the post-effective amendment will be sent to
each investor whose shares are held in the escrow account within 5 business
days after the effective date of the post-effective amendment.
Each investor will have no fewer than 20 and no more than 45 business days
from the effective date of the post-effective amendment to notify us in
writing that the investor elects to remain an investor.
If we do not receive written notification from any investor within 45
business days following the effective date, the proportionate portion of
the funds and any related interest or dividends held in the escrow account
on the investor's behalf will be returned to the investor within 5 business
days by first class mail or other equally prompt means.
The acquisition will be closed only if a minimum number of investors
representing 80% of the maximum offering proceeds equaling $80,000 elect to
reconfirm their investment.
If a closed acquisition has not occurred by ______________ (18 months from
the date of this prospectus), the funds held in the escrow account will be
returned to all investors on a proportionate basis within 5 business days
by first class mail or other equally prompt means.
Release Of Securities And Funds
The cash will be released to us, and the shares will be released to you, only
after:
The escrow agent has received a signed representation from us and any other
evidence acceptable by the escrow agent that:
We have signed an agreement for the acquisition of a business whose fair
market value represents at least 80% of the maximum offering proceeds and
has filed the required post-effective amendment.
The post-effective amendment has been declared effective.
We have satisfied all of the prescribed conditions of the reconfirmation
offer.
The closing of the acquisition of the business with a fair value of at
least 80% of the maximum proceeds.
5
<PAGE>
Determination of Offering Price
The offering price of $1.00 per share for the shares has been arbitrarily
determined by us. This price bears no relation to our assets, book value, or any
other customary investment criteria, including our prior operating history.
Among factors considered by us in determining the offering price were:
Estimates of our business potential
Our limited financial resources
The amount of equity desired to be retained by present shareholders The
amount of dilution to the public The general condition of the securities
markets
RISK FACTORS
Our business is subject to numerous risk factors, including the following:
No Operating History or Revenue and Minimal Assets.
We have had no recent operating history nor any revenues or earnings from
operations since our incorporation. We have no significant assets or financial
resources. We will sustain operating expenses without revenues, at least until
we complete a business acquisition. This may result in our incurring an
operating loss that will increase continuously until we can acquire a profitable
business. We cannot assure you that we can identify a suitable business
opportunity.
No access to your funds while held in escrow.
If we are unable to locate an acquisition candidate, you will have to wait 18
months from the date of this prospectus before a proportionate portion of your
funds are returned, without interest. You will be offered return of your
proportionate portion of the funds held in escrow only upon the reconfirmation
offering required to be conducted upon signing of an agreement to acquire an
acquisition candidate that represents 80% of the maximum offering proceeds
Failure of sufficient number of investors to reconfirm investment.
A business combination with an acquisition candidate cannot be closed unless,
after the reconfirmation offering required by Rule 419, investors representing
80% of the maximum offering proceeds elect to reconfirm their investment. If,
after completion of the reconfirmation offering, a sufficient number of
investors do not reconfirm their investment, the business combination will not
be closed. If so, none of the shares held in escrow will be issued and the cash
will be returned to you on a proportionate basis without interest.
Extremely limited capitalization.
As of February 29, 2000, there were $2,487 assets and $1,500 in liabilities.
There was $987 available in our treasury as of February 29, 2000. Assuming the
sale of all the shares in this offering, we will receive net proceeds of
approximately $100,000, all of which must be deposited in the escrow account. It
is unlikely that we will need additional funds, but we may if an acquisition
candidate insists we obtain additional capital. We may require additional
financing in the future in order to close a business combination. This financing
may consist of the issuance of debt or equity securities. These funds might not
be available, if needed, or might not be available on terms acceptable to us.
6
<PAGE>
No transfer of escrowed securities.
No transfer or other disposition of the escrowed securities is permitted other
than by will or the laws of descent and distribution, or under a qualified
domestic relations order as defined by the Internal Revenue Code of 1986 as
amended, or Title 7 of the Employee Retirement Income Security Act, or the
related rules. Under Rule 15g-8, it is unlawful for any person to sell or offer
to sell the securities or any interest in the securities held in the Rule 419
escrow account other than under a qualified domestic relations order in divorce
proceedings. Any and all contracts for sale to be satisfied by delivery of the
securities and sales of derivative securities to be settled by delivery of the
securities are prohibited. You are further prohibited from selling any interest
in the securities or any derivative securities whether or not physical delivery
is required.
Speculative Nature of Company's Operations.
The success of our plan of operation will depend to a great extent on the
operations, financial condition and management of the identified business
opportunity. While management intends to seek business combination(s) with
entities having established operating histories, we cannot assure you that we
will be successful in locating candidates meeting that criteria. In the event we
complete a business combination, the success of our operations may be dependent
upon management of the successor firm or venture partner firm and numerous other
factors beyond our control.
Scarcity of and Competition for Business Opportunities and Combinations.
The Company is and will continue to be an insignificant participant in the
business of seeking mergers with, joint ventures with and acquisitions of small
private and public entities. A large number of established and well-financed
entities, including venture capital firms, are active in mergers and
acquisitions of companies that may be desirable target candidates for us. Nearly
all these entities have significantly greater financial resources, technical
expertise and managerial capabilities than we do and, consequently, we will be
at a competitive disadvantage in identifying possible business opportunities and
successfully completing a business combination. We will also compete in seeking
merger or acquisition candidates with numerous other small public companies.
No Agreement for Business Combination or Other Transaction.
We have no arrangement, agreement or understanding to engage in a merger, joint
venture or acquisition of a private or public entity. No assurances can be given
that we will successfully identify and evaluate suitable business opportunities
or that we will conclude a business combination. Management has not identified
any particular industry or specific business within an industry for evaluation.
We cannot guarantee that we will be able to negotiate a business combination on
favorable terms.
No Standards for Business Combination.
We have not established an operating history or earnings, assets, net worth or
other criteria that we will require a target business opportunity to have
achieved. Accordingly, we may enter into a business combination with a business
opportunity having no significant operating history, losses, limited or no
potential for earnings, limited assets, negative net worth or other
characteristics that are indicative of development stage companies.
7
<PAGE>
Continued Management Control, Limited Time Availability.
While seeking a business combination, management anticipates devoting no more
than ten hours per month. None of our officers have entered into a written
employment agreements with us. We have not obtained key man life insurance on
any of our officers or directors. The loss of the services of any of these
individuals would adversely affect development of our business and its
likelihood of continuing operations. See "Management."
Conflicts of Interest - General.
Our officers and directors may participate in business ventures that could
compete directly with us. Additional conflicts of interest and non-arms length
transactions may also arise in the event our officers or directors are involved
in the management of any firm with which we transact business. Management has
adopted a policy that we will not seek a merger with, or acquisition of, any
entity in which management serves as officers, directors or partners, or in
which they or their family members own or hold any direct or indirect ownership.
Affiliation With Other "Blank Check" Companies.
Our officers and directors may be affiliated with other "blank check" companies.
In the event that management identifies a candidate for a business combination,
and the candidate expresses no preference for a particular company, management
may enter into a business combination with another blank check company.
Reporting Requirements May Delay or Preclude Acquisition.
Sections 13 and 15(d) of the '34 Act require reporting companies to provide
certain information about significant acquisitions, including certified
financial statements for the company acquired, covering one, two, or three
years, depending on the relative size of the acquisition. The time and
additional costs that may be incurred by some target entities to prepare these
statements may significantly delay or prevent consummation of an acquisition.
Acquisition prospects that are unable to obtain the required audited statements
may be inappropriate for acquisition.
Lack of Market Research or Marketing Organization.
We have not conducted market research indicating that market demand exists for
the transactions we contemplate. We do not have, and do not plan to establish, a
marketing organization. Even if demand is identified for a merger or
acquisition, we cannot assure you that we will be successful in completing a
business combination.
Lack of Diversification.
Our inability to diversify our activities into a number of areas may subject us
to economic fluctuations within a particular business or industry and therefore
increase the risks associated with our operations.
International Business Risk.
If we enter into a business combination with foreign business, we will be
subject to risks inherent in business operations outside of the United States.
These risks include, for example, currency fluctuations, regulatory problems,
punitive tariffs, unstable local tax policies, trade embargoes, risks related to
shipment of raw materials and finished goods across national borders and
cultural and language differences. Foreign economies may differ favorably or
unfavorably from the United States economy in growth of gross national product,
rate of inflation, market development, rate of savings, capital investment and
in other respects.
8
<PAGE>
Probable Change in Control and Management.
A business combination involving the issuance of our common stock may result in
shareholders of a private company obtaining a controlling interest in the
Company. If that occurs, management may be required to sell or transfer all or a
portion of the Company's common stock held by them, or resign as members of the
Board of Directors of the Company. The change in control could result in removal
of one or more present officers and directors and a corresponding reduction in
or elimination of their participation in our future affairs.
Reduction of Percentage Share Ownership Following a Business Combination.
Our primary plan of operation is based upon a business combination with a
private business that may result in the issuance of our securities to the
shareholders of the private company. The issuance of previously authorized and
unissued common stock would result in reduction in percentage of shares owned by
shareholders of the Company and may result in a change in control or management.
Disadvantages of Blank Check Offering.
We may enter into a business combination with a company that desires to
establish a public trading market for its shares. A business opportunity may
attempt to avoid what it deems to be adverse consequences of undertaking its own
public offering by seeking a business combination with us. The consequences may
include time delays of the registration process, significant expenses to be
incurred in the offering, loss of voting control to public shareholders and the
inability or unwillingness to comply with various federal and state laws enacted
for the protection of investors.
Absence of Trading Market.
There currently is no trading market for our stock and a trading market may not
develop.
Limitations on Share Resale.
Initially, our securities may be sold in the State of _______ only (although we
are considering registering the shares in other states), and may be resold by
you in ____________________ only until a resale exemption is available in other
states.
No Underwriter.
We are selling the shares through our President without the use of a
professional securities underwriting firm. Consequently, there may be less due
diligence performed in conjunction with this offering than would be performed in
an underwritten offering.
"Penny" Stock Regulation of Broker-Dealer Sales of Company Securities.
For transactions covered by Rule 15g-9 under the '34 Act, a broker-dealer must
furnish all investors in penny stocks with a risk disclosure document required
by the rule, make a special suitability determination of the purchaser and have
received the purchaser's written agreement to the transaction before the sale.
In order to approve a person's account for transactions in penny stock, the
broker or dealer must (i) obtain information concerning the person's financial
situation, investment experience and investment objectives; (ii) reasonably
determine, based on the information required by paragraph (i) that transactions
in penny stock are suitable for the person and that the person has sufficient
knowledge and experience in financial matters that the person reasonably may be
expected to be capable of evaluating the rights of transactions in penny stock;
9
<PAGE>
and (iii) deliver to the person a written statement describing the basis on
which the broker or dealer made the determination required by paragraph (ii) in
this section, stating in a highlighted format that it is unlawful for the broker
or dealer to effect a transaction in a designated security subject to the
provisions of paragraph (ii) of this section unless the broker or dealer has
received, before the transaction, a written agreement to the transaction from
the person; and stating in a highlighted format immediately preceding the
customer signature line that the broker or dealer is required to provide the
person with the written statement and the person should not sign and return the
written statement to the broker or dealer if it does not accurately reflect the
person's financial situation, investment experience and investment objectives
and obtain from the person a manually signed and dated copy of the written
statement.
A penny stock means any equity security other than a security (i) registered, or
approved for registration upon notice of issuance on a national securities
exchange that makes transaction reports available pursuant to 17 CFR 11Aa3-1
(ii) authorized or approved for authorization upon notice of issuance, for
quotation on the Nasdaq NMS; (iii) that has a price of five dollars or more or .
. . . (iv) whose issuer has net tangible assets in excess of $2,000,000
demonstrated by financial statements dated less than fifteen months previously
that the broker or dealer has reviewed and has a reasonable basis to believe are
true and complete in relation to the date of the transaction with the person.
The rule may affect the ability of broker-dealers to sell the Company's
securities.
Taxation.
Federal and state tax consequences may be major considerations in any business
combination we undertake. Currently, a transaction may be structured to result
in tax-free treatment to both companies, as prescribed by various federal and
state tax provisions. We intend to structure any business combination to
minimize the federal and state tax consequences to both the Company and the
target entity; however, we cannot guarantee that the business combination will
meet the statutory requirements of a tax-free reorganization or that the parties
will obtain the intended tax-free treatment upon a transfer of stock or assets.
A non-qualifying reorganization could result in the imposition of both federal
and state taxes that may have an adverse effect on both parties to the
transaction.
Requirement of Audited Financial Statements May Disqualify Business
Opportunities.
Management believes that any potential business opportunity must provide audited
financial statements for review for the protection of all parties to the
business combination. One or more attractive business opportunities may choose
to forego the possibility of a business combination with us, rather than incur
the expenses associated with preparing audited financial statements.
YOUR RIGHTS AND SUBSTANTIVE PROTECTION UNDER RULE 419
DEPOSIT OF OFFERING PROCEEDS AND SECURITIES
Rule 419 requires that offering proceeds, after deduction for underwriting
commissions, underwriting expenses and dealer allowances, if any, and the
securities purchased by you and other investors in this offering, be deposited
into an escrow or trust account governed by an agreement that contains certain
terms and provisions specified by Rule 419. Under Rule 419, the funds will be
released to us and the securities will be released to you only after we have met
the following three basic conditions:
10
<PAGE>
First, we must sign an agreement for an acquisition of a business or asset that
will constitute our business and for which the fair value of the business or net
assets to be acquired represents at least 80% of the maximum offering proceeds,
but excluding underwriting commissions, underwriting expenses and dealer
allowances, if any.
Second, we must file a post-effective amendment to the registration statement
that includes the results of this offering including, but not limited to, the
gross offering proceeds raised to date, the amounts paid for underwriting
commissions, underwriting expenses and dealer allowances, if any, amounts
dispersed to us and amounts remaining in the escrow account. In addition, we
must disclose the specific amount, use and appropriation of funds disbursed to
us to date, including, payments to officers, directors, controlling shareholders
or affiliates, specifying the amounts and purposes of these payments, and the
terms of a reconfirmation offer that must contain conditions prescribed by the
rules. The post-effective amendment must also contain information regarding the
acquisition candidate and business, including audited financial statements.
Third, we will mail to each investor within five business days of a
post-effective amendment, a copy of the prospectus. The Reconfirmation Offering
shall be made as described under "Prospectus Summary; Reconfirmation Offering. "
After we submit a signed representation to the escrow agent that the
requirements of Rule 419 have been met and after the acquisition is closed, the
escrow agent can release the cash and shares.
Accordingly, we have entered into an escrow agreement with The Nevada Agency and
Trust Company which provides that:
The proceeds are to be deposited into the escrow account maintained by the
escrow agent promptly upon receipt. While Rule 419 permits 10% of the funds
to be released to us prior to the reconfirmation offering, we do not intend
to release these funds. The funds and any dividends or interest thereon, if
any, are to be held for the sole benefit of the investor and can only be
invested in bank deposit, in money market mutual funds, Canadian government
or federal government securities or securities for which the principal or
interest is guaranteed by the Canadian government or federal government.
All securities issued for the offering and any other securities issued,
including stock splits, stock dividends or similar rights are to be
deposited directly into the escrow account upon issuance. Your name must be
included on the stock certificates or other documents evidencing the
securities. The securities held in the escrow account are to remain as
issued, and are to be held for your sole benefit. You retain the voting
rights, if any, to the securities held in your name. The securities held in
the escrow account may neither be transferred or disposed of nor any
interest created in them other than by will or the laws of descent and
distribution, or under a qualified domestic relations order as defined by
the Internal Revenue Code of 1986 or Table 1 of the Employee Retirement
Income Security Act.
Warrants, convertible securities or other derivative securities relating to
securities held in the escrow account may be exercised or converted in
accordance with their terms, provided that, however, the securities
received upon exercise or conversion, together with
11
<PAGE>
any cash or other consideration paid for the exercise or conversion, are to
be promptly deposited into the escrow account.
DILUTION
The difference between the initial public offering price per share of common
stock and the net tangible book value per share after this offering constitutes
the dilution to investors in this offering. Net tangible book value per share of
common stock is determined by dividing our net tangible book value (total
tangible assets less total liabilities) by the number of shares of common stock
outstanding.
