U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10 - SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
FOR SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
LIONHEART INVESTMENTS, INC.
(Name of Small Business Issuer in its Charter)
Nevada 98 - 0219158
(State or other jurisdiction of (IRS Employer ID Number)
incorporation or organization)
404 Scott Point Drive, Salt Spring Island, BC V8K 2R2 Canada
(Address of Principal Executive Offices)(Zip Code)
Issuer's Telephone Number: (250) 537-5732
Securities to be Registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered. Each class is to be
registered
Not Applicable
Securities to be registered under Section 12(g) of the Act:
Common Stock
(Title of Class)
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
General
Lionheart Investments, Inc. was incorporated under the laws of
the State of Nevada on April1, 1997, and is in the early
developmental and promotional stages. To date Lionheart
Investments, Inc.'s only activities has been organizational ones,
directed at developing its business plan and raising its initial
capital. The Company has not commenced any commercial
operations. The Company has no full-time employees and owns no
real estate.
The Company's business plan is to seek, investigate, and, if
warranted, acquire one or more properties or businesses, and to
pursue other related activities intended to enhance shareholder
value. The acquisition of a business opportunity may be made by
purchase, merger, exchange of stock, or otherwise, and may
encompass assets or a business entity, such as a corporation,
joint venture, or partnership. The Company has very limited
capital, and it is unlikely that the Company will be able to take
advantage of more than one such business opportunity.
The Company intends to seek opportunities demonstrating the
potential of long-term growth as opposed to short-term earnings.
At the present time the Company has not identified any business
opportunity that it plans to pursue, nor has the Company reached
any agreement or definitive understanding with any person
concerning an acquisition.
Lionheart Investments, Inc. officer and director has a number of
contacts within the field of corporate finance. As a result, she
has had preliminary contacts with representatives of numerous
companies concerning the general possibility of a merger or
acquisition by a public shell company. However, none of these
preliminary contacts or discussions involved the possibility of a
merger or acquisition transaction with the Company.
It is anticipated that Lionheart Investments, Inc.'s officer and
director will contact broker/dealers and other persons with whom
she is acquainted who are involved in corporate finance matters
to advise them of Lionheart Investments, Inc.'s existence and to
determine if any companies or businesses they represent have an
interest in considering a merger or acquisition with the Company.
No assurance can be given that the Company will be successful in
finding or acquiring a desirable business opportunity, given the
limited funds that are available for acquisitions, or that any
acquisition that occurs will be on terms that are favorable to
the Company or its stockholders.
Lionheart Investments, Inc. search will be directed toward small
and medium-sized enterprises. These enterprises will have a
desire to become public corporations and which are able to
satisfy presently or in the near future, satisfy, the minimum
asset requirements in order to qualify shares for trading on the
NASD Bulletin Board quotation service, NASDAQ or a stock exchange
(See "Investigation and Selection of Business Opportunities").
Lionheart Investments, Inc. anticipates that the business
opportunities presented to it will:
(i) be recently organized with no operating history or a
history of losses attributable to under-capitalization or
other factors;
(ii) be experiencing financial or operating difficulties;
(iii} be in need of funds to develop a new product or
service or to expand into a new market;
(iv) be relying upon an untested product or marketing
concept; or
(v) have a combination of the characteristics mentioned in
(i)through(iv).
The Company intends to concentrate its acquisition efforts on
properties or businesses that it believes to be undervalued.
Given the above factors, investors should expect that any
acquisition candidate may have a history of losses or low
profitability. Lionheart Investments, Inc. does not propose to
restrict its search for investment opportunities to any
particular geographical area or industry and may, therefore,
engage in essentially any business to the extent of its limited
resources. This includes industries such as service, finance,
natural resources, manufacturing, high technology, product
development, medical, communications and others. Lionheart
Investments, Inc.'s discretion in the selection of business
opportunities is unrestricted, subject to the availability of
such opportunities, economic conditions, and other factors.
As a consequence of this registration of its securities, any
entity that has an interest in being acquired by, or merging into
Lionheart Investments, Inc., is expected to be an entity that
desires to become a public company and establish a public trading
market for its securities. In connection with such a merger or
acquisition, it is highly likely that an amount of stock
constituting control of Lionheart Investments, Inc. would be
issued by Lionheart Investments, Inc. or purchased from the
current principal shareholders by the acquiring entity or its
affiliates. If stock is purchased from the current shareholders,
the transaction is very likely to result in substantial gains to
them relative to their purchase price for such stock. In
Lionheart Investments, Inc.'s judgment, none of its officers and
directors would thereby become an "underwriter" within the
meaning of the Section 2(11) of the Securities Act of 1933.
The sale of a controlling interest by certain principal
shareholders of Lionheart Investments, Inc. could occur at a time
when the other shareholders of Lionheart Investments, Inc. remain
subject to restrictions on the transfer of their shares.
Depending upon the nature of the transaction, the current sole
officer and director of Lionheart Investments, Inc. may resign
her management positions with Lionheart Investments, Inc. in
connection with its acquisition of a business opportunity.
See "Form of Acquisition," below, and "Risk Factors" - "
Lionheart Investments, Inc. - lack of Continuity in Management."
In the event of such a resignation current management would not
have any control over the conduct of business following Lionheart
Investments, Inc.'s combination with a business opportunity.
It is anticipated that business opportunities will come to
Lionheart Investments, Inc.'s attention from various sources,
including its officer and director, its other stockholders,
professional advisors such as attorneys and accountants,
securities broker/dealers, venture capitalists, members of the
financial community, and others who may present unsolicited
proposals. Lionheart Investments, Inc. has no plans,
understandings, agreements, or commitments with any individual
for such person to act as a finder of opportunities for Lionheart
Investments, Inc..
Lionheart Investments, Inc. does not foresee that it would enter
into a merger or acquisition transaction with any business with
which its sole officer or director is currently affiliated.
Should Lionheart Investments, Inc. determine in the future,
contrary to foregoing expectations, that a transaction with an
affiliate would be in its best interests of its stockholders,
Lionheart Investments, Inc. is in general permitted by Nevada law
to enter into such a transaction if:
1. The material facts as to the relationship or interest of the
affiliate and as to the contract or transaction are disclosed or
are known to the Board of Directors, and the Board in good faith
authorizes the contract or transaction by the affirmative vote of
a majority of the disinterested directors, even though the
disinterested directors constitute less than a quorum; or
2. The material facts as to the relationship or interest of the
affiliate and as to the contract or transaction are disclosed or
are known to the stockholders entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by
vote of the stockholders; or
3. The contract or transaction is fair to Lionheart
Investments, Inc. as of the time it is authorized, approved or
ratified, by the Board of Directors or the stockholders.
Investigation and Selection of Business Opportunities
To a large extent a decision to participate in a specific
business opportunity may be made upon management's analysis of:
the quality of the other company's management and personnel;
the anticipated acceptability of new products or marketing
concepts;
the merit of technological changes; and
the perceived benefit Lionheart Investments, Inc. will
derive from becoming a publicly held entity.
There are numerous other factors which are difficult, if not
impossible, to analyze through the application of any objective
criteria. In many instances, it is anticipated that the
historical operations of a specific business opportunity may not
necessarily be indicative of the potential for the future. This
is due to the possible need to shift marketing approaches
substantially, expand significantly, change product emphasis,
change or substantially augment management, or make other
changes. The Company will be dependent upon the owners of a
business opportunity to identify any such problems which may
exist and to implement, or be primarily responsible for the
implementation of required changes.
Lionheart Investments, Inc. may participate in a business
opportunity with a newly organized firm or with a firm that is
entering a new phase of growth. We should emphasize that we will
incur further risks, because management in many instances will
not have proved its abilities or effectiveness. The eventual
market for such company's products or services will likely not be
established, and such company may not be profitable when
acquired.
It is anticipated that the Company will not be able to diversify,
but will essentially be limited to one such venture because of
Lionheart Investments, Inc.'s limited financing. This lack of
diversification will not permit Lionheart Investments, Inc. to
offset potential losses from one business opportunity against
profits from another, and should be considered an adverse factor
affecting any decision to purchase Lionheart Investments, Inc.'s
securities. It is emphasized that management of Lionheart
Investments, Inc. may effect transactions having a potentially
adverse impact upon Lionheart Investments, Inc.'s shareholders
pursuant to the authority and discretion of Lionheart
Investments, Inc.'s management to complete acquisitions without
submitting any proposal to the stockholders for their
consideration.
Holders of Lionheart Investments, Inc.'s securities should not
anticipate that Lionheart Investments, Inc. necessarily will
furnish such holders, prior to any merger or acquisition, with
financial statements or any other documentation, concerning a
target company or its business. In some instances, however, the
proposed participation in a business opportunity may be submitted
to the stockholders for their consideration, either voluntarily
by such directors to seek the stockholders' advice and consent or
because state law so requires.
The analysis of business opportunities will be undertaken by or
under the supervision of Lionheart Investments, Inc.'s President,
who is not a professional business analyst. See "Management".
Although there are no current plans to do so, Company management
might hire an outside consultant to assist in the investigation
and selection of business opportunities and might pay a finder's
fee.
Since Company management has no current plans to use any outside
consultants or advisors to assist in the investigation and
selection of business opportunities, no policies have been
adopted regarding use of such consultants or advisors. No
policies have been developed concerning the criteria to be used
in selecting such consultants or advisors, the services to be
provided, the term of service, or regarding the total amount of
fees that may be paid. However, because of our limited resources
it is likely that any such fee we agree to pay would be paid in
stock and not in cash. Otherwise, Lionheart Investments, Inc.
anticipates that it will consider, among other things, the
following factors:
- Potential for growth and profitability indicated by new
technology, anticipated market expansion, or new products;
- Lionheart Investments, Inc.'s perception of how any
particular business opportunity will be received by the
investment community and by Lionheart Investments, Inc.'s
stockholders;
- Whether, following the business combination, the financial
condition of the business opportunity would be or would have a
significant prospect in the foreseeable future of becoming
sufficient to enable the securities of Lionheart Investments,
Inc. to qualify for listing on an exchange or on a national
automated securities quotation system, such as NASDAQ, so as to
permit the trading of such securities to be exempt from the
requirements of Rule l5c2-6 adopted by the Securities and
Exchange Commission. See "Risk Factors - Regulation of Penny
Stocks;
- Capital requirements and anticipated availability of
required funds to be provided by Lionheart Investments, Inc. or
from operations, through the sale of additional securities,
through joint ventures or similar arrangements, or from other
sources;
- The extent to which the business opportunity can be
advanced;
- Competitive position as compared to other companies of
similar size and experience within the industry segment as well
as within the industry as a whole;
- Strength and diversity of existing management, or management
prospects that are scheduled for recruitment;
- The cost of participation by Lionheart Investments, Inc. as
compared to the perceived tangible and intangible values and
potential; and
- The accessibility of required management expertise,
personnel, raw materials, services, professional assistance, and
other required items.
In regard to the possibility that the shares of Lionheart
Investments, Inc. would qualify for listing on NASDAQ, the
current standards include the requirements that the issuer of the
securities that are sought to be listed have total assets of at
least $4,000,000 and total capital and surplus of at least
$2,000,000. Many, and perhaps most, of the business
opportunities that might be potential candidates for a
combination with Lionheart Investments, Inc. would not satisfy
the NASDAQ listing criteria.
No one of the factors described above will be controlling in the
selection of a business opportunity and management will attempt
to analyze all factors appropriate to each opportunity and make a
determination based upon reasonable investigative measures and
available data.
Potentially available business opportunities may occur in many
different industries and at various stages of development, all of
which will make the task of comparative investigation and
analysis of such business opportunities extremely difficult and
complex. Potential investors must recognize that, because of
Lionheart Investments, Inc.'s limited capital available for
investigation and management's limited experience in business
analysis, Lionheart Investments, Inc. may not discover or
adequately evaluate adverse facts about the opportunity to be
acquired.
Lionheart Investments, Inc. is unable to predict when it may
participate in a business opportunity. It expects, however, that
the analysis of specific proposals and the selection of a
business opportunity may take several months or more.
Prior to making a decision to participate in a business
opportunity, Lionheart Investments, Inc. will generally request
that it be provided with written materials regarding the business
opportunity containing such items as:
- a description of products, services and company history;
- management resumes;
- financial information;
- available projections, with related assumptions upon which
they are based;
- an explanation of proprietary products and services;
- evidence of existing patents, trademarks, or services marks,
or rights thereto;
- present and proposed forms of compensation to management;
- a description of transactions between such company and its
affiliates during relevant periods;
- a description of present and required facilities;
- an analysis of risks and competitive conditions;
- a financial plan of operation and estimated capital
requirements;
- audited financial statements, or if they are not available,
unaudited financial statements together with reasonable
assurances that audited financial statements would be able to be
produced within a reasonable period of time, not to exceed 60
days, following completion of a merger transaction; and
- other information deemed relevant.
As part of Lionheart Investments, Inc.'s investigation, the
executive officer and director may meet personally with
management and key personnel, may visit and inspect material
facilities, obtain independent analysis or verification of
certain information provided, check references of management and
key personnel and take other reasonable investigative measures to
the extent of the Company's limited financial resources and
management expertise.
It is possible that the range of business opportunities that
might be available for consideration could be limited by the
impact of Securities and Exchange Commission regulations
regarding purchase and sale of "penny stocks". The regulations
would affect, and possibly impair, any market that might develop
in Lionheart Investments, Inc.'s securities until such time as
they qualify for listing on NASDAQ or on another exchange which
would make them exempt from applicability of the "penny stock"
regulations. See "Risk Factors - Regulation of Penny Stocks".
Company management believes that various types of potential
merger or acquisition candidates might find a business
combination with Lionheart Investments, Inc. to be attractive.
