File No. 333-35760
--------------------------------------------------------------------------------
As filed with the Securities & Exchange Commission on July 18, 2000
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM SB-2 - AMENDMENT NO. 1
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
<PAGE>
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, 500,000 $0.20 $100,000 $26.40
Par value
$0.0001
----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
and pursuant to Rule 457.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission acting pursuant to said section 8(a),
may determine.
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 Not Applicable
</TABLE>
2
<PAGE>
<TABLE>
<S> <C> <C>
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
</TABLE>
3
<PAGE>
<TABLE>
<S> <C> <C>
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
28. Undertakings Undertakings
</TABLE>
4
<PAGE>
INITIAL PUBLIC OFFERING
PROSPECTUS
LIONS GATE INVESTMENT LIMITED
500,000 SHARES OF COMMON STOCK
$0.20 PER SHARE
Lions Gate Investment Limited is a startup company organized in the State of
Nevada as a blank check company. Our 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 offering will expire 12 months from the effective date of this prospectus.
The offering may be extended for an additional 90 days in our discretion.
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 9.
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 $0.20 $100,000.00
Underwriting discounts/commissions $0.00 $0.00
Estimated offering expenses $0.00 $0.00
Net offering proceeds to Lions Gate Investment $0.20 $100,000.00
Limited
</TABLE>
The date of this Prospectus is July 18, 2000
5
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
PROSPECTUS SUMMARY ................................................................................................... 7
LIMITED STATE REGISTRATION ........................................................................................... 7
SUMMARY FINANCIAL INFORMATION ........................................................................................ 7
RISK FACTORS ......................................................................................................... 9
We have no operating history or revenue which would permit you to judge the probability of our success ............ 9
Money you invest will be unavailable for your use for an extended period of time .................................. 9
The amount of money we are raising may not be enough for us to succeed financially or to fund the development
of our business acquisition ....................................................................................... 10
We have no funds and do not have a full time management team that can conduct a complete investigation and
analysis of a target, merger or acquisition candidate. We may not find a suitable candidate ...................... 10
A change in control of the company and change in management may occur which could adversely affect our success..... 10
There is no market on which our shares trade and there is a limited number of states in which you may sell
your shares which severely limits your liquidity .................................................................. 10
We have no agreement for a business combination or other transaction in place ..................................... 10
Our management is under no contractual obligation to remain with us and their departure could cause our
business to fail .................................................................................................. 11
Our sole director and officer is affiliated with other blank check companies which creates a conflict of
interest .......................................................................................................... 11
Our proposed acquisition may result in new management and a loss of control of corporate affairs .................. 11
We will not engage professional underwriters to help sell our shares .............................................. 11
Determination of Offering Price ................................................................................... 12
Management may sell shares at a premium to the price paid to other shareholders ................................... 12
HOW RULE 419 PROTECTS YOU UNTIL WE FIND AN ACQUISITION CANDIDATE ..................................................... 12
DILUTION ............................................................................................................. 13
USE OF PROCEEDS ...................................................................................................... 14
CAPITALIZATION ....................................................................................................... 15
DESCRIPTION OF BUSINESS .............................................................................................. 15
PLAN OF OPERATION .................................................................................................... 16
DESCRIPTION OF PROPERTY .............................................................................................. 18
PRINCIPAL SHAREHOLDERS ............................................................................................... 18
MANAGEMENT ........................................................................................................... 19
EXECUTIVE COMPENSATION ............................................................................................... 20
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ....................................................................... 21
LEGAL PROCEEDINGS .................................................................................................... 21
MARKET FOR OUR COMMON STOCK .......................................................................................... 21
DESCRIPTION OF SECURITIES ............................................................................................ 22
SHARES ELIGIBLE FOR FUTURE RESALE .................................................................................... 23
WHERE CAN YOU FIND MORE INFORMATION? ................................................................................. 23
REPORTS TO STOCKHOLDERS .............................................................................................. 24
PLAN OF DISTRIBUTION ................................................................................................. 24
LEGAL MATTERS ........................................................................................................ 25
EXPERTS .............................................................................................................. 25
FINANCIAL STATEMENTS ................................................................................................. 26
INDEMNIFICATION OF OFFICERS AND DIRECTORS ............................................................................ 27
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION .......................................................................... 27
RECENT SALES OF UNREGISTERED SECURITIES .............................................................................. 27
</TABLE>
6
<PAGE>
PROSPECTUS SUMMARY
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 or agreements 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 to 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: 500,000 shares of common stock, $0.001 par value, being offered
at $0.20 per share.
