U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2
TO
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Global Yacht Services, Inc.,
---------------------------
(Exact name of registrant as specified in its charter)
Nevada 4499 88-0488686
- ------ ---- ----------
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification No.)
incorporation or
organization)
7710 Hazard Center Drive, Suite E-415, San Diego, California 92108
- ------------------------------------------------------------ -----
(Address of registrant's principal executive offices) (Zip Code)
619.990.0976
------------
(Registrant's Telephone Number, Including Area Code)
Michael J. Muellerleile
MC Law Group
4100 Newport Place, Suite 660
Newport Beach, California 92660
949.250.8655
Facsimile 949.250.8656
(Name, Address and Telephone Number of Agent for Service)
Approximate date of proposed sale to the public: From time to time after this
registration statement becomes effective.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] _______
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _______
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _______
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
====================================== ======================== ==================== ======================= ===============
Title of each class Amount Proposed maximum Proposed maximum Amount of
of securities to be offering price aggregate registration
to be registered registered per share offering price fee
- -------------------------------------- ------------------------ -------------------- ----------------------- ---------------
Common Stock, $.001 par value 750,000(1) $0.20 $150,000 $39.60
- -------------------------------------- ------------------------ -------------------- ----------------------- ---------------
Common Stock, $.001 par value 50,000(2) $0.20 $10,000 $2.64
====================================== ======================== ==================== ======================= ===============
Total Registration Fee: $42.24
(1) Represents shares offered for sale by Global Yacht Services, Inc.
(2) Represents shares offered by selling shareholders. The offering price of
$0.20 per share for the selling shareholders was estimated for the purpose
of calculating the registration fee pursuant to Rule 457 of Regulation C.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until this registration statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
1
Preliminary Prospectus
Global Yacht Services, Inc.,
a Nevada corporation
800,000 Shares of Common Stock
This prospectus relates to 800,000 shares of our common stock. We are offering
for sale 750,000 shares of our common stock in a direct public offering. The
purchase price is $0.20 per share. No underwriter is involved in the offering
and distribution of the shares. We are offering the shares without any
underwriting discounts or commissions. Our president, Mitch Keeler, will offer
and sell the shares on our behalf. If all of the shares offered are purchased,
the proceeds to us will be $150,000. No minimum amount is required to be sold in
this offering. This is our initial public offering and no public market
currently exists for shares of our common stock. This offering will terminate
six months following the effective date of this registration statement.
- --------------------- ------------------- -------------------- ----------------
Title of securities Number of offered Offering price Proceeds
to be offered shares per share
- --------------------- ------------------- -------------------- ----------------
Common Stock(1) 750,000 $0.20 $150,000
- --------------------- ------------------- -------------------- ----------------
(1)Represents shares offered for sale by Global Yacht Services, Inc.
^
Additionally, the selling security holders want to sell 50,000 shares of our
issued and outstanding common stock. The selling security holders may sell our
common stock at prices then prevailing or related to the then current market
price or at negotiated prices. We will not receive any of the proceeds from the
sale of those shares being offered by the selling shareholders.
See "Risk Factors" on Pages 5 to 8 for factors to be considered before
purchasing shares of our common stock.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
The information in this prospectus is not complete and may be changed. We will
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state or other jurisdiction where the offer or sale of these
securities is not permitted.
The date of this prospectus is December 18, 2001.
Subject to completion.
2
TABLE OF CONTENTS
Prospectus Summary ...........................................................4
Risk Factors..................................................................5
Use of Proceeds...............................................................8
Determination of Offering Price...............................................9
Dilution......................................................................9
Selling Security Holders.....................................................10
Plan of Distribution.........................................................10
Legal Proceedings............................................................11
Directors, Executive Officers, Promoters and Control Persons.................11
Security Ownership of Certain Beneficial Owners and Management...............14
Description of Securities....................................................14
Interest of Named Experts and Counsel........................................15
Disclosure of Commission Position on Indemnification for Securities
Act Liabilities..............................................................15
Organization Within Last Five Years..........................................15
Description of Business......................................................16
Management' Discussion and Analysis of Financial Condition and Results
of Operations................................................................20
Description of Property......................................................22
Certain Relationships and Related Transactions...............................23
Market for Common Equity and Related Stockholder Matters.....................22
Executive Compensation ......................................................24
Financial Statements.........................................................25
Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.........................................................42
Legal Matters................................................................42
Experts......................................................................42
Additional Information.......................................................42
Indemnification of Directors and Officers....................................42
Other Expenses of Issuance and Distribution..................................43
Recent Sales of Unregistered Securities......................................43
Exhibits.....................................................................44
Undertakings.................................................................44
Signatures...................................................................45
Outside Back Cover Page
Dealer Prospectus Delivery Obligation
Until _______, all dealers that effect transactions in these securities, whether
or not participating in this offering, may be required to deliver a prospectus.
This is in addition to the dealers' obligations to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
3
Prospectus Summary
- ------------------
Our Business: Our principal business address is 7710
Hazard Center Drive, Suite E-415, San
Diego, California 92108. Our telephone
number is 619.990.0976.
We provide a broad range of yacht services
internationally. Our services include the
following:
o yacht rental and charter;
o yacht sales and yacht services,
such as the provision of captain,
crew, supplies, maintenance,
delivery as well as complete
contracted care of yachts; and
o sales and service of yacht and
related marine parts and
equipment.
Our president, Mitch Keeler, is an
experienced captain and possesses a
captain certification from the U.S. Coast
Guard. Mr. Keeler provides professional
advice and consultation for all aspects of
yacht lease, purchase and ownership and is
available for on site assistance anywhere
in the world.
Our state of organization: We were incorporated in Nevada on
February 21, 2001.
Summary financial information: The summary financial information set
forth below is derived from the more
detailed financial statements appearing
elsewhere in this Form SB-2. We have
prepared our financial statements
contained in this Form SB-2 in accordance
with generally accepted accounting
principles in the United States. All
information should be considered in
conjunction with our financial statements
and the notes contained elsewhere in this
Form SB-2.
Income Statement Period from Period from
February 21, 2001 to February 21, 2001 to
September 30, 2001 June 30, 2001
$ $
Revenue 20,236 12,875
Gross Profit (Loss) 7,971 8,875
Net Income (Los (16,577) (2,897)
Net Income (Loss) Per Share (.01) (.00)
Balance Sheet September 30, 2001 June 30, 2001
$ $
Total Assets 47,078 64,029
Total Liabilities 1,750 5,606
Shareholders' Equity 45,328 58,423
Primary offering
- ----------------
Number of shares being offered: We intend to sell 750,000 shares of our
common stock being registered pursuant to
this registration statement.
Number of shares outstanding 1,282,777 shares of our common stock are
after the offering: currently issued and outstanding. After
the offering, 2,032,777 shares of our
common stock will be issued and
outstanding.
Estimated use of proceeds: We will receive $150,000 if all of the
offered shares are sold. We intend to use
any proceeds from such sale for marketing
expenses and for working capital.
Secondary offering
- ------------------
Number of shares being offered: The selling security holders want to sell
50,000 shares of our issued and
outstanding common stock.
Estimated use of proceeds: We will not receive any of the proceeds
from the sale of those shares being
offered by the selling security holders.
4
RISK FACTORS
In addition to the other information in this prospectus, the following risk
factors should be considered carefully in evaluating our business before
purchasing any of our shares of common stock. A purchase of our common stock is
speculative in nature and involves a lot of risks. Any person who cannot afford
the loss of his or her entire purchase price for the offered shares should not
purchase of the offered shares because such a purchase is highly speculative and
involves significant risks. Our business objectives must also be considered
speculative, and we cannot guaranty that we will satisfy those objectives.
Purchasers of the offered shares may not realize any return on their purchase of
the offered shares. Purchasers may lose their investments in us completely.
Risks related to our business:
We have a limited operating history upon which an evaluation of our prospects
can be made.
We were incorporated in February 2001. Our lack of operating history makes an
evaluation of our business and prospects very difficult. Our prospects must be
considered speculative, considering the risks, expenses, and difficulties
frequently encountered in the establishment of a new business. We cannot be
certain that our business will be successful or that we will generate
significant revenues.
We have incurred a net loss since inception and expect to incur net losses for
the foreseeable future.
As of September 30, 2001, our losses since inception were approximately $16,577.
We expect to incur significant operating and capital expenditures and, as a
result, we expect significant net losses in the future. We will need to generate
significant revenues to achieve and maintain profitability. We may not be able
to generate sufficient revenues to achieve profitable operations.
We depend on the continued use of our president's yacht for the charter services
that we provide.
We do not own a ship or yacht for the charter services that we provide. Those
charter services represent approximately 70% of our revenues. The yacht that was
used to generate charter services revenue was the private property of our
president. Our president has made no commitment to provide the use of his
property in the future. We cannot guaranty that our president will continue to
allow us to use his property in the future. If our president does not allow us
to utilize his yacht in the future, then our revenues may significantly decrease
or our expenses may substantially increase because we will be forced to pay
third parties for the use of their yachts.
We may not be able to further implement our business strategy unless sufficient
funds are raised in this offering, which could prevent us from conducting
marketing activities and becoming profitable.
In order to further develop our business and fund proposed marketing activities,
we believe that we need proceeds of approximately $100,000 from this offering.
We believe that $100,000 will be sufficient to pay for the expenses of this
offering and our proposed marketing activities. We may not realize sufficient
proceeds to complete further development costs, or to provide adequate cash flow
for planned marketing expenses. We have not yet engaged in any significant
marketing of our products and services. Our marketing activities are
significantly limited and, to pay for more sophisticated marketing activities,
we need to raise funds in this offering. Our inability to raise sufficient funds
in this offering may significantly hinder our growth and our ability to market
our products and services. If we fail to raise sufficient funds in this
offering, investors may lose their entire cash investment.
5
[material omitted]
We face intense competition in the recreational boating industry and may not
have adequate resources to market our products in order to compete successfully.
We operate in a highly competitive environment. In addition to facing
competition generally from non-boating recreation businesses seeking to attract
discretionary spending dollars, the recreational boat and yacht charter industry
is highly fragmented, resulting in intense competition for customers and
suitable retail locations, particularly on or near waterways. Competition
increases during periods of stagnant economic growth, such as currently exists.
We compete primarily with single-location boat dealers and, with respect to
sales of marine parts, accessories, services and equipment, with national
specialty marine parts and accessories stores, catalog retailers, sporting goods
stores, and mass merchants. Many of these competitors have greater financial
resources than we have, enabling them to finance acquisition and development
opportunities, to pay higher prices for the same opportunities or to develop and
support their own operations. In addition, many of these companies can offer
bundled, value-added or additional services not provided by us, and may have
greater name recognition. Our ability to compete effectively will be hindered
unless we raise sufficient funds in this offering.
Problems with third-party suppliers could interrupt our operations, which could
hinder our ability to generate revenues.
We purchase parts and equipment and contract for services from third parties.
Therefore, we are subject to the following risks:
o delays in shipments;
o work stoppages; and
o termination of supply agreements.
The occurrence of any of these events or the loss of any supplier could
interrupt our operations until alternative supply arrangements are made. We
cannot assure you that we will be able to obtain parts or equipment from other
suppliers in sufficient quantities to meet our near-term schedules or on
substantially similar terms as our current arrangements. In addition, parts or
equipment obtained from alternative sources may not meet customer preferences.
We may not be able to increase the size of our operations because the boating
industry has been stagnant during recent years.
The recreational boating industry has experienced stagnant overall revenue
growth over the last 10 to 15 years. Consumer spending patterns, federal tax
policies, and the cost and availability of fuel impact overall boat purchases,
especially luxury, high-end yachts. We believe that the lack of increase in
overall boat purchases has resulted from increased competition from other
recreational activities, perceived hassles of boat ownership, and relatively
poor customer service and education throughout the retail boat industry. The
lack of industry growth will hinder our ability to grow our operations.
Our ability to conduct profitable operations depends upon a number of factors
relating to or affecting consumer spending for luxury goods and services, such
as recreational boats or yacht charters.
Unfavorable local, regional, or national economic developments or uncertainties
regarding future economic prospects could reduce consumer spending in the
markets we serve. Consumer spending on luxury goods and services also may
decline as a result of lower consumer confidence levels, even if prevailing
economic conditions are favorable. In an economic downturn, consumer
discretionary spending levels generally decline, at times resulting in
disproportionately large reductions in the sale of luxury goods and services. We
may be unable to maintain our profitability during any period of adverse
economic conditions or low consumer confidence. In addition, changes in federal
and state tax laws, such as an imposition of luxury taxes on new boat purchases,
also influence consumers' decisions to purchase products we offer and could have
a negative effect on our sales.
