Dobi Medical International (DOBI) Inactive
Filed: 13 Mar 02, 12:00am
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[xx] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 2002
Commission file Number: 000-32523
LIONS GATE INVESTMENT LIMITED
(Exact name of small business issuer as specified in its charter)
Nevada
(State or other jurisdiction of incorporation or organization)
98-0222710
(I.R.S. Employer Identification Number)
2271 Flanders Avenue, S.W.
Calgary, Alberta, T2T 5K9 Canada
(Address of principal executive offices)
(403)606-7696
(Issuer's telephone number)
State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 4,900,000 common shares as at January 31, 2002
Transitional Small Business Disclosure Format (check one): Yes [ ] No [ X ]
LIONS GATE INVESTMENT LIMITED
INDEX
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet as of January 31, 2002 and July 31, 2001
Statement of Operations for the period ended
January 31, 2002
Consolidated Statements of Cash Flows for the period ended
January 31, 2002
Consolidated Statements of Changes in Stockholders' Equity
Notes to Consolidated Financial Statements
Item 2 Plan of Operation
PART II. OTHER INFORMATION
Item 1 Legal Proceedings
Item 2 Changes in Securities
Item 3 Defaults Upon Senior Securities
Item 4 Submission of Matters to a Vote of Security Holders
Item 5 Other Information
Item 6 Exhibits and Reports on Form 8K
SIGNATURES
LIONS GATE INVESTMENT LIMITED
(A Development Stage Company)
FINANCIAL STATEMENTS
(Expressed in United States Dollars)
(Unaudited)
JANUARY 31, 2002
LIONS GATE INVESTMENT LIMITED
(A Development Stage Company)
BALANCE SHEETS
(Expressed in U.S. dollars)
(Unaudited)
<table>
January 31, 2002 | July 31, 2001 | ||
ASSETS | |||
Current | |||
Cash | $ 40,826 | $ 45,432 | |
Royalty income receivable | 1,485 | 1,565 | |
Total current assets | 42,311 | 46,997 | |
Royalty interest (Note 4) | 50,000 | 50,000 | |
Total assets | $ 92,311 | $ 96,997 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Current | |||
Accounts payable and accrued liabilities | $ 4,050 | $ 1,500 | |
Stockholders' equity | |||
Capital stock (Note 5) | |||
Authorized | |||
100,000,000 | common shares with a par value of $0.0001 | ||
Issued | |||
July 31, 2001 4,900,000 common shares | |||
January 31, 2002 4,900,000 common shares | 490 | 490 | |
Additional paid-in capital | 104,210 | 104,210 | |
Deficit accumulated during the development stage | (16,439) | (9,203) | |
Total stockholders' equity | 88,261 | 95,497 | |
Total liabilities and stockholders' equity | $ 92,311 | $ 96,997 | |
</table>
History and organization of the Company (Note 1)
Going concern (Note 2)
On behalf of the Board of Directors:
/s/ Keith A. Ebert /s/N. Desmond Smith
Keith A. Ebert, Director N. Desmond Smith, Director
The accompanying notes are an integral part of these financial statements.
LIONS GATE INVESTMENT LIMITED
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Expressed in U.S. dollars)
(Unaudited)
<table>
Cumulative Amounts From Incorporation on October 29, 1999 to January 31, 2002 |
Period Ended January 31, 2002 |
Period Ended January 31, 2001 |
Period Ended January 31, 2002 |
Period Ended January 31, 2001 | |
EXPENSES | |||||
Consulting fees | $ 6,917 | $ 1,417 | $ - | $ 3,917 | $ - |
Filing and transfer agent fees | 1,142 | 187 | - | 547 | - |
Office and miscellaneous | 2,823 | 371 | 17 | 465 | 56 |
Professional fees | 9,732 | 3,100 | - | 4,550 | - |
(20,614) | (5,075) | (17) | (9,479) | (56) | |
OTHER ITEM | |||||
Royalty revenue | 4,175 | 1,093 | - | 2,243 | - |
Loss for the period | $ (16,439) | $ (3,982) | $ (17) | $ (7,236) | $ (56) |
Basic and diluted loss per share | $ (0.01) | $ (0.01) | $ (0.01) | $ (0.01) | |
Weighted average number of shares outstanding |
|
|
|
|
</table>
The accompanying notes are an integral part of these financial statements.