Common stock outstanding prior to the offering: 4,700,000 shares
Common stock to be outstanding after the 5,200,000 shares
offering:
</TABLE>
LIMITED STATE REGISTRATION
Our common shares may not be sold by us or resold by you in the states of
Alaska, Arizona, Idaho, Illinois, Iowa, Kansas, Kentucky, Maryland,
Massachusetts, Missouri, Nebraska, North Dakota, Pennsylvania, South Dakota,
Tennessee, Utah, Vermont and Washington.
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 has 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
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
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 from this offering can be
released, we must sign an agreement to acquire a business meeting certain
criteria. The agreement must provide for the acquisition of a business or assets
for which the fair value 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 certain prescribed conditions that must be
satisfied before the cash and shares can be released from escrow.
Reconfirmation Offering
The reconfirmation offer must be made 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 portion of the funds
and any related interest or dividends
8
<PAGE>
held in the escrow account on the investor's behalf will be returned to
the investor within 5 business days by first class mail.
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 an acquisition has not closed within 18 months of the effective 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.
Release Of Securities And Funds
-------------------------------
The cash from this offering 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 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 have 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.
We have closed the acquisition of a business with a fair value of at
least 80% of the maximum proceeds.
RISK FACTORS
An investment in our business is risky and could result in a loss of your entire
investment. The risk factors include the following:
We have no operating history or revenue which would permit you to judge the
probability of our success.
--------------------------------------------------------------------------------
We have no operating history nor any revenues from operations since our
incorporation. We have no significant assets or financial resources. Our lack of
operating history makes it very difficult for you to make an investment decision
based upon our managerial skill or ability to successfully complete a merger
with an acquisition candidate. In the event our business fails as a result of
our lack of experience, you could lose your entire investment.
Money you invest will be unavailable for your use for an extended period of
time.
--------------------------------------------------------------------------------
It is likely that we will require many months to locate an acquisition
candidate. It is possible that you will have to wait 18 months from the
effective date of this prospectus for the return of your funds without interest.
Your funds will be unavailable for any other use during this period. Any money
you invest in us will be returned only in the event investors representing 80%
of the maximum offering proceeds do not elect to reconfirm their investment in
the business combination which we may select.
9
<PAGE>
The amount of money we are raising may not be enough for us to succeed
financially or to fund the development of our business acquisition.
--------------------------------------------------------------------------------
As of February 29, 2000, we had $2,487 in assets and $1,500 in liabilities. We
had $987 in our treasury. Even if all the shares which we are offering are sold,
the proceeds may not be enough for us to fund the development of our acquisition
candidate. Many of the acquisition candidates we will be reviewing will require
large sums of money to succeed, perhaps even millions of dollars. If we are
unable to raise additional financing, our company could fail and you could lose
your entire investment.
We have no funds and do not have a full time management team that can conduct a
complete investigation and analysis of a target, merger or acquisition
candidate.
--------------------------------------------------------------------------------
We may not find a suitable candidate. We do not have funds to hire skilled
managers and current management of our company has limited time to complete a
full investigation of potential acquisition candidates. As a result, we may make
a poor decision in which business which we acquire or we may be unable to
identify any acquisition candidate. In the event we do not identify an
acquisition candidate, you will lose the use of your investment money without
interest for a period of approximately 18 months. In the event management makes
a poor decision on which candidate should be acquired and this offering is
reconfirmed as required by Rule 419, you may lose your entire investment as a
result of the failure of our business.