6
Fuel price increases or supply shortages may increase our costs of operations,
which will reduce our profitability.
Diesel or gasoline engines power some of the recreational boats we charter or
service. Consequently, a significant increase in the price or tax on the sale of
fuel on a regional or national basis or an interruption in the supply could
significantly increase our costs of operations and therefore reduce our
profitability. At various times in the past, diesel or gasoline fuel has been
difficult to obtain. The supply of fuels may be interrupted, rationing may be
imposed, or the price of or tax on fuels may significantly increase in the
future.
We anticipate that we may need to raise additional capital to market our
products and services. Our failure to raise additional capital will
significantly affect our ability to fund our proposed marketing activities.
To market our products and services, we may be required to raise additional
funds. We do not know if we will be able to acquire additional financing at
commercially reasonable rates. We anticipate that we will spend a lot of funds
on the marketing and promotion of our products and services. Our failure to
obtain additional funds would significantly limit or eliminate our ability to
fund our sales and marketing activities.
We anticipate that we may seek additional funding through public or private
sales of our securities. That could include equity securities, or through
commercial or private financing arrangements. Adequate funds may not be
available when needed or on terms acceptable to us. In the event that we are not
able to obtain additional funding on a timely basis, we may be required to limit
any proposed operations or eliminate certain or all of our marketing programs.
Risks related to owning our common stock:
The concurrent offering of shares by our selling security holders with the
offering of shares to be sold by us may make it more difficult for us to sell
our shares
We are selling 750,000 shares concurrently with the sale of 50,000 shares by the
selling security holders. To the extent that selling security holder and our
shares are being offered for sale concurrently, each sale of shares held by our
selling security holders may reduce the number of investors willing to buy our
shares as well as the demand for our shares. In addition, the selling security
holders may sell their shares at market price, which may hinder our ability to
sell our shares if the market price is less than the offering price for our
shares. As a result, we may not be able to raise sufficient funds from this
offering to implement our business strategy and our ability to raise capital may
be hampered.
We arbitrarily determined the offering price of the shares of common stock.
Therefore, investors may lose all or part of their investment if the offering
price is higher than the current market value of the offered shares.
The offering price of the shares of common stock being offered by us has been
determined primarily by our capital requirements and has no relationship to any
established criteria of value, such as book value or earnings per share.
Additionally, because we have no significant operating history and have only
generated minimal revenues to date, the price of the shares of common stock is
not based on past earnings, nor is the price of the shares indicative of current
market value for the assets owned by us. Investors could lose all or a part of
their investment if the offering price has been arbitrarily set too high. Even
if a public trading market develops for our common stock, the shares may not
attain market values commensurate with the offering price.
Because we may be subject to the "penny stock" rules, the level of trading
activity in our stock may be reduced which may make it difficult for investors
to sell their shares.
Broker-dealer practices in connection with transactions in "penny stocks" are
regulated by certain penny stock rules adopted by the Securities and Exchange
Commission. Penny stocks, like shares of our common stock, generally are equity
securities with a price of less than $5.00, other than securities registered on
certain national securities exchanges or quoted on Nasdaq. The penny stock rules
require a broker-dealer, prior to a transaction in a penny stock not otherwise
exempt from the rules, to deliver a standardized risk disclosure document that
provides information about penny stocks and the nature and level of risks in the
penny stock market. The broker-dealer also must provide the customer with
current bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction, and, if the broker-dealer
is the sole market maker, the broker-dealer must disclose this fact and the
broker-dealer's presumed control over the market, and monthly account statements
showing the market value of each penny stock held in the customer's account. In
addition, broker-dealers who sell these securities to persons other than
established customers and "accredited investors" must make a special written
determination that the penny stock is a suitable investment for the purchaser
and receive the purchaser's written agreement to the transaction. Consequently,
these requirements may have the effect of reducing the level of trading
activity, if any, in the secondary market for a security subject to the penny
stock rules, and investors in our common stock may find it difficult to sell
their shares.
7
We lack a public market for shares of our common stock, which may make it
difficult for investors to sell their shares.
There is no public market for shares of our common stock. We cannot guaranty
that an active public market will develop or be sustained. Therefore, investors
may not be able to find purchasers for their shares of our common stock. Should
there develop a significant market for our shares, the market price for those
shares may be significantly affected by such factors as our financial results
and introduction of new products and services. Factors such as announcements of
new services by us or our competitors and quarter-to-quarter variations in our
results of operations, as well as market conditions in our sector may have a
significant impact on the market price of our shares. Further, the stock market
has experienced extreme volatility that has particularly affected the market
prices of stock of many companies and that often has been unrelated or
disproportionate to the operating performance of those companies.
Forward Looking Statements
- --------------------------
Information in this prospectus contains "forward looking statements" which can
be identified by the use of forward-looking words such as "believes",
"estimates", "could", "possibly", "probably", "anticipates", "estimates",
"projects", "expects", "may", "will", or "should" or other variations or similar
words. No assurances can be given that the future results anticipated by the
forward-looking statements will be achieved. The following matters constitute
cautionary statements identifying important factors with respect to those
forward-looking statements, including certain risks and uncertainties that could
cause actual results to vary materially from the future results anticipated by
those forward-looking statements. Among the key factors that have a direct
bearing on our results of operations are the effects of various governmental
regulations, the fluctuation of our direct costs and the costs and effectiveness
of our operating strategy. Other factors could also cause actual results to vary
materially from the future results anticipated by those forward-looking
statements.
Use of Proceeds
- ---------------
We will receive up to $150,000 if all of the shares of common stock offered by
us at $0.20 per share are purchased. We cannot guaranty that we will sell any or
all of the shares being offered by us.
======================== ======================== ================== ================== =================================
Offered Shares Sold Offering Proceeds Approximate Total Net Principal Uses of Net Proceeds
Offering Expenses Offering Proceeds
- ------------------------ ------------------------ ------------------ ------------------ ---------------------------------
187,500 shares (25%) $37,500 $16,190 $21,310 Working Capital
- ------------------------ ------------------------ ------------------ ------------------ ---------------------------------
Marketing Expenses and Working
375,000 shares (50%) $75,000 $16,190 $58,810 Capital
- ------------------------ ------------------------ ------------------ ------------------ ---------------------------------
Marketing Expenses and Working
562,500 shares (75%) $112,500 $16,190 $96,310 Capital
- ------------------------ ------------------------ ------------------ ------------------ ---------------------------------
Marketing Expenses and Working
750,000 shares (100%) $150,000 $16,190 $133,810 Capital
======================== ======================== ================== ================== =================================
If less than 25% of the shares are sold, then we intend to use the net proceeds
that we receive solely for working capital. Working capital will be used to pay
general administrative expenses of approximately $10,000, legal expenses of
approximately $10,000 and accounting expenses of approximately $7,000 for the
next twelve months. Those expenses may increase if we are able to grow our
operations and marketing activities.
8
Assuming at least 50% of the shares are purchased, we intend to use 25% of the
net proceeds for marketing expenses, and 75% of the proceeds for working
capital. Marketing expenses includes costs associated with in person marketing
presentations to potential customers, including travel and entertainment
expenses. Marketing expenses also includes development, preparation and printing
of marketing materials, such as brochures and catalogs.
None of the proceeds will be used to reimburse the expenses that were previously
paid by our president including office rent or compensation for services
provided prior to the offering. If the offering proceeds are insufficient to pay
the offering expenses in full, then we intend to pay those expenses from our
current cash reserves.
We will not receive any of the proceeds from the sale of those shares being
offered by the selling security holders.
Determination of Offering Price
- -------------------------------
Factors Used to Determine Share Price. The offering price of the 750,000 shares
of common stock being offered by us has been determined primarily by our capital
requirements and has no relationship to any established criteria of value, such
as book value or earnings per share. Additionally, because we have no
significant operating history and have not generated any revenues to date, the
price of the shares of common stock is not based on past earnings, nor is the
price of the shares indicative of current market value for the assets owned by
us. No valuation or appraisal has been prepared for our business and potential
business expansion.
The offering price of the shares being offered by the selling security holders
has no relationship to any established criteria of value, such as book value or
earnings per share.
Dilution
- --------
We intend to sell 750,000 shares of our common stock being registered by this
registration statement. We were initially capitalized by the sale of our common
stock. The following table sets forth the number of shares of common stock
purchased from us, the total consideration paid and the price per share. The
table assumes all 750,000 shares of common stock will be sold. The founding
shareholders include Mitch Keeler and Melissa Day, our officers and directors.
The shareholders include Flexgene Corp. and Carib Ventures, Inc.
============================== ========================================= ====================================== ==================
Shares Issued Total Consideration Price
----------------------------------------- -------------------------------------- Per Share
Number Percent Amount Percent
- ------------------------------ ---------------------- ------------------ ------------------- ------------------ ------------------
Founding Shareholders 1,005,000 Shares 48.25% $10,500 4.99% $0.01
- ------------------------------ ---------------------- ------------------ ------------------- ------------------ ------------------
Shareholders 277,777 Shares 13.34% $50,000 23.75% $0.18
- ------------------------------ ---------------------- ------------------ ------------------- ------------------ ------------------
Purchasers of Shares 750,000 Shares 36.01% $150,000 71.26% $0.20
============================== ====================== ================== =================== ================== ==================
Total 2,032,777 Shares 100% $210,500 100%
============================== ====================== ================== =================== ================== ==================
The following table sets forth the difference between the offering price of the
shares of our common stock being offered by us, the net tangible book value per
share, and the net tangible book value per share after giving effect to the
offering by us, assuming that 100%, 50% and 25% of the offered shares are sold.
Net tangible book value per share represents the amount of total tangible assets
less total liabilities divided by the number of shares outstanding as of
September 30, 2001.
- --------------------------------------------------------------------- ------------------ ------------------- -------------------
100% of offered 50% of offered 25% of offered
shares are sold shares are sold shares are sold
- --------------------------------------------------------------------- ------------------ ------------------- -------------------
Offering Price $0.20 per share $0.20 per share $0.20 per share
- --------------------------------------------------------------------- ------------------ ------------------- -------------------
Net tangible book value at 9/30/01 $0.04 per share $0.04 per share $0.04 per share
- --------------------------------------------------------------------- ------------------ ------------------- -------------------
Net tangible book value after giving effect to the offering $0.10 per share $0.07 per share $0.06 per share
- --------------------------------------------------------------------- ------------------ ------------------- -------------------
Increase in net tangible book value per share attributable to cash
payments made by new investors $0.06 per share $0.03 per share $0.02 per share
- --------------------------------------------------------------------- ------------------ ------------------- -------------------
Per Share Dilution to New Investors $0.10 per share $0.13 per share $0.14 per share
- --------------------------------------------------------------------- ------------------ ------------------- -------------------
Percent Dilution to New Investors 50% 65% 70%
- --------------------------------------------------------------------- ------------------ ------------------- -------------------
The shares offered for sale by the selling security holders are already
outstanding and, therefore, do not contribute to dilution.
9
Selling Security Holders
- ------------------------
The following table sets forth information concerning the selling security
holders including:
1. the number of shares owned by each selling security holder prior to
this offering;
2. the total number of shares that are to be offered for each selling
security holder;
3. the total number of shares and the percentage of common stock that will
be owned by each selling security holder upon completion of the
offering; and
4. the percentage of common stock that will be owned by each selling
security holder upon completion of the offering if all of the offered
shares are sold by the selling security holders and the company.
The shares offered for sale constitute all of the shares known to us to be
beneficially owned by the selling security holders. None of the selling security
holders has held any position or office with us, except as specified in the
following table. Other than the relationships described below, none of the
selling security holders had or have any material relationship with us. None of
the selling security holders is a broker-dealer or an affiliate of a
broker-dealer to our knowledge.
- ------------------------- ------------------------ ------------------------ --------------------------- ---------------------------
Name of Selling Amount of Shares of Amount of Shares of Amount of Shares of Percentage of Common
Security Holder Common Stock Owned by Common Stock to be Common Stock Owned by Stock Owned if all of the
Selling Security Offered by the Selling Selling Security Holder Offered Shares Are Sold
Holder Before the Security Holder After the Offering
Offering
- ------------------------- ------------------------ ------------------------ --------------------------- ---------------------------
Flexgene Corp. 180,555 25,000 155,555 7.65%
- -----------------------------------------------------------------------------------------------------------------------------------
Carib Ventures, Inc. 97,222 25,000 72,222 3.55%
- -----------------------------------------------------------------------------------------------------------------------------------
Plan of Distribution
- --------------------
Primary Offering. We are offering for sale 750,000 shares of our common stock in
a direct public offering. We have not conducted any discussions or negotiations
for the sale of all or any portion of those 750,000 shares of our common stock.