As of February 29, 2000, our net tangible book value was $987 or $0.0002 per
share of common stock. Net tangible book value represents the amount of our
total assets, less any intangible assets and total liabilities. After giving
effect to the sale of the 100,000 shares of common stock offered through this
prospectus (at an initial public offering price of $1.00 per share), and after
deducting estimated expenses of the offering), our adjusted pro forma net
tangible book value as of February 29, 2000, would have been $100,987 or $0.0210
per share. This represents an immediate increase in net tangible book value of
$0.0208 per share to existing shareholders and an immediate dilution of $0.979
per share to investors in this offering. The following table illustrates this
per share dilution:
<TABLE>
<S> <C>
Public offering price per share $1.00
Net tangible book value per share before offering $0.0002
Increase per share attributable to new investors $0.0208
-------
Dilution per share to new investors $0.979
======
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES BEFORE MONEY RECEIVED FOR SHARES NET TANGIBLE BOOK VALUE PER
OFFERING BEFORE OFFERING SHARE BEFORE OFFERING
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
4,700,000 2,450.00 0.0002
- ------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES AFTER TOTAL AMOUNT OF MONEY PRO-FORMA NET TANGIBLE BOOK
OFFERING RECEIVED FOR SHARES VALUE PER SHARE AFTER OFFERING
- ------------------------------------------------------------------------------------------------------------
4,800,000 102,450.00 0.0210
- ------------------------------------------------------------------------------------------------------------
</TABLE>
As of the date of this prospectus, the following table sets forth the percentage
of equity to be purchased by investors in this offering compared to the
percentage of equity to be owned by the present stockholders, and the
comparative amounts paid for the shares by the investors in this offering as
compared to the total consideration paid by our present stockholders.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE PRICE
- ----------------------------------------------------------------------------------------------------------------
NUMBER PERCENT AMOUNT PERCENT PAID PER SHARE
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
New Investors 100,000 2% $100,000.00 98% $1.00
- ----------------------------------------------------------------------------------------------------------------
Existing Shareholders 4,700,000 98% $2,450.00 2% $0.001
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
USE OF PROCEEDS
The gross proceeds of this offering will be $100,000. While Rule 419 permits 10%
of the funds ($10,000) to be released from escrow to us, we do not intend to
request release of these funds. This offering is not contingent on a minimum
member of shares to be sold and will be sold on a first come, first served
basis. If subscriptions exceed the amount being offered, these excess
subscriptions will be promptly refunded without deductions for commissions or
expenses. Accordingly, we will receive these funds in the event a business
combination is closed in accordance with Rule 419.
We have not incurred and do not intend to incur in the future any debt from
anyone other than management for our organizational activities. Debt to
management will not be repaid. Management is not aware of any circumstances that
would change this policy. Accordingly, no portion of the proceeds are being used
to repay debt. It is anticipated that management will pay the expenses of the
offering, estimated to be $10,000.
Under Rule 419, after the reconfirmation offering and the closing of the
business combination, and assuming the sale of all the shares in this offering,
$100,000, plus any dividends received, but less any amount returned to investors
who did not reconfirm their investment under Rule 419, will be released to us.
<TABLE>
<CAPTION>
ASSUMING MAXIMUM OFFERING
--------------------------------
AMOUNT PERCENT
------ -------
<S> <C> <C>
Offering Expenses (1) $10,000 10%
Working Capital $90,000 90%
Total (3) $100,000 100%
</TABLE>
(1) Offering costs include filing, printing, legal, accounting, transfer agent
and escrow agent fees.
If less than the maximum proceeds are raised, a greater portion of this accrued
liability will have to be borne by the acquisition candidate as a condition of
the merger. Management believes that this is in our best interest, because it
reduces the amount of liabilities an acquisition candidate must assume in the
merger, and thus, may facilitate an acquisition transaction.
(3) All offering proceeds will be held in escrow pending a business
combination. We will not request a release of 10% of these funds under Rule
419.
The proceeds received in this offering will be put into the escrow account
pending closing of a business combination and reconfirmation. These funds will
be in an insured bank account in either a certificate of deposit, interest
bearing savings account or in short term Canadian or federal government
securities as placed by __________________________.
We will not receive any of the proceeds from the sale of the common stock being
offered by the Selling Stockholders.
13
<PAGE>
CAPITALIZATION
The following table sets forth our capitalization as of February 29, 2000, and
pro-forma as adjusted to give close to the sale of 100,000 shares offered by us.
<TABLE>
<CAPTION>
ACTUAL AS ADJUSTED
-------- -----------
<S> <C> <C>
Stockholders' Equity:
Common stock, $0.0001 par value;
Authorized 100,000,000 shares,
Issued and outstanding
4,700,000 shares and 4,800,000 shares, pro-forma as $470 480
adjusted
Additional paid-in capital 4,230 104,220
Deficit accumulated during the development period (3,713) (3,713)
Total stockholders equity 987 100,987
Total Capitalization 987 100,987
</TABLE>
DESCRIPTION OF BUSINESS
Lions Gate Investment Limited (referred to as "us," "we" or "our"), was
incorporated on October 29, 1999 under the laws of the State of Nevada to engage
in any lawful corporate purpose. Other than issuing shares to its shareholders,
we never commenced any other operational activities. We can be defined as a
"blank check" company, whose sole purpose at this time is to locate and
consummate a merger or acquisition with a private entity. The Board of Directors
has elected to commence implementation of our principal business purpose,
described below under "Plan of Operation."
The proposed business activities classifies us as a "blank check" company. The
Securities and Exchange Commission defines these companies as "any development
stage company that is issuing a penny stock (within the meaning of section 3
(a)(51) of the Securities Exchange Act of 1934) and that has no specific
business plan or purpose, or has indicated that its business plan is to merge
with an unidentified company or companies." Many states have enacted statutes,
rules and regulations limiting the sale of securities of "blank check" companies
in their respective jurisdictions. Management does not intend to undertake any
efforts to cause a market to develop in our securities, either debt or equity,
until we have successfully implemented our business plan. We intend to comply
with the periodic reporting requirements of the Securities Exchange Act of 1934
for so long as it is subject to those requirements.
Investment Company Act of 1940
Although we will be subject to regulation under the Securities Act of 1933, as
amended (the "'33 Act"), and the Securities Exchange Act of 1934, as amended
(the "'34 Act"), management believes we will not be subject to regulation under
the Investment Company Act of 1940, as amended (the "'40 Act"), since we will
not be engaged in the business of investing or trading in
14
<PAGE>
securities. In the event we engage in business combinations that result in our
holding passive investment interests in a number of entities, we could be
subject to regulation under the '40 Act. If that occurs, we would be required to
register as an investment company and could be expected to incur significant
registration and compliance costs. We have obtained no formal determination from
the Securities and Exchange Commission as to our status under the '40 Act and,
consequently, a violation of the Act could subject us to material adverse
consequences.
Investment Advisors Act of 1940
Under Section 202(a)(11) of the Investment Advisors Act of 1940, as amended, an
"investment adviser" means any person who, for compensation, engages in the
business of advising others, either directly or through publications or
writings, as to the value of securities or as to the advisability of investing
in, purchasing, or selling securities, or who, for compensation and as part of a
regular business, issues analyses or reports concerning securities. We seek to
locate a suitable business candidate, and we do not intend to engage in the
business of advising others in investment matters for a fee or other type of
consideration.
Dissenter's Rights
The Nevada Revised Statutes ("NRS") ss. 78.3793 require that on the 10th day
following the acquisition of a controlling interest by an acquiring person, if
the control shares are accorded full voting rights pursuant to NRS ss.ss. 78.378
to 78.3793, inclusive, and the acquiring person has acquired a majority interest
of the voting shares, any stockholder of record, other than the acquiring
person, who has not voted in favor of authorizing voting rights for the control
shares is entitled to demand payment for the fair value of his shares by making
a written demand.
Forward Looking Statements
We caution readers regarding forward looking statements found in the following
discussion and elsewhere in this registration statement and in any other
statement made by, or on our behalf, whether or not in future filings with the
Securities and Exchange Commission. Forward looking statements are statements
not based on historical information and relate to future operations, strategies,
financial results or other developments. Forward looking statements are based
upon estimates and assumptions that are inherently subject to significant
business, economic and competitive uncertainties and contingencies, many of
which are beyond our control and many of which are subject to change. These
uncertainties and contingencies can affect actual results and could cause actual
results to differ materially from those expressed in any forward looking
statements made on our behalf. We disclaim any obligation to update forward
looking statements. Readers should also understand that under Section
27A(b)(2)(D) of the '33 Act, and Section 21E(b)(2)(D) of the '34 Act do not
apply to statements made in connection with an initial public offering.
PLAN OF OPERATION
We seek to acquire assets or shares of a business that generates revenues, in
exchange for its securities. We have not identified a particular acquisition
target and have not entered into any negotiations regarding an acquisition. As
soon as this registration statement becomes effective under Section 12 of the
'34 Act, we intend to contact investment bankers, corporate financial
15
<PAGE>
analysts, attorneys and other investment industry professionals through various
media. None of our officers, directors, promoters or affiliates have engaged in
any preliminary contact or discussions with any representative of any other
company regarding the possibility of an acquisition or merger with us as of the
date of this registration statement.
Depending upon the nature of the relevant business opportunity and the
applicable state statutes governing how the transaction is structured, the
Company's Board of Directors expects that it will provide our shareholders with
complete disclosure documentation concerning a potential business opportunity
and the structure of the proposed business combination prior to consummation.
Disclosure is expected to be in the form of a proxy or information statement, in
addition to the post-effective amendment.
While any disclosure must include audited financial statements of the target
entity, we cannot assure you that such audited financial statements will be
available. As part of the negotiation process, the Board of Directors does
intend to obtain certain assurances of value, including statements of assets and
liabilities, material contracts, accounts receivable statements, or other
indicia of the target entity's condition prior to consummating a transaction.
Closing documents will include representations that the value of the assets
transferred will not materially differ from the representations included in the
closing documents, or the transaction will be voidable.
We will remain a shell corporation until a merger or acquisition candidate is
identified. It is anticipated that our cash requirements will be minimal, and
that all necessary capital, to the extent required, will be provided by the
directors or officers. We do not anticipate that we will have to raise capital
in the next twelve months. We also do not expect to acquire any plant or
significant equipment.
We have no full time employees. Our President and Secretary has agreed to
allocate a portion of his time to our activities, without compensation. This
officer anticipates that our business plan can be implemented by his devoting
approximately ten (10) hours each per month to our business affairs and,
consequently, conflicts of interest may arise with respect to their limited time
commitment. We do not expect any significant changes in the number of employees.
See "Management."
Our officers and directors may become involved with other companies who have a
business purpose similar to ours. As a result, potential conflicts of interest
may arise in the future.
General Business Plan
Our purpose is to acquire an interest in business opportunities presented by
persons or firms that seek the perceived advantages of an Exchange Act
registered corporation. We will not restrict our search to any specific
business, industry, or geographical location and we may participate in a
business venture of virtually any kind or nature. This discussion of the
proposed business is general and is not meant to restrict our discretion to
search for and enter into potential business opportunities. Management
anticipates that it may be able to participate in only one potential business
venture because we have nominal assets and limited financial resources. See the
financial statements at page F-1 of this prospectus. This lack of
diversification should be considered a substantial risk to our shareholders.
16
<PAGE>
We may seek a business opportunity with companies that have recently commenced
operations, or that wish to utilize the public marketplace in order to raise
additional capital in order to expand into new products or markets, to develop a
new product or service, or for other corporate purposes. We may acquire assets
and establish wholly owned subsidiaries in various businesses or acquire
existing businesses as subsidiaries.
We anticipate that the selection of a business opportunity will be complex and
extremely risky. Due to general economic conditions, rapid technological
advances being made in some industries and shortages of available capital,
management believes that there are numerous firms seeking the perceived benefits
of a publicly registered corporation. The perceived benefits may include
facilitating or improving the terms for additional equity financing that may be
sought, providing liquidity for incentive stock options or similar benefits to
key employees, providing liquidity (subject to restrictions of applicable
statutes) for all shareholders and other factors. Business opportunities may
occur in many different industries and at various stages of development, all of
which will make the task of comparative investigation and analysis of these
business opportunities extremely difficult and complex.
We have, and will continue to have, no capital to provide to the owners of
business opportunities. However, management believes we will be able to offer
owners of acquisition candidates the opportunity to acquire a controlling
ownership interest in a publicly registered company without incurring the cost
and time required to conduct an initial public offering. The owners of the
business opportunities will, however, incur significant legal and accounting
costs in connection with acquisition of a business opportunity, including the
costs of preparing Form 8-K's, 10-K's or 10-KSBs, 10-Q's or 10-QSBs, agreements
and related reports and documents. The '34 Act specifically requires that any
merger or acquisition candidate comply with all applicable reporting
requirements, which include providing audited financial statements to be
included within the numerous filings relevant to complying with the '34 Act.
Nevertheless, the officers and directors of the Company have not conducted
market research and are not aware of statistical data that would support the
perceived benefits of a merger or acquisition transaction for the owners of a
business opportunity.
The analysis of new business opportunities will be undertaken by our officers
and directors, none of whom is a professional business analyst. Management
intends to concentrate on identifying preliminary prospective business
opportunities that may be brought to our attention through present associations
of our officers and directors, or by our shareholders. In analyzing prospective
business opportunities, management will consider:
* the 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;
17
<PAGE>
* the quality and experience of management services that 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 could be
anticipated to impact our proposed activities;
* the potential for growth or expansion;
* the potential for profit;
* the perceived public recognition of acceptance of products, services,
or trades;
* name identification; and
* other relevant factors.
Our officers and directors expect to meet personally with management and key
personnel of the business opportunity as part of their "due diligence"
investigation. To the extent possible, the Company intends to utilize written
reports and personal investigations to evaluate businesses. We will not acquire
or merge with any company that cannot provide audited financial statements
within a reasonable period of time after closing of the proposed transaction.
Our management will rely upon their own efforts and, to a much lesser extent,
the efforts of our shareholders, in accomplishing our business purposes. We do
not anticipate that any outside consultants or advisors, except for our legal
counsel and accountants, will be utilized by us to accomplish our business
purposes. However, if we do retain an outside consultant or advisor, any cash
fee will be paid by the prospective merger/acquisition candidate, as we have no
cash assets. We have no contracts or agreements with any outside consultants and
none are contemplated.
We will not restrict our search for any specific kind of firms, and may acquire
a venture that is in its preliminary or development stage or is already
operating. We cannot predict the status of any business in which we may become
engaged, because the business may need to seek additional capital, may desire to
have its shares publicly traded, or may seek other perceived advantages that we
may offer. Furthermore, we do not intend to seek capital to finance the
operation of any acquired business opportunity until we have successfully
consummated a merger or acquisition.
We anticipate that we will incur nominal expenses in the implementation of our
business plan. Because we have no capital to pay these anticipated expenses,
present management will pay these charges with their personal funds, as interest
free loans, for a minimum of twelve months from the date of this registration
statement. If additional funding is necessary, management and or shareholders
will continue to provide capital or arrange for additional outside funding.
However, the only opportunity that management has to have these loans repaid
will be from a prospective merger or acquisition candidate. Management has no
agreements with us that would impede or prevent consummation of a proposed
transaction. We cannot assure, however, that management will continue to provide
capital indefinitely if a merger candidate cannot be found.
18
<PAGE>
If a merger candidate cannot be found in a reasonable period of time, management
may be required reconsider its business strategy, which could result in our
dissolution.
Acquisition of Opportunities
In implementing a structure for a particular business acquisition, we may become
a party to a merger, consolidation, reorganization, joint venture, or licensing
agreement with another corporation or entity. We may also acquire stock or
assets of an existing business. On the consummation of a transaction, it is
probable that our present management and shareholders will no longer be in
control. In addition, our directors may, as part of the terms of the acquisition
transaction, resign and be replaced by new directors without a vote of our
shareholders. Furthermore, management may negotiate or consent to the purchase
of all or a portion of our stock. Any terms of sale of the shares presently held
by officers and/or directors will be also afforded to all other shareholders on
similar terms and conditions. Any and all sales will only be made in compliance
with the securities laws of the United States and any applicable state.
