REGISTRATION NO. 333-46326
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
PRE-EFFECTIVE AMENDMENT NUMBER ONE TO FORM SB-2
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
HARLEQUIN INVESTMENTS, INC.
(Exact name of small business issuer in its charter)
Colorado 5499 98-0219220
(State or other jurisdiction of (Primary standard (I.R.S. Employer
incorporation or organization) industrial code) Identification Number)
HARLEQUIN INVESTMENTS, INC.
404 Scott Point Drive
Salt Spring Island, British Columbia V8K 2R2, CANADA
(250) 537-5732
(Address and telephone number of principal executive offices)
Agent for Service: With a Copy to:
Inge L. E. Kerster, President Christopher J. Moran, Attorney at Law
Harlequin Investments, Inc. 4625 Clary Lakes Drive .
404 Scott Point Drive Roswell,Georgia 30075
Salt Spring Island, BC V8K 2R2,
CANADA (770) 518-0025
(250) 537-5732 Fax: (770) 518-9640
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this
Registration Statement.
If this Form is filed to register additional securities for an
Offering pursuant to Rule 462(b) under the Securities Act, check
the following box and list the Securities Act Registration
Statement number of the earlier effective Registration Statement
for the same Offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list
the Securities Act Registration Statement number of the earlier
effective Registration Statement for the same Offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list
the Securities Act Registration Statement number of the earlier
effective Registration Statement for the same Offering. [_]
If delivery of the Prospectus is expected to be made pursuant to
Rule 434, check the following box. [_]
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Amount Maximum Maximum Amount of
Title of to be Offering Aggregate Registration
each Class Registered Price Offering Fee
of per unit price
Securities
to be
registered
Class A
Common Stock 2500000 $.01 $25,000 $ 7.00
_________________________________________________________________
The registration 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.
SUBJECT TO COMPLETION [January 9, 2001]
PROSPECTUS
*****,2000
HARLEQUIN INVESTMENTS, INC.
404 Scott Point Drive
Salt Spring Island, BC V8K 2R2 CANADA
(250) 537-5732
2,500,000 Shares of Common Stock
This is the initial public offering of common stock of Harlequin
Investments, Inc. and no public market currently exists for
shares of our common stock. The initial public offering price is
$0.01 per share of common stock and was arbitrarily determined.
These securities will be sold by our President, Inge L.E.
Kerster, who will not receive any commission or other
remuneration for such sales, for a period of thirty (30) days
from the date of this prospectus.
This offering is on a best efforts-no minimum basis. There is no
minimum purchase requirement and no arrangement to place funds in
an escrow, trust, or similar account.
We will amend and complete the information in this prospectus.
The information in this prospectus is not complete and may be
changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these
securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
This investment involves a high degree of risk.
See "Risk Factors" beginning on Page 2.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or passed upon the adequacy or accuracy of this
Prospectus. Any representation to the contrary is a criminal
offense.
TABLE OF CONTENTS
PROSPECTUS
SUMMARY................................................... 1
RISK
FACTORS................................................... 1
USE OF
PROCEEDS................................................. 13
DETERMINATION OF OFFERING
PRICE..........................................,......... 13
PLAN OF
DISTRIBUTION............................................. 13
LEGAL
PROCEEDINGS.............................................. 14
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS.................................................. 15
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT................................................. 15
DESCRIPTION OF
SECURITIES................................................ 16
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES................................................. 17
DESCRIPTION OF
BUSINESS.................................................. 17
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION.................................................. 23
DESCRIPTION OF
PROPERTY.................................................. 26
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS.............................................. 27
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS................................................... 27
EXECUTIVE
COMPENSATION.............................................. 27
FINANCIAL
STATEMENTS................................................ 28
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL
DISCLOSURE................................................ 43
SUMMARY
Harlequin Investments, Inc. (Harlequin) is a corporation formed under the
laws of the State of Colorado, whose principal executive offices are
located in Salt Spring Island, British Columbia, Canada.
We expect to use the net proceeds from this offering for organizational
purposes and to determine the feasibility of buying, selling and brokering
sports antiques and collectibles via the Internet. Should the plan prove
to be feasible, we intend to market sports antiques, collectibles and
memorabilia on a business to business, business to individual and
individual-to-individual basis. We have an established website name,
www.thesportscollections.com and if our business plan proves to be
feasible we will proceed to build the website, develop a further business
plan and change the name of Harlequin Investments, Inc. to
thesportscollections.com.
The proposed business activities described herein could classify us as a
"blank check" company. Many states have enacted statutes, rules and
regulations limiting the sale of securities of "blank check" companies in
their prospective jurisdictions. Management does not intend to undertake
any efforts to cause a market to develop in the Company's securities until
such time as we have
successfully implemented our business plan described herein.
Name, Address, and Telephone Number of Registrant
Harlequin Investments, Inc.
404 Scott Point Drive
Salt Spring Island, British Columbia V8K 2R2, CANADA
(250) 537-5732
(250) 538-0036 Fax
The Offering
Price per share Offered...............................$0.01
Common Stock Offered by Harlequin Investments, Inc. 2500000 shares
Common Stock Outstanding Prior to Offering............210,000 shares
Common Stock Outstanding After Offering*..............2710000 shares
* Assumes sale of all shares offered
Risk Factors
You should carefully consider the following risk factors and all other
information contained in this prospectus before purchasing our common
stock. Investing in our common stock involves a high degree of risk. Any
of the following risks could adversely affect our business, financial
condition and results of operations and could result in a complete loss of
your investment.
Risks Related to the Business of Harlequin Investments, Inc.
Our success depends on a number of things that should be considered by
prospective investors. Harlequin Investments, Inc. is a new company and we
have no history of earnings or profit and there is no assurance that it
will operate profitably in the future. We cannot assure you that we will
provide a return on investment in the future.
Harlequin Investments, Inc. is in our earliest stages of development and
may never become profitable.
We are in the earliest stages of development and could fail before
implementing our business plan. Harlequin must be regarded as a "start up"
venture that will incur losses for the foreseeable future. We have no
operating history or revenues from operations, and face unforeseen costs,
expenses, problems and difficulties that could easily prevent us from ever
becoming profitable.
Harlequin has had no operating revenue to date and may not become
profitable.
Harlequin has had no operating history nor any revenues or earnings from
operations. Harlequin has no significant assets or financial resources.
Harlequin will, in all likelihood, sustain operating expenses without
corresponding revenues, at least until our business plan is fully
operational. This may result in our incurring a net operating loss which
will increase continuously at least until our business plan becomes fully
operational.
We are at a competitive disadvantage because we lack any market research
or marketing organization.
Harlequin has neither conducted, nor have others made available to us,
results of market research indicating that market demand exists for the
transactions contemplated by Harlequin. Moreover, Harlequin does not
have, and does not plan to establish, a marketing organization. Even in
the event demand is identified for our potential product, there is no
assurance Harlequin will be successful in obtaining the necessary funding
to become fully operational.
We may not be able to sale enough shares to follow through with our
business plan.
The 2,500,000 common shares are to be offered directly by our President,
and no individual, firm, or corporation has agreed to purchase or take
down any of the shares. It is not know whether we will be able to sell
any shares. In any event: the $25,000 to be raised in this offering will
be insufficient to do anything more than conduct a feasibility study and
pay the expenses of this offering and we have no commitments for future
financing.
Harlequin's offering price is arbitrary and the value of our securities
may never actually reach the offering price.
The offering price of the shares bears no relation to book value, assets,
earnings, or any other objective criteria of value. This price has been
arbitrarily determined by our sole officer and director. There can be no
assurance that, even if a public trading market develops for Harlequin's
securities, the shares will attain market values commensurate with the
offering price.
Harlequin shares are to be offered based on a direct participation
offering basis.
The shares are offered by Harlequin on a direct participation offering
basis, and no individual, firm or corporation has agreed to purchase or
take down any of the offered shares. We cannot and do not make any
statement guaranteeing that shares will be sold. No provisions have been
made to deposit in escrow the funds received from the purchase of shares
sold by us. Accordingly, the proceeds we raise, if any, may be
insufficient to pay our offering expenses and conduct our feasibility
study.
Harlequin's shares may never actually be traded and therefore purchasers
may never be able to resale.
Prior to the offering, there has been no public market for the shares
being offered. An active trading market may not develop. Consequently,
purchasers of the shares may not be able to resell their securities at
prices equal to or greater than the respective initial public offering
prices. The market price of the shares may be affected significantly by
factors such as announcements by us or our competitors, variations in our
results of operations, and market conditions in the retail, electronic
commerce, and internet industries in general. Movements in prices of stock
may also affect the market price in general. As a result of these factors,
purchasers of the shares
offered hereby may not be able to liquidate an investment in the shares
readily or at all.
Shares sold in the future may have to comply with Rule 144.
All of the 2,500,000 shares, which are held by management, have been
issued in reliance on the private placement exemption under the Securities
Act. Such shares will not be available for sale in the open market
without separate registration except in reliance upon Rule 144 under the
Securities Act.
In general, under Rule 144 a person (or persons whose shares are
aggregated) who has beneficially owned shares acquired in a non-public
transaction for at least one year, including persons who may be deemed
affiliates of Harlequin (as that term is defined under the Act) would be
entitled to sell within any three-month period a number of shares that
does not exceed the greater of 1% of the then outstanding shares of common
stock, or the average weekly reported trading volume on all national
securities exchanges and through NASDAQ during the four calendar weeks
preceding such sale, provided that certain current public information is
then available. If a substantial number of the shares owned by management
were sold pursuant to Rule 144 or a registered offering, the market price
of the common stock could be adversely affected.