There is no minimum number of shares that must be purchased by each prospective
purchaser and the maximum number of shares we will sell is 750,000. We will not
pay any commissions or other fees, directly or indirectly to any person or firm
in connection with solicitation of sales of the common stock. There are no
minimum proceeds set for this offering. We will not place the funds raised in an
escrow account. All funds received in this offering will be deposited directly
into our corporate general account and will be available for immediate
utilization. This offering will terminate six months following the effective
date of this registration statement.
Mitch Keeler, our president, will participate in the offer and sale of our
shares of common stock, and rely on the safe harbor from broker-dealer
registration set out in Rule 3a4-1 under the Securities Exchange Act of 1934.
Although Mr. Keeler is an associated person of the company as that term is
defined in Rule 3a4-l under the Exchange Act, he is deemed not to be a broker
for the following reasons:
o Mr. Keeler is not subject to a statutory disqualification as that term
is defined in Section 3(a)(39) of the Exchange Act at the time of his
participation in the sale of our securities.
o Mr. Keeler will not be compensated for his participation in the sale of
company securities by the payment of commission or other remuneration
based either directly or indirectly on transactions in securities.
o Mr. Keeler is not an associated person of a broker or dealer at the
time of participation in the sale of company securities.
10
Mr. Keeler will restrict his participation to the following activities:
o preparing any written communication or delivering any communication
through the mails or other means that does not involve oral
solicitation by the president of a potential purchaser;
o responding to inquiries of potential purchasers in communication
initiated by the potential purchasers, provided, however, that the
content of responses are limited to information contained in a
registration statement filed under the Securities Act or other offering
document;
o performing ministerial and clerical work involved in effecting any
transaction.
We have not retained a broker for the sale of securities being offered. In the
event we retain a broker who may be deemed an underwriter, an amendment to the
registration statement will be filed.
The shares of common stock being offered by us have not been registered for sale
under the securities laws of any state as of the date of this prospectus. We
intend to register or qualify the offered shares in the following states:
Nevada, New York, Michigan, Massachusetts and Rhode Island.
Under the Securities Exchange Act of 1934 and the regulations thereunder, any
person engaged in a distribution of the shares of our common stock offered by
this prospectus may not simultaneously engage in market making activities with
respect to our common stock during the applicable "cooling off" periods prior to
the commencement of such distribution.
Secondary Offering. The offering by the selling security holders will start as
soon as this registration statement is declared effective. The selling security
holders may sell our common stock in the over-the-counter market, or on any
securities exchange on which our common stock is or becomes listed or traded, in
negotiated transactions or otherwise. The selling security holders may sell our
common stock at prices then prevailing or related to the then current market
price or at negotiated prices. The shares will not be sold in an underwritten
public offering. The shares may be sold directly or through brokers or dealers.
The methods by which the shares may be sold include:
o purchases by a broker or dealer as principal and resale by such broker
or dealer for its account;
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and
o privately negotiated transactions.
The shares of common stock being offered by the selling security holders have
not been registered for sale under the securities laws of any state as of the
date of this prospectus. Brokers or dealers effecting transactions in the shares
of our common stock should confirm the registration thereof under the securities
laws of the states in which transactions occur or the existence of any exemption
from registration or qualification. The following states have adopted an
exemption from state registration for any isolated non-issuer transaction,
whether or not effected through a broker-dealer: Alabama, Alaska, Colorado,
Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Indiana, Iowa, Kansas,
Kentucky, Maine, Maryland, Massachusetts, Mississippi, Missouri, Montana,
Nebraska, Nevada, New Jersey, New Mexico, North Carolina, Oklahoma, Oregon,
Rhode Island, South Carolina, Utah, Vermont, Washington, West Virginia,
Wisconsin, and Wyoming. Therefore, the selling security holders may offer their
shares of common stock promptly in those states in reliance upon a state law
exemption from state registration or qualification. The State of California
provides an exemption from non-issuer transaction qualification requirements for
any offer or sale of a security by the owner for his or her account if the sale
is not accompanied by the publication of any advertisement and is not effected
by or through a broker-dealer in a public offering.
Brokers and dealers engaged by selling security holders may arrange for other
brokers or dealers to participate. Brokers or dealers may receive commissions or
discounts from selling security holders, or, if any such broker-dealer acts as
agent for the purchaser of such shares, from such purchaser, in amounts to be
negotiated. Broker-dealers may agree with the selling security holders to sell a
specified number of such shares at a stipulated price per share, and, to the
extent such broker-dealer is unable to do so acting as agent for a selling
security holder, to purchase as principal any unsold shares at the price
required to fulfill the broker-dealer commitment to such selling security
holder. Broker-dealers who acquire shares as principal may resell those shares
from time to time in the over-the-counter market or otherwise at prices and on
terms then prevailing or then related to the then-current market price or in
negotiated transactions and, in connection with such resales, may receive or pay
commissions. In the event that a broker-dealer is added as a formal participant
to the marketing effort of the selling security holders, we will file a post
effective amendment to disclose such event.
11
The selling security holders and any broker-dealers participating in the
distributions of the shares may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act of 1933. Any profit on the sale
of shares by the selling security holders and any commissions or discounts given
to any such broker-dealer may be deemed to be underwriting commissions or
discounts. The shares may also be sold pursuant to Rule 144 under the Securities
Act of 1933 beginning one year after the shares were issued.
We have filed the registration statement, of which this prospectus forms a part,
with respect to the sale of the shares by the selling security holders. There
can be no assurance that the selling security holders will sell any or all of
the offered shares.
Under the Securities Exchange Act of 1934 and the regulations thereunder, any
person engaged in a distribution of the shares of our common stock offered by
this prospectus may not simultaneously engage in market making activities with
respect to our common stock during the applicable "cooling off" periods prior to
the commencement of such distribution. Also, the selling security holders are
subject to applicable provisions which limit the timing of purchases and sales
of our common stock by the selling security holders.
We have informed the selling security holders that, during such time as they may
be engaged in a distribution of any of the shares we are registering by this
registration statement, they are required to comply with Regulation M. In
general, Regulation M precludes any selling security holder, any affiliated
purchasers and any broker-dealer or other person who participates in a
distribution from bidding for or purchasing, or attempting to induce any person
to bid for or purchase, any security which is the subject of the distribution
until the entire distribution is complete. Regulation M defines a "distribution"
as an offering of securities that is distinguished from ordinary trading
activities by the magnitude of the offering and the presence of special selling
efforts and selling methods. Regulation M also defines a "distribution
participant" as an underwriter, prospective underwriter, broker, dealer, or
other person who has agreed to participate or who is participating in a
distribution.
Regulation M prohibits any bids or purchases made in order to stabilize the
price of a security in connection with the distribution of that security, except
as specifically permitted by Rule 104 of Regulation M. These stabilizing
transactions may cause the price of our common stock to be more than it would
otherwise be in the absence of these transactions. We have informed the selling
security holders that stabilizing transactions permitted by Regulation M allow
bids to purchase our common stock if the stabilizing bids do not exceed a
specified maximum. Regulation M specifically prohibits stabilizing that is the
result of fraudulent, manipulative, or deceptive practices. Selling security
holders and distribution participants are required to consult with their own
legal counsel to ensure compliance with Regulation M.
Legal Proceedings
- -----------------
There are no legal actions pending against us nor are any legal actions
contemplated by us at this time.
Directors, Executive Officers, Promoters and Control Persons
- ------------------------------------------------------------
Executive Officers and Directors. We are dependent on the efforts and abilities
of certain of our senior management. The interruption of the services of key
management could hinder our ability to conduct operations and complete future
development, if suitable replacements are not promptly obtained. We hope that we
will enter into employment agreements with Mitch Keeler and Melissa Day.
Although we do not know the terms of those proposed agreements, we hope to enter
into an employment agreement with Mitch Keeler and Melissa Day with a term of at
least one year with compensation contingent on us becoming profitable. We cannot
guaranty that each executive will remain with us during or after the term of his
or her employment agreement. In addition, our success depends, in part, upon our
ability to attract and retain other talented personnel. Although we believe that
our relations with our personnel are good and that we will continue to be
successful in attracting and retaining qualified personnel, we cannot guaranty
that we will be able to continue to do so. Our officers and directors will hold
office until their resignations or removal.
12
Our directors and principal executive officers are as specified on the following
table:
================= =============== ============================================
Name Age Position
- ----------------- --------------- --------------------------------------------
Mitch Keeler 43 President and Director
- ----------------- --------------- --------------------------------------------
Melissa Day 33 Secretary, Treasurer, Director
================= =============== ============================================
Mitch Keeler. Mr. Keeler is our president and one of our directors since our
inception. Mr. Keeler is our principal executive officer and is responsible for
our day-to-day operations. Mr. Keeler currently devotes approximately 40 hours
per week to our business. Mr. Keeler has been a licensed yacht captain for the
past twenty years. He has a 100 Ton Master license, and is qualified for motor
and sail operations and commercial assistance towing. He also has completed the
following courses: U.S. Coast Guard Advanced Navigation; the Shipboard
Firefighting School, Coast Guard Certified Course at Mobile, Alabama and the
Maritime Consortium Compliance with U.S. Coast Guard Drug Testing Regulations.
From 1997 to the present, Mr. Keeler has been the owner and operator of ^
Tlaquepaque Yacht Charters, managing the crew and performing routine maintenance
on a cruising route between Baja California, Mexico to Santa Barbara, CA.
Tlaquepaque Yacht Charters' current operations include the rental of Mr.
Keeler's yacht, Tlaquepaque, to other yacht charter service companies. Mr.
Keeler currently devotes less than two hours per month on the business of
Tlaquepaque Yacht Charters. Also from 1997 to the present, he has served as a
tugboat captain for West Coast Tugs, where he moves various vessels and barges,
works closely with pilots, and trains the crew. From 1994 to 1997, he served as
the operations manager and captain for San Diego Harbor Excursions, conducting
both ferry and dinner charters as the Captain of the Spirit of San Diego, a 120'
Blaunt 600 passenger charter yacht. He also served as the manager of charters,
performing maintenance, Coast Guard inspections, and personnel and deliveries.
Prior to 1994, he was the captain of vessels ranging between 65' and 120', and
has experience including interisland cruising in Hawaii, returning a vessel to
Newport Beach from Kauai, Pacific yacht racing, long range cruising, conducting
sport fishing charters, dinner cruises and whale watching trips. Mr. Keeler has
not been a director of any other reporting company.
Melissa Day. Ms. Day has been our secretary and treasurer since our inception
and was appointed one of our directors in August 2001. Ms. Day is our principal
financial and accounting officer and is responsible for all of our financial
reporting and record keeping. Ms. Day currently devotes approximately 40 hours
per week to our business. Ms. Day has experience in the charter industry and has
experience in advertising, web site design, graphic art and marketing. Ms. Day
is a Microsoft Certified Professional in Windows NT, and has experience in
network administration, design and installation. From 1999 to 2000, Ms. Day was
a technical marketing director for Technology Answers, and in 1999 a Marketing
Director of Information Systems for CFS Management. She was the Assistant NT
Systems Administrator from 1998 to 1999 for Centrax Corporation, and from 1996
to 1998 was the owner of Business Systems Consulting, providing consulting
services for technical-based business. She has a Bachelor of Science degree in
business administration from the University of Southern California, with an
emphasis in marketing and entrepreneurship, which she earned in 1993, and has an
Associates degree in Computer Applications and Networks from Coleman College in
La Mesa, California. Ms. Day is not an officer or director of any other
reporting company.
There is no family relationship between any of our officers or directors. There
are no orders, judgments, or decrees of any governmental agency or
administrator, or of any court of competent jurisdiction, revoking or suspending
for cause any license, permit or other authority to engage in the securities
business or in the sale of a particular security or temporarily or permanently
restraining any of our officers or directors from engaging in or continuing any
conduct, practice or employment in connection with the purchase or sale of
securities, or convicting such person of any felony or misdemeanor involving a
security, or any aspect of the securities business or of theft or of any felony.
Nor are any of the officers or directors of any corporation or entity affiliated
with us so enjoined.
