File Number: 333-91485
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended June 30, 2001
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the
transition period from -------------- to --------------
Commission file number ------------------
Kingsgate Acquisitions, Inc.
------------------------------
(Name of small business
issuer in its charter)
Delaware 6770 98-02116
- --------------------------------------------------------------------------------
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
Wolfgang Schwarz
KINGSGATE ACQUISITIONS, INC.
c/o Look Models International, Inc.
Passauerplatz #1
Vienna 1010, Austria
011-43-1-533-5816
------------------------------------------------------------
(Address and telephone number of principal executive offices,
principal place of business,
and name, address and telephone number of agent
for service of process)
Check whether the registrant filed all documents and reports required to be
filed by Section l2, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. NA
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: As of September 13, 2001,
there are 2,000,000 shares of common stock issued and outstanding. Transitional
Small Business Disclosure Format (Check one): Yes [ ] No [X]
KINGSGATE ACQUISITIONS, INC.
JUNE 30, 2001 QUARTERLY REPORT ON FORM 10-QSB
TABLE OF CONTENTS
Page Number
Special Note Regarding Forward Looking Information..................... 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements........................................... 4
Item 2. Plan of Operation ....... ..................................... 13
Item 3. Quantitative and Qualitative Disclosures About Market Risk..... 15
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.............................................. 15
Item 2. Changes in Securities and Use of Proceeds...................... 15
Item 3. Defaults Upon Senior Securities................................ 15
Item 4. Submission of Matters to a Vote of Security Holders............ 15
Item 5. Other Information.............................................. 15
Item 6. Exhibits and Reports on Form 8-K............................... 15
2
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
To the extent that the information presented in this Quarterly Report on
Form 10-QSB for the quarter ended June 30, 2001 discusses financial projections,
information or expectations about our products or markets, or otherwise makes
statements about future events, such statements are forward- looking. We are
making these forward-looking statements in reliance on the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Although we
believe that the expectations reflected in these forward-looking statements are
based on reasonable assumptions, there are a number of risks and uncertainties
that could cause actual results to differ materially from such forward-looking
statements. These risks and uncertainties are described, among other places in
this Quarterly Report, in "Management's Discussion and Analysis of Financial
Condition and Results of Operations".
In addition, we disclaim any obligations to update any forward-looking
statements to reflect events or circumstances after the date of this Quarterly
Report. When considering such forward-looking statements, you should keep in
mind the risks referenced above and the other cautionary statements in this
Quarterly Report.
3
PART I -- FINANCIAL INFORMATION
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
The condensed financial statements for the periods ended June 30, 2001
included herein have been prepared by Kingsgate Acquisitions, Inc., (the
"Company") without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission (the "Commission"). In the opinion of
management, the statements include all adjustments necessary to present fairly
the financial position of the Company as of June 30, 2001, and the results of
operations and cash flows for the three month periods ended June 30, 2001 and
2000. The Company's results of operations during the three months of the
Company's fiscal year are not necessarily indicative of the results to be
expected for the full fiscal year. The financial statements included in this
report should be read in conjunction with the financial statements and notes
thereto in the Company's Annual Report on Form 10-KSB for the fiscal years ended
December 31, 2000.
STATEMENTS
REPORT OF INDEPENDENT ACCOUNTANTS..............................................5
Balance Sheet as of June 30, 2001 and December 31, 2000....................... 6
Statement of Operations for the six months ended June 30, 2001 and 2000. .....7
Statement of Cash Flows for the six months ended June 30, 2001 and 2000....... 8
Statement of Stockholders' Equity for the six months ended June 30, 2001.......9
Notes to Consolidated Financial Statements................................... 10
4
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Directors of
Kingsgate Acquisitions, Inc. (a development stage company)
I have reviewed the accompanying balance sheet of Kingsgate Acquisitions,
Inc. (a development stage company) as of June 30, 2001, and the related
statements of operations and of cash flows for the six month periods ended June
30, 2000 and 2001. These financial statements are the responsibility of the
Company's management.
I have conducted my review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with auditing standards generally accepted in the United States, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, I do not express such an opinion.
Based on my review, I are not aware of any material modifications that
should be made to the accompanying interim financial statements referred to
above for them to be in conformity with generally accepted accounting
principles.