While the actual terms of a future transaction cannot be predicted, it is
expected that the parties to the business transaction will find it desirable to
avoid the creation of a taxable event and thereby structure the acquisition in a
so-called "tax-free" reorganization under Sections 368(a)(1) or 351 of the
Internal Revenue Code (the "Code"). In order to obtain tax-free treatment under
the Code, it may be necessary for the owners of the acquired business to own 80%
or more of the voting stock of the surviving entity. In that event, the
shareholders of the Company would retain 20% or less of the issued and
outstanding shares of the surviving entity, which would result in significant
dilution in the equity of the shareholders.
As part of the "due diligence" investigation, our officers and directors will
meet personally with management and key personnel, may visit and inspect
material facilities, obtain independent 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. How we will participate in an opportunity
will depend on the nature of the opportunity, the respective needs and desires
of the parties, the management of the target company and our relative
negotiation strength.
Negotiations with target company management are expected to focus on the
percentage of our Company that the target company shareholders would acquire in
exchange for all of their shareholdings in the target company. Depending upon
the target company's assets and liabilities, our shareholders will probably hold
a substantially lesser percentage ownership interest following any merger or
acquisition. Percentage ownership may be subject to significant reduction in the
event we acquire a company with substantial assets. Any merger or acquisition
effected by us can be expected to have a significant dilutive effect on the
percentage of shares held by our remaining shareholders.
We will participate in a business opportunity only after the negotiation and
signing of appropriate written agreements. Although we cannot predict the terms
of the agreements, generally the agreements will require some specific
representations and warranties by all of the parties, will specify certain
events of default, will detail the terms of closing and the conditions that must
be satisfied by each of the parties before and after the closing.
19
<PAGE>
We will not acquire or merge with any entity that cannot provide independent
audited financial statements concurrent with the closing of the proposed
transaction. We are subject to the reporting requirements of the '34 Act.
Included in these requirements is our affirmative duty to file independent
audited financial statements as part of its Form 8-K to be filed with the
Securities and Exchange Commission upon consummation of a merger or acquisition,
as well as our audited financial statements included in our annual report on
Form 10-K (or 10-KSB, as applicable) and quarterly reports on Form 10-Q (or
10-QSB, as applicable). If the audited financial statements are not available at
closing, or if the audited financial statements provided do not conform to the
representations made by the candidate to be acquired in the closing documents,
the closing documents will provide that the proposed transaction will be
voidable at the discretion of our present management. If the transaction is
voided, the agreement will also contain a provision providing for the
acquisition entity to reimburse us for all costs associated with the proposed
transaction.
Competition
We are an insignificant participant among the firms that engage in the
acquisition of business opportunities. There are many established venture
capital and financial concerns that have significantly greater financial and
personnel resources and technical expertise than we do. In view of our extremely
limited financial resources and limited management availability, we will
continue to be at a significant competitive disadvantage compared to our
competitors.
DESCRIPTION OF PROPERTY
We have no properties and at this time have no agreements to acquire any
properties. We intend to acquire assets or a business in exchange for our
securities.
We operate from our offices at Suite 2901, 1201 Marinaside Crescent, Vancouver,
British Columbia, V6Z 2V2, Canada. Space is provided to the Company on a rent
free basis by Mr. Ebert, a director of the Company, and it is anticipated that
this arrangement will remain until we successfully consummate a merger or
acquisition. Management believes that this space will meet our needs for the
foreseeable future.
PRINCIPAL SHAREHOLDERS
The table below lists the beneficial ownership of our voting securities by each
person known by us to be the beneficial owner of more than 5% of our securities,
as well as the securities beneficially owned by all our directors and officers.
Unless specifically indicated, the shareholders listed possess sole voting and
investment power with respect to the shares shown.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER OF BENEFICIAL OWNER OF CLASS
- -------------- ------------------- ------------------- --------
<S> <C> <C> <C>
Common Keith Ebert 2,500,000 shares 53.19%
Suite 2901 Direct Ownership
1201 Marinaside Crescent
Vancouver, B.C.
V6Z 2V2
</TABLE>
20
<PAGE>
The balance of our outstanding common stock is held by 44 persons.
MANAGEMENT
Our director and officer is as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- ---- --------
<S> <C> <C>
Keith Ebert 35 C.E.O., Secretary, Treasurer and Director
</TABLE>
The above listed officer and director will serve until the next annual meeting
of the shareholders or until his death, resignation, retirement, removal, or
disqualification, or until his successors have been duly elected and qualified.
Vacancies in the existing Board of Directors are filled by majority vote of the
remaining Directors. Our officer serves at the will of the Board of Directors.
There are no family relationships between any executive officer and director.
Resumes
Keith Ebert was appointed to his positions on October 30, 1999. He devotes his
time as necessary to our business, which time is expected to be approximately
ten hours per month.
Mr. Ebert is a qualified Mechanical Engineer BA Sc., MECH (UBC) (1987). For the
two years preceding the date of this Registration Statement, Mr. Ebert has been
self employed managing his investment portfolio. From 1995 onwards, Mr. Ebert
was employed as a Vice-President, Corporate Finance with both Marleau, Lemire
Securities Inc. and C.M. Oliver & Co. Ltd. in Vancouver, British Columbia. Mr.
Ebert was responsible for North American West Coast institutional sales in both
posts. Mr. Ebert has diverse corporate finance experience across a broad
spectrum of industries ranging from technology to resource. In addition to being
a qualified mechanical engineer, Mr. Ebert has passed the Canadian Investment
Dealers Association's branch manager's exam and partners, directors and
officers' exam. Mr. Ebert acted as branch manager of C.M. Oliver & Co. Ltd. in
London, England.
Mr. Ebert has no prior experience as an officer or director of a blank check
company, however he does have extensive direct experience in identifying
emerging companies for investment and/or business combinations.
Conflicts of Interest
Members of our management are associated with other firms involved in a range of
business activities. Consequently, there are potential inherent conflicts of
interest in their acting as officers and directors of the Company.
Our officers and directors are now and may in the future become shareholders,
officers or directors of companies that may be formed for the purpose of
engaging in business activities similar to those conducted by us. Accordingly,
additional direct conflicts of interest may arise in the future with respect to
individuals acting on behalf of the Company or other entities. Conflicts of
interest may arise with respect to opportunities that come to the attention of
these
21
<PAGE>
individuals in the performance of their duties. The Company does not have a
right of first refusal to opportunities that come to management's attention.
The officers and directors are, so long as they remain officers or directors,
subject to the restriction that all opportunities contemplated by our plan of
operation that come to their attention, either in the performance of their
duties or in any other manner, will be considered opportunities of, and be made
available to us and the other companies that they are affiliated with on an
equal basis. A breach of this requirement will be a breach of the fiduciary
duties of the officer or director. If we or the companies that the officers and
directors are affiliated with both desire to take advantage of an opportunity,
then those officers and directors would abstain from negotiating and voting upon
the opportunity. However, all directors may still individually take advantage of
opportunities if we should decline to do so. Except as stated above, we have not
adopted any other conflict of interest policy with respect to transactions.
EXECUTIVE COMPENSATION
None of our officers and/or directors have received any compensation. They all
have agreed to act without compensation until authorized by the Board of
Directors, which is not expected to occur until we have generated revenues from
operations. As of the date of this registration statement, we have no funds
available to pay directors. Further, none of the directors are accruing any
compensation pursuant to any agreement with us.
It is possible that, after we successfully complete a merger or acquisition,
that company may employ or retain one or more members of our management for the
purposes of providing services to the surviving entity. Each member of
management has agreed to disclose to the Board of Directors any discussions
concerning possible employment by any entity that proposes to undertake a
transaction with us and further, to abstain from voting on the transaction.
Therefore, as a practical matter, if each member of the Board of Directors is
offered employment in any form from any prospective merger or acquisition
candidate, the proposed transaction will not be approved by the Board of
Directors as a result of the inability of the Board to affirmatively approve the
transaction. The transaction would then be presented to our shareholders for
approval.
It is possible that persons associated with management may refer a prospective
merger or acquisition candidate to us. In the event we complete a transaction
with any entity referred by associates of management, it is possible that the
associate will be compensated for their referral in the form of a finder's fee.
It is anticipated that this fee will be either in the form of restricted common
stock issued by us as part of the terms of the proposed transaction, or will be
in the form of cash consideration. If compensation is in the form of cash,
payment will be tendered by the acquisition or merger candidate, because we have
insufficient cash available. The amount of any finder's fee cannot be determined
as of the date of this registration statement, but is expected to be comparable
to consideration normally paid in like transactions, which range up to ten (10%)
percent of the transaction price. No member of management will receive any
finders fee, either directly or indirectly, as a result of their efforts to
implement our business plan.
No retirement, pension, profit sharing, stock option or insurance programs have
been adopted by the Company for the benefit of its employees.
22
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There have been no related party transactions, or any other transactions or
relationships required to be disclosed pursuant to Item 404 of Regulation S-B.
LEGAL PROCEEDINGS
There is no litigation pending or threatened by or against us.
MARKET FOR OUR COMMON STOCK
There is no trading market for our common stock at present and there has been no
trading market to date. Management has not undertaken any discussions with any
prospective market maker concerning the participation in the aftermarket for the
Company's securities and management does not intend to initiate any discussions
until we have consummated a merger or acquisition. We cannot guarantee that a
trading market will ever develop or if a market does develop, that it will
continue.
Market Price
Our common stock is not quoted at the present time. The Securities and Exchange
Commission has adopted a Rule that established the definition of a "penny
stock," for purposes relevant to us, as any equity security that has a market
price of less than $5.00 per share or with an exercise price of less than $5.00
per share, subject to certain exceptions. For any transaction involving a penny
stock, unless exempt, the rules require: (i) that a broker or dealer approve a
person's account for transactions in penny stocks; and (ii) the broker or dealer
receive from the investor a written agreement to the transaction, setting forth
the identity and quantity of the penny stock to be purchased. In order to
approve a person's account for transactions in penny stocks, the broker or
dealer must (i) obtain financial information and investment experience and
objectives of the person; and (ii) make a reasonable determination that the
transactions in penny stocks are suitable for that person and that person has
sufficient knowledge and experience in financial matters to be capable of
evaluating the risks of transactions in penny stocks. The broker or dealer must
also deliver, prior to any transaction in a penny stock, a disclosure schedule
prepared by the Commission relating to the penny stock market, which, in
highlight form, (i) sets forth the basis on which the broker or dealer made the
suitability determination; and (ii) that the broker or dealer received a signed,
written agreement from the investor prior to the transaction. Disclosure also
has to be made about the risks of investing in penny stock in both public
offering and in secondary trading, and about commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities and the rights and remedies available to an investor in cases of
fraud in penny stock transactions. Finally, monthly statements have to be sent
disclosing recent price information for the penny stock held in the account and
information on the limited market in penny stocks.
Management would prefer to undertake a transaction with a merger or acquisition
candidate which will allow our securities to be traded without penny stock
limitations. However, we cannot predict whether, upon a successful merger or
acquisition, we will qualify our securities for listing on Nasdaq or some other
national exchange, or be able to maintain the maintenance criteria necessary to
insure continued listing.
23
<PAGE>
Escrow
The common stock under this offering will remain in escrow until our closing of
a business combination under the requirements of Rule 419. There are currently
45 holders of our outstanding common stock. The outstanding common stock was
sold in reliance upon an exemption from registration contained in Section 4(2)
of the Securities Act. Assuming our officer, director, current shareholders and
any of their affiliates or associates purchase 80% of the shares in this
offering, although this is not their current intention, current shareholders
will own 96.67% of the outstanding shares upon completion of the offering.
Holders
There are forty five (45) holders of our common stock. In October, 1999, we
issued 2,450,000 shares for cash and 2,250,000 shares for services in formation
and organization valued at $0.001 per share ($2,250.00). All of our issued and
outstanding shares of common stock were issued in accordance with the exemption
from registration afforded by Section 4(2) of the Securities Act of 1933.
The following table shows the number of shares of our common stock which may be
offered for sale from time to time by the Selling Stockholders. The shares
offered for sale constitute all of the shares known to us to be beneficially
owned by the Selling Stockholders. None of the Selling Stockholders has held any
position or office with the Company, except as specified in the following table.
Other than the relationships described below, none of the Selling Stockholders
had or have any material relationship with the Company.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
NUMBER
NUMBER NAME OF SELLING STOCKHOLDERS OF SHARES
- ---------------------------------------------------------------------------
<S> <C> <C>
1 Tom Bollum 50,000
- ---------------------------------------------------------------------------
2 Keith Ebert, 2,500,000
C.E.O., Secretary, Treasurer and Director
- ---------------------------------------------------------------------------
3 Renata Kubicek 50,000
- ---------------------------------------------------------------------------
4 Gerald J. Shields 50,000
- ---------------------------------------------------------------------------
5 Sandra Ann Hughes 50,000
- ---------------------------------------------------------------------------
6 Rob Smith 50,000
- ---------------------------------------------------------------------------
7 Jackie A. Tuskey 50,000
- ---------------------------------------------------------------------------
8 Darren Ross 50,000
- ---------------------------------------------------------------------------
9 Brian Tuskey 50,000
- ---------------------------------------------------------------------------
10 Mary Ann Myers 50,000
- ---------------------------------------------------------------------------
11 Tom Connell 50,000
- ---------------------------------------------------------------------------
12 Dr. Keith Lim Inc. 50,000
- ---------------------------------------------------------------------------
13 Jane Shields 50,000
- ---------------------------------------------------------------------------
14 Doug Irwin 50,000
- ---------------------------------------------------------------------------
15 Margot Jones 50,000
- ---------------------------------------------------------------------------
16 John Furlan 50,000
- ---------------------------------------------------------------------------
</TABLE>
24
<PAGE>
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------
17 Rick Gateman 50,000
- ---------------------------------------------------------------------------
18 Tom Simmons 50,000
- ---------------------------------------------------------------------------
19 John Jardine 50,000
- ---------------------------------------------------------------------------
20 Gail Fish 50,000
- ---------------------------------------------------------------------------
21 Ro Lal 50,000
- ---------------------------------------------------------------------------
22 Erin Strench 50,000
- ---------------------------------------------------------------------------
23 Allen Wilson 50,000
- ---------------------------------------------------------------------------
24 Beverly Strench 50,000
- ---------------------------------------------------------------------------
25 Neville Ebert 50,000
- ---------------------------------------------------------------------------
26 Gloria Martino 50,000
- ---------------------------------------------------------------------------
27 Bill Martino 50,000
- ---------------------------------------------------------------------------
28 Andrew Allan 50,000
- ---------------------------------------------------------------------------
29 Haroon Rashid 50,000
- ---------------------------------------------------------------------------
30 Ann Marie Butler Rashid 50,000
- ---------------------------------------------------------------------------
31 Kenny Chan 50,000
- ---------------------------------------------------------------------------
32 Dwight Chan 50,000
- ---------------------------------------------------------------------------
33 Dee Gorrell 50,000
- ---------------------------------------------------------------------------
34 Shauna Loiselle 50,000
- ---------------------------------------------------------------------------
35 Paul Canfield 50,000
- ---------------------------------------------------------------------------
36 Janet Moher 50,000
- ---------------------------------------------------------------------------
37 Ruth Canfield 50,000
- ---------------------------------------------------------------------------
38 Jill Jankovich 50,000
- ---------------------------------------------------------------------------
39 Dan Nugent 50,000
- ---------------------------------------------------------------------------
40 Judy Morey 50,000
- ---------------------------------------------------------------------------
41 Rob Furlan 50,000
- ---------------------------------------------------------------------------
42 Sandra Furlan 50,000
- ---------------------------------------------------------------------------
43 Karen Lynn Bollum 50,000
- ---------------------------------------------------------------------------
44 Dr. Denis Vincent 50,000
- ---------------------------------------------------------------------------
45 Lindsay Nevison 50,000
- ---------------------------------------------------------------------------
</TABLE>
Dividends
We have not paid any dividends to date, and have no plans to do so in the
immediate future.
Transfer Agent
We do not have a transfer agent at this time.
DESCRIPTION OF SECURITIES
Our authorized capital stock consists of 100,000,000 shares, of common stock,
par value $.0001 per share. There are 4,700,000 shares of common stock issued
and outstanding as of the date of this filing.