Competition may severely affect our growth and financial stability.
If our study results in a positive recommendation and we are able to raise
the additional capital required to implement our full business plan, we
will still face a very stiff competition. The electronic commerce
industry is new, ever changing and very competitive. Harlequin
Investments, Inc. expects competition to intensify in the future. If we
fail to attract and retain a large customer base and our competitors
establish a larger and better market position it could result in a decline
in revenue, if any, and of market share, if any. It is easy to get into
business on the Internet and new competitors can launch sites at a
relatively low cost. In addition, the Internet market for antiques and
collectibles is very competitive and no clear leader has been established.
We will compete with a variety of other companies, including traditional
retail antique and collectibles stores and the online retail websites of
some traditional retailers.
Dealers may not want to pay for our services as brokers and as a clearing
house for sales to other dealers.
If we do find it feasible to start our business we will be dependent on
attracting retail buyers who are looking for a specific item or items and
locating that item or items from dealers and individuals all over the
world. We will charge a commission to the dealer. The dealers may not
want to pay us a commission. If this happens, a large part of our
business plan would be non-operable resulting in a loss of sales, if any,
and a negative affect on our stock..
Conflicts of Interest May Arise Between Companies Owned by the Sole
Officer and Director.
Inge L. E. Kerster, the majority shareholder and sole officer and director
of Harlequin Investments, Inc., is also the majority shareholder and sole
officer and director of Xiang, Inc. and Belfleur Inc. Both of these
companies plan to investigate the feasibility of developing
Anitquecarcollections.com and antiquescollections.com, respectively. It
is possible that Ms. Kerster could devote more time and resources to any
of the three companies that is more likely to succeed.
Dependence on Key Personnel May Affect and/or Cause Harm to the Company.
Our future performance will be substantially dependent on the services of
senior management and other key personnel. The loss of the services of
any of our executives or other key employees, if and when we have them,
could harm our business. Our new business, should we decide it to be
feasible, will be dependent on attracting and retaining key employees.
Such personnel are in great demand by other online companies. We could
well find ourselves not only competing in the market place but also for
quality, reliable employees.
Dependence on One Individual Who Will Not Devote Her Full Time and
Attention to Harlequin Investments, Inc.'s Affairs Could Result in Delays
or Business Failure.
Inge Kerster is serving as our sole officer and director. Loss of her
services may hamper our ability to implement the business plan, and could
cause our stock to become worthless. We will be heavily dependent upon
Ms. Kerster's entrepreneurial skills and experience to implement our
business plan. Her inability to devote full time and attention to the
affairs of Harlequin Investments, Inc. could result in delay(s) in getting
into business, if we find the plan is feasible.
Harlequin does not have an employment agreement with Ms. Kerster and there
is no assurance that she will continue to manage our affairs in the
future. We could lose the services of Ms. Kerster, or she could decide to
join a competitor or otherwise compete with us directly or indirectly.
This would have a negative affect on our business and could cause the
price of the stock to be worthless. The services of Ms. Kerster would be
difficult to replace. Because investors will not necessarily be able to
evaluate the merits of the business decisions of Harlequin, they should
carefully and critically assess Ms. Kerster's background.
Dependence on One Individual Who Has No Experience in the Marketing and
Brokering of Antiques and Collectibles Could Result in Delays or Business
Failure.
Ms. Kerster has no experience in the sports collectibles and memorabilia
business on or off the Internet. Ms. Kerster is not an antique or
collectibles dealer by trade. We will likely need to rely on others who
understand that business. Because of this lack of experience Harlequin
may overestimate the marketability of the products and may underestimate
the costs and difficulties of selling or brokering the products. These
difficulties could prevent us from accurately determining the feasibility
of the business plan, limiting our profitability, if any, and decreasing
the value of our stock.
Dependence on Internet and computer technology may lead to interruptions
or delays in service to our customers.
The Internet is subject to rapidly changing technology, industry
standards, users' needs and frequent new service introductions. Our future
success, if any, will depend on our use of leading technologies to provide
seamless access for our customers to our website. There can be no
assurance that Harlequin will be successful in adjusting to new
technologies, developing new services or improving existing services.
Our success will also depend on growth and expansion of the Internet to
expose our products and services to more and more potential clients. The
Internet may not be able to support the demands placed on it by continued
growth. The growth in volume of Internet traffic could cause shortages in
Internet addresses and overworked search engines. Such problems could
have negative affects on our operations and business.
The Company's website operations may be exposed to computer viruses,
hacking or similar disruptive problems caused by users, other Internet
sites, interconnecting networks and the various telephone networks.
Computer viruses or problems caused by third parties could lead to
interruptions, delays or cessation in service.
The Internet may not prove to be a viable long-term commercial marketplace
for a number of reasons. These could include inadequate or delayed
development of technology and performance improvements. The success of
Harlequin will depend, in large part, upon third parties maintaining the
facilities to provide a reliable network backbone with the speed, data
capacity, security and hardware necessary for reliable Internet access and
services.
Dependence on use of the Internet for commerce.
The business of selling goods over the Internet, particularly through
personal trading, is new and constantly changing. Our future revenues and
profits, if any, will be dependent upon the widespread acceptance of the
Internet and online services as a way of shopping by consumers and a way
to locate needed inventory by dealers. Rapid growth in the use of and
interest in the Internet and online services is very recent. This
acceptance and use may not continue. Even if the Internet is accepted
concerns about fraud, privacy and other problems may mean that a large
enough base of consumers will not adopt the Internet as a way to buy or
sell. In particular, our website will require users to make publicly
available their e-mail addresses and other personal information that some
people will not be willing to provide.
These concerns may increase as additional publicity over privacy issues on
the Internet increases. Market acceptance for our products and services
over the Internet is very uncertain. Even if use of the Internet and
electronic commerce continues to increase, the rate of growth, if any, of
the sports collectibles and memorabilia market could be less than the
online market for other products. Our rate of revenue growth and
prospects for profitability could therefore be less than that of other
online merchants.
Our revenues, if any, will be dependent on our ability to manage growth.
In our feasibility study we must develop a plan or strategy to manage
potential growth. If we decide to go ahead with our business plan we
could well experience a period of heavy expansion in all areas of our
business. We need to have a plan to handle this potential growth in our
customer base and market. This expansion will place a significant strain
on our management, operational and financial resources. The areas that are
put under severe strain by our rate of growth would include the following:
The Website. We must constantly add new hardware, update software
and add new engineering expertise to handle the increased use of our
website. This may reduce our margins, if any. If we are unable to
increase the capacity of our systems at the pace of the demand for
this capacity, our website may become unstable and may cease to
operate until the problem is dealt with. We may experience downtime
that could harm our business and anger users of our website and
reduce future revenues, if any.
Customer Support. We must expand our customer support operations to
accommodate the increased number of users and transactions. If we
are unable to hire and successfully train sufficient employees or
contractors in this area, users of our website may have negative
experiences and current and future revenues could suffer.
Customer Accounts. Our revenues are dependent on prompt and accurate
payment processes. If we are unable to enlarge our processing
abilities to accommodate the increasing number of transactions, our
ability to collect revenue will be harmed.
Inability to expand the company's systems may limit growth.
Another crucial answer that we will be looking for in the feasibility
study is what sort of volume is necessary to:
pay all projected expenses and arrive at a "break-even" point;
Create enough profit in order to provide a acceptable return on the
stockholders' investment.
At this point, without confirmation by the study, it seems likely that we
will have to generate a high volume of traffic and transactions. The
satisfactory performance, reliability and availability of our website and
processing systems will be critical to our ability to attract and retain
large numbers of users. Our revenues depend on the number of items listed
by users, the volume of user transactions and our success in locating
acceptable merchandise for our dealer-to-dealer service. If the volume of
traffic on our website or the number of items being listed for sale
increases, it may be necessary for us to expand and upgrade our
technology, transaction processing systems and network.
We may be unable to accurately project the rate or timing of increases, if
any, expand and upgrade our systems and infrastructure to accommodate any
increases. We plan to use systems developed by outside concerns to build,
develop and operate our service and for transaction processing, including
billing and collections processing. We will have to continually have these
specialist companies improve these systems in order to accommodate the
level of use of our website.
In addition, we may add new features and functionality to our services
that would result in the need to develop or license additional
technologies. Our inability to quickly add additional software and
hardware or to upgrade our technology, transaction processing systems or
network infrastructure to handle increased traffic or transaction volume
could have adverse consequences. These consequences could include system
disruptions, slower response times, lower levels of customer service and
delays in reporting accurate financial information.
Inability to Protect or Enforce Our Intellectual Property Rights Could Do
Serious Damage.
If our business plan proves to be feasible we intend to protect our
proprietary rights in products and services. While we may enter into
confidentiality and non-competition agreements with our employees and
contractors, these arrangements may or may not prevent someone from
developing a similar Internet business. We will register our trademarks
and service marks in the U.S. and internationally. Effective trademark,
service mark, copyright and trade secret protection may not be available
in every country in which our online services are made available. In
fact, one large question to be answered in our feasibility study is
whether or not we have any specific intellectual property to protect other
than www.thesportscollections.com., our domain name. You should carefully
consider that this offering is to determine the feasibility of Harlequin's
proposed sports antique and collectibles business. Until we have some
answers, any risk considered could be much greater.