13
Security Ownership of Certain Beneficial Owners and Management
- --------------------------------------------------------------
The following table sets forth certain information regarding the beneficial
ownership of our common stock as of December 18, 2001, by each person or entity
known by us to be the beneficial owner of more than 5% of the outstanding shares
of common stock, each of our directors and named executive officers, and all of
our directors and executive officers as a group. The percentages in the table
assume that the selling security holders will not sell any of their shares which
are being registered in this registration statement.
Title of Class Name of Beneficial Owner Amount and Nature of Percent of Class Percent of Class Percent of Class if
Beneficial Owner if No Shares are if 750,000 Shares 500,000 Shares are
Sold are Sold Sold
- --------------- ------------------------------- ---------------------- -------------------- ------------------- --------------------
Common Stock Mitch Keeler 1,000,000 shares, 77.96% 49.19% 56.09%
7710 Hazard Center Drive, president, director
Suite E-415, San Diego,
California 92108
Common Stock Melissa Day 5,000 shares, 0.38% 0.24% 0.28%
7710 Hazard Center Drive, secretary,
Suite E-415, San Diego, treasurer, director
California 92108
Common Stock Flexgene Corp. 180,555 shares 14.08% 8.88% 10.13%
The Mill Mall, Barkers
P.O. Box 62
Roadtown, Tortola, BVI
Common Stock Carib-Ventures Inc. 97,222 shares 7.58% 4.78% 5.45%
Caribbean Place, Suite #3
P.O. Box 599
Providenciales, Turks &
Caicos Islands, BWI
Common Stock All directors and named 1,005,000 shares 78.34% 49.43% 56.37%
executive officers as a group
The officer, director and shareholder of Flexgene Corp. is Martin Regan. The
director of Carib-Ventures Inc. is Sterling Directors Ltd. and Keith Burant. The
shareholder of Carib-Ventures Inc. is Meridian Trust Company Limited, which is
controlled by Keith Burant.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. In accordance with Securities and Exchange
Commission rules, shares of our common stock which may be acquired upon exercise
of stock options or warrants which are currently exercisable or which become
exercisable within 60 days of the date of the table are deemed beneficially
owned by the optionees. Subject to community property laws, where applicable,
the persons or entities named in the table above have sole voting and investment
power with respect to all shares of our common stock indicated as beneficially
owned by them.
Changes in Control. Our management is not aware of any arrangements which may
result in "changes in control" as that term is defined by the provisions of Item
403(c) of Regulation S-B.
Description of Securities
- -------------------------
We were originally authorized to issue 25,000 shares of no par common stock. In
May 2001, we amended our Articles of Incorporation to authorize 50,000,000
shares of $.001 par value common stock. As of December 18, 2001, 1,282,777
shares of our common stock were issued and outstanding. No preferred stock is
authorized.
14
Each shareholder of our common stock is entitled to a pro rata share of cash
distributions made to shareholders, including dividend payments. The holders of
our common stock are entitled to one vote for each share of record on all
matters to be voted on by shareholders. There is no cumulative voting with
respect to the election of our directors or any other matter. Therefore, the
holders of more than 50% of the shares voted for the election of those directors
can elect all of the directors. The holders of our common stock are entitled to
receive dividends when, as and if declared by our Board of Directors from funds
legally available therefore. Cash dividends are at the sole discretion of our
Board of Directors. In the event of our liquidation, dissolution or winding up,
the holders of common stock are entitled to share ratably in all assets
remaining available for distribution to them after payment of our liabilities
and after provision has been made for each class of stock, if any, having any
preference in relation to our common stock. Holders of shares of our common
stock have no conversion, preemptive or other subscription rights, and there are
no redemption provisions applicable to our common stock.
Dividend Policy. We have never declared or paid a cash dividend on our capital
stock. We do not expect to pay cash dividends on our common stock in the
foreseeable future. We currently intend to retain our earnings, if any, for use
in our business. Any dividends declared in the future will be at the discretion
of our board of directors and subject to any restrictions that may be imposed by
our lenders.
Our Articles of Incorporation and our Bylaws do not contain any provisions which
were included to delay, defer, discourage or prevent a change in control.
Interest of Named Experts and Counsel
- -------------------------------------
No "expert" or our "counsel" was hired on a contingent basis, or will receive a
direct or indirect interest in us, or was a promoter, underwriter, voting
trustee, director, officer, or employee of the company, at any time prior to the
filing of this registration statement.
Disclosure of Commission Position on Indemnification for Securities Act
Liabilities
- ------------------------------------------------------------------------
Article Twelve of our Articles of Incorporation provides, among other things,
that our officers and directors shall not be personally liable to us or our
shareholders for monetary damages for breach of fiduciary duty as an officer or
a director, except for liability:
o for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law; or
o for unlawful payments of dividends or unlawful stock purchase or
redemption by us.
Accordingly, our directors may have no liability to our shareholders for any
mistakes or errors of judgment or for any act of omission, unless the act or
omission involves intentional misconduct, fraud, or a knowing violation of law
or results in unlawful distributions to our shareholders.
Indemnification Agreements. We will enter into indemnification agreements with
each of our executive officers. We will agree to indemnify each such person for
all expenses and liabilities, including criminal monetary judgments, penalties
and fines, incurred by such person in connection with any criminal or civil
action brought or threatened against such person by reason of such person being
or having been our officer or director or employee. In order to be entitled to
indemnification by us, such person must have acted in good faith and in a manner
such person believed to be in our best interests. With respect to criminal
actions, such person must have had no reasonable cause to believe his or her
conduct was unlawful.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to our directors, officers and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in that act and is, therefore, unenforceable.
Organization Within Last Five Years
- -----------------------------------
Transactions with Promoters. Mitch Keeler was our promoter. In May 2001, we
issued 1,000,000 shares of our common stock to Mr. Keeler in exchange for
$10,000.
15
Description of Business
- -----------------------
Our Background. We were incorporated in Nevada on February 21, 2001.
Our Business. We provide a broad range of yacht services in the global
marketplace. Our services include yacht rental and charter, yacht sales and
yacht services, such as the provision of captain, crew, supplies, maintenance,
delivery as well as full-scale contracted care of yachts. Our president, Mitch
Keeler, is an experienced captain and possesses a captain certification from the
U.S. Coast Guard. Mr. Keeler provides professional advice and consultation for
all aspects of yacht lease, purchase and ownership and is available for on site
assistance anywhere in the world.
We currently generate revenues from our charter services, which range from day
charters to full week charters. We currently offer private yacht charters in San
Diego, usually of up to one week in duration as well as corporate charters,
which are typically 3 to 5 hours and short range. We have very few charters that
are longer than one week, however, they do occur. Our officers act as captain
and crew for our charter services, but we often utilize outside businesses for
services such as catering and bartending.
To date, we have provided charter services with only Mr. Keeler's yacht,
Tlaquepaque. For those charter services, Mr. Keeler did not get paid or
reimbursed for providing the use of his yacht. We do not believe that there are
limitations on our use of Mr. Keeler's yacht in the future, although Mr. Keeler
has not made any formal commitment to provide us with the use of his yacht at no
charge. We anticipate that Mr. Keeler will not expect to be paid or reimbursed
for providing the use of his yacht as long as he is our president and maintains
a significant equity interest in us.
We also have arrangements with four yacht charter companies, which provide that
we may use their yachts for our charter services. Those arrangements provide
that we can rent those companies' yachts for fixed daily and hourly rental fees
ranging from $300 per hour to $3000 per day depending on the size of the yacht.
We cannot guaranty that those yachts will be available in the event that we need
to rent those yachts to provide our services.
We have also generated revenues from our yacht management services and our
delivery services. Yacht management services include managing the yacht for the
owners including routine maintenance, repairs and electronics installation.
Regular maintenance includes services such as exterior and interior cleaning,
bottom cleaning, waxing and zinc replacement. Delivery services include
delivering newly purchased yachts to various locations around the world.
We use subcontractors on a per job basis for various services that we provide.
Those subcontractors are paid by us when we are paid by the client.
Subcontractors for our charter services may include, but are not limited to, the
following: captains, deckhands, stewards, cooks, caterers, entertainment, and
bartenders. Other subcontractors that we use include yacht repair persons and
skilled electronics installers.
Our Products and Services. We intend to be a professional source that the yacht
owner or enthusiast will utilize for all their yachting requirements, including
brokering sales or providing consulting services for yacht purchases, overseeing
delivery to a foreign destination, recruiting captain and crew, procuring and
supervising quality subcontract repairs and routine maintenance, and providing
yacht charter cruises. We intend to provide high quality customer service, which
we hope will result in repeat and referral business.
We currently provide the following services:
o yacht services such as the provision of captains, engineers and crew,
from a list of qualified prospects and also supplies and maintenance;
o deliveries of yachts to worldwide destinations;
o full-scale contracted care yachts, including interior and exterior
cleaning twice monthly, exterior waxing twice yearly, bottom cleaning
once monthly, and routine maintenance;
o advice and consultation to clients with regard to all aspects of yacht
lease, purchase, custom construction and ownership, such as
consultation at a boat show by contract, although we have not generated
any revenues from theses services; and
o brokering traditional face-to-face yacht sales, of vessels in the $1 -
1.5 million range, although we have not generated any revenues from
theses services.
16
We are currently equipped to provide all of the above services those services
only require the manpower of our officers and directors and the use of
subcontractors.
We intend to provide the following services:
o yacht sales or lease by means of the website, of vessels in the
$500,000 range; and
o custom yacht design and construction.
In order to provide the above services, we need to develop our website. We also
intend to establish relationships with various parties including yacht owners,
sellers, brokers, lessors, charter agents, maintenance suppliers, industry
professionals and specialists, captains, crew, engineers, designers, insurance
agents, legal advisors, and government agents. In the high-end yachting
industry, reputation of the company and its personnel is very important to the
customers. Our president, Mitch Keeler has extensive contacts and experience in
all aspects of the yachting industry due to his 20 years in the field as a
licensed yacht captain. We believe that a significant portion of our customers
will be generated by referral from Mr. Keeler's contacts.
Our facilities are located in San Diego, California, giving us a presence in
what we believe is one of the world's largest luxury yacht markets. We also
intend to conduct operations to the eastern Caribbean market through Global
Yacht Services (BVI) Limited, our wholly owned subsidiary. We anticipate that
our subsidiary will establish an office in Tortola, British Virgin Islands, so
that we provide services to that market. Our subsidiary has not conducted any
operations to date.
We anticipate that we will develop our website so that it will function as a
means for global clients to access our range of services and communicate with
us. In California, the chief means of contact will be in person, by mail,
e-mail, phone or fax, although we anticipate that a significant portion of our
business will be conducted away from the office or at the client's location. We
believe that we must be accessible via multiple types of communication systems,
such as cellular phone and email, so that prospects and clients can always reach
us.
We anticipate that we will rely upon effective business systems to grow our
business. We intend to develop an information database to capture client data
for future business development, which will cue our management follow-up calls
to brokers and clients for a regular check up to ensure they are satisfied with
current services. As with many other luxury purchases, luxury yacht purchases
are often cyclical with some clients upgrading to new models every 2 or 3 years.
We hope to serve these clients in making these upgrade purchases. However, we
expect that other clients will maintain their original yacht, but make use of
relevant maintenance services through us.
Our business, as well as the entire recreational boating industry, is highly
seasonal, with seasonality varying in different geographic markets. We expect to
realize significantly lower sales and operations in winter months in climates
that are characterized by cold temperatures or severe weather. However, we
anticipate activity to generally fluctuate with seasonal changes. Our business
could become substantially more seasonal as we expand operations into colder
regions of the United States. In addition, weather conditions adversely impact
our operating results. For example, drought conditions, reduced rainfall levels,
and excessive rain may force boating areas to close or render boating dangerous
or inconvenient, thereby curtailing customer demand for our products. In
addition, unseasonably cool weather and prolonged winter conditions may lead to
shorter selling seasons in certain locations. Hurricanes and other storms could
result in the disruption of our proposed Caribbean operations or damage to our
proposed boat inventories and facilities. As a result, our operating results in
some future quarters could be below our expectations.
Our Website www.gysi-online.com. Our current website, which is hosted by a local
provider in San Diego, California, displays our corporate logo and contact
information and provides a general description of our staff, the services that
we provide as well as links to resources of interest to yacht owners. We believe
that there is a need in the global yacht industry for clients to obtain timely
and comprehensive services. We hope to fulfill this need by means of our
website, which we intend to further develop to provide one-stop shopping and
support for clients and prospective clients.