25
<PAGE>
Common Stock
All shares of common stock have equal voting rights and, when validly issued and
outstanding, are entitled to one vote per share in all matters to be voted upon
by shareholders. The shares of common stock have no preemptive, subscription,
conversion or redemption rights and may be issued only as fully paid and
non-assessable shares. Cumulative voting in the election of directors is not
permitted, which means that the holders of a majority of the issued and
outstanding shares of common stock represented at any meeting where a quorum is
present will be able to elect the entire Board of Directors if they so choose.
In that event, the holders of the remaining shares of common stock will not be
able to elect any directors. In the event of liquidation, each shareholder is
entitled to receive a proportionate share of our assets available for
distribution to shareholders after the payment of liabilities and after
distribution in full of preferential amounts, if any. All shares of our common
stock issued and outstanding are fully paid and non-assessable. Holders of stock
are entitled to share pro rata in dividends and distributions with respect to
the common stock, as may be declared by the Board of Directors out of funds
legally available for that purpose. We have no intention to issue additional
shares other than under this Registration Statement.
There are no outstanding options or warrants to acquire our common equity. The
4,700,000 shares of our common stock currently outstanding are restricted
securities as that term is defined in the Securities Act. We are offering
100,000 shares of our common stock at $1.00 per share. Dilution to the investors
in this offering shall be approximately $0.979 per share.
SHARES ELIGIBLE FOR FUTURE RESALE
There has been no public market for our common stock and we cannot assure you
that a public market for our common stock will be developed or be sustained
after this offering. Sales of substantial amounts of common stock in the public
market after this offering, or the possibility of substantial sales occurring,
could adversely affect prevailing market prices for the common stock or our
future ability to raise capital through an offering of equity securities.
Upon completion of this offering, we will have 4,800,000 shares outstanding. The
100,000 shares sold in this offering and the 4,700,000 shares offered for sale
to the public by the Selling Stockholders will be freely tradeable without
restriction or further registration under the Securities Act unless purchased by
"affiliates" of Lions Gate Investment Limited, as that term is defined in Rule
144 under the Securities Act ("Rule 144") described below. Sales of outstanding
shares to residents of certain states or jurisdictions may only be effected by
registration in or applicable exemption from the registration provisions of the
securities laws of those states or jurisdictions.
WHERE CAN YOU FIND MORE INFORMATION?
We are not a reporting company, and are not subject to the reporting
requirements of the Exchange Act. We have filed a registration statement with
the SEC on form SB-2 to register the offer and sale of the shares. This
prospectus is part of that registration statement, and, as permitted by the
SEC's rules, does not contain all of the information in the registration
statement. For further information about us and the shares offered under this
prospectus, you may refer to the registration statement and to the exhibits and
schedules filed as a part of the registration
26
<PAGE>
statement. You can review the registration statement and its exhibits and
schedules at the public reference facility maintained by the SEC at Judiciary
Plaza, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
regional offices of the SEC at 7 World Trade Center, Suite 1300, New York, New
York 10048 and Citicorp Center, Suite 1400, 500 West Madison Street, Chicago,
Illinois 60661. Please call the SEC 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'd
be pleased to speak with you about any aspect of our business and this offering.
REPORTS TO STOCKHOLDERS
We intend to furnish our stockholders with annual reports containing audited
financial statements as soon as practicable at the end of each fiscal year. Our
fiscal year ends on October 31.
PLAN OF DISTRIBUTION
We offer the right to subscribe for 100,000 shares at $1.00 per share. We
propose to offer the shares directly on a best efforts, no minimum basis, and no
compensation is to be paid to any person for the offer and sale of the shares.
The offering shall be conducted by our president. Although he is an associated
person of us as that term is defined in Rule 3a4-1 under the Exchange Act, he is
deemed not to be a broker for the following reasons:
He is not subject to a statutory disqualification as that term is defined
in Section 3(a)(39) of the Exchange Act at the time of his participation in
the sale of our securities.
He will not be compensated for 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.
He is not an associated person of a broker or dealers at the time of his
participation in the sale of our securities.
He will restrict his participation to the following activities:
A. Preparing any written communication or delivering any communication
through the mails or other means that does not involve oral
solicitation by him of a potential purchaser;
B. Responding to inquiries of potential purchasers in a communication
initiated by the potential purchasers, provided however, that the
content of responses are limited to information contained in a
registration statement filed under the Securities Act or other
offering document;
C. Performing ministerial and clerical work involved in effecting any
transaction.
27
<PAGE>
As of the date of this Prospectus, no broker has been retained by us for the
sale of securities being offered. In the event a broker who may be deemed an
underwriter is retained by us, an amendment to our registration statement will
be filed.
The Selling Stockholders may, from time to time, sell all or a portion of their
common stock in the over-the-counter market, or on any other national securities
exchange on which our common stock is or becomes listed or traded, in negotiated
transactions or otherwise, at prices then prevailing or related to the then
current market price or at negotiated prices. The shares will not be sold in an
underwritten public offering. Their common stock may be sold directly or through
brokers or dealers. The methods by which the common stock may be sold include
(a) a block trade (which may involve crosses) in which the broker or dealer will
attempt to sell the common stock as agent but may buy and resell a portion of
the block as principal to facilitate the transaction; (b) purchases by a broker
or dealer as principal and resale by such broker or dealer for its account
pursuant to this Prospectus; (c) ordinary brokerage transactions and
transactions in which the broker solicits purchasers; and (d) privately
negotiated transactions. Brokers and dealers engaged by Selling Stockholders may
arrange for other brokers or dealers to participate. Brokers or dealers may
receive commissions or discounts from Selling Stockholders (or, if any such
broker-dealer acts as agent for the purchaser of such shares, from such
purchaser) in amounts to be negotiated. Broker-dealers may agree with the
Selling Stockholders to sell a specified number of shares at a stipulated price
per share, and, to the extent such broker-dealer is unable to do so acting as
agent for a Selling Stockholder, to purchase as principal any unsold shares at
the price required to fulfill the broker-dealer commitment to the Selling
Stockholder. Broker-dealers who acquire shares as principal may thereafter
resell the shares from time to time in transactions (which may involve crosses
and block transactions and sales to and through other broker-dealers, including
transactions of the nature described above) in the over-the-counter market or
otherwise at prices and on terms then prevailing at the time of sale, at prices
then related to the then-current market price or in negotiated transactions and,
in connection with such resales, may pay to or receive commissions from the
purchasers.
In connection with the distribution of their stock, the Selling Stockholders may
enter into hedging transactions with broker-dealers. In connection with such
transactions, broker-dealers may engage in short sales of our common stock. The
Selling Stockholders (except for officers and directors of the Company) may also
sell their common stock and redeliver their common stock to close out their
short positions. The Selling Stockholders may also enter into option or other
transactions with broker-dealers which require the delivery to the broker-dealer
of their common stock. The Selling Stockholders may also lend or pledge their
common stock to a broker-dealer and the broker-dealer may sell their common
stock so lent or, upon a default, the broker-dealer may sell the pledged shares.
In addition to the foregoing, the Selling Stockholders may enter into, from time
to time, other types of hedging transactions.
The Selling Stockholders and any broker-dealers participating in the
distributions of the our common stock may be deemed to be "underwriters" within
the meaning of Section 2(11) of the Securities Act of 1933, and any profit on
the sale of our common stock by the Selling Stockholders, and any commissions or
discounts given to any such broker-dealer, may be deemed to be underwriting
commissions or discounts pursuant to the Securities Act of 1933.
28
<PAGE>
Our common stock may also be sold pursuant to Rule 144 pursuant to the
Securities Act of 1933 beginning one year after the shares of our common stock
were issued, provided such date is at least 90 days after the date of this
Prospectus.
The Company has filed the Registration Statement, of which this Prospectus forms
a part, for the sale of the Selling Stockholders' shares of our common stock. We
can give no assurance that the Selling Stockholders will sell any or all of the
shares of our common stock.
Pursuant to the Securities Exchange Act of 1934, any person engaged in a
distribution of the common stock offered by this Prospectus may not
simultaneously engage in market making activities for our common stock during
the applicable "cooling off" periods prior to the commencement of such
distribution. In addition, the Selling Stockholders will be subject to
applicable provisions of the Securities Exchange Act of 1934 and the rules and
regulations thereunder.
The Company will pay all of the expenses incident to the offering and sale of
the Selling Stockholders' common stock, other than commissions, discounts and
fees of underwriters, dealers or agents.
Arbitrary Determination of Offering Price
The initial offering price of $1.00 per share has been arbitrarily determined by
us, and bears no relationship whatsoever to our assets, earnings, book value or
any other objective standard of value. Among the factors considered by us were:
A. The lack of operating history;
B. The proceeds to be raised by the offering;
C. The amount of capital to be contributed by the public in
proportion to the amount of stock to be retained by present
stockholders;
D. The current market conditions in the over-the-counter market
Method of Subscribing
Persons may subscribe by filling in and signing the share purchase agreement and
delivering it, prior to the expiration date, to us. The purchase price of $1.00
per share must be paid in cash or by check, bank draft or postal express money
order payable in United States dollars to our order. You may not pay in cash.
LEGAL MATTERS
The validity of the shares offered under this prospectus is being passed upon
for us by Antoine Devine of Evers & Hendrickson. LLP of San Francisco,
California.
29
<PAGE>
EXPERTS
Our financial statements as of the four month period ended February 29, 2000,
included in this prospectus and in the registration statement, have been so
included in reliance upon the reports of Davidson & Company, independent
certified public accountants, included in this prospectus, and upon the
authority of said firm as experts in accounting and auditing.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Article VI of our Bylaws sets forth certain indemnification rights. Our Bylaws
provide that we will possess and may exercise all powers of indemnification of
officers, directors, employees, agents and other persons and all incidental
powers and authority. Our Board of Directors is authorized and empowered to
exercise all of our powers of indemnification, without shareholder action. Our
assets could be used or attached to satisfy any liabilities subject to
indemnification. See Exhibit 3.1 hereto.
Disclosure of Commission Position on Indemnification for Securities Act
Liabilities
The Nevada Revised Statutes, as amended, authorize us to indemnify any director
or officer under certain prescribed circumstances and subject to certain
limitations against certain costs and expenses, including attorneys' fees
actually and reasonably incurred in connection with any action, suit or
proceedings, whether civil, criminal, administrative or investigative, to which
the person is a party by reason of being a director or officer if it is
determined that the person acted in accordance with the applicable standard of
conduct set forth in the statutory provisions. Our Bylaws provide for the
indemnification of directors and officers to the full extent permitted by Nevada
law.
We may also purchase and maintain insurance for the benefit of any director or
officer that may cover claims for situations where we could not provide
indemnification.
Insofar as indemnification for liabilities arising under the '33 Act may be
permitted to officers, directors or persons controlling us pursuant to the
foregoing, we have been informed that in the opinion of the U.S. Securities and
Exchange Commission, this form of indemnification is against public policy as
expressed in the '33 Act, and is therefore unenforceable.
FINANCIAL STATEMENTS
The following financial statements are attached to this report and filed as a
part of this Registration Statement.
30
<PAGE>
LIONS GATE INVESTMENT LIMITED
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
FEBRUARY 29, 2000
F-1
<PAGE>
[LETTERHEAD DAVIDSON & COMPANY]
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Lions Gate Investment Limited
(A Development Stage Company)
We have audited the balance sheet of Lions Gate Investment Limited (A
Development Stage Company) as at February 29, 2000 and the related statements of
operations, changes in stockholders' equity and cash flows for the period from
incorporation on October 29, 1999 to February 29, 2000. 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 audit.
We conducted our audit in accordance with United States generally accepted
auditing standards. Those standards require that we plan and perform an 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 used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at February 29, 2000 and the
results of its operations, changes in stockholders' equity and its cash flows
for the period from incorporation on October 29, 1999 to February 29, 2000 in
accordance with United States 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 2 to the
financial statements, the Company has incurred a net loss since inception and
has had no revenues and has a minimal working capital position at February 29,
2000. These factors raise substantial doubt about the Company's ability to
continue as a going concern. Management's plans in regard to these matters are
describe in Note 2. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
"DAVIDSON & COMPANY"
Vancouver, Canada Chartered Accountants
April 11, 2000
A Member of SC INTERNATIONAL
Suite 1200, Stock Exchange Tower, 609 Granville Street, P.O. Box 10372,
Pacific Centre, Vancouver, BC, Canada, V7Y 1G6
Telephone (604) 687-0947 Fax (604) 687-6172
F-2
<PAGE>
LIONS GATE INVESTMENT LIMITED
(A Development Stage Company)
BALANCE SHEET
FEBRUARY 29, 2000
<TABLE>
<S> <C>
================================================================================
ASSETS
CURRENT
Cash $ 2,487
================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT
Accounts payable and accrued liabilities $ 1,500
--------
STOCKHOLDERS' EQUITY
Capital stock
Authorized
100,000,000 common shares with a par value of $0.0001
Allotted
4,700,000 common shares 470
Additional paid-in capital 4,230
Deficit accumulated during the development stage (3,713)
--------
987
--------
$ 2,487
================================================================================
</TABLE>
ON BEHALF OF THE BOARD:
/s/ Keith Ebert, Sole Director
- ------------------------------
The accompanying notes are an integral part of these financial statements
F-3
<PAGE>
LIONS GATE INVESTMENT LIMITED
(A Development Stage Company)
STATEMENT OF OPERATIONS
PERIOD FROM INCORPORATION ON OCTOBER 29, 1999 TO FEBRUARY 29, 2000
<TABLE>
================================================================================
<S> <C>
EXPENSES
Office and miscellaneous $ 2,213
Professional fees 1,500
------------
LOSS FOR THE PERIOD $ 3,713
================================================================================
BASIC AND DILUTED LOSS PER SHARE $ (0.01)
================================================================================
WEIGHTED AVERAGE SHARES ALLOTTED 4,700,000
================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements
F-4
<PAGE>
LIONS GATE INVESTMENT LIMITED
(A Development Stage Company)
STATEMENT OF CASH FLOWS
PERIOD FROM INCORPORATION ON OCTOBER 29, 1999 TO FEBRUARY 29, 2000
<TABLE>
==========================================================================================================
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Loss for the period $ (3,713)
Item not affecting cash:
Common shares allotted for services 2,250
Changes in non-cash working capital items:
Increase in accounts payable and accrued liabilities 1,500
---------------
Net cash provided by operating activities 37
---------------
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash used in investing activities -
--------------
CASH FLOWS FROM FINANCING ACTIVITIES
Share subscriptions received in advance 2,450
---------------
Net cash provided by financing activities 2,450
---------------
CHANGE IN CASH POSITION DURING THE PERIOD 2,487
CASH POSITION, BEGINNING OF THE PERIOD -
---------------
CASH POSITION, END OF THE PERIOD $ 2,487
=========================================================================================================
SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS:
Cash paid for income taxes $ -
Cash paid for interest $ -
=========================================================================================================
SUPPLEMENTAL DISCLOSURE OF NON-CASH OPERATING, INVESTING, AND FINANCING
ACTIVITIES:
Common shares allotted for services $ 2,250
=========================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements
F-5
<PAGE>
LIONS GATE INVESTMENT LIMITED
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
==============================================================================================================================
Deficit
Accumulated
Common Stock Additional During the Total
------------------------ Paid-in Development Stockholders'
Shares Amount Capital Stage Equity
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE, OCTOBER 29, 1999 - $ - $ - $ - $ -
Common shares allotted
for services 2,250,000 225 2,025 - 2,250
Common shares allotted for cash 2,450,000 245 2,205 - 2,450
Loss for the period - - - (3,713) (3,713)
---------- ------ -------- -------- --------
BALANCE, FEBRUARY 29, 2000 4,700,000 $ 470 $ 4,230 $ (3,713) $ 987
==============================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements
F-6
<PAGE>
LIONS GATE INVESTMENT LIMITED
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
FEBRUARY 29, 2000
================================================================================
1. ORGANIZATION OF THE COMPANY
The Company was incorporated on October 29, 1999 under the laws of Nevada
to engage in any lawful business or activity for which corporations may be
organized under the laws of the State of Nevada. In accordance with
Statement of Financial Accounting Standards No. 7 "Accounting and Reporting
by Development Stage Companys", the Company is deemed to be in the
Development Stage.