These include:
1. acquisition candidates desiring to create a public market
for their shares in order to enhance liquidity for current
shareholders;
2. acquisition candidates which have long-term plans for
raising capital through the public sale of securities and believe
that the possible prior existence of a public market for their
securities would be beneficial; and
3. acquisition candidates which plan to acquire additional
assets through issuance of securities rather than for cash, and
believe that the possibility of development of a public market
for their securities will be of assistance in that process.
Acquisition candidates that have a need for an immediate cash
infusion are not likely to find a potential business combination
with Lionheart Investments, Inc. to be an attractive alternative.
Form of Acquisition
It is impossible to predict the manner in which Lionheart
Investments, Inc. may participate in a business opportunity.
Specific business opportunities will be reviewed as well as the
respective needs and desires of Lionheart Investments, Inc.. The
basis of that review and the relative negotiating strength of
Lionheart Investments, Inc., the legal structure or method deemed
by management to be suitable will also be reviewed. Such
structure may include, but is not limited to, leases, purchase
and sale agreements, licenses, joint ventures and other
contractual arrangements. Lionheart Investments, Inc. may act
directly or indirectly through an interest in a partnership,
corporation or other form of organization.
Implementing such structure may require the merger, consolidation
or reorganization of Lionheart Investments, Inc. with other
corporations or forms of business organization and although it is
likely, there is no assurance that Lionheart Investments, Inc.
would be the surviving entity. In addition, the present
management and stockholders of Lionheart Investments, Inc. most
likely will not have control of a majority of the voting shares
of Lionheart Investments, Inc. following a reorganization
transaction. As part of such a transaction, Lionheart
Investments, Inc.'s existing directors may resign and new
directors may be appointed without any vote by stockholders.
It is likely that Lionheart Investments, Inc. will acquire its
participation in a business opportunity through the issuance of
Common Stock or other of its securities. Although the terms of
any such transaction cannot be predicted, it should be noted that
in certain circumstances the criteria for determining whether or
not an acquisition is a so-called "tax free reorganization" under
the Internal Revenue Code of 1936, depends upon the issuance to
the stockholders of the acquired company of a controlling
interest (i.e. 80% or more) of the common stock of the combined
entities immediately following the reorganization.
If a transaction were structured to take advantage of these
provisions rather than other "tax free" provisions provided under
the Internal Revenue Code, Lionheart Investments, Inc.'s current
stockholders would retain in the aggregate 20% or less of the
total issued and outstanding shares. This could result in
substantial additional dilution in the equity of those who were
stockholders of Lionheart Investments, Inc. prior to such
reorganization. Any such issuance of additional shares might
also be done simultaneously with a sale or transfer of shares
representing a controlling interest in Lionheart Investments,
Inc. by the current officers, directors and principal
shareholders. (See "Description of Business General").
It is anticipated that any new securities issued in any
reorganization would be issued in reliance upon exemptions, if
any are available, from registration under applicable federal and
state securities laws. In some circumstances, however, as a
negotiated element of the transaction Lionheart Investments, Inc.
may agree to register such securities either at the time the
transaction is consummated, or under certain conditions or at
specified times thereafter. The issuance of substantial
additional securities and their potential sale into any trading
market that might develop in Lionheart Investments, Inc.'s
securities may have a depressive effect upon such market.
Lionheart Investments, Inc. will participate in a business
opportunity only after the negotiation and execution of a written
agreement.
Although the terms of such agreement cannot be predicted
generally such an agreement would require specific
representations and warranties by all of the parties thereto,
specify certain events of default, detail the terms of closing
and the conditions which must be satisfied by each of the parties
thereto prior to such closing, outline the manner of bearing
costs if the transaction is not closed, set forth remedies upon
default and include miscellaneous other terms.
As a general matter, Lionheart Investments, Inc. anticipates that
it, and/or its officer and principal shareholders will enter into
a letter of intent with the management, principals or owners of a
prospective business opportunity prior to signing a binding
agreement. Such a letter of intent will set forth the terms of
the proposed acquisition but will not bind any of the parties to
consummate the transaction. Execution of a letter of intent will
by no means indicate that consummation of an acquisition is
probable.
Neither Lionheart Investments, Inc. nor any of the other parties
to the letter of intent will be bound to consummate the
acquisition unless and until a definitive agreement concerning
the acquisition as described in the preceding paragraph is
executed. Even after a definitive agreement is executed, it is
possible that the acquisition would not be consummated should any
party elect to exercise any right provided in the agreement to
terminate it on specified grounds.
It is anticipated that the investigation of specific business
opportunities and the negotiation, drafting and execution of
relevant agreements, disclosure documents and other instruments
will require substantial management time and attention and
substantial costs for accountants, attorneys and others. If a
decision is made not to participate in a specific business
opportunity, the costs incurred in the related investigation
would not be recoverable. Moreover, because many providers of
goods and services require compensation at the time or soon after
the goods and services are provided, the inability of Lionheart
Investments, Inc. to pay until an indeterminate future time may
make it impossible to procure goods and services.
Investment Company Act and Other Regulation
Lionheart Investments, Inc. may participate in a business
opportunity by purchasing, trading or selling the securities of
such business. The Company does not, however, intend to engage
primarily in such activities. Specifically, it intends to
conduct its activities so as to avoid being classified as an
"investment company" under the Investment Company Act of 1940
(the "Investment Act"), and therefore to avoid application of the
costly and restrictive registration and other provisions of the
Investment Act.
Section 3(a) of the Investment Act contains the definition of an
"investment company," and it excludes any entity that does not
engage primarily in the business of investing, reinvesting or
trading in securities, or that does not engage in the business of
investing, owning, holding or trading "investment securities"
(defined as "all securities other than government securities or
securities of majority-owned subsidiaries") the value of which
exceeds 40% of the value of its total assets (excluding
government securities, cash or cash items). Lionheart
Investments, Inc. intends to implement its business plan in a
manner that will result in the availability of this exception
from the definition of " investment company". Consequently,
Lionheart Investments, Inc.'s participation in a business or
opportunity through the purchase and sale of investment
securities will be limited.
Lionheart Investments, Inc.'s plan of business may involve
changes in its capital structure, management, control and
business, especially if it consummates a reorganization as
discussed above. Each of these areas is regulated by the
Investment Act, in order to protect purchasers of investment
company securities. Since Lionheart Investments, Inc. will not
register as an investment company, stockholders will not be
afforded these protections. Any securities that Lionheart
Investments, Inc. might acquire in exchange for its Common Stock
are expected to be "restricted securities" within the meaning of
the Securities Act of 1933 (the "Act"). If Lionheart Investments,
Inc. elects to resell such securities, such sale cannot proceed
unless a registration statement has been declared effective by
the Securities and Exchange Commission or an exemption from
registration is available. Section 4(1) of the Act, which
exempts sales of securities not involving a distribution, would
in all likelihood be available to permit a private sale.
Although the plan of operation does not contemplate resale of
securities acquired, if such a sale were to be necessary,
Lionheart Investments, Inc. would be required to comply with the
provisions of the Act to effect such resale.
An acquisition made by Lionheart Investments, Inc. may be in an
industry that is regulated or licensed by federal, state or local
authorities. Compliance with such regulations can be expected to
be a time-consuming and expensive process.
Competition
Lionheart Investments, Inc. expects to encounter substantial
competition in its efforts to locate attractive opportunities,
primarily from business development companies, venture capital
partnerships and corporations, venture capital affiliates of
large industrial and financial companies, small investment
companies and wealthy individuals. Many of these entities will
have significantly greater experience, resources and managerial
capabilities than Lionheart Investments, Inc. and will therefore
be in a better position than Lionheart Investments, Inc. to
obtain access to attractive business opportunities. Lionheart
Investments, Inc. also will experience competition from other
public "blind pool" companies, many of which may have more funds
available than does Lionheart Investments, Inc.
Administrative Offices
Lionheart Investments, Inc. currently maintains a mailing address
at 404 Scott Point Drive, Salt Spring Island, BC Canada, the
address of its officer and director. Lionheart Investments,
Inc.'s telephone number is (250) 537-5732. Other than this
mailing address, Lionheart Investments, Inc. does not currently
maintain any other office facilities, and does not anticipate the
need for maintaining office facilities at any time in the
foreseeable future. Lionheart Investments, Inc. pays no rent or
other fees for the use of this mailing address.
Employees
Lionheart Investments, Inc. is a development stage company and
currently has no employees. Management expects to use
consultants, attorneys and accountants as necessary and does not
anticipate a need to engage any full-time employees so long as it
is seeking and evaluating business opportunities. The need for
employees and their availability will be addressed in connection
with the decision whether or not to acquire or participate in
specific business opportunities.
Although there is no current plan with respect to its nature or
amount, remuneration may be paid to or accrued for the benefit of
Lionheart Investments, Inc.'s sole officer prior to, or in
conjunction with, the completion of a business acquisition.
Lionheart Investments, Inc.'s sole officer and director has
received no fees for organizing the corporation. See "Executive
Compensation" and "Certain Relationships and Related
Transactions".
Risk Factors
1. Conflicts of Interest.
Certain conflicts of interest exist between Lionheart
Investments, Inc. and its sole officer and director. She has
other business interests to which she devotes his attention and
she may be expected to continue to do so although management time
should be devoted to the business of Lionheart Investments, Inc..
As a result, conflicts of interest may arise that can be resolved
only through her exercise of such judgment as is consistent with
her fiduciary duties to Lionheart Investments, Inc. See
"Management" and "Conflicts of Interest".
Lionheart Investments, Inc.'s sole officer and director may
elect, in the future, to form one or more additional public shell
companies with a business plan similar or identical to that of
Lionheart Investments, Inc.. Any such additional public shell
companies would also be in direct competition with Lionheart
Investments, Inc. for available business opportunities. (See
Item 5 - Directors, Executive Officers, Promoters and Control
Persons - Conflicts of Interest.")
It is anticipated that the Company's sole officer and director
may actively negotiate or otherwise consent to the purchase of a
portion of her common stock as a condition to, or in connection
with, a proposed merger or acquisition transaction. In this
process, Lionheart Investments, Inc.'s President may consider her
own personal benefit rather than the best interests of other
Company shareholders, and the other Company shareholders are not
expected to be afforded the opportunity to approve or consent to
any particular stock buy-out transaction. See "Conflicts of
Interest".
2. Possible Need For Additional Financing.
Lionheart Investments, Inc. has very limited funds and such funds
may not be adequate to take advantage of any available business
opportunities. Even if Lionheart Investments, Inc.'s funds prove
to be sufficient to acquire an interest in, or complete a
transaction with, a business opportunity, Lionheart Investments,
Inc. may not have enough capital to exploit the opportunity.
The ultimate success of Lionheart Investments, Inc. may depend
upon its ability to raise additional capital. Lionheart
Investments, Inc. has not investigated the availability, source,
or terms that might govern the acquisition of additional capital
and will not do so until it determines a need for additional
financing. If 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 terms acceptable to
Lionheart Investments, Inc.. If not available, Lionheart
Investments, Inc.'s operations will be limited to those that can
be financed with its modest capital.
3. Regulation of Penny Stocks.
Lionheart Investments, Inc.'s securities, when available for
trading, will be subject to a Securities and Exchange Commission
rule that imposes special sales practice requirements upon
broker/dealers who sell such securities to persons other than
established customers or accredited investors. For purposes of
the rule, the phrase "accredited investors" means, in general
terms; institutions with assets in excess of $5.000.000 or
individuals having a net worth in excess of $2,000,000 or having
an annual income that exceeds $200,000 or when 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
broker/dealers to sell Lionheart Investments, Inc.'s securities.
In addition, the Securities and Exchange Commission has adopted a
number of rules to regulate "Penny Stocks". Such rules include
Rules 3aSl-l, l2g-l, l2g-2, l2g-3, l2g-4, l2g-5, l2g-6, and l2g-7
under the Securities Exchange Act of 1934. Because the securities
of Lionheart Investments, Inc. may constitute "penny stocks"
within the meaning of the rules, the rules would apply to
Lionheart Investments, Inc. and to its securities. The rules may
further affect the ability of owners of shares to sell the
securities of Lionheart Investments, Inc. in any market that
might develop for them.
Shareholders should be aware that, according to 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:
(i) control of the market for the security by one or a few
broker/dealers that are often related to the promoter or
issuer;
(ii) manipulation of prices through prearranged
matching of purchases and sales and false and misleading
press releases;
(iii) "boiler room" practices involving high-pressure
sales tactics and unrealistic price projections by
inexperienced sales persons;
(iv) excessive and undisclosed bid-ask differentials
and markups by selling broker/dealers: and
(v) the wholesale dumping of the same securities by
promoters and broker/dealers after prices have been manipulated
to a desired level, along with the resulting inevitable collapse
of those prices and with consequent investor losses.
Lionheart Investments, Inc.'s management is aware of the abuses
that have occurred historically in the penny stock market.
Although Lionheart Investments, Inc. does not expect to be in a
position to dictate the behavior of the market or of
broker/dealers who participate in the market, management will
strive within the confines of practical limitations to prevent
the described patterns from being established with respect to
Lionheart Investments, Inc.'s securities.
4. No Operating History.
Lionheart Investments, Inc. was formed in March, 1999 for the
purpose of registering its common stock under the 1934 Act and
acquiring a business opportunity. Lionheart Investments, Inc.
has no operating history, revenues from operations, or assets
other than cash from private sales of stock. Lionheart
Investments, Inc. faces all of the risks of a new business and
the special risks inherent in the investigation, acquisition or
involvement in a new business opportunity. Lionheart
Investments, Inc. must be regarded as a new or "start-up" venture
with all of the unforeseen costs, expenses, problems and
difficulties to which such ventures are subject.
5. No Assurance of Success or Profitability.
There is no assurance that Lionheart Investments, Inc. will
acquire a favorable business opportunity. Even if Lionheart
Investments, Inc. should become involved in a business
opportunity there is no assurance that it will generate revenues
or profits or that the market price of Lionheart Investments,
Inc.'s Common Stock will be increased thereby.