Fraudulent Activities on Our Website May Cause Harm to the Company.
Our future success will depend largely upon sellers reliably delivering
and accurately representing their listed goods and buyers paying the
agreed purchase price. We anticipate that we will receive notice from
users who did not receive the goods that they purchased or if they were
received the condition of the goods was not as represented. While we can
suspend the accounts of users who fail to fulfill their obligations to
other users, we do not have the ability to guarantee that any products
will be delivered as represented. Our leverage with sellers is the
refusal of thesportscollections.com to do further business with the
offending party.
In our listing agreement, we will require that all sold goods by a dealer
will have a money-back guarantee as to being "as advertised". Getting an
enforceable guarantee from an individual may be more difficult. Negative
publicity generated due to fraudulent or deceptive representations could
damage our reputation and affect the value of our domain name. We may
receive demands from users for reimbursement or threats of legal action.
This could be costly to deal with, divert management attention and
eliminate profits, if any.
Our liability under these conditions is just one of the items we must
examine in our feasibility study. If we find that we cannot protect
ourselves through guarantees by sellers and proper disclaimers as to
liability, we definitely will be unable to proceed and begin to get into
business.
If Our Study Indicates That the Proposed Business is Not Feasible, You May
Lose Your Entire Investment.
The feasibility study may indicate that our current business plan is not
feasible. If this happens one of several things could happen:
- All funds would be spent by the study and we could be declared
insolvent and be forced into bankruptcy.
- We could simply cease operations and become dormant.
- We could seek additional funding from our officers, directors and
shareholders.
- We could look for someone to buy the corporation, settle the debts,
if any, and take over from present management.
- We could look for another concern that wants access to public
markets, combine with them and seek to salvage the shareholders'
investment.
Inge Kerster, our only officer and director will be by far the largest
shareholder and could effectively elect to take any one of the above
options, or do nothing at all. There is a definite risk that whatever she
chooses to do, you may not agree. Please consider this carefully before
you decide to invest.
If Ms. Kerster should decide to acquire a new asset or enter into a new
business combination, this would likely include the issuance of a
significant amount of Harlequin's common stock. If this happens, it is
likely that a majority of the voting power would be transferred to new
investors. New investors may replace our present management. New
management may decide to go in an entirely new direction and present
stockholders or anyone investing in this offering would have no say in
that direction. In such case, an investor could lose the entire
investment on a business decision it did not get to evaluate at the time
of investing.
Our Inability to Rapidly Hire, Train and Manage New Employees May Limit
Our Sales Volume and Profits, If Any.
If management decides that the projected business is feasible we must be
able to hire, train and manage new employees at a rapid rate. If we are
unsuccessful in hiring, training and integrating new employees, our
business could be affected. Assembling a good staff is always subject to
errors in the hiring process. We will be competing with other concerns on
and off the Internet that are looking for good people. We may be unable
to hire, train, retain and manage required personnel.
Our Business is Dependent on the Development and Maintenance of our Web
Infrastructure.
Our success, should we decide to go ahead with the business plan, will
depend largely on the development and maintenance of the Web
infrastructure. This includes creation and maintenance of a reliable
network backbone with the necessary speed, data capacity and security. We
will also require timely development of complementary products such as
high speed modems for providing reliable Web access and services. The
cost of keeping up with new technical developments may in itself eliminate
any chance for profit and cause a failure of the business.
Financial risks
Harlequin Investments, Inc. Has No Operating History and Financial Results
Are Uncertain.
Harlequin Investments, Inc. is a young company with no history of earnings
or profit and there is no assurance that it will operate profitably in the
future. We face all the risks of a new business. As a result of our
limited operating history, it is difficult to accurately forecast our
potential revenue should our feasibility study indicate we proceed with
our business plan. There is no meaningful historical financial data upon
which to base planned operating expenses. Revenue and income potential is
unproven and the business model has not yet proven to be feasible. There
is no assurance that Harlequin will provide a return on investment in the
future or even be in business. An investor in our common stock must
consider the challenges, risks and uncertainties encountered by early-
stage companies using new and unproven business models in new and rapidly
evolving markets. These challenges include our ability to:
- execute on Harlequin Investments, Inc.'s business model;
- create brand recognition;
- manage growth in Harlequin Investments, Inc.'s operations;
- create a customer base cost-effectively;
- retain customers;
- access additional capital when required;
- attract and retain key personnel.
Harlequin Investments, Inc. cannot be certain that our business model will
prove to be successful if we do have indications that it may be feasible.
We Will Definitely Need Additional Financing Which May Not Be Available
and That Will Likely Dilute Present Ownership Interests.
The ultimate success of Harlequin and our proposed website,
www.thesportscollections.com will depend on our ability to raise
additional capital. No commitments to provide additional funds have been
made by management or other shareholders. We have not investigated the
availability, source or terms of additional financing. When additional
capital is needed, there is no assurance that funds will be available from
any source or, if available, that they can be obtained on acceptable
terms. If not available our operations would be severely limited, and we
would be unable to implement our business plan, if it is indicated that it
could be feasible. Our website is not constructed or developed and is not
operating.
Risks related to the securities market
Our Common Stock Has No Prior Market and Prices May Decline After the
Offering.
There is no public market for the common stock of Harlequin Investments,
Inc. and no assurance can be given that a market will develop or that any
shareholder will be able to liquidate our investment without a long delay,
if at all. The trading market price of Harlequin Investments, Inc.'s
common stock may decline below the offering price or disappear altogether.
If a market should develop, the price may be highly volatile. Factors
such as those discussed in this "Risk Factors" section may have an impact
on the market price of our securities.
Owing to the low price of the securities, many brokerage firms may not be
willing to deal in the securities. Even if a purchaser finds a
broker/dealer willing to deal in the common stock of Harlequin
Investments, Inc. the combination of brokerage commissions, state transfer
taxes, if any, and other selling costs may exceed the selling price.
Further, most lending institutions will not permit the use of such
securities as collateral for loans. Thus, a purchaser may be unable to
sell or otherwise realize the value invested in the stock.
Investors May Face Restrictions On the Resale of Harlequin Investments,
Inc. Stock Due to Federal Penny Stock Regulations.
The securities of Harlequin, when and if they become available for trading,
will be subject to the Securities and Exchange Commission rule that imposes
special sales practice requirements upon broker-dealers that sell such
securities to other than established customers or accredited investors.
For purposes of the rule, the phrase "accredited investors" means, in
general
terms:
a) institutions with assets exceeding $5,000,000; and
b) individuals having a net worth in excess of $1,000,000 or having
an annual income that exceeds $200,000 (or that, combined with a
spouse's income, exceeds $300,000).
For transactions covered by the rule, the broker-dealer must make a
special suitability determination for the purchaser and receive the
purchaser's written agreement to the transaction prior to the sale.
Consequently, the rule may affect the ability of purchasers of Harlequin
Investments, Inc. securities to buy or sell in any market that may
develop.
The Commission has adopted a number of rules to regulate "penny stocks."
Such rules include Rules 3a51-1, 15g-1, 15g- 2, 15g-3, 15g-4, 15g-5, 15g-6
and 15g-7 under the Securities and Exchange Act of 1934.
Because Harlequin Investments, Inc. securities will constitute "penny
stock" within the meaning of the rules, the rules would apply to our
securities. The rules may further affect the ability of owners of
Harlequin Investments, Inc.'s shares to sell their securities in any
market that may develop for them. There may be a limited market for penny
stocks, due to the regulatory burdens on broker/dealers and the market
among dealers may not be active.
Investors in penny stock often are unable to sell stock back to the dealer
that sold them the stock. The mark-ups or commissions charged by the
broker/dealers could be greater than any profit a seller may make. Because
of large dealer spreads, investors may be unable to sell the stock
immediately back to the dealer at the same price the dealer sold the stock
to the investor. In some cases the stock may fall quickly in value.
Investors may be unable to reap any profit from any sale of the stock, if
they can sell it at all.
Shareholders should be aware that, according to the Securities and
Exchange Commission Release No. 34-29093, the market for penny stocks has
suffered in recent years from patterns of fraud and abuse. Such patterns
include:
control of the market for the security by one or a few broker-dealers
that are often related to the promoter or issuer;
manipulation of prices through prearranged matching of purchases and
sales and false and misleading press releases;
"boiler room" practices involving high pressure sales tactics and
unrealistic price projections by inexperienced sales persons;
excessive and undisclosed bid-ask differentials and markups by
selling broker/dealers; and
the wholesale dumping of the same securities by promoters and
broker/dealers after prices have been manipulated to a desired level,
along with the inevitable collapse of those prices with consequent
investor losses.
Summary of Penny Stock Risks.
1) Harlequin Investments, Inc. stock is a penny stock.
2) Some states will not allow you to sell to their citizens.
3) Some broker/dealers will not handle transactions in penny stocks.
4) SEC rules make selling your stock a cumbersome procedure.
5) Penny stock markets can be very volatile with large swings up or
down.
Investors May Face Restrictions on the Resale of Harlequin Investments,
Inc. Stock Due To State Blue Sky Laws.
Because our common stock has not been registered for resale under the blue
sky laws of any state, the holders of such shares and those persons
desiring to purchase them in any trading market that may develop in the
future should be aware that there may be state blue sky law restrictions
on the ability of investors to sell and on purchasers to buy these
securities. Each state has our own securities laws often called "blue sky
laws", which limit sales of stock to a state's residents unless the stock
is registered in that state or qualifies for an exemption from
registration. These laws also govern the reporting requirements for
broker/dealers and their registered representatives doing business
directly or indirectly in the state. Before a security is sold in a
state, there must be a registration in place to cover the transaction, and
the broker, if any, must be registered in that state, or the security must
otherwise be exempt from registration.