A change in control of the company and change in management may occur which
could adversely affect our success.
--------------------------------------------------------------------------------
A business combination involving the issuance of our shares may result in
shareholders of a private company obtaining a controlling interest in our
company. A business combination may also result in our director being required
to resign or in management being required to sell all or a portion of their
shares. A change of control or change in management could result in the
appointment of new members of management who are not as capable as current
management or who may make business decisions which cause the failure of our
company.
There is no market on which our shares trade and there is a limited number of
states in which you may sell your shares which severely limits your liquidity.
--------------------------------------------------------------------------------
Even if we are successful in completing a merger or acquisition, we may not be
successful in listing our shares on a public market. Until our shares are listed
on a public market, you have no liquidity to sell your shares and you will not
be able to obtain a return on your investment. If our shares are never listed on
a public market, it may be impossible for you to recover the money you invested
in our shares. The following states restrict the sale and resale of shares of
blank check companies: Alaska, Arizona, Idaho, Illinois, Iowa, Kansas, Kentucky,
Maryland, Massachusetts, Missouri, Nebraska, North Dakota, Pennsylvania, South
Dakota, Tennessee, Utah, Vermont and Washington. You are unable to liquidate
your investment by selling our shares in these states.
We have no agreement for a business combination or other transaction in place.
--------------------------------------------------------------------------------
We have no arrangement, agreement or understanding to engage in a merger, joint
venture or acquisition of a private or public entity. We may not successfully
identify a suitable business opportunity or conclude a business combination.
Management has not identified any particular industry or specific business
within an industry for evaluation. In the event that we are unable to
10
<PAGE>
complete a business acquisition, the funds you invest will be unavailable for
your use for up to 18 months.
Our management is under no contractual obligation to remain with us and their
departure could cause our business to fail.
--------------------------------------------------------------------------------
Our sole director and officer, Mr. Keith Ebert, has varied business interests
and is working for other blank check companies. Mr. Ebert has not signed a
written employment agreement with us and we cannot afford to pay Mr. Ebert. In
the event Mr. Ebert decides to resign as director and officer of our company, we
may be unable to attract another qualified officer and director which would
severely impact the company's ability to find an acquisition candidate. In the
event Mr. Ebert resigns after we conclude an acquisition, his departure could
result in the failure of our company and the loss of your entire investment.
Our sole director and officer is affiliated with other blank check companies
which creates a conflict of interest.
--------------------------------------------------------------------------------
Our sole director and officer is affiliated with three other blank check
companies, Cascadia Capital Corporation, Fidelity Capital Concepts Limited and
Triple 8 Development Corporation which creates a conflict of interest. The
identification of a merger target or acquisition candidate is the sole
responsibility of Mr. Ebert. He will decide which of the blank check companies
he is affiliated with will acquire which acquisition candidate. As a result, it
is possible that Mr. Ebert may choose acquisition candidates for other blank
check companies instead of our company or may choose a more successful
acquisition candidate for another blank check company. This conflict of interest
could result in our company never identifying an acquisition candidate or in
selecting a poor acquisition candidate resulting in the failure of our business.
Mr. Ebert also has other business interests which demand his time and attention
and which may conflict with his ability to devote sufficient time to us to make
our business a success.
Our proposed acquisition may result in new management and a loss of control of
corporate affairs.
--------------------------------------------------------------------------------
A business combination involving the issuance of our common stock may result in
our current shareholders losing controlling interest to the shareholders of
another company. If this occurs, our sole officer and director, Mr. Keith Ebert,
may be forced or requested to resign his positions in order for new management
to be appointed. New management may make business decisions which are not in the
interest of our current shareholders and a change of control may result in our
current shareholders losing direction over our corporate affairs.
We will not engage professional underwriters to help sell our shares.