6. Possible Business - Not Identified and Highly Risky.
Lionheart Investments, Inc. has not identified and has no
commitments to enter into or acquire a specific business
opportunity and therefore can disclose the risks and hazards of a
business or opportunity that it may enter into in only a general
manner, and cannot disclose the risks and hazards of any specific
business or opportunity that it may enter into. An investor can
expect a potential business opportunity to be quite risky.
Lionheart Investments, Inc.'s acquisition of or participation in
a business opportunity will likely be highly illiquid and could
result in a total loss to Lionheart Investments, Inc. and its
stockholders if the business or opportunity proves to be
unsuccessful. See Item 1 - "Description of Business".
7. Type of Business Acquired.
The type of business to be acquired may be one that desires to
avoid effecting its own public offering and the accompanying
expense, delays, uncertainties and federal and state requirements
which purport to protect investors. Because of Lionheart
Investments, Inc.'s limited capital, it is more likely than not
that any acquisition by Lionheart Investments, Inc. will involve
other parties whose primary interest is the acquisition of
control of a publicly traded company. Moreover, any business
opportunity acquired may be currently unprofitable or present
other negative factors.
8. Impracticability of Exhaustive Investigation.
Lionheart Investments, Inc.'s limited funds and the lack of full-
time management will likely make it impracticable to conduct a
complete and exhaustive investigation and analysis of a business
opportunity before Lionheart Investments, Inc. commits its
capital or other resources thereto. Management decisions,
therefore, will likely be made without detailed feasibility
studies, independent analysis, market surveys and the like which,
if Lionheart Investments, Inc. had more funds available to it,
would be desirable.
Lionheart Investments, Inc. will be particularly dependent in
making decisions upon information provided by the promoter,
owner, sponsor, or others associated with the business
opportunity seeking Lionheart Investments, Inc.'s participation.
A significant portion of Lionheart Investments, Inc.'s available
funds may be expended for investigative expenses and other
expenses related to preliminary aspects of completing an
acquisition transaction, whether or not any business opportunity
investigated is eventually acquired.
9. Lack of Diversification.
Because of the limited financial resources that Lionheart
Investments, Inc. has, it is unlikely that Lionheart Investments,
Inc. will be able to diversify its acquisitions or operations.
Lionheart Investments, Inc.'s probable inability to diversify its
activities into more than one area will subject Lionheart
Investments, Inc. to economic fluctuations within a particular
business or industry and therefore increase the risks associated
with Lionheart Investments, Inc.'s operations.
10. Possible Reliance upon Unaudited Financial Statements.
Lionheart Investments, Inc. generally will require audited
financial statements from companies that it proposes to acquire.
No assurance can be given, however, that audited financials will
be available to Lionheart Investments, Inc.. In cases where
audited financials are unavailable, Lionheart Investments, Inc.
will have to rely upon unaudited information received from target
companies' management that has not been verified by outside
auditors. The lack of the type of independent verification which
audited financial statements would provide, increases the risk
that Lionheart Investments, Inc., in evaluating an acquisition
with such a target company. It will not have the benefit of full
and accurate information about the financial condition and
operating history of the target company. This risk increases the
prospect that the acquisition of such a company might prove to be
an unfavorable one for Lionheart Investments, Inc. or the holders
of its securities.
Moreover, Lionheart Investments, Inc. will be subject to the
reporting provisions of the Securities Exchange Act of 1934 (the
"Exchange Act"), and thus will be required to furnish certain
information about significant acquisitions, including audited
financial statements for any business that it acquires.
Consequently, acquisition prospects that do not have, or are
unable to provide reasonable assurances that they will be able to
obtain, the required audited statements would not be considered
by Lionheart Investments, Inc. to be appropriate for acquisition
so long as the reporting requirements of the Exchange Act are
applicable.
Should the Company, during the time it remains subject to the
reporting provisions of the Exchange Act, complete an acquisition
of an entity for which audited financial statements prove to be
unobtainable, Lionheart Investments, Inc. would be exposed to
enforcement actions by the Securities and Exchange Commission
(the "Commission") and to corresponding administrative sanctions,
including permanent injunctions against Lionheart Investments,
Inc. and its management. The legal and other costs of defending
a Commission enforcement action would have material, adverse
consequences for Lionheart Investments, Inc. and its business.
The imposition of administrative sanctions would subject
Lionheart Investments, Inc. to further adverse consequences.
In addition, the lack of audited financial statements would
prevent the securities of Lionheart Investments, Inc. from
becoming eligible for listing on NASDAQ, or on any existing stock
exchange. Moreover, the lack of such financial statements is
likely to discourage broker/dealers from becoming or continuing
to serve as market makers in the securities of Lionheart
Investments, Inc.. Without audited financial statements,
Lionheart Investments, Inc. would almost certainly be unable to
offer securities under a registration statement pursuant to the
Securities Act of 1933, and the ability of Lionheart Investments,
Inc. to raise capital would be significantly limited until such
financial statements were to become available.
11. Other Regulation.
An acquisition made by Lionheart Investments, Inc. may be of a
business that is subject to regulation or licensing by federal,
state or local authorities. Compliance with such regulations and
licensing can be expected to be a time-consuming, expensive
process and may limit other investment opportunities of Lionheart
Investments, Inc..
12. Dependence upon Management. Limited Participation of
Management.
Lionheart Investments, Inc. currently has a single individual who
is serving as its sole officer and director. Lionheart
Investments, Inc. will be heavily dependent upon her skills,
talents, and abilities to implement its business plan, and may,
from time to time, find that the inability of the sole officer
and director to devote her full time attention to the business of
Lionheart Investments, Inc. results in a delay in progress toward
implementing its business plan.
Furthermore, since one individual is serving as the sole officer
and director of Lionheart Investments, Inc., it will be entirely
dependent upon her experience in seeking, investigating, and
acquiring a business and in making decisions regarding Lionheart
Investments, Inc.'s operations. See "Management." Because
investors will not be able to evaluate the merits of possible
business acquisitions by Lionheart Investments, Inc. they should
critically assess the information concerning Lionheart
Investments, Inc.'s sole officer and director.
13. Lack of Continuity in Management.
Lionheart Investments, Inc. does not have an employment agreement
with its sole officer and director, and as a result, there is no
assurance that she will continue to manage Lionheart Investments,
Inc. in the future. In connection with acquisition of a business
opportunity, it is likely the current officer and director will
resign. A decision to resign will be based upon the identity of
the business opportunity and the nature of the transaction, and
is likely to occur without the vote or consent of the
stockholders of Lionheart Investments, Inc.
14. Indemnification of Officers and Directors.
Lionheart Investments, Inc.'s Articles of Incorporation provide
for the indemnification of its directors, officers, employees and
agents, under certain circumstances, against attorney's fees and
other expenses incurred by them in any litigation to which they
become a party arising from their association with, or activities
on behalf of, Lionheart Investments, Inc.. Lionheart
Investments, Inc. will also bear the expenses of such litigation
for any of its directors, officers, employees or agents upon such
person's promise to repay Lionheart Investments, Inc. if it is
ultimately determined that any such person shall not have been
entitled to indemnification. This indemnification policy could
result in substantial expenditures by Lionheart Investments, Inc.
which it will be unable to recoup.
15. Director's Liability Limited.
Lionheart Investments, Inc.'s Articles of Incorporation exclude
personal liability of its directors to the Company and its
stockholders for monetary damages for breach of fiduciary duty
except in certain specified circumstances. Accordingly,
Lionheart Investments, Inc. will have a much more limited right
of action against its directors than otherwise would be the case.
This provision does not affect the liability of any director
under federal or applicable state securities laws.
16. Dependence upon outside Advisors.
To supplement the business experience of its sole officer and
director, Lionheart Investments, Inc. may be required to employ
accountants, technical experts, appraisers, attorneys or other
consultants or advisors. The selection of any such advisors will
be made by the President without any input from stockholders.
Furthermore, it is anticipated that such persons may be engaged
on an "as needed" basis without a continuing fiduciary or other
obligation to Lionheart Investments, Inc. In the event the
President of Lionheart Investments, Inc. considers it necessary
to hire outside advisors, she may elect to hire persons who are
affiliates, if they are able to provide the required services.
17. Leveraged Transactions.
There is a possibility that any acquisition of a business
opportunity by Lionheart Investments, Inc. may be leveraged,
i.e., Lionheart Investments, Inc. may finance the acquisition of
the business opportunity by borrowing against the assets of the
business opportunity to be acquired, or against the projected
future revenues or profits of the business opportunity. This
could increase Lionheart Investments, Inc.'s exposure to larger
losses. A business opportunity acquired through a leveraged
transaction is profitable only if it generates enough revenues to
cover the related debt and expenses. Failure to make payments on
the debt incurred to purchase the business opportunity could
result in the loss of a portion or all of the assets acquired.
There is no assurance that any business opportunity acquired
through a leveraged transaction will generate sufficient revenues
to cover the related debts and expenses.
18. Competition.
The search for potentially profitable business opportunities is
intensely competitive. Lionheart Investments, Inc. expects to be
at a disadvantage when competing with many firms that have
substantially greater financial and management resources and
capabilities than Lionheart Investments, Inc. These competitive
conditions will exist in any industry in which Lionheart
Investments, Inc. may become interested.
19. No Foreseeable Dividends.
Lionheart Investments, Inc. has not paid dividends on its Common
Stock and does not anticipate paying such dividends in the
foreseeable future.
20. Loss of Control by Present Management and Stockholders.
Lionheart Investments, Inc. may consider an acquisition in which
it would issue as consideration for the business opportunity to
be acquired an amount of Lionheart Investments, Inc.'s authorized
but unissued Common Stock that would, upon issuance, represent
the great majority of the voting power and equity of Lionheart
Investments, Inc. The result of such an acquisition would be
that the acquired company's stockholders and management would
control Lionheart Investments, Inc., and the Company's management
could be replaced by persons unknown at this time. Such a merger
would result in a greatly reduced percentage of ownership of
Lionheart Investments, Inc. by its current shareholders. In
addition, the Company's President could sell her control block of
stock at a premium price to the acquired company's stockholders.
The result of any of the above would be a new group taking over
full control of the Company.
21. No Public Market Exists.
There is no public market for Lionheart Investments, Inc.'s
common stock, and no assurance can be given that a market will
develop or that a shareholder ever will be able to liquidate his
or her investment without considerable delay, if at all. If a
market should develop, the price may be highly volatile. Factors
such as those discussed in this section may have a significant
impact upon the market price of the securities offered. Owing to
the low price of the securities, many brokerage firms may not be
willing to effect transactions in the securities. Even if a
purchaser finds a broker/dealer willing to effect a transaction
in these securities, the combination of brokerage commissions,
state transfer taxes, if any, and any other selling costs may
exceed the selling price. Further, many lending institutions
will not permit the use of such securities as collateral for any
loans.
22. Rule 144 Sales
All of the outstanding shares of Common Stock held by present
stockholders are "restricted securities" within the meaning of
Rule 144 under the Securities Act of 1933. As restricted shares,
these shares may be resold only pursuant to an effective
registration statement or under the requirements of Rule 144 or
other applicable exemptions from registration under the Act and
as required under applicable state securities laws.
Rule 144 provides in essence that a person who has held
restricted securities for a prescribed period may, under certain
conditions, sell every three months, in brokerage transactions, a
number of shares that does not exceed the greater of 1% of a
company's outstanding Common Stock or the average weekly trading
volume during the four calendar weeks prior to the sale. There
is no limit on the amount of restricted securities that may be
sold by a non-affiliate after the restricted securities have been
held by the owner for a period of two years. A sale under Rule
144 or under any other exemption from the Act, if available, or
pursuant to subsequent registrations of shares of Common Stock of
present stockholders, may have a depressive effect upon the price
of the Common Stock in any market that may develop.
Of the total 1,350,000 shares of common stock held by present
stockholders of Lionheart Investments, Inc. 350,000 shares will
become available for resale under Rule 144 ninety (90) days after
Lionheart Investments, Inc. registers its common stock under
Section 12(g) of the Securities and Exchange Commission, all of
which will be subject to applicable volume restrictions under the
Rule. 500,000 shares held by the Company's Officer and Director
could become eligible for sale under Rule 144 three months after
she ceases to be an affiliate of the Company. The remaining
500,000 shares could become available for resale starting in May,
2001.
22. Blue Sky Considerations.
Because the securities registered hereunder have not been
registered for resale under the blue sky laws of any state, the
holders of such shares and persons who desire to purchase them in
any trading market that might develop in the future, should be
aware that there may be significant state blue-sky law
restrictions upon the ability of investors to sell the securities
and of purchasers to purchase the securities. Some jurisdictions
may not under any circumstances allow the trading or resale of
"blind-pool" or "blank-check" securities. Accordingly, investors
should consider the secondary market for the Company's securities
to be a limited one.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATIONS.
Liquidity and Capital Resources
Lionheart Investments, Inc. remains in the development stage and,
since inception, has experienced no significant change in
liquidity or capital resources or stockholder's equity other than
the receipt of net cash proceeds in the amount of $ 2,700 from
its inside capitalization funds. Consequently, Lionheart
Investments, Inc.'s balance sheet for the period of 11, 1996
(inception) through September 30, 2000, reflects current assets
of $ 2,026 in the form of cash, and total assets of $ 2,026.
Lionheart Investments, Inc. will carry out its plan of business
as discussed above. Lionheart Investments, Inc. cannot predict
to what extent its liquidity and capital resources will be
diminished prior to the consummation of a business combination or
whether its capital will be further depleted by the operating
losses (if any) of the business entity which Lionheart
Investments, Inc. may eventually acquire.