Our Target Markets and Marketing Strategy. We do not believe that our current
operations depend on one or a limited number of customers. We intend to serve
the global high-end luxury yachting market through relationship marketing and
our website. We will begin by providing service in the San Diego region, central
to the southern California yacht market, by approaching existing yacht owners to
act as charter agents. Yacht services such as care-taking or maintenance, making
travel arrangements and brokering captains and crew, yacht delivery world-wide,
yacht sales and general yachting related services will be provided initially in
San Diego, Orange, and Los Angeles counties. The southern California region is
second only to Florida in the U.S. market for luxury yachts and services.
17
We intend to be competitive in price to satisfy those clients who are price
shoppers. However, we intend to provide high quality services, which we believe
will attract loyal clients for whom price will be a secondary consideration. We
will promote our services primarily by means of our website, but also by
relationship-building with yacht brokers, articles and advertisements in trade
publications such as Yachts International, duPont Registry, Yachting, Yachting
World, Sea Magazine and Motor Yachting Magazine, as well as by reputation and
word-of-mouth. Additionally, we anticipate that attendance at a number of boat
shows will be necessary, often in a contract capacity to assist a client to find
a new vessel.
Our Growth Strategy. Our objective is to establish our reputation of providing
preeminent services to luxury yacht owners and users of yacht services initially
in San Diego, Orange and Los Angeles counties. Our strategy is to provide
clients with exceptional personal service and access to products and services.
Key elements of our strategy include:
o cultivate relationships with existing and potential clients;
o increase our relationships with third party providers of maintenance
and repair products and services;
o continue to promote our website and expand its capabilities; and
o expand operations in the southern California and eastern Caribbean
markets.
Our Competition. The market for luxury yacht sales and services is very
competitive. We compete primarily with single-location boat dealers and yacht
brokers with respect to brokering sales or providing consulting services for
yacht purchases and overseeing delivery to a foreign destination. We also
compete with national specialty marine parts and accessories stores, catalog
retailers, sporting goods stores, and mass merchants with respect to sales of
marine parts, accessories, services and equipment.
We also compete with other providers of yacht charter services and with cruise
ship lines and other forms of vacation choices and types of recreation. In
addition, several of our competitors, especially those selling marine equipment
and accessories, are large international, national or regional businesses that
have substantial financial, marketing, and other resources. Private boat
charters are additional competition.
We intend to compete on the basis of price and quality of service and by
offering a complete range of services. We intend to utilize the experience and
contacts of Mitch Keeler to provide high quality services at a reasonable price.
We believe that Mr. Keeler's experience and contacts in the industry will allow
us to pay less for the services that we subcontract. We also believe that we can
compete by providing a complete range of services, from assisting clients with
purchase, delivery maintenance and sale of their yacht. We can also teach the
client how to operate the boat and understand the systems. We believe that by
offering a total range of services to the yacht owner we can compete effectively
with those competitors that only offer one of the services that we provide.
Additionally, the market for similar products and services offered over the
Internet is highly competitive. There are no substantial barriers to entry in
these markets, and we expect that competition will continue to intensify. Our
yacht purchasing and maintenance services compete against a variety of Internet
and traditional boat and other recreational equipment purchasing services as
well as boat manufacturers, yacht brokers and yacht maintenance companies.
Therefore, the competitive factors faced by both Internet commerce companies as
well as traditional, offline companies within the boating equipment and service
industries affect us. To compete successfully in the global marketplace as an
Internet-based commercial entity, we must significantly increase awareness of
our services and brand name.
We anticipate we will compete with other entities which maintain similar
commercial websites including buymarine.com, yachtworld.com, boating.com,
boattraderonline.com, boatowners.com and boat-yachts.com. In addition, all major
cruise companies, yacht manufacturers and other boating industry players have
their own websites and many have recently launched or announced plans to launch
online buying services. For example, Campers & Nicholsons, or C&N, which is
based overseas with a long-established history and reputation, uses traditional
means such as relying on referrals, direct mail and high-end catalogue to
generate leads. However, C&N also has a website, cnconnect.com, but mostly
relies upon this means of communication to generate calls to brokers. On the
other hand, Yachtstore generates the majority of its business from its website,
where a buyer can conduct transactions from yacht purchases to charter
arrangements without speaking to a live broker. We also compete with yacht
charter or maintenance companies, as well as yacht manufacturers and dealers.
Such companies may already maintain or may introduce websites which compete with
ours.
18
Many of these competitors have greater financial resources than we have,
enabling them to finance acquisition and development opportunities, to pay
higher prices for the same opportunities or to develop and support their own
operations. In addition, many of these companies can offer bundled, value-added
or additional services not provided by us, and may have greater name
recognition. These companies might be willing to sacrifice profitability to
capture a greater portion of the market for yacht sales, service or charters, or
pay higher prices than we would for the same expansion and development
opportunities. Consequently, we may encounter significant competition in our
efforts to achieve our internal growth objectives.
Our Intellectual Property. We do not presently own any patents, trademarks,
copyrights, licenses, concessions or royalties. Our success may depend in part
upon our ability to protect our trade name, preserve our trade secrets, obtain
and maintain patent protection for our technologies, products and processes, and
operate without infringing the proprietary rights of other parties. However, we
may rely on certain proprietary technologies, trade secrets, and know-how that
are not patentable. Although we may take action to protect our unpatented trade
secrets and our proprietary information, in part, by the use of confidentiality
agreements with our employees, consultants and certain of our contractors, we
cannot guaranty that
o these agreements will not be breached;
o we would have adequate remedies for any breach; or
o our proprietary trade secrets and know-how will not otherwise become
known or be independently developed or discovered by competitors.
We cannot guaranty that our actions will be sufficient to prevent imitation or
duplication of either our products and services by others or prevent others from
claiming violations of their trade secrets and proprietary rights.
We own the Internet domain name www.gysi-online.com. Under current domain name
registration practices, no one else can obtain an identical domain name, but
someone might obtain a similar name, or the identical name with a different
suffix, such as ".org", or with a country designation. The regulation of domain
names in the United States and in foreign countries is subject to change, and we
could be unable to prevent third parties from acquiring domain names that
infringe or otherwise decrease the value of our domain names.
Government Regulation. Our yacht sales, maintenance and charter operations are
subject to extensive regulation, supervision, and licensing under various
federal, state, and local statutes, ordinances, and regulations. For example,
broker services require sales licenses in most states, and boats under charter
must adhere to U.S. Coast Guard standards, including safety regulations such as
those for life-saving equipment, and are subject to various vessel inspection
and testing requirements. Also, vessel manufacturers must certify yachts and all
recreational powerboats sold in the U.S. meet U.S. Coast Guard standards. These
certifications specify standards for the design and construction of yachts and
other powerboats. In addition, yacht safety is subject to federal regulation
under the Boat Safety Act of 1971. The Boat Safety Act requires boat
manufacturers to recall products for replacement of parts or components that
have demonstrated defects affecting safety. In addition, boats manufactured for
sale in other countries must be certified to meet standards in those
jurisdictions.
Certain states have required or are considering requiring a license to operate a
recreational boat. These licensing requirements are not expected to be unduly
restrictive. They may, however, discourage potential first-time buyers, which
could hinder our ability to generate revenues. In addition, certain state and
local governmental authorities are contemplating regulatory efforts to restrict
boating activities on certain inland bodies of water. While the scope of these
potential regulations is not yet known, their adoption and enforcement could
significant reduce our revenues.
19
Changes in federal and state tax laws, such as an imposition of luxury taxes on
new boat purchases, also could influence consumers' decisions to purchase
products we offer and could have a negative effect on our sales. For example,
during 1991 and 1992, the federal government imposed a luxury tax on new
recreational boats with sales prices in excess of $100,000, which coincided with
a sharp decline in boating industry sales from the late 1980s compared to 1992.
Our business or that of our subcontractors may involve the use, handling,
storage, and contracting for recycling or disposal of hazardous or toxic
substances or wastes, including environmentally sensitive materials, such as
motor oil, waste motor oil and filters, transmission fluid, antifreeze, freon,
waste paint and lacquer thinner, batteries, solvents, lubricants, degreasing
agents, gasoline, and diesel fuels. Accordingly, we could be subject to
regulation by federal, state, and local authorities establishing investigation
and health and environmental quality standards, and liability related thereto,
and providing penalties for violations of those standards.
In particular, the Comprehensive Environmental Response, Compensation and
Liability Act, or CERCLA or Superfund, imposes joint, strict, and several
liability on:
o owners or operators of facilities at, from, or to which a release of
hazardous substances has occurred;
o parties who generated hazardous substances that were released at such
facilities; and
o parties who transported or arranged for the transportation of hazardous
substances to such facilities.
A majority of states have adopted Superfund statutes comparable to and, in some
cases, more stringent than CERCLA. In addition, operations conducted on
waterways are subject to federal or state laws regulating navigable waters
(including oil pollution prevention), fish and wildlife, and other matters.
Additionally, Internet access and online services are not subject to direct
regulation in the United States. Changes in the laws and regulations relating to
the telecommunications and media industry, however, could impact our business.
For example, the Federal Communications Commission could begin to regulate the
Internet and online services industry, which could result in increased costs for
us. The laws and regulations applicable to the Internet and to our services are
evolving and unclear and could damage our business. There are currently few laws
or regulations directly applicable to access to, or commerce on, the Internet.
Due to the increasing popularity and use of the Internet, it is possible that
laws and regulations may be adopted, covering issues such as user privacy,
defamation, pricing, taxation, content regulation, quality of products and
services, and intellectual property ownership and infringement. Such legislation
could expose us to substantial liability as well as dampen the growth in use of
the Internet, decrease the acceptance of the Internet as a communications and
commercial medium, or require us to incur significant expenses in complying with
any new regulations. The European Union has recently adopted privacy and
copyright directives that may impose additional burdens and costs on
international operations.
Our Research and Development. We are not currently conducting any research and
development activities, other than the development of our website. We do not
anticipate conducting such activities in the near future.
Employees. As of December 18, 2001, we have two full time employees. As of
September 30, 2001, we had no employees. We anticipate that we will not hire any
employees in the next six months, unless we generate significant revenues. From
time-to-time, we anticipate that we will use the services of independent
contractors and consultants for the various services that we provide.
Facilities. Our executive, administrative and operating offices are located 7710
Hazard Center Drive, Suite E-415, San Diego, California 92108.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
- --------------------------------------------------------------------------
For the period from February 21, 2001, our date of formation, through September
30, 2001.
- -------------------------------------------------------------------------------
Liquidity and Capital Resources. We have cash of $47,078 as of September 30,
2001. ^ We believe that our available cash is sufficient to pay our day-to-day
expenditures. Our officers and directors provided us with our initial
capitalization of $10,500. In May 2001, we sold 277,777 shares of common stock
to two investors for $0.18 per share. The total proceeds were approximately
$50,000. Those proceeds were used to provide us with additional working capital.
As of September 30, 2001, our total liabilities were approximately $1,750, all
of which was for accounts payable and accrued expenses.
20
Results of Operations.
Revenues. We have realized revenues of approximately $20,236 during the period
ended September 30, 2001. Those revenues included approximately $14,627 for
charter services, $2,000 for delivery services and $3,609 for yacht management
fees. We anticipate that our revenues will increase significantly as we expand
our customer base.
For the period ended September 30, 2001, our cost of revenues was approximately
$12,265. Cost of revenues includes approximately $8,507 for charter expenses and
$3,758 for yacht management expenses. Charter expenses include yacht fuel,
docking fees, and supplies and maintenance. Our president, Mitch Keeler, owns
one yacht, Tlaquepaque, which may be used for our charter services. To date, we
have provided charter services with only Mr. Keeler's yacht, Tlaquepaque. For
those charter services, Mr. Keeler did not get paid or reimbursed for providing
the use of his yacht. We do not believe that there are limitations on our use of
Mr. Keeler's yacht in the future, although Mr. Keeler has not made any formal
commitment to provide us with the use of his yacht at no charge. We anticipate
that Mr. Keeler will not expect to be paid or reimbursed for providing the use
of his yacht as long as he is our president and maintains a significant equity
interest in us. ^ Our gross margin for the period ended September 30, 2001, was
approximately $7,971.
We also have arrangements with four yacht charter companies, which provide that
we may use their yachts for our charter services. Those arrangements provide
that we can rent those companies' yachts for fixed daily and hourly rental fees
ranging from $300 per hour to $3000 per day depending on the size of the yacht.
We cannot guaranty that those yachts will be available if we need to rent those
yachts to provide our services.
Operating Expenses. For the period ended September 30, 2001, our total expenses
were approximately $24,586. The majority of those expenses were legal and
professional fees of $14,910. Other expenses included advertising expenses of
approximately $1,121, office supplies and expenses of approximately $2,622 and
outside services of independent contractors of approximately $3,000. For the
period ended September 30, 2001, we experienced a net loss of approximately
$16,577.
