AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 18, 2002
REGISTRATION NO. 333-68806
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM SB-2/A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
M-GAB DEVELOPMENT CORPORATION
(Name of small business issuer in its charter)
FLORIDA 4724 33-0961490
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization Classification Code Number) Identification No.)
1059 E. SKYLER DRIVE
DRAPER, UTAH 84020 (801) 361-7644
(Address of principal executive offices
and intended principal place of business) (Telephone number)
Carl M. Berg, President
1059 E. Skyler Drive
Draper, Utah 84020
(801) 361-7644
(Name, address, and telephone
number of agent for service)
COPIES TO:
Brian A. Lebrecht, Esq.
The Lebrecht Group, APLC
22342 Avenida Empresa, Suite 230
Rancho Santa Margarita, California 92688
(949) 635-1240
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time 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, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
This Post-Effective Amendment is being filed to change the offering price
and extend the offering deadline in the registration statement previously
declared effected by the Commission on November 15, 2001.
CALCULATION OF REGISTRATION FEE
TITLE OF EACH PROPOSED PROPOSED
CLASS OF. . . . . . . . . . . AMOUNT MAXIMUM MAXIMUM AMOUNT OF
SECURITIES TO BE. . . . . . . TO BE OFFERING PRICE AGGREGATE REGISTRATION
REGISTERED. . . . . . . . . . REGISTERED PER UNIT (1) OFFERING PRICE FEE
- ----------------------------- ----------- ---------------- --------------- -------------
Common Stock offered for sale 2,000,000 $ 0.10 $ 200,000 $ 18.40
- ----------------------------- ----------- ---------------- --------------- -------------
Common Stock of certain . . . 463,000 $ 0.10 $ 4.26
selling shareholders $ 46,300
- ----------------------------- ----------- ---------------- --------------- -------------
Total Registration Fee . $ 22.66
- ----------------------------- -------------
(1) The offering price per share for the selling security holders was
estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 of Regulation C.
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
Up to 2,463,000 shares of common stock
M-GAB DEVELOPMENT CORPORATION
M-GAB Development is registering 2,000,000 shares, representing 25% of the
outstanding common stock if all shares are sold, for sale to investors by M-GAB
at a price of $0.10 per share. This offering will terminate when all 2,000,000
shares are sold or on October 15, 2002.
M-GAB is also registering up to 463,000 shares, representing 6% of the
outstanding common stock, for sale by:
- Brian A. Lebrecht, M-GAB's legal counsel (450,000 shares); and
- Twelve individuals identified in the Selling Security Holders section
of this prospectus, each of which purchased shares from M-GAB (13,000
shares).
INVESTING IN THE COMMON STOCK INVOLVES RISKS. M-GAB CURRENTLY HAS NO
OPERATIONS, NO INCOME, AND NO ASSETS, IS IN UNSOUND FINANCIAL CONDITION, AND YOU
SHOULD NOT INVEST UNLESS YOU CAN AFFORD TO LOSE YOUR ENTIRE INVESTMENT. SEE
"RISK FACTORS" BEGINNING ON PAGE 3.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Other than shares sold for the benefit of M-GAB, all of the common stock
registered by this prospectus will be sold by the selling shareholders on their
own behalf at a price of $0.10 per share.
The shares to be sold for the benefit of M-GAB will be offered by our sole
officer and director, Mr. Berg, on a best efforts basis with no minimum. In the
event, however, that we elect to sell these securities through an underwriter,
we may pay a cash fee of up to 10% of the proceeds, resulting in net proceeds to
M-GAB of $0.09 per share, or $180,000 if the total offering is completed.
The common stock is not currently listed on any securities exchange.
THE DATE OF THIS PROSPECTUS IS SEPTEMBER 12, 2002
PROSPECTUS SUMMARY
M-GAB DEVELOPMENT CORPORATION
We intend to develop, market and distribute an interactive travel brochure
that will contain images and video of world-class destination resorts, as well
as remote vacation getaway locations such as Lake Powell and the Grand Canyon.
We currently have no agreements with any resorts or destinations to provide this
service. We intend to generate revenues from both the production of our product
(paid by the destination resort or location) and from the sale of our product on
a subscription basis via the Internet (paid by existing Internet web sites).