Results of Operations
During the period from April 1, 1995 (inception) through
September 30, 2000, Lionheart Investments, Inc. has engaged in no
significant operations other than organizational activities.
After being dormant for approximately three years the Company
began its acquisition of capital and preparation for registration
of its securities under the Securities Exchange Act of 1934. No
revenues were received by Lionheart Investments, Inc. during this
period.
For the current fiscal year, Lionheart Investments, Inc.
anticipates incurring a loss as a result of organizational
expenses, expenses associated with registration under the
Securities Exchange Act of 1934, and expenses associated with
locating and evaluating acquisition candidates. The Company
anticipates that until a business combination is completed with
an acquisition candidate, it will not generate revenues other
than interest income, and may continue to operate at a loss after
completing a business combination, depending upon the performance
of the acquired business.
Need for Additional Financing
Lionheart Investments, Inc. believes that its existing capital
will be sufficient to meet its cash needs, including the costs of
compliance with the continuing reporting requirements of the
Securities Exchange Act for a period of approximately one year.
Accordingly, in the event Lionheart Investments, Inc. is able to
complete a business combination during this period, it
anticipates that its existing capital will be sufficient to allow
it to accomplish the goal of completing a business combination.
There is no assurance, however, that the available funds will
ultimately prove to be adequate to allow it to complete a
business combination, and once a business combination is
completed, the Company's needs for additional financing are
likely to increase substantially.
No commitments to provide additional funds have been made by
management or other stockholders. Accordingly, there can be no
assurance that any additional funds will be available to
Lionheart Investments, Inc. to allow it to cover its expenses.
Irrespective of whether Lionheart Investments, Inc.'s cash assets
prove to be inadequate to meet operational needs, the Company
might seek to compensate providers of services by issuances of
stock in lieu of cash. For information as to the policy in
regard to payment for consulting services. See "Certain
Relationships and Transactions."
ITEM 3. DESCRIPTION OF PROPERTY.
Lionheart Investments, Inc. does not currently maintain an
office or any other facilities. It does currently maintain a
mailing address at 404 Scott Point Drive, Salt Spring Island, BC
V8K 2R2 Canada, the address of its sole Officer and Director.
Lionheart Investments, Inc. pays no rent for the use of this
mailing address. The telephone number is (250) 537-5732.
Lionheart Investments, Inc. does not believe that it will need to
maintain an office at any time in the foreseeable future in order
to carry out its plan.
The following table sets forth, as of the date of this
registration statement, the number of shares of Common Stock
owned of record and beneficially by executive officers, directors
and persons who hold 5.0% or more of the outstanding common stock
of Lionheart Investments, Inc. Also included are the shares held
by all executive officers and directors as a group.
Number of Percentage of
Name and Address Shares Owned Class Owned
Shares Owned
Inge L. E. Kerster
404 Scott Point Drive
Salt Spring Island, BC
V8K 2R2 Canada 500,000*common 37.04
Sandringham Investments Limited
500,000*Common 37.04
All directors and executive
officers as a group (1 person)
500,000 Common 74.08
The person listed is the sole officer and director of Lionheart
Investments, Inc.
* On April 1, 1997 Inge Kerster received 5000 shares for services
rendered to the registrant. On September 29, 2000 the Company
restated its Articles of Incorporation to increase its authorized
capital from 10,000 shares of $0.10 par value common stock to
50,000,000 $0.001 par value common stock and 10,000,000 $0.001
par value preferred stock. The Company then affected a 100-1
forward split of the issued and outstanding stock. On September
30, 2000 Sandringham Investments, Limited, a company controlled
by Ms Kerster and of which she is the President, purchased an
additional 500,000 shares for cash. These shares should be
considered beneficially owned by Inge L.E. Kerster.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS.
The directors and executive officers currently serving Lionheart
Investments, Inc. are as follows:
Name Age Positions Held and Tenure
Inge L. E. Kerster 53 Director and
President
since April, 1997
The director named above will serve until the first annual
meeting of Lionheart Investments, Inc.'s stockholders.
Thereafter, directors will be elected for one-year terms at the
annual stockholders' meeting. Officers will hold their positions
at the pleasure of the Board of Directors, absent any employment
agreement, of which none currently exists or is contemplated.
There is no arrangement or understanding between the sole
director and officer of Lionheart Investments, Inc. and any other
person pursuant to which any director or officer was or is to be
selected as a director or officer.
The sole director and officer of Lionheart Investments, Inc. will
devote her time to Lionheart Investments, Inc.'s affairs on an
"as needed" basis. As a result, the actual amount of time which
she will devote to Lionheart Investments, Inc.'s affairs is
unknown and is likely to vary substantially from month to month.
Biographical Information
Inge L.E. Kerster who is Lionheart Investments, Inc.'s President,
has served as the sole officer and director of Lionheart
Investments, Inc. since April, 1997.
Ms. Kerster is currently President and majority shareholder of
Sandringham Investments, Limited, a British Columbia corporation
engaged in providing consulting services relating to mergers and
acquisitions and assisting Canadian companies seeking publicly
trading status in the United States.
Indemnification of Officers and Directors
As permitted by Nevada law, Lionheart Investments, Inc.'s
Articles of Incorporation provide that Lionheart Investments,
Inc. will indemnify its directors and officers against expenses
and liabilities they incur to defend, settle, or satisfy any
civil or criminal action brought against them on account of their
being or having been Company directors or officers unless, in any
such action, they are adjudged to have acted with gross
negligence or willful misconduct. Insofar as indemnification for
liabilities arising under the Securities Act of 1933 may be
permitted to directors, officers or persons controlling Lionheart
Investments, Inc.
Pursuant to the foregoing provisions, Lionheart Investments, Inc.
has been informed 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.
Exclusion of Liability
Pursuant to the Nevada Business Corporation Act, Lionheart
Investments, Inc.'s Articles of Incorporation exclude personal
liability for its directors for monetary damages based upon any
violation of their fiduciary duties as directors, except as to
liability for any breach of the duty of loyalty, acts or
omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, acts in violation of
Section 7-106-401 of the Nevada Business Corporation Act, or any
transaction from which a director receives an improper personal
benefit. This exclusion of liability does not limit any right
that a director may have to be indemnified and does not affect
any director's liability under federal or applicable state
securities laws.
Conflicts of Interest
The sole officer and director of Lionheart Investments, Inc. will
not devote more than a portion of her time to the affairs of
Lionheart Investments, Inc.. There will be occasions when the
time requirements of Lionheart Investments, Inc.'s business
conflict with the demands of her other business and investment
activities. Such conflicts may require that Lionheart
Investments, Inc. attempt to employ additional personnel. There
is no assurance that the services of such persons will be
available or that they can be obtained upon terms favorable to
Lionheart Investments, Inc.
Lionheart Investments, Inc.'s President may elect, in the future,
to form one or more additional blind pools or blank check
companies with a business plan similar or identical to that of
Lionheart Investments, Inc. Any such additional blind pool or
blank check companies would also be in direct competition with
Lionheart Investments, Inc. for available business opportunities.
There is no procedure in place that would allow Ms. Kerster to
resolve potential conflicts in an arms-length fashion.
Accordingly, he will be required to use his discretion to resolve
them in a manner that he considers appropriate. Lionheart
Investments, Inc.'s sole officer and director may actively
negotiate or otherwise consent to the purchase of a portion of
her common stock as a condition to, or in connection with, a
proposed merger or acquisition transaction. It is anticipated
that a substantial premium over the initial cost of such shares
may be paid by the purchaser in conjunction with any sale of
shares by Lionheart Investments, Inc.'s officer and director
which is made as a condition to, or in connection with, a
proposed merger or acquisition transaction. The fact that a
substantial premium may be paid to Lionheart Investments, Inc.'s
sole officer and director to acquire his shares creates a
potential conflict of interest for her in satisfying her
fiduciary duties to Lionheart Investments, Inc. and its other
shareholders. Even though such a sale could result in a
substantial profit to her she would be legally required to make
the decision based upon the best interests of Lionheart
Investments, Inc. and Lionheart Investments, Inc.'s other
shareholders, rather than her own personal pecuniary benefit.
ITEM 6. EXECUTIVE COMPENSATION.
At inception of Lionheart Investments, Inc., its sole director,
Inge Kerster received 5,000 shares of Common Stock valued at
$0.10 per share in consideration of pre-incorporation services
rendered to Lionheart Investments, Inc. related to investigating
and developing Lionheart Investments, Inc.'s proposed business
plan and capital structure, and completion of the incorporation
and organization. On September 29, 2000, the Company's restated
Articles of Incorporation, changed its capital structure to
50,000,000 par value $0.001common shares and 10,000,000 par value
$0.001 preferred shares and effected a 100 - 1 forward split.
No officer or director has received any other remuneration.
Although there is no current plan in existence, it is possible
that Lionheart Investments, Inc. will adopt a plan to pay or
accrue compensation to its sole officer and director for services
related to seeking business opportunities and completing a merger
or acquisition transaction. See "Certain Relationships and
Related Transactions." Lionheart Investments, Inc. has no stock
option, retirement, pension, or profit-sharing programs for the
benefit of directors, officers or other employees, but the Board
of Directors may recommend adoption of one or more such programs
in the future.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Prior to the date of this registration statement, Lionheart
Investments, Inc. issued to its Officer and Director, and to
other shareholders, a total of 1,350,000 shares of Common Stock
for a total of $2,700.00 in cash and $ 500 in services.
Certificates evidencing the Common Stock issued by Lionheart
Investments, Inc. to these persons have all been stamped with a
restrictive legend, and are subject to stop transfer orders. For
additional information concerning restrictions that are imposed
upon the securities held by current stockholders, and the
responsibilities of such stockholders to comply with federal
securities laws in the disposition of such common stock. See
"Risk Factors -Rule 144 Sales".
No officer, director, promoter, or affiliate of Lionheart
Investments, Inc. has or proposes to have any direct or indirect
material interest in any asset proposed to be acquired by
Lionheart Investments, Inc. through security holdings, contracts,
options, or otherwise.
Lionheart Investments, Inc. has adopted a policy under which any
consulting or finder's fee that may be paid to a third party for
consulting services to assist management in evaluating a
prospective business opportunity would be paid in stock or in
cash. Any such issuance of stock would be made on an ad hoc
basis. Accordingly, Lionheart Investments, Inc. is unable to
predict whether or in what amount such a stock issuance might be
made.
Although there is no current plan in existence, it is possible
that Lionheart Investments, Inc. will adopt a plan to pay or
accrue compensation to its sole Officer and Director for services
related to seeking business opportunities and completing a merger
or acquisition transaction.
Lionheart Investments, Inc. maintains a mailing address at the
office of its President, but otherwise does not maintain an
office. As a result, it pays no rent and incurs no expenses for
maintenance of an office and does not anticipate paying rent or
incurring office expenses in the future. It is likely that
Lionheart Investments, Inc. will establish and maintain an office
after completion of a business combination.
Although management has no current plans to cause Lionheart
Investments, Inc. to do so, it is possible that Lionheart
Investments, Inc. may enter into an agreement with an acquisition
candidate requiring the sale of all or a portion of the Common
Stock held by Lionheart Investments, Inc.'s current stockholders
to the acquisition candidate or its principals or to other
individuals or business entities, or requiring some other form of
payment to Lionheart Investments, Inc.'s current stockholders, or
requiring the future employment of specified officers and payment
of salaries to them. It is more likely than not that any sale of
securities by Lionheart Investments, Inc.'s current stockholders
to an acquisition candidate would be at a price substantially
higher than that originally paid by such stockholders. Any
payment to current stockholders in the context of an acquisition
involving Lionheart Investments, Inc. would be determined
entirely by the largely unforeseeable terms of a future agreement
with an unidentified business entity.
ITEM 8. DESCRIPTION OF SECURITIES.
Common Stock
Lionheart Investments, Inc.'s Re-stated Articles of Incorporation
authorize the issuance of 50,000,000 shares of Common Stock, par
value $0.001. Each record holder of Common Stock is entitled to
one vote for each share held on all matters properly submitted to
the stockholders for their vote. Cumulative voting for the
election of directors is not permitted by the Articles of
Incorporation.
Holders of outstanding shares of Common Stock are entitled to
such dividends as may be declared from time to time by the Board
of Directors out of legally available funds: and, in the event of
liquidation, dissolution or winding up of the affairs of
Lionheart Investments, Inc. In the event that any of the
aforementioned situations occur holders are entitled to receive,
ratably, the net assets of Lionheart Investments, Inc. available
to stockholders after distribution is made to the preferred
stockholders, if any, who are given preferred rights upon
liquidation. Holders of outstanding shares of Common Stock have
no preemptive, conversion or redemptive rights. All of the
issued and outstanding shares of Common Stock are, and all
unissued shares when offered and sold will be, duly authorized,
validly issued, fully paid, and non-assessable. To the extent
that additional shares of Lionheart Investments, Inc.'s Common
Stock are issued, the relative interests of then existing
stockholders may be diluted.
Preferred Stock
Lionheart Investments, Inc.'s Articles of Incorporation authorize
the issuance of 10,000,000 shares of preferred stock, par value
$0.001. The Board of Directors of Lionheart Investments, Inc. is
authorized to issue the preferred stock from time to time in
series and is further authorized to establish such series, to fix
and determine the variations in the relative rights and
preferences as between series, to fix voting rights, if any, for
each series, and to allow for the conversion of preferred stock
into Common Stock. No preferred stock has been issued by
Lionheart Investments, Inc. Lionheart Investments, Inc.
anticipates that preferred stock may be utilized in making
acquisitions.
Transfer Agent
Lionheart Investments, Inc. is currently serving as its own
transfer agent, and plans to continue to serve in that capacity
until such time as management believes it is necessary or
appropriate to employ an independent transfer agent in order to
facilitate the creation of a public trading market for Lionheart
Investments, Inc.'s securities. Since Lionheart Investments,
Inc. does not currently expect any public market to develop for
its securities until after it has completed a business
combination, it does not currently anticipate that it will seek
to employ an independent transfer agent until it has completed
such a transaction.