I previously audited in accordance with generally accepted auditing
standards, the balance sheet as of December 31, 2000, and the related statements
of operations, of changes in shareholders' equity and of cash flows for the
period from inception, September 28, 1999, through December 31, 1999 and for the
year ended December 31, 2000 (not presented herein), and assuming that Kingsgate
Acquisitions, Inc. (a development stage company) will continue as a going
concern. As more fully described in Note 2, the Company is a blank check company
that is dependent upon the success of management to successfully complete a self
underwriting and locate a potential business to acquire and may require
additional capital to enter into any business combination. These conditions
raise substantial doubt about the Company's ability to continue as a going
concern. Management's plans as to these matters are described in Note 2. The
financial statements do not include any adjustments to reflect the possible
effects on the recoverability and classification of assets or the amounts and
classifications of liabilities that may result from the possible inability of
Kingsgate Acquisitions, Inc. (a development stage company) to continue as a
going concern.
Thomas Monahan Certified Public Accountant
Paterson, New Jersey
July 18, 2001
5
KINGSGATE ACQUISITIONS, INC.
(A development stage company)
BALANCE SHEET
December 31, June 30,
2000 2001
Unaudited
----------- ---------
ASSETS
Current assets
Cash $ 7,344 $ 6,564
Escrowed funds receivable 99,888 99,888
---------- --------
Total current assets 107,232 106,452
Total $ 107,232 $ 106,452
========== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accrued liabilities $ 500 $ 500
--------- --------
Total current liabilities $ 500 500
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value;
5,000,000 shares authorized;
-0- shares issued and outstanding
Common stock, $.001 par value;
50,000,000 shares authorized;
At December 31, 2000 and June 30, 2001
there were 3,000,000 and 3,000,000
shares issued and outstanding respctively. 3,000 3,000
Additional paid-in capital 105,215 105,215
Deficit accumulated during the
development stage (1,483) (2,263)
--------- --------
Total stockholders equity 106,732 105,952
--------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 107,232 $ 106,452
========= ========
See notes to financial statements.
6
KINGSGATE ACQUISITIONS, INC.
(A development stage company)
STATEMENT OF OPERATIONS
For the six For the six
months ended months ended
June 30, June 30,
2001 2000
Unaudited unaudited
----------------- -----------
Income $ -0- $ -0-
Costs of goods sold -0- -0-
------ ------
Gross profit -0-
Operations:
General and administrative 780 -0-
Depreciation and Amortization -0- -0-
------ ------
Total costs 780 -0-
Net profit (loss) $ (780) $ -0-
======= =======
PER SHARE AMOUNTS:
Net loss per share -
basic and diluted $(0.00) $ (0.00)
======= ======
Weighted-average number of
shares outstanding -
basic and diluted 3,000,000 3,000,000
========= ==========
See notes to financial statements.
7
KINGSGATE ACQUISITIONS, INC.
(A development stage company)
STATEMENT OF OPERATIONS
For the six For the six
months ended months ended
June 30, June 30,
2001 2000
Unaudited unaudited
----------------- -----------
Income $ -0- $ -0-
Costs of goods sold -0- -0-
------ -----
Gross profit -0- -0-
Operations:
General and administrative 780 -0-
Depreciation and Amortization -0- -0-
------ ------
Total costs 780 -0-
Net profit (loss) $ (780) $ -0-
======= =====
PER SHARE AMOUNTS:
Net profit (loss) per common
share outstanding - basic $ 0.00 $ 0.00
========= ======
WEIGHTED AVERAGE NUMBER OF
SHARES OF COMMON STOCK OUTSTANDING 3,000,000 3,000,000
========== =========
8
KINGSGATE ACQUISITIONS, INC.
(A development stage company)
STATEMENT OF CASH FLOWS
For the six For the six
months ended months ended
June 30, June 30,
2001 2000
Unaudited Unaudited
------------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (780) $ -0-
Item not affecting cash flow
from operations:
Amortization -0- -0-
Accrued expenses -0- -0-
--------- -------
NET CASH USED IN OPERATING ACTIVITIES (780) -0-
CASH USED IN INVESTING ACTIVITIES -0- -0-
TOTAL CASH FLOWS FROM FINANCING ACTIVITIES -0- -0-
Increase (decrease) in cash (780) -0-
Cash balance beginning of period 107,232 8,052
------- -------
CASH, end of period $ 106,452 $ 8,052
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Cash paid for interest $ - $ -
Cash paid for income taxes $ - $ -
See notes to financial statements.
9
KINGSGATE ACQUISITIONS, INC.