LIONS GATE INVESTMENT LIMITED
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
(Expressed in U.S. dollars)
(Unaudited)
<table>
Common Stock |
Paid-in |
Accumulated During the Development |
Stockholders' | ||
Shares | Amount | Capital | Stage | Equity | |
Balance, October 29, 1999 | - | $- | $- | $- | $- |
Common shares issued for services |
|
|
|
|
|
Common shares issued for cash | 2,450,000 | 245 | 2,205 | - | 2,450 |
Loss for the period | - | - | - | (4,738) | (4,738) |
Balance, July 31, 2000 | 4,700,000 | 470 | 4,230 | (4,738) | (38) |
Private placement | 100,000 | 10 | 49,990 | - | 50,000 |
Acquisition of royalty interest | 100,000 | 10 | 49,990 | - | 50,000 |
Loss for the year | - | - | - | (4,465) | (4,465) |
Balance, July 31, 2001 | 4,900,000 | 490 | 104,210 | (9,203) | 95,497 |
Loss for the period | - | - | - | (7,236) | (7,236) |
Balance, January 31, 2002 | 4,900,000 | $490 | $104,210 | $(16,439) | $88,261 |
</table>
The accompanying notes are an integral part of these financial statements.
LIONS GATE INVESTMENT LIMITED
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Expressed in U.S. dollars)
(Unaudited)
<table>
Period From Incorporation on October 29, 1999 to January 31, 2002 |
Period Ended January 31, 2002 |
Period Ended January 31, 2001 | |
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Loss for the period | $ (16,439) | $ (7,236) | $ (56) |
Item not affecting cash: | |||
Common shares issued for services | 2,250 | - | - |
Changes in non-cash working capital items: | |||
(Increase) decrease in royalty income receivable | (1,485) | 80 | (1,500) |
Increase (decrease) in accounts payable and accrued liabilities | 4,050 | 2,550 | - |
Net cash used in operating activities | (11,624) | (4,606) | (1,556) |
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Issuance of shares | 52,450 | - | - |
Net cash provided by financing activities | 52,450 | - | - |
Change in cash and cash equivalents during the period | 40,826 | (4,606) | (1,556) |
Cash and cash equivalents, beginning of the period | - | 45,432 | 2,462 |
Cash and cash equivalents, end of the period | $ 40,826 | $ 40,826 | $ 906 |
Supplemental disclosure with respect to cash flows: | |||
Cash paid for income taxes | $ - | $ - | $ - |
Cash paid for interest | - | - | - |
Supplemental disclosure of non-cash investing, and financing activities: | |||
Common shares issued for services | $ 2,250 | $ - | $ - |
Common shares issued for royalty interest | 50,000 | - | - |
</table>
The accompanying notes are an integral part of these financial statements.
LIONS GATE INVESTMENT LIMITED
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
(Expressed in U.S. dollars)
(Unaudited)
JANUARY 31, 2002
1. HISTORY AND ORGANIZATION OF THE COMPANY
The Company was incorporated on October 29, 1999 under the laws of Nevada to engage in any lawful business or activity for which corporations may be organized under the laws of the State of Nevada. In accordance with Statement of Financial Accounting Standards No. 7 "Accounting and Reporting by Development Stage Enterprises", the Company is deemed to be in the Development Stage. The Company is in the business of earning royalty income on oil and gas properties. During the year ended July 31, 2001, the Company issued 100,000 common shares at an agreed value of $50,000 to acquire a 2% gross overriding royalty interest on oil and gas production (Note 4).
The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, changes in stockholders' equity and cash flows at January 31, 2002 and for the period then ended have been made. These financial statements should be read in conjunction with the audited financial statements of the Company for the year ended July 31, 2001. The results of operations for the period ended January 31, 2002 are not necessarily indicative of the results to be expected for the year ending July 31, 2002.
2. GOING CONCERN
The Company's financial statements are prepared using the generally accepted accounting principles of the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, to date the Company has received minimal royalty revenue. Without realization of additional capital, or additional sources of revenue, it would be unlikely for the Company to continue as a going concern. The Company's management plans on advancing funds on an as needed basis and in the longer term, deriving cash from revenue from the operations. The Company's ability to continue as a going concern is dependent on these additional management advances, and, ultimately, upon achieving profitable operations.
<table>
January 31, 2002 | July 31, 2001 | |
Deficit | $(16,439) | $(9,203) |
Working capital | 38,261 | 45,497 |
</table>
3. SIGNIFICANT ACCOUNTING POLICIES
Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles of the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the period. Actual results could differ from these estimates.
LIONS GATE INVESTMENT LIMITED
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
(Expressed in U.S. dollars)
(Unaudited)
JANUARY 31, 2002
3. SIGNIFICANT ACCOUNTING POLICIES (cont'd)
Cash and cash equivalents
The Company considers highly liquid investments with original maturities of three months or less to be cash equivalents.