Reports to Stockholders
Lionheart Investments, Inc. plans to furnish its stockholders
with an annual report for each fiscal year containing financial
statements audited by its independent certified public
accountants. In the event Lionheart Investments, Inc. enters
into a business combination with another company, it is the
present intention of management to continue furnishing annual
reports to stockholders. Additionally, Lionheart Investments,
Inc. may, in its sole discretion, issue unaudited quarterly or
other interim reports to its stockholders when it deems
appropriate. Lionheart Investments, Inc. intends to comply with
the periodic reporting requirements of the Securities Exchange
Act of 1934 for so long as it is subject to those requirements.
PART II
ITEM 1. MARKET PRICE AND DIVIDENDS ON THE REGISTRANT'S COMMON
EQUITY AND OTHER SHAREHOLDER MATTERS.
No public trading market exists for Lionheart Investments, Inc.'s
securities and all of its outstanding securities are restricted
securities as defined in Rule 144. There were nine shareholders
of record of Lionheart Investments, Inc.'s common stock on
September 30, 2000. No dividends have been paid to date and
Lionheart Investments, Inc.'s Board of Directors does not
anticipate paying dividends in the foreseeable future.
ITEM 2. LEGAL PROCEEDINGS.
Lionheart Investments, Inc. is not a party to any pending legal
proceedings, and no such proceedings are known to be
contemplated.
No director, officer or affiliate of Lionheart Investments, Inc.
and no owner of record or beneficial owner of more than 5.0% of
the securities of Lionheart Investments, Inc., or any associate
of any such director, officer or security holder is a party
adverse to Lionheart Investments, Inc. or has a material interest
adverse to Lionheart Investments, Inc. in reference to pending
litigation.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
Not applicable.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
Since April 1, 1997 (the date of Lionheart Investments, Inc.'s
formation) Lionheart Investments, Inc. has sold its Common Stock
to the persons listed in the table below in transactions
summarized as follows:
<TABLE>
<CAPTION>
Name Date of Shares Price
Sale per Share Aggregate
Purchase
<S> <C> <C> <C> <C>
Inge L. E. Kerster* 12/27/97 500,000** 0.001 $500.00
Sandringham Investments
Limited 09/30/00 500,000 0.004 $2,000
Leo S. Sawchuk 03/14/99 50,000** 0.002 $ 100
Leo Franken 03/14/99 50,000** 0.002 $ 100
Todd Larsen 03/15/99 50,000** 0.002 $ 100
Ken Larsen 03/15/99 50,000** 0.002 $ 100
Anthony V. Feimann 04/2/99 50,000** 0.002 $ 100
Leigh Anne Elliot 03/16/99 50,000** 0.002 $ 100
Ronald Chan 03/18/99 50,000** 0.002 $ 100
</TABLE>
*Consideration consisted of pre-incorporation consulting
services rendered to the Registrant related to investigating
and developing the Registrant's proposed business plan and
capital structure and completing the organization and
incorporation of the Registrant.
** Shares listed are all reflecting the 100-1 forward split
on September 29, 2000.
Each of the sales listed above was made for cash or services. All
of the listed sales were made in reliance upon the exemption from
registration offered by Section 4(2) of the Securities Act of
1933. Based upon Purchaser Subscription forms completed by each
of the subscribers and the pre-existing relationship between the
subscribers of Lionheart Investments, Inc.'s sole officer and
director, Lionheart Investments, Inc. had reasonable grounds to
believe immediately prior to making an offer to the private
investors, and did in fact believe, when such subscriptions were
accepted, that such purchasers:
(1) were purchasing for investment and not with a view to
distribution, and
(2) had such knowledge and experience in financial and business
matters that they were capable of evaluating the merits and risks
of their investment and were able to bear those risks. The
purchasers had access to pertinent information enabling them to
ask informed questions.
The shares were issued without the benefit of registration. An
appropriate restrictive legend is imprinted upon each of the
certificates representing such shares, and stop-transfer
instructions have been entered in Lionheart Investments, Inc.'s
transfer records. All such sales were effected without the aid
of underwriters, and no sales commissions were paid.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Articles of Incorporation and the Bylaws of Lionheart
Investments, Inc., filed as Exhibits 3.1 and 3.2, respectively,
provide that Lionheart Investments, Inc. will indemnify its
officers and directors for costs and expenses incurred in
connection with the defense of actions, suits, or proceedings
where the officer or director acted in good faith and in a manner
he reasonably believed to be in Lionheart Investments, Inc.'s
best interest and is a party by reason of her status as an
officer or director, absent a finding of negligence or misconduct
in the performance of duty.
FINANCIAL STATEMENTS.
Audited Financial Statements, including a report of an
Independent auditor, follows.
LIONHEART INVESTMENTS, INC.
(A Development Stage Enterprise)
AUDIT REPORT
SEPTEMBER 30, 2000
Janet Loss, C.P.A., P.C.
Certified Public Accountant
1780 South Belaire, Suite 500
Denver, Nevada 80222
LIONHEART INVESTMENTS, INC.
(A Development Stage Enterprise)
INDEX TO FINANCIAL STATEMENTS
TABLE OF CONTENTS
ITEM PAGE
Report of Certified Public Accountant 1
Balance Sheet, September 30, 2000 2
Statement of Operations, for the period April 1, 1997
(Inception) through May 31, 2000
3
Statement of Stockholders' Equity (Deficit)for the period
April 1, 1997 (Inception) through September 30, 2000
4
Statement of Cash Flows for the period from
April 1, 1997 (Inception) through September 30, 2000
5
Notes to Financial Statements 6 &7
Janet Loss, C.P.A., P.C.
Certified Public Accountant
1780 South Bellaire, Suite 500
Denver, Nevada 80210
(303) 782-0878
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Lionheart Investments, Inc.
404 Scott Point Drive
Salt Spring Island, BC V8K 2R2
Canada
I have audited the accompanying Balance Sheet of Lionheart
Investments, Inc. (A Development Stage Enterprise) as of
September 30, 2000 and the Statements of Operations,
Stockholders' Equity, and Cash Flows for the period April 1, 1997
(Inception) through September 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
Lionheart Investments, Inc. (a development stage enterprise) as
of September 30, 2000, and the results of its operations and
changes in its cash flows for the period from April 1, 1997
(Inception) through September 30, 2000, in conformity with
generally accepted accounting principles.
Janet Loss, C.P.A., P.C.
October 20, 2000
LIONHEART INVESTMENTS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEET
AS AT SEPTEMBER 30, 2000
ASSETS
CURRENT ASSETS
Cash $ 526
TOTAL CURRENT ASSETS 526
TOTAL ASSETS 526
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
TOTAL CURRENT LIABILITIES 0
STOCKHOLDERS' EQUITY:
Common stock, $0.001 par value;
50,000,000 shares Authorized, and
1,350,000 shares Issued and outstanding 1,350
Preferred Stock 10,000,000 par value
$0.001shares authorized, none issued
and outstanding 0
Additional Paid-In Capital 1,850
Deficit accumulated during the development stage (2,674)
TOTAL STOCKHOLDERS' EQUITY 526
TOTAL LIABILITY AND STOCKHOLDERS' EQUITY $ 526
The accompanying notes are an integral part of the financial
statements.
LIONHEART INVESTMENTS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF OPERATIONS
FOR THE PERIOD APRIL 1, 1995 (INCEPTION)
THROUGH SEPTEMBER 30, 2000
REVENUES: $ 0
OPERATING EXPENSES:
Fees 165
Taxes and Licenses 320
Office Expenses 189
Consulting Fees 2,000
TOTAL OPERATING EXPENSES 2,674
NET (LOSS) FOR THE PERIOD (2,674)
NET (LOSS) PER SHARE (0.0000)
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 1,350,000
The accompanying notes are an integral part of the financial
statements.
LIONHEART INVESTMENTS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD FROM APRIL 1, 1995 (INCEPTION)
THROUGH SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
Deficit
Accumulated
Number Number Common Preferred Additional During the Total
of Shares of Shares Stock Stock Paid-in Development Stockholders'
Common Preferred Amount Amount Capital Stage Equity
<S> <C> <C> <C> <C> <C> <C> <C>
Common Stock
Issued April,
1997 For
Services @
$.10 5,000 0 500 0 0 0 500
Common Stock
Issued April,
1999 For
Cash @ $.20 3,500 0 350 0 350 0 700
Common Stock
Issued to
reflect
100-1 split 841500 0 0 0 0 0 0
Common Stock
Issued
September
2000 for
Cash@ $0.004 500000 0 500 0 1,500 0 2,000
Net (Loss) for
The Period 0 0 0 0 0 (2,674) (2,674)
Balances
September 30,
2000 1350000 0 1,350 0 1,850 (2,674) 526
</TABLE>
The accompanying notes are an integral art of these financial statements
LIONHEART INVESTMENTS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CASH FLOWS
FOR THE PERIOD APRIL 1, 1995 (INCEPTION)
THROUGH SEPTEMBER 30, 2000
CASH FLOWS FROM (TO) OPERATING ACTIVITIES:
NET LOSS FOR THE PERIOD $ (2,674)
CASH FLOWS FROM FINANCING ACTIVITIES:
ISSUANCE OF COMMON STOCK 3,200
CASH FLOWS FROM INVESTING ACTIVITIES: 0
NET INCREASE IN CASH FOR THE PERIOD: 526
CASH, BEGINNING OF THE PERIOD 0
CASH, END OF THE PERIOD 526
The accompanying notes are an integral part of the financial
statements.
LIONHEART INVESTMENTS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
NOTE I - ORGANIZATION AND HISTORY
The Company is a Nevada Corporation and the Company has been in
the development stage since its formation on April 1, 1997.
The Company's only activities have been organizational, directed
at raising its initial capital and developing its business plan.
On April 1, 1997, Lionheart Investments, Inc. issued 5,000 shares
of common stock to its sole officer and director as founders'
shares in return for the time, effort and expenses to organize and
form the corporation. On April 2, 1999 the Company issued a total
of 3,500 shares of common stock to seven individuals for cash.
On September 29, 2000 the Company restated its Articles of
Incorporation and increased its capitalization from 10,000
authorized shares of common stock with a par value of $0.10 per
share to 50,000,000 authorized shares of common stock with a par
value of $0.001 and 10,000,000 shares of preferred stock with a
par value of $0.001 per share.
On September 29, 2000 the Company forward split all of its issued
and outstanding stock 100-1.
On September 30, 2000 the Company issued 500,000 shares of common
stock to Sandringham Investments, Limited in return for $2,000 in
cash.
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 September 30, 2000, there was $2,026 in cash
equivalents.
YEAR END
The Company has elected to have a fiscal year ended September 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
Inge Kerster, the Company's sole officer and director is the
majority owner of Sandringham Investments Limited and as such may
be considered to own 500,000 shares of common stock beneficially
and 500,000 shares of common stock directly.
PART III
Item 1. Index to Exhibits
The exhibits listed below are filed as part of this Registration
Statement.
Exhibit Number Document
3 (i) Subscription Agreement
3 (ii) Articles of Incorporation
3 (iii) Bylaws
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of
1934 the Registrant caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized.
LIONHEART INVESTMENTS, INC.
/S/ Inge L. E. Kerster
Inge L. E. Kerster
(Principal Executive Officer)
Date: October 22, 2000
EXHIBIT 3 (i)
SUBSCRIPTION AGREEMENT
LIONHEART INVESTMENTS, INC..
404 Scott Point Drive
Salt Spring Island, BC V8K 2R2
The undersigned does hereby subscribe for ____________common
shares of the capital stock of LIONHEART INVESTMENTS, INC. at a
price of $ US 0.20 per share for a total of _________________
United States dollars.
The shares subscribed for will be full paid, non-assessable.
A share certificate will be mailed to the address indicated below
within fourteen days of the date of this subscription.
The share certificate should be made out and entered into the
corporate records, as follows:
Name: _________________________________________________
Address: _______________________________________________
Telephone: ___________________
The purchaser warrants that the shares purchased herein are for
investment purposes only and not for re-sale or distribution.
The purchaser acknowledges that he or she has been informed
specifically that after this initial funding has been completed,
the Company will remain inactive for a minimum period of one year.
A copy of this Subscription Agreement executed by an officer of
the Company shall constitute a receipt for funds received.
Signed, on this the ___ day of _______, 1999. Purchaser:
___________________________
Received from
, the sum of United States dollars, being payment
in full for______common shares of the capital stock of
LIONHEART INVESTMENTS, INC.
Inge L. E. Kerster, President
EXHIBIT 3 (ii)
ARTICLES OF INCORPORATION
RESTATED ARTICLES OF INCORPORATION
OF
LIONHEART INVESTMENTS, INC.
******************************************************************
The undersigned, acting as incorporator, pursuant to the
provisions of the laws of the State of
Nevada relating to private corporations, hereby adopts the
following Articles of Incorporation:
ARTICLE ONE. (NAME)
The name of the corporation is: LIONHEART INVESTMENTS, INC.
The address of the corporation is: 404 Scott Point Drive, Salt
Spring Island, BC V8K 2R2 Canada
ARTICLE TWO. (RESIDENT AGENT) The initial agent for service
of process is The Nevada Agency and Trust, 50 West Liberty Street,
Suite 880, State of Nevada 89501.
ARTICLE THREE. (PURPOSES) The purposes for which the
corporation is organized are to engage in any activity or business
not in conflict with the laws of the State of Nevada or of the
United States of America, and without limiting the generality of
the foregoing, specifically:
(OMNIBUS). To have to exercise all the powers now or hereafter
conferred by the laws of the State of Nevada upon corporations
organized pursuant to the laws under which the corporation is
organized and any and all acts amendatory thereof and supplemental
thereto.