The Company is a "Blank Check" company which plans to search for a suitable
business to merge with or acquire. Operations since incorporation consisted
primarily of obtaining capital contributions by the initial investors and
activities regarding the registration of the offering with the Securities
and Exchange Commission.
2. GOING CONCERN
The Company's financial statements are prepared using the generally
accepted accounting principles applicable to a going concern, which
contemplates the realization of assets and liquidation of liabilities in
the normal course of business. However, the Company has no current source
of revenue. Without realization of additional capital, it would be unlikely
for the Company to continue as a going concern. The Company's management
plans on advancing funds on an as needed basis and in the longer term,
deriving cash from revenue from the operations of the merger or acquisition
candidate, if found. The Company's ability to continue as a going concern
is dependent on these additional management advances, and, ultimately, upon
achieving profitable operations through a merger or acquisition candidate.
<TABLE>
<CAPTION>
================================================================================
February 29,
2000
- --------------------------------------------------------------------------------
<S> <C>
Deficit $ (3,713)
Working capital 987
================================================================================
</TABLE>
3. SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amount of revenues and expenses
during the period. Actual results could differ from these estimates.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include highly liquid investments with original
maturities of three months or less.
INCOME TAXES
Income taxes are provided in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes". A deferred tax
asset or liability is recorded for all temporary differences between
financial and tax reporting and net operating loss carryforwards. Deferred
tax expenses (benefit) result from the net change during the year of
deferred tax assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion or all
of the deferred tax assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and rates
on the date of enactment.
F-7
<PAGE>
LIONS GATE INVESTMENT LIMITED
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
FEBRUARY 29, 2000
================================================================================
3. SIGNIFICANT ACCOUNTING POLICIES (cont'd.....)
ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 ("SFAS 133"), "Accounting for
Derivative Instruments and Hedging Activities" which establishes accounting
and reporting standards for derivative instruments and for hedging
activities. SFAS 133 is effective for all fiscal quarters of fiscal years
beginning after June 15, 1999. In June 1999, the Financial Accounting
Standards Board issued SFAS 137 to defer the effective date of SFAS 133 to
fiscal quarters of fiscal years beginning after June 15, 2000. The Company
does not anticipate that the adoption of the statement will have a
significant impact on its financial statements.
REPORTING ON COSTS OF START-UP ACTIVITIES
In April 1998, the American Institute of Certified Public Accountant's
issued Statement of Position 98-5 ("SOP 98-5"), "Reporting on the Costs of
Start-Up Activities" which provides guidance on the financial reporting of
start-up costs and organization costs. It requires costs of start-up
activities and organization costs to be expensed as incurred. SOP 98-5 is
effective for fiscal years beginning after December 15, 1998 with initial
adoption reported as the cumulative effect of a change in accounting
principle. The adoption by the Company of SOP 98-5 during the period
resulted in the Company expensing all startup costs.
COMPREHENSIVE INCOME
The Company has adopted Statement of Financial Accounting Standards No. 130
("SFAS 130"), "Reporting Comprehensive Income". This statement establishes
rules for the reporting of comprehensive income and its components. The
adoption of SFAS 130 had no impact on total stockholders' equity as of
February 29, 2000.
STOCK-BASED COMPENSATION
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation," encourages, but does not require, companies to
record compensation cost for stock-based employee compensation plans at
fair value. The Company has chosen to account for stock-based compensation
using Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees." Accordingly compensation cost for stock options is
measured as the excess, if any, of the quoted market price of the Company's
stock at the date of the grant over the amount an employee is required to
pay for the stock.
LOSS PER SHARE
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS
128"). Under SFAS 128, basic and diluted earnings per share are to be
presented. Basic earnings per share is computed by dividing income
available to common shareholders by the weighted average number of common
shares outstanding during the year. Diluted earnings per share takes into
consideration common shares outstanding (computed under basic earnings per
share) and potentially dilutive common shares.
4. CAPITAL STOCK
On November 1, 1999, the Company allotted 2,450,000 of its common shares
for proceeds of $2,450 and allotted 2,250,000 of its common shares at a
deemed value of $2,250 for services rendered.
Proposed public offering of common stock
The Company is preparing to commence with a "Blank Check" offering subject
to Rule 419 of the Securities Act of 1933, as amended, for 100,000 common
shares to be sold at a price of $1.00 per share.
F-8
<PAGE>
LIONS GATE INVESTMENT LIMITED
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
FEBRUARY 29, 2000
================================================================================
4. CAPITAL STOCK (cont'd.....)
Rule 419 requirements
Rule 419 requires that offering proceeds, after deduction for underwriting
commissions, underwriting expenses and deal allowances issued, 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 the Rule. Under Rule 419, the Deposited
Funds and 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(s) for an
acquisition(s) meeting certain prescribed criteria. Second, the company
must file a post-effective amendment to the registration statement that
includes the terms of a reconfirmation offer that must contain conditions
prescribed by the rules. The post-effective amendment must also contain
information regarding the acquisition candidate(s) and its business(es),
including audited financial statements. The agreement(s) must include, as a
condition precedent to their consummation, a requirement that the number of
investors representing 80% of the maximum proceeds must elect to reconfirm
their investments. Third, the company must conduct the reconfirmation offer
and satisfy all of the prescribed conditions, including the condition that
investors representing 80% of the Deposited Funds must elect to remain
investors. The post-effective amendment must also include the terms of the
reconfirmation offer mandated by Rule 419. The reconfirmation offer must
include certain prescribed conditions that must be satisfied before the
Deposited Funds and Deposited Securities can be released from escrow. After
the company submits a signed representation to the escrow agent that the
requirements of Rule 419 have been met and after the acquisition(s) 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 the investors on a
pro-rata basis.
5. RELATED PARTY TRANSACTION
During the period ended February 29, 2000, the Company allotted 2,250,000
common shares at a deemed value of $2,250 to a director of the Company in
exchange for services rendered.
6. INCOME TAXES
For income tax purposes, the Company has a net operating loss carryforward
("NOL") at February 29, 2000 of approximately $3,700 expiring in 2014 if
not offset against future federal taxable income. There may be certain
limitations as to the future annual use of the NOLs due to certain changes
in the Company's ownership.
Income tax benefit attributable to net loss differed from the amount
computed by applying the statutory Federal Income tax rate applicable for
each period as a result of the following:
<TABLE>
<S> <C>
Computed "expected" tax benefit $ 1,200
Decrease in tax benefit resulting from net operating loss
for which no benefit is currently available (1,200)
-------------
$ -
=============
</TABLE>
The Company has deferred tax assets of approximately $1,200 at February 29,
2000, resulting primarily from net operating loss carryforwards. The
deferred tax assets have been fully offset by a valuation allowance
resulting from the uncertainty surrounding their future realization.
F-9
<PAGE>
LIONS GATE INVESTMENT LIMITED
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
FEBRUARY 29, 2000
================================================================================
7. FINANCIAL INSTRUMENTS
The Company's financial instruments consist of cash, accounts payable and
accrued liabilities. Unless otherwise noted, it is management's opinion
that the Company is not exposed to significant interest, currency or credit
risks arising from these financial instruments. The fair value of these
financial instruments approximate their carrying values, unless otherwise
noted.
8. UNCERTAINTY DUE TO THE YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize
the year 2000 as 1900 or some other date, resulting in errors when
information using year 2000 dates is processed. In addition, similar
problems may arise in some systems which use certain dates in 1999 to
represent something other than a date. Although the change in date has
occurred, it is not possible to conclude that all aspects of the Year 2000
Issue that may affect the entity, including those related to customers,
suppliers, or other third parties, have been fully resolved.
F-10
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 24. Indemnification of Directors and Officers
ITEM 25. Other Expenses of Issuance and Distribution
ITEM 26. Recent Sales of Unregistered Securities
ITEM 27. Exhibits
3.1 Articles of Incorporation
3.3 Bylaws
5.1 Opinion of Evers & Hendrickson with respect to the legality of the
shares being registered
23.1 Consent of Davidson & Company
23.2 Consent of Evers & Hendrickson (included in Exhibit 5.1)
27.1 Financial Data Schedule
99.1* Escrow Agreement
* To be filed in an amendment.
Item 28 -- Undertakings
We undertake that we will:
1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the Securities
Act;
(ii) Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the
registration statement; and
(iii)Include any additional or changed material information on the plan of
distribution.
2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the bona
fide offering.
3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
We undertake to provide to the underwriters at the closing specified in the
underwriting agreement certificates in such denominations and registered in such
names as the underwriter requires to permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
II-1
<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 on Form SB-2 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Vancouver, Province of British Columbia, Canada,
on April 25, 2000.
LIONS GATE INVESTMENT LIMITED
/s/ Keith Ebert, President and Director
In accordance with the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates stated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ------ ----
<S> <C> <C>
/s/ Keith Ebert President April 25, 2000
</TABLE>
II-2
<PAGE>
EXHIBIT INDEX
3.1 Articles of Incorporation
3.3 Bylaws
5.1 Opinion of Evers & Hendrickson with respect to the legality of the
shares being registered
23.1 Consent of Davidson & Company
23.2 Consent of Evers & Hendrickson (included in Exhibit 5.1)
27.1 Financial Data Schedule
99.1* Escrow Agreement
* To be filed in an amendment.
EXHIBIT 3.1
ARTICLES OF INCORPORATION
Of
LIONS GATE INVESTMENT LIMITED
A Nevada Corporation
KNOW ALL MEN BY THESE PRESENTS:
That I, the Undersigned, for the purpose of forming a corporation under the
Laws of the State of Nevada, relating to the General Corporation Law.
I DO HEREBY CERTIFY THAT:
FIRST: The name of the corporation shall be:
LIONS GATE INVESTMENT LIMITED
SECOND: The address of The Nevada Agency and Trust Company, resident agent and
Agent for Service of Process of this corporation, is to be located at Suite 880,
Bank of America Plaza, 50 West Liberty Street, Reno, Nevada 89501.
THIRD: This Corporation is authorized to carry on any lawful business or
enterprise. This corporation may conduct all or any part of its business and may
hold, purchase, mortgage, lease and convey real and/or personal property,
anywhere in the world.
FOURTH: The authorized capital stock of this corporation is ONE HUNDRED MILLION
(100,000,000) common shares with a par value of $0.0001 per share. The common
shares of this corporation are non assessable. The board of directors has the
authority to prescribe, by resolution, the classes, series, number of each class
and series, voting powers, designations, preferences, limitations, restrictions
and relative rights of each class and series of stock.
FIFTH: The members of the governing board of this corporation shall be styled as
directors over the age of eighteen (18) and their number shall be not less than
one nor more than
<PAGE>
ten. The initial director of the corporation shall be one, and the name and
address of the initial director is:
Gerald R. Tuskey
Suite 1000
409 Granville Street
Vancouver, B.C.
V6C 1T2
SIXTH: The name and address of the incorporator is as follows:
Gerald R. Tuskey
Suite 1000
409 Granville Street
Vancouver, B.C.
V6C 1T2
SEVENTH: The period of existence of this corporation shall be perpetual.
EIGHTH: No director, officer or shareholder of this corporation shall have
personal liability for damages for breach of any fiduciary duty as a director or
officer to the corporation, its shareholders or any other person except for:
(a) acts or omissions which involve intentional misconduct, fraud
or a knowing violation of law;
or
(b) the payment of dividends in violation of NRS78.300
I, THE UNDERSIGNED, FOR THE PURPOSE OF FORMING A CORPORATION UNDER THE LAWS OF
THE STATE OF NEVADA, DO MAKE, FILE AND RECORD THIS CERTIFICATE, AND CERTIFY THAT
THE FACTS STATED ARE TRUE AND I HAVE ACCORDINGLY SET MY HAND AND SEAL THIS DAY:
OCTOBER 18, 1999.
/s/ Gerald R. Tuskey
EXHIBIT 3.3
BYLAWS
OF
LIONS GATE INVESTMENT LIMITED
A Nevada Corporation
ARTICLE I
OFFICES
SECTION 1. PRINCIPAL EXECUTIVE OR BUSINESS OFFICES. The Board of Directors shall
fix the location of the principal executive office of the corporation at any
place within or outside the State of Nevada. If the principal executive office
is located outside Nevada and the corporation has one or more business offices
in Nevada, the Board of Directors shall fix and designate a principal business
office in Nevada.
SECTION 2. OTHER OFFICES. Branch or subordinate offices may be established at
any time and at any place by the
Board of Directors.
ARTICLE II
MEETINGS OF SHAREHOLDERS
SECTION 1. PLACE OF MEETINGS. Meetings of shareholders shall be held at any
place within or outside the State of Nevada designated by the Board of
Directors. In the absence of a designation by the Board, shareholders' meetings
shall be held at the corporation's principal executive office.
SECTION 2. ANNUAL MEETING. The annual meeting of shareholders shall be held each
year on a date and at a time designated by the Board of Directors.
The date so designated shall be within three months after the end of the
corporation's fiscal year, and within fifteen months after the last annual
meeting.
At each annual meeting, Directors shall be elected and any other proper business
within the power of the shareholders may be transacted.
SECTION 3. SPECIAL MEETINGS. Special meetings of the shareholders may be called
at any time by the Board of Directors, by the Chair of the Board, by the
President or a Vice President, or by one or more shareholders holding shares
that in the aggregate are entitled to cast ten percent or more of the votes at
that meeting.
If a special meeting is called by anyone other than the Board of Directors, the
person or persons calling the meeting shall make a request in writing, delivered
personally or sent by registered mail or by telegraphic or other facsimile
transmission, to the Chair of the Board or the President, Vice President, or
Secretary, specifying the time and date of the meeting (which is not less than
35 nor more than 60 days after receipt of the request) and the general nature of
the business proposed to be transacted. Within 20 days after receipt, the
officer receiving the request shall
<PAGE>
cause notice to be given to the shareholders entitled to vote, in accordance
with the provisions of Sections 4 and 5 of this Article II, stating that a
meeting will be held at the time requested by the person(s) calling the meeting,
and stating the general nature of the business proposed to be transacted. If
notice is not given within 20 days after receipt of the request, the person or
persons requesting the meeting may give the notice. Nothing contained in this
paragraph shall be construed as limiting, fixing, or affecting the time when a
meeting of shareholders called by action of the Board may be held.
SECTION 4. NOTICE OF SHAREHOLDERS' MEETINGS. All notices of meetings of
shareholders shall be sent or otherwise given in accordance with the
requirements of Section 5 of this Article II and shall not be fewer than 10 nor
more than 60 days before the date of the meeting. Shareholders entitled to
notice shall be determined in accordance with the provision of Section 11 of
this Article II. The notice shall specify the place, date, and hour of the
meeting, and (i) in the case of a special meeting, the general nature of the
business to be transacted, or (ii) in the case of the annual meeting, those
matters that the Board of Directors, at the time of giving the notice, intends
to present for action by the shareholders. If Directors are to be elected, the
notice shall include the names of all nominees whom the Board intends, at the
time of the notice, to present for election.
The notice shall also state the general nature of any proposed action to be
taken at the meeting to approve any of the following matters:
(i) A transaction in which a Director has a financial interest;
(ii) An amendment of the Articles of Incorporation;
(iii) A reorganization;
(iv) A voluntary dissolution; or
(v) A distribution in dissolution that requires approval of the
outstanding shares.
SECTION 5. MANNER OF GIVING NOTICE: AFFIDAVIT OF NOTICE. Notice of any
shareholders' meeting shall be given either personally or by first-class mail or
telegraphic or other written communication, charges prepaid, addressed to the
shareholder at the address appearing on the corporation's books or given by the
shareholder to the corporation for purposes of notice. If no address appears on
the corporation's books or has been given as specified above, notice shall be
either (1) sent by first-class mail addressed to the shareholder at the
corporation's principal executive office, or (2) published at least once in a
newspaper of general circulation in the county where the corporation's principal
executive office is located. Notice is deemed to have been given at the time
when delivered personally or deposited in the mail or sent by other means of
written communication.