In our opinion, we believe that destination resorts and locations will
desire to have their properties featured using our travel brochure as a way to
increase interest in their location, and through our relationships hope to form
with major Internet web sites, as a way to increase their overall Internet
exposure. We have not yet conducted any market research to support our opinion.
In our opinion, we believe that existing Internet sites that provide
travel-related products and services, such as Yahoo.com, Expedia.com, American
Express Travel, and the major airlines, will subscribe to our products to
enhance their Internet presence, improve their customer service, retain existing
customers, and increase sales revenues by providing their customers the
opportunity to take a "virtual vacation" and experience exotic locales from our
client's website. As above, we have not yet conducted any market research to
support our opinion.
Our offices are currently located at 1059 E. Skyler Drive, Draper, Utah
84020, and our telephone number is (801) 361-7644.
Even if we are successful in raising the full $200,000 under this offering,
our management does not know how long this will satisfy our cash requirements
because we do not know how much it will cost to finance our business plan. Cash
will be used to conduct market research, purchase production equipment, to
market our products, and for working capital. We currently have no plans for
raising additional capital.
THE OFFERING
Securities Offered:
Shares Offered by M-GAB: We are registering to sell to new investors
up to 2,000,000 shares of common stock.
We will sell these shares to new investors
at $0.10 per share.
Shares Offered by
Selling Shareholders We are registering shares for sale by
selling shareholders, including:
- 450,000 shares issued to our legal
counsel, Brian A. Lebrecht.
- 13,000 shares issued to twelve
individuals identified in the Selling
Security Holders section of this
prospectus, each of which purchased
shares from M-GAB.
2
RISK FACTORS
Any investment in our common stock involves a high degree of risk. You
should consider carefully the following information, together with the other
information contained in this prospectus, before you decide to buy our common
stock. If any of the following events actually occurs, our business, financial
condition or results of operations would likely suffer. In this case, the
market price, if any, of our common stock could decline, and you could lose all
or part of your investment in our common stock.
Because we are a new company that has not generated any revenues since our
formation, we may not be profitable if we commence operations, and our investors
may lose all or part of their investment.
We were incorporated in March 2001. We have not commenced our business
plan, have no assets, and we have not generated any revenues. We do not
anticipate generating any revenue in our current fiscal year, and do not expect
to be profitable during the next fiscal year. Our prospects must be considered
speculative, considering the risks, expenses, and difficulties frequently
encountered in the establishment of a new business. In the event we commence
operations, we cannot guaranty that we will be profitable. Our failure to
generate sufficient revenues or be profitable may cause an investor to lose all
or part of his investment.
Our officers and directors are engaged in other activities that could have
conflicts of interest with us or they may not devote sufficient time to our
affairs.
We currently have only one officer and director, Carl M. Berg. Currently,
Mr. Berg devotes the majority of his time to other employment. As a result,
conflicts of interest in allocating time, services, and functions between us and
the other activities may occur from time to time.
We will need to hire or retain additional members of our management team.
Our current management team consists of only one individual, Mr. Berg. We
will need to hire or retain the services of a greater number of experienced
people, and people with skills and experience that can help us carry out our
business plan. We may experience a delay in finding qualified people, if we can
find them at all, which will cause a delay in executing our business plan. We
may have to pay certain highly qualified candidates a high level of
compensation, which will affect our cash flow and our profitability.
Our ability to generate revenues and achieve market acceptance is uncertain
because our business is based on an untested business plan, which may never be
accepted by potential customers.
Our business is based on an untested business plan, which may never be
accepted by potential destinations, resort owners, or customers. Our failure to
complete our development and to market our services and products successfully
could significantly affect our ability to succeed which will affect potential
investors' ability to sell their shares of common stock. Our inability to
generate revenues may cause potential investors to lose all or part of their
investment.
3
We will need to raise additional capital to develop and grow our business.
If we are successful in raising $200,000 under this offering, we do not
know how long the funds will last because we have not determined how much it
will cost to finance our business plan. If we raise less than $200,000 in this
offering, our ability to carry out our business plan will be severely limited,
and possibly eliminated. This would have a material adverse effect on our
ability to commence operations. We cannot guaranty that we will be able to
obtain additional financing at commercially reasonable rates, and we have no
other plans for raising additional funds.
Our industry is highly competitive and we may not have adequate resources
to market our products to compete successfully.
Competition in the Internet industry is intense. In order to succeed, we
have to enter into agreements with property owners and destination resorts to
produce our travel brochure. In addition, we will have to market our brochures
to existing Internet web sites which are presented with numerous competing
products on a regular basis. There is intense competition in each of these
areas. Our competition may have substantially more cash and other resources
than we do, making it difficult for us to obtain the necessary agreements,
commence operations, and operate profitably.
Our ability to generate business will depend on continued growth of online
commerce in the event we commence operations.
If we commence operations, our ability to generate business will depend on
continued growth in the use of the Internet, particularly in the area of travel.
Rapid growth in the use of the Internet and online services is a recent
phenomenon. This growth may not continue. A sufficiently broad base of
consumers may not accept, or continue to use, the Internet as a medium of
commerce. We cannot guaranty that the number of Internet users will continue to
grow in general or with respect to travel web sites.
Our sole director and officer owns a majority of our common stock, allowing
him to exert significant influence in matters concerning management of our
company and matters requiring shareholder approval.
Our sole director and officer beneficially owns over 92% of the common
stock before this offering, and will own over 69% of the common stock if we are
successful in raising the full $200,000. Such concentrated control of the
company gives him the ability to nominate the entire board of directors and
control all matters requiring approval by our stockholders. Such concentrated
control may also make it difficult for our shareholders to receive a premium for
their shares of our common stock in the event we merge with a third party or
enter into a different transaction which requires shareholder approval, and may
adversely affect the price of our common stock.
Our sole director and officer will be permitted to sell some of his stock,
which may have a negative effect on our stock price and ability to raise
additional capital, and may make it difficult for investors to sell their stock
at any price.
Our sole officer and director is the owner of 5,550,000 shares of our
common stock, representing over 92% of our total issued shares. He has agreed
not to sell any of those shares until at least thirty days after the completion
of our offering for $200,000. If our common stock is listed on the
over-the-counter electronic bulletin board, and after the thirty day lock-up
period, he may sell up to 1% of our outstanding stock (currently 60,130 shares)
every 90 days in the open market pursuant to Rule 144, which may have a negative
effect on our stock price and may prevent us from obtaining additional capital.
In addition, if Mr. Berg is selling his stock into the open market, it may make
it difficult or impossible for investors to sell their stock at any price.
4
Because we may be subject to the "penny stock" rules, the level of trading
activity in our stock may be reduced.
We anticipate that a market maker will apply to have our common stock
listed on the OTC Electronic Bulletin Board. If successful, broker-dealer
practices in connection with transactions in "penny stocks" are regulated by
certain penny stock rules adopted by the Securities and Exchange Commission.
Penny stocks, like shares of our common stock, generally are equity securities
with a price of less than $5.00, other than securities registered on certain
national securities exchanges or quoted on Nasdaq. The penny stock rules
require a broker-dealer, prior to a transaction in a penny stock not otherwise
exempt from the rules, to deliver a standardized risk disclosure document that
provides information about penny stocks and the nature and level of risks in the
penny stock market. The broker-dealer also must provide the customer with
current bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction, and, if the broker-dealer
is the sole market maker, the broker-dealer must disclose this fact and the
broker-dealer's presumed control over the market, and monthly account statements
showing the market value of each penny stock held in the customer's account. In
addition, broker-dealers who sell these securities to persons other than
established customers and "accredited investors" must make a special written
determination that the penny stock is a suitable investment for the purchaser
and receive the purchaser's written agreement to the transaction. Consequently,
these requirements may have the effect of reducing the level of trading
activity, if any, in the secondary market for a security subject to the penny
stock rules, and investors in our common stock may find it difficult to sell
their shares.
We lack a public market for shares of our common stock, which will make it
difficult for investors to sell their shares.
There is no public market for shares of our common stock. We cannot
guaranty that an active public market will develop or be sustained. Therefore,
investors may not be able to find purchasers for their shares of our common
stock. Should there develop a significant market for our shares, the market
price for those shares may be significantly affected by such factors as our
financial results and introduction of new products and services. Factors such
as announcements of new or enhanced products by us or our competitors and
quarter-to-quarter variations in our results of operations, as well as market
conditions in the Internet sector may have a significant impact on the market
price of our shares. Further, the stock market has experienced extreme
volatility that has particularly affected the market prices of stock of many
companies and that often has been unrelated or disproportionate to the operating
performance of those companies.
Investors' ability to resell their shares will also be hampered because our