--------------------------------------------------------------------------------
We are selling shares through our president, Mr. Keith Ebert, without the use of
a professional securities underwriting firm. Professional underwriters have
extensive contacts and networks which they can rely on in raising money for
companies. Professional underwriters also conduct extensive due diligence on
potential acquisition candidates. Our management does not have an extensive
network of contacts which can finance our company nor does our management have
the time availability to complete a due diligence review of acquisition
candidates to the extent that would be completed by a professional underwriter.
Our decision not to use a professional underwriter could result in us not
raising enough capital to attract an acquisition candidate or in selecting a
poor acquisition candidate. The result could be the failure of our business and
the loss of your entire investment.
11
<PAGE>
Determination of Offering Price
-------------------------------
The offering price of $0.20 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
Management may sell shares at a premium to the price paid to other shareholders.
--------------------------------------------------------------------------------
Management may consent to the purchase of a portion or all of their
shareholdings as a condition or in connection with a proposed merger or
acquisition. A premium may be paid for management shares in connection with such
a merger or acquisition transaction as management shares represent a control
position in the company. The potential for management's shares being purchased
at a premium could put management in a conflict of interest position where
management's own pecuniary interests rank ahead of those of the company's other
shareholders. This could result in management agreeing to an acquisition which
is in management's best interests and which may be less beneficial to the
company's other shareholders.
HOW RULE 419 PROTECTS YOU UNTIL WE FIND AN ACQUISITION CANDIDATE
Rule 419 requires that your money and the securities purchased by you and other
investors in this offering, be deposited into an escrow or trust account. 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:
(1) We must sign an agreement for the acquisition of a business or
asset which has a fair value of at least 80% of the maximum
offering proceeds
(2) We must file a post-effective amendment to the registration
statement that includes the results of this offering including
how much we raised, how much we have spent and what we still
have in escrow. We must disclose the specific amount and use
of funds spent by us, including, payments to officers,
directors, controlling shareholders or affiliates. The
post-effective amendment must also contain information
regarding the acquisition candidate and business, including
audited financial statements.
(3) We will mail a copy of the prospectus to each investor within
five business days of a post-effective amendment. 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.
12
<PAGE>
Accordingly, we have entered into an escrow agreement with City National Bank
which provides that:
Your funds 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 interest, 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 not be transferred or
disposed.
DILUTION
The difference between the initial public offering price per share of our shares
and the net tangible book value per share after this offering constitutes the
dilution to investors in our 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 500,000 shares of common stock offered through this
prospectus at an initial public offering price of $0.20 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 $0.0194
per share. This represents an immediate increase in net tangible book value of
$0.0192 per share to existing shareholders and an immediate dilution of $0.9806
per share to investors in this offering. The following table illustrates this
per share dilution:
<TABLE>
<S> <C> <C>
Public offering price per share $0.20
Net tangible book value per share before offering $0.0002
Increase per share attributable to new investors $0.0192
-------
Dilution per share to new investors $0.9806
=======
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES BEFORE MONEY RECEIVED FOR SHARES BEFORE NET TANGIBLE BOOK VALUE PER SHARE
OFFERING OFFERING BEFORE OFFERING
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
4,700,000 2,450.00 0.0002
----------------------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES AFTER TOTAL AMOUNT OF MONEY PRO-FORMA NET TANGIBLE BOOK VALUE
OFFERING RECEIVED FOR SHARES PER SHARE AFTER OFFERING
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
5,200,000 102,450.00 0.0194
----------------------------------------------------------------------------------------------------------------------
</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 500,000 9.6% $100,000.00 98% $0.20
-----------------------------------------------------------------------------------------------------------------
Existing Shareholders 4,700,000 90.4% $2,450.00 2% $0.001
-----------------------------------------------------------------------------------------------------------------
</TABLE>
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. We will receive these funds if we close a business combination.
We have not incurred and do not intend to incur 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.
After the reconfirmation offering and the closing of a business combination, we
will receive $100,000 less any amount returned to investors who did not
reconfirm their investment under Rule 419.
Offering expenses referred to in the following table include filing, printing,
legal, accounting, transfer agent and escrow agent fees. Management will pay
these expenses estimated to be $10,000. All offering proceeds will be held in
escrow pending a business combination.