II. (CARRYING ON BUSINESS OUTSIDE STATE). To conduct and
carry on its business or any branch thereof in any state or
territory of the United States or in any foreign country in
conformity with the laws of such state, territory, or foreign
country, and to have and maintain in any state, territory, or
foreign country a business office, plant, store or other facility.
III. (PURPOSES TO BE CONSTRUED AS POWERS). The purposes
specified herein shall be construed both as purposes and powers
and shall be in no wise limited or restricted by reference to, or
inference from, the terms of any other clause in this or any other
article, but the purposes and powers specified in each of the
clauses herein shall be regarded as independent purposes and
powers, and the enumeration of specific purposes and powers shall
not be construed to limit or restrict in any manner the meaning of
general terms or of the general powers of the corporation; nor
shall the expression of one thing be deemed to exclude another,
although it be of like nature not expressed.
ARTICLE FOUR. (CAPITAL STOCK) The corporation shall have
authority to issue an aggregate of SIXTY MILLION (60,000,000)
shares of stock, par value ONE MILL ($0.001) per share divided
into two (2) classes of stock as follows for a total
capitalization of SIXTY THOUSAND DOLLARS ($60,000).
NON-ASSESSABLE COMMON STOCK: SIXTY MILLION (60,000,000) shares
of Common stock, Par Value ONE MILL ($0.001) per share, and
PREFERRED STOCK: TEN MILLION (10,000,000) shares of Preferred
stock, Par Value ONE MILL ($0.001) per share.
All capital stock when issued shall be fully paid and non-
assessable. No holder of shares of capital stock of the
corporation shall be entitled as such to any pre-emptive or
preferential rights to subscribe to any unissued stock, or any
other securities, which the corporation may now or hereafter be
authorized to issue.
The corporation's capital stock may be issued and sold from time
to time for such consideration as may be fixed by the Board of
Directors, provided that the consideration so fixed is not less
than par value.
Holders of the corporation's Common Stock shall not possess
cumulative voting rights at any shareholders meetings called for
the purpose of electing a Board of Directors or on other matters
brought before stockholders meetings, whether they be annual or
special.
ARTICLE FIVE. (DIRECTORS). The affairs of the corporation
shall be governed by a Board of Directors of not more than fifteen
(15) nor less than one (1) person. The name and address of the
first Board of Directors is:
NAME
ADDRESS
Inge L. E. Kerster 404 Scott Point Drive
Salt Spring Island, BC V8K 2R2
Canada
ARTICLE SIX. (ASSESSMENT OF STOCK). The capital stock of the
corporation, after the amount of the subscription price or par
value has been paid in, shall not be subject to pay debts of the
corporation, and no paid up stock and no stock issued as fully
paid up shall ever be assessable or assessed.
ARTICLE SEVEN. (INCORPORATOR). The name and address of the
incorporator of the corporation is as follows:
NAME ADDRESS
Inge L.E. Kerster 404 Scott Point Drive
Salt Spring Island, BC V8K 2R2
Canada
ARTICLE EIGHT. (PERIOD OF EXISTENCE). The period of existence of
the Corporation shall be perpetual.
ARTICLE NINE. (BY-LAWS) Its Board of Directors shall adopt the
initial By-laws of the corporation. The power to alter, amend, or
repeal the By-laws, or to adopt new By-laws, shall be vested in
the Board of Directors, except as otherwise may be specifically
provided in the By-laws.
ARTICLE TEN. (STOCKHOLDERS' MEETINGS). Meetings of stockholders
shall be held at such place within or without the State of Nevada
as may be provided by the By-laws of the corporation. The
President or any other executive officer of the corporation, the
Board of Directors, or any member may call special meetings of the
stockholders thereof, or by the record holder or holders of at
least ten percent (10%) of all shares entitled to vote at the
meeting. Any action otherwise required to be taken at a meeting
of the stockholders, except election of directors, may be taken
without a meeting if a consent in writing, setting forth the
action so taken, shall be signed by stockholders having at least a
majority of the voting power.
ARTICLE ELEVEN. (CONTRACTS OF CORPORATION) No contract or other
transaction between the corporation and any other corporation,
whether or not a majority of the shares of the capital stock of
such other corporation is owned by this corporation, and no act of
this corporation shall be any way be affected or invalidated by
the fact that any of the directors of this corporation are
pecuniarily or otherwise interested in, or are directors or
officers of such other corporation. Any director of this
corporation, individually, or any firm of which such director may
be a member, may be a party to, or may be pecuniarily or otherwise
interested in any contract or transaction of the corporation;
provided, however, that the fact that he or such firm is so
interested shall be disclosed or shall have been known to the
Board of Directors of this corporation, or a majority thereof; and
any director of this corporation who is also a director or officer
of such other corporation, or who is so interested, may e counted
in determining the existence of a quorum at any meeting of the
Board of Directors of this corporation that shall authorize such
contract or transaction, and may vote thereat to authorize such
contract or transaction, with like force and effect as if he were
no such director or officer of such other corporation or not so
interested.
ARTICLE TWELVE. (LIABILITY OF DIRECTORS AND OFFICERS) No
director or officer shall have any personal liability to the
corporation or its stockholders for damages for breach of
fiduciary duty as a director or officer, except that this Article
Twelve shall not eliminate or limit the liability of a director or
officer for (I) acts or omissions which involve intentional
misconduct, fraud or a knowing violation of law, or (ii) the
payment of dividends in violation of the Nevada Revised Statutes.
IN WITNESS WHEREOF. The undersigned incorporator has hereunto
affixed her/her signature at Denver, Nevada, this 29th day of
September, 2000.
__________________________________
INGE L. E. KERSTER
EXHIBIT 3 (iii)
BYLAWS
BYLAWS OF
LIONHEART INVESTMENTS, INC.
CONTENTS OF INITIAL BYLAWS
ARTICLE PAGE
1.00 CORPORATE CHARTER AND BYLAWS
1.01 Corporate Charter Provisions 4
1.02 Registered Agent or Office Requirement
of Filing Changes with Secretary of State 4
1.03 Initial Business Office 4
1.04 Amendment of Bylaws 4
2.00 DIRECTORS AND DIRECTORS MEETINGS
2.01 Action Without Meeting 5
2.02 Telephone Meetings 5
2.03 Place of Meetings 5
2.04 Regular Meetings 5
2.05 Call of Special Meeting 5
2.06 Quorum 6
2.07 Adjournment Notice of Adjourned Meetings 6
2.08 Conduct of Meetings 6
2.09 PoIrs of the Board of Directors 6
2.10 Board Committees Authority to Appoint 7
2.11 Transactions with Interested Directors 7
2.12 Number of Directors 7
2.13 Term of Office 7
2.14 Removal of Directors 8
2.15 Vacancies 8
2.15(a) Declaration of Vacancy 8
2.15(b) Filling Vacancies by Directors 8
2.15(c) Filling Vacancies by Shareholders 8
2.16 Compensation 9
2.17 Indemnification of Directors and Officers 9
2.18 Insuring Directors, Officers, and Employees 9
3.00 SHAREHOLDERS> MEETINGS
3.01 Action Without Meeting 9
3.02 Telephone Meetings 10
3.03 Place of Meetings 10
3.04 Notice of Meetings 10
3.04 Voting List 10
3.05 Votes per Share 11
3.07 Cumulative Voting 11
3.08 Proxies 11
3.09 Quorum 12
3.09(a) Quorum of Shareholders 12
3.09(b) Adjourn for Lack or Loss of Quorum 12
3.10 Voting by Voice or Ballot 12
3.11 Conduct of Meetings 12
3.12 Annual Meetings 12
3.13 Failure to Hold Annual Meeting 13
3.14 Special Meetings 13
4.00 OFFICERS
4.01 Title and Appointment 13
4.01(a) Chairman 13
4.01(b) President 14
4.01(c) Vice President 14
4.01(d) Secretary 14
4.01(e) Treasurer 15
4.01(f) Assistant Secretary or
Assistant Treasurer 15
4.02 Removal and Resignation 15
4.03 Vacancies 16
4.04 Compensation 16
5.00 AUTHORITY TO EXECUTE INSTRUMENTS
5.01 No Authority Absent Specific Authorization 16
5.02 Execution of Certain Instruments 16
6.00 ISSUANCE AND TRANSFER OF SHARES
6.01 Classes and Series of Shares 17
6.02 Certificates for Fully Paid Shares 17
6.03 Consideration for Shares 17
6.04 Replacement of Certificates 17
6.05 Signing Certificates Facsimile Signatures 18
6.06 Transfer Agents and Registrars 18
6.07 Conditions of Transfer 18
6.08 Reasonable Doubts as to Right to Transfer 18
7.00 CORPORATE RECORDS AND ADMINISTRATION
7.01 Minutes of Corporate Meetings 18
7.02 Share Register 19
7.03 Corporate Seal 19
7.04 Books of Account 19
7.05 Inspection of Corporate Records 20
7.06 Fiscal Year 20
7.07 Waiver of Notice 20
8.00 ADOPTION OF INITIAL BYLAWS 20
ARTICLE ONE CORPORATE CHARTER AND BYLAWS
1.01 CORPORATE CHARTER PROVISIONS
The Corporations Charter authorizes sixty million (60,000,000)
shares to be issued par value $0.001, comprised of fifty million
(50,000,000) common shares and ten million (10,000,000) preferred
shares. The officers and transfer agents issuing shares of the
Corporation shall ensure that the total number of shares
outstanding at any given time does not exceed this number. Such
officers and agents shall advise the Board at least annually of
the authorized shares remaining available to be issued. No shares
shall be issued for less than the par value stated in the Charter.
Each Charter provision shall be observed until amended by Restated
Articles or Articles of Amendment duly filed with the Secretary of
State.
1.02 REGISTERED AGENT AND OFFICE REQUIREMENT OF FILING CHANGES
WITH SECRETARY OF STATE
The address of the Registered Office provided in the Articles of
Incorporation, as duly filed with the Secretary of State for the
State of Nevada, is: 50 West Liberty Street, Suite 880, Reno,
Nevada 89501. The name of the Registered Agent of the
Corporation at such address, as set forth in its Articles of
Incorporation, is: The Nevada Agency and Trust. The Registered
Agent or Office may be changed by filing a Statement of Change of
Registered Agent or Office or both with the Secretary of State,
and not otherwise. Such filing shall be made promptly with each
change. Arrangements for each change in Registered Agent or Office
shall ensure that the Corporation is not exposed to the
possibility of a default judgment. Each successive Registered
Agent shall be of reliable character and Ill informed of the
necessity of immediately furnishing the papers of any lawsuit
against the Corporation to its attorneys.
1.03 INITIAL BUSINESS OFFICE
The address of the initial principal business office of the
Corporation is hereby established as: 404 Scott Point Drive, Salt
Spring Island, BC V8K 2R2 Canada. The Corporation may have
additional business offices within the State of Nevada and where
it may be duly qualified to do business outside of Nevada, as the
Board of Directors may from time to time designate or the business
of the Corporation may require.
1.04 AMENDMENT OF BYLAWS
The Shareholders or Board of Directors, subject to any limits
imposed by the Shareholders, may amend or repeal these Bylaws and
adopt new Bylaws. All amendments shall be upon advice of counsel
as to legality, except in emergency. Bylaw changes shall take
effect upon adoption unless otherwise specified. Notice of Bylaws
changes shall be given in or before notice given of the first
Shareholders' meeting following their adoption.
ARTICLE TWO DIRECTORS AND DIRECTORS' MEETINGS
2.01 ACTION BY CONSENT OF BOARD WITHOUT MEETING
Any action required or permitted to be taken by the Board of
Directors may be taken without a meeting, and shall have the same
force and effect as a unanimous vote of Directors, if all members
of the Board consent in writing to the action. Such consent may be
given individually or collectively.
2.02 TELEPHONE MEETINGS
Subject to the notice provisions required by these Bylaws and by
the Business Corporation Act, Directors may participate in and
hold a meeting by means of conference call or similar
communication by which all persons participating can hear each
other. Participation in such a meeting shall constitute presence
in person at such meeting, except participation for the express
purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.
2.03 PLACE OF MEETINGS
Meetings of the Board of Directors shall be held at the business
office of the Corporation or at such other place within or without
the State of Nevada as may be designated by the Board.
2.04 REGULAR MEETINGS
Regular meetings of the Board of Directors shall be held, without
call or notice, immediately following each annual Shareholders'
meeting, and at such other regularly repeating times as the
Directors may determine.
2.05 CALL OF SPECIAL MEETING
Special meetings of the Board of Directors for any purpose may be
called at any time by the President or, if the President is absent
or unable or refuses to act, by any Vice President or any two
Directors. Written notices of the special meetings, stating the
time and place of the meeting, shall be mailed ten days before, or
telegraphed or personally delivered so as to be received by each
Director not later than two days before, the day appointed for the
meeting. Notice of meetings need not indicate an agenda.
Generally, a tentative agenda will be included, but the meeting
shall not be confined to any agenda included with the notice.
Meetings provided for in these Bylaws shall not be invalid for
lack of notice if all persons entitled to notice consent to the
meeting in writing or are present at the meeting and do not object
to the notice given. Consent may be given either before or after
the meeting.
Upon providing notice, the Secretary or other officer sending
notice shall sign and file in the Corporate Record Book a
statement of the details of the notice given to each Director. If
such statement should later not be found in the Corporate Record
Book, due notice shall be presumed.
2.06 QUORUM
The presence throughout any Directors' meeting, or adjournment
thereof, of a majority of the authorized number of Directors shall
be necessary to constitute a quorum to transact any business,
except to adjourn. If a quorum is present, every act done or
resolution passed by a majority of the Directors present and
voting shall be the act of the Board of Directors.