We do not know whether our stock will be registered under the laws of any
state or states. A determination regarding registration will be made by
the broker/dealers, if any, that agree to serve as the market makers for
the stock of Harlequin Investments, Inc.
Accordingly, investors should consider the potential secondary market for
Harlequin Investments, Inc.'s securities to be a limited one. Investors
may be unable to resell their stock, or may be unable to resell it without
the significant expense of state registration or qualification.
Limited State Registration
We will initially only register or otherwise qualify our shares in the
State of New York and in various provinces of Canada. This means that
American investors who reside in states other than New York shall not be
able to participate in this offering. This geographical restriction may
make it harder for our sole officer and director to sell our shares.
Use of Proceeds
The net proceeds to Harlequin Investments, Inc. from the sale of the
2,500,000 shares of common stock offered hereby at an assumed initial
public offering price of $.01 per share are estimated to be $25,000. We
shall use the net proceeds for organizational purposes and to conduct a
search for and retain qualified consultants to assess the feasibility of
the business plan. In the event we raise less than $25,000 it may be
impossible for us to ever engage in business. We do not have any loan
commitment or funding agreement with any person in the event we do not
raise the entire $25,000.
We anticipate that the feasibility study will cost approximately $10,000
initially and $20,000 when completed. None of these proceeds will be paid
to officers, directors, promoters or their affiliates.
Determination of Offering Price
The price of the shares in this offering was arbitrarily set. The offering
price is not an indication of and is not based upon the actual value of
Harlequin Investments, Inc. It bears no relationship to the book value,
assets, earnings or any other recognized criteria of value. The offering
price should not be regarded as an indicator of the future market price of
the securities.
Plan of Distribution
General
Harlequin Investments, Inc. will sell a maximum of 2,500,000 shares of our
common stock to the public on a "best efforts" basis. There can be no
assurance that any of these shares will be sold. The gross proceeds will
be $25,000 if all the shares offered are sold. No commissions or other
fees will be paid, directly or indirectly, by Harlequin or any of our
principals to any person or firm in connection with solicitation of sales
of the shares.
The following discussion addresses the material terms of the plan of
distribution.
We are offering up to 2,500,000 shares of our common stock at a
price of $0.01 per share to be sold by our sole executive officer and
director. Since this offering is conducted as a direct participation
offering, there can be no assurance that any of the shares will be sold.
If we fail to sell all the shares we are trying to sell, our ability to
implement our business plan will be materially effected, and you may lose
all or substantially all of your investment.
There is currently no market for any of our shares and little likelihood
that a public market for such securities will develop after the closing of
this offering or be sustained if developed. While we plan following the
closing of this offering to take affirmative steps to request or encourage
one or more broker/dealers to act as a market maker for our securities, no
such efforts have yet been undertaken and no assurances are given that any
such efforts will prove successful. As such, investors may not be able to
readily dispose of any shares purchased in this offering.
The offering shall be conducted by our president and sole director, Inge
L. E. Kerster.
Although Ms. Kerster is an associated person of us as that term is defined
in Rule 3a4-1 under the Exchange Act, Ms. Kerster is deemed not to be a
broker for the following reasons:
* She 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 her
participation in the sale of our securities.
* She will not be compensated for her participation in the sale
of our securities by the payment of commission or other remuneration based
either directly or indirectly on transactions in securities.
* She is not an associated person of a broker or dealers at the
time of her participation in the sale of our securities.
* She will restrict her participation to the following
activities:
A. Preparing any written communication or delivering any
communication through the mails or other means that does not involve oral
solicitation by her of a potential purchaser;
B. Responding to inquiries of potential purchasers in a
communication initiated by the potential purchasers, provided however,
that the content of responses are limited to information contained in a
registration statement filed under the Securities Act or other offering
document;
C. Performing ministerial and clerical work involved in
effecting any transaction.
As of the date of this prospectus, no broker has been retained by us for
the sale of securities being offered. In the event a broker who may be
deemed an underwriter is retained by us, an
amendment to our registration statement will be filed.
The offering will remain open for a period until *****, 2001 or 60 days
from the date of this prospectus, unless the entire gross proceeds are
earlier received or we decide, in our sole
discretion, to cease selling efforts. Our sole officer and director, and
our stockholders and their affiliates may purchase shares in this
offering.
Legal Proceedings
Harlequin Investments, Inc. is not a party to any pending legal proceeding
or litigation and none of its property is the subject of a pending legal
proceeding. Further, the sole officer and director knows of no legal
proceedings against Harlequin Investments, Inc. or our property
contemplated by any governmental authority.
Directors, Executive Officers, Promoters and Control Persons
The following table sets forth the name, age and position of the sole
director, executive officer, promoter and control person of Harlequin
Investments, Inc.:
Name Age Position
Inge L. E. Kerster 54 President, Secretary, Treasurer,
Director,
Promoter and Control Person
In January, 2000, Ms. Kerster was elected as the sole officer and director
of Harlequin Investments, Inc. by the current shareholders, of whom she is
majority stockholder. She will serve until the first annual meeting of
shareholders and her successor(s) are elected and qualified. Thereafter,
directors will be elected for one-year terms at the annual shareholders'
meeting. Officers will hold their positions at the pleasure of the board
of directors, absent any employment agreement. Ms. Kerster is the sole
"Parent" and "Promoter" of our company, as those terms are defined in the
Securities Act and in relevant state law.
Biographical Information
Inge L. E. Kerster. Ms. Kerster became President and majority shareholder
in Harlequin Investments, Inc. on January 20, 2000. Ms. Kerster, is a
business and financial consultant and is President of Sandringham
Investments Limited specializing in the preparation and filing of
documentation for Canadian and other foreign citizens and corporations
that desire to become publicly trading in the United States. Ms. Kerster
is currently serving as an officer and director for several private
companies and companies seeking publicly trading status in the United
States.
Ms. Kerster is the sole officer, and director of Xiang, Inc., Belfleur,
Inc., Nemo Enterprises, Inc., First Corporation, and Lionheart
Investments, Inc. all of which have, or plan to, register their securities
under The Securities Act or The Securities and Exchange Act.
Previous Experience in Blank Check Offerings
Inge L. E. Kerster is the sole officer and director of Digicomm Services,
Inc. (formerly Nemo Enterprises, Inc.) and Lionheart Investments, Inc.
Both of these companies have made filings with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934. Both of these
companies are blank check companies that do not have either substantial
assets or a business plan and are currently seeking business
opportunities. These companies have never conducted a public offering.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of December 31, 2000, the issued and
outstanding common stock of Harlequin Investments, Inc. owned of record or
beneficially by each executive officer and director and by each person who
owned of record, or was known by Harlequin Investments, Inc. to own
beneficially, more than 5% of our common stock, and the shareholdings of
all executive officers and directors as a group. Each person has sole
voting and investment power with respect to the shares shown.
Shares Percentage of
Name Owned Shares Owned
Inge L.E. Kerster 150,000 73.17
President, Secretary, Treasurer, and Director
404 Scott Point Drive
Salt Spring Island, BC V8K 2R2 Canada
All Executive Officers and Directors as a Group
(1 Individual)......................... 150,000 73.17
Description of Securities
The following description of our securities is a summary of the material
terms of our capital stock. This summary is subject to and qualified in
its entirety by the Harlequin Investments, Inc. Articles of Incorporation
and Bylaws, which are included as exhibits to the registration statement
of which this prospectus forms a part, and by the applicable provisions of
Colorado law.
The authorized capital stock of Harlequin Investments, Inc. consists of
110,000,000 shares: 100,000,000 shares of Common Stock having a par value
of $0.001 per share and 10,000,000 shares of Preferred Stock having a par
value of $0.001 per share.
The holders of shares of common stock of Harlequin Investments, Inc. do
not have cumulative voting rights in connection with the election of the
Board of Directors. This means that the holders of more than 50% of the
shares voting can elect all of the directors if they so choose and the
holders of the remaining shares will not be able to elect any directors.
The holders of shares of common stock are entitled to dividends, out of
funds legally available, when and as declared by our Board of Directors.
Our Board of Directors has never declared a dividend and does not
anticipate declaring a dividend in the future. Each outstanding share of
common stock entitles the holder thereof to one vote per share on all
matters. The holders of the shares of common stock have no preemptive or
subscription rights. In the event of liquidation, dissolution or winding
up of the affairs of Harlequin Investments, Inc., holders are entitled to
receive, ratably, the net assets of Harlequin Investments, Inc. available
after payment of all creditors.
All of our issued and outstanding shares of common stock are duly
authorized, validly issued, fully paid, and non-assessable. To the extent
that additional shares of Harlequin's common stock are issued, the
relative interests of existing shareholders may be diluted.