<TABLE>
<CAPTION>
ASSUMING MAXIMUM OFFERING
-----------------------------------
AMOUNT PERCENT
----------- ---------
<S> <C> <C>
Offering Expenses $Nil 0%
Working Capital $100,000 100%
Total $100,000 100%
</TABLE>
14
<PAGE>
The money we receive 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 City
National Bank.
CAPITALIZATION
The following table shows our capitalization as of February 29, 2000.
<TABLE>
<CAPTION>
<S> <C>
Stockholders' Equity:
Common stock, $0.0001 par value;
Authorized 100,000,000 shares,
Issued and outstanding
4,700,000 shares $470
Additional paid-in capital 4,230
Deficit accumulated during the development period (3,713)
Total stockholders equity 987
Total Capitalization 987
</TABLE>
DESCRIPTION OF BUSINESS
We were 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 our
shareholders, we have not commenced any operational activities. We are a blank
check company, whose sole purpose at this time is to locate and consummate a
merger or acquisition with a private entity.
Our sole officer and director, Mr. Keith Ebert, has been instrumental in setting
up our company. Mr. Ebert provides free office space to the company and has
financed the company's costs to date. In consideration of Mr. Ebert's efforts,
we issued Mr. Ebert 2,500,000 common shares at a deemed price of $0.001 per
share.
The Securities and Exchange Commission defines blank check companies as any
development stage company that is issuing a penny stock 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. Management does not intend to
undertake any efforts to cause a market to develop in our securities until we
have successfully implemented our business plan.
Investment Company Act of 1940
------------------------------
We will be subject to regulation under the Securities Act of 1933 and the
Securities Exchange Act of 1934. Management believes we will not be subject to
regulation under the Investment Company Act of 1940, since we will not be
engaged in the business of investing or trading in securities.
15
<PAGE>
PLAN OF OPERATION
We seek to acquire assets or shares of a business that generates revenues, in
exchange for our shares. . When this registration statement becomes effective,
our President will attempt to find an acquisition candidate. Our President has
not engaged in any preliminary contact or discussions with any other company
regarding the possibility of an acquisition or merger as of the date of this
registration statement.
We will provide our shareholders with complete disclosure documentation
concerning potential business opportunities. Disclosure is expected to be in the
form of a proxy or information statement.
Our Director intends to obtain certain assurances of value, including statements
of assets and liabilities, material contracts or accounts receivable statements
before closing a transaction.
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 will be provided by the directors or officers. We do
not anticipate having to raise capital in the next twelve months. We do not
expect to acquire any plant or significant equipment.
We have no full time employees. Mr. Keith Ebert is our only part time employee.
Mr. Ebert has agreed to allocate a portion of his time to our activities,
without compensation. Mr. Ebert anticipates that our business plan can be
implemented by him devoting approximately ten (10) hours per month to our
business affairs. We do not expect any significant changes in the number of
employees.
General Business Plan
---------------------
Our purpose is to acquire an interest in a business which seeks the perceived
advantages of an Exchange Act registered corporation. We will not restrict our
search to any specific business or, industry. Management anticipates that it may
be able to participate in only one potential business venture because we have
nominal assets and limited financial resources.
We may seek a business combination with companies that have recently commenced
operations. It is likely that any business we select will require additional
capital to expand into new products or markets.
We anticipate that the selection of a business opportunity will be complex and
extremely risky. Due to general economic conditions, rapid technological
advances and shortages of available capital, management believes there are
numerous firms seeking the perceived benefits of a publicly registered
corporation. Business opportunities may occur in different industries and at
various stages of development.
We currently 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.
16
<PAGE>
The analysis of new business opportunities will be undertaken by Mr. Keith Ebert
who is not a professional business analyst. Management intends to concentrate on
identifying business opportunities that may be brought to our attention through
Mr. Ebert's business associations. 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;
* 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 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.