2.07 ADJOURNMENT AND NOTICE OF ADJOURNED MEETINGS
A quorum of the Directors may adjourn any Directors' meeting to
meet again at a stated hour on a stated day. Notice of the time
and place where an adjourned meeting will be held need not be
given to absent Directors if the time and place is fixed at the
adjourned meeting. In the absence of a quorum, a majority of the
Directors present may adjourn to a set time and place if notice is
duly given to the absent members, or until the time of the next
regular meeting of the Board.
2.08 CONDUCT OF MEETINGS
At every meeting of the Board of Directors, the Chairman of the
Board, if there is such an officer, and if not, the President, or
in the President's absence, a Vice President designated by the
President, or in the absence of such designation, a Chairman
chosen by a majority of the Directors present, shall preside. The
Secretary of the Corporation shall act as Secretary of the Board
of Directors' meetings. When the Secretary is absent from any
meeting, the Chairman may appoint any person to act as Secretary
of that meeting.
2.09 POWERS OF THE BOARD OF DIRECTORS
The business and affairs of the Corporation and all corporate
poIrs shall be exercised by or under authority of the Board of
Directors, subject to limitations imposed by law, the Articles of
Incorporation, any applicable Shareholders' agreement, and these
Bylaws.
2.10 BOARD COMMITTEES AUTHORITY TO APPOINT
The Board of Directors may designate an executive committee and
one or more other committees to conduct the business and affairs
of the Corporation to the extent authorized. The Board shall have
the poIr at any time to change the poIrs and membership of, fill
vacancies in, and dissolve any committee. Members of any committee
shall receive such compensation as the Board of Directors may from
time to time provide. The designation of any committee and the
delegation of authority thereto shall not operate to relieve the
Board of Directors, or any member thereof, of any responsibility
imposed by law.
2.11 TRANSACTIONS WITH INTERESTED DIRECTORS
Any contract or other transaction between the Corporation and any
of its Directors (or any corporation or firm in which any of its
Directors are directly or indirectly interested) shall be valid
for all purposes notwithstanding the presence of that Director at
the meeting during which the contract or transaction was
authorized, and notwithstanding the Directors' participation in
that meeting. Ther section shall apply only if the contract or
transaction is just and reasonable to the Corporation at the time
it is authorized and ratified, the interest of each Director is
known or disclosed to the Board of Directors, and the Board
nevertheless authorizes or ratifies the contract or transaction by
a majority of the disinterested Directors present. Each interested
Director is to be counted in determining whether a quorum is
present, but shall not vote and shall not be counted in
calculating the majority necessary to carry the vote. Ther section
shall not be construed to invalidate contracts or transactions
that would be valid in its absence.
2.12 NUMBER OF DIRECTORS
The number of Directors of ther Corporation shall be no more than
fifteen (15) or less than one (1). No Director need be a resident
of Nevada or a Shareholder. The number of Directors may be
increased or decreased from time to time by amendment to these
Bylaws. Any decrease in the number of Directors shall not have the
effect of shortening the tenure, which any incumbent Director
would otherwise enjoy.
2.13 TERM OF OFFICE
Directors shall be entitled to hold office until their successors
are elected and qualified. Election for all Director positions,
vacant or not vacant, shall occur at each annual meeting of the
Shareholders and may be held at any special meeting of
Shareholders called specifically for that purpose.
2.14 REMOVAL OF DIRECTORS
The entire Board of Directors or any individual Director may be
removed from office by a vote of Shareholders holding a majority
of the outstanding shares entitled to vote at an election of
Directors. However, if less than the entire Board is to be
removed, no one of the Directors may be removed if the votes cast
against her removal would be sufficient to elect him if then
cumulatively voted at an election of the entire Board of
Directors. No director may be so removed except at an election of
the class of Directors of which he is a part. If any or all
Directors are so removed, new Directors may be elected at the same
meeting. Whenever a class or series of shares is entitled to elect
one or more Directors under authority granted by the Articles of
Incorporation, the provisions of ther Paragraph apply to the vote
of that class or series and not to the vote of the outstanding
shares as a whole.
2.15 VACANCIES
Vacancies on the Board of Directors shall exist upon the
occurrence of any of the following events: (a) the death,
resignation, or removal of any Director; (b) an increase in the
authorized number of Directors; or (c) the failure of the
Shareholders to elect the full authorized number of Directors to
be voted for at any annual, regular, or special Shareholders'
meeting at which any Director is to be elected.
2.15(a) DECLARATION OF VACANCY
A majority of the Board of Directors may declare vacant the office
of a Director if the Director: (a) is adjudged incompetent by a
court order; (b) is convicted of a crime involving moral
turpitude; (c) or fails to accept the office of Director, in
writing or by attending a meeting of the Board of Directors,
within thirty (30) days of notice of election.
2.15(b) FILLING VACANCIES BY DIRECTORS
Vacancies other than those caused by an increase in the number of
Directors may be filled temporarily by majority vote of the
remaining Directors, though less than a quorum, or by a sole
remaining Director. Each Director so elected shall hold office
until a qualified successor is elected at a Shareholders' meeting.
2.15(c) FILLING VACANCIES BY SHAREHOLDERS
Any vacancy on the Board of Directors, including those caused by
an increase in the number of Directors shall be filled by the
Shareholders at the next annual meeting or at a special meeting
called for that purpose. Upon the resignation of a Director
tendered to take effect at a future time, the Board or the
Shareholders may elect a successor to take office when the
resignation becomes effective.
2.16 COMPENSATION
Directors shall receive such compensation for their services as
Directors as shall be determined from time to time by resolution
of the Board. Any Director may serve the Corporation in any other
capacity as an officer, agent, employee, or otherwise, and receive
compensation therefor.
2.17 INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Board of Directors shall authorize the Corporation to pay or
reimburse any present or former Director or officer of the
Corporation any costs or expenses actually and necessarily
incurred by that officer in any action, suit, or proceeding to
which the officer is made a party by reason of holding that
position, provided, hoIver, that no officer shall receive such
indemnification if finally adjudicated therein to be liable for
negligence or misconduct in office. Ther indemnification shall
extend to good-faith expenditures incurred in anticipation of
threatened or proposed litigation. The Board of Directors may in
proper cases, extend the indemnification to cover the good-faith
settlement of any such action, suit, or proceeding, whether
formally instituted or not.
2.18 INSURING DIRECTORS, OFFICERS, AND EMPLOYEES
The Corporation may purchase and maintain insurance on behalf of
any Director, officer, employee, or agent of the Corporation, or
on behalf of any person serving at the request of the Corporation
as a Director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise, against
any liability asserted against that person and incurred by that
person in any such corporation, whether or not the Corporation has
the poIr to indemnify that person against liability for any of
those acts.
ARTICLE THREE SHAREHOLDERS' MEETINGS
3.01 ACTION WITHOUT MEETING
Any action that may be taken at a meeting of the Shareholders
under any provision of the Nevada Business Corporation Act may be
taken without a meeting if authorized by a consent or waiver filed
with the Secretary of the Corporation and signed by all persons
who would be entitled to vote on that action at a Shareholders'
meeting. Each such signed consent or waiver, or a true copy
thereof, shall be placed in the Corporate Record Book.
3.02 TELEPHONE MEETINGS
Subject to the notice provisions required by these Bylaws and by
the Business Corporation Act, Shareholders may participate in and
hold a meeting by means of conference call or similar
communication by which all persons participating can hear each
other. Participation in such a meeting shall constitute presence
in person at such meeting, except participation for the express
purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.
3.03 PLACE OF MEETINGS
Shareholders' meetings shall be held at the business office of the
Corporation, or at such other place within or without the State of
Nevada as may be designated by the Board of Directors or the
Shareholders.
3.04 NOTICE OF MEETINGS
The President, the Secretary, or the officer or persons calling a
Shareholders' Meeting. shall give notice, or cause it to be given,
in writing to each Director and to each Shareholder entitled to
vote at the meeting at least ten (10) but not more than sixty (60)
days before the date of the meeting. Such notice shall state the
place, day, and hour of the meeting, and, in case of a special
meeting, the purpose or purposes for which the meeting is called.
Such written notice may be given personally, by mail, or by other
means. Such notice shall be addressed to each recipient at such
address as appears on the Books of the Corporation or as the
recipient has given to the Corporation for the purpose of notice.
Meetings provided for in these Bylaws shall not be invalid for
lack of notice if all persons entitled to notice consent to the
meeting in writing or are present at the meeting in person or by
proxy and do not object to the notice given, Consent may be given
either before or after the meeting. Notice of the reconvening of
an adjourned meeting is not necessary unless the meeting is
adjourned more than thirty days past the date stated in the
notice, in which case notice of the adjourned meeting shall be
given as in the case of any special meeting. Notice may be waived
by written waivers signed either before or after the meeting by
all persons entitled to the notice.
3.05 VOTING LIST
At least ten (10), but not more than sixty (60), days before each
Shareholders' meeting, the officer or agent having charge of the
Corporation's share transfer books shall make a complete list of
the Shareholders entitled to vote at that meeting or any
adjournment thereof, arranged in alphabetical order, with the
address and the number of shares held by each. The list shall be
kept on file at the Registered Office of the Corporation for at
least ten (10) days prior to the meeting, and shall be subject to
inspection by any Director, officer, or Shareholder at any time
during usual business hours. The list shall also be produced and
kept open at the time and place of the meeting and shall be
subject, during the whole time of the meeting, to the inspection
of any Shareholder. The original share transfer books shall be
prima facie evidence as to the Shareholders entitled to examine
such list or transfer books or to vote at any meeting of
Shareholders. HoIver, failure to prepare and to make the list
available in the manner provided above shall not affect the
validity of any action taken at the meeting.
3.06 VOTES PER SHARE
Each outstanding share, regardless of class, shall be entitled to
one (1) vote on each matter submitted to a vote at a meeting of
Shareholders, except to the extent that the voting rights of the
shares of any class or classes are limited or denied pursuant to
the Articles of Incorporation. A Shareholder may vote in person or
by proxy executed in writing by the Shareholder, or by the
Shareholder's duly authorized attorney-in-fact.
3.07 CUMULATIVE VOTING
Cumulative voting is expressly forbidden
3.08 PROXIES
A Shareholder may vote either in person or by proxy executed in
writing by the Shareholder or her or her duly authorized attorney
in fact. Unless otherwise provided in the proxy or by law, each
proxy shall be revocable and shall not be valid after eleven (11)
months from the date of its execution,
3.09 QUORUM
3.09(a) QUORUM OF SHAREHOLDERS
As to each item of business to be voted on, the presence (in
person or by proxy) of the persons who are entitled to vote a
majority of the outstanding voting shares on that matter shall
constitute the quorum necessary for the consideration of the
matter at a Shareholders' meeting. The vote of the holders of a
majority of the shares entitled to vote on the matter and
represented at a meeting at which a quorum is present shall be the
act of the Shareholders' meeting.
3.09(b) ADJOURNMENT FOR LACK OR LOSS OF QUORUM
No business may be transacted in the absence of a quorum, or upon
the withdrawal of enough Shareholders to leave less than a quorum;
other than to adjourn the meeting from time to time by the vote of
a majority of the shares represented at the meeting.
3.10 VOTING BY VOICE OR BALLOT
Elections for Directors need not be by ballot unless a Shareholder
demands election by ballot before the voting begins.
3.11 CONDUCT OF MEETINGS
Meetings of the Shareholders shall be chaired by the President,
or, in the President's absence, a Vice President designated by the
President, or, in the absence of such designation, any other
person chosen by a majority of the Shareholders of the Corporation
present in person or by proxy and entitled to vote. The Secretary
of the Corporation, or, in the Secretary's absence, an Assistant
Secretary, shall act as Secretary of all meetings of the
Shareholders. In the absence of the Secretary or Assistant
Secretary, the Chairman shall appoint another person to act as
Secretary of the meeting.
3.12 ANNUAL MEETINGS
The time, place, and date of the annual meeting of the
Shareholders of the Corporation, for the purpose of electing
Directors and for the transaction of any other business as may
come before the meeting, shall be set from time to time by a
majority vote of the Board of Directors. If the day fixed for the
annual meeting shall be on a legal holiday in the State of Nevada,
such meeting shall be held on the next succeeding business day. If
the election of Directors is not held on the day thus designated
for any annual meeting, or at any adjournment thereof, the Board
of Directors shall cause the election to be held at a special
meeting of the Shareholders as soon thereafter as possible.
3.13 FAILURE TO HOLD ANNUAL MEETING
If, within any 13-month period, an annual Shareholders' Meeting is
not held, any Shareholder may apply to a court of competent
jurisdiction in the county in which the principal office of the
Corporation is located for a summary order that an annual meeting
be held.
3.14 SPECIAL MEETINGS
A special Shareholders' meeting may be called at any time by. (a)
the President; (b) the Board of Directors; or (c) one or more
Shareholders holding in the aggregate one-tenth or more of all the
shares entitled to vote at the meeting. Such meeting may be called
for any purpose. The party calling the meeting may do so only by
written request sent by registered mail or delivered in person to
the President or Secretary. The officer receiving the written
request shall within ten (10) days from the date of its receipt
cause notice of the meeting to be sent to all the Shareholders
entitled to vote at such a meeting. If the officer does not give
notice of the meeting within ten (10) days after the date of
receipt of the written request, the person or persons calling the
meeting may fix the time of the meeting and give the notice. The
notice shall be sent pursuant to Section 3.04 of these Bylaws. The
notice of a special Shareholders' meeting must state the purpose
or purposes of the meeting and, absent consent of every
Shareholder to the specific action taken, shall be limited to
purposes plainly stated in the notice, notwithstanding other
provisions herein.
ARTICLE FOUR OFFICERS
4.01 TITLE AND APPOINTMENT
The officers of the Corporation shall be a President and a
Secretary, as required by law. The Corporation may also have, at
the discretion of the Board of Directors, a Chairman of the Board,
one or more Vice Presidents, a Treasurer, one or more Assistant
Secretaries, and one or more Assistant Treasurers. One person may
hold any two or more offices, including President and Secretary.