Disclosure of Commission Position on Indemnification for Securities Act
Liabilities
The Articles of Incorporation of Harlequin Investments, Inc., filed as
Exhibit 3.1 to our registration statement on Form SB-2, provide that we
will indemnify our officers and directors to the full extent permitted by
Colorado state law. The Bylaws of Harlequin Investments, Inc., filed as
Exhibit 3.2 to our registration statement, provide that we will indemnify
and hold harmless each person who was, is or is threatened to be made a
party to or is otherwise involved in any threatened proceedings by reason
of the fact that he or she is or was a director or officer of Harlequin
Investments, Inc. or is or was serving as a director, officer, partner,
trustee, employee, or agent of another entity, against all losses, claims,
damages, liabilities and expenses actually and reasonably incurred or
suffered in connection with such proceeding.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to our directors, officers and controlling
persons, pursuant to the forgoing provisions or otherwise, we have been
advised that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in that Act and
is, therefore, unenforceable.
Important Notice
This prospectus contains forward-looking statements that involve risks and
uncertainties. The words such as "anticipates", "believes", "plans",
"expects", "future", "intends" and similar expressions identify these
forward-looking statements. Harlequin Investments, Inc.'s actual results
could differ materially from those anticipated in these forward-looking
statements as the result of certain factors, including those set forth in
"Risk Factors" and elsewhere in this prospectus.
Description of Business
General
Harlequin Investments, Inc. was incorporated under the laws of the State
of Colorado on January 19, 2000, and we are in our early developmental and
promotional stages. To date, our only activities have been organizational,
raising our initial capital, developing the business plan and establishing
the need for a feasibility study. We have not commenced commercial
operations. We have no full time employees and own no real estate. If we
do not raise sufficient funds through this offering and through subsequent
offerings, we may never be able to commence operations.
Business Plan
Harlequin Investments, Inc. through our website,
www.thesportscollections.com plans to operate a variety of Internet-
related services including:
an online B2B (Business-to-Business), B2C (Business-to-Consumer) and
C2C (Consumer-to-Consumer ) trading service, known as
thesportscollections.com;
a service that establishes a clearing house or brokerage service to
connect sports memorabilia and collectibles retailers and
wholesalers; and
a listing service for individuals seeking to buy or sell items via
our online Internet service. The Company is committed to pursuing
all commercial opportunities in the online person-to-person, business-
to-consumer and business-to-business trading service areas dealing
with sports antiques, collectibles and memorabilia.
Our business plan initially is to determine the feasibility of selling and
brokering these items and related products to specific markets. Should
Harlequin Investments, Inc. determine that the plan is feasible, it
intends to market sports collectibles and memorabilia and other associated
products to dealers, individuals, museums and other similar types of
customers. Besides buying and selling on our own account, we plan on
operating a central directory and clearing house to bring our customers
and suppliers together, wherever they are located.
As an example, a collector's estate is being liquidated and the executors
desire to expose the deceased's collection(s) to as many potential buyers
as possible. For a small fee our website will list and display all of the
products for sale including color photos and a complete description.
Anyone looking for a single piece or several objects will be able to view
our website and purchase those items there. Purchasers would also pay a
fee. Payment will be done by credit or debit card or by e-check.
Harlequin Investments, Inc. intends, if our feasibility study so
indicates, to develop and market an Internet application that enables
sports collectors to locate and purchase goods directly from dealers and
other specialty concerns or individuals whose items we are able expose to
a world-wide market. For the collectors and dealers involved, the site
will provide a sales outlet for their goods at a reasonable and acceptable
price. We believe that this service will generate a better profit margin,
compared to sales conducted through traditional distribution and wholesale
organizations.
Harlequin Investments, Inc. hopes that our projected feasibility study
will confirm our ability to establish an economic model that will be
superior to traditional marketing models. We provide a transaction
service that eliminates much of the traditional cost of sales for the
seller, while providing better prices for the consumer. The Harlequin
projected website will offer sports collectibles world-wide by generating
descriptive web pages featuring top quality photos of the pieces for sale.
The site will initially focus on the sale and marketing of items offered
for sale by dealers and individuals. We will continuously add new
products to our cataloging system as consumer confidence in Internet
commerce and security grows.
The objective is to create an Internet portal site that functions as a
search engine, a software application that enables the user to locate
information from a database or other archive. We will differ from typical
search engines in that all of the material displayed is merchandise that
can be purchased immediately from the offering party. A portal site is
an Internet site that functions as a starting point for world-wide web
sessions.
What we believe are the Benefits of Our Business Plan
We believe that an Internet-based, centralized trading place may offer the
following benefits:
- Facilitates buyers and sellers meeting, listing items for sale,
exchanging information, interacting with each other and ultimately buying
and selling;
- Allows buyers and sellers to trade directly, bypassing traditional
intermediaries and lowering costs for both parties;
- Offers buyers global access with a significantly broader selection of
goods to purchase and provides sellers the opportunity to sell their goods
efficiently to a broader base of buyers;
- Offers significant convenience, allows trading at all hours and
provides continuous updated information; and
- Fosters a sense of community through direct buyer and seller
communication, thereby enabling interaction between individuals with
mutual interests.
In addition, the community orientation, ease of direct buyer to seller
communication and efficient access to information on the trading history
of the buyer and seller can help reduce or eliminate the risks of online
trading. We believe there is a good market opportunity existing for an
Internet-based, centralized trading facility that applies the unique
features of the Internet to make personal, world-wide trading easier.
As consumer confidence in Internet technology increases, we expect to
become the de facto research tool for locating the lowest-priced source of
everyday and specialized goods. If the feasibility study is positive we
hope be able to put the team and the technology in place to successfully
create, deploy, and market an Internet service to provide direct
purchasing to consumers while eliminating many of the marketing costs of
sellers. There can be no assurance we will ever be able to achieve this
goal.
Regulation of the Internet.
In general, existing laws and regulations apply to transactions and other
activity on the Internet; however, the precise applicability of these laws
and regulations to the Internet is sometimes
uncertain. The vast majority of such laws were adopted prior to the
advent of the Internet and, as a result, do not deal with the unique
issues of the Internet or electronic commerce. Nevertheless, numerous
federal and state government agencies have already demonstrated
significant activity in promoting consumer protection and enforcing other
regulatory and disclosure statutes on the Internet.
Due to the increasing use of the Internet as a medium for commerce and
communication, it is possible that new laws and regulations may be enacted
with respect to the Internet and electronic commerce covering issues such
as user privacy, freedom of expression, advertising, pricing, content and
quality of products and services, taxation, intellectual property rights
and information security. The adoption of such laws or regulations and the
applicability of existing laws and regulations to the Internet may impair
the growth of Internet use and result in a decline in our sales.
A number of legislative proposals have been made at the federal, state and
local level, and by foreign governments, that would impose additional
taxes on the sale of goods and services over the Internet, and certain
states have taken measures to tax Internet-related activities. Although
Congress recently placed a three-year moratorium on new state and local
taxes on Internet access or on discriminatory taxes on electronic
commerce, existing state or local laws were expressly excepted from this
moratorium. Further, once this moratorium is lifted, some type of federal
and/or state taxes may be imposed upon Internet commerce. Such legislation
or other attempts at regulating commerce over the Internet may
substantially impair the growth of commerce on the Internet and, as a
result, adversely affect the opportunity of Harlequin Investments, Inc. to
derive financial benefit from such activities.
Part of the mandate given to the people or organization that will conduct
our feasibility study, if and when they are hired, will be to attempt to
cut through most of the speculation and arrive at a reasonable forecast as
to what future legislation may be.
E-commerce and the Internet today.
We have assembled some of the available data regarding Internet commerce
that will be a portion of the information that is to be digested in order
to complete our study as to feasibility.
Web Commerce: 1996 $2.6 billion
2000 $220 billion
Web Users: 1996 28 million
2000 175 million
(Source: Ziff Davis)
Nearly one trillion will be spent on Information Technology (IT) in 2000,
representing about 60 percent of all capital spending compared to just 10%
of all capital spending in 1980.
(Source: NUA)
Nearly half of US Internet users have purchased a product or service
online.
(Source: A. C. Nielsen-May 11, 2000)
Consumers who have used the Internet since 1995 spend an average of $ 388
per transaction while those who have been online for a year only spend an
average of $ 187 per transaction. The equivalent figure for those who
have been using the Internet since 1997 is $ 298.
(Source: National Association of Business Economics)
An estimated 120 million Internet users, or 40 percent of the total number
online, have already made an online purchase, according to a study from
the Angus Reid Group. Over 50 % of all online transactions were made in
the USA. US users made an average of 7 purchases in the three months
before the survey, spending an average of $828. The worldwide average
spent by an individual in the same period was less than $500.
75% of online shoppers in the US and Canada pay for e-commerce purchases
by credit card. Direct bank drafts, bank transfers and cash on delivery
are the other most favored payments methods. 93% of Internet shoppers
around the world said they were "somewhat satisfied" or "extremely
satisfied" with their online shopping experience.
(Source: Angus Reid Group)
Internet advertising revenue more than doubled in 1999, coming to a year-
end total of $ 4.62 billion.
(Source: Internet Advertising Bureau [IAB])
AS OF MARCH, 2000 THERE WERE A WORLD-WIDE TOTAL OF 304,360,000 INTERNET
CONNECTIONS. THE BREAKDOWN IS AS FOLLOWS:
Africa 2,589,000
Asia/Pacific 68,900,000
Europe 83,350,000
Middle East 1,900,000
USA & Canada 136,860,000
South Africa 10,740,000
(Source: Various; Methodology - Compiled by: Nua Internet Surveys)
Anticipated Milestones and Timetables
Implementation of Business Plan: Milestones
Our business plan is to determine the feasibility of buying, selling and
brokering antiques and collectibles via the Internet. Should we determine
that our business plan is feasible, we intend
to seek additional financing. We will attempt to achieve implementation
of our business plan by meeting the following milestones:
Market Survey.