Amortization and impairment
Amortization of the cost of the Company's royalty interest will be computed using the units of production method primarily on a separate-property basis using proved reserves as estimated annually by an independent petroleum engineer.
In accordance with the provisions of Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of," the Company recognizes impairment losses for long-lived assets when indicators of impairment are present and the undiscounted cash flows are not sufficient to recover the assets' carrying amount. The impairment loss is measured by comparing the fair value of the asset to its carrying amount. Fair values are based on discounted future cash flows. The Company's royalty interest was reviewed for indicators of impairment resulting in no recognition of impairment provisions for the period ended January 31, 2002.
Income taxes
Income taxes are provided in accordance with SFAS No. 109, "Accounting for Income Taxes". A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carryforwards. Deferred tax expenses (benefit) result from the net change during the year of deferred tax assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
New accounting pronouncements
In June, 2001, the Financial Accounting Standards Board ("FASB") approved the issuance of Statement of Financial Accounting Standards ("SFAS") No. 141, "Business Combinations" and SFAS No. 142, "Goodwill and Other Intangible Assets". SFAS No. 141 states that all business combinations should be accounted for using the purchase method of accounting making the use of the pooling-of-interest method prohibited. SFAS No. 141 is effective for business combinations completed after June 30, 2001. SFAS No. 142 addresses the accounting for all purchased intangible assets, but not the accounting for internally developed intangible assets. Goodwill will no longer be amortized but will be reviewed for impairment in accordance with SFAS No. 142. SFAS No. 142 is effective for fiscal years beginning after December 15, 2001. Early adoption is permitted for entities with fiscal years beginning after March 15, 2001.
LIONS GATE INVESTMENT LIMITED
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
(Expressed in U.S. dollars)
(Unaudited)
JANUARY 31, 2002
3. SIGNIFICANT ACCOUNTING POLICIES (cont'd)
New accounting pronouncements (cont'd)
In July 2001, FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations" that records the fair value of the liability for closure and removal costs associated with the legal obligations upon retirement or removal of any tangible long-lived assets. The initial recognition of the liability will be capitalized as part of the asset cost and depreciated over its estimated useful life. SFAS 143 is required to be adopted effective January 1, 2003.
In August 2001, FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" that supersedes SFAS No. 121 "Accounting for the Impairment or Disposal of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." SFAS No. 144 is required to be adopted effective January 1, 2002.
The adoption of these new pronouncements is not expected to have a material effect on the Company's financial position or results of operations.
Loss per share
Under SFAS No. 128 "Earnings Per Share", basic and diluted earnings per share are to be presented. Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding during the year. Diluted earnings per share takes into consideration common shares outstanding (computed under basic earnings per share) and potentially dilutive common shares.
4. ROYALTY INTEREST
<table>
January 31, 2002 | July 31, 2001 | |||
Royalty interest | $50,000 | $50,000 |
</table>
Edgerton, Alberta
During fiscal 2001, the Company issued 100,000 common shares with an agreed value of $50,000 to acquire a 2% gross overriding royalty interest over certain petroleum producing lands in the Province of Alberta, Canada known as Edgerton "27", TWP 42, RGE 3, W4M, Section 27 granted by Harbour Petroleum Company Limited.
5. CAPITAL STOCK
On November 1, 1999, the Company issued 2,450,000 of its common shares for proceeds of $2,450 and issued 2,250,000 of its common shares at an agreed value of $2,250 for services rendered.
On February 14, 2001, the Company completed a private placement of 100,000 common shares for proceeds of $50,000.
LIONS GATE INVESTMENT LIMITED
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
(Expressed in U.S. dollars)
(Unaudited)
JANUARY 31, 2002
5. CAPITAL STOCK (cont'd)
On February 14, 2001, the Company issued 100,000 common shares with a par value of $0.0001 for an agreed value of $50,000 for acquisition of a royalty interest (Note 4).
6. INCOME TAXES
The Company's total deferred tax asset is as follows:
<table>
2002 |
2001 | |
Tax benefit of net operating loss carryforward | $ 5,100 | $ 4,340 |
Valuation allowance | (5,100) | (4,340) |
$ - | $ - |
</table>
The Company has a net operating loss carryforward of approximately $15,500, which if not used, will begin to expire in the year 2017. The Company has provided a full valuation allowance on the deferred tax asset because of the uncertainty regarding realizability.
7. FINANCIAL INSTRUMENTS
The Company's financial instruments consist of cash, royalty income receivable, accounts payable and accrued liabilities. Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. The fair value of these financial instruments approximate their carrying values, unless otherwise noted.