All officers shall be elected by and hold office at the pleasure
of the Board of Directors, which shall fix the compensation and
tenure of all officers.
4.01(a) CHAIRMAN OF THE BOARD
The Chairman, if there shall be such an officer, shall, if
present, preside at the meetings of the Board of Directors and
exercise and perform such other powers and duties as may from time
to time be assigned to the Chairman by the Board of Directors or
prescribed by these Bylaws.
4.01(b) PRESIDENT
Subject to such supervisory powers, if any, as may be given to the
Chairman, if there is one, by the Board of Directors, the
President shall be the chief executive officer of the Corporation
and shall, subject to the control of the Board of Directors, have
general supervision, direction, and control of the business and
officers of the Corporation. The President shall have the general
powers and duties of management usually vested in the office of
President of a corporation; shall have such other powers and
duties as may be prescribed by the Board of Directors or the
Bylaws; and shall be ex officio a member of all standing
committees, including the executive committee, if any. In
addition, the President shall preside at all meetings of the
Shareholders and in the absence of the Chairman, or if there is no
Chairman, at all meetings of the Board of Directors.
4.01(c) VICE PRESIDENT
Any Vice President shall have such powers and perform such duties
as from time to time may be prescribed by these Bylaws, by the
Board of Directors, or by the President. In the absence or
disability of the President, the senior or duly appointed Vice
President, if any, shall perform all the duties of the President,
pending action by the Board of Directors when so acting, such Vice
President shall have all the powers of, and be subject to all the
restrictions on, the President.
4.01(d) SECRETARY
The Secretary shall:
A. See that all notices are duly given in accordance with the
provisions of these Bylaws and as required by law. In case of the
absence or disability of the Secretary. or the Secretary's refusal
or neglect to act, notice may be given and served by an Assistant
Secretary or by the Chairman, the President, any Vice President,
or by the Board of Directors.
B. Keep the minutes of corporate meetings, and the Corporate
Record Book, as set out in Section 7.01 hereof.
C. Maintain, in the Corporate Record Book, a record of all share
certificates issued or canceled and all shares of the Corporation
canceled or transferred.
D. Be custodian of the Corporation's records and of any seal,
which the Corporation may from time to time adopt. when the
Corporation exercises its right to use a seal, the Secretary shall
see that the seal is embossed on all share certificates prior to
their issuance and on all documents authorized to be executed
under seal in accordance with the provisions of these Bylaws.
E. In general, perform all duties incident to the office of
Secretary, and such other duties as from time to time may be
required by Sections 7.01, 7.02, and 7.03 of these Bylaws, by
these Bylaws generally, by the Board of Directors, or by the
President.
4.01(e) TREASURER
The Treasurer shall:
F. Have charge and custody of, and be responsible for, all funds
and securities of the Corporation, and deposit all funds in the
name of the Corporation in those banks, trust companies, or other
depositories that shall be selected by the Board of Directors.
G. Receive, and give receipt for, monies due and payable to the
Corporation.
H. Disburse or cause to be disbursed the funds of the
Corporation as may be directed by the Board of Directors, taking
proper vouchers for those disbursements.
I. If required by the Board of Directors or the President, give
to the Corporation a bond to assure the faithful performance of
the duties of the Treasurer's office and the restoration to the
Corporation of all corporate books, papers, vouchers, money, and
other property of whatever kind in the Treasurer's possession or
control, in case of the Treasurer's death, resignation,
retirement, or removal from office. Any such bond shall be in a
sum satisfactory to the Board of Directors, with one or more
sureties or a surety company satisfactory to the Board of
Directors.
J. In general, perform all the duties incident to the office of
Treasurer and such other duties as from time to time may be
assigned to the Treasurer by Sections 7.O4 and 7.05 of these
Bylaws, by these Bylaws generally, by the Board of Directors, or
by the President.
4.01(f) ASSISTANT SECRETARY AND ASSISTANT TREASURER
The Assistant Secretary or Assistant Treasurer shall have such
powers and perform such duties as the Secretary or Treasurer,
respectively, or as the Board of Directors or President may
prescribe. In case of the absence of the Secretary or Treasurer,
the senior Assistant Secretary or Assistant Treasurer,
respectively, may perform all of the functions of the Secretary or
Treasurer.
4.02 REMOVAL AND RESIGNATION
Any officer may be removed, either with or without cause, by vote
of a majority of the Directors at any regular or special meeting
of the Board, or, except in case of an officer chosen by the Board
of Directors, by any committee or officer upon whom that power of
removal may be conferred by the Board of Directors. Such removal
shall be without prejudice to the contract rights, if any, of the
person removed. Any officer may resign at any time by giving
written notice to the Board of Directors, the President, or the
Secretary of the Corporation. Any resignation shall take effect on
the date of the receipt of that notice or at any later time
specified therein, and, unless otherwise specified therein, the
acceptance of that resignation shall not be necessary to make it
effective.
4.03 VACANCIES
Upon the occasion of any vacancy occurring in any office of the
Corporation, by reason of death, resignation, removal, or
otherwise, the Board of Directors may elect an acting successor to
hold office for the unexpired term or until a permanent successor
is elected.
4.04 COMPENSATION
The compensation of the officers shall be fixed from time to time
by the Board of Directors, and no officer shall be prevented from
receiving a salary by reason of the fact that the officer is also
a Shareholder or a Director of the Corporation, or both.
ARTICLE FIVE - AUTHORITY TO EXECUTE INSTRUMENTS
5.01 NO AUTHORITY ABSENT SPECIFIC AUTHORIZATION
These Bylaws provide certain authority for the execution of
instruments. The Board of Directors, except as otherwise provided
in these Bylaws, may additionally authorize any officer or
officers, agent or agents, to enter into any contract or execute
and deliver any instrument in the name of and on behalf of the
Corporation, and such authority may be general or confined to
specific instances. Unless expressly authorized by these Bylaws or
the Board of Directors, no officer, agent, or employee shall have
any power or authority to bind the Corporation by any contract or
engagement nor to pledge its credit nor to render it peculiarly
liable for any purpose or in any amount.
5.02 EXECUTION OF CERTAIN INSTRUMENTS
Formal contracts of the Corporation, promissory notes, deeds,
deeds of trust, mortgages, pledges, and other evidences of
indebtedness of the Corporation, other corporate documents, and
certificates of ownership of liquid assets held by the Corporation
shall be signed or endorsed by the President or any Vice President
and by the Secretary or the Treasurer, unless otherwise
specifically determined by the Board of Directors or otherwise
required by law.
ARTICLE SIX - ISSUANCE AND TRANSFER OF SHARES
6.01 CLASSES AND SERIES OF SHARES
The Corporation may issue one or more classes or series of shares,
or both. Any of these classes or series may have full, limited, or
no voting rights, and may have such other preferences, rights,
privileges, and restrictions as are stated or authorized in the
Articles of Incorporation. All shares of any one class shall have
the same voting, conversion, redemption, and other rights,
preferences, privileges, and restrictions, unless the class is
divided into series, If a class is divided into series, all the
shares of any one series shall have the same voting, conversion,
redemption, and other. rights, preferences, privileges, and
restrictions. There shall always be a class or series of shares
outstanding that has complete voting rights except as limited or
restricted by voting rights conferred on some other class or
series of outstanding shares.
6.02 CERTIFICATES FOR FULLY PAID SHARES
Neither shares nor certificates representing shares may be issued
by the Corporation until the full amount of the consideration has
been received when the consideration has been paid to the
Corporation, the shares shall be deemed to have been issued and
the certificate representing the shares shall be issued to the
shareholder.
6.03 CONSIDERATION FOR SHARES
Shares may be issued for such consideration as may be fixed from
time to time by the Board of Directors, but not less than the par
value stated in the Articles of Incorporation. The consideration
paid for the issuance of shares shall consist of money paid, labor
done, or property actually received, and neither promissory notes
nor the promise of future services shall constitute payment nor
partial payment for shares of the Corporation.
6.04 REPLACEMENT OF CERTIFICATES
No replacement share certificate shall be issued until the former
certificate for the shares represented thereby shall have been
surrendered and canceled, except that replacements for lost or
destroyed certificates may be issued, upon such terms, conditions,
and guarantees as the Board may see fit to impose, including the
filing of sufficient indemnity.
6.05 SIGNING CERTIFICATES-FACSIMILE SIGNATURES
All share certificates shall be signed by the officer(s)
designated by the Board of Directors. The signatures of the
foregoing officers may be facsimiles. If the officer who has
signed or whose facsimile signature has been placed on the
certificate has ceased to be such officer before the certificate
issued, the certificate may be issued by the Corporation with the
same effect as if he or she Ire such officer on the date of its
issuance.
6.06 TRANSFER AGENTS AND REGISTRARS
The Board of Directors may appoint one or more transfer agents or
transfer clerks, and one or more registrars, at such times and
places as the requirements of the Corporation may necessitate and
the Board of Directors may designate. Each registrar appointed, if
any, shall be an incorporated bank or trust company, either
domestic or foreign.
6.07 CONDITIONS OF TRANSFER
The party in whose name shares of stock stand on the books of the
Corporation shall be deemed the owner thereof as regards the
Corporation, provided that whenever any transfer of shares shall
be made for collateral security, and not absolutely, and prior
written notice thereof shall be given to the Secretary of the
Corporation, or to its transfer agent, if any, such fact shall be
stated in the entry of the transfer.
6.08 REASONABLE DOUBTS AS TO RIGHT TO TRANSFER
When a transfer of shares is requested and there is reasonable
doubt as to the right of the person seeking the transfer, the
Corporation or its transfer agent, before recording the transfer
of the shares on its books or issuing any certificate therefor,
may require from the person seeking the transfer reasonable proof
of that person's right to the transfer. If there remains a
reasonable doubt of the right to the transfer, the Corporation may
refuse a transfer unless the person gives adequate security or a
bond of indemnity executed by a corporate surety or by two
individual sureties satisfactory to the Corporation as to form,
amount, and responsibility of sureties. The bond shall be
conditioned to protect the Corporation, its officers, transfer
agents, and registrars, or any of them, against any loss, damage,
expense, or other liability for the transfer or the issuance of a
new certificate for shares.
ARTICLE SEVEN - CORPORATE RECORDS AND ADMINISTRATION
7.01 MINUTES OF CORPORATE MEETINGS
The Corporation shall keep at the principal office, or such other
place as the Board of Directors may order, a book recording the
minutes of all meetings of its Shareholders and Directors, with
the time and place of each meeting, whether such meeting was
regular or special, a copy of the notice given of such meeting, or
of the written waiver thereof, and, if it is a special meeting,
how the meeting was authorized. The record book shall further show
the number of shares present or represented at Shareholders'
meetings, and the names of those present and the proceedings of
all meetings.
7.02 SHARE REGISTER
The Corporation shall keep at the principal office, or at the
office of the transfer agent, a share register showing the names
of the Shareholders, their addresses, the number and class of
shares issued to each, the number and date of issuance of each
certificate issued for such shares, and the number and date of
cancellation of every certificate surrendered for cancellation.
The above information may be kept on an information storage device
such as a computer, provided that the device is capable of
reproducing the information in clearly legible form. If the
Corporation is taxed under Internal Revenue Code Section 1244 or
Subchapter S, the Officer issuing shares shall maintain the
appropriate requirements regarding issuance.
7.03 CORPORATE SEAL
The Board of Directors may at any time adopt, prescribe the use
of, or discontinue the use of, such corporate seal as it deems
desirable, and the appropriate officers shall cause such seal to
be affixed to such certificates and documents as the Board of
Directors may direct.
7.04 BOOKS OF ACCOUNT
The Corporation shall maintain correct and adequate accounts of
its properties and business transactions, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses,
capital, surplus, and shares. The corporate bookkeeping procedures
shall conform to accepted accounting practices for the
Corporation's business or businesses. subject to the foregoing,
The chart of financial accounts shall be taken from, and designed
to facilitate preparation of, current corporate tax returns. Any
surplus, including earned surplus, paid-in surplus, and surplus
arising from a reduction of stated capital, shall be classed by
source and shown in a separate account. If the Corporation is
taxed under Internal Revenue Code Section 1244 or Subchapter S,
the officers and agents maintaining the books of account shall
maintain the appropriate requirements.
7.05 INSPECTION OF CORPORATE RECORDS
A Director or Shareholder demanding to examine the Corporation's
books or records may be required to first sign an affidavit that
the demanding party will not directly or indirectly participate in
reselling the information and will keep it confidential other than
in use for proper purposes reasonably related to the Director's or
Shareholder's role. A Director who insists on examining the
records while refusing to sign this affidavit thereby resigns as a
Director.
7.06 FISCAL YEAR
The fiscal year of the Corporation shall be as determined by the
Board of Directors and approved by the Internal Revenue Service.
The Treasurer shall forthwith arrange a consultation with the
Corporation's tax advisers to determine whether the Corporation is
to have a fiscal year other than the calendar year. If so, the
Treasurer shall file an election with the Internal Revenue Service
as early as possible, and all correspondence with the IRS,
including the application for the Corporation's Employer
Identification Number, shall reflect such non-calendar year
election.
7.07 WAIVER OF NOTICE
Any notice required by law or by these Bylaws may be waived by
execution of a written waiver of notice executed by the person
entitled to the notice. The waiver may be signed before or after
the meeting.
ARTICLE EIGHT - ADOPTION OF INITIAL BYLAWS
The Board of Directors adopted the foregoing bylaws on March 13,
1999.
/S/ Inge L. E. Kerster
Director
Atttested to, and certified by: /S/ Inge L. E. Kerster, Secretary
Inge L. E. Kerster, Secretary
