As filed with the Securities and Exchange Commission on July 13, 2005
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1 TO FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
==========
Colorado Signature Leisure, Inc. 50-0012982
(State or Other Jurisdiction of (Name of Registrant in Our (I.R.S. Employer Identification No.)
Incorporation Charter)
or Organization)
Stephen W. Carnes
100 Candace Drive 100 Candace Drive
Suite 100 Suite 100
Maitland, Florida 32751 5990 Maitland, Florida 32751
(Address and telephone number of Principal (Primary Standard Industrial (Name, address and telephone number
Executive Offices and Principal Place of Classification Code Number) of agent for service)
Business)
Copies to:
Clayton E. Parker, Esq. Christopher K. Davies, Esq.
Kirkpatrick & Lockhart Nicholson Graham LLP Kirkpatrick & Lockhart Nicholson Graham LLP
201 S. Biscayne Boulevard, Suite 2000 201 S. Biscayne Boulevard, Suite 2000
Miami, Florida 33131 Miami, Florida 33131
Telephone: (305)539=3300 Telephone: (305)539=3300
Telecopier: (305)358=7095 Telecopier: (305)358=7095
Approximate date of commencement of proposed sale to the public: As
soon as practicable after this registration statement becomes effective.
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933 check the following box. |X|
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 delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. |_|
CALCULATION OF REGISTRATION FEE
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Proposed Maximum
Proposed Maximum Aggregate Amount Of
Title Of Each Class Of Amount To Be Offering Price Offering Registration
Securities To Be Registered Registered Per Share (1) Price (1) Fee
============================================================================================================================
Common Stock, par value $0.0001 per share 164,398,693 shares (2) $0.036 $5,918,353 $696.78
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TOTAL 164,398,693 shares (2) $0.036 $5,918,353 $696.78
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933. For the purposes
of this table, we have used the average of the closing bid and asked
prices as of a recent date.
(2) Of these shares, 163,398,693 are being registered under a Standby Equity
Distribution Agreement and 1,000,000 were issued as a one=time commitment
fee to Katalyst Capital Group, Ltd.
================
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 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
PROSPECTUS
Subject to completion, dated July 13, 2005
SIGNATURE LEISURE, INC.
164,398,693 Shares of Common Stock
This prospectus relates to the sale of up to 164,398,693 shares of
common stock of Signature Leisure, Inc. ("Signature") by certain persons who are
stockholders of Signature, including Katalyst Capital Group, Ltd. ("Katalyst
Capital"). Please refer to "Selling Stockholders" beginning on page 14.
Signature is not selling any shares of common stock in this offering and
therefore will not receive any proceeds from this offering. Signature will,
however, receive proceeds from the sale of common stock under the Standby Equity
Distribution Agreement (the "Equity Distribution Agreement"), which was entered
into on October 26, 2004 between Signature and Katalyst Capital, and no other
stockholders. All costs associated with this registration will be borne by
Signature. Signature has agreed to allow Katalyst Capital to retain 1% of the
proceeds raised under the Equity Distribution Agreement.
Our common stock is quoted on the Over-the-Counter Bulletin Board under
the symbol "SGLS.OB". The shares of common stock are being offered for sale by
the selling stockholders at prices established on the Over-the-Counter Bulletin
Board during the term of this offering. On July 1, 2005, the last reported sale
price of our common stock was $0.031 per share. These prices will fluctuate
based on the demand for the shares of our common stock.
Please refer to "Risk Factors" beginning on page 6.
The Securities and Exchange Commission and state securities regulators
have not approved or disapproved of these securities, or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The information in this prospectus is not complete and may be changed.
Neither the selling stockholders nor we may 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 we are
not soliciting an offer to buy these securities in any state where the offer or
sale is not permitted.
The date of this prospectus is July ___, 2005
TABLE OF CONTENTS
PROSPECTUS SUMMARY.....................................................................................1
THE OFFERING...........................................................................................2
RISK FACTORS...........................................................................................6
FORWARD-LOOKING STATEMENTS............................................................................12
SELLING STOCKHOLDERS..................................................................................13
USE OF PROCEEDS RECEIVED FROM THE EQUITY DISTRIBUTION AGREEMENT.......................................15
DILUTION 16
STANDBY EQUITY DISTRIBUTION AGREEMENT.................................................................17
PLAN OF DISTRIBUTION..................................................................................19
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS............................................20
DESCRIPTION OF BUSINESS...............................................................................25
MANAGEMENT............................................................................................28
DESCRIPTION OF PROPERTY...............................................................................31
LEGAL PROCEEDINGS.....................................................................................31
PRINCIPAL STOCKHOLDERS................................................................................31
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS........................................................32
MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND OTHER STOCKHOLDER MATTERS........33
DESCRIPTION OF SECURITIES.............................................................................34
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANT ON ACCOUNTING AND FINANCIAL DISCLOSURE...................35
EXPERTS 35
LEGAL MATTERS.........................................................................................35
HOW TO GET MORE INFORMATION...........................................................................35
FINANCIAL STATEMENTS.................................................................................F-1
PART II ...........................................................................................II-1
i
PROSPECTUS SUMMARY
The following is only a summary of the information, financial statements
and notes included in this prospectus. You should read the entire prospectus
carefully, including "Risk Factors" and our Financial Statements and the notes
to the Financial Statements before making any investment in Signature.
Overview
Signature Leisure was incorporated in the State of Colorado on March 15,
2000 as JDLPhotos.com. Signature Leisure, Inc. intends to generate revenues
through the operations of Parker Productions, a modeling and event staffing
business. On February 15, 2005 Signature acquired all of the assets of Parker
Productions. Signature Leisure, d.b.a Signature Auto, also intends to invest
additional capital to reestablish operations as an independent dealer in motor
vehicles within the State of Florida as a further means to generate revenue for
the company. Additional capital will be required to re-establish inventory and
renew auto sales operations.
Going Concern
Our consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. As shown in the accompanying
financial statements, we have incurred significant losses since inception. This
factor, among others, may indicate that we will be unable to continue as a going
concern for reasonable period of time. The financial statements do not include
any adjustments relating to the recoverability and classification of liabilities
that might be necessary should we be unable to continue as a going concern. Our
continuation as a going concern is dependent upon our ability to generate
sufficient cash flow to meet our obligations on a timely basis and ultimately to
attain profitability. We have limited capital with which to pursue our business
plan. There can be no assurance that our future operations will be significant
and profitable, or that we will have sufficient resources to meet our
objectives. We intend to conduct debt and equity financings to raise sufficient
capital in order to meet our financial requirements over the next twelve months
and to fund our business plan. There is no assurance that we will be successful
in raising additional funds.
About Us
Our principal executive offices are located at 1000 Candace Drive, Suite
100, Maitland, Florida 32751. Our telephone number is (407) 599-2886, and our
consumer website is located at www.signatureleisure.com.
1
THE OFFERING
This offering relates to the sale of common stock by certain persons
who are, or beneficially deemed to be, stockholders of Signature. Katalyst
Capital intends to sell up to 164,398,693 shares of common stock, 163,398,693 of
which are under the Equity Distribution Agreement, and 1,000,000 shares of
common stock were issued to Katalyst Capital Group as a one-time commitment fee
under the Equity Distribution Agreement. The commitment amount of the Equity
Distribution Agreement is $5,000,000.
On January 20, 2005, we entered into an Equity Distribution Agreement
with Katalyst Capital Group. Under the Equity Distribution Agreement, Signature
may issue and sell to Katalyst Capital Group common stock for a total purchase
price of up to $5,000,000. The purchase price for our shares is equal to 99%, or
a 1% discount, of the offering price, which is defined in the Equity
Distribution Agreement as the lowest volume weighted average price of the common
stock during the five trading days following the notice date. The amount of each
cash advance is subject to a maximum advance amount of $200,000, with no cash
advance occurring within five trading days of a prior advance. Katalyst Capital
Group received 1,000,000 shares of common stock issued as a one-time commitment
fee under the Equity Distribution Agreement on October 26, 2004. Katalyst
Capital Group will be paid a fee equal to 1% of each advance, which will be
retained by Katalyst Capital Group from each advance. On July 7, 2005, Signature
entered into a Placement Agent Agreement with Spencer-Clarke, LLC, a
registered broker-dealer. Pursuant to the Placement Agent Agreement, Signature
paid Spencer - Clarke, LLC, a one-time placement agent fee of $10,000.
As our stock price declines, we would be required to issue a greater
number of shares under the Equity Distribution Agreement for a given advance. If
we do not issue a greater number of shares during a time when our stock price is
declining we will receive a reduced amount of total cash from advances we
receive under the Equity Distribution Agreement. This is demonstrated by the
following table, which shows the number of shares to be issued under the Equity
Distribution Agreement at an assumed offering price of $0.0306 per share and
25%, 50% and 75% discounts to the assumed market price.
Assumed Offering: $0.0306 $0.0230 $0.0153 $0.0077
No. of Shares(1): 163,398,693 163,398,693 163,398,693 163,398,693
Total Outstanding (2): 230,412,857 230,412,857 230,412,857 230,412,857
Percent Outstanding (3): 70.92% 70.92% 70.92% 70.92%
Net Cash to Signature 4,665,000 3,477,500 2,290,000 1,102,500
(1) Represents the number of shares of common stock to be issued to
Katalyst Capital Group, under the Equity Distribution Agreement at the
prices set forth in the table, assuming sufficient authorized shares
are available.
(2) Represents the total number of shares of common stock outstanding after
the issuance of the shares to Katalyst Capital Group, under the Equity
Distribution Agreement, not including shares issued under the secured
convertible debentures and the compensation debenture.
(3) Represents the shares of common stock to be issued as a percentage of
the total number shares outstanding.
2
Common Stock Offered 164,398,693 shares by selling stockholders
Offering Price Market price
Common Stock Outstanding Before the Offering(1) 67,014,164 shares as of July 7, 2005
Use of Proceeds We will not receive any proceeds of the shares offered by
the selling stockholders. Any proceeds we receive from the
sale of common stock under the Equity Distribution Agreement
will be used for general working capital purposes. See "Use
of Proceeds."
Risk Factors The securities offered hereby involve a high degree of risk
and immediate substantial dilution. See "Risk Factors" and
"Dilution."
Over-the-Counter Bulletin Board Symbol SGLS.OB
===============
(1) Excludes up to 163,398,693 shares of our common stock that will be issued
under the Equity Distribution Agreement.
3
SUMMARY FINANCIAL INFORMATION
FOR SIGNATURE LEISURE, INC.
FOR THE FOR THE YEAR ENDED FOR THE YEAR ENDED
BALANCE SHEET DATA THREE MONTHS ENDED DECEMBER 31, DECEMBER 31,
MARCH 31, 2005 2004 2003
============== ============== ==============
Assets
Current assets:
Cash $ 1,388 $ 10,749 $ 101,513
Deposit 5,500
Accounts receivable, net 4,695 == ==
============== ============== ==============
Total current assets 6,083 == ==
Intangible assets (Note 7):
Website, net 9,583 == ==
Contact list, net 9,583 == ==
============== ============== ==============
25,249
Liabilities and Shareholders' Deficit
Current liabilities:
Accounts payable $ 29,379 $ 19,162 $ 14,200
Accrued liabilities 2,200 4,500 ==
Indebtedness to related parties (Note 2) 964,213 732,128 125,000
Note payable (Note 4) 45,000 25,000 ==
Accrued interest payable (note 4) 2,663 159 ==
============== ============== ==============
Total current liabilities 1,043,455 780,949 139,200
============== ============== ==============
Shareholders' deficit (Note 6):
Preferred stock, $.001 par value,
10,000,000 shares authorized,
=0= shares issued and outstanding == ==
Common stock, $.0001 par value,
500,000,000 shares authorized, 13,464,164 shares
issued and outstanding as of March 31, 2005;
10,439,130 shares issued and outstanding as of
December 31, 2006 1,346 1,044 3,847
Additional paid=in capital 2,919,598 2,574,205 1,281,878
Outstanding stock option 600
============== ============== ==============
Retained deficit (3,939,150) (3,345,449) (1,442,912)
============== ============== ==============
Total shareholders' deficit (1,018,206) (770,200) (32,107)
============== ============== ==============
$ 25,249 $ 10,749 $ 107,013
============== ============== ==============
The accompanying notes are an integral part of these financial statements.
4
SUMMARY FINANCIAL INFORMATION FOR
SIGNATURE LEISURE, INC. AND SUBSIDIARIES
FOR THE FOR THE FOR THE FOR THE YEAR
THREE MONTHS ENDED THREE MONTHS ENDED YEAR ENDED ENDED
MARCH 31, MARCH 31, DECEMBER 31, DECEMBER 31,
2005 2004 2004 2003
STATEMENT OF OPERATIONS ================ ================ ================ ================
Revenues:
Vehicle sales $ -- $ 60,772 $ -- $ --
Service revenues 7,315 -- -- --
================ ================ ================ ================
Total revenue 7,315 60,772 228,867 --
Operating expenses:
Cost of sales:
Vehicles -- 65,682 232,168 --
Contract services 4,669 -- -- --
Stock=based compensation (Note 6):
Business plan services -- -- -- 10,800
Legal services 50,000 0 40,000 90,000
Health and fitness consulting -- -- -- 16,138
Public relations services -- -- 65,500 238,692
Stock options -- -- -- 125,000
Other business consulting 294,425 289,480 608,600 430,240
Contributed rent and services (Note 2) 1,271 == 424 153,285
General and administrative 249,707 111,641 1,183,019 254,687
================ ================ ================ ================
Operating expenses 600,072 466,803 2,129,711 1,318,842
================ ================ ================ ================
Operating loss (592,757) (406,031) (1,900,844) (1,318,842)
Interest expense (944) (98) (1,693) --
================ ================ ================ ================
Loss before income taxes (593,701) (406,129) (1,902,537) (1,318,842)
Provision for income taxes (Note 5) -- --
================ ================ ================ ================
Net loss $ (593,701) $ (406,129) $ (1,902,537) $ (1,318,842)
================ ================ ================ ================
Weighted average loss per share:
Basic and diluted $ (0.05) $ (0.37) $ (1.05) $ (1.48)
================ ================ ================ ================
Weighted average number of shares of common
stock outstanding 11,965,206 1,086,496 1,808,275 894,049
================ ================ ================ ================
* Restated for 40:1 reverse stock split (see Note 9).
The accompanying notes are an integral part of these financial statements.
5
RISK FACTORS
We Are Subject To Various Risks That May Materially Harm Our Business, Financial
Condition And Results Of Operations
You should carefully consider the risks and uncertainties described
below and the other information in this filing before deciding to purchase our
common stock. If any of these risks or uncertainties actually occurs, our
business, financial condition or operating results could be materially harmed.
In that case, the trading price of our common stock could decline and you could
lose all or part of your entire investment.
Risks Related To Our Business
Signature Has Historically Lost Money And Losses May Continue In The Future,
Which May Cause Us To Curtail Operations
Since our inception we have not been profitable and have lost money on
both a cash and non-cash basis. For the years ended December 31, 2004 and
December 31, 2003 we incurred net losses of $1,902,537 and $1,318,842
respectively. For the three months ended March 31, 2005 we incurred a net loss
of $593,701 and had a retained operating deficit of $1,018,206 as of March 31,
2005. Future losses are likely to occur, as we are dependent on spending money
to pay for our operations. No assurances can be given that we will be successful
in reaching or maintaining profitable operations. Accordingly, we may experience
liquidity and cash flow problems. If our losses continue, our ability to operate
may be severely impacted.
Management Recognizes That We Must Raise Additional Financing To Fund Our
Ongoing Operations And Implement Our Business Plan Or We Could Be Forced To
Curtail Or Cease Operations
It is imperative that we obtain debt and/or equity financing to
implement our business plan and to finance ongoing operations. There can be no
assurance that any new capital will be available or that adequate funds will be
sufficient for our operations, whether from financial markets, or that other
arrangements will be available when needed or on terms satisfactory to our
management. Our failure to obtain adequate additional financing may require us
to delay, curtail or scale back some or all of our operations and may hinder our
ability to expand our business. Any additional financing may involve dilution to
our then-existing shareholders, which could result in a decrease in the price of
our shares.
Currently, we are dependent upon external financing to fund our
operations. Our financing needs are expected to be provided, in large part, by
our Equity Distribution Agreement. The amount of each advance under the Equity
Distribution Agreement is subject to a maximum amount equal to $200,000. Because
of this maximum advance restriction, we may not be able to access sufficient
funds when needed. If the market price of our shares of common stock declines,
we would be required to issue more shares of common stock in order to draw down
the same dollar amount of an advance than if our stock price were higher.
We Have Been The Subject of a Going Concern Opinion By Our Independent Auditors
Which Have Raised Substantial Doubt As To Our Ability To Continue As A Going
Concern
Our consolidated financial statements have been prepared assuming we
will continue as a going concern. Our net loss for the fiscal year ended
December 31, 2004 was $1,902,537 and for three months ended March 31, 2005 our
net loss was $593,701. Our retained deficit was $3,345,449 at December 31, 2004
and $1,018,206 for the three months ended March 31, 2004. These factors, among
others, raise substantial doubt about the Company's ability to continue as a
going concern. Assurances cannot be given that adequate financing can be
obtained to meet our capital needs. If we are unable to generate profits and
unable to continue to obtain financing to meet our working capital requirements,
we may have to curtail our business sharply or cease operations altogether. Our
continuation as a going concern is dependent upon our ability to generate
sufficient cash flow to meet our obligations on a timely basis, to retain our
current financing, to obtain additional financing, and, ultimately, to attain
profitability. Should any of these events not occur, the accompanying financial
statements will be adversely effected and we may have to cease operations.
6
Our Common Stock May Be Affected By Limited Trading Volume And May Fluctuate
Significantly, Which May Affect Our Shareholders' Ability To Sell Shares Of Our
Common Stock
Prior to this filing, there has been a limited public market for our
common stock and there can be no assurance that a more active trading market for
our common stock will develop. An absence of an active trading market could
adversely affect our shareholders' ability to sell our common stock in short
time periods, or possibly at all. Our common stock has experienced, and is
likely to experience in the future, significant price and volume fluctuations,
which could adversely affect the market price of our common stock without regard
to our operating performance. In addition, we believe that factors such as
quarterly fluctuations in our financial results and changes in the overall
economy or the condition of the financial markets could cause the price of our
common stock to fluctuate substantially. These fluctuations may also cause short
sellers to enter the market from time to time in the belief that we will have
poor results in the future. We cannot predict the actions of market participants
and, therefore, can offer no assurances that the market for our stock will be
stable or appreciate over time. The factors may negatively impact shareholders'
ability to sell shares of our common stock.