For the period from February 21, 2001, our date of formation, through June 30,
2001.
- ------------------------------------------------------------------------------
Results of Operations.
Revenues. We have realized revenues of approximately $12,875 from yacht charters
and management services that we provided during the period ended June 30, 2001.
We anticipate that our revenues will increase significantly as we expand our
customer base. For the period ended June 30, 2001, our cost of revenues was
approximately $4,000. Cost of revenues includes approximately $1,450 for yacht
fuel, $1,050 for port and docking fees and $1,500 for supplies and maintenance.
There are no yacht rental expenses listed on our financial statements for the
period ended June 30, 2001, because we have chosen to break down the cost of
using the various yachts into categories, such as yacht fuel, docking fees, and
supplies and maintenance. Our president, Mitch Keeler, owns one yacht,
Tlaquepaque, which we may use for our charter services. Mr. Keeler does not
expect to be paid or reimbursed for providing the use of his yacht. Our gross
margin for the period ended June 30, 2001, was approximately $8,875.
Operating Expenses. For the period ended June 30, 2001, our total expenses were
approximately $10,921. The majority of those expenses were legal and
professional fees of $5,885. Other expenses included advertising expenses of
approximately $1,100, office supplies and expenses of approximately $1,747 and
outside services of independent contractors of approximately $1,500. For the
period ended June 30, 2001, we experienced a net loss of approximately $2,897.
21
Our Plan of Operation for the Next Twelve Months. In our management's opinion,
to effectuate our business plan in the next twelve months, the following events
should occur or we should reach the following milestones in order for us to
become profitable:
1. We must conduct marketing activities to promote our services and obtain
additional customers to increase our customer base. We currently market
our business primarily through referrals and our website. Our
president, Mitch Keeler, had a large foundation of business and a
strong reputation in the industry, which we believe has been
transferred to us. We believe that referrals comprise approximately 70%
of our business and business generated from our website is
approximately 30% of our business. Future marketing will include
articles and advertisements in industry publications, such as:
Yachting, Motor Boating, and Sea. Within six months, we should have
increased our customer base.
2. We must develop relationships with various parties including yacht
owners, sellers, brokers, lessors, charter agents, maintenance
suppliers, industry professionals and specialists, captains, crew,
engineers, designers, insurance agents, legal advisors, and government
agents. We believe that these parties will help supply some of our
services and they may become sources of referrals. Within six to twelve
months, we should have developed relationships with several of those
parties who provide some of the services that we offer as well as be
sources of referrals.
3. We must develop our website so that it will function as a means for
global clients to access our range of services and communicate with us
for support services as well as for use as a marketing tool to inform
and persuade customers to engage our services. We intend to develop our
website so that we utilize a database set up on the backend, which will
capture customer information and allow us to process information
concerning our clients and potential clients. One objective for our
website is to interact with clients in "real time" so that they feel
that their needs are being taken care of professionally and on a
personal level. Within six to twelve months, we should have developed
our website to provide those services.
We anticipate that we will use the funds raised in this offering and revenues
generated to fund marketing activities and for working capital. We believe that
the size of our operations may vary depending on the amount of funds raised in
this offering. If we are able to sell all of the shares in this offering, we
believe that the size of our operations will increase because we will be able to
increase our marketing activities. If we do not raise any funds in this
offering, we may not have adequate funds to market our services. Our failure to
market and promote our services will hinder our ability to increase the size of
our operations and generate additional revenues.
We have cash of $47,078 as of September 30, 2001. In the opinion of management,
available funds will satisfy our working capital requirements for the next
twelve months. Those funds do not include any funds raised in this offering. Our
forecast for the period for which our financial resources will be adequate to
support our operations involves risks and uncertainties and actual results could
fail as a result of a number of factors. In order to expand our operations, we
do not currently anticipate that we will need to raise additional capital in
addition to the funds raised in this offering. If we do not raise adequate funds
from this offering, then we may not be able to conduct marketing activities and
expand our operations. ^
We are not currently conducting any research and development activities, other
than the development of our website. We do not anticipate conducting such
activities in the near future. In the event that we expand our customer base,
then we may need to hire additional employees or independent contractors as well
as purchase or lease additional equipment.
Description of Property
- -----------------------
Property held by us. As of the date specified in the following table, we held
the following property:
=============================== =========================
Property September 30, 2001
------------------------------- -------------------------
Cash $47,078
------------------------------- -------------------------
Property and Equipment, net $0
=============================== =========================
Our Facilities. Our executive, administrative and operating office is
approximately 150 square feet and is located in the personal residence of Mitch
Keeler, our president and one of our directors. We have complete ownership of
this office and we do not share this office with any other business. We believe
that our facilities are adequate for our needs and that additional suitable
space will be available on acceptable terms as required. We do not own any real
estate. Mitch Keeler, our president and director, currently provides office
space to us at no charge. We do not have a written lease or sublease agreement
and Mr. Keeler does not expect to be paid or reimbursed for providing office
facilities. Our financial statements reflect, as occupancy costs, the fair
market value of that space, which is approximately $193 per month. That amount
has been included in the financial statements as additional capital contribution
by Mr. Keeler.
22
Certain Relationships and Related Transactions
- ----------------------------------------------
Related party transactions.
Mitch Keeler, our president and director, currently provides office space to us
at no charge. Mr. Keeler does not expect to be paid or reimbursed for providing
office facilities. Our financial statements reflect, as occupancy costs, the
fair market value of that space, which is approximately $193 per month. That
amount has been included in the financial statements as additional capital
contribution by Mr. Keeler.
Our president, Mitch Keeler, owns one yacht, Tlaquepaque, which is used for our
charter services. Mr. Keeler does not expect to be paid or reimbursed for
providing the use of his yacht.
In February 2001, we issued 1,000,000 shares of our common stock to Mitch
Keeler, our president and one of our directors, in exchange for $10,000, or
$0.01 per share.
In May 2001, we issued 5,000 shares of our common stock to Melissa Day, our
secretary, treasurer and one of our directors, in exchange for $500, or $0.10
per share.
With regard to any future related party transaction, we plan to fully disclose
any and all related party transactions, including, but not limited to, the
following:
o disclose such transactions in prospectus' where required;
o disclose in any and all filings with the Securities and Exchange
Commission, where required;
o obtain uninterested directors consent; and
o obtain shareholder consent where required.
Market for Common Equity and Related Stockholder Matters
- --------------------------------------------------------
Reports to Security Holders. Our securities are not listed for trading on any
exchange or quotation service. We are not required to comply with the timely
disclosure policies of any exchange or quotation service. The requirements to
which we would be subject if our securities were so listed typically include the
timely disclosure of a material change or fact with respect to our affairs and
the making of required filings. Although we are not required to deliver an
annual report to security holders, we intend to provide an annual report to our
security holders, which will include audited financial statements.
When we become a reporting company with the Securities and Exchange Commission,
the public may read and copy any materials filed with the Securities and
Exchange Commission at the Security and Exchange Commission's Public Reference
Room at 450 Fifth Street N.W., Washington, D.C. 20549. The public may also
obtain information on the operation of the Public Reference Room by calling the
Securities and Exchange Commission at 1-800-SEC-0330. The Securities and
Exchange Commission maintains an Internet site that contains reports, proxy and
information statements, and other information regarding issuers that file
electronically with the Securities and Exchange Commission. The address of that
site is http://www.sec.gov.
As of December 18, 2001, there were four record holders of our common stock.
There are no outstanding shares of our common stock which can be sold pursuant
to Rule 144. There are no outstanding options or warrants to purchase, or
securities convertible into, shares of our common stock. We have agreed to
register for sale 50,000 shares of common held by current security holders.
There have been no cash dividends declared on our common stock. Dividends are
declared at the sole discretion of our Board of Directors.
23
Our existing shareholders have substantial influence over our operations and can
significantly influence matters requiring shareholder approval. Mitch Keeler and
Melissa Day, each of whom is one of our officers and directors, will
beneficially own approximately 49% of our common stock following the completion
of this offering if all of the shares of are sold, or approximately 56% if two
thirds of the offered shares are sold. As a result, they will have the ability
to control or significantly influence all matters requiring approval by our
shareholders, including the election and removal of directors, approval of
significant corporate transactions and the ability to control the decision of
whether a change in control will occur.
Penny stock regulation. Shares of our common stock will probably be subject to
rules adopted by the Securities and Exchange Commission that regulate
broker-dealer practices in connection with transactions in "penny stocks". Penny
stocks are generally equity securities with a price of less than $5.00, except
for securities registered on certain national securities exchanges or quoted on
the Nasdaq system, provided that current price and volume information with
respect to transactions in those securities is provided by the exchange or
system. The penny stock rules require a broker-dealer, prior to a transaction in
a penny stock not otherwise exempt from those rules, deliver a standardized risk
disclosure document prepared by the Securities and Exchange Commission, which
contains the following:
o a description of the nature and level of risk in the market for penny
stocks in both public offerings and secondary trading;
o a description of the broker's or dealer's duties to the customer and of
the rights and remedies available to the customer with respect to
violation to such duties or other requirements of securities' laws;
o a brief, clear, narrative description of a dealer market, including
"bid" and "ask" prices for penny stocks and the significance of the
spread between the "bid" and "ask" price;
o a toll-free telephone number for inquiries on disciplinary actions;
o definitions of significant terms in the disclosure document or in the
conduct of trading in penny stocks; and
o such other information and is in such form, including language, type,
size and format, as the Securities and Exchange Commission shall
require by rule or regulation.
Prior to effecting any transaction in penny stock, the broker-dealer also must
provide the customer the following:
o the bid and offer quotations for the penny stock;
o the compensation of the broker-dealer and its salesperson in the
transaction;
o the number of shares to which such bid and ask prices apply, or other
comparable information relating to the depth and liquidity of the
market for such stock; and
o monthly account statements showing the market value of each penny stock
held in the customer's account.
In addition, the penny stock rules require that prior to a transaction in a
penny stock not otherwise exempt from those rules, the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitably statement. These
disclosure requirements may have the effect of reducing the trading activity in
the secondary market for a stock that becomes subject to the penny stock rules.
Holders of shares of our common stock may have difficulty selling those shares
because our common stock will probably be subject to the penny stock rules.
Executive Compensation
- ----------------------
Any compensation received by our officers, directors, and management personnel
will be determined from time to time by our Board of Directors. Our officers,
directors, and management personnel will be reimbursed for any out-of-pocket
expenses incurred on our behalf.
Summary Compensation Table. The table set forth below summarizes the annual and
long-term compensation for services in all capacities to us payable to our chief
executive officer and our other executive officers during the year ending
December 31, 2001. Our Board of Directors may adopt an incentive stock option
plan for our executive officers which would result in additional compensation.
24
============================================ ======= ============= ============= ===================== ==========================
Name and Principal Position Year Annual Bonus ($) Other Annual All Other Compensation
Salary ($) Compensation ($)
- -------------------------------------------- ------- ------------- ------------- --------------------- --------------------------
Mitch Keeler - president 2001 None None None None
- -------------------------------------------- ------- ------------- ------------- --------------------- --------------------------
Melissa Day - secretary, treasurer 2001 None None None None
============================================ ======= ============= ============= ===================== ==========================
Compensation of Directors. Our current directors are also our employees and
receive no extra compensation for their service on our board of directors.
Compensation of Officers. As of December 18, 2001, our officers have received no
compensation for their services provided to us.
Employment Contracts. We anticipate that we will enter into an employment
agreement with Mitch Keeler, although we do not currently know the terms of that
employment agreement.
Financial Statements
- --------------------
GLOBAL YACHT SERVICES, INC.
CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2001
25
GLOBAL YACHT SERVICES, INC.
CONTENTS
PAGE
----
Consolidated Financial Statements (Unaudited)
Consolidated Balance Sheet 27
Consolidated Statements of Operations 28
Consolidated Statements of Changes in Stockholders' Equity 29
Consolidated Statements of Cash Flows 30
Notes to Consolidated Financial Statements 31
26
GLOBAL YACHT SERVICES, INC.
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2001
(UNAUDITED)
ASSETS
------
Current assets
Cash $ 47,078
Accounts receivable, net ---
-------------
Total current assets 47,078
Other assets ---
-------------
Total assets $ 47,078
=============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities
Accounts payable and accrued expenses $ 1,750
-------------
Total current liabilities 1,750
-------------
Stockholders' Equity
Common stock, $.001 par value;
Authorized shares-- 50,000,000
Issued and outstanding shares-- 1,282,777 1,283
Additional paid-in capital 60,622
Deficit accumulated during the development stage (16,577)
------------
Total stockholders' equity 45,328
-------------
Total liabilities and stockholders' equity $ 47,078
=============
See accompaning notes to financial statements.