If any notice or report mailed to a shareholder at the address appearing on the
corporation's books is returned marked to indicate that the United States Postal
Service is unable to deliver the document to the shareholder at that address,
all future notices or reports shall be deemed to have been duly given without
further mailing if the corporation holds the document available for the
2
<PAGE>
shareholder on written demand at the corporation's principal executive office
for a period of one year from the date the notice or report was given to all
other shareholders.
An affidavit of the mailing, or other authorized means of giving notice or
delivering a document, of any notice of shareholders' meeting, report, or other
document sent to shareholders, may be executed by the corporation's Secretary,
Assistant Secretary, or transfer agent, and, if executed, shall be filed and
maintained in the minute book of the corporation.
SECTION 6. QUORUM. The presence in person or by proxy of the holders of a
majority of the shares entitled to vote at any meeting of the shareholders shall
constitute a quorum for the transaction of business. The shareholders present at
a duly called or held meeting at which a quorum is present may continue to do
business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum, if any action taken (other than
adjournment) is approved by at least a majority of the shares required to
constitute a quorum.
SECTION 7. ADJOURNED MEETING; NOTICE. Any shareholders' meeting, annual or
special, whether or not a quorum is present, may be adjourned from time to time
by the vote of the majority of the shares represented at that meeting, either in
person or by proxy, but in the absence of a quorum, no other business may be
transacted at that meeting, except as provided in Section 6 of this Article II.
When any meeting of shareholders, either annual or special, is adjourned to
another time or place, notice of the adjourned meeting need not be given if the
time and place are announced at the meeting at which the adjournment is taken,
unless a new record date for the adjourned meeting is fixed, or unless the
adjournment is for more than 45 days from the date set for the original meeting,
in which case the Board of Directors shall set a new record date. Notice of any
such adjourned meeting, if required, shall be given to each shareholder of
record entitled to vote at the adjourned meeting, in accordance with the
provisions of Sections 4 and 5 of this Article II. At any adjourned meeting, the
corporation may transact any business that might have been transacted at the
original meeting.
SECTION 8. VOTING. The shareholders entitled to vote at any meeting of
shareholders shall be determined in accordance with the provisions of Section 11
of this Article II. The shareholders' vote may be by voice vote or by ballot,
provided, however, that any election for Directors must be by ballot if demanded
by any shareholder before the voting has begun. On any matter other than the
election of Directors, any shareholder may vote part of the shares the
shareholder is to vote in favor of the proposal and refrain from voting the
remaining shares or vote them against the proposal, but, if the shareholder
fails to specify the number of shares that the shareholder is voting
affirmatively, it will be conclusively presumed that the shareholder's approving
vote is with respect to all shares that the shareholder is entitled to vote. If
a quorum is present (or if a quorum has been present earlier at the meeting but
some shareholders have withdrawn), the affirmative vote of a majority of the
shares represented and voting, provided such shares voting affirmatively also
constitute a majority of the number of shares required for a quorum, shall be
the act of the shareholders unless the vote of a greater number or voting by
classes is required by law or by the Articles of Incorporation.
3
<PAGE>
At a shareholders' meeting at which Directors are to be elected, no shareholder
shall be entitled to cumulate votes (i.e., cast for any candidate a number of
votes greater than the number of votes which that shareholder normally would be
entitled to cast), unless the candidates' names have been placed in nomination
before commencement of the voting and a shareholder has given notice at the
meeting, before the voting has begun, of the shareholder's intention to cumulate
votes. If any shareholder has given such a notice, then all shareholders
entitled to vote may cumulate their votes for candidates in nomination, and may
give one candidate a number of votes equal to the number of Directors to be
elected multiplied by the number of votes to which that shareholder's shares are
normally entitled, or distribute the shareholder's votes on the same principle
among any or all of the candidates, as the shareholder thinks fit. The
candidates receiving the highest number of votes, up to the number of Directors
to be elected, shall be elected.
SECTION 9. WAIVER OF NOTICE OR CONSENT BY ABSENT SHAREHOLDERS. The transactions
of any meeting of shareholders, either annual or special, however called and
noticed and wherever held, shall be as valid as though they were had at a
meeting duly held after regular call and notice, if a quorum is present either
in person or by proxy, and if each person entitled to vote who was not present
in person or by proxy, either before or after the meeting, signs a written
waiver of notice or a consent to holding the meeting or an approval of the
minutes of the meeting.
A shareholder's attendance at a meeting also constitutes a waiver of notice of
that meeting, unless the shareholder at the beginning of the meeting objects to
the transaction of any business on the ground that the meeting was not lawfully
called or convened. In addition, attendance at a meeting does not constitute a
waiver of any right to object to consideration of matters required by law to be
included in the notice of the meeting which were not so included, if that
objection is expressly made at the meeting.
SECTION 10. SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING. Any action
that could be taken at an annual or special meeting of shareholders may be taken
without a meeting and without prior notice, if a consent in writing, setting
forth the action so taken, is signed by the holders of outstanding shares having
not less than the minimum number of votes that would be necessary to authorize
or take that action at a meeting at which all shares entitled to vote on that
action were present and voted.
Directors may be elected by written consent of the shareholders without a
meeting and vacancies on the Board (other than vacancies created by removal) not
filled by the Board may be filled by the written consent of the holders of a
majority of the outstanding shares entitled to vote.
All consents shall be filed with the Secretary of the corporation and shall be
maintained in the corporate records. Any shareholder or other authorized person
who has given a written consent may revoke it by a writing received by the
Secretary of the corporation before written consents of the number of shares
required to authorize the proposed action have been filed with the Secretary.
Unless the consents of all shareholders entitled to vote have been solicited in
writing, prompt notice shall be given of any corporate action approved by
shareholders without a meeting by less
4
<PAGE>
than unanimous consent, to those shareholders entitled to vote who have not
consented in writing.
SECTION 11. RECORD DATE FOR SHAREHOLDER NOTICE OF MEETING, VOTING, AND GIVING
CONSENT.
(a) For purposes of determining the shareholders entitled to receive notice of
and vote at a shareholders' meeting or give written consent to corporate
action without a meeting, the Board may fix in advance a record date that
is not more than 60 nor less than 10 days before the date of a
shareholders' meeting, or not more than 60 days before any other action.
(b) If no record date is fixed:
(i) The record date for determining shareholders entitled to receive
notice of and vote at a shareholders' meeting shall be the business
day next preceding the day on which notice is given, or if notice is
waived as provided in Section 9 of this Article II, the business day
next preceding the day on which the meeting is held.
(ii) The record date for determining shareholders entitled to give
consent to corporate action in writing without a meeting, if no
prior action has been taken by the Board, shall be the day on which
the first written consent is given.
(iii) The record date for determining shareholders for any other purpose
shall be as set forth in Section 1 of Article VIII of these Bylaws.
(c) A determination of shareholders of record entitled to receive notice of
and vote at a shareholders' meeting shall apply to any adjournment of the
meeting unless the Board fixes a new record date for the adjourned
meeting. However, the Board shall fix a new record date if the adjournment
is to a date more than 45 days after the date set for the original
meeting.
(d) Only shareholders of record on the corporation's books at the close of
business on the record date shall be entitled to any of the notice and
voting rights listed in subsection (a) of this section, notwithstanding
any transfer of shares on the corporation's books after the record date,
except as otherwise required by law.
SECTION 12. PROXIES. Every person entitled to vote for Directors or on any other
matter shall have the right to do so either in person or by one or more agents
authorized by a written proxy signed by the person and filed with the Secretary
of the corporation. A proxy shall be deemed signed if the shareholder's name is
placed on the proxy (whether by manual signature, typewriting, telegraphic
transmission, or otherwise) by the shareholder or the shareholder's attorney in
fact. A validly executed proxy that does not state that it is irrevocable shall
continue in full force and effect unless (i) revoked by the person executing it,
before the vote pursuant to that proxy, by a writing delivered to the
corporation stating that the proxy is revoked, or by attendance at the meeting
and voting in person by the person executing the proxy or by a subsequent proxy
executed by the same person and presented at the meeting; or (ii) written
5
<PAGE>
notice of the death or incapacity of the maker of that proxy is received by the
corporation before the vote pursuant to that proxy is counted; provided,
however, that no proxy shall be valid after the expiration of 6 months from the
date of the proxy, unless coupled with an interest. The revocability of a proxy
that states on its face that it is irrevocable shall be governed by NRS 78.355.
SECTION 13. INSPECTORS OF ELECTION. Before any meeting of shareholders, the
Board of Directors may appoint any persons other than nominees for office to act
as inspectors of election at the meeting or its adjournment. If no inspectors of
election are so appointed, the Chair of the meeting may, and on the request of
any shareholder or a shareholder's proxy shall, appoint Inspectors of Election
at the meeting. The number of Inspectors shall be either one or three. If
Inspectors are appointed at a meeting on the request of one or more shareholders
or proxies, the holders of a majority of shares or their proxies present at the
meeting shall determine whether one or three Inspectors are to be appointed. If
any person appointed as Inspector fails to appear or fails or refuses to act,
the Chair of the meeting may, and upon the request of any shareholder or a
shareholder's proxy shall, appoint a person to fill that vacancy.
These Inspectors shall: (a) determine the number of shares outstanding and the
voting power of each, the shares represented at the meeting, the existence of a
quorum, and the authenticity, validity, and effect of proxies; (b) receive
votes, ballots, or consents; (c) hear and determine all challenges and questions
in any way arising in connection with the right to vote; (d) count and tabulate
all votes or consents; (e) determine when the polls shall close; (f) determine
the result; and (g) do any other acts that may be proper to conduct the election
or vote with fairness to all shareholders.
ARTICLE III
DIRECTORS
SECTION 1. POWERS. Subject to the provisions of the Nevada General Corporation
Law and any limitations in the Articles of Incorporation and these Bylaws
relating to action required to be approved by the shareholders or by the
outstanding shares, the business and affairs of the corporation shall be managed
and all corporate powers shall be exercised by or under the direction of the
Board of Directors.
Without prejudice to these general powers, and subject to the same limitations,
the Board of Directors shall have the power to:
(a) Select and remove all officers, agents, and employees of the corporation;
prescribe any powers and duties for them that are consistent with law,
with the Articles of Incorporation, and with these Bylaws; fix their
compensation; and require from them security for faithful service.
(b) Change the principal executive office or the principal business office in
the State of Nevada from one location to another; cause the corporation to
be qualified to do business in any other state, territory, dependency, or
country and conduct business within or outside the State of Nevada; and
designate any place within or outside the State of Nevada for holding any
shareholders' meeting or meetings, including Annual Meetings.
6
<PAGE>
(c) Adopt, make, and use a corporate seal; prescribe the forms of certificates
of stock; and alter the form of the seal and certificates.
(d) Authorize the issuance of shares of stock of the corporation on any lawful
terms, in consideration of money paid, labor done, services actually
rendered, debts or securities cancelled, or tangible or intangible
property actually received.
(e) Borrow money and incur indebtedness on behalf of the corporation, and
cause to be executed and delivered for the corporation's purposes, in the
corporate name, promissory notes, bonds, debentures, deeds of trust,
mortgages, pledges, hypothecations, and other evidences of debt and
securities.
SECTION 2. NUMBER OF DIRECTORS. The number of Directors shall be no fewer than
one (1) nor more than five (5). The exact number of authorized Directors shall
be two (2) until changed, within the limits specified above, by a Bylaw amending
this section, duly adopted by the Board of Directors, or the shareholders. The
maximum or minimum number of Directors cannot be changed, nor can a fixed number
be substituted for the maximum and minimum numbers, except by a duly adopted
amendment to the Articles of Incorporation or by an amendment to this Bylaws
duly adopted by a majority of the outstanding shares entitled to vote. However,
once shares have been issued to more than two (2) shareholders, an amendment
that would reduce the authorized number of Directors to a number fewer than five
cannot be adopted if the votes cast against its adoption at a shareholders'
meeting or the shares not consenting to an action by written consent are equal
to more than one-sixth (16 2/3%) of the outstanding shares entitled to vote.
SECTION 3. ELECTION AND TERM OF OFFICE OF DIRECTORS. Directors shall be elected
at each Annual Meeting of the shareholders to hold office until the next Annual
Meeting. Each Director, including a Director elected to fill a vacancy, shall
hold office until the expiration of the term for which elected and until a
successor has been elected and qualified.
No reduction of the authorized number of Directors shall have the effect of
removing any Director before that Director's term of office expires.
SECTION 4. VACANCIES. A vacancy in the Board of Directors shall be deemed to
exist: (a) if a Director dies, resigns, or is removed by the shareholders or an
appropriate court, as provided in NRS 78.335 and 78.345; (b) if the Board of
Directors declares vacant the office of a Director who has been convicted of a
felony or declared of unsound mind by an order of court; (c) if the authorized
number of Directors is increased; or (d) if at any shareholders' meeting at
which one or more Directors are elected the shareholders fail to elect the full
authorized number of Directors to be voted for at that meeting.
Any Director may resign effective on giving written notice to the Chair of the
Board, the President, the Secretary, or the Board of Directors, unless the
notice specifies a later effective date. If the resignation is effective at a
future time, the Board may elect a successor to take office when the resignation
becomes effective.
7
<PAGE>
Except for a vacancy caused by the removal of a Director, vacancies on the Board
may be filled by approval of the Board or, if the number of Directors then in
office is less than a quorum, by (1) the unanimous written consent of the
Directors then in office, (2) the affirmative vote of a majority of the
Directors then in office at a meeting held pursuant to notice or waivers of
notice complying with NRS 78.370 and & 78.375, or (3) a sole remaining Director.
A vacancy on the Board caused by the removal of a Director may be filled only by
the shareholders, except that a vacancy created when the Board declares the
office of a Director vacant as provided in clause (b) of the first paragraph of
this section of the Bylaws may be filled by the Board of Directors.
The shareholders may elect a Director at any time to fill a vacancy not filled
by the Board of Directors.
The term of office of a Director elected to fill a vacancy shall run until the
next annual meeting of the shareholders, and such a Director shall hold office
until a successor is elected and qualified.
SECTION 5. PLACE OF MEETINGS; TELEPHONE MEETINGS. Regular meetings of the Board
of Directors may be held at any place within or outside the State of Nevada as
designated from time to time by the Board. In the absence of a designation,
regular meetings shall be held at the principal executive office of the
corporation. Special meetings of the Board shall be held at any place within or
outside the State of Nevada designated in the notice of the meeting, or if the
notice does not state a place, or if there is no notice, at the principal
executive office of the corporation. Any meeting, regular or special, may be
held by conference telephone or similar communication equipment, provided that
all Directors participating can hear one another.
SECTION 6. ANNUAL DIRECTORS' MEETING. Immediately after each annual
shareholders' meeting, the Board of Directors shall hold a regular meeting at
the same place, or at any other place that has been designated by the Board of
Directors, to consider matters of organization, election of officers, and other
business as desired. Notice of this meeting shall not be required unless some
place other than the place of the annual shareholders' meeting has been
designated.
SECTION 7. OTHER REGULAR MEETINGS. Other regular meetings of the Board of
Directors shall be held without call at times to be fixed by the Board of
Directors from time to time. Such regular meetings may be held without notice.
SECTION 8. SPECIAL MEETINGS. Special meetings of the Board of Directors may be
called for any purpose or purposes at any time by the Chair of the Board, the
President, any Vice President, the Secretary, or any two Directors.
Special meetings shall be held on four days' notice by mail or forty-eight
hours' notice delivered personally or by telephone or telegraph. Oral notice
given personally or by telephone may be transmitted either to the Director or to
a person at the Director's office who can reasonably be expected to communicate
it promptly to the Director. Written notice, if used, shall be addressed to each
Director at the address shown on the corporation's records. The notice need not
specify the purpose of the meeting, nor need it specify the place if the meeting
is to be held at the principal executive office of the corporation.
8
<PAGE>
SECTION 9. QUORUM. A majority of the authorized number of Directors shall
constitute a quorum for the transaction of business, except to adjourn as
provided in Section 11 of this Article III. Every act or decision done or made
by a majority of the Directors present at a meeting duly held at which a quorum
is present shall be regarded as the act of the Board of Directors.