We expect to meet personally with management and key personnel of the business
opportunity as part of our due diligence investigation. To the extent possible,
we intend 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 using outside consultants or advisors, except for legal counsel
and accountants. 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 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. If additional funding is necessary, management and or shareholders
will continue to provide capital or arrange for additional
17
<PAGE>
outside funding. If a merger candidate cannot be found within a reasonable
period of time, management will not continue to provide capital.
How Our Acquisition May be Structured
-------------------------------------
To close our business acquisition, we may become 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 closing, 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. 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. All sales will be made
in compliance with the securities laws of the United States and any applicable
state.
Management may visit material facilities, obtain independent verification of
information and check references of management and key personnel. We will
participate in a business opportunity only after the negotiation and signing of
appropriate written agreements
Negotiations with target company management are expected to focus on the
percentage of our company that the target company shareholders will acquire. Our
percentage ownership in the combined company will likely be significantly lower
than our current ownership interest.
Competition
-----------
We are an insignificant participant among the firms that engage in the
acquisition of business opportunities. There are many established venture
capital groups 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.
18
<PAGE>
<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
Common Management as a 2,500,000 shares 53.19%
group Direct Ownership
</TABLE>
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, C.F.O. 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 elected. 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 or director.
Resumes
-------
Keith Ebert was appointed to his positions on October 30, 1999. He devotes his
time on an as needed basis which he expects 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. Mr. Ebert worked for Marleau,
Lemire Securities Inc. from February, 1993 to July, 1995. Mr. Ebert worked for
C.M. Oliver & Co. Ltd. from July, 1995 to May, 1997. Marleau, Lemire Securities
Inc. and C.M. Oliver & Co. Ltd. were broker dealers registered by the Investment
Dealers Association of Canada. 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 from October, 1995 to January, 1997.
19
<PAGE>
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
---------------------
Our sole officer and director is also an officer, director and shareholder of
Cascadia Capital Corporation, Fidelity Capital Concepts Limited and Triple 8
Development Corporation. These three companies are also blank check companies.
Our officers and directors are now and may in the future become shareholders,
officers or directors of blank check companies. Accordingly, additional direct
conflicts of interest may arise in the future with respect to individuals acting
on our behalf and on behalf of other companies. We do not have a right of first
refusal to opportunities that come to management's attention.
EXECUTIVE COMPENSATION
Mr. Ebert was issued 2,250,000 shares of our company at a deemed price of $0.001
per share in consideration for his services in organizing the company and acting
as officer and director. Mr. Ebert purchased an additional 250,000 shares for
cash at $0.001 per share.
No other compensation has been awarded to, earned by or paid to our officers
and/or directors since our inception. Management has agreed to act without
compensation until authorized by the Board of Directors, which is not expected
to occur until we have generated revenues from operations. As of the date of
this registration statement, we have no funds available to pay officers or
directors. Further, our director is not accruing any compensation pursuant to
any agreement with us.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
------------------------------------------------------------------------------------------------------------------------
Long Term Compensation
------------------------------------------------------------------------------------------------------------------------
Annual Compensation Awards Payouts
------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
------------------------------------------------------------------------------------------------------------------------
Other All
Annual Restricted Securities Other
Comp- Stock Underlying LTIP Comp-
Name and Principle Salary Bonus ensation Award(s) Option/SARs Payouts ensation
Position Year ($) ($) ($) ($) (#) ($) ($)
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Keith A. Ebert, 1999/ Nil Nil Nil Nil Nil Nil Nil
President, C.F.O. and 2000
Director
------------------------------------------------------------------------------------------------------------------------
</TABLE>
If we successfully complete a merger or acquisition, it is possible that the
company may employ or retain one or more members of our management for the
purposes of providing services to the surviving entity. Management has agreed to
disclose any discussions concerning possible employment to the Board of
Directors and to abstain from voting on the transaction.
It is possible that management associates may refer a merger or acquisition
candidate to us. In the event we complete a transaction with an 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
20
<PAGE>
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 made by the acquisition or merger candidate. 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 ranges up to ten (10%) percent of the transaction price. No member of
management will receive a 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 us for the benefit of our employees.