27
GLOBAL YACHT SERVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
FEBRUARY 21, 2001
THREE MONTHS ENDED (INCEPTION) -
SEPTEMBER 30, 2001 SEPTEMBER 30, 2001
Revenues ------------------ ------------------
Charter services $ 3,027 $ 14,627
Delivery services 2,000 2,000
Yacht management fees 2,334 3,609
Less: returns and allowances --- ---
-------------- --------------
Net revenues 7,361 20,236
Cost of revenues
Charter expenses $ 6,007 $ 8,507
Yacht management expenses 2,258 3,758
-------------- --------------
Total cost of revenues 8,265 12,265
-------------- --------------
Gross margin (904) 7,971
General and administrative expenses
Advertising 21 1,121
Legal and professional fees 9,025 14,910
Occupancy 585 1,405
Office supplies and expense 875 2,622
Outside services 1,500 3,000
Printing and reproduction 95 632
Telephone and utilities 704 896
-------------- --------------
Total operating expenses 12,805 24,586
-------------- --------------
Loss from operations (13,709) (16,615)
Other income 29 38
-------------- --------------
Loss before provision for income taxes (13,680) (16,577)
Provision for income tax expense (benefit) --- ---
-------------- --------------
Net loss/Comprehensive loss $ (13,680) $ (16,577)
============== ==============
Net loss/comprehensive loss per common share
- --- basic and diluted $ (.01) $ (.01)
============== ==============
Weighted average of common shares
--- basic and diluted 1,282,777 1,165,051
============== ==============
See accompanying notes to financial statements.
28
GLOBAL YACHT SERVICES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FEBRUARY 21, 2001 (INCEPTION) THROUGH SEPTEMBER 30, 2001
(UNAUDITED)
Common Stock Additional
----------------------------- Paid-In Accumulated
Shares Amount Capital Deficit Total
------------- ------------- ------------- ------------ -------------
Balance, February 21, 2001 --- $ --- $ --- $ --- $ ---
Issuance of common stock,
February 22, 2001 1,000,000 1,000 9,000 --- 10,000
Issuance of common stock,
May 4, 2001 5,000 5 495 --- 500
Issuance of common stock,
May 25, 2001 277,777 278 49,722 --- 50,000
Cost of occupancy
Contributed by officer --- --- 820 --- 820
Net loss/comprehensive loss --- --- --- (2,897) (2,897)
------------- ------------- ------------- ------------ -------------
Balance, June 30, 2001 1,282,777 1,283 60,037 (2,897) 58,423
------------- ------------- ------------- ------------ -------------
Cost of occupancy
Contributed by officer --- --- 585 --- 585
Net loss/comprehensive loss --- --- --- (13,680) (13,680)
------------- ------------- ------------- ------------ -------------
Balance, September 30, 2001 1,282,777 $ 1,283 $ 60,622 $ (16,577) $ 45,328
============= ============= ============= ============ =============
See accompanying notes to financial statements.
29
GLOBAL YACHT SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FEBRUARY 21, 2001
THREE MONTHS ENDED (INCEPTION) -
SEPTEMBER 30, 2001 SEPTEMBER 30, 2001
CASH FLOWS FROM OPERATING ACTIVITIES ------------------ ------------------
Net loss $ (13,680) $ (16,577)
Adjustments to reconcile net loss to net cash used in operating
activities
Occupancy costs contributed by officer 585 1,405
Changes in operating assets and liabilities
Decrease in accounts receivable 600 ---
Increase (decrease) in accounts payable
and accrued expenses (3,856) 1,750
---------------- ---------------
Net cash provided by operating activities (16,351) (13,422)
---------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES --- ---
---------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock --- 60,500
---------------- ---------------
Net cash provided by financing activities --- 60,500
---------------- ---------------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (16,351) 47,078
CASH AND CASH EQUIVALENTS, beginning of period 63,429 ---
--------------- ---------------
CASH AND CASH EQUIVALENTS, end of period $ 47,078 $ 47,078
=============== ===============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Income taxes paid $ --- $ ---
=============== ===============
Interest paid $ --- $ ---
=============== ===============
See accompanying notes to financial statements.
30
GLOBAL YACHT SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2001
(UNAUDITED)
NOTE 1 - PRINCIPLES OF CONSOLDIATION AND BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements include
the accounts of the Global Yacht Services, Inc. and its majority owned
subsidiary, Global Yacht Services, Ltd. All significant intercompany
transactions have been eliminated, if any. The unaudited consolidated financial
statements included herein have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-QSB and Item 301(b) of Regulation S-B. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three-month period ended September 30, 2001 and from February
21, 2001 (inception) through September 30, 2001 are not necessarily indicative
of the results that may be expected for the year ended December 31, 2001. For
further information, the statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the Company's
registration statement on Form SB-2.
NOTE 2 - COMMON STOCK
On February 22, 2001, the Company issued 1,000,000 shares of its common
stock to its officer and founder for $10,000 cash to initially capitalize the
Company. Since there was no readily available market value at the time the
shares were issued, the value of $0.01 per share was considered as a reasonable
estimate of fair value between the officer and the Company.
On May 4, 2001, the Company issued 5,000 shares of its common stock to
an officer for $500 cash. Since there was no readily available market value at
the time the shares were issued, the value of $0.10 per share was considered as
a reasonable estimate of fair value between the office and the Company.
On May 31, 2001, the Company completed a "best efforts" offering of its
common stock pursuant to the provisions of Section 5 of the Securities Act of
1933 and Regulation S promulgated by the Securities and Exchange Commission. In
accordance with the Private Placement Memorandum Offering, the Company issued
277,777 shares of its common stock at $0.18 per share for a total of $50,000.
NOTE 3 - RELATED PARTY TRANSACTIONS
On February 22, 2001 and May 4, 2001, the Company issued 1,000,000 and
5,000 shares of its common stock, respectively to it current officers for cash
as described in Note 2.
The Company occupies office space provided by its officer. Accordingly,
occupancy costs have been allocated to the Company based on the square foot
percentage assumed multiplied by the officer's total monthly costs. These
amounts are shown in the accompanying consolidated statement of operations for
the three-month period ended September 30, 2001 and from February 21, 2001
(inception) and are considered additional contributions of capital by the
officer and the Company.
31
GLOBAL YACHT SERVICES, INC.
REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2001
32
GLOBAL YACHT SERVICES, INC.
CONTENTS
PAGE
-----
Independent Auditor's Report 34
Consolidated Financial Statements:
Consolidated Balance Sheet 35
Consolidated Statement of Operations 36
Consolidated Statement of Changes in Stockholders' Equity 37
Consolidated Statement of Cash Flows 38
Notes to Consolidated Financial Statements 39 - 41
33
Independent Auditor's Report
To the Stockholders of
Global Yacht Services, Inc.
I have audited the accompanying consolidated balance sheet of Global
Yacht Services, Inc. and its subsidiary as of June 30, 2001, and the related
consolidated statements of operations, changes in stockholders' equity, and cash
flows for the period February 21, 2001 (inception) through June 30, 2001. 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 audit.
I conducted my audit in accordance with generally accepted auditing
standards in the United States. Those standards require that I plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. I believe that my audit provides a reasonable basis for
my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Global Yacht
Services, Inc. and its subsidiary as of June 30, 2001, and the results of its
operations and its cash flows for the period February 21, 2001 (inception)
through June 30, 2001 in conformity with generally accepted accounting
principles in the Unites States.
/s/ Quintanilla
A Professional Accountancy Corporation
Laguna Niguel, California
August 29, 2001
34
GLOBAL YACHT SERVICES, INC.
CONSOLIDATED BALANCE SHEET
JUNE 30, 2001
ASSETS
------
Current assets
Cash $ 63,429
Accounts receivable, net 600
----------------
Total current assets 64,029
Other assets ---
----------------
Total assets $ 64,029
================
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities
Accounts payable and accrued expenses $ 5,606
----------------
Total current liabilities 5,606
----------------
Contingencies
Stockholders' Equity
Common stock, $.001 par value;
Authorized shares-- 50,000,000
Issued and outstanding shares-- 1,282,777 1,283
Additional paid-in capital 60,037
Accumulated deficit (2,897)
-----------------
Total stockholders' equity 58,423
----------------
Total liabilities and stockholders' equity $ 64,029
================
See accompanying notes to consolidated financial statements.
35
GLOBAL YACHT SERVICES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
FEBRUARY 21, 2001 (INCEPTION) THROUGH JUNE 30, 2001
Revenues
Charter services $ 11,600
Yacht management fees 1,275
Less: returns and allowances ---
------------------
Net revenues 12,875
Cost of revenues
Yacht fuel 1,450
Port and docking fees 1,050
Supplies and maintenance 1,500
-----------------
Total cost of revenues 4,000
-----------------
Gross margin 8,875
General and administrative expenses
Advertising 1,100
Legal and professional fees 5,885
Occupancy 820
Office supplies and expense 1,747
Outside services 1,500
Printing and reproduction 537
Telephone and utilities 192
-----------------
Total general and administrative expenses 11,781
-----------------
Loss from operations (2,906)
Other income (expense)
Interest income 9
-----------------
Net loss before provision for income taxes (2,897)
Provision for income tax expense (benefit) ---
-----------------
Net loss/Comprehensive loss $ (2,897)
==================
Net income per common share-- basic and diluted $ ---
==================
Weighted average of common shares-- basic and diluted 1,080,280
==================
See accompanying notes to consolidated financial statements.
36
GLOBAL YACHT SERVICES, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FEBRUARY 21, 2001 (INCEPTION) THROUGH JUNE 30, 2001
Common Stock Additional
------------ Paid-In Accumulated
Shares Amount Capital deficit Total
------------ ----------- ----------- -------------- -----------
Balance, February 21, 2001 --- $ --- $ --- $ --- $ ---
Issuance of common stock,
February 22, 2001 1,000,000 1,000 9,000 --- 10,000
Issuance of common stock,
May 4, 2001 5,000 5 495 --- 500
Issuance of common stock,
May 25, 2001 277,777 278 49,722 --- 50,000
Cost of occupancy
contributed by officer --- --- 820 --- 820
Net loss/Comprehensive loss --- --- --- (2,897) (2,897)
------------ ----------- ----------- -------------- -----------
Balance, June 30, 2001 1,282,777 $ 1,283 $ 59,997 $ (2,897) $ 58,423
============ =========== =========== ============== ===========
See accompanying notes to consolidated financial statements.
37
GLOBAL YACHT SERVICES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FEBRUARY 21, 2001 (INCEPTION) THROUGH JUNE 30, 2001
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (2,897)
Adjustments to reconcile net loss to net cash used in
operating activities
Occupancy costs contributed by officer 820
Changes in operating assets and liabilities
(Increase) in accounts receivable (600)
Increase in accounts payable and accrued expenses 5,606
------------------
Net cash provided by operating activities 2,929
------------------
CASH FLOWS FROM INVESTING ACTIVITIES ---
------------------
Net cash provided by investing activities ---
------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock 60,500
------------------
Net cash provided by financing activities 60,500
------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 63,429
CASH AND CASH EQUIVALENTS, beginning of period ---
------------------
CASH AND CASH EQUIVALENTS, end of period $ 63,429
==================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Income taxes paid $ ---
=================
Interest paid $ ---
=================
See accompanying notes to consolidated financial statements.
38
GLOBAL YACHT SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2001
Note 1 - BUSINESS DESCRIPTION AND SIGNIFICANT ACCOUNTING POLICIES
Business Description - Global Yacht Services, Inc. and its subsidiary
(the "Company") provides chartering, delivery, maintenance and consulting
services to luxury yacht owners and manufacturers. The Company's President is a
United States Coast Guard certified captain. The Company was incorporated in the
state of Nevada on February 21, 2001 and is headquartered in San Diego,
California.
Principles of Consolidation - The accompanying consolidated financial
statements include the accounts of Global Yacht Services, Inc. and its majority
owned subsidiary Global Yacht Services, Ltd. (collectively, the "Company"). All
significant intercompany accounts and transactions have been eliminated, if any.
Cash and Cash Equivalents - For purposes of the consolidated balance
sheet and consolidated statement of cash flows, the Company considers all highly
liquid debt instruments purchased with an original maturity of three months or
less to be cash equivalents.