In order to determine the feasibility of our business plan, we must
conduct research into the various potential target markets. The market
analysis research will likely consist of a telephone survey to 200 to
500 potential clients, focusing on our core target markets, such as
antique dealers. The survey would likely contain questions that would
determine the marketing approach and acceptability of specific products.
The survey would take approximately four to six weeks. The cost of the
survey is estimated to be $10,000 to $20,000 which would be paid for out
of the proceeds of this offering.
Hire Sales people.
Should we determine that our business plan is feasible, we will then
have to engage salespeople to market our product. We expect that we may
hire up to four salespeople during our first year of operation, two
salespeople initially. The hiring process would include running
advertisements in the local newspaper and conducting interviews. It is
anticipated that hiring the salespeople may take four to eight weeks.
The cost of hiring the salespeople, not including compensation, is
estimated at $ 5,000.
Establish an Office.
We would then have to establish an office for the sales force and
administration. This would include equipment such as office furniture,
computers and telephones. It is anticipated that it may take four to six
weeks to locate acceptable office space and select and purchase
equipment. The expense of office rental is estimated to be $ 36,000 per
year. Office furniture and equipment is estimated to require a capital
outlay of $15,000.
Development of Advertising Campaign.
The next step would be to develop an advertising campaign, including
establishing a list of prospects based on potential clients identified in
the market survey and designing and printing sales materials. It is
anticipated that it would take approximately six to ten weeks to develop the
advertising campaign, although, depending on the availability of resources we
will attempt to develop our advertising campaign concurrently with establishing
an office. The cost of developing the campaign is estimated at
approximately $ 150,000.
Implementation of Advertising Campaign/Sales Calls.
Implementation of the advertising campaign would begin with mailing the
sales materials to the identified list of prospects. Approximately two
to four weeks thereafter, the salespeople would begin telephone follow-
ups and scheduling of sales calls. Although it will be
necessary to make sales calls throughout the life of the company, it is
estimated that the first round of sales calls will take approximately
eight to twelve weeks to complete. The cost of salary and expenses for
two salespeople is estimated at $175,000 per year.
Achieve Revenues.
It is difficult to quantify how long it will take to convert a sales
call into actual sales and revenues. We will not begin receiving orders
until our sales force is able to convince potential clients to begin
offering antiques and collectables to their customers, or to convert
from an existing advertising source. We hope that clients would begin
placing orders within weeks of a sales call, but it may take several
months before people begin to purchase products. Moreover, customers may
not be willing to pay for products at the time they order, and may
insist on
buying on account, which would delay receipt of revenues another month
or two. Assuming we have received all necessary approvals to begin
raising funds by February 1, 2001 and assuming an offering period of
approximately one month, in a best case scenario we may receive our
first revenues as early as September 30, 2001. However, a more realistic
estimate of first revenues would be January 1, 2002 or later.
As discussed more fully in the Management's Discussion and Analysis--
Liquidity and Capital Resources section, the expenses of implementing
our business plan will exceed the funds raised by this offering, and we
will have to obtain additional financing through an offering or through
capital contributions by current shareholders. No commitments to provide
additional funds have been made by management or shareholders.
Accordingly, there can be no assurance that any additional funds will be
available on terms acceptable to us or at all.
Employees.
Harlequin Investments, Inc. is a development stage company and we
currently have no employees. We are currently managed by Inge Kerster,
our sole officer and director. We look to Ms. Kerster for her
entrepreneurial skills and talents. Management plans to use consultants,
attorneys and accountants to conduct the planned feasibility study and
does not plan to engage any full-time employees until the results of that
study are properly evaluated. We do not currently have any agreements in
place with consultants, nor do we have any established criteria with
respect consultant experience, services to be provided or the terms of
service. We may hire employees in the future based on the projected size
of the market and the compensation necessary to retain qualified
employees. A portion of any employee compensation could include the right
to acquire stock in Harlequin Investments, Inc., which would dilute the
ownership interest of holders of existing shares of our common stock.
Available Information and Reports to Securities Holders.
Harlequin Investments, Inc. has filed with the Securities and Exchange
Commission a registration statement on Form SB-2 with respect to the
common stock offered by this prospectus. This prospectus, which is a part
of the registration statement, does not contain all of the information set
forth in the registration statement or the attached exhibits and
schedules. For further information with respect to Harlequin Investments,
Inc. and our common stock, see the registration statement and the exhibits
and schedules. Any document we file may be read and copied at the
Commission's Public Reference Room located at 450 Fifth Street N.W.,
Washington D.C. 20549. Please call the Commission at 1-800-SEC-0330 for
further information about the public reference rooms. The Harlequin
Investments, Inc. filings with the Commission are also available to the
public from the Commission's website at http://www.sec.gov.
Upon completion of this offering we will become subject to the information
and periodic reporting requirements of the Securities Exchange Act and
will file periodic reports, proxy statements and other information with
the Commission. Such periodic reports, proxy statements and other
information will be available for inspection and copying at the
Commission's public reference rooms, and the website of the Commission.
Management's Discussion and Analysis or Plan of Operation
The following discussion assumes that the results of the proposed
feasibility study are positive and we go on to put the full business plan
into affect. If this should be the case it is certain that Harlequin
Investments, Inc. will need to seek a large capital injection. We have
not had any discussions with anyone about this needed capital nor do we
intend to do so until the study is completed. Accordingly: we can give
you no assurance that you will not lose your entire investment in our
company.
Harlequin Investments, Inc. will attempt to establish several online
services on the proposed website, www.thesportscollections.com. If we are
successful, these services will include:
- Inventory listings of participating sports antique and collectable
dealers for browsing and for sale to the general public and other
dealers;
- A listing service displaying items for sale from individuals sellers;
- A free "items wanted" service that informs sellers as to a specific
item or items that are required either by a dealer, architect, designer
or individual; and
- An alerting system designed to flag listings that seem to fill the
"items wanted" listings.
We hope that the www.thesportscollections.com site will serve as a
centralized trading place for buyers and sellers to meet, negotiate sales,
and finally consummate transactions directly, thereby bypassing the time
and expense of other intermediaries. We plan to collect a transaction fee
from both sides.
Site Implementation.
The Harlequin website is fairly simple in nature. Preliminary inquiries
with website builders and developers have indicated that the biggest
obstacle will be the capacity required. Dealers will list some or all of
their inventory, complete with a color picture option. Estimated time
to construct and test website: six to nine months. Estimated cost:
$500,000 to $1,000,000.
Numerous factors affect the time of commerce site implementation including
the following:
Number of features implemented. Adding features to a site takes
development and testing time;
Degree of customized versus packaged software used. Highly
customized sites take longer to develop than those relying heavily on
functions provided off the shelf;
Complete back-end integration, often crucial for a high-quality
customer satisfaction;
Technical expertise of staff. A shortage of technical skills
plagues site implementation. It is common for members of site
development teams to work with a package for the first time, learning
as they go along.
Clarity of vision. Numerous decisions about partners, business
processes, a site's feature set, and look and feel all affect the
time necessary to develop a site. When decisions change during the
course of development building time lengthens.
Website development is more than implementing a system. It is about
building a business. Two aspects of site development have a major impact
on overall development time: business process design and partner
selection. Business process design entails numerous decisions about the
day-to-day operation of an online business and includes everything from
the sequence of steps in an online transaction to the maintenance of a
site. Sites must make decisions about dozens of operational questions,
including the following:
Product information. Where to obtain it? What are the processes for
updating, approving, and releasing it to the site?
Non-product site content. Who creates it? approves it? how and
when is it released?
Merchandising. Staffing and process decisions on everything from
product selection to product presentation and site promotions.
Shipping charges. Is shipping free? Is it charged at a flat rate,
or is it a percentage of order value?
Items wanted. How should a site conduct customer communications
relating to them?
Returns. Who pays for return shipping? Is a return materials
authorization (RMA) required, or are return shipping labels included in
outbound shipments?
Customer e-mail. Does the site accept customer inquiries via e-mail?
Who is expected to handle them? What response time is targeted?
Live customer service. Is it available by phone or live chat?
During what hours?
Partner selection is a vital element of launching a commerce site. It can
take months for a Web venture to identify and come to agreements with the
variety of partners involved in the operation of a site. Each partner may
present its own business process questions, as well as training and
integration issues. Most commerce sites end up contracting with several
of the following types of partners:
* Credit and Debit card processors
* Fulfillment partner
* Call center
* Shipping carriers
* Web site host
There are literally hundreds of vital questions to be asked and answered
about implementing a full business plan. Some of these will be identified
and answered by our projected feasibility study. Others will be asked by
the website builder/developer and hopefully answered by us. There is no
assurance we will ever become profitable.
Website Launch Estimated Expenditures.
- It now costs an average of $536,000 to develop a website and an
annual average of $591,000 to maintain it.
- E-commerce sites cost $836,000 to build and $1,000,000 to maintain
every year.
- Maintenance costs do not include salaries or overhead costs.
(Source: Association of National Advertisers)
Harlequin Investments, Inc. was incorporated in January, 2000 and in the
near future, subject to the results of a planned feasibility study and
subsequent financing, will enter the preparatory stage of building an
Internet site for the marketing of antiques and collectibles and other
related products. We plan to begin with the hiring of consultants to
determine the feasibility of the project. If the results of that study
are positive we will continue with the next steps: financing and
developing proprietary data base programming and web server configuration.