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. There has been no trading
market to date. Management has not discussed market making with any market maker
or broker dealer. 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," 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:
* that a broker or dealer approve a person's account for transactions in
penny stocks; and
* 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
* obtain financial information and investment experience and objectives
of the person; and
* 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.
21
<PAGE>
The broker or dealer must also deliver, prior to any transaction in a penny
stock, a disclosure schedule relating to the penny stock market, which, in
highlight form,
* sets forth the basis on which the broker or dealer made the suitability
determination; and
* 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.
Escrow
------
The common stock under this offering will remain in escrow until the 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 at $0.001 per share ($2,450) 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.
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.
Common Stock
------------
All shares of common stock have equal voting rights and are entitled to one vote
per share in all matters to be voted upon by shareholders. Our shares have no
pre-emptive, 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 our
issued shares represented at any meeting where a quorum is present will be able
22
<PAGE>
to elect the entire Board of Directors. 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 of preferred amounts. 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 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 shares. 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
500,000 shares of our common stock at $0.20 per share. Dilution to the investors
in this offering shall be approximately $0.9806 per share.
SHARES ELIGIBLE FOR FUTURE RESALE
There is 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 common stock in the public market after this offering could
cause our share price to drop and could adversely affect our ability to raise
capital through an offering of shares.
Upon completion of this offering, we will have 5,200,000 shares outstanding. The
500,000 shares sold in this offering will be freely tradeable without
restriction or further registration under the Securities Act unless purchased by
affiliates of Lions Gate Investment Limited. Sales of our shares to residents of
Alaska, Arizona, Idaho, Illinois, Iowa, Kansas, Kentucky, Maryland,
Massachusetts, Missouri, Nebraska, North Dakota, Pennsylvania, South Dakota,
Tennessee, Utah, Vermont and Washington may only be effected by registration in
those states.
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 500,000 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 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.
23
<PAGE>
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 500,000 shares at $0.20 per share. 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 associated
person with 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 dealer at the time of his
participation in the sale of our securities.
He will restrict his participation to the following activities:
A. Preparing written communications or delivering written
communications through the mails or other means that does not
involve oral solicitation by him of a potential purchaser; and
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; or
C. Transactions involving offers and sales of our shares made
under a plan or agreement submitted for the vote or consent of
shareholders of any company we may acquire in connection with
a merger or plan of acquisition involving the exchange of the
acquired company's shares or assets for shares of our company.
Our shares may be sold under Rule 144 of the Securities Act of 1933 beginning
one year after the shares were issued, provided such date is at least 90 days
after the date of this prospectus.
Under 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 before the start of the distribution.
We Arbitrarily Determined Our of Offering Price
-----------------------------------------------
24
<PAGE>
The initial offering price of $0.20 per share has been arbitrarily determined by
us, and bears no relationship to our assets, earnings, book value or any other
objective standard of value. Among the factors we considered 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
How You Can Buy Our Shares
--------------------------
You can purchase our shares by completing and signing the share purchase
agreement which is attached to this prospectus. The completed share purchase
agreement and your payment must be delivered to us before the expiration of our
offering. The purchase price of $0.20 per share must be paid by check, bank
draft or money order payable in U.S. dollars to "Lions Gate Investment Limited".
All funds received from investors will be placed into an escrow account until we
have complied with Rule 419.
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.
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
included in reliance on the reports of Davidson & Company, independent certified
public accountants, included in this prospectus, and upon the authority of,
Davidson & Company, experts in accounting and auditing.
Disclosure of Commission Position on Indemnification for Securities Act
Liabilities
-----------------------------------------------------------------------
The Nevada Revised Statutes authorize us to indemnify directors or officers
under certain circumstances and subject to certain limitations. 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.
25
<PAGE>
In the opinion of the U.S. Securities and Exchange Commission, indemnification
for liabilities arising under the "33 Act to officers, directors or persons
controlling us 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.