We Could Fail To Attract Or Retain Key Personnel, Which Could Be Detrimental To
Our Operations
Our success largely depends on the efforts and abilities of our President,
Stephen W. Carnes. The loss of his services could materially harm our business
because of the cost and time necessary to find their successors. Such a loss
would also divert management attention away from operational issues. We do not
presently maintain key-man life insurance policies on our Chief Executive
Officer. We also have other key employees who manage our operations and if we
were to lose their services, senior management would be required to expend time
and energy to find and train their replacements. To the extent that we are
smaller than our competitors and have fewer resources we may not be able to
attract the sufficient number and quality of staff.
Future Acquisitions May Disrupt Our Business And Deplete Our Financial Resources
Any future acquisitions we make could disrupt our business and seriously
harm our financial condition. We intend to consider investments in complementary
companies and products. While we have no current agreements to do so, we
anticipate buying businesses in the future in order to fully implement our
business strategy. In the event of any future acquisitions, we may:
o issue stock that would dilute our current stockholders' percentage
ownership;
o incur debt;
o assume liabilities;
o incur amortization expenses related to goodwill and other intangible
assets; or
o incur large and immediate write-offs.
The use of debt or leverage to finance our future acquisitions should
allow us to make acquisitions with an amount of cash in excess of what may be
currently available to us. If we use debt to leverage up our assets, we may not
be able to meet our debt obligations if our internal projections are incorrect
or if there is a market downturn. This may result in a default and the loss in
foreclosure proceedings of the acquired business or the possible bankruptcy of
our business.
Our operation of any acquired business will also involve numerous risks,
including:
o integration of the operations of the acquired business and its
products;
o unanticipated costs;
o diversion of management's attention from our core business;
o adverse effects on existing business relationships with suppliers
and customers;
o risks associated with entering markets in which we have limited
prior experience; and
7
o potential loss of key employees, particularly those of the purchased
organizations.
We Are Subject To Price Volatility Due To Our Operations Materially Fluctuating;
As A Result, Any Quarter-To-Quarter Comparisons In Our Financial Statements May
Not Be Meaningful
As a result of the evolving nature of the markets in which we compete, as
well as the current nature of the public markets and our current financial
condition, we believe that our operating results may fluctuate materially, as a
result of which quarter-to-quarter comparisons of our results of operations may
not be meaningful. If in some future quarter, whether as a result of such a
fluctuation or otherwise, our results of operations fall below the expectations
of securities analysts and investors, the trading price of our common stock
would likely be materially and adversely affected. You should not rely on our
results of any interim period as an indication of our future performance.
Additionally, our quarterly results of operations may fluctuate significantly in
the future as a result of a variety of factors, many of which are outside our
control. Factors that may cause our quarterly results to fluctuate include,
among others:
o our ability to retain existing clients and customers;
o our ability to attract new clients and customers at a steady rate;
o our ability to maintain client satisfaction;
o the extent to which our products gain market acceptance;
o the timing and size of client and customer purchases;
o introductions of products and services by competitors;
o price competition in the markets in which we compete;
o our ability to attract, train, and retain skilled management;
o the amount and timing of operating costs and capital expenditures
relating to the expansion of our business, operations, and
infrastructure; and
o general economic conditions and economic conditions specific to
media distribution and music.
We May Not Be Able To Compete Effectively In Markets Where Our Competitors Have
More Resources
Many of our competitors have longer operating histories, larger customer
bases, longer relationships with clients, and significantly greater financial,
technical, marketing, and public relations resources than Signature. Based on
total assets and annual revenues, we are significantly smaller than many of our
competitors. Similarly, we compete against significantly larger and
better-financed companies in our business. We may not successfully compete in
any market in which we conduct business currently or in the future. The fact
that we compete with established competitors who have substantially greater
financial resources and longer operating histories than us, enables them to
engage in more substantial advertising and promotion and attract a greater
number of customers and business than we currently attract. While this
competition is already intense, if it increases, it could have an even greater
adverse impact on our revenues and profitability.
We May Be Unable To Manage Growth, Which May Impact Our Potential Profitability
Successful implementation of our business strategy requires us to manage
our growth. Growth could place an increasing strain on our management and
financial resources. To manage growth effectively, we will need to:
o Establish definitive business strategies, goals and objectives.
o Maintain a system of management controls.
o Attract and retain qualified personnel, as well as, develop, train
and manage management-level and other employees.
8
If we fail to manage our growth effectively, our business, financial
condition or operating results could be materially harmed, and our stock price
may decline.
Risks Related To This Offering
Future Sales By Our Stockholders May Negatively Affect Our Stock Price And Our
Ability To Raise Funds In New Stock Offerings
Sales of our common stock in the public market following this offering
could lower the market price of our common stock. Sales may also make it more
difficult for us to sell equity securities or equity-related securities in the
future at a time and price that our management deems acceptable or at all. Of
the 67,014,164 shares of common stock outstanding as of July 7, 2005, 14,222,165
shares are, or will be, freely tradable without restriction, unless held by our
"affiliates". The remaining 52,790,999 of common stock, which will be held by
existing stockholders, including the officers and directors, are "restricted
securities" and may be resold in the public market only if registered or
pursuant to an exemption from registration. Some of these shares may be resold
under Rule 144.
Existing Shareholders Will Experience Significant Dilution From Our Sale Of
Shares Under The Equity Distribution Agreement
The sale of shares pursuant to the Equity Distribution Agreement will have
a dilutive impact on our stockholders. For example, if the offering occurred on
July 1, 2005 at an assumed offering price of $0.0306 per share, the new
stockholders would experience an immediate dilution in the net tangible book
value of $0.0101 per share. As a result our net income per share could decrease
in future periods, and the market price of our common stock could decline. In
addition, the lower our stock price, the more shares of common stock we will
have to issue in order to receive the maximum cash advance allowed under the
Equity Distribution Agreement. If our stock price is lower, then our existing
stockholders would experience greater dilution. Katalyst Capital Group Will Pay
Less Than The Then-Prevailing Market Price And Will Have An Incentive To Sell
Its Shares, Which May Cause The Price Of Our Common Stock To Decline
Katalyst Capital Group will purchase shares of our common stock pursuant
to the Equity Distribution Agreement at a purchase price that is less than the
then-prevailing market price of our common stock. Katalyst Capital Group will
have an incentive to immediately sell any shares of our common stock that it
purchases pursuant to the Equity Distribution Agreement to realize a gain on the
difference between the purchase price and the then-prevailing market price of
our common stock. To the extent Katalyst Capital Group sells its common stock,
the common stock price may decrease due to the additional shares in the market.
This could allow Katalyst Capital Group to sell greater amounts of common stock,
the sales of which would further depress the stock price.
The Selling Stockholders Intend To Sell Their Shares Of Common Stock In The
Market, Which Sales May Cause Our Stock Price To Decline
The selling stockholders intend to sell in the public market 164,398,639
shares of common stock being registered in this offering. That means that up to
164,398,639 shares may be sold pursuant to this registration statement. Such
sales may cause our stock price to decline. Our officers and directors and those
shareholders who are significant shareholders as defined by the SEC will
continue to be subject to the provisions of various insider trading and Rule 144
regulations.
The Sale Of Our Stock Under Our Equity Distribution Agreement Could Encourage
Short Sales By Third Parties, Which Could Contribute To The Future Decline Of
Our Stock Price
In many circumstances the provision of financing based on the distribution
of equity for companies that are traded on the Over-the-Counter Bulletin Board
has the potential to cause a significant downward pressure on the price of
common stock. This is especially the case if the shares being placed into the
market exceed the market's ability to take up the increased stock or if
Signature has not performed in such a manner to show that the equity funds
raised will be used to grow Signature. Such an event could place further
9
downward pressure on the price of common stock. Under the terms of our Equity
Distribution Agreement, we may request numerous cash advances. Even if we use
the cash advances to grow our revenues and profits or invest in assets that are
materially beneficial to us, the opportunity exists for short sellers and others
to contribute to the future decline of our stock price. If there are significant
short sales of stock, the price decline that would result from this activity
will cause the share price to decline more so which in turn may cause long
holders of the stock to sell their shares thereby contributing to sales of stock
in the market. If there is an imbalance on the sell side of the market for our
stock, the price will likely decline.
Our Common Stock May Be Affected By Limited Trading Volume And May Fluctuate
Significantly, Which May Affect Our Shareholders' Ability To Sell Shares Of Our
Common Stock
Prior to this filing, there has been a limited public market for our
common stock and there can be no assurance that a more active trading market for
our common stock will develop. An absence of an active trading market could
adversely affect our shareholders' ability to sell our common stock in short
time periods, or possibly at all. Our common stock has experienced, and is
likely to experience in the future, significant price and volume fluctuations,
which could adversely affect the market price of our common stock without regard
to our operating performance. In addition, we believe that factors such as
quarterly fluctuations in our financial results and changes in the overall
economy or the condition of the financial markets could cause the price of our
common stock to fluctuate substantially. These fluctuations may also cause short
sellers to enter the market from time to time in the belief that we will have
poor results in the future. We cannot predict the actions of market participants
and, therefore, can offer no assurances that the market for our stock will be
stable or appreciate over time. The factors may negatively impact shareholders'
ability to sell shares of our common stock.
Our Common Stock Is Deemed To Be "Penny Stock," Which May Make It More Difficult
For Investors To Sell Their Shares Due To Suitability Requirements
Our common stock is deemed to be "penny stock" as that term is defined in
Rule 3a51-1 promulgated under the Securities Exchange Act of 1934. These
requirements may reduce the potential market for our common stock by reducing
the number of potential investors. This may make it more difficult for investors
in our common stock to sell shares to third parties or to otherwise dispose of
them. This could cause our stock price to decline. Penny stocks are stock:
o With a price of less than $5.00 per share;
o That are not traded on a "recognized" national exchange;
o Whose prices are not quoted on the NASDAQ automated quotation system
(NASDAQ listed stock must still have a price of not less than $5.00
per share); or
o In issuers with net tangible assets less than $2.0 million (if the
issuer has been in continuous operation for at least three years) or
$10.0 million (if in continuous operation for less than three
years), or with average revenues of less than $6.0 million for the
last three years.
o Broker/dealers dealing in penny stocks are required to provide
potential investors with a document disclosing the risks of penny
stocks. Moreover, broker/dealers are required to determine whether
an investment in a penny stock is a suitable investment for a
prospective investor.
The Price You Pay In This Offering Will Fluctuate And May Be Higher Or Lower
Than The Prices Paid By Other People Participating In This Offering
The price in this offering will fluctuate based on the prevailing market
price of the common stock on the Over-the-Counter Bulletin Board. Accordingly,
the price you pay in this offering may be higher or lower than the prices paid
by other people participating in this offering.
We May Not Be Able To Access Sufficient Funds Under The Equity Distribution
Agreement When Needed
We are dependent on external financing to fund our operations. Our
financing needs are expected to be substantially provided from the Equity
Distribution Agreement we have signed with Katalyst Capital Group. No assurances
can be given that such financing will be available in sufficient amounts or at
all when needed, in part, because we are limited to a maximum cash advance of
$200,000 during any seven trading day period. Based on an assumed market price
of $0.0306 per share, we will be able to draw a total amount of $5,000,000 in
gross proceeds under the Equity Distribution Agreement. This amount will utilize
all of the 163,398,693 shares of our common stock registered for the Equity
Distribution Agreement under this registration statement. If the actual average
price at which we sell shares of common stock under the Equity Distribution
Agreement is less than $0.0306 per share, we would need to register additional
shares to fully utilize the funds available under the Equity Distribution
Agreement.
10
We May Not Be Able To Obtain A Cash Advance Under The Equity Distribution
Agreement If Katalyst Capital Group Holds More Than 9.9% Of Our Common Stock
In the event Katalyst Capital Group holds more than 9.9% of our
then-outstanding common stock, we will be unable to obtain a cash advance under
the Equity Distribution Agreement. A possibility exists that Katalyst Capital
Group may own more than 9.9% of our outstanding common stock at a time when we
would otherwise plan to make an advance under the Equity Distribution Agreement.
In that event, if we are unable to obtain additional external funding or
generate revenue from the sale of our products, we could be forced to curtail or
cease our operations.
11
FORWARD-LOOKING STATEMENTS
Information included or incorporated by reference in this prospectus may
contain forward-looking statements. This information may involve known and
unknown risks, uncertainties and other factors which may cause our actual
results, performance or achievements to be materially different from the future
results, performance or achievements expressed or implied by any forward-looking
statements. Forward-looking statements, which involve assumptions and describe
our future plans, strategies and expectations, are generally identifiable by use
of the words "may," "will," "should," "expect," "anticipate," "estimate,"
"believe," "intend" or "project" or the negative of these words or other
variations on these words or comparable terminology.
This prospectus contains forward-looking statements, including statements
regarding, among other things, (a) our projected sales and profitability, (b)
our growth strategies, (c) anticipated trends in our industry, (d) our future
financing plans and (e) our anticipated needs for working capital. These
statements may be found under "Management's Discussion and Analysis" and
"Description of Business," as well as in this prospectus generally. Actual
events or results may differ materially from those discussed in forward-looking
statements as a result of various factors, including, without limitation, the
risks outlined under "Risk Factors" and matters described in this prospectus
generally. In light of these risks and uncertainties, there can be no assurance
that the forward-looking statements contained in this prospectus will in fact
occur.
12
SELLING STOCKHOLDERS
The following table presents information regarding the selling
stockholders. The selling shareholders are the entities who have assisted in or
provided financing to Signature. A description of each selling shareholder's
relationship to Signature and how each selling shareholder acquired the shares
to be sold in this offering is detailed in the information immediately following
this table.
Percentage of Percentage
of Outstanding Percentage
Outstanding Shares to be Shares to Be of Shares
Shares Acquired Acquired Beneficially
Shares Beneficially under the under the Owned
Beneficially Owned Equity Equity Shares to be After
Owned Before Before Distribution Distribution Sold in the Offering
Selling Stockholder Offering Offering (1) Agreement Agreement Offering (1)
Shares Acquired in Financing Transactions with Signature
Katalyst Capital
Group, Ltd. 1,000,000 1.49% 163,398,693 70.92% 164,398,693(2) 0%
Consultants and Others
____________________
=========== ======== =========== ========= ============= =========
Total 1,000,000 1.49% 163,398,693 70.92% 164,398,693 0%
=========== ======== =========== ========= ============= =========
* Equals less than 1%.
(1) Applicable percentage of ownership is based on 67,014,164 shares of common
stock outstanding as of July 7, 2005, together with securities exercisable
or convertible into shares of common stock within 60 days of July 7, 2005,
for each stockholder. 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. Shares of
common stock subject to securities exercisable or convertible into shares
of common stock that are currently exercisable or exercisable within 60
days of July 7, 2005 are deemed to be beneficially owned by the person
holding such securities for the purpose of computing the percentage of
ownership of such person, but are not treated as outstanding for the
purpose of computing the percentage ownership of any other person. Note
that affiliates are subject to Rule 144 and Insider trading regulations -
percentage computation is for form purposes only.
(2) Includes the 163,398,693 shares to be acquired by Katalyst Capital Group
under the Equity Distribution Agreement and 1,000,000 shares of common
stock received as a one-time commitment fee under the Equity Distribution
Agreement.
The following information contains a description of each selling
shareholder's relationship to Signature and how each selling shareholder
acquired the shares to be sold in this offering is detailed below. None of the
selling stockholders have held a position or office, or had any other material
relationship, with Signature, except as follows:
Shares Acquired In Financing Transactions With Signature
Katalyst Capital Group, Ltd. Katalyst Capital Group is the investor under
the Equity Distribution Agreement. All investment decisions of, and control of,
Katalyst Capital Group are held by Jason Tribeca. Katalyst Capital Group
acquired all shares being registered in this offering in financing transactions
with Signature. Those transactions are explained below:
Equity Distribution Agreement. On October 26, 2004, we entered into an
Equity Distribution Agreement with Katalyst Capital Group. Under the Equity
Distribution Agreement, Signature may issue and sell to Katalyst Capital Group
common stock for a total purchase price of up to $5,000,000. The purchase price
for the shares is equal to 99% of the market price, which is defined in the
Equity Distribution Agreement as the lowest volume weighted average price of the
common stock during the five trading days following the notice date. The amount
of each advance is subject to an aggregate maximum advance amount of $200,000,
with no advance occurring within seven trading days of a prior advance. In
connection with the Equity Distribution Agreement, Katalyst Capital Group
received 1,000,000 shares of our common stock as a one-time commitment fee.
Katalyst Capital Group is entitled to retain a fee of 1% of each cash advance.
There are certain risks related to sales by Katalyst Capital Group,
including:
The outstanding shares will be issued based on discount to the market
rate. As a result, the lower the stock price around the time Katalyst Capital
Group is issued shares, the greater likelihood that Katalyst Capital Group
receives more shares.
13
To the extent Katalyst Capital Group sells its common stock, the common
stock price may decrease due to the additional shares in the market. This could
allow Katalyst Capital Group to sell greater amounts of common stock, the sales
of which would further depress the stock price.
The significant downward pressure on the price of the common stock as
Katalyst Capital Group sells material amounts of common stocks could encourage
short sales by third parties. This could place further downward pressure on the
price of the common stock.
Spencer-Clarke, LLC. On July 7, 2005, we entered into a Placement
Agent Agreement with Spencer-Clarke, LLC , a registered broker-dealer.
Pursuant to the Placement Agent Agreement, we paid Spencer - Clarke, LLC a
one-time placement agent fee of $10,000.
With respect to the sale of unregistered securities referenced above, all
transactions were exempt from registration pursuant to Section 4(2) of the
Securities Act of 1933 (the "1933 Act"), and Regulation D promulgated under the
1933 Act. In each instance, the purchaser had access to sufficient information
regarding Signature so as to make an informed investment decision. More
specifically, we had a reasonable basis to believe that each purchaser was an
"accredited investor" as defined in Regulation D of the 1933 Act and otherwise
had the requisite sophistication to make an investment in our securities.