SECTION 10. WAIVER OF NOTICE. Notice of a meeting, although otherwise required,
need not be given to any Director who (i) either before or after the meeting
signs a waiver of notice or a consent to holding the meeting without being given
notice; (ii) signs an approval of the minutes of the meeting; or (iii) attends
the meeting without protesting the lack of notice before or at the beginning of
the meeting. Waivers of notice or consents need not specify the purpose of the
meeting. All waivers, consents, and approvals of the minutes shall be filed with
the corporate records or made a part of the minutes of the meeting.
SECTION 11. ADJOURNMENT TO ANOTHER TIME OR PLACE. Whether or not a quorum is
present, a majority of the Directors present may adjourn any meeting to another
time or place.
SECTION 12. NOTICE OF ADJOURNED MEETING. Notice of the time and place of
resuming a meeting that has been adjourned need not be given unless the
adjournment is for more than 24 hours, in which case notice shall be given,
before the time set for resuming the adjourned meeting, to the Directors who
were not present at the time of the adjournment. Notice need not be given in any
case to Directors who were present at the time of adjournment.
SECTION 13. ACTION WITHOUT A MEETING. Any action required or permitted to be
taken by the Board of Directors may be taken without a meeting, if all members
of the Board of Directors individually or collectively consent in writing to
that action. Any action by written consent shall have the same force and effect
as a unanimous vote of the Board of Directors. All written consents shall be
filed with the minutes of the proceedings of the Board of Directors.
SECTION 14. FEES AND COMPENSATION OF DIRECTORS. Directors and members of
committees of the Board may be compensated for their services, and shall be
reimbursed for expenses, as fixed or determined by resolution of the Board of
Directors. This section shall not be construed to preclude any Director from
serving the corporation in any other capacity, as an officer, agent, employee,
or otherwise, and receiving compensation for those services.
ARTICLE IV
COMMITTEES
SECTION 1. COMMITTEES OF THE BOARD. The Board of Directors may, by resolution
adopted by a majority of the authorized number of Directors, designate one or
more committees, each consisting of two or more Directors. The Board may
designate one or more Directors as alternate members of any committee, to
replace any absent member at a committee meeting. The appointment of committee
members or alternate members requires the vote of a majority of the authorized
number of Directors. A committee may be granted any or all of the powers and
authority of the Board in the management of the business and affairs of the
corporation.
9
<PAGE>
SECTION 2. MEETINGS AND ACTION OF COMMITTEES. Meetings and action of committees
shall be governed by, and held and taken in accordance with, Bylaw provisions
applicable to meetings and actions of the Board of Directors, as provided in
Section 5 and Sections 7 through 13 of Article III of these Bylaws, as to the
following matters: place of meetings; regular meetings; special meetings and
notice; quorum; waiver of notice; adjournment; notice of adjournment; and action
without meeting, with such changes in the context of these Bylaws as are
necessary to substitute the committee and its members for the Board of Directors
and its members, except that (a) the time of regular meetings of committees may
be determined either by resolution of the Board of Directors or by resolution of
the committee; (b) special meetings of committees may also be called by
resolution of the Board of Directors; and (c) notice of special meetings of
committees shall also be given to all alternative members who shall have the
right to attend all meetings of the committee. The Board of Directors may adopt
rules for the governance of any committee not inconsistent with these Bylaws.
ARTICLE V
OFFICERS
SECTION 1. OFFICERS. The officers of the corporation shall be a President and
Chief Executive Officer, a Secretary, and a Treasurer. The corporation may also
have, at the discretion of the Board of Directors, a Chair of the Board, one or
more Vice Presidents, one or more Assistant Secretaries, a Chief Financial
Officer, one or more Assistant Treasurers, and such other officers as may be
appointed in accordance with Section 3 of this Article. Any number of offices
may be held by the same person.
SECTION 2. APPOINTMENT OF OFFICERS. The officers of the corporation, except for
subordinate officers appointed in accordance with Section 3 of this Article V,
shall be appointed by the Board of Directors, and shall serve at the pleasure of
the Board of Directors.
SECTION 3. SUBORDINATE OFFICERS. The Board of Directors may appoint, and may
empower the Chair to appoint other officers as required by the business of the
corporation, whose duties shall be as provided in the Bylaws, or as determined
from time to time by the Board of Directors or the Chair.
SECTION 4. REMOVAL AND RESIGNATION OF OFFICERS. Any officer chosen by the Board
of Directors may be removed at any time, with or without cause or notice, by the
Board of Directors. Subordinate officers appointed by persons other than the
Board under Section 3 of this Article may be removed at any time, with or
without cause or notice, by the Board of Directors or by the officer by whom
appointed. Officers may be employed for a specified term under a contract of
employment if authorized by the Board of Directors; such officers may be removed
from office at any time under this section, and shall have no claim against the
corporation or individual officers or Board members because of the removal
except any right to monetary compensation to which the officer may be entitled
under the contract of employment.
Any officer may resign at any time by giving written notice to the corporation.
Resignations shall take effect on the date of receipt of the notice, unless a
later time is specified in the notice. Unless otherwise specified in the notice,
acceptance of the resignation is not necessary to make it
10
<PAGE>
effective. Any resignation is without prejudice to the rights, if any, of the
corporation to monetary damages under any contract of employment to which the
officer is a party.
SECTION 5. VACANCIES IN OFFICES. A vacancy in any office resulting from an
officer's death, resignation, removal, disqualification, or from any other cause
shall be filled in the manner prescribed in these Bylaws for regular election or
appointment to that office.
SECTION 6. CHAIR OF THE BOARD. The Board of Directors may elect a Chair, who
shall preside, if present, at Board meetings and shall exercise and perform such
other powers and duties as may be assigned from time to time by the Board of
Directors.
SECTION 7. PRESIDENT. Except to the extent that the Bylaws or the Board of
Directors assign specific powers and duties to the Chair of the Board (if any),
the President shall be the corporation's general manager and Chief Executive
Officer and, subject to the control of the Board of Directors, shall have
general supervision, direction, and control over the corporation's business and
its officers. The managerial powers and duties of the President shall include,
but are not limited to, all the general powers and duties of management usually
vested in the office of President of a corporation, and the President shall have
other powers and duties as prescribed by the Board of Directors or the Bylaws.
The President shall preside at all meetings of the shareholders and, in the
absence of the Chair of the Board or if there is no Chair of the Board, shall
also preside at meetings of the Board of Directors.
SECTION 8. CHAIR OF THE BOARD. The Chair of the Board, if such an officer be
elected, shall, if present, preside at meetings of the Board of Directors and
exercise and perform such other powers and duties as may be from time to time
assigned by the Board of Directors or prescribed by the By-laws. If there is no
President, the Chair of the Board shall in addition be the Chief Executive
Officer of the corporation and shall have the powers and duties prescribed in
Section 7 of this Article V.
SECTION 9. VICE PRESIDENTS. If desired, one or more Vice Presidents may be
chosen by the Board of Directors in accordance with the provisions for
appointing officers set forth in Section 2 of this Article V. In the absence or
disability of the President, the President's duties and responsibilities shall
be carried out by the highest ranking available Vice President if Vice
Presidents are ranked or, if not, by a Vice President designated by the Board of
Directors. When so acting, a Vice President shall have all the powers of and be
subject to all the restrictions on the President. Vice Presidents of the
corporation shall have such other powers and perform such other duties as
prescribed from time to time by the Board of Directors, the Bylaws, or the
President (or Chair of the Board if there is no President).
SECTION 10. SECRETARY
(a) Minutes.
The Secretary shall keep, or cause to be kept, minutes of all of the
shareholders' meetings and of all other Board meetings. If the Secretary is
unable to be present, the Secretary or the presiding officer of the meeting
shall designate another person to take the minutes of the meeting.
11
<PAGE>
The Secretary shall keep, or cause to be kept, at the principal executive office
or such other place as designated by the Board of Directors, a Book of Minutes
of all meetings and actions of the shareholders, of the Board of Directors, and
of committees of the Board. The minutes of each meeting shall state the time and
place the meeting was held; whether it was regular or special; if special, how
it was called or authorized; the names of Directors present at Board or
committee meetings; the number of shares present or represented at shareholders'
meetings; an accurate account of the proceedings; and when it was adjourned.
(b) Record of Shareholders.
The Secretary shall keep, or cause to be kept, at the principal executive office
or at the office of the transfer agent or registrar, a record or duplicate
record of shareholders. This record shall show the names of all shareholders and
their addresses, the number and classes of shares held by each, the number and
date of share certificates issued to each shareholder, and the number and date
of cancellation of any certificates surrendered for cancellation.
(c) Notice of Meetings.
The Secretary shall give notice, or cause notice to be given, of all
shareholders' meetings, Board meetings, and meetings of committees of the Board
for which notice is required by statute or by the Bylaws. If the Secretary or
other person authorized by the Secretary to give notice fails to act, notice of
any meeting may be given by any other officer of the corporation.
(d) Other Duties.
The Secretary shall keep the seal of the corporation, if any, in safe custody.
The Secretary shall have such other powers and perform other duties as
prescribed by the Board of Directors or by the Bylaws.
SECTION 11. CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall keep, or
cause to be kept, adequate and correct books and records of accounts of the
properties and business transactions of the corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital,
retained earnings, and shares. The books of account shall at all reasonable
times be open to inspection by any Director.
The Chief Financial Officer shall (1) deposit corporate funds and other
valuables in the corporation's name and to its credit with depositaries
designated by the Board of Directors; (2) make disbursements of corporate funds
as authorized by the Board; (3) render a statement of the corporation's
financial condition and an account of all transactions conducted as Chief
Financial Officer whenever requested by the Chair, the President or the Board of
Directors; and (4) have other powers and perform other duties as prescribed by
the Board of Directors or the Bylaws.
Unless the Board of Directors has elected a separate Treasurer, the Chief
Financial Officer shall be deemed to be the treasurer for purposes of giving any
reports or executing any certificates or other documents.
12
<PAGE>
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES, AND OTHER AGENTS
SECTION 1. AGENTS, PROCEEDINGS, AND EXPENSES. For the purposes of this Article,
"agent" means any person who is or was a Director, officer, employee, or other
agent of this corporation, or who is or was serving at the request of this
corporation as a Director, officer, employee, or agent of another foreign or
domestic corporation, partnership, joint venture, trust or other enterprise, or
who was a Director, officer, employee, or agent of a foreign or domestic
corporation that was a predecessor corporation of this corporation or of another
enterprise at the request of such predecessor corporation; "proceeding" means
any threatened, pending, or completed action or proceeding, whether civil,
criminal, administrative, or investigative; and "expenses" includes, without
limitation, attorney fees and any expenses of establishing a right to
indemnification under Section 4 or Section 5(d) of this Article VI.
SECTION 2. ACTIONS OTHER THAN BY THE CORPORATION. This corporation shall have
the power to indemnify any person who was or is a party, or is threatened to be
made a party, to any proceeding (other than an action by or in the right of this
corporation to procure a judgment in its favor) by reason of the fact that such
person is or was an agent of this corporation, against expenses, judgments,
fines, settlements, and other amounts actually and reasonably incurred in
connection with such proceeding if that person acted in good faith and in a
manner that the person reasonably believed to be in the best interests of this
corporation and, in the case of a criminal proceeding, had no reasonable cause
to believe the conduct of that person was unlawful. The termination of any
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent shall not, of itself, create a presumption that the
person did not act in good faith and in a manner that the person reasonably
believed to be in the best interests of this corporation or that the person had
reasonable cause to believe that the person's conduct was not unlawful.
SECTION 3. ACTIONS BY OR IN THE RIGHT OF THE CORPORATION. This corporation shall
have the power to indemnify any person who was or is a party, or is threatened
to be made a party, to any threatened, pending, or completed action by or in the
right of this corporation to procure a judgment in its favor by reason of the
fact that such person is or was an agent of this corporation, against expenses
actually and reasonably incurred by such person in connection with the defense
or settlement of that action, if such person acted in good faith, in a manner
such person believed to be in the best interests of this corporation and its
shareholders. No indemnification shall be made under this Section 3 for the
following:
(a) With respect to any claim, issue, or matter as to which such person has
been adjudged to be liable to this corporation in the performance of such
person's duty to the corporation and its shareholders, unless and only to
the extent that the court in which such proceeding is or was pending shall
determine on application that, in view of all the circumstances of the
case, such person is fairly and reasonably entitled to indemnity for
expenses and then only to the extent that the court shall determine;
(b) Amounts paid in settling or otherwise disposing of a pending action
without court approval; or
13
<PAGE>
(c) Expenses incurred in defending a pending action that is settled or
otherwise disposed of without court approval.
SECTION 4. SUCCESSFUL DEFENSE BY AGENT. To the extent that an agent of this
corporation has been successful on the merits in defense of any proceeding
referred to in Section 2 or 3 of this Article VI, or in defense of any claim,
issue, or matter therein, the agent shall be indemnified against expenses
actually and reasonably incurred by the agent in connection therewith.
SECTION 5. REQUIRED APPROVAL. Except as provided in Section 4 of this Article
VI, any indemnification under this Section shall be made by the corporation only
if authorized in the specific case, after a determination that indemnification
of the agent is proper in the circumstances because the agent has met the
applicable standard of conduct set forth in Section 2 or 3 by one of the
following:
(a) A majority vote of a quorum consisting of Directors who are not parties to
such proceeding;
(b) Independent legal counsel in a written opinion if a quorum of Directors
who are not parties to such a proceeding is not available;
(c) (i) The affirmative vote of a majority of shares of this corporation
entitled to vote represented at a duly held meeting at which a quorum is
present; or
(ii) the written consent of holders of a majority of the outstanding
shares entitled to vote (for purposes of this subsection 5(c), the shares
owned by the person to be indemnified shall not be considered outstanding
or entitled to vote thereon); or
(d) The court in which the proceeding is or was pending, on application made
by this corporation or the agent or the attorney or other person rendering
services in connection with the defense, whether or not such application
by the agent, attorney, or other person is opposed by this corporation.
SECTION 6. ADVANCE OF EXPENSES. Expenses incurred in defending any proceeding
may be advanced by the corporation before the final disposition of such
proceeding on receipt of an undertaking by or on behalf of the agent to repay
such amounts if it shall be determined ultimately that the agent is not entitled
to be indemnified as authorized in this Article VI. By unanimous vote of all
Directors, other than a Director who may be a party to such proceeding, this
provision requiring an undertaking may be waived; provided, however, that such
waiver shall not relieve the agent of liability.
SECTION 7. OTHER CONTRACTUAL RIGHTS. The indemnification provided by this
Article VI shall not be deemed exclusive of any other rights to which those
seeking indemnification may be entitled under any Bylaw, agreement, vote of
shareholders or disinterested Directors, or otherwise, both as to action in an
official capacity and as to action in another capacity while holding such
office, to the extent such additional rights to indemnification are authorized
in the
14
<PAGE>
articles of the corporation. Nothing in this section shall affect any right to
indemnification to which persons other than such Directors and officers may be
entitled by contract or otherwise.
SECTION 8. LIMITATIONS. No indemnification or advance shall be made under this
Article VI, except as provided in Section 4 or Section 5(d), in any circumstance
if it appears:
(a) That it would be inconsistent with a provision of the articles, Bylaws, a
resolution of the shareholders, or an agreement in effect at the time of
the accrual of the alleged cause of action asserted in the proceeding in
which expenses were incurred or other amounts were paid, which prohibits
or otherwise limits indemnification; or
(b) That it would be inconsistent with any condition expressly imposed by a
court in approving settlement.
SECTION 9. INSURANCE. This corporation may purchase and maintain insurance on
behalf of any agent of the corporation insuring against any liability asserted
against or incurred by the agent in that capacity or arising out of the agent's
status as such, whether or not this corporation would have the power to
indemnify the agent against that liability under the provisions of this Article
VI.
SECTION 10. FIDUCIARIES OF CORPORATE EMPLOYEE BENEFIT PLAN. This Article VI does
not apply to any proceeding against any trustee, investment manager, or other
fiduciary of an employee benefit plan in that person's capacity as such, even
though that person may also be an agent of the corporation. The corporation
shall have the power to indemnify, and to purchase and maintain insurance on
behalf of any such trustee, investment manager, or other fiduciary of any
benefit plan for any or all of the Directors, officers, and employees of the
corporation or any of its subsidiary or affiliated corporations.
SECTION 11. SURVIVAL OF RIGHTS. The rights provided by this Article VI shall
continue for a person who has ceased to be an agent and shall inure to the
benefit of the heirs, executors, and administrators of such person.