PLAN OF OPERATION
The following discussion of the plan of operations of the Company should be read in conjunction with the financial statements and the related notes thereto included elsewhere in this quarterly report for the six months ended January 31, 2002. This quarterly report contains certain forward-looking statements and the Company's future operation results could differ materially from those discussed herein.
Geophysical Data Audit
We commenced the initial stage of our business plan in June, 2001. We are examining suitable trade geophysical data available in the immediate vicinity of our current royalty interest. Our examination of trade data brokers' inventory will determine the geographic location, age and parameters of existing data with a view to acquiring and re-processing suitable data. The study is anticipated to take approximately 60 days and acquisition and processing will take an additional 30 days. The activity of data acquisition involves our company reviewing currently available seismic data for quality and technical merit and purchasing that geophysical data in the geographic area of our proposed activity. This data is recorded digitally and can be manipulated through the application of various filters and processes which clarify the data from extraneous seismic noise. This constitutes reprocessing seismic data. This activity is conducted by geophysicists with specialized training.
The estimated costs of this initial program are:
Data Acquisition - 20 kilometers (12.5 miles) @ $260 per kilometer: $5,200
Re-processing - @ $194 per kilometer: $3,880
Consultant - Identification and monitoring reprocessing
@ $325 per day for 10 days: $ 3,250
Total: $12,330
Geophysical Acquisition Programme
The initial geophysical audit programme will identify selected areas that require specific data acquisition to define drilling targets. The programme may be structured as a geophysical farm-in with a drilling option or we may elect to acquire the data on open Crown Lands. In the first case we will contract with property owners or the owners of hydrocarbon rights to allow us to acquire data in exchange for an option to drill on the subject lands if our geophysical data defines a prospective drilling target. In the second case, we would acquire the proprietary data with a view to requesting the Province of Alberta to post the lands for public auction. In either case we would secure the optimum drilling locations. If our company pursues a geophysical farm-in, it means that we have negotiated the rights to petroleum and natural gas lands by acquiring geophysical data over lands currently owned by a third party. The negotiations involve offering the third party the acquired geophysical data at no cost in return for the exclusive right to drill a well on the petroleum and natural gas lands in order to earn a portion of the petroleum and natural gas rights. If petroleum and natural gas rights over certain lands have not been leased by the government to oil and gas companies, those lands are considered to be open lands. In this case, there are no parties to negotiate farm-ins with as the petroleum and natural gas rights over open lands are available only through government run auctions.
Management of the Company is working on our phase one exploration program having acquired a library of available geophysical data in our area of interest. Management expects to identify which data it will acquire and re-process before the end of calendar 2001. Our phase two geophysical acquisition program is currently scheduled for the spring of 2002.
The estimated costs of a geophysical exploration programme are:
Permitting and Right of Way @ $970 per kilometer -10 kilometers: $9,700
Acquisition @ $1,290 per kilometer: $12,900
Processing and Interpretation: $ 4,500
Total: $27,100
Drilling Option
We currently do not have the funds necessary to pursue a drilling program following our first two phases. However, in the event drill targets are identified and we are able to raise funding independently or through industry partners, we would consider the following options.
We would use our geophysical audit and acquisition data as an enticement to lessors of mineral rights to trade our data for the right to drill an earning well on the petroleum and natural gas rights at no additional cost to the lessor. We would seek to recover our drilling cost from the sale of the first hydrocarbons and after recovery of these costs share in future development and profits at the negotiated rates.
Alternatively, should our geophysical acquisition delineate a drilling target on open Crown lands, we would place a bid to acquire a lease to the lands at a regulated open auction. Current land prices vary from $400 to $1500 dollars per acre and the size of the offered lands could be as high as 640 acres. In this scenario the Company would not share the interest in the mineral rights with third parties.
Drilling option scenario costs are:
Drilling one well to a depth of 750 metres: $162,000
Total: $162,000
Land acquisition scenario costs are:
Acquiring 640 acres @ $645 per acre: $412,800
Drilling costs per well @ eight wells: $1,296,000
Total: $1,708,800
"CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. Except for historical matters, the matters discussed in this Form 10-QSB are forward-looking statements based on current expectations and involve risks and uncertainties. Forward-looking statements include, but are not limited to, statements under the following heading: "Plan of Operations" the timing and expected profitable results of sales and the need for no additional financing.
PART II
OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None
Item 2 CHANGES IN SECURITIES AND USE OF PROCEEDS
None
Item 3 DEFAULTS UPON SENIOR SECURITIES
None
Item 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
Item 5 OTHER INFORMATION
None
Item 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
LIONS GATE INVESTMENT LIMITED
Dated: March 11, 2002 Per: /s/N. Desmond Smith
N. Desmond Smith,
President, C.F.O. and Director