(A development stage company)
STATEMENT OF STOCKHOLDERS' EQUITY
Deficit
accumulated
Additional during
Preferred Preferred Common Common paid in development
stock stock stock stock capital stage Total
(shares) ($) (shares) ($) ($) ($) ($)
- ----------------------------------------------------------------------------------------------------
Sale of 2,000,000
shares of
common stock 0 $ 0 2,000,000 $ 2,000 $ 18,000 $ 20,000
Net profit (loss) $ (663) (663)
- ----------------------------------------------------------------------------------------------------
Balance
December 31,1999 0 $ 0 2,000,000 $ 2,000 $ 18,000 $ (663) $ 19,337
Sale of stock 1,000,000 1,000 99,000 100,000
Write off of deferred
offering expenses (11,785) (11,785)
Net income (loss) (820) (820)
- ----------------------------------------------------------------------------------------------------
Balances
December 31, 2000 0 $ 0 3,000,000 $ 3,000 $105,215 $ (1,483) $106,732
Unaudited
Net loss ( 780) ( 780)
- ----------------------------------------------------------------------------------------------------
Balances
June 30, 2001 0 $ 0 3,000,000 $ 3,000 $105,215 $ (2,263) $105,952
See notes to financial statements.
10
KINGSGATE ACQUISITIONS, INC.
(A development stage company)
December 31, 2000 and March 31, 2001
Note A - Basis of Reporting
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q. 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, such statements include all adjustments which are considered
necessary for a fair presentation of the financial position of Kingsgate
Acquisitions, Inc. (the "Company") at June 30, 2001 and the results of its
operations, and cash flows for the six-month period then ended. The results of
operations for the six-month period ended June 30, 2001 are not necessarily
indicative of the operating results for the full year. It is suggested that
these financial statements be read in conjunction with the financial statements
and related disclosures for the year ended December 31, 2000 included in the
Company's Form 10-KSB.
Note B - Net Loss Per Share of Common Stock
Basic and diluted loss per share is computed by dividing consolidated net
loss by the weighted average number of shares of common stock outstanding during
the year. Common stock equivalents are not included in the diluted loss per
share for period from inception, to June 30, 2001 as they are antidilutive.
Note C - Income Taxes
The Company provides for the tax effects of transactions reported in the
financial statements. The provision if any, consists of taxes currently due plus
deferred taxes related primarily to differences between the basis of assets and
liabilities for financial and income tax reporting. The deferred tax assets and
liabilities, if any represent the future tax return consequences of those
differences, which will either be taxable or deductible when the assets and
liabilities are recovered or settled. As of June 30, 2001, the Company had no
material current tax liability, deferred tax assets, or liabilities to impact on
the Company's financial position because the deferred tax asset related to the
Company's net operating loss carryforward and was fully offset by a valuation
allowance.
At June 30, 2001, the Company has net operating loss carry forwards for
income tax purposes of $2,262. This carryforward is available to offset future
taxable income, if any, and expires in the year 2010. The Company's utilization
of this carryforward against future taxable income may become subject to an
annual limitation due to a cumulative change in ownership of the Company of more
than 50 percent.
11
The components of the net deferred tax asset as of June 30, 2001 are as
follows:
Deferred tax asset:
Net operating loss carry forward $ 769
Valuation allowance $ (769)
--------
Net deferred tax asset $ -0-
========
The Company recognized no income tax benefit for the loss generated in the
period from inception, June 7, 1985, to June 30, 2001.
SFAS No. 109 requires that a valuation allowance be provided if it is more
likely than not that some portion or all of a deferred tax asset will not be
realized. The Company's ability to realize benefit of its deferred tax asset
will depend on the generation of future taxable income. Because the Company has
yet to recognize significant revenue from the sale of its products, the Company
believes that a full valuation allowance should be provided.
Note D - Related Party transactions
a. Office Space
Rental of office space and use of office, computer and telecommunications
equipment are provided by the President of the Company on a month to month basis
at a monthly rental of $500 per month commencing with the sale of the units in
the proposed offering until consummation of an acquisition. From the period from
inception, September 28, 1999, to December 31, 1999 and for the three months
ended March 31, 2001, the accrual for rent is $-0-. .
b. Officer Salaries
No officer has received a salary in excess of $100,000.
12
Item 2. PLAN OF OPERATION
Kingsgate does not currently engage in any business activities which
Kingsgate does not currently engage in any business activities which
provide any cash flow. The costs of identifying, investigating, and analyzing
business combinations are being paid with money in Kingsgate's treasury, and not
with proceeds received from Kingsgate's initial public offering.
Kingsgate may seek a business combination in the form of firms which have
recently commenced operations, are developing companies in need of additional
funds for expansion into new products or markets, are seeking to develop a new
product or service, or are established businesses which may be experiencing
financial or operating difficulties and are in need of additional capital. A
business combination may involve the acquisition of, or merger with, a company
which does not need substantial additional capital but which desires to
establish a public trading market for its shares, while avoiding what it may
deem to be adverse consequences of undertaking a public offering itself, such as
time delays, significant expense, loss of voting control and compliance with
various Federal and State securities laws.