14
USE OF PROCEEDS
RECEIVED FROM THE EQUITY DISTRIBUTION AGREEMENT
This prospectus relates to shares of our common stock that may be offered
and sold from time to time by certain selling stockholders. There will be no
proceeds to us from the sale of shares of common stock in this offering.
However, we will receive proceeds from the sale of 163,398,693 shares of common
stock to Katalyst Capital Group under the Equity Distribution Agreement. The
purchase price under the Equity Distribution Agreement of the shares purchased
under the Equity Distribution Agreement will be equal to 99% of the market price
which is defined as the lowest volume weighted average price of our common stock
on the Over-the=Counter Bulletin Board for the five days immediately following
the notice date. As an additional fee we will pay Katalyst Capital Group 1% of
each cash advance we receive.
Pursuant to the Equity Distribution Agreement, we cannot receive a cash
advance for more than $200,000 every seven trading days or more than $5,000,000
over 24 months. We are issuing 163,398,693 shares of common stock under this
registration statement in connection with the Equity Distribution Agreement. If
we were to utilize the entire $5,000,000 available under the Equity Distribution
Agreement, we should receive $4,865,000 in net proceeds.
For illustrative purposes only, we have set forth below our intended use
of proceeds for the range of net proceeds indicated below to be received under
the Equity Distribution Agreement. The table assumes estimated offering expenses
of $85,000, plus a 1% retainer payable to Katalyst Capital Group under the
Equity Distribution Agreement. The figures below are estimates only, and may be
changed due to various factors, including the timing of the receipt of the
proceeds.
Gross proceeds $1,000,000 $3,000,000 $5,000,000
Net proceeds $905,000 $2,885,000 $4,865,000
No. of shares issued under the Equity Distribution
Agreement at an assumed offering price of $0.0306 32,679,738 98,039,216 163,398,693
USE OF PROCEEDS: AMOUNT AMOUNT AMOUNT
====================================================== ======================= ======================= =====================
Business Development $ 300,000 $ 885,000 $ 2,000,000
Infrastructure and Improvements 100,000 500,000 565,000
Operating Capital 505,000 1,500,000 2,300,000
Total $ 905,000 $ 2,885,000 $ 4,865,000
===========================================================================================================================
15
DILUTION
Our net tangible book value as of March 31, 2005 was a deficit of
$(1,042,067) or $(0.0774) per share of common stock. Net tangible book value per
share is determined by dividing out tangible book value (total tangible assets
less total liabilities) by the number of outstanding shares of our common stock.
Since this offering is being made solely by the selling stockholders and none of
the proceeds will be paid to Signature, our net tangible book value will be
unaffected by this offering. Our net tangible book value and our net tangible
book value per share, however, will be impacted by the common stock to be issued
under the Equity Distribution Agreement. The amount of dilution will depend on
the offering price and number of shares to be issued under the Equity
Distribution Agreement. The following example shows the dilution to new
investors at an assumed offering price of $0.0306 per share, which is in the
range of the recent share price.
If we assume that we had issued 163,398,693 common stock under the
Equity Distribution Agreement at an assumed offering price of $0.0306 per share
(i.e., the number of shares registered in this offering under the Equity
Distribution Agreement), less retention fees equal to 1% of the advances we will
receive from Katalyst Capital Group and offering expenses of $85,000, our net
tangible book value as of March 31, 2005 would have been $3,822,933 or $0.0216
per share. Katalyst Capital Group would receive a 1% discount to the per=share
price on the purchase of 163,398,693 shares of common stock. Such an offering
would represent an immediate increase in the net tangible book value to existing
stockholders of $0.0990 per share and an immediate dilution to new stockholders
of $0.0990 per share. The following table illustrates the per share dilution:
Assumed offering price per share $0.0306
Net tangible book value per share before this offering $(0.774)
Increase attributable to new investors $0.0990
=========
Net tangible book value per share after this offering $0.0216
========
Dilution per share to new stockholders $0.0090
========
The dilution tables set forth on this page are used to show the
dilution that will result to our shareholders caused by our use of the equity
line of credit provided under the Equity Distribution Agreement.
In order to give prospective investors an idea of the dilution per
share they may experience, we have prepared the following table showing the
dilution per share at various assumed market prices:
DILUTION
ASSUMED NO. OF SHARES TO BE PER SHARE
OFFERING PRICE ISSUED TO NEW INVESTORS
$0.0306 163,398,693(1) $0.0090
$0.0230 163,398,693 $0.0083
$0.0153 163,398,693 $0.0077
$0.0077 163,398,693 $0.0070
(1) This represents the maximum number of shares of common stock that are
being registered under the Equity Distribution Agreement at this time.
16
STANDBY EQUITY DISTRIBUTION AGREEMENT
Summary
On January 20, 2005, we entered into an Equity Distribution Agreement
with Katalyst Capital Group. Pursuant to the Equity Distribution Agreement, we
may, at our discretion, periodically sell to Katalyst Capital Group shares of
common stock for a total purchase price of up to $5,000,000. For each share of
common stock purchased under the Equity Distribution Agreement, Katalyst Capital
Group will pay us 99% of the lowest volume weighted average price of our common
stock on the Over=the=Counter Bulletin Board or other principal market on which
our common stock is traded for the five days immediately following the notice
date. The number of shares purchased by Katalyst Capital Group for each cash
advance is determined by dividing the amount of each advance by the purchase
price for the shares of common stock. Further, Katalyst Capital Group will
retain 1% of each cash advance we receive under the Equity Distribution
Agreement. Katalyst Capital Group is a private limited partnership whose
business operations are conducted through its general partner, Yorkville
Advisors, LLC. In addition, we engaged Spencer = Clarke, a registered
broker=dealer, as our placement agent in connection with the Equity Distribution
Agreement. For its services, Spencer = Clarke received $10,000. The
effectiveness of the sale of the shares under the Equity Distribution Agreement
is conditioned upon us registering the shares of common stock with the SEC and
obtaining all necessary permits or qualifying for exemptions under applicable
state laws. The costs associated with this registration will be borne by us.
There are no other significant closing conditions to cash advances under the
Equity Distribution Agreement.
Equity Distribution Agreement Explained
Pursuant to the Equity Distribution Agreement, we may periodically sell
shares of common stock to Katalyst Capital Group to raise capital to fund our
working capital needs. The periodic sale of shares is known as an advance. We
may request an advance every seven trading days. A closing will be held the
first trading day after the pricing period at which time we will deliver shares
of common stock and Katalyst Capital Group will pay the advance amount. We may
request cash advances under the Equity Distribution Agreement once the
underlying shares are registered with the SEC. Thereafter, we may continue to
request cash advances until Katalyst Capital Group has advanced us a total
amount of $5,000,000 or 24 months after the effective date of the this
registration statement, whichever occurs first.
The amount of each advance is subject to a maximum amount of $200,000,
and we may not submit a request for an advance within seven trading days of a
prior advance. The amount available under the Equity Distribution Agreement is
not dependent on the price or volume of our common stock. Our ability to request
advances is conditioned upon us registering the shares of common stock with the
SEC. In addition, we may not request cash advances if the shares to be issued in
connection with such advances would result in Katalyst Capital Group owning more
than 9.9% of our outstanding common stock. We would be permitted to make draws
on the Equity Distribution Agreement only so long as Katalyst Capital Group'
beneficial ownership of our common stock remains lower than 9.9% and, therefore,
a possibility exists that Katalyst Capital Group may own more than 9.9% of our
outstanding common stock at a time when we would otherwise plan to make an
advance under the Equity Distribution Agreement.
We do not have any agreements with Katalyst Capital Group regarding the
distribution of such stock, although Katalyst Capital Group has indicated that
it intends to promptly sell any stock received under the Equity Distribution
Agreement.
We cannot predict the actual number of shares of common stock that will
be issued pursuant to the Equity Distribution Agreement, in part, because the
purchase price of the shares will fluctuate based on prevailing market
conditions and we have not determined the total amount of advances we intend to
draw. Nonetheless, we can estimate the number of shares of our common stock that
will be issued using certain assumptions. Assuming we issued the number of
shares of common stock being registered in the accompanying registration
statement at an assumed offering price of $0.0306 per share, we would issue
163,398,693 shares of common stock to Katalyst Capital Group for net proceeds of
$4,865,000. These shares would represent 70.92% of our outstanding common stock
upon issuance. We are registering 163,398,693 shares of common stock for sale
under the Equity Distribution Agreement. Assuming an offering price of $0.0306
per share, we should be able to fully utilize the entire $5,000,000 available
under the Equity Distribution Agreement. If the average price for which we sold
the shares under the Equity Distribution Agreement is lower than $0.0306 per
share, we will need to file another registration statement with the SEC to
register additional shares of common stock to fully utilize the shares we are
registering under the Equity Distribution Agreement.
17
As our stock price declines, we would be required to issue a greater
number of shares under the Equity Distribution Agreement for a given advance. If
we do not issue a greater number of shares during a time when our stock price is
declining we will receive a reduced amount of total cash from advances we
receive under the Equity Distribution Agreement. This is demonstrated by the
following table, which shows the number of shares to be issued under the Equity
Distribution Agreement at an assumed offering price of $0.0306 per share and
25%, 50% and 75% discounts to the assumed market price.
Assumed Offering: $0.0306 $0.0230 $0.0153 $0.0077
No. of Shares(1): 163,398,693 163,398,693 163,398,693 163,398,693
Total Outstanding (2): 230,412,857 230,412,857 230,412,857 230,412,857
Percent Outstanding (3): 70.92% 70.92% 70.92% 70.92%
Net Cash to Signature 4,665,000 3,477,500 2,290,000 1,102,500
(1) Represents the number of shares of common stock to be issued to
Katalyst Capital Group, under the Equity Distribution Agreement at the
prices set forth in the table, assuming sufficient authorized shares
are available.
(2) Represents the total number of shares of common stock outstanding after
the issuance of the shares to Katalyst Capital Group, under the Equity
Distribution Agreement, not including shares issued under the secured
convertible debentures and the compensation debenture.
(3) Represents the shares of common stock to be issued as a percentage of
the total number shares outstanding.
Proceeds used under the Equity Distribution Agreement will be used in the
manner set forth in the "Use of Proceeds" section of this prospectus. We cannot
predict the total amount of proceeds to be raised in this transaction because we
have not determined the total amount of the advances we intend to receive.
Katalyst Capital Group has the ability to permanently terminate its obligation
to purchase shares of our common stock under the Equity Distribution Agreement
if there shall occur any stop order or suspension of the effectiveness of this
registration statement for an aggregate of fifty (50) trading days other than
due to acts by Katalyst Capital Group or if we fail materially to comply with
certain terms of the Equity Distribution Agreement, which remain unsecured for
thirty (30) days after notice from Katalyst Capital Group.
All fees and expenses under the Equity Distribution Agreement will be
borne by us. We expect to incur expenses of approximately $85,000 in connection
with this registration, consisting primarily of professional fees. In connection
with the Equity Distribution Agreement, on January 20, 2005, Katalyst Capital
Group received 1,000,000 shares of common stock as a one=time commitment fee.
18
PLAN OF DISTRIBUTION
The selling stockholders have advised us that the sale or distribution
of our common stock owned by the selling stockholders may be effected by the
selling stockholders as principals or through one or more underwriters, brokers,
dealers or agents from time to time in one or more transactions (which may
involve crosses or block transactions) (i) on the over=the=counter market or on
any other market in which the price of our shares of common stock are quoted or
(ii) in transactions otherwise than in the over=the=counter market or in any
other market on which the price of our shares of common stock are quoted. Any of
such transactions may be effected at market prices prevailing at the time of
sale, at prices related to such prevailing market prices, at varying prices
determined at the time of sale or at negotiated or fixed prices, in each case as
determined by the selling stockholders or by agreement between the selling
stockholders and underwriters, brokers, dealers or agents, or purchasers. If the
selling stockholders effect such transactions by selling their shares of common
stock to or through underwriters, brokers, dealers or agents, such underwriters,
brokers, dealers or agents may receive compensation in the form of discounts,
concessions or commissions from the selling stockholders or commissions from
purchasers of common stock for whom they may act as agent (which discounts,
concessions or commissions as to particular underwriters, brokers, dealers or
agents may be in excess of those customary in the types of transactions
involved).
Katalyst Capital Group is an "underwriter" within the meaning of the
Securities Act of 1933 in connection with the sale of common stock under the
Equity Distribution Agreement. Katalyst Capital Group will pay us 99% of the
lowest volume weighted average price of our common stock on the Over=the=Counter
Bulletin Board or other principal trading market on which our common stock is
traded for the five days immediately following our request for an advance. In
addition, Katalyst Capital Group will retain 1% of the proceeds received by us
under the Equity Distribution Agreement, and received 1,000,000 of our common
stock as a one=time commitment fee. The 1% retainage and the commitment fee are
underwriting discounts. In addition, we engaged Spencer = Clarke, an
unaffiliated registered broker=dealer, to act as our placement agent in
connection with the Equity Distribution Agreement.
We will pay all the expenses incident to the registration, offering and
sale of the shares of common stock to the public other than commissions, fees
and discounts of underwriters, brokers, dealers and agents. If any of these
other expenses exists, we expect the selling stockholders to pay these expenses.
We have agreed to indemnify Katalyst Capital Group and its controlling persons
against certain liabilities, including liabilities under the Securities Act. We
estimate that the expenses of the offering to be borne by us will be
approximately $85,000. The offering expenses consist of: an SEC registration fee
of $696.78, printing expenses of $2,500, accounting fees of $15,000, legal fees
of $50,000 and miscellaneous expenses of $16,803.22. We will not receive any
proceeds from the sale of any of the shares of common stock by the selling
stockholders. We will, however, receive proceeds from the sale of common stock
under the Equity Distribution Agreement.
Katalyst Capital Group is a corporation based in Turks and Caicos, BWI.
Katalyst Capital Group is in the business of investing in and financing public
and private companies. Katalyst Capital Group does not intend to make a market
in our stock or to otherwise engage in stabilizing or other transactions
intended to help support the stock price. Prospective investors should take
these factors into consideration before purchasing our common stock.
Under the securities laws of certain states, the shares of common stock
may be sold in such states only through registered or licensed brokers or
dealers. The selling stockholders are advised to ensure that any underwriters,
brokers, dealers or agents effecting transactions on behalf of the selling
stockholders are registered to sell securities in all fifty states. In addition,
in certain states the shares of common stock may not be sold unless the shares
have been registered or qualified for sale in such state or an exemption from
registration or qualification is available and we have complied with them.
The selling stockholders should be aware that the anti=manipulation
provisions of Regulation M under the Exchange Act will apply to purchases and
sales of shares of common stock by the selling stockholders, and that there are
restrictions on market=making activities by persons engaged in the distribution
of the shares. Under Registration M, the selling stockholders or their agents
may not bid for, purchase, or attempt to induce any person to bid for or
purchase, shares of our common stock while such selling stockholders are
distributing shares covered by this prospectus. The selling stockholders are
advised that if a particular offer of common stock is to be made on terms
constituting a material change from the information set forth above with respect
to the Plan of Distribution, then, to the extent required, a post=effective
amendment to the accompanying registration statement must be filed with the SEC.
19
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
Overview
The current business of Signature includes the operations of Parker
Productions, a modeling and event staffing business, and Signature Auto, an
independent dealer in motor vehicles. Primary focus of operations for the next
12=month period will be Parker Productions' operations, as a currently
functioning entity expected to generate revenues. Signature expects to use
profits from operations to maintain and grow Parker Productions' operations, and
to rebuild the Signature Auto sales business.
The Hurricanes that hit Central Florida in August and September 2004
severely damaged our offices and auto sales facility located at 1111 N. Orlando
Ave, Winter Park, FL 32789 to a level of destruction that Signature and the
facility's landlord agreed to have the lease terminate early, ending on
September 30, 2004.
Subsequently, we relocated to office and warehouse space located at 100
Candace Drive, Suite 100, Maitland, Florida 32751, which is presently being
provided to us at no cost by Renovo Holdings. The Chief Executive Officer of
Renovo Holdings is Stephen Carnes who is also the Chief Executive Officer of
Signature Leisure, Inc. The facility is approximately 3,600 sq. ft.
Management intends to begin working towards starting to rebuild the
auto sales business; however additional working capital will be required in
order to enhance our operations of auto sales. Additionally, Management intends
to pursue and review other business opportunities in addition to the auto sales
operations.
Signature Leisure, Inc. (formerly Valde Connections, Inc.) (formerly
JDLPhotos.com, Inc.), since our inception, has had insufficient revenues to
support operations. Revenue from sales was generally sufficient to cover the
costs of goods, but never developed to a sufficient level to support the
officers' salaries and other overhead expenses.
Parker Productions operations are being developed as a modeling and
event staffing business. The individual models and staff that we provide to
clients operate as independent contractors for Signature. Presently, sales
revenues from operations are very limited, though we continue to work on
building our list of clients. Recent new clients include Lapgevity L.P., Bong
Vodka, Financial Content, Inc. and TCS Audio Carvin Corporation. We have
provided models and staff to assist clients at tradeshows and business
conferences.
Going Concern
Our consolidated financial statements have been prepared assuming we
will continue as a going concern. Our net loss for the fiscal year ended
December 31, 2004 was $1,902,537 and for three months ended March 31, 2005 our
net loss was $593,701. Our retained deficit was $3,345,449 at December 31, 2004
and $1,018,206 for the three months ended March 31, 2004. These factors, among
others, raise substantial doubt about the Company's ability to continue as a
going concern. Assurances cannot be given that adequate financing can be
obtained to meet our capital needs. If we are unable to generate profits and
unable to continue to obtain financing to meet our working capital requirements,
we may have to curtail our business sharply or cease operations altogether. Our
continuation as a going concern is dependent upon our ability to generate
sufficient cash flow to meet our obligations on a timely basis, to retain our
current financing, to obtain additional financing, and, ultimately, to attain
profitability. Should any of these events not occur, the accompanying financial
statements will be adversely effected and we may have to cease operations.
Results Of Operations For The Three Months Ended March 31, 2005,
Compared To The Three Months Ended March 31, 2004
Revenues
During the three months ended March 31, 2005, we had revenues of
$7,315. This was a decrease of $53,457 when compared to our revenues for the
three months ended March 31, 2005. This decrease in revenues was due primarily
to our lack of vehicle sales for the three month period. Through March 31, 2005,
our revenues were derived primarily through our subsidiary Parker Productions,
Inc. from event planning services.