The estimated total cost of this program is $250,000. We may be unable
to raise money from other sources and the proceeds of this offering are
insufficient to fund anything more than our proposed feasibility study.
The estimated cost of the web site to launch date is estimated at
$850,000. Our website is not up and operational nor will it be until these
preliminary steps have taken place.
In the first year of operations, which we anticipate to be starting
sometime in the first half of the year 2001 Harlequin Investments, Inc.
will require an additional $2,000,000 to fully develop the website and
establish and sustain an extensive marketing program. It is expected that
approximately $2,000,000 in advertising costs will be incurred in the
first year to assist in the launching of the site. Funding requirements
could increase significantly in year two, depending on the success of the
marketing program in year one. Should anticipated results be generated,
the company proposes to raise up to $20,000,000 in year two through a
public offering of securities, of which $10,000,000 would be allocated to
marketing costs. There can be no assurance that we will be able to raise
any additional funds and we have not entered into any contracts or letters
of understanding relating to any future financing.
There are no revenues as of the date of this prospectus. Harlequin
Investments Inc. has not constructed or activated our website.
Harlequin Investments, Inc. is conducting this offering, in part, because
we believe that an early registration of our equity securities will
minimize some of the barriers to capital formation that otherwise exist.
By having a registration statement in place, we believe that we will be in
a better position, either to conduct a future public offering of our
securities or to undertake a private placement with registration rights,
than if we were a completely private company.
We believe that the cost of registering our securities, and undertaking
the required disclosure obligations will be offset by being able to get
better terms for future financing efforts, however there is no assurance
of this.
Description of Property
Harlequin Investments, Inc. is provided some office space and telephone
answering facilities within the office of our officer and director. We
pay no rent and own no real estate.
Certain Relationships and Related Transactions
No director, executive officer or nominee for election as a director of
Harlequin Investments, Inc. and no owner of five percent or more of the
outstanding shares or any member of their immediate family has entered
into or proposed any transaction in which the amount involved exceeds
$10,000. Ms. Kerster is president and majority shareholder of Sandringham
Investments, Limited, a British Columbia corporation providing consulting
services to Canadian companies desiring to become trading entities in the
United States.
Market for Common Equity and Related Stockholder Matters
No established public market exists for the securities of Harlequin
Investments, Inc. We have no common equity subject to outstanding
purchase options or warrants and we have no securities convertible to
common equity. There is no common equity that can be sold pursuant to
Rule 144 of the Securities Act or that Harlequin Investments, Inc. has
agreed to register under the Securities Act for sale by shareholders.
Except for this offering there is no common equity that is being or has
been publicly proposed to be, publicly offered.
As of December 31, 2000, there are 210,000 shares issued and outstanding.
All of these shares were issued under Section 4(2) and Regulation S of the
Securities Act and are subject to the re-sale restrictions of Rule 144.
To date we have not paid any dividends on our common stock and do not
expect to pay any dividends in the foreseeable future.
Executive Compensation
No officer or director has received any remuneration from Harlequin
Investments, Inc. Although there is no current plan in existence it is
possible that we will adopt a plan to pay or accrue compensation to our
officers and directors for services rendered related to the implementation
of the business plan. We have no stock option, retirement, incentive or
profit sharing plan or program for the benefit of officers, directors or
employees but the Board of Directors may recommend the adoption of one or
more of such programs in the future. No one receives any compensation
from Harlequin Investments, Inc. and we do not have a compensation policy
or committee.
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2000
PREPARED BY MANAGEMENT
HARLEQUIN INVESTMENTS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEET
AS AT DECEMBER 31, 2000
(PREPARED BY MANAGEMENT)
ASSETS
CURRENT ASSETS:
CASH 1,062
TOTAL CURRENT ASSETS 1,062
TOTAL ASSETS 1,062
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
DUE TO RELATED PARTY 1,500
TOTAL CURRENT LIABILITIES 1,500
STOCKHOLDERS' EQUITY:
COMMON STOCK, $0.001 PAR
VALUE; 100,000,000 SHARES
AUTHORIZEDAND 210 ,000 SHARES
ISSUED AND OUTSTANDING 210
PREFERRED STOCK, $0.001 PAR
VALUE - 10,000,000 AUTHORIZED
NONE ISSUED AND OUTSTANDING 0
ADDITIONAL PAID-IN CAPITAL 1,140
(DEFICIT) ACCUMULATED DURING
THE DEVELOPMENT STAGE (1,788)
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) ( 438)
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 1,062
SEE ACCOMPANYING NOTES
HARLEQUIN INVESTMENTS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF OPERATIONS
FOR THE PERIOD JANUARY 19, 2000 (INCEPTION)
THROUGH DECEMBER 31, 2000
(PREPARED BY MAMAGEMENT)
REVENUES: $ 0
OPERATING EXPENSES:
DOCUMENT PREPARATION AND FILING FEES 1,750
OFFICE EXPENSES 38
TOTAL OPERATING EXPENSES 1,788
NET (LOSS) FOR THE PERIOD (1,788)
NET (LOSS) PER SHARE (0.01)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 210,000
SEE ACCOMPANYING NOTES
HARLEQUIN INVESTMENTS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CASH FLOWS
FOR THE PERIOD JANUARY 19, 2000 (INCEPTION)
THROUGH DECEMBER 31, 2000
(PREPARED BY MANAGEMENT)
CASH FLOWS PROVIDED BY (USED FOR)
CASH FLOWS FROM (BY) OPERATING ACTIVITIES:
NET INCOME (LOSS) FOR THE PERIOD $ (1,788)
CASH FLOWS FROM INVESTING ACTIVITIES: 0
CASH FLOWS FROM (TO) FINANCING ACTIVITIES:
LOAN FROM RELATED PARTY 1,500
ISSUANCE OF COMMON STOCKS 1,350
INCREASE (DECREASE) IN CASH FOR THE PERIOD 1.062
CASH, BEGINNING OF PERIOD 0
CASH, END OF PERIOD 1,062
SEE ACCOMPANYING NOTES
NOTES TO UNAUDITED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying financial statements have been prepared in accordance
with US Securities and Exchange Commission ("SEC") requirements for
interim financial statements. Therefore, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. The financial statements
should be read in conjunction with the year ended December 31, 1999
financial statements of Harlequin Investments, Inc. ("Registrant")
included in the Form SB-2 filed with the SEC by the Registrant.
The results of operations for the interim period shown in this report are
not necessarily indicative of the results to be expected for the full
year. In the opinion of management, the information contained herein
reflects all adjustments necessary to make the results of operations for
the interim periods a fair statement of such operation. All such
adjustments are of a normal recurring nature.
NOTE II - DUE TO RELATED PARTY
The officer and director of Harlequin Investments, Inc. advanced the
Company a total of $1,500 to defray the costs of accounting and legal
fees.
HARLEQUIN INVESTMENTS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
AUDIT REPORT
Janet Loss, C.P.A., P.C.
Certified Public Accountant
1780 S. Belaire, Suite 500
Denver, Colorado 80222
HARLEQUIN INVESTMENTS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
INDEX TO FINANCIAL STATEMENTS
TABLE OF CONTENTS
ITEM PAGE
Report of Certified Public Accountant..................... 1
Balance Sheet, June 30, 2000 ......................... 2
Statement of Operations, for the Period January 19, 2000 (Inception)
Through June 30, 2000 ............................... 3
Statement of Stockholders' Equity (Deficit), January 19, 2000 (Inception)
Through June 30, 2000................................. 4
Statement of Cash Flows for the Period From January 19, 2000 (Inception)
Through June 30, 2000 .....................5
Notes to Financial Statements 6-7
Janet Loss, C.P.A., P.C.
Certified Public Accountant
1780 South Belaire, Suite 500
Denver, Colorado 80210
(303) 782-0878
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Harlequin Investments, Inc.
404 Scott Point Drive
Salt Spring Island, BC V8K 2R2 Canada
Ladies and Gentlemen:
I have audited the accompanying Balance Sheet of Harlequin Investments,
Inc. (A Development Stage Enterprise) as of June 30, 2000 and the
Statements of Operations, Stockholders' Equity, and Cash Flows for the
period January 19, 2000 (Inception) through June 30, 2000. These
financial statements are the responsibility of the Company's management.
My responsibility is to express an opinion on these financial statements
based on my audits.
My examination was made in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audits to
obtain reasonable assurance as to 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. I believe that our audit
provides a reasonable basis for our opinion.
In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Harlequin Investments,
Inc. (a development stage enterprise) as of June 30, 2000, and the results
of its operations and changes in its cash flows for the period from
January 19, 2000 (Inception) through June 30, 2000, in conformity with
generally accepted accounting principles.
Janet Loss, C.P.A., P.C.