Receivables - Receivables represent valid claims against debtors for
sales or other charges arising on or before the balance-sheet date and are
reduced to their estimated net realizable value. An allowance for doubtful
accounts will be computed as a percentage (%) of sales when more experience is
established. As of June 30, 2001, the Company considered all receivables fully
collectible.
Fair Value of Financial Instruments - The carrying value of cash,
accounts receivable, and accounts payable and accrued expenses approximate their
fair value due to the short period to maturity of these instruments.
Recognition of Revenues and Costs of Goods Sold - The Company records
revenues of its services when they are complete and collectibility is reasonably
assured. The Company will also provide an allowance for returns when experience
is established. Cost of goods sold consists of fuel, docking fees, supplies and
cost of services and related expenses of personnel used.
Advertising Costs - The Company expenses all advertising costs as
incurred.
Income Taxes - The Company recognizes deferred tax assets and
liabilities based on differences between the financial reporting and tax bases
of assets and liabilities using the enacted tax rates and laws that are expected
to be in effect when the differences are expected to be recovered. The Company
provides a valuation allowance for deferred tax assets for which it does not
consider realization of such assets to be more likely than not.
Net Loss per Common Share - The Company has adopted the provisions of
Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS
128"). SFAS 128 requires the reporting of basic and diluted earnings/loss per
share. Basic loss per share is calculated by dividing net loss by the weighted
average number of outstanding common shares during the period.
39
GLOBAL YACHT SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2001
Note 1 - BUSINESS DESCRIPTION AND SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
Accounting Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
New Accounting Pronouncements - In March 2000, the Emerging Issues Task
Force (EITF) of the FASB reached a consensus on EITF Issue 00-2, "Accounting for
Web Site Development Costs." This consensus provides guidance on what types of
costs incurred to develop Web sites should be capitalized or expensed. The
Company adopted this consensus upon incorporation on February 21, 2001. Such
capitalized costs, if material, are to be included in "Fixed assets, net" and
will be depreciated over a period of two years.
NOTE 2 - CONTINGENCIES
As shown in the accompanying financial statements, the Company has
incurred a net operating loss of $2,897 since inception through June 30, 2001.
The Company occupies office space within the officer's residence.
Accordingly, occupancy costs have been allocated to the Company based on the
square foot percentage assumed multiplied by the officer's total monthly costs.
These amounts are shown in the accompanying consolidated statement of operations
for period ended June 30, 2001.
NOTE 3 - ACCRUED EXPENSES
Accrued Wages and Compensated Absences - The Company currently does not
have any employees. The majority of development costs and services have been
provided to the Company by outside, third party vendors. As such, there is no
accrual for wages or compensated absences as of June 30, 2001.
NOTE 4 - COMMON STOCK
On February 22, 2001, the Company issued 1,000,000 shares of its common
stock to its officer and founder for $10,000 cash to initially capitalize the
Company. Since there was no readily available market value at the time the
shares were issued, the value of $0.01 per share was considered as a reasonable
estimate of fair value between the officer and the Company.
On May 4, 2001, the Company issued 5,000 shares of its common stock to
an officer for $500 cash. Since there was no readily available market value at
the time the shares were issued, the value of $0.10 per share was considered as
a reasonable estimate of fair value between the office and the Company.
40
GLOBAL YACHT SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2001
NOTE 4 - COMMON STOCK (CONT'D)
On May 31, 2001, the Company completed a "best efforts" offering of its
common stock pursuant to the provisions of Section 5 of the Securities Act of
1933 and Regulation S promulgated by the Securities and Exchange Commission. In
accordance with the Private Placement Memorandum Offering, the Company issued
277,777 shares of its common stock at $0.18 per share for a total of $50,000.
NOTE 5 - INCOME TAXES
At June 30, 2001, the Company has available for federal income tax
purposes a net operating loss carryforward of approximately $2,897, expiring
2016, that may be used to offset future taxable income. Therefore, no provision
for income taxes has been provided.
In addition, the Company has deferred tax assets of approximately $435
at June 30, 2001. The Company has not recorded a benefit from its net operating
loss carryforward because realization of the benefit is uncertain and,
therefore, a valuation allowance of ($435) has been provided for the deferred
tax assets.
NOTE 6 - RELATED PARTY TRANSACTIONS
On February 22, 2001 and May 4, 2001, the Company issued 1,000,000 and
5,000 shares of its common stock, respectively to it current officers for cash
as described in Note 4.
The Company occupies office space provided by its officer. Accordingly,
occupancy costs have been allocated to the Company based on the square foot
percentage assumed multiplied by the officer's total monthly costs. These
amounts are shown in the accompanying consolidated statement of operations for
the period ended June 30, 2001 and are considered additional contributions of
capital by the officer and the Company.
41
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
- ---------------------------------------------------------------------------
In August 2001, our Board of Directors appointed Quintanilla Accountancy
Corporation, independent accountants, to audit our financials statements from
February 21, 2001, our date of formation, through June 30, 2001.
There have been no disagreements with our accountant since our formation
required to be disclosed pursuant to Item 304 of Regulation S-B.
LEGAL MATTERS
The validity of the issuance of the shares of common stock offered by us has
been passed upon by the law firm of MC Law Group, located in Newport Beach,
California.
EXPERTS
Our financial statements for the period from February 21, 2001, our date of
formation, through June 30, 2001, appearing in this prospectus which is part of
a Registration Statement have been audited by Quintanilla Accountancy
Corporation and are included in reliance upon such reports given upon the
authority of Quintanilla Accountancy Corporation as experts in accounting and
auditing.
ADDITIONAL INFORMATION
We have filed a registration statement on Form SB-2 with the Securities and
Exchange Commission pursuant to the Securities Act of 1933. This prospectus does
not contain all of the information set forth in the registration statement and
the exhibits and schedules to the registration statement. For further
information regarding us and our common stock offered hereby, reference is made
to the registration statement and the exhibits and schedules filed as a part of
the registration statement.
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
Indemnification of Directors and Officers
- -----------------------------------------
Article Twelve of our Articles of Incorporation provides, among other things,
that our officers and directors shall not be personally liable to us or our
shareholders for monetary damages for breach of fiduciary duty as an officer or
a director, except for liability:
o for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law; or
o for unlawful payments of dividends or unlawful stock purchase or
redemption by us.
42
Accordingly, our directors may have no liability to our shareholders for any
mistakes or errors of judgment or for any act of omission, unless the act or
omission involves intentional misconduct, fraud, or a knowing violation of law
or results in unlawful distributions to our shareholders.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to our directors, officers and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
Other Expenses of Issuance and Distribution
- -------------------------------------------
We will pay all expenses in connection with the registration and sale of our
common stock. None of the expenses will be paid by the selling security holders.
The estimated expenses of issuance and distribution are set forth below.
======================================== ==================== ===============
Registration Fees Approximately $39.60
- ---------------------------------------- -------------------- ---------------
Transfer Agent Fees Approximately $650.00
- ---------------------------------------- -------------------- ---------------
Costs of Printing and Engraving Approximately $500.00
- ---------------------------------------- -------------------- ---------------
Legal Fees Approximately $10,000.00
- ---------------------------------------- -------------------- ---------------
Accounting Fees Approximately $5,000.00
======================================== ==================== ===============
Recent Sales of Unregistered Securities
- ---------------------------------------
There have been no sales of unregistered securities within the last three years,
which would be required to be disclosed pursuant to Item 701 of Regulation S-B,
except for the following:
In May 2001, we issued 97,222 shares of our common stock to Carib-Ventures, Inc.
in exchange for $17,499.96, and 180,555 shares of our common stock to Flexgene
Corp. for $32,499.90. The shares were issued in a transaction which we believe
satisfies the requirements of that certain exemption from the registration and
prospectus delivery requirements of the Securities Act of 1933, which exemption
is specified by the provisions of Section 5 of that act and Regulation S. There
were no commissions paid on the sale of these shares. The net proceeds were
approximately $50,000. Both of the investors were non-U.S. persons and the sale
was made in an offshore transaction. No directed selling efforts were made in
the United States by us or any person acting on our behalf. The offer or sale
was not made to a U.S. person or for the account or benefit of a U.S. person.
The purchasers of the securities certified that they were not U.S. persons and
they were not acquiring the securities for the account or benefit of any U.S.
person. The purchaser of the securities has agreed to resell such securities
only in accordance with the provisions of Regulation S or pursuant to
registration under the Securities Act of 1933. The shares of common stock issued
to the purchaser contain a legend to the effect that transfer is prohibited
except in accordance with the provisions of this Regulation S or pursuant to
registration under the Securities Act of 1933. We will not register any transfer
of the securities unless such transfer is made in accordance with the provisions
of Regulation S or pursuant to registration under the Securities Act of 1933.
In May 2001, we issued 5,000 shares of our common stock to Melissa Day, our
secretary, treasurer and one of our directors, in exchange for $500, or $0.10
per share. The shares were issued in a transaction which we believe satisfies
the requirements of that certain exemption from the registration and prospectus
delivery requirements of the Securities Act of 1933, as amended, which exemption
is specified by the provisions of Section 4(2) of that act. We believe that Ms.
Day has such knowledge and experience in financial and business matters that she
is capable of evaluating the merits and risks of the prospective investment. In
addition, Ms. Day had sufficient access to material information about us because
she is our secretary, treasurer and one of our directors.
In February 2001, we issued 1,000,000 shares of our common stock to Mitch
Keeler, our president and one of our directors, in exchange for $10,000, or
$0.01 per share. The shares were issued in a transaction which we believe
satisfies the requirements of that certain exemption from the registration and
prospectus delivery requirements of the Securities Act of 1933, as amended,
which exemption is specified by the provisions of Section 4(2) of that act. We
believe that Mr. Keeler has such knowledge and experience in financial and
business matters that he is capable of evaluating the merits and risks of the
prospective investment. In addition, Mr. Keeler had sufficient access to
material information about us because he is our president and one of our
directors.
43
Exhibits
- --------
Copies of the following documents are filed with this registration
statement, Form SB-2, as exhibits:
Exhibit No.
- ------------
1. Underwriting Agreement (not applicable)
3.1 Articles of Incorporation*
3.2 Certificate of Amendment to Articles of Incorporation*
3.3 Bylaws*
5. Executed Opinion Re: Legality**
8. Opinion Re: Tax Matters (not applicable)
11. Statement Re: Computation of Per Share Earnings***
15. Letter on unaudited interim financial information (not applicable)
21 Subsidiaries of the Registrant**
23.1 Consent of Auditors
23.2 Consent of Counsel****
* Included in registration statement on Form SB-2 filed on
September 21, 2001.
** Included in registration statement on Form SB-2, Amendment No.1 filed
on November 21, 2001.
*** Included in Financial Statements
**** Included in Exhibit 5
Undertakings
- ------------
A. Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to our directors, officers and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities, other than the payment by us of expenses incurred or paid by
our director, officer or controlling person in the successful defense of any
action, suit or proceeding, is asserted by such director, officer or controlling
person in connection with the securities being registered, we will, unless in
the opinion of our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
B. We hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by Section 10(a)
(3) of the Securities Act of 1933;
(ii) To specify in the prospectus any facts or events
arising after the effective date of the registration
statement, or most recent post-effective amendment
thereof, which, individually or in the aggregate,
represent a fundamental change in the information set
forth in the registration statement. Notwithstanding
the foregoing, any increase or decrease in volume of
securities offered, if the total dollar value of
securities offered would not exceed that which was
registered, and any deviation from the low or high
end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Securities and Exchange Commission pursuant to Rule
424(b), Section 230.424(b) of Regulation S-B, if, in
the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum
aggregate offering price set forth in the
"Calculation of Registration Fee" table in the
effective registration statement; and
(iii) To include any additional or changed material
information with respect to the plan of distribution
not previously disclosed in the registration
statement or any material change to such information
in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
44
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, as amended,
we certify that we have reasonable grounds to believe that we meet all of the
requirements of filing on Form SB-2 and authorized this registration statement
to be signed on our behalf by the undersigned, in the city of San Diego, State
of California, on December 18, 2001.
Global Yacht Services, Inc.,
a Nevada corporation
/s/ Mitch Keeler
- --------------------------------------------
Mitch Keeler
principal executive officer
president, director
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated:
/s/ Mitch Keeler December 18, 2001
- --------------------------------------------
Mitch Keeler
principal executive officer
president, director
/s/ Melissa Day December 18, 2001
- --------------------------------------------
Melissa Day
principal financial officer
secretary, treasurer, director