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We believe that our sales will increase as the result of our marketing
efforts, the growth of our internal sales team and our efforts in exploring
additional sales channels for our services.
Cost Of Sales
For the three months ended March 31, 2005, the cost of our sales was
$4,669, as compared to $65,682 for the three months ended March 31, 2004. This
was a decrease in costs to us of $61,013. For the three months ended March 31,
2005, the cost of our services increased primarily because of our lack of sales.
We believe our cost of sales will increase for the next quarter as a result of
our increased sales which management believes may occur as a result of our
increased marketing efforts.
Expenses
For the three months ended March 31, 2005, our general and
administrative expenses were $249,707, as compared to $111,641 for the three
months ended March 31, 2004. This means that our general and administrative
expenses increased by $138,066. The primary reason for this increase is due to
our hiring of additional employees to increase our sales force.
Net Loss
We incurred a net loss of $593,701 for the three month ended March 31,
2005, compared to a net loss of $406,129 for the three months ended March 31,
2004. The increased loss was due primarily to the increase in general and
administrative expenses, stock based compensation for legal services of $50,000
and other business consulting services of $294,425. At March 31, 2005, we had
current assets of $6,083 and current liabilities of $1,043,455, resulting in a
working capital deficit of $1,037,372.
Results Of Operations For The Year Ended December 31, 2004, Compared To
The Year Ended December 31, 2003
Revenues
During the fiscal year ending December 31, 2004, we had revenues of
$228,867 and experienced a net operating loss of $1,902,537. General and
administrative expenses of $1,183,019 and stock=based compensation totaling
$714,100 were primary contributors to the net operating loss.
During the fiscal year ending December 31, 2003, we had no revenues and
experienced a net operating loss of $1,318,842. The net operating loss was
primarily comprised of general and administrative expenses totaling $254,687;
stock=based compensation of $910,870 and contributed rent and services totaling
$153,285.
The significant difference in net operating loss for the fiscal years
ending December 31, 2004 and 2003 is primarily due to a significant increase in
general and administrative expenses for the period ending December 31, 2004.
During the year ended December 31, 2004, we generated $751,850 in
revenues which was an increase in revenues of $470,675 when compared to our
revenues of $281,175 for the year ended December 31, 2003. This increase in
revenues was primarily due to an increase in our advertising budget and the
addition of sales and marketing professionals.
We believe that our sales will increase as the result of our marketing
efforts, the growth of our internal sales team and our efforts in exploring
additional sales channels for our services.
Cost Of Services
For the twelve months ended December 31, 2004, the cost of our services
was $232,168, as compared to $0 for the twelve months ended December 31, 2003.
This was an increase in costs to us of $232,168, primarily based on expenses
related to operations of the business. We believe our cost of services will
increase for the next quarter as a result of our increased operations.
21
Gross Profit
For the twelve months ended December 31, 2004, and for the year ended
December 31, 2004, we did not to have any gross profits.
Expenses
For the twelve months ended December 31, 2004, our general and
administrative expenses were $1,183,019, as compared to $254,687 for the twelve
months ended December 31, 2003. Our general and administrative expenses
increased as a result of several factors. First, there were costs associated
with the opening and operation of the automobile dealership, such costs included
insurance, licenses & permits, marketing, software and legal fees. Additionally,
we had additional consultants that were working with the company with regards to
the automobile dealership. Finally, our interest expense increased by
approximately $1,693 in 2004 due to loans provided to the company from an
officer of the company during the period.
Net Loss
We incurred a net loss of $1,902,537 for the year ended December 31,
2004, compared to a net loss of $1,318,842 for the year ended December 31, 2003.
The increased loss was due primarily to an increase in administrative expenses
at a time when we did not have sufficient sales to offset these expenses. At
December 31, 2004, we had current assets of $10,749 and current liabilities of
$780,949, resulting in a working capital deficit of $770,200.
Liquidity And Capital Resources
As of March 31, 2005 we had approximately $6,083 in cash and cash
equivalents. This amount of available cash is not sufficient to satisfy our need
for working capital for the short term
Cash used in operating activities for the three months ended March 31,
2005 was $33,361 compared to $71,391 for the same period a year earlier. The
cash used in operating activities was mainly a result of our net loss and
operating expenses.
Cash provided by financing activities was $24,000 for the three months
ended March 31, 2005 compared to $0 in the same period for 2004. The cash
provided in 2005 was mainly from the proceeds of notes and the issuance of
common stock.
We continue to experience substantial cash flow difficulties and we
expect to experience cash flow difficulties for an indefinite period. As a
result, we have no plans to make any material capital expenditures. At March 31,
2004, we had a working capital deficit of $1,018,206, and at December 31, 2004,
we had a working capital deficit of $770,200. Although no assurances can be
given, we believe that our cash flow deficit will improve as revenues and sales
increase. In addition, although no assurances can be given, we believe that we
may be able to secure additional equity and/or debt financing.
On January 18, 2005, our sole director and shareholders approved a 40:1
reverse split of its $.0001 par value common stock. The split was declared
effective as of February 4, 2005. The effect of the reverse stock split has been
retroactively applied to all disclosures in the accompanying condensed
consolidated financial statements.
On February 9, 2005, Katalyst advanced us $20,000 in exchange for a
second promissory note. The note carries an eight percent interest rate and
matures on December 31, 2005. Accrued interest expense on the note totaled $227
at March 31, 2005.
On October 26, 2004, we entered into an Equity Distribution Agreement
with Katalyst Capital Group. Under the Equity Distribution Agreement, Signature
may issue and sell to Katalyst Capital Group common stock for a total purchase
price of up to $5,000,000. The purchase price for our shares is equal to 99%, or
a 1% discount, of the offering price, which is defined in the Equity
Distribution Agreement as the lowest volume weighted average price of the common
stock during the five trading days following the notice date. The amount of each
cash advance is subject to a maximum advance amount of $200,000, with no cash
advance occurring within five trading days of a prior advance. Katalyst Capital
Group received 1,000,000 shares of common stock issued as a one=time commitment
fee under the Equity Distribution Agreement on October 26, 2004. Katalyst
Capital Group will be paid a fee equal to 1% of each advance, which will be
retained by Katalyst Capital Group from each advance. On July 7, 2005, Signature
entered into a Placement Agent Agreement with Spencer-Clark, a registered
broker-dealer. Pursuant to the Placement Agent Agreement, Signature paid
$10,000.
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We intend to use the advances under the Equity Distribution Agreement
to assist in the offset of our current cash flow difficulties. However, we must
first file, and the SEC must declare effective, a registration statement
registering the resale of the registrable securities before an advance can be
made. Also, if we fail for any reason to repay any of the above loans on a
timely basis, then we may have to curtail our business sharply or cease
operations altogether.
As of December 31, 2004, we owed our sole officer and director, Stephen
Carnes, $28,033 for working capital advances and expenses paid on our behalf.
The obligation does not carry an interest rate and is due on demand. During the
three months ended March 31, 2005, the sole officer and director advanced us an
additional $4,000 and paid expenses on our behalf totaling $15,045. As of March
31, 2005, the balance we owed Stephen Carnes was $47,078.
During 2004, a shareholder loaned us $28,210 in exchange for a
promissory note. The note carries an eight percent interest rate and matured on
December 31, 2004. The note is currently in default. We have repaid $13,275
toward the note as of March 31, 2005. Accrued interest expense on the note
totaled $1,859 at March 31, 2005. The remaining principal and accrued interest
balances of $16,794 are included in the accompanying financial statements as
"Indebtedness to related parties".
On December 2, 2004, we entered into a loan transaction with Katalyst
Capital Group pursuant to which we borrowed $25,000. The loan bears interest at
the rate of 8% per annum and is unsecured. The promissory note we issued in
exchange for the loan matures on December 31, 2005.
During the fiscal year ending December 31, 2004, we received $67,968
net cash provided by financing activities from the issuance of notes payable and
officer advances. Net cash used in operating activities totaled 4158,732. The
resultant overall net decrease in cash for the period was $90,764; where the
beginning balance for the period was $101,515, the resultant balance cash
balance at the end of the period was $10,749.
During the fiscal year ending December 31, 2003, we received $223,000
net cash provided by financing activities from the sale of common stock. Net
cash used in operating activities totaled $135,790. The resultant overall net
increase in cash for the period was $87,210; where the beginning balance for the
period was $14,303, the resultant cash balance at the end of the period is
$101,513.
A critical component of our operating plan impacting our continued
existence is the ability to obtain additional capital through additional equity
and/or debt financing. We do not anticipate enough positive internal operating
cash flow until such time as we can generate substantial revenues, which may
take the next few years to fully realize. In the event we cannot obtain the
necessary capital to pursue our strategic plan, we may have to cease or
significantly curtail our operations. This would materially impact our ability
to continue operations.
Our near term cash requirements are anticipated to be offset through
the receipt of funds from private placement offerings and loans obtained through
private sources. Since inception, we have financed cash flow requirements
through debt financing and issuance of common stock for cash and services. As we
expand operational activities, we may continue to experience net negative cash
flows from operations, pending receipt of servicing or licensing fees, and will
be required to obtain additional financing to fund operations through common
stock offerings and bank borrowings to the extent necessary to provide working
capital.
Over the next twelve months we believe that existing capital and
anticipated funds from operations will not be sufficient to sustain operations
and planned expansion. Consequently, we will be required to seek additional
capital in the future to fund growth and expansion through additional equity or
debt financing or credit facilities. No assurance can be made that such
financing would be available, and if available it may take either the form of
debt or equity. In either case, the financing could have a negative impact on
our financial condition and our Stockholders.
We anticipate incurring operating losses over the next twelve months.
Our lack of operating history makes predictions of future operating results
difficult to ascertain. Our prospects must be considered in light of the risks,
expenses and difficulties frequently encountered by companies in their early
stage of development. Such risks include, but are not limited to, an evolving
and unpredictable business model and the management of growth. To address these
23
risks we must, among other things, obtain a customer base, implement and
successfully execute our business and marketing strategy, continue to develop
and upgrade technology and products, respond to competitive developments, and
attract, retain and motivate qualified personnel. There can be no assurance that
we will be successful in addressing such risks, and the failure to do so can
have a material adverse effect on our business prospects, financial condition
and results of operations.
Off=Balance Sheet Arrangements
We do not have any off=balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that are material to
investors.
24
DESCRIPTION OF BUSINESS
Overview
Business Development
Signature Leisure, Inc. was incorporated in the State of Colorado on
March 15, 2000 as JDLPhotos.com, Inc. Through January 20, 2003, JDLPhotos.com,
Inc. was located in Longmont, Colorado and was a retailer of matted and framed
photographs. Due to the continuing losses from operations and the increasing
expense related to the public entity, a new management and business
opportunities were sought. On January 20, 2003, we transferred its business back
to James DeLutes, its majority shareholder and underwent a change of control. As
a result of this transfer and the change in control, we became a public shell.
In February of 2003, we changed our name from JDLPhotos.com, Inc. to
Valde Connections, Inc. We began pursuing a business strategy of identifying
profitable clinical day spa and salons for potential acquisitions, as well as
considering future company growth through building new facilities in selected
locations. In August of 2003 we changed our name to Signature Leisure, Inc., to
more closely relate with our business direction.
Due to the difficulty we had trying to complete agreements for spa
operations; management began considering other opportunities to generate
revenue.
During the months of January and February 2004, Signature Leisure, Inc.
announced events, outside the scope of the our prior business strategy, that
were undertaken to expedite the generation of revenues. We received a license
from the State of Florida's Department of Highway Safety and Motor Vehicles to
operate as an independent dealer in motor vehicles, and registered with the
State of Florida to enable the use of the name "Signature Auto" to conduct
business operations within the State of Florida.
In February 2004, we completed the registration process to become
buyers and sellers of vehicles at five Central Florida vehicle auction
facilities. We also announced the receipt of a line of credit from Automotive
Finance Corporation, an Allete Company. We began participating in automobile
auctions and the establishment of an inventory. We sold our first six vehicles
during the week of March 8th, 2004. Signature Leisure, Inc., d.b.a. Signature
Auto was operated this pre=owned automobile dealership at 1111 N. Orlando
Avenue, Winter Park, Florida 32789.
The Hurricanes that hit Central Florida in August and September 2004
severely damaged our offices and auto sales facility located at 1111 N. Orlando
Ave, Winter Park, FL 32789 to a level of destruction that Signature and the
facility's landlord agreed to have the lease terminate early, ending on
September 30, 2004. Subsequently, we relocated to office and warehouse space
located at 100 Candace Drive, Suite 100, Maitland, Florida 32751, which is
presently being provided to us at no cost by Renovo Holdings. The CEO of Renovo
Holdings is Stephen Carnes, the CEO of Signature Leisure, Inc. The facility is
approximately 3,600 sq. ft.
On November 22, 2004, we announced that we had recently signed a Letter
of Intent to acquire Parker Productions, a modeling and event staffing company
located in Central Florida. The transaction was completed on February 15, 2005
whereby Signature effected an acquisition of Parker Productions, a sole
proprietorship; for all of the working assets used in the operations of Parker
Productions, including the website, contact list and files of Parker
Production's models and clients, and the use of the name "Parker Productions".
On February 15, 2005, we acquired certain assets from Parker
Productions, a sole proprietorship operating in the State of Florida. Parker's
operations consisted of modeling and event staffing services.
During February 2005, Signature incorporated a new company with the
name Parker Productions, Inc. Parker Productions, Inc. is a wholly=owned
subsidiary of Signature leisure, Inc. Following Signature's acquisition of the
Parker assets, Signature placed the assets in Parker Productions, Inc.
25
Business Of Issuer
The current business of Signature Leisure, Inc. includes the operations of
Parker Productions, a modeling and event staffing business, and Signature Auto,
an independent dealer in motor vehicles. Primary focus of operations for the
next 12=month period will be Parker Productions' operations, as a currently
functioning entity expected to generate revenues. Signature Leisure, Inc.
expects to use profits from operations to maintain and grow Parker Productions'
operations, and to rebuild the Signature Auto sales business. Management intends
to begin working towards starting to rebuild the auto sales business; however
additional working capital will be required in order to ramp up operations of
auto sales. Additionally, Management intends to pursue and review other business
opportunities in addition to the auto sales operations. Parker Productions
operations are being developed as a modeling and event staffing business. The
individual models and staff that the Company provides to clients operate as
independent contractors to the Company. Presently, sales revenues from
operations are very limited, though the Company continues to work on building
its list of clients. Recent new clients include Lapgevity L.P., Bong Vodka,
Financial Content, Inc. and TCS Audio Carvin Corporation. The Company has
provided models and staff to assist clients at tradeshows and business
conferences.
Competitive Business Conditions
Car Dealership
We operate in a very competitive local market. Within the pre=owned
vehicle sales marketplace there are three distinct categories of dealerships.
The first is the franchise dealer, which is a dealership that sells pre=owned
vehicles in addition to new cars and the business is operated under a franchise
from a major manufacturer such as Chrysler, Ford, Chevrolet, Toyota or Nissan.
The second category is that of the major regional or nationwide pre=owned
vehicle dealer, such as a Carmax as well as Budget Auto Sales. The third
category is the independent retailer, which typically consists of a single
location, and it is within this third category that we compete. Our competitors
include such dealerships as Contemporary Cars Incorporated and MacKey Auto
Broker, both local and independently pre=owned dealers.
This is a highly competitive business, and we expect competition to
increase in the future. Increased competition could result in:
o price reductions, decreased revenue and lower profit margins;
o inability to gain market share;
o loss of market share once, and if gained; and
o increased marketing expenditureships.
Modeling and Event Staffing Business
The modeling and event staffing business is another industry characterized
by intense competition. Our main competition in the region is Axis Talent and
Promotions. Competition is intense and we expect it to increase. Increased
competition could result in:
o price reductions, decreased revenue and lower profit margins;
o inability to gain market share;
o loss of market share once, and if gained; and
o increased marketing expenditures.
As a result of our competition targeting our same market; individuals and
corporate entities interested in our modeling and event staffing services, we
will only be able to distinguish our services as the result of our advertising
programs and ultimately quality and efficiency of service. Our goal is to
determine methods by which we can maximize contacts with national clients. We do
not anticipate distinguishing our services from other like services available in
the market in the near future.
26
Employees
Currently, we have three employees, our President and sole Director, our
Sales and Finance Manager, and an executive secretary. The event staffing
segment is currently dependent on independent contractors and subcontractors to
provide the needed employees for the events.
Marketing
Management believes Signature Auto's most important group of potential
customers are individuals who are knowledgeable enough to know what they want
and need from a vehicle with little or no prompting from a sales person.
Management believes this type of clientele does not care to waste their time or
money looking for bargain vehicles needing excessive initial repair or
questionable advice from sales personnel. As they go into markets looking at new
vehicles, they are very sensitive to traditional sales pitch style approaches
and scenarios. We believe these buyers are generally prone to investigative
shopping online and through magazine and classified listings.
We believe the most important element of general competition, by far, is
what it takes to keep clients for repeat business and word of mouth publicity.
Management believes it is worth making minor concessions in any single
transaction to maintain a client relationship that brings the client back for
the future purchases and most importantly puts the client in a positive position
to speak about our organization.
Parker Productions utilizes a continually adaptive sales and marketing
model to attract clients from the highest potential income segments. An
attractive, flexible, and client goal tailored program allows us to market
ourselves to any business category in any area.
We currently focus on business segments, whose needs generally match our
offerings, outlining several benefits to potential clients including fiscal and
time efficiencies as well as more effective exposure and campaign results
We believe clients rarely compare promotional groups directly, looking for
two, or more, possible providers of a proposed project or job. We believe they
typically follow word=of=mouth recommendations, rather than selecting from a
menu of possible providers.
Government Regulation
We are not aware of any government regulations that we need to comply with
in order to operate our businesses.
27
MANAGEMENT
Officers And Directors
The following table sets forth the names and positions of our executive
officers and directors. Our directors are elected at our annual meeting of
stockholders and serve for one year or until successors are elected and qualify.
Our Board of Directors elect our officers, and their terms of office are at the
discretion of the Board, except to the extent governed by an employment
contract.
As of July 7, 2005, our directors and executive officers, their age,
positions, the dates of their initial election or appointment as directors or
executive officers, and the expiration of their terms are as follows:
Name of Director/Executive Officer Age Position Period Served
Stephen W. Carnes 41 President and Sole Director January 20, 2003 to present
Set forth below is a brief description of the background and business
experience of each of our executive officers:
SHEPHEN CARNES, age 41 is President and Sole Director since January 20,
2003. Since July 2003 to the present, Mr. Carnes has also served as President
and CEO of Renovo Holdings, which is a publicly traded company on the
Over=the=Counter Bulletin Board under the symbol RNVO. Renovo Holdings is
presently a development stage company that intends to capitalize upon the niche
market opportunities within the commercial and residential restoration service
markets. From 2000 to 2003, he founded and co=owned a private public relations
firm that assisted companies with marketing and public relations. Prior to that,
Mr. Carnes had been Self=employed as an independent manufacturers representative
acting as an outside sales representative for various companies. Mr. Carnes has
received a B.S. degree in Business Administration from Indiana University at
Fort Wayne, Indiana.
The directors shall be elected at an annual meeting of the stockholders
and except as otherwise provided within the Bylaws of Signature Leisure, Inc.,
as pertaining to vacancies, shall hold office until his successor is elected and
qualified. All Directors serve in such capacity until the next annual meeting of
our shareholders and until their successors have been elected and qualified. The
officers serve at the discretion of the company's Directors.
Committees Of The Board of Directors
Currently, Signature Leisure does not have any executive or standing
committees of the board of directors.
Family Relationships
There are no familial relationships among the officers and directors, nor
are there any arrangements or understanding between any of our directors or
officers or any other person pursuant to which any officer or director was or is
to be selected as an officer or director.
Involvement In Certain Legal Proceedings
The directors of Signature are aware of no petitions or receivership
actions having been filed or court appointed as to the business activities,
officers, directors, or key personnel of Signature.
None of our officers, directors, promoters or control persons have been
involved in the past five years in any of the following:
(1) any bankruptcy petition filed by or against any business of which such
person was a general partner or executive officer either at the time of the
bankruptcy or within two years prior to that time;
(2) any conviction in a criminal proceeding or being subject to a pending
criminal proceeding (excluding traffic violations and other minor offenses);
28
(3) Being subject to any order, judgment or decree, not subsequently
reversed, suspended or vacated, or any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise limiting
his involvement in any type of business, securities or banking activities; or
(4) Being found by a court of competent jurisdiction (in a civil action),
the Commission or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law, and the judgment has not been
reversed, suspended, or vacated.
Audit Committee And Financial Expert
We do not have an audit committee. Stephen W. Carnes performs some of the
same functions of an audit committee, such as: recommending a firm of
independent certified public accountants to audit the annual financial
statements; reviewing the independent auditors' independence, the financial
statements and their audit report; and reviewing management's administration of
the system of internal accounting controls. We do not currently have a written
audit committee charter or similar document. We currently do not generate
sufficient revenue to hire a financial expert for an audit committee.
Code Of Ethics
On June 6, 2005, our board of directors adopted a written Code of Ethics
designed to deter wrongdoing and promote honest and ethical conduct, full, fair
and accurate disclosure, compliance with laws, prompt internal reporting and
accountability to adherence to the Code of Ethics. This Code of Ethics is being
filed with the SEC as an exhibit to this registration statement.
Executive Compensation
The following table sets forth, for the fiscal year ended December 31,
2004, information regarding the compensation earned by our Chief Executive
Officer and each of our most highly compensated executive officers whose
aggregate annual salary and bonus exceeded $100,000, for each of the years
indicated (the "Named Executive Officers"), with respect to services rendered by
such persons to Signature and its subsidiaries.
SUMMARY COMPENSATION TABLE
Annual Compensation Awards Payouts
Securities
Underlying
Other Annual Restricted Options/ All Other
Salary Bonus Compensation Award(s) SARs LTIP Payouts Compensation
Position Year ($) ($) ($) ($) (#) ($) ($)
Steven W. Carne* 2004 250,000 0 8,400 0 0 0 750,000
President and 2003 125,000 0 4,200 0 0 0 10,800
Director 2002 0 0 0 0 0 0 0
Notes:
*Stephen W. Carnes is the sole officer and director of Signature Leisure, Inc.
Commencing July 1, 2003, we began accruing an annual salary of $250,000 for its
sole officer and director based on an employment agreement executed during the
three months ended September 30, 2003. In addition, under the terms of the
employment agreement, the sole officer and director was awarded a monthly auto
allowance of $700 per month and opportunities to receive performance=based
bonuses. As of December 31, 2004, the sole officer and director had not received
any payments toward the auto allowance. The balance owed at December 31, 2004
for the auto allowance totaled $12,600 ($8,400 accrued in fiscal year 2004 and
$4,200 accrued in fiscal year 2003).
The sole officer and director was given the opportunity to earn a bonus of
$750,000 upon the successful completion of (1) raising a minimum of $200,000,
and (2) the opening or acquisition of our first business unit. During 2003, the
sole officer and director raised $250,000 through the sale of our common stock
and in 2004, the sole officer and director opened our first business unit
(Signature Auto). As a result, we accrued $750,000 in officer compensation to
recognize the bonus earned by the sole officer and director during the year
ended December 31, 2004. In February 2005, the sole officer and director also
earned a $150,000 bonus for initiating our Parker Productions, Inc. operations.
During October 2004, the sole officer and director approved the issuance of
7,500,000 shares of our restricted common stock as payment of $450,000 of the
sole officer and director's accrued compensation. On the date of issuance, the
Company's common stock had a traded market value of approximately $.08. Our sole
officer and director valued the stock issuance at $.06 per share (a 25% discount
from the traded market value).
Of the total $450,000 in stock issued to the sole officer and director, $375,000
was allocated to the sole officer and director's accrued salary, which reduced
the salary accrual to $=0= as of December 31, 2004. The remaining $75,000 was
allocated to the sole officer and director's $750,000 bonus, which reduced the
bonus accrual to $675,000 as of December 31, 2004. As of March 31, 2005, accrued
salaries and bonuses of the sole officer and director totaled $62,500 and
$825,000, respectively.
29
On January 20, 2003, we issued 27,000 shares of common stock to Mr.
Stephen W. Carnes as consideration for his serving on the Board of Directors,
assuming the liability of being an officer and director of a publicly trading
and reporting company, his business expertise and his business leadership. On
the transaction date, the Company's common stock had no reliable market value.
The value of the transaction could not be objectively measured as the services
were rendered by related parties. The shares were valued by the Board of
Directors at $.01 per share based on the estimated fair value of the services.
Stock=based compensation expense of $10,800 was recognized for the year ended
December 31, 2003.
As of March 31, 2005, Signature had no group life, health,
hospitalization, medical reimbursement or relocation plans in effect. Further,
we have no pension plans or plans or agreements which provide compensation on
the event of termination of employment or change in control of us.
Compensation Of Directors
We do not pay members of our Board of Directors any fees for attendance
or similar remuneration or reimburse them for any out=of=pocket expenses
incurred by them in connection with our business.
Employment Agreements
On September 3, 2003, we executed an Employment Agreement with Stephen
Carnes. Under the terms of the Agreement, the president is to receive a salary
of $250,000 per year and an automobile allowance of $700 per month. In addition,
the president has the opportunity to earn the following bonuses:
(a) A bonus of $750,000 upon the successful completion of (1) raising a
minimum of $200,000 for Signature, and (2) the opening or acquisition of our
first business unit.
(b) A bonus of $150,000 for each additional merger and/or acquisition
and/or business unit start=up brought to Signature.
30
DESCRIPTION OF PROPERTY
Signature Leisure, Inc. has office and warehouse space located at 100
Candace Drive, Suite 100, Maitland, Florida 32751. These facilities are
presently being provided to Signature by Renovo Holdings. The Chief Executive
Officer of Renovo Holdings is Stephen Carnes, the Chief Executive Officer of
Signature. The facility is approximately 3,600 sq. ft.
LEGAL PROCEEDINGS
There are no pending legal proceedings involving Signature.
PRINCIPAL STOCKHOLDERS
Security Ownership Of Certain Beneficial Owners And Management
The table below sets forth information with respect to the beneficial
ownership of our common stock as of July 7, 2005 for (i) any person who we know
is the beneficial owner of more than 5% of our outstanding common stock; (ii)
each of our directors or those nominated to be directors, and executive
officers; and (iii) all of our directors and executive officers as a group.
===========================================================================================================================
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Name and Address Amount and Nature of Beneficial Percentage
Title of Class of Beneficial Owner Ownership of Class(1) (2)
Stephen W. Carnes 48,041,999 71.69%
4185 W. Lake Mary Blvd. #137
Lake Mary, Florida
===========================================================================================================================
SECURITY OWNERSHIP OF MANAGEMENT
Name and address Amount and Nature of Percentage
Title of Class of Beneficial Owner Beneficial Ownership of Class (1)
Stephen W. Carnes 48,041,999 71.69%
4185 W. Lake Mary Blvd. #137
Lake Mary, Florida
All Officers and Directors as a Group 48,041,999 71.69%
===========================================================================================================================
===============
(1) Less than 1%.
(2) Applicable percentage of ownership is based on 67,014,164 shares of
common stock outstanding as of July 7, 2005 for each stockholder.
Beneficial ownership is determined in accordance with the rules of the
SEC and generally includes voting of investment power with respect to
securities. Shares of common stock subject to securities exercisable or
convertible into shares of common stock that are currently exercisable
or exercisable within 60 days of July 7, 2005 are deemed to be
beneficially owned by the person holding such options for the purpose
of computing the percentage of ownership of such persons, but are not
treated as outstanding for the purpose of computing the percentage
ownership of any other person.
31
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In December 2004, Renovo Holdings, an affiliate under common control,
began contributing office space to us on a month=to=month basis. During the
three months ended March 31, 2005, the affiliate contributed office space valued
at $1,271 based on the affiliate's rent payments and the percentage office space
we utilized.
Working Capital Advances
During the year ended December 31, 2004, Signature owed its sole
officer and director, Stephen Carnes, $28,033 for working capital advances and
expenses paid on our behalf. The advances do not carry an interest rate and are
due on demand. During the three months ended March 31, 2005, Mr. Carnes advanced
us an additional $4,000 and paid expenses on our behalf totaling $15,045. As of
March 31, 2005, the balance owed the sole officer and director of $47,078 is
included in the accompanying financial statements as "Indebtedness to related
parties".
Note Payable
During March 2004, a shareholder loaned Signature $28,210 in exchange
for a promissory note. The note carries an eight percent interest rate and
matures on December 31, 2004. Signature repaid $13,275 toward the note as of
March 31, 2005. Accrued interest expense on the note totaled $1,859 at March 31,
2005. The remaining principal and accrued interest balances of $16,794 are
included in the accompanying financial statements as "Indebtedness to related
parties".
32
MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND OTHER STOCKHOLDER MATTERS
(a) Market Information
Signature's common stock is listed on the NASDAQ Bulletin Board under the
symbol "SGLS". Previously, the common stock was listed under the symbol "VLDE"
(effective February 14, 2003). Prior to that, the common stock was listed under
the symbol "JDLP" (effective May 24, 2002). The quotations provided are for the
over the counter market which reflect interdealer prices without retail mark=up,
mark=down or commissions, and may not represent actual transactions.
The following table sets forth the high and low bid prices for our common
stock for the periods indicated as reported by the NASDAQ Over=the=Counter
Bulletin Board. The quotations reflect inter=dealer prices, without retail
mark=up, mark=down or commission and may not represent actual transactions.
Closing Bid Closing Ask
2003 High Low High Low
January 2 = January 27 .04 .03 None None
January 28= March 31 .78 .01 .82 .17
April 1 = June 30 .28 .175 .29 .19
July 1 = September 30 .19 .035 .215 .05
October 1 = December 31 .06 .02 .07 .025
2004
January 2 = March 31 .06 .014 .075 .018
April 1 = June 30 .018 .005 .023 .008
July 1 = September 30 .006 .002 .012 .004
October 1 = December 31 .017 .002 .021 .003
2005
January 3 = February 3 .009 .0031 .01 .0038
February 4 = March 31 .175 .055 .189 .06
April 1 = June 30 .065 .027 .067 .03
July 1 = July 7 .053 .039 .056 .04
(b) Holders Of Common Stock
As of July 7, 2005, we had approximately 63 shareholders of our common
stock and 67,014,164 shares of our common stock were issued and outstanding.
(c) Dividend
We have never declared or paid a cash dividend. There are no restrictions
on the common stock or otherwise that limit the ability of us to pay cash
dividends if declared by the Board of Directors. The holders of common stock are
entitled to receive dividends if and when declared by the Board of Directors,
out of funds legally available therefore and to share pro=rata in any
distribution to the shareholders. Generally, we are not able to pay dividends if
after payment of the dividends, we would be unable to pay our liabilities as
they become due or if the value of our assets, after payment of the liabilities,
is less than the aggregate of our liabilities and stated capital of all classes.
We do not anticipate declaring or paying any cash dividends in the foreseeable
future.
(d) Equity Compensation Plan
None of our securities were authorized for issuance pursuant to any equity
compensation plan as of December 31, 2004.
33
DESCRIPTION OF SECURITIES
General
Our Articles of Incorporation authorize the issuance of 500,000,000
shares of common stock, $0.01 par value per share. As of July 7, 2005, there
were 67,014,164 outstanding shares of common stock. We are authorized to issue
10,000,000 shares of preferred stock but to date we have not issued any shares
of preferred stock. Set forth below is a description of certain provisions
relating to our capital stock. For additional information, regarding our stock
please refer to our Articles of Incorporation and By=Laws.
Common Stock
Each outstanding share of common stock has one vote on all matters
requiring a vote of the stockholders. There is no right to cumulative voting;
thus, the holder of fifty percent or more of the shares outstanding can, if they
choose to do so, elect all of the directors. In the event of a voluntary of
involuntary liquidation, all stockholders are entitled to a pro rata
distribution after payment of liabilities and after provision has been made for
each class of stock, if any, having preference over the common stock. The
holders of the common stock have no preemptive rights with respect to future
offerings of shares of common stock. Holders of common stock are entitled to
dividends if, as and when declared by the Board out of the funds legally
available therefore. It is our present intention to retain earnings, if any, for
use in its business. The payment of dividends on the common stock are,
therefore, unlikely in the foreseeable future.
Preferred Stock
We have 10,000,000 authorized shares of preferred stock with a par
value of $0.0001 per share, issuable in such series and bearing such voting,
dividend, conversion, liquidation and other rights and preferences as the Board
of Directors may determine. As of July 7, 2005, none of our preferred shares
were outstanding.
Limitation Of Liability: Indemnification
Our Articles of Incorporation include an indemnification provision
under which we have agreed to indemnify our directors and officers of from and
against certain claims arising from or related to future acts or omissions as a
director or officer of Signature. Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be permitted to directors, officers
and controlling persons of Signature pursuant to the foregoing, or otherwise, we
have been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable.
Anti=Takeover Effects Of Provisions Of The Articles Of Incorporation
Authorized And Unissued Stock
The authorized but unissued shares of our common stock are available
for future issuance without our stockholders' approval. These additional shares
may be utilized for a variety of corporate purposes including but not limited to
future public or direct offerings to raise additional capital, corporate
acquisitions and employee incentive plans. The issuance of such shares may also
be used to deter a potential takeover of Signature that may otherwise be
beneficial to stockholders by diluting the shares held by a potential suitor or
issuing shares to a stockholder that will vote in accordance with Signature's
Board of Directors' desires. A takeover may be beneficial to stockholders
because, among other reasons, a potential suitor may offer stockholders a
premium for their shares of stock compared to the then=existing market price.
The existence of authorized but unissued and unreserved shares of
preferred stock may enable the Board of Directors to issue shares to persons
friendly to current management which would render more difficult or discourage
an attempt to obtain control of Signature by means of a proxy contest, tender
offer, merger or otherwise, and thereby protect the continuity of our
management.
34
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANT
ON ACCOUNTING AND FINANCIAL DISCLOSURE
We have had no changes or disagreements with our accountants.
EXPERTS
The consolidated financial statements for the fiscal years ended
December 31, 2004 and December 31, 2003, included in this prospectus, and
incorporated by reference in the registration statement, have been audited by
Cordovano and Honeck, LLP, respectively, as stated in their independent
auditors' reports appearing with the financial statements and incorporated by
reference in this registration statement. These financial statements are
included in reliance upon their reports, given upon their authority as experts
in accounting and auditing.
Transfer Agent
The transfer agent for our common stock is Corporate Stock Transfer.
Their address is 3200 Cherry Creek Drive South, Suite 430, Denver, CO 80209.
Their telephone number is (303) 282=4800.
LEGAL MATTERS
Kirkpatrick & Lockhart Nicholson Graham LLP will pass upon the validity
of the shares of common stock offered hereby. Kirkpatrick & Lockhart Nicholson
Graham LLP is located at 201 South Biscayne Boulevard, Miami Center, Suite 2000,
Miami, Florida 33131.
HOW TO GET MORE INFORMATION
We have filed with the Securities and Exchange Commission in
Washington, DC, a registration statement on Form SB=2 under the Securities Act
of 1933 with respect to the shares we are offering. Prior to the effective date
of the registration statement we were not subject to the information
requirements of the Securities Exchange Act of 1934. This prospectus does not
contain all of the information set forth in the registration statement, as
permitted by the rules and regulations of the SEC. Reference is hereby made to
the registration statement and exhibits thereto for further information with
respect to Signature and the shares to which this prospectus relates. Copies of
the registration statement and other information filed by Signature with the SEC
can be inspected and copied at the public reference facilities maintained by the
SEC in Washington, DC at 450 Fifth Street, NW, Washington, DC 20549. In
addition, the SEC maintains a World Wide Website that contains reports, proxy
statements and other information regarding registrants such as Signature which
filed electronically with the SEC at the following Internet address:
(http:www.sec.gov).
35
FINANCIAL STATEMENTS
CONTENTS
Page
FINANCIAL REPORT FOR THE THREE MONTHS ENDED MARCH 31, 2005
Condensed Consolidated Balance Sheet as of March 31, 2005 (unaudited) F=1
Condensed Consolidated Statements of Operations, for the three months
ended March 31, 2005 and 2004 (unaudited) F=2
Condensed Consolidated Statement of Changes in Shareholders' Deficit
for the three months ended March 31, 2005 (unaudited) F=3
Condensed Consolidated Statements of Cash Flows,
for the three months ended March 31, 2005 and 2004 (unaudited) F=4
Notes to Condensed Consolidated Financial Statements (unaudited)
for The Three Months Ended March 31, 2005 F=5
FINANCIAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2004 AND DECEMBER 31, 2003
Independent Auditors' Report F=9
Balance Sheet for the Year Ended December 31, 2004 F=10
Statements of Operations for the Year Ended December 31, 2004 F=11
Statement of Changes In Shareholders' Deficit for the Year Ended December 31, 2004 F=12
Statements of Cash Flows for the Year Ended December 31, 2004 F=13
Notes to Financial Statements for the Year Ended December 31, 2004 F=14
SIGNATURE LEISURE, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited) March 31, 2005
Assets
Current assets:
Cash $ 1,388
Accounts receivable, net 4,695
==============
Total current assets 6,083 Intangible assets (Note 7):
Website, net 9,583
Contact list, net 9,583
==============
$ 25,249
==============
Liabilities and Shareholders' Deficit
Current Liabilities
Accounts payable $ 29,379
Accrued liabilities 2,200
Indebtedness to related parties (Note 2) 964,213
Notes payable (Note 4) 45,000
Accrued interest payable (Note 4) 2,663
==============
Total current liabilities 1,043,455
==============
Shareholders' deficit (Note 6)
Preferred stock, $ .001 par value, 10,000,000 shares authorized;
=0= shares issued and outstanding ==
Common Stock, $.0001 par value, 500,000,000 shares authorized;
13,464,164 shares issued and outstanding 1,346
Additional paid=in capital 2,919,598
Retained deficit (3,939,150)
==============
Total shareholders' deficit (1,018,206)
==============
$ 25,249
==============
See accompanying notes to condensed consolidated financial statements
F=1
SIGNATURE LEISURE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended
March 31,
============================
2005 2004
============ ============
Revenues:
Vehicle sales $ == $ 60,772
Service revenues 7,315 ==
============ ============
Total revenue 7,315 60,772
============ ============
Operating expenses:
Cost of sales:
Vehicles -- 65,682
Contract services 4,669 --
Stock-based compensation (Note 6):
Legal services 50,000 --
Other business consulting 294,425 289,480
Contributed rent (Note 2) 1,271 --
General and administrative 249,707 111,641
------------ ------------
Operating expenses 600,072 466,803
------------ ------------
Operating loss (592,757) (406,031)
Interest expense (944) (98)
------------ ------------
Loss before income taxes (593,701) (406,129)
Provision for income taxes (Note 5) -- --
------------ ------------
Net loss $ (593,701) $ (406,129)
============ ============
Weighted average loss per share:
Basic and diluted $ (0.05) $ (0.37)
============ ============
Weighted average number of shares of common stock outstanding 11,965,206 1,086,496
============ ============
See accompanying notes to condensed consolidated financial statements
F-2
SIGNATURE LEISURE, INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' DEFICIT
(Unaudited)
Common Stock
-------------------------
Additional
Paid-in Retained
Shares Par Value Capital Deficit Total
----------- ----------- ----------- ----------- -----------
Balance - January 1, 2005 10,439,164 1,044 2,574,204 (3,345,449) (770,201)
Common stock issued in exchange for
legal, public relations, and
consulting services (Note 6) 3,025,000 302 344,123 -- 344,425
Office space contributed by an
affiliate (Note 2) -- -- 1,271 -- 1,271
Net loss -- -- -- (593,701) (593,701)
----------- ----------- ----------- ----------- -----------
Balance - March 31, 2005 13,464,164 $ 1,346 $ 2,919,598 $(3,939,150) $(1,018,206)
=========== =========== =========== =========== ===========
See accompanying notes to condensed consolidated financial statements
F-3
SIGNATURE LEISURE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Three Months Ended
----------------------------
March 31, March 31,
2005 2004
------------ ------------
Net cash used in operating activities $ (33,361) $ (71,391)
------------ ------------
Cash Flows from financing activities:
Proceeds from issuance of note payable (Note 4) 20,000 --
Proceeds from officer advances (Note 2) 4,000 --
------------ ------------
Net cash provided by financing activities 24,000 --
------------ ------------
Net change in cash (9,361) (71,391)
Cash at beginning of period 10,749 101,513
------------ ------------
Cash at end of period $ 1,388 $ 30,122
============ ============
Supplemental disclosure of cash flow information: Cash paid during the period
for:
Interest $ -- $ 98
============ ============
Income Taxes $ -- $ --
============ ============
See accompanying notes to condensed consolidated financial statements
F-4
SIGNATURE LEISURE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1: Basis of presentation
The interim financial statements presented herein have been prepared pursuant to
the rules and regulations of the Securities and Exchange Commission ("SEC").
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations. The
interim financial statements should be read in conjunction with the Company's
annual financial statements for the year ended December 31, 2004, notes and
accounting policies thereto included in the Company's Annual Report on Form
10-KSB as filed with the SEC.
In the opinion of management, all adjustments (consisting only of normal
recurring adjustments) which are necessary to provide a fair presentation of
operating results for the interim period presented have been made. The results
of operations for the periods presented are not necessarily indicative of the
results to be expected for the year.
Interim financial data presented herein are unaudited.
In February 2005, the Company incorporated a wholly-owned subsidiary, Parker
Productions, Inc. (see Note 7).
Principles of Consolidation
The accompanying condensed consolidated financial statements include the
activities of Signature Leisure, Inc. and its wholly-owned subsidiary, Parker
Productions, Inc. All significant intercompany balances and transactions have
been eliminated in consolidation.
Note 2: Related Party Transactions
Working capital advances
As of December 31, 2004, the Company owed its sole officer and director $28,033
for working capital advances and expenses paid on behalf of the Company. The
obligation does not carry an interest rate and is due on demand. During the
three months ended March 31, 2005, the sole officer and director advanced the
Company an additional $4,000 and paid expenses on behalf of the Company totaling
$15,045. As of March 31, 2005, the balance owed the sole officer and director of
$47,078 is included in the accompanying financial statements as "Indebtedness to
related parties".
Note payable
During 2004, a shareholder loaned the Company $28,210 in exchange for a
promissory note. The note carries an eight percent interest rate and matured on
December 31, 2004. The note is currently in default. The Company has repaid
$13,275 toward the note as of March 31, 2005. Accrued interest expense on the
note totaled $1,859 at March 31, 2005. The remaining principal and accrued
interest balances of $16,794 are included in the accompanying financial
statements as "Indebtedness to related parties".
Accrued compensation and common stock
Commencing July 1, 2003, the Company began accruing an annual salary of $250,000
for its sole officer and director based on an employment agreement executed in
2003. In addition, under the terms of the employment agreement, the sole officer
and director was awarded a monthly auto allowance of $700 per month and
opportunities to receive performance-based bonuses. As of March 31, 2005, the
sole officer and director had not received any payments toward the auto
allowance. The balance owed at March 31, 2005 for the auto allowance totaled
$14,700, which is included in the accompanying condensed consolidated financial
statements as "Indebtedness to related parties".
F-5
SIGNATURE LEISURE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Pursuant to the terms of the employment agreement, the sole officer and director
earned a $750,000 bonus for the successful completion of (1) raising a minimum
of $200,000 for the Company, and (2) the opening or acquisition of the Company's
first business unit (Signature Auto). The Company accrued $750,000 in officer
compensation to recognize the bonus earned by the sole officer and director
during the year ended December 31, 2004.
In February 2005, the sole officer and director also earned a $150,000 bonus for
initiating the Company's Parker Productions, Inc. operations (see Note 7).
During October 2004, the sole officer and director approved the issuance of
7,500,000 shares of the Company's restricted common stock as payment of $450,000
of the sole officer and director's accrued compensation.
Of the total $450,000 in stock issued to the sole officer and director, $375,000
was allocated to the sole officer and director's salary accrued through December
31, 2004. The remaining $75,000 was allocated to the sole officer and director's
$750,000 bonus, which reduced the bonus accrual to $675,000 as of December 31,
2004.
As of March 31, 2005, accrued salaries and bonuses of the sole officer and
director totaled $62,500 and $825,000, respectively. These accruals are included
in the accompanying condensed consolidated financial statements as "Indebtedness
to related parties".
Contributed rent and services
In December 2004, Renovo Holdings, an affiliate under common control, began
contributing office space to the Company on a month-to-month basis. During the
three months ended March 31, 2005, the affiliate contributed office space valued
at $1,271 based on the affiliate's rent payments and the percentage office space
utilized by the Company.
Note 3: Vehicle Floor Plans
The Company has established two $50,000 floor plans of which all $100,000 was
unused at March 31, 2005. These credit lines are approved for financing
pre-owned vehicle inventory purchases. One line carries a 4.50% interest rate
and the second carries a variable interest rate equal to 3.00% over the prime
rate. Advances under the floor plans are payable within 30 days of disbursement
and are collateralized by the Company's vehicles inventory and other
Company-owned assets.
Note 4: Note Payable
On December 2, 2004, the Company received proceeds of $25,000 from Katalyst
Capital Group, Ltd. ("Katalyst"), an unrelated third party, in exchange for a
promissory note. The note carries an eight percent interest rate and matures on
December 31, 2005. Accrued interest expense on the note totaled $659 at March
31, 2005.
On February 9, 2005, Katalyst advanced the Company an additional $20,000 in
exchange for a second promissory note. The note carries an eight percent
interest rate and matures on December 31, 2005. Accrued interest expense on the
note totaled $227 at March 31, 2005.
F-6
SIGNATURE LEISURE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 5: Income Tax
The Company records its income taxes in accordance with Statement of Financial
Accounting Standard No. 109, "Accounting for Income Taxes". The Company incurred
net operating losses during all periods presented resulting in a deferred tax
asset, which was fully allowed for; therefore, the net benefit and expense
resulted in $-0- income taxes.
Note 6: Shareholders' Deficit
Reverse stock split
On January 18, 2005, the Company's sole director and shareholders approved a
40:1 reverse split of its $.0001 par value common stock. The split was declared
effective as of February 4, 2005. The effect of the reverse stock split has been
retroactively applied to all disclosures in the accompanying condensed
consolidated financial statements.
Common stock
Between January 1 and March 31, 2005, the Company issued 3,025,000 shares of its
common stock to consultants in exchange for legal and business consulting
services. The transactions issued were recorded based on the fair value of the
services provided, ranging from $.06 to $.26 per share. Stock-based compensation
expense of $344,425 has been recognized in the accompanying condensed
consolidated financial statements.
Standby Equity Distribution Agreement
During October 2004, the Company entered into a Standby Equity Distribution
Agreement (the "Agreement") with Katalyst. Under the terms of the Agreement,
Katalyst has committed to purchase up to $5 million of the Company's common
stock over the course of 24 months after an effective registration of the
Company's common stock. Any purchases are to be issued under the securities laws
of the United States under Regulation D. The purchase price has been set at 98%
of the market price, which is to be calculated based on the lowest daily volume
weighted average price of the stock over the five trading days following the
Company's funding request. No shares have been issued under the Agreement
through the date of this report. By the terms of this agreement the effective
date occurs on the date on which the SEC first declares effective a related
registration statement or by mutual written agreement of the parties. Neither of
these conditions has occurred.
F-7
SIGNATURE LEISURE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 7: Asset Acquisition
On February 15, 2005, the Company acquired assets from Parker Productions
("Parker"), a sole proprietorship operating in the State of Florida. Parker's
operations consisted of modeling and event staffing services. The Company
acquired the assets (including the website www.parkerproductions.com, a contact
list of models and clients, and use of the name Parker Productions) in exchange
for the following:
1. $20,000 cash;
2. A structured agreement to pay 2% of the net profits of the Parker Productions
division to Jill Reynolds (former owner of the Parker assets) for as long as the
Company operates the Parker Productions division or for a minimum of ten years,
whichever period is longer.
3. Ear-marked $ 20,000 cash as "seed capital" for use within the Parker
Productions division.
During February 2005, Signature incorporated a new company with the name Parker
Productions, Inc. ("PPI"). PPI is a wholly-owned subsidiary of Signature.
Following Signature's acquisition of the Parker assets, Signature placed the
assets in PPI.
The website and contact list are stated at cost and amortized over an estimated
useful life of three years using the straight-line method. Amortization
commenced on February 15, 2005 and amortization expense for the three months
ended March 31, 2005 totaled $834. Estimated aggregate amortization in future
years is as follows:
Year ended December 31,
2005 $ 5,833
2006 6,667
2007 6,667
2008 833
-----------
$ 20,000
===========
F-8
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders:
Signature Leisure, Inc.
We have audited the accompanying balance sheet of Signature Leisure, Inc. as of
December 31, 2004, and the related statements of operations, changes in
shareholders' deficit, and cash flows for the years ended December 31, 2004 and
2003. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits 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. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Signature Leisure, Inc. as of
December 31, 2004, and the results of its operations and its cash flows for the
years ended December 31, 2004 and 2003, in conformity with accounting principles
generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 1 to the financial
statements, the Company has suffered significant operating losses since
inception, which raises a substantial doubt about its ability to continue as a
going concern. Management's plans in regard to this matter are also described in
Note 1. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
As discussed in Notes 2, 8 and 9 to the financial statements, the Company has
entered into several transactions with its sole officer and director including,
but not limited to, the issuance of 7,500,000 shares of the Company's common
stock in exchange for accrued compensation and the approval of a $750,000 bonus
under the terms of an employment agreement. Related party transactions are not
considered to be arms-length transactions under Generally Accepted Accounting
Principles.
Cordovano and Honeck LLP
Denver, Colorado
March 22, 2005
F-9
SIGNATURE LEISURE, INC.
BALANCE SHEET
December 31, 2004
Assets
Current assets:
Cash $ 10,749
Liabilities and Shareholders' Deficit
Current liabilities:
Accounts payable $ 19,162
Accrued liabilities 4,500
Indebtedness to related parties (Note 2) 732,128
Note payable (Note 4) 25,000
Accrued interest payable (note 4) 159
-----------
Total current liabilities 780,949
-----------
Shareholders' deficit (Note 6):
Preferred stock, $.001 par value,
10,000,000 shares authorized,
-0- shares issued and outstanding --
Common stock, $.0001 par value,
500,000,000 shares authorized,
10,439,130 shares issued and outstanding 1,044
Additional paid-in capital 2,574,205
Retained deficit (3,345,449)
Total shareholders' deficit (770,200)
-----------
$ 10,749
===========
The accompanying notes are an integral part of these financial statements.
F-10
SIGNATURE LEISURE, INC.
STATEMENTS OF OPERATIONS
For the Year Ended
December 31,
--------------------------
2004 2003
----------- -----------
Revenues $ 228,867 $ --
Operating expenses:
Cost of goods sold 232,168 --
Stock-based compensation (Note 6):
Business plan services -- 10,800
Legal services 40,000 90,000
Health and fitness consulting -- 16,138
Public relations services 65,500 238,692
Stock options -- 125,000
Other business consulting 608,600 430,240
Contributed rent and services (Note 2) 424 153,285
General and administrative 1,183,019 254,687
----------- -----------
Operating expenses 2,129,711 1,318,842
----------- -----------
Operating loss 1,900,844) (1,318,842)
Interest expense (1,693) --
----------- -----------
Loss before income taxes 1,902,537) (1,318,842)
Provision for income taxes (Note 5) -- --
----------- -----------
Net loss $ 1,902,537) $(1,318,842)
=========== ===========
Weighted average loss per share:
Basic and diluted $ (1.05) $ (1.48)
=========== ===========
Weighted average number of shares of common stock outstanding * 1,808,275 * 894,049
=========== ===========
* Restated for 40:1 reverse stock split (see Note 9).
The accompanying notes are an integral part of these financial statements.
F-11
SIGNATURE LEISURE, INC.
STATEMENT OF CHANGES IN SHAREHOLDERS' DEFICIT
Common Stock
--------------------------
Additional
Paid-in Retained
Shares Par Value Capital Deficit Total
----------- ----------- ----------- ----------- -----------
Balance - December 31, 2002 162,750 16 138,663 (124,070) 14,609
Cancellation of common stock held
by former president and attorney
(Note 6) (151,250) (15) (19,594) -- (19,609)
Common stock issued to officers in
exchange for business planning
services, $.01/share (Note 6) 27,000 3 10,797 -- 10,800
Common stock dividend, 20:1 (Note 6) 770,000 77 (77) -- --
Common stock sales, less $127,500
of offering costs (Note 6) 36,808 4 122,496 -- 122,500
Common stock issued in exchange
for offering costs (Note 6) 12,500 1 104,999 -- 105,000
Common stock issued in exchange
for legal, public relations, and
consulting services (Note 6) 103,822 10 775,060 -- 775,070
Common stock options granted (Note 6) -- -- 125,000 -- 125,000
Office space and services
contributed by an officer (Note 2) -- -- 153,285 -- 153,285
----------- ----------- ----------- ----------- -----------
Net loss -- -- -- (1,318,842) (1,318,842)
Balance - December 31, 2003 961,630 96 1,410,629 (1,442,912) (31,187)
Common stock issued in exchange
for legal, public relations, and
consulting services (Note 6) 1,977,500 198 713,902 -- 714,100
Common stock issued to an officer
as payment for accrued salaries
(Note 2) 7,500,000 750 449,250 -- 450,000
Office space contributed by an
affiliate (Note 2) -- -- 424 -- 424
Net loss -- -- -- (1,902,537) (1,902,537)
----------- ----------- ----------- ----------- -----------
Balance - December 31, 2004 10,439,130 $ 1,044 $ 2,574,205 $(3,345,449) $ (770,200)
=========== =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements.
F-12
SIGNATURE LEISURE, INC.
STATEMENTS OF CASH FLOWS
For the Year Ended
December 31,
----------------------------
2004 2003
------------ ------------
Cash Flows from Operating Activities
Net Loss $ (1,902,537) $ (1,318,842)
Transactions not requiring cash:
Stock-based compensation (Note 6) 714,100 910,870
Contributed rent and services (Note 2) 424 153,285
Changes in operating assets and liabilities:
Inventory and other current assets 5,500 (5,500)
Accounts payable and other current liabilities 140,381 (4,803)
Related party accruals (Note 2) 883,400 129,200
------------ ------------
Net cash used in operating activities (158,732) (135,790)
------------ ------------
Cash Flows from Financing Activities
Proceeds from issuance of note payable to related party (Note 2) 28,210 --
Repayment of note payable to related party (Note 2) (13,275) --
Proceeds from issuance of note payable, other (Note 4) 25,000 --
Proceeds from officer advances (Note 2) 33,890 --
Repayment of officer advances (Note 2) (5,857) --
Proceeds from sale of common stock -- 250,000
Offering costs -- (27,000)
------------ ------------
Net cash provided by financing activities 67,968 223,000
------------ ------------
Net change in cash (90,764) 87,210
Cash at beginning of period 101,513 14,303
------------ ------------
Cash at end of period $ 10,749 $ 101,513
============ ============
Supplemental disclosure of cash flow information: Cash paid during the year for:
Interest $ -- $ --
============ ============
Income Taxes $ -- $ --
============ ============
Non-cash investing and financing transactions:
Common stock issued as payment for accrued salaries (Note 2) $ 450,000 $ --
============ ============
Asset and stock exchange with former president (Notes 1 and 6) $ -- $ 19,609
============ ============
Common stock issued as payment for offering costs (Note 4) $ -- $ 105,000
============ ============
The accompanying notes are an integral part of these financial statements.
F-13
SIGNATURE LEISURE, INC.
NOTES TO FINANCIAL STATEMENTS
Note 1 - Nature of Business and Summary of Significant Accounting Policies
Description of organization
Through January 20, 2003, Signature Leisure, Inc. (referred to as "Signature" or
the "Company") was a retailer of matted and framed photographs located in
Longmont, Colorado under the name JDLPhotos.com, Inc. Photographs were sold at
art shows and via the Internet. On January 20, 2003, the Company transferred its
photography business and substantially all of its assets back to its president
(and majority shareholder) in exchange for the cancellation of all of the common
stock of the Company held by the president. In addition, 1,250 shares of common
stock previously issued to the Company's attorney for services were cancelled.
This transaction resulted in a change in control and left the Company as a
public shell corporation. Following the change in control, the Company's sole
director resolved to alter the Company's business plan. During the year ended
December 31, 2004, the Company's business plan has been focused on pre-owned
vehicle sales. In February 2005, the Company acquired assets related to modeling
and event staffing (see Note 9).
Effective February 10, 2003, the Company changed its name from JDLPhotos.com,
Inc. to Valde Connections, Inc. During August 2003, the Company changed its name
from Valde Connections, Inc. to Signature Leisure, Inc. The Company's pre-owned
vehicle sales operations are conducted under the dba "Signature Auto".
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. As shown in the accompanying
financial statements, the Company has incurred significant losses since
inception. This factor, among others, may indicate that the Company will be
unable to continue as a going concern for reasonable period of time.
The financial statements do not include any adjustments relating to the
recoverability and classification of liabilities that might be necessary should
the Company be unable to continue as a going concern. The Company's continuation
as a going concern is dependent upon its ability to generate sufficient cash
flow to meet its obligations on a timely basis and ultimately to attain
profitability. The Company has limited capital with which to pursue its business
plan. There can be no assurance that the Company's future operations will be
significant and profitable, or that the Company will have sufficient resources
to meet its objectives. The Company intends to conduct debt and equity
financings to raise sufficient capital in order to meet its financial
requirements over the next twelve months and to fund its business plan. There is
no assurance that the Company will be successful in raising additional funds.
Use of estimates
The preparation of the financial statements in conformity with generally
accepted accounting principals requires management to make estimates and
assumptions that affect certain reported amounts of assets and liabilities;
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. Accordingly, actual results could differ from those estimates.
Financial Instruments
At December 31, 2004, the fair value of the Company's financial instruments
approximate fair value due to the short-term maturity of the instruments.
Inventory
Inventories are stated at the lower of cost or market. The cost of used vehicles
is determined on a specific identification method. The Company had no vehicles
inventory at December 31, 2004.
F-14
SIGNATURE LEISURE, INC.
NOTES TO FINANCIAL STATEMENTS
Revenue recognition
The Company's revenue recognition policies follow the guidance of the Security
and Exchange Commission's Staff Accounting Bulletin No. 101 ("SAB 101"). SAB 101
states that revenue is realized and earned when all of the following criteria
are met:
1. Persuasive evidence of an arrangement exists;
2. Delivery has occurred or services have been rendered;
3. The seller's price to the buyer is fixed or determinable; and
4. Collectibility is reasonably assured.
The company recognizes revenue from pre-owned vehicle sales upon transfer of
title. The company does not provide any warranties upon sale of its pre-owned
vehicles. All vehicles are sold "as-is".
Advertising
Advertising costs are charged to operations are charged to operations when
incurred.
Income taxes
The Company accounts for income taxes under the provisions of SFAS No. 109,
"Accounting for Income Taxes". SFAS No. 109 requires recognition of deferred tax
liabilities and assets for the expected future tax consequences of events that
have been included in the financial statements or tax returns. Under this
method, deferred tax assets and liabilities arise from the difference between
the tax basis of an asset or liability and its reported amount on the financial
statements. Deferred tax amounts are determined by using the tax rates expected
to be in effect when the taxes will actually be paid or refunds received, as
provided under currently enacted law. Valuation allowances are established when
necessary to reduce the deferred tax assets to the amounts expected to be
realized. Income tax expense or benefit is the tax payable or refundable,
respectively, for the period plus or minus the change during the period in the
deferred tax assets and liabilities.
Net loss per share
Basic earnings/loss per share is computed by dividing income available to common
shareholders (the numerator) by the weighted-average number of common shares
(the denominator) for the period. The computation of diluted earnings per share
is similar to basic earnings per share, except that the denominator is increased
to include the number of additional common shares that would have been
outstanding if potentially dilutive common shares had been issued. Common stock
options outstanding at December 31, 2004 were not included in the diluted loss
per share as all 15,000 options were anti-dilutive. Therefore, basic and diluted
losses per share at December 31, 2004 were equal.
Stock-based compensation
The Company accounts for stock-based employee compensation arrangements in
accordance with Accounting Principles Board ("APB") Opinion 25, "Accounting for
Stock Issued to Employees" and complies with the disclosure provisions of SFAS
No. 123, "Accounting for Stock-Based Compensation." Under APB No. 25,
compensation expense is based on the difference, if any, on the date of grant,
between the fair value of the Company's stock and the exercise price. The
Company accounts for stock issued to non-employees in accordance with the
provisions of SFAS No. 123. SFAS 123 requires the fair value based method of
accounting for stock issued to non-employees in exchange for services.
Companies that elect to use the method provided in APB 25 are required to
disclose pro forma net income and pro forma earnings per share information that
would have resulted from the use of the fair value based method. The Company has
elected to continue to apply the provisions of APB Opinion No. 25 and provide
the pro forma disclosure provisions of SFAS No. 123. The Company did not report
pro forma disclosures in the accompanying financial statements as the Company
did not grant any employee stock options as of December 31, 2004.
F-15
SIGNATURE LEISURE, INC.
NOTES TO FINANCIAL STATEMENTS
Recent accounting pronouncements
In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary Assets
- - an amendment of APB Opinion No. 29." This Statement eliminates the exception
for nonmonetary exchanges of similar productive assets and replaces it with a
general exception for exchanges of nonmonetary assets that do not have
commercial substance. A nonmonetary exchange has commercial substance if the
future cash flows of the entity are expected to change significantly as a result
of the exchange. This Statement is effective for nonmonetary asset exchanges
occurring in fiscal periods beginning after June 15, 2005. The Company does not
expect application of SFAS No. 153 to have a material affect on its financial
statements.
In December 2004, the FASB issued a revision to SFAS No. 123, "Share-Based
Payment." This Statement supercedes APB Opinion No. 25, "Accounting for Stock
Issued to Employees" and its related implementation guidance. It establishes
standards for the accounting for transactions in which an entity exchanges its
equity instruments for goods or services. It also addresses transactions in
which an entity incurs liabilities in exchange for goods or services that are
based on the fair value of the entity's equity instruments or that may be
settled by the issuance of those equity instruments. This Statement does not
change the accounting guidance for share-based payment transactions with parties
other than employees provided in Statement No. 123 as originally issued and EITF
Issue No. 96-18. This Statement is effective for public entities that file as
small business issuers as of the beginning of the first fiscal period that
begins after December 15, 2005. The application of SFAS No. 123 (revised) would
not currently have a material impact on the Company's financial statements.
Note 2 - Related Party Transactions
Working capital advances
During the year ended December 31, 2004, the sole officer and director advanced
the Company $17,857 for working capital and paid $16,033 of expenses on behalf
of the Company. The advances do not carry an interest rate and are due on
demand. As of December 31, 2004, the Company had repaid $5,857. The remaining
balance of $28,033 is included in the accompanying financial statements as
"Indebtedness to related parties".
The Company's sole officer and director paid expenses on behalf of the Company
totaling $13,369 during the year ended December 31, 2003. The Company repaid all
of the advances prior to December 31, 2003.
Note payable
During March 2004, a shareholder loaned the Company $28,210 in exchange for a
promissory note. The note carries an eight percent interest rate and matures on
December 31, 2004. The Company repaid $13,275 toward the note as of December 31,
2004. Accrued interest expense on the note totaled $1,560 at December 31, 2004.
The remaining principal and accrued interest balances of $16,495 are included in
the accompanying financial statements as "Indebtedness to related parties".
Accrued compensation and common stock
Commencing July 1, 2003, the Company began accruing an annual salary of $250,000
for its sole officer and director based on an employment agreement executed
during the three months ended September 30, 2003 (see Note 8). In addition,
under the terms of the employment agreement, the sole officer and director was
awarded a monthly auto allowance of $700 per month and opportunities to receive
performance-based bonuses. As of December 31, 2004, the sole officer and
director had not received any payments toward the auto allowance. The balance
owed at December 31, 2004 for the auto allowance totaled $12,600, which is
included in the accompanying financial statements as "Indebtedness to related
parties".
F-16
SIGNATURE LEISURE, INC.
NOTES TO FINANCIAL STATEMENTS
The sole officer and director was given the opportunity to earn a bonus of
$750,000 upon the successful completion of (1) raising a minimum of $200,000 for
the Company, and (2) the opening or acquisition of the Company's first business
unit. During 2003, the sole officer and director raised $250,000 through the
sale of the Company's common stock and in 2004, the sole officer and director
opened the Company's first business unit (Signature Auto). As a result, the
Company accrued $750,000 in officer compensation to recognize the bonus earned
by the sole officer and director during the year ended December 31, 2004.
The sole officer and director earned a second bonus in February 2005 (see Note
8).
During October 2004, the sole officer and director approved the issuance of
7,500,000 shares of the Company's restricted common stock as payment of $450,000
of the sole officer and director's accrued compensation.
On the date of issuance, the Company's common stock had a traded market value of
approximately $.08. The Company's sole officer and director valued the stock
issuance at $.06 per share (a 25 percent discount from the traded market value).
In valuing the stock, the sole officer and director considered the following:
1. Shares issued to the sole officer and director were restricted under Rule 144
(common shares issued to other third-parties during the year were free-trading);
2. The Company's common stock is thinly traded and significant stock trades can
cause high volatility and fluctuations in the traded market value;
3. After the restriction is lifted from the shares, the sole officer and
director is still limited by the number of shares he can sell based on the total
number of shares in the market at the time of sale.
Of the total $450,000 in stock issued to the sole officer and director, $375,000
was allocated to the sole officer and director's accrued salary, which reduced
the salary accrual to $-0- as of December 31, 2004. The remaining $75,000 was
allocated to the sole officer and director's $750,000 bonus, which reduced the
bonus accrual to $675,000 as of December 31, 2004. The bonus accrual is included
in the accompanying financial statements as "Indebtedness to related parties".
Contributed rent and services
Officers contributed office space to the Company for the period from January 1,
2003 through November 30, 2003. The office space was valued at $2,685 per month
based on the market rate in the local area and is included in the accompanying
financial statements as contributed rent expense with a corresponding credit to
additional paid-in capital. The Company entered into a lease for office space
commencing December 1, 2003. The Company's office lease was terminated during
November 2004. Following termination of the lease, Renovo Holdings, an affiliate
under common control, began contributing office space to the Company on a
month-to-month basis. During the month of December 2004, the affiliate
contributed office space valued at $424 based on the affiliate's rent payments
and the percentage office space utilized by the Company.
Officers contributed time and effort to the Company valued at $123,750 for the
six months ended June 30, 2003. The time and effort was valued by the officers
at $125 per hour based on the level of services performed and is included in the
accompanying financial statements as contributed services with a corresponding
credit to additional paid-in capital.
Note 3 - Vehicle Floor Plans
The Company has established two $50,000 floor plans of which all $100,000 was
unused at December 31, 2004. These credit lines are approved for financing
pre-owned vehicle inventory purchases. One line carries a 4.50% interest rate
and the second carries a variable interest rate equal to 3.00% over the prime
rate. Advances under the floor plans are payable within 30 days of disbursement
and are collateralized by the Company's vehicles inventory and other
Company-owned assets.
F-17
SIGNATURE LEISURE, INC.
NOTES TO FINANCIAL STATEMENTS
Note 4 - Note Payable
On December 2, 2004, the Company received proceeds of $25,000 in exchange for a
promissory note. The note carries an eight percent interest rate and matures on
December 31, 2005. Accrued interest expense on the note totaled $159 at December
31, 2004.
Note 5 - Income Taxes
A reconciliation of the U.S. statutory federal income tax rate to the effective
rate is as follows for the years ended December 31, 2004 and 2003:
For the Years Ended
December 31,
------------------------
2004 2003
------------------------
U.S. statutory federal rate, graduated 34.00% 34.00%
State income tax rate, net of federal benefit 3.63% 3.63%
Permanent book-to-tax differences -0.01% -4.87%
Net operating loss carry forward -37.62% -32.76%
------------------------
Effective tax rate 0.00% 0.00%
========================
At December 31, 2004, the Company's current tax benefit consisted of a net tax
asset of $1,117,909, due to operating loss carryforwards of $3,012,924, which
was fully allowed for, in the valuation allowance of $1,117,909. The valuation
allowance results in deferred tax expense, which offsets the net deferred tax
asset for which there is no assurance of recovery. The changes in the valuation
allowance for the years ended December 31, 2004 and 2003 totaled $710,121 and
$387,723, respectively. Net operating loss carryforwards will expire through
2024.
The valuation allowance will be evaluated at the end of each year, considering
positive and negative evidence about whether the asset will be realized. At that
time, the allowance will either be increased or reduced; reduction could result
in the complete elimination of the allowance if positive evidence indicates that
the value of the deferred tax asset is no longer impaired and the allowance is
no longer required.
Should the Company undergo an ownership change, as defined in Section 382 of the
Internal Revenue Code, the Company's tax net operating loss carryforwards
generated prior to the ownership change will be subject to an annual limitation
which could reduce or defer the utilization of those losses.
Note 6 - Shareholder's Equity
Preferred stock
The preferred stock may be issued in series as determined by the sole director.
As required by law, each series must designate the number of shares in the
series and each share of a series must have identical rights of (1) dividend,
(2) redemption, (3) rights in liquidation, (4) sinking fund provisions for the
redemption of the shares, (5) terms of conversion and (6) voting rights. The
Company is authorized to issue 10,000,000 of its $0.001 par value preferred
stock. No preferred stock was issued and outstanding at December 31, 2004.
F-18
SIGNATURE LEISURE, INC.
NOTES TO FINANCIAL STATEMENTS
Common stock
2004
During the year ended December 31, 2004, the Company issued 200,000 shares of
its common stock to attorneys in exchange for legal services. The shares issued
were valued based on the market value of the Company's common stock on the
transaction date of $.20 per share. Stock-based compensation expense of $40,000
was recognized in the accompanying financial statements for the year ended
December 31, 2004.
During the year ended December 31, 2004, the Company issued 77,500 shares of its
common stock to a consultant in exchange for public relations services. The
shares issued were valued based on the market value of the Company's common
stock on the transaction dates, ranging from $.52 to $2.00 per share.
Stock-based compensation expense of $65,500 was recognized in the accompanying
financial statements for the year ended December 31, 2004.
During the year ended December 31, 2004, the Company issued 1,700,000 shares of
its common stock to consultants in exchange for business consulting services.
The shares issued were valued based on the market value of the Company's common
stock on the transaction dates, ranging from $.20 to $2.60 per share.
Stock-based compensation expense of $608,600 was recognized in the accompanying
financial statements for the year ended December 31, 2004.
2003
On January 20, 2003, the Company transferred its photography business and
substantially all of its assets back to its former president (and majority
shareholder) in exchange for the cancellation of all of the common stock of the
Company held by the president (150,000 shares). In addition, 1,250 shares of
common stock previously issued to the Company's attorney for services were
cancelled. Also, on January 20, 2003, the Company issued 27,000 shares of its
common stock to new management in exchange for establishing a new business plan
for the Company. On the transaction date, the Company's common stock had no
reliable market value. The value of the transaction could not be objectively
measured as the services were rendered by related parties. The shares were
valued by the sole director at $.40 per share based on the estimated fair value
of the services. Stock-based compensation expense of $10,800 was recognized in
the accompanying financial statements for the year ended December 31, 2003.
On January 27, 2003, the Company executed and twenty-for-one stock dividend for
shareholders of record on January 24, 2003. As a result of the stock dividend,
the number of common shares issued and outstanding increased from 38,500 to
808,500.
During the year ended December 31, 2003, the Company issued 9,375 shares of its
common stock to attorneys in exchange for legal services. The shares issued were
valued based on the market value of the Company's common stock on the
transaction dates, ranging from $8.40 to $10.40 per share. Stock-based
compensation expense of $90,000 was recognized in the accompanying financial
statements for the year ended December 31, 2003.
During the year ended December 31, 2003, the Company issued 12,500 shares of its
common stock in exchange for stock offering costs. The shares issued were valued
based on the market value of the Company's common stock on the transaction
dates, or approximately $8.40 per share. Offering costs of $105,000 were
recognized as an offset to common stock sale proceeds in the accompanying
financial statements for the year ended December 31, 2003.
During the year ended December 31, 2003, the Company issued 1,625 shares of its
common stock to consultants in exchange for health and fitness consulting
services. The shares issued were valued based on the market value of the
Company's common stock on the transaction dates, ranging from $8.40 to $10.40
per share. Stock-based compensation expense of $16,138 was recognized in the
accompanying financial statements for the year ended December 31, 2003.
F-19
SIGNATURE LEISURE, INC.
NOTES TO FINANCIAL STATEMENTS
During the year ended December 31, 2003, the Company issued 24,872 shares of its
common stock to consultants in exchange for public relations services. The
shares issued were valued based on the market value of the Company's common
stock on the transaction dates, ranging from $6.80 to $10.40 per share.