SECTION 12. EFFECT OF AMENDMENT. Any amendment, repeal, or modification of this
Article VI shall not adversely affect an agent's right or protection existing at
the time of such amendment, repeal, or modification.
SECTION 13. SETTLEMENT OF CLAIMS. The corporation shall not be liable to
indemnify any agent under this Article VI for (a) any amounts paid in settlement
of any action or claim effected without the corporation's written consent, which
consent shall not be unreasonably withheld or (b) any judicial award, if the
corporation was not given a reasonable and timely opportunity to participate, at
its expense, in the defense of such action.
SECTION 14. SUBROGATION. In the event of payment under this Article VI, the
corporation shall be subrogated to the extent of such payment to all of the
rights of recovery of the agent, who shall execute all papers required and shall
do everything that may be necessary to secure such rights, including the
execution of such documents as may be necessary to enable the corporation
effectively to bring suit to enforce such rights.
15
<PAGE>
SECTION 15. NO DUPLICATION OF PAYMENTS. The corporation shall not be liable
under this Article VI to make any payment in connection with any claim made
against the agent to the extent the agent has otherwise actually received
payment, whether under a policy of insurance, agreement, vote, or otherwise, of
the amounts otherwise indemnifiable under this Article.
ARTICLE VII
RECORDS AND REPORTS
SECTION 1. MAINTENANCE OF SHAREHOLDER RECORD AND INSPECTION BY SHAREHOLDERS. The
corporation shall keep at its principal executive office or at the office of its
transfer agent or registrar, as determined by resolution of the Board of
Directors, a record of the names and addresses of all shareholders and the
number and class of shares held by each shareholder, a copy certified by the
Secretary of State of the corporation's articles of incorporation and all
amendments thereto, and a copy certified by an officer of the corporation of its
bylaws and all amendments thereto.
Any person who has been a stockholder of record for at least 6 months
immediately preceding his or her demand, or any shareholder or shareholders
holding at least 5 percent in the aggregate of the outstanding voting shares of
the corporation shall have the right to inspect and copy the record of
shareholders' names and addresses and shareholdings during usual business hours,
on five days' prior written demand on the corporation.
SECTION 2. MAINTENANCE AND INSPECTION OF BYLAWS. The corporation shall keep at
its principal executive office, or if its principal executive office is not in
the State of Nevada, at its principal business office in this state, a copy
certified by an officer of the corporation of the Bylaws as amended to date,
which shall be open to inspection by the shareholders at all reasonable times
during office hours. If the principal executive office of the corporation is
outside the State of Nevada and the corporation has no principal business office
in this state, the Secretary shall, on the written request of any shareholder,
furnish to that shareholder a copy of the Bylaws as amended to date.
SECTION 3. MAINTENANCE AND INSPECTION OF MINUTES AND ACCOUNTING RECORDS. The
minutes of proceedings of the shareholders, Board of Directors, and committees
of the Board, and the accounting books and records, shall be kept at the
principal executive office of the corporation, or at such other place or places
as designated by the Board of Directors. The minutes shall be kept in written
form, and the accounting books and records shall be kept either in written form
or in a form capable of being converted into written form. The minutes and
accounting books and records shall be open to inspection on the written demand
of any shareholder or holder of a voting trust certificate at any reasonable
time during usual business hours, for a purpose reasonably related to the
holder's interests as a shareholder or holder of a voting trust certificate. The
inspection may be made in person or by an agent or attorney, and shall include
the right to copy and make extracts. These rights of inspection shall extend to
the records of each subsidiary of the corporation.
SECTION 4. INSPECTION BY DIRECTORS. Every Director shall have the absolute right
at any reasonable time to inspect all books, records, and documents of every
kind and the physical
16
<PAGE>
properties of the corporation and each of its subsidiary corporations. This
inspection by a Director may be made in person or by an agent or attorney and
the right of inspection includes the right to copy and make extracts of
documents.
SECTION 5. ANNUAL REPORT TO SHAREHOLDERS. The Board of Directors shall cause an
annual report to be sent to the shareholders not later than 120 days after the
close of the fiscal year adopted by the corporation. This report shall be sent
at least 15 days (if third-class mail is used, 35 days) before the annual
meeting of shareholders to be held during the next fiscal year and in the manner
specified for giving notice to shareholders in Section 5 of Article II of these
Bylaws. The annual report shall contain a balance sheet as of the end of the
fiscal year and an income statement and a statement of cash flows for the fiscal
year prepared in accordance with generally accepted accounting principles
applied on a consistent basis and accompanied by any report of independent
accountants, or, if there is no such report, the certificate of an authorized
officer of the corporation that the statements were prepared without audit from
the corporation's books and records.
SECTION 6. ANNUAL REPORT TO SHAREHOLDERS. Inasmuch as, and for as long as, there
are fewer than 100 shareholders, the requirement of an annual report to
shareholders referred to in Section 5 is expressly waived. However, nothing in
this provision shall be interpreted as prohibiting the Board of Directors from
issuing annual or other periodic reports to the shareholders, as the Board
considers appropriate.
SECTION 7. FINANCIAL STATEMENTS. The corporation shall keep a copy of each
annual financial statement, quarterly or other periodic income statement, and
accompanying balance sheets prepared by the corporation on file in the
corporation's principal executive office for 12 months; these documents shall be
exhibited at all reasonable times, or copies provided, to any shareholder on
demand.
If no annual report for the last fiscal year has been sent to shareholders, on
written request of any shareholder made more than 120 days after the close of
the fiscal year the corporation shall deliver or mail to the shareholder, within
30 days after receipt of the request, a balance sheet as of the end of that
fiscal year and an income statement and statement of cash flows for that fiscal
year.
A shareholder or shareholders holding 5 percent or more of the outstanding
shares of any class of stock of the corporation may request in writing an income
statement for the most recent three-month, six-month, or nine-month period
(ending more than 30 days before the date of the request) of the current fiscal
year, and a balance sheet of the corporation as of the end of that period. If
such documents are not already prepared, the chief financial officer shall cause
them to be prepared and shall deliver the documents personally or mail them to
the requesting shareholders within 30 days after receipt of the request. A
balance sheet, income statement, and statement of cash flows for the last fiscal
year shall also be included, unless the corporation has sent the shareholders an
annual report for the last fiscal year.
Quarterly income statements and balance sheets referred to in this section shall
be accompanied by the report, if any, of independent accountants engaged by the
corporation or
17
<PAGE>
the certificate of an authorized corporate officer stating that the financial
statements were prepared without audit from the corporation's books and records.
SECTION 8. ANNUAL STATEMENT OF GENERAL INFORMATION.
(a) Every year, during the calendar month in which the original Articles of
Incorporation were filed with the Nevada Secretary of State, the
corporation shall file a statement with the Secretary of State on the
prescribed form, setting forth the authorized number of Directors; the
names and complete business or residence addresses of all incumbent
Directors; the names and complete business or residence addresses of the
President, the Secretary, and the Treasurer; the street address of the
corporation's principal executive office or principal business office in
this state; a statement of the general type of business constituting the
principal business activity of the corporation; and a designation of the
agent of the corporation for the purpose of service of process.
(b) Notwithstanding the provisions of paragraph (a) of this section, if there
has been no change in the information in the corporation's last annual
statement on file in the Secretary of State's office, the corporation may,
in lieu of filing the annual statement described in paragraph (a) of this
section, advise the Secretary of State, on the appropriate form, that no
changes in the required information have occurred during the applicable
period.
ARTICLE VIII
GENERAL CORPORATE MATTERS
SECTION 1. RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING. For purposes
of determining the shareholders entitled to receive payment of dividends or
other distributions or allotment of rights, or entitled to exercise any rights
in respect of any other lawful action (other than voting at and receiving notice
of shareholders' meetings and giving written consent of the shareholders without
a meeting), the Board of Directors may fix in advance a record date, which shall
be not more than 60 nor less than 10 days before the date of the dividend
payment, distribution, allotment, or other action. If a record date is so fixed,
only shareholders of record at the close of business on that date shall be
entitled to receive the dividend, distribution, or allotment of rights, or to
exercise the other rights, as the case may be, notwithstanding any transfer of
shares on the corporation's books after the record date, except as otherwise
provided by statute.
If the Board of Directors does not so fix a record date in advance, the record
date shall be at the close of business on the later of (1) the day on which the
Board of Directors adopts the applicable resolution or (2) the 60th day before
the date of the dividend payment, distribution, allotment of rights, or other
action.
SECTION 2. AUTHORIZED SIGNATORIES FOR CHECKS. All checks, drafts, other orders
for payment of money, notes, or other evidences of indebtedness issued in the
name of or payable to the corporation shall be signed or endorsed by such person
or persons and in such manner authorized from time to time by resolution of the
Board of Directors.
18
<PAGE>
SECTION 3. EXECUTING CORPORATE CONTRACTS AND INSTRUMENTS. Except as otherwise
provided in the articles or in these Bylaws, the Board of Directors by
resolution may authorize any officer, officers, agent, or agents to enter into
any contract or to execute any instrument in the name of and on behalf of the
corporation. This authority may be general or it may be confined to one or more
specific matters. No officer, agent, employee, or other person purporting to act
on behalf of the corporation shall have any power or authority to bind the
corporation in any way, to pledge the corporation's credit, or to render the
corporation liable for any purpose or in any amount, unless that person was
acting with authority duly granted by the Board of Directors as provided in
these Bylaws, or unless an unauthorized act was later ratified by the
corporation.
SECTION 4. CERTIFICATES FOR SHARES. A certificate or certificates for shares of
the capital stock of the corporation shall be issued to each shareholder when
any of the shares are fully paid.
In addition to certificates for fully paid shares, the Board of Directors may
authorize the issuance of certificates for shares that are partly paid and
subject to call for the remainder of the purchase price, provided that the
certificates representing partly paid shares shall state the total amount of the
consideration to be paid for the shares and the amount actually paid.
All certificates shall certify the number of shares and the class or series of
shares represented by the certificate. All certificates shall be signed in the
name of the corporation by (1) either the Chair of the Board of Directors, the
Vice Chair of the Board of Directors, the President, or any Vice President, and
(2) either the Chief Financial Officer, any Assistant Treasurer, the Secretary,
or any Assistant Secretary.
Any or all of the signatures on the certificate may be facsimile. If any
officer, transfer, agent, or registrar who has signed or whose facsimile
signature has been placed on a certificate shall have ceased to be that officer,
transfer agent, or registrar before that certificate is issued, the certificate
may be issued by the corporation with the same effect as if that person were an
officer, transfer agent, or registrar at the date of issue.
SECTION 5. LOST CERTIFICATES. Except as provided in this Section 5, no new
certificates for shares shall be issued to replace old certificates unless the
old certificate is surrendered to the corporation for cancellation at the same
time. If share certificates or certificates for any other security have been
lost, stolen, or destroyed, the Board of Directors may authorize the issuance of
replacement certificates on terms and conditions as required by the Board, which
may include a requirement that the owner give the corporation a bond (or other
adequate security) sufficient to indemnify the corporation against any claim
that may be made against it (including any expense or liability) on account of
the alleged loss, theft, or destruction of the old certificate or the issuance
of the replacement certificate.
SECTION 6. SHARES OF OTHER CORPORATIONS: HOW VOTED. Shares of other corporations
standing in the name of this corporation shall be voted by one of the following
persons, listed in order of preference:
19
<PAGE>
(1) Chair of the Board, or person designated by the Chair of the Board; (2)
President, or person designated by the President; (3) First Vice President, or
person designated by the First Vice President; (4) other person designated by
the Board of Directors.
The authority to vote shares granted by this section includes the authority to
execute a proxy in the name of the corporation for purposes of voting the
shares.
SECTION 7. REIMBURSEMENT OF CORPORATION IF PAYMENT NOT TAX DEDUCTIBLE. If all or
part of the compensation, including expenses, paid by the corporation to a
Director, officer, employee, or agent is finally determined not to be allowable
to the corporation as a federal or state income tax deduction, the Director,
officer, employee, or agent to whom the payment was made shall repay to the
corporation the amount disallowed. The Board of Directors shall enforce
repayment of each such amount disallowed by the taxing authorities.
SECTION 8. CONSTRUCTION AND DEFINITIONS. Unless the context requires otherwise,
the general provisions, rules of construction, and definitions in NRS 78.010
through 78.795 shall govern the construction of these Bylaws. Without limiting
the generality of this provision, the singular number includes the plural, the
plural number includes the singular, and the term "person" includes both a
corporation and a natural person.
ARTICLE IX
AMENDMENTS
SECTION 1. AMENDMENT BY SHAREHOLDERS. New Bylaws may be adopted or these Bylaws
may be amended or repealed by the vote or written consent of holders of a
majority of the outstanding shares entitled to vote; provided, however, that if
the Articles of Incorporation of the corporation set forth the number of
authorized Directors of the corporation, the authorized number of Directors may
be changed only by an amendment of the Articles of Incorporation.
SECTION 2. POWERS OF DIRECTORS. Subject to the right of the Shareholders to
adopt, amend or repeal Bylaws, as provided in Section 1 of this Article IX, the
Board of Directors may adopt, amend or repeal any of these Bylaws other than a
Bylaw or amendment thereof changing the authorized number of Directors.
20
<PAGE>
LIONS GATE INVESTMENT LIMITED
SECRETARY'S CERTIFICATE OF ADOPTION OF BYLAWS
BY
A DIRECTOR
ADOPTION BY DIRECTOR.
The undersigned Secretary of LIONS GATE INVESTMENT LIMITED, hereby certifies
that at a duly held meeting held on the 1st day of November, 1999, the Board of
Directors of this corporation did approve as the Bylaws of this corporation the
Bylaws which precede this certification in the Minute Book of this corporation.
Executed this 1st day of November, 1999.
/s/ Gerald R. Tuskey
--------------------
Secretary
21
EXHIBIT 5.1
[EVERS & HENDRICKSON LETTERHEAD]
April 17, 2000
Securities and Exchange Commission
Division of Corporate Finance
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Lions Gate Investment Limited, Legality of Shares
Dear Madam/Sirs:
We have made reasonable inquiry and are of the opinion that the securities being
offered, will, when sold, be legally issued, fully paid and non-assessable.
We are not opining as to any other statements contained in the Form SB-2
registration statement, nor as to matters that occur after the date thereof.
Very truly yours,
EVERS & HENDRICKSON, LLP
By: /s/ Antoine M. Devine, Partner
cc: Keith A Ebert
EXHIBIT 23.1
[DAVIDSON & COMPANY LETTERHEAD]
April 20, 2000
LIONS GATE INVESTMENT LIMITED
Suite 2901 - 1201 Marinaside Crescent
Vancouver, BC
V6Z 2V2
RE: FORM 2-SB
Dear Sirs:
We refer to the Form 2-SB Registration Statement of Lions Gate Investment
Limited (the "Company") filed pursuant to the Securities Exchange Act of 1933,
as amended.
We conducted an audit of the Company's financial statements and have provided an
audit report dated April 11, 2000 in connection with the preparation of the Form
2-SB. We hereby consent to the filing of our audit report as part of the
aforementioned Registration Statement.
"DAVIDSON & COMPANY"
Vancouver, Canada Chartered Accountants
A Member of SC INTERNATIONAL
Suite 1200, Stock Exchange Tower, 609
Granville Street, P.O. Box 10372,
Pacific Centre, Vancouver, BC, Canada, V7Y 1G6
Telephone (604) 687-0947 Fax (604) 687-6172
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AUDITED
FINANCIAL STATEMENTS FOR THE PERIOD ENDED FEBRUARY 29, 2000 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001111697
<NAME> LIONS GATE INVESTMENT LIMITED
<MULTIPLIER> 1
<CURRENCY> US$
<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> OCT-31-2000
<PERIOD-START> OCT-29-1999
<PERIOD-END> FEB-29-2000
<EXCHANGE-RATE> 1.0
<CASH> 2,487
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,487
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,487
<CURRENT-LIABILITIES> 1,500
<BONDS> 0
0
0
<COMMON> 470
<OTHER-SE> 517
<TOTAL-LIABILITY-AND-EQUITY> 987
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (3,713)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,713)
<EPS-BASIC> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