The Company through an initial self-underwritten public offering pursuant
to Rule 419 of the Securities Act of 1933, sold 1,000,000 units at $0.10 per
unit raising an aggregate of $100,000. Each unit consisted of one share of
common stock and five two-year redeemable common stock purchase warrants. All
the offering proceeds as well as certificates representing the shares and
warrants purchased in the offering are being held in an escrow account.
On August 16, 2000, the Company entered into a Securities Purchase
Agreement, (the "Agreement") whereby the Company would issue 7,854,400 shares of
common stock to former Sky E-Com shareholders in proportion to their share
holdings. In addition, our founding stockholders will transfer to Sky E-Com's
stockholders 1,500,000 of their shares. Our founders shall continue to hold
500,000 shares, representing 4.6% of the combined entity. The Company's public
stockholders hold 1,000,000 shares, representing 9.2% of the combined entity.
The former stockholders of Sky E-Com will own 9,354,400 shares of our common
stock representing 86.2% of the combined entity.
The acquisition was the subject of a prospectus for the reconfirmation of
the offering and the election to remain investors.
As Of December 31, 2000, the transaction has been rescinded.
Rule 419 required that we complete an acquisition within eighteen months of
the effective date of our registration statement. As we were unable to complete
an acquisition within this time frame, we were required to refund the balance of
our escrow account to our investors. In accordance with Rule 419, we utilized
10% of the proceeds of our offering ($10,000) for expenses relating to updating
our financial statements, and preparing our first post-effective amendment.
Pursuant to our escrow agreement with Chittenden Bank, we advised Chittenden to
refund the balance of our escrow agent to our investors, and Chittenden Bank has
advised us that it did so on March 20, 2002. We completed our acquisition of
Look Models on September 6, 2002, prior to the submission of this registration
statement.
On September 6, 2002, we acquired Look Models International, Inc., a
Delaware corporation. Look Models, along with its wholly-owned subsidiaries,
operates that through its wholly-owned subsidiaries, operates a model agency, an
event marketing, licensing and sponsorship business, and a product development
and distributor business that manufactures and distributes a line of cosmetics
and other related products both in the retail and wholesale sectors.
13
The transaction represents as a reverse acquisition of Kingsgate by LMI,
since the shareholders of LMI will own approximately 85.2% of the post
acquisition common shares of the consolidated entity immediately after the
completion of the transaction. For accounting purposes, the acquisition has been
treated as an acquisition of the Company by LMI and as a recapitalization of
LMI.
In March 2002, Kingsgate refunded the entire $100,000 raised in its public
offering and returned the certificates to the company as a merger was not
completed within the 18 month time frame as set forth in Rule 419 of the
Securities Act of 1933.
Pursuant to the Agreement, the shareholders of LMI agreed to sell to
Kingsgate 100% of all of the issued and outstanding shares of LMI, in exchange
for 10,500,000, $.001 par value, newly issued shares of voting common stock of
Kingsgate. Additionally, 1,000,000, $.001 par value common shares held by
Kingsgate's founders are to be transferred to the founder of LMI, Wolfgang
Schwarz. The transaction was completed in September 2002. After the transaction
and assuming the sale of all 1,000,000 shares of common stock pursuant to this
offering, Kingsgate will have a total of 13,500,000 shares of common stock
issued and outstanding.
The transaction represents as a reverse acquisition of Kingsgate by LMI,
since the shareholders of LMI will own approximately 85.2% of the post
acquisition common shares of the consolidated entity immediately after the
completion of the transaction. For accounting purposes, the acquisition has been
treated as an acquisition of the Company by LMI and as a recapitalization of
LMI.
Kingsgate does intends to raise additional capital prior to consummation of
a business combination within the next twelve months.
14
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable.
PART II OTHER INFORMATION
Item 1. Legal Proceedings.
No legal proceedings were brought, are pending or are threatened during the
quarter.
Item 2. Changes in Securities
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security-Holders
None.
Item 5. Other information
None.
Item 6. Exhibits and Reports on Form 8-K
No 8-K has been filed.
15
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on it behalf by the undersigned, thereunto duly authorized.
/s/Wolfgang Schwarz
- -------------------------- Dated: November 13, 2002
Wolfgang Schwarz
President, Director
/s/Uli Petzold
- -------------------------- Dated: November 13, 2002
Uli Petzold
Secretary, Director