Stock-based compensation expense of $238,692 was recognized in the accompanying
financial statements for the year ended December 31, 2003.
During the year ended December 31, 2003, the Company issued 67,950 shares of its
common stock to consultants in exchange for business consulting services. The
shares issued were valued based on the market value of the Company's common
stock on the transaction dates, ranging from $2.40 to $10.40 per share.
Stock-based compensation expense of $430,240 was recognized in the accompanying
financial statements for the year ended December 31, 2003.
Common stock options
Effective April 28, 2003, the Company granted a consultant options to purchase
15,000 shares of the Company's common stock. The options' exercise prices range
from $12.00 to $30.00 and expire on April 28, 2005. The Company determined the
fair value of the options in accordance with SFAS 123 and recorded stock-based
compensation expense of $125,000 in the accompanying financial statements.
The following schedule summarizes the changes in the Company's outstanding stock
options for the years ended December 31, 2004 and 2003:
Weighted
Options Outstanding and Exercisable Average
-------------------------------------------------- ---------------
Exercise Exercise
Number of Price Per Price Per
Shares Share Share
------------ ----------------- ---------------
Balance at December 31, 2002 - $ 0.00 $ -
Options granted 15,000 $ 12.00 to $30.00 $ 20.80
Options exercised - $ 0.00 $ -
Options expired - $ 0.00 $ -
----------- --------------
Balance at December 31, 2003 15,000 $ 12.00 to $30.00 $ 20.80
Options granted - $ 0.00 $ -
Options exercised - $ 0.00 $ -
Options expired - $ 0.00 $ -
----------- --------------
Balance at December 31, 2004 15,000 $ 12.00to $30.00 $ 20.80
=========== ==============
The fair value for the options granted during the fiscal year ended December 31,
2003 was estimated at the date of grant using the Black-Scholes option-pricing
model with the following assumptions:
Risk-free interest rate 2.00%
Dividend yield 0.00%
Volatility factor 210.33%
Weighted average expected life 2 years
F-20
SIGNATURE LEISURE, INC.
NOTES TO FINANCIAL STATEMENTS
The Black-Scholes options valuation model was developed for use in estimating
the fair value of traded options, which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input of
highly subjective assumptions including the expected stock price volatility.
Because the Company's stock options have characteristics significantly different
from those of traded options, and because changes in the subjective input
assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its stock options. However, the Company has
presented the pro forma net loss and pro forma basic and diluted loss per common
share using the assumptions noted above.
Standby Equity Distribution Agreement
During October 2004, the Company entered into a Standby Equity Distribution
Agreement (the "Agreement") with Katalyst Capital Group, Ltd. ("Katalyst").
Under the terms of the Agreement, Katalyst has committed to purchase up to $5
million of the Company's common stock over the course of 24 months after an
effective registration of the Company's common stock. Any purchases are to be
issued under the securities laws of the United States under Regulation D. The
purchase price has been set at 98% of the market price, which is to be
calculated based on the lowest daily volume weighted average price of the stock
over the five trading days following the Company's funding request. No shares
have been issued under the Agreement through the date of this report. By the
terms of this agreement the effective date occurs on the date on which the SEC
first declares effective a related registration statement or by mutual written
agreement of the parties. Neither of these conditions has occurred.
Note 7 - Letters of Intent
On March 3, 2003, the Company signed a Letter of Intent with a limited liability
company ("LLC") to build and operate a hair salon and day spa. Under the terms
of the Letter of Intent, the Company and the LLC would share the costs of
building the facility and in the subsequent revenues. Further due diligence and
negotiations continued with the LLC through September 30, 2003. Final closing
details could not be agreed upon between the LLC and the Company. The Company
has subsequently suspended negotiations.
On April 7, 2003, the Company signed a Letter of Intent with a combination salon
and day spa, whereby the Company would acquire all of the outstanding common
shares of the salon in exchange for common stock of the Company, which is
intended to qualify as tax-free exchange. Further due diligence efforts were
undertaken and the Company has elected to no longer pursue the salon and day spa
as an acquisition candidate. No further negotiations are anticipated.
Note 8 - Commitments and Contingencies
Consulting Agreement
On September 26, 2003, the Company signed an agreement to hire a consultant that
would provide business combinations and merger and acquisition services to the
Company. During October 2003, after signing the agreement and paying a $50,000
retainer, the Company determined that the consultant was not acting in the best
interests of the Company and not performing its duties as required under the
agreement. On October 28, 2003, the Company terminated the consultant's
agreement.
Employment Agreement
On September 3, 2003, the Company executed an Employment Agreement (the
"Agreement") with its sole officer and director. Under the terms of the
Agreement, the sole officer and director is to receive a salary of $250,000 per
year and an automobile allowance of $700 per month. In addition, the sole
officer and director has the opportunity to earn the following bonuses:
F-21
SIGNATURE LEISURE, INC.
NOTES TO FINANCIAL STATEMENTS
1. A bonus of $750,000 upon the successful completion of (1) raising a minimum
of $200,000 for the Company, and (2) the opening or acquisition of the Company's
first business unit. This bonus was earned during 2004 (see Note 2).
2. A bonus of $150,000 for each additional merger and/or acquisition and/or
business unit start-up brought to the Company. A $150,000 bonus was earned in
February 2005 (see Note 9).
Note 9 - Subsequent Events
Reverse stock split
On January 18, 2005, the Company's sole director and shareholders approved a
40:1 reverse split of its $.0001 par value common stock. The split was declared
effective as of February 4, 2005. The stock split reduced the number of common
shares outstanding from 449,815,190 to 11,245,380. The effect of the reverse
stock split has been retroactively applied to January 1, 2003.
Common stock
Between January 1 and March 3, 2005, the Company issued 3,025,000 shares of its
common stock to consultants in exchange for business consulting services. The
shares issued were valued based on the market value of the Company's common
stock on the transaction dates, ranging from $.06 to $.26 per share. Stock-based
compensation expense of $344,425 will be recognized in the Company's 2005
financial statements.
Asset acquisition
On February 15, 2005, the Company acquired the assets of Parker Productions
("Parker"), a sole proprietorship operating in the State of Florida. Parker's
operations consisted of modeling and event staffing services. The Company
acquired Parker's assets (including the website www.parkerproductions.com, a
contact list of models and clients, and use of the name Parker Productions) in
exchange for the following:
1. $20,000 cash;
2. A structured agreement to pay 2% of the net profits of the Parker Productions
division to Jill Reynolds (former owner of the Parker assets) for as long as the
Company operates the Parker Productions division or for a minimum of ten years,
whichever period is longer.
3. Ear-marked $20,000 cash as "seed capital" for use within the Parker
Productions division.
During February 2005, Signature incorporated a new company with the name Parker
Productions, Inc. ("PPI"). PPI is a wholly-owned subsidiary of Signature.
Following Signature's acquisition of the Parker assets, Signature placed the
assets in PPI.
Officer bonus
The sole officer and director was given the opportunity to earn a bonus of
$150,000 for each additional merger, acquisition, or business unit start-up
brought to the Company after the initial business unit. During February 2005,
the sole officer and director earned a $150,000 bonus following the commencement
of the PPI operations.
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We have not authorized any dealer, salesperson or other person to provide any
information or make any representations about Signature Leisure, Inc., except
the information or representations contained in this prospectus. You should not
rely on any additional information or representations if made.
-----------------------
This prospectus does not constitute an offer to sell, or ----------------------
a solicitation of an offer to buy any securities:
|_| except the common stock offered by this
prospectus;
|_| in any jurisdiction in which the offer or
solicitation is not authorized;
|_| in any jurisdiction where the dealer or other
salesperson is not qualified to make the offer
or solicitation;
|_| to any person to whom it is unlawful to make the
offer or solicitation; or
|_| to any person who is not a United States
resident or who is outside the jurisdiction of
the United States.
The delivery of this prospectus or any accompanying sale does not imply that:
|_| there have been no changes in the affairs of Signature after the date
of this prospectus; or
|_| the information contained in this prospectus is
correct after the date of this prospectus.
-----------------------
Until _________, 2005, all dealers effecting transactions in the registered
securities, whether or not participating in this distribution, may be required
to deliver a prospectus. This is in addition to the obligation of dealers to
deliver a prospectus when acting as underwriters.
---------------------
PROSPECTUS
---------------------
164,398,693 Shares of Common Stock
SIGNATURE LEISURE, INC.
July ___, 2005
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Indemnification Of Directors And Officers
Our Articles of Incorporation include an indemnification provision
under which we have agreed to indemnify our directors and officers from and
against certain claims arising from or related to future acts or omissions as a
director or officer of Signature. Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be permitted to directors, officers
and controlling persons of Signature pursuant to the foregoing, or otherwise, we
have been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable.
Other Expenses Of Issuance And Distribution
The following table sets forth estimated expenses expected to be
incurred in connection with the issuance and distribution of the securities
being registered. We will pay all of the expenses in connection with this
offering.
Securities and Exchange Commission Registration Fee $ 696.78
Printing and Engraving Expenses $ 2,500.00
Accounting Fees and Expenses $ 15,000.00
Legal Fees and Expenses $ 50,000.00
Miscellaneous $ 16,803.22
TOTAL $ 85,000.00
Recent Sales Of Unregistered Securities
We have issued the following securities in the past three years without
registering them under the Securities Act of 1933:
2003
On January 20, 2003, the Company transferred its photography business
and substantially all of its assets back to its former president (and majority
shareholder) in exchange for the cancellation of all of the common stock of the
Company held by the president (150,000 shares). In addition, 1,250 shares of
common stock previously issued to the Company's attorney for services were
cancelled. Also, on January 20, 2003, the Company issued 27,000 shares of its
common stock to new management in exchange for establishing a new business plan
for the Company. On the transaction date, the Company's common stock had no
reliable market value. The value of the transaction could not be objectively
measured as the services were rendered by related parties. The shares were
valued by the sole director at $.40 per share based on the estimated fair value
of the services. Stock-based compensation expense of $10,800 was recognized in
the accompanying financial statements for the year ended December 31, 2003.
On January 27, 2003, the Company executed and twenty-for-one stock
dividend for shareholders of record on January 24, 2003. As a result of the
stock dividend, the number of common shares issued and outstanding increased
from 38,500 to 808,500.
Effective April 28, 2003, the Company granted a consultant options to
purchase 15,000 shares of the Company's common stock. The options' exercise
prices range from $12.00 to $30.00 and expire on April 28, 2005. The Company
determined the fair value of the options in accordance with SFAS 123 and
recorded stock-based compensation expense of $125,000 in the accompanying
financial statements.
During the year ended December 31, 2003, the Company issued 9,375
shares of its common stock to attorneys in exchange for legal services. The
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shares issued were valued based on the market value of the Company's common
stock on the transaction dates, ranging from $8.40 to $10.40 per share.
Stock-based compensation expense of $90,000 was recognized in the accompanying
financial statements for the year ended December 31, 2003.
During the year ended December 31, 2003, Signature Leisure, Inc.
entered into a securities purchase agreement for the sale of $500,000 of our
common stock. The initial purchase was for $250,000 resulting in the issuance of
1,472,320 common $.0001 par value shares to a single foreign purchaser in
exempted transactions under Regulation "D", Section 4(2) of the Securities Act
of 1933, 4(6) of the Securities Act of 1933 and are subject to Rule 144 of the
Securities Act of 1933, as amended. Signature Leisure, Inc. conducted the
private offering through its executive officers and directors.
During the year ended December 31, 2003, the Company issued 12,500
shares of its common stock in exchange for stock offering costs. The shares
issued were valued based on the market value of the Company's common stock on
the transaction dates, or approximately $8.40 per share. Offering costs of
$105,000 were recognized as an offset to common stock sale proceeds for the year
ended December 31, 2003.
During the year ended December 31, 2003, the Company issued 1,625
shares of its common stock to consultants in exchange for health and fitness
consulting services. The shares issued were valued based on the market value of
the Company's common stock on the transaction dates, ranging from $8.40 to
$10.40 per share. Stock-based compensation expense of $16,138 was recognized in
the accompanying financial statements for the year ended December 31, 2003.
During the year ended December 31, 2003, the Company issued 24,872
shares of its common stock to consultants in exchange for public relations
services. The shares issued were valued based on the market value of the
Company's common stock on the transaction dates, ranging from $6.80 to $10.40
per share. Stock-based compensation expense of $238,692 was recognized in the
accompanying financial statements for the year ended December 31, 2003.
During the year ended December 31, 2003, the Company issued 67,950
shares of its common stock to consultants in exchange for business consulting
services. The shares issued were valued based on the market value of the
Company's common stock on the transaction dates, ranging from $2.40 to $10.40
per share. Stock-based compensation expense of $430,240 was recognized in the
accompanying financial statements for the year ended December 31, 2003.
2004
On January 20, 2004, the Company issued 1,000,000 shares of common
stock to Katalyst Capital as a commitment fee related to the Equity Distribution
Agreement.
On January 30, 2004 the sole officer and director approved the issuance
of 2,500 common shares issued at $2.00 a share on January 30, 2004 valued at
$5,000 issued to Equitilink LLC for investor relations services provided to
Signature Leisure Inc.
During the year ended December 31, 2004, the Company issued 200,000
shares of its common stock to attorneys in exchange for legal services. The
shares issued were valued based on the market value of the Company's common
stock on the transaction date of $.20 per share. Stock-based compensation
expense of $40,000 was recognized in the accompanying financial statements for
the year ended December 31, 2004.
During the year ended December 31, 2004, the Company issued 77,500
shares of its common stock to a consultant in exchange for public relations
services. The shares issued were valued based on the market value of the
Company's common stock on the transaction dates, ranging from $.52 to $2.00 per
share. Stock-based compensation expense of $65,500 was recognized in the
accompanying financial statements for the year ended December 31, 2004.
During the year ended December 31, 2004, the Company issued 1,700,000
shares of its common stock to consultants in exchange for business consulting
services. The shares issued were valued based on the market value of the
Company's common stock on the transaction dates, ranging from $.20 to $2.60 per
share. Stock-based compensation expense of $608,600 was recognized in the
accompanying financial statements for the year ended December 31, 2004.
During October 2004, the sole officer and director approved the
issuance of 7,500,000 shares of the Company's restricted common stock as payment
of $450,000 of the sole officer and director's accrued compensation.
Unless otherwise noted in this section, with respect to the sale of
unregistered securities referenced above, all transactions were exempt from
registration pursuant to Section 4(2) of the Securities Act of 1933 (the "1933
II-2
Act"), and Regulation D promulgated under the 1933 Act. In each instance, the
purchaser had access to sufficient information regarding Signature so as to make
an informed investment decision. More specifically, we had a reasonable basis to
believe that each purchaser was an "accredited investor" as defined in
Regulation D of the 1933 Act and otherwise had the requisite sophistication to
make an investment in Signature's securities.
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION LOCATION
2.0 Form of Common Stock Share Certificate of Incorporated by reference filed as an
Signature Leisure, Inc. exhibit to Registration Statement on
Form 10-SB filed on May 6, 2004.
3.0 Amended and Restated Articles of Incorporation of Incorporated by reference filed as an
Signature Leisure, Inc. exhibit to Registration Statement on
Form 10-SB filed on May 6, 2004.
3.1 Amended and Restated Bylaws of Signature Leisure, Incorporated by reference filed as an
Inc. exhibit to Registration Statement on
Form 10-SB filed on May 6, 2004.
3.1 Articles of Incorporation as amended, Amendment to Incorporated by reference filed as an
Articles of Incorporation as filed with the exhibit to Registration Statement on
Colorado Secretary of State on July 14, 2004 Form 10-SB filed on May 6, 2004.
3.2 Bylaws Incorporated by reference filed as an
exhibit to Registration Statement on
Form 10-SB filed on May 6, 2004.
5.1 Opinion of Kirkpatrick & Lockhart LLP re: Legality Filed by amendment.
10.1 Closing Document for Parker Productions - by and Incorporated by reference filed as an
between Signature Leisure, Inc. and Parker exhibit to Registration Statement on
Productions, February 15, 2005 Form 10-SB filed on May 6, 2004.
10.2 Letter of Intent - Acquisition of Assets of Parker Incorporated by reference filed as an
Productions, by and between Signature Leisure, exhibit to Registration Statement on
Inc. and Jill Reynolds, Parker Productions, Form 10-SB filed on May 6, 2004.
November 12, 2004
10.3 Standby Equity Distribution Agreement dated Incorporated by reference to the Company's
January 20, 2004 between Catalyst Capital Group, form SB-2 filed on July 11,2005
Ltd. and Signature Leisure, Inc.
10.4 Placement Agent Agreement dated January 20, 2004 Incorporated by reference to the Company's
between Spencer - Clarke, LLC, and Signature form SB-2 filed on July 11,2005
Leisure, Inc.
10.5 Escrow Agreement dated January 20 2004 between Incorporated by reference to the Company's
Signature Leisure, Inc. and Marchena and Graham form SB-2 filed on July 11,2005
14 Code of Ethics Provided herewith
23.1 Consent of Kirkpatrick & Lockhart Nicholson Incorporated by reference to Exhibit 5.1
Graham, LLP
23.2 Consent of Cordovano and Honeck, LLP Provided herewith
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Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any period in which it offers or sells
securities, a post-effective amendment to this registration statement to:
(i) Include any prospectus required by Sections 10(a)(3) of
the Securities Act of 1933 (the "Act");
(ii) Reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the 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 Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective Registration Statement;
(iii) Include any additional or changed material information
on the plan of distribution;
(2) That, for the purpose of determining any liability under the
Act, 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 bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities that remain unsold at the end of the offering.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the small business
issuer pursuant to the foregoing provisions, or otherwise, the small business
issuer has 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. In the event that a claim for indemnification
against such liabilities (other than the payment by the small business issuer of
expenses incurred or paid by a director, officer or controlling person of the
small business issuer in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the small business issuer will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
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SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on our behalf by the undersigned, on July 12, 2005.
Date: July 12, 2005 SIGNATURE LEISURE, INC.
By: /s/ Stephen W. Carnes
-------------------------------------
Name: Stephen W. Carnes
Title: President and Principal Accounting
Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been duly singed by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.
SIGNATURE DATE
- ------------------------ -----------------------
/s/ Stephen W. Carnes
- ------------------------
Stephen W. Carnes July 12, 2005
Sole Director
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