December 22, 2000
HARLEQUIN INVESTMENTS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEET
AS AT JUNE 30, 2000
ASSETS
CURRENT ASSETS:
CASH 788
TOTAL CURRENT ASSETS 788
TOTAL ASSETS 788
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES: 0
STOCKHOLDERS' EQUITY:
COMMON STOCK, $0.001 PAR
VALUE; 100,000,000 SHARES
AUTHORIZEDAND 210,000 SHARES
ISSUED AND OUTSTANDING 210
PREFERRED STOCK, $0.001 PAR
VALUE - 10,000,000 AUTHORIZED
NONE ISSUED AND OUTSTANDING 0
ADDITIONAL PAID-IN CAPITAL 1,140
(DEFICIT) ACCUMULATED DURING
THE DEVELOPMENT STAGE (562)
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 788
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY 788
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
HARLEQUIN INVESTMENTS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF OPERATIONS
FOR THE PERIOD JANUARY 19, 2000 (INCEPTION)
THROUGH JUNE 30, 2000
REVENUES: $ 0
OPERATING EXPENSES:
DOCUMENT PREPARATION AND FILING FEES 550
OFFICE EXPENSES 12
TOTAL OPERATING EXPENSES 562
NET (LOSS) FOR THE PERIOD (562)
NET (LOSS) PER SHARE (0.01)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 210,000
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
HARLEQUIN INVESTMENTS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD JANUARY 19, 2000 (INCEPTION)
THROUGH JUNE 30, 2000
<TABLE>
<CAPTION>
COMMON DEFICIT
STOCK PREFERRED ACCUMULATE
NUMBER COMMON PREFERRED OTHER DURING TOTAL
OF STOCK STOCK PAID THE STOCKHOLDER'S
SHARES AMOUNT NUMBER STOCK IN DEVELOPMENT EQUITY
OF AMOUNT CAPITAL STAGE
SHARES
<S> <C> <C> <C> <C> <C> <C> <C>
COMMON
STOCK
ISSUED
JANUARY
19, 2000
FOR 150000 150 0 0 0 0 150
SERVICES
COMMON
STOCK
ISSUED
MAY 31,
2000 FOR 60000 60 0 0 1140 0 1,200
CASH
(LOSS)
FOR THE
PERIOD 0 0 0 0 0 (562) (562)
____________________________________________________________________________________
BALANCES
JUNE 30,
2000 210000 210 0 0 0 (562) 788
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
HARLEQUIN INVESTMENTS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CASH FLOWS
FOR THE PERIOD JANUARY 19, 2000 (INCEPTION)
THROUGH JUNE 30, 2000
CASH FLOWS PROVIDED BY (USED FOR)
CASH FLOWS FROM (BY) OPERATING ACTIVITIES:
NET INCOME (LOSS) FOR THE PERIOD (562)
CASH FLOWS FROM INVESTING ACTIVITIES: 0
CASH FLOWS FROM (TO) FINANCING ACTIVITIES:
ISSUANCE OF COMMON STOCKS 1,350
INCREASE (DECREASE)IN CASH FOR THE PERIOD 788
CASH, BEGINNING OF PERIOD 0
CASH, END OF PERIOD $ 788
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
HARLEQUIN INVESTMENTS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
NOTE I - ORGANIZATION AND HISTORY
The Company is a Colorado Corporation and the Company has been in the
development stage since its formation on January 19, 2000. The Company's
only activities have been organizational, directed at acquiring its
principle assets, raising its initial capital and developing its business
plan.
NOTE II - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DEVELOPMENT STAGE ACTIVITIES
The Company has been in the development stage since inception.
ACCOUNTING METHOD
The Company records income and expenses on the accrual method.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents includes cash on hand, cash on deposit, and
highly liquid investments with maturities generally of three months or
less. At June 30, 2000, there were no cash equivalents.
YEAR END
The Company has elected to have a fiscal year ended June 30.
USE OF ESTIMATES
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that effect the reported amounts of assets and liabilities at
the date of financial statements, as well as revenues and expenses
reported for the periods presented. The Company regularly assesses these
estimates and, while actual results may differ management believes that
the estimates are reasonable.
NOTE III - RELATED PARTY TRANSACTIONS
None.
Changes and Disagreements with Accountants on Accounting and Financial
Disclosure
None
PART II - Information Not Required in Prospectus
Indemnification of Officers and Directors
The Articles of Incorporation of Harlequin Investments, Inc. filed as
Exhibit 3.1 provide that it must indemnify its directors and officers to
the fullest extent permitted under Colorado law against all liabilities
incurred by reason of the fact that the person is or was a director or
officer of Harlequin Investments, Inc. or a fiduciary of an employee
benefit plan, or is or was serving at the request of Harlequin
Investments, Inc. as a director or officer, or fiduciary of an employee
benefit plan, of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise.
The effect of these provisions is potentially to indemnify Harlequin
Investments, Inc.'s directors and officers from all costs and expenses of
liability incurred by them in connection with any action, suit or
proceeding in which they are involved by reason of their affiliation with
Harlequin Investments, Inc.. Pursuant to Colorado law, a corporation may
indemnify a director, provided that such indemnity shall not apply on
account of:
(a) acts or omissions of the director finally adjudged to be
intentional
misconduct or a knowing violation of law;
(b) unlawful distributions; or
(c) any transaction with respect to which it was finally adjudged that
such
director personally received a benefit in money, property, or
services to which the director was not legally entitled.
The Bylaws of Harlequin Investments, Inc., filed as Exhibit 3.2, provide
that it will indemnify its officers and directors for costs and expenses
incurred in connection with the defense of actions, suits, or proceedings
against them on account of their being or having been directors or
officers, absent a finding of negligence or misconduct in office.
Harlequin Investments, Inc.'s Bylaws also permit it to maintain insurance
on behalf of its officers, directors, employees and agents against any
liability asserted against and incurred by that person whether or not
Harlequin Investments, Inc. has the power to indemnify such person against
liability for any of those acts.
Other Expenses of Issuance and Distribution
The amounts set forth are estimates except for the SEC registration fee:
Amount to
be Paid
SEC registration fee $ 7.00
Printing and engraving expenses
Attorneys' fees and expenses 8,000.00
Accountants' fees and expenses 1,500.00
Transfer agent's and registrar's fees and expenses 500.00
Miscellaneous 100.00
Total $10,107.00
The Registrant will bear all expenses shown above.
Recent Sales of Unregistered Securities
Set forth below is information regarding the issuance and sales of
Harlequin Investments, Inc.'s securities without registration since its
formation. No such sales involved the use of an underwriter and no
commissions were paid in connection with the sale of any securities.
On January 20, 2000 Harlequin Investments, Inc. issued 150,000 shares of
its common stock to its sole officer, promoter and director, Inge L. E.
Kerster. These shares were issued pursuant to Section 4 (2) of the
Securities Act and were for the expense, time and effort to incorporate,
organize and prepare our initial business plan.
On April 1, 2000 Harlequin issued 5,000 shares of its common stock to each
of twelve individuals at a price of $0.02 per share. These shares were
issued in reliance on Section 4 (2) and Regulation S of the Securities
Act. These shares were sold to a small number of sophisticated and/or
accredited investors who were given access to the type of information that
is contained in this registration statement. No advertising or public
solicitation was used. These investors are all citizens of Canada who
took their common stock pursuant to the restrictions of Rule 144 and,
accordingly, the exemption of Regulation S is also claimed for these
sales. The names of these shareholders and their respective
shareholdings are:
Inge L. E. Kerster 150,000
Anne Dysart 5,000
Ronald I. Orr 5,000
Ronald Chan 5,000
Paul McKenzie 5,000
Edward D. Duncan 5,000
Paul M. Naaykens 5,000
Michael Travis 5,000
Nancy Travis 5,000
Edward G. Byrd 5,000
Sarah C. N. Byrd 5,000
Darryl Culp 5,000
Rebecca M. E. Kerster 5,000
All shareholders are residents of Canada and received their shares
in reliance upon Regulation S as well as Section 4(2) of the Securities
Act of 1933. All are sophisticated or accredited investors and were
given full access to the books and records of Harlequin Investments, Inc.
In addition, all investors are close friends or business associates of
Inge L. E. Kerster.
Exhibits
The following exhibits are filed as part of this Registration Statement:
Exhibit
Number Description
* 3.1 Articles of Incorporation
* 3.2 Bylaws
4.2 Stock Subscription Agreement
* 5.1 Opinion re: legality
23.1 Consent of Independent Auditors
*23.2 Consent of Counsel (see Exhibit 5.1)
27.1 Financial Data Schedule
*Previously Filed
Undertakings
The Registrant hereby undertakes that it will:
(1) File, during any period in which it offers or sells securities,
a post-effective amendment to this Registration Statement to:
(a) Include any Prospectus required by section 10(a)(3) of the
Securities Act;
(b) Reflect in the Prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the Registration Statement; and
(c) 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 of the
securities at that time to be the initial 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.
(4) Provide to the Underwriters at the closing specified in the
underwriting agreement certificates in such denominations and
registered in such names as required by the Underwriters to permit
prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid by
a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
Signatures
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form SB-2 and authorized this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the Village of Ganges, Salt Spring Island,
British Columbia, Canada, on January 9, 2001.
Harlequin Investments, Inc.
/S/ Inge L. E. Kerster
Inge L. E. Kerster, President
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.
Signature ____ Title Date
/S/ Inge L. E. Kerster President, Secretary, January 9,2001
Inge L. E. Kerster Treasurer and Director
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITOR
Janet Loss, C.P.A., P.C.
Certified Public Accountant
1780 South Bellaire
Suite 500
Denver, CO 80222
The Board of Directors
Harlequin Investments Inc.
404 Scott Point Drive
Salt Spring Island, BC V8K 2R2
Canada
Dear Sirs:
This letter will authorize you to include the Audit of your company dated
June 30, 2000 and the Audit Report dated October 20, 2000 in the
Registration statement currently under review with the Securities and
Exchange Commission.
Yours Truly,
/S/ Janet Loss, C.P.A., P.C.
Janet Loss, C.P.A., P.C.
December 24, 2000