F-1 Financial Statements
26
<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
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Article VI of our Bylaws states certain indemnification rights. Our Bylaws
provide that we possess and may exercise powers of indemnification for officers,
directors, employees, agents and other persons. Our Board of Directors is
authorized and empowered to exercise all of our powers of indemnification,
without shareholder action. Our assets could be used to satisfy any liabilities
subject to indemnification.
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
All expenses of our offering are being paid by management. These expenses
include registration fees of $26.40, accounting fees of $1,250 and legal fees of
approximately $2,500.
RECENT SALES OF UNREGISTERED SECURITIES
On November 1, 1999, we issued 2,450,000 common shares at $0.001 per share to 45
subscribers who are friends, relatives or business associates of management. The
sale of our common shares was not a public offering and no underwriter or agent
was used. We relied on the exemption contained in section 4(2) of the Securities
Act of 1933. We issued an additional 2,250,000 common shares at a deemed price
of $0.001 per share to Mr. Keith Ebert, the Company's current sole director and
officer in consideration for his services in organizing the Company and seeking
an acquisition. The value of the services rendered is $2,250.
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 Subscription Agreement
* Previously Filed
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;
27
<PAGE>
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in
the information in the registration statement. Notwithstanding
the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities
offered would not exceed that which was registered) any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the
effective registration statement; 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.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Act") may be permitted to directors, officers and controlling persons
of the small business issuer pursuant to the foregoing provisions, or otherwise,
the small business issuer has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable.
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 July 18, 2000.
LIONS GATE INVESTMENT LIMITED
/s/ Keith Ebert
------------------------------------
Keith Ebert, President,
Chief Financial Officer 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, C.F.O. July 18, 2000
--------------- and Director
Keith Ebert
</TABLE>
28
<PAGE>
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.
<PAGE>
APPENDIX A
_____________ SHARES OF LIONS GATE INVESTMENT LIMITED
SHARE PURCHASE AGREEMENT
To: The Nevada Agency and Trust Company
Suite 880, 50 West Liberty Street, Reno, Nevada 89501
Please issue shares of your common stock in the amounts and name(s) shown below.
My signature acknowledges that I have read the prospectus dated ___________,
2000, and am aware of the risk factors contained in the prospectus. I represent
that I have relied solely on the contents of the prospectus in making an
investment decision to purchase the shares offered by Lions Gate Investment
Limited, and I have not relied on any other statements made by or with regard to
the company in connection with its anticipated operations or financial
performance.
THE UNDERSIGNED ACKNOWLEDGES THAT CITY NATIONAL BANK IS ACTING SOLELY AS ESCROW
HOLDER IN CONNECTION WITH THE OFFERING OF THE SHARES OF LIONS GATE INVESTMENT
LIMITED, AND MAKES NO RECOMMENDATION WITH RESPECT TO THOSE SHARES. CITY NATIONAL
BANK HAS MADE NO INVESTIGATION REGARDING THE OFFERING, THE ISSUER OR ANY OTHER
PERSON OR ENTITY INVOLVED IN THE OFFERING.
_____________________________ _____________________________
(Signature) (Date)
_____________________________ ______________________________
(Signature) (Date)
Enclosed is payment for ________ shares at $________; Total: $________
Register the shares in the following name(s) and amount(s):
(Please Print)
Name(s): _________________________________________________________
Number of share(s): ________________
As (check one) [ ] Individual [ ] Joint Tenancy [ ] Husband & Wife as community
property[ ] Tenants in Common [ ] Corporation [ ] Trust [ ] Other:
For the person(s) who will be registered shareowners:
Mailing Address: ______________________________________________________________
City, State, Zip: _____________________________________________________
Telephone: _____________________________________________________
Social Security or Taxpayer ID Number(s): ____________________________________
Note: Please attach any instructions for mailing the certificates
or shareowner communications other than to the registered shareowner at
this address.
No Subscription Is Effective Until Acceptance.
Subscription Accepted by Lions Gate Investment Limited:
_________________________
Keith Ebert, President Date _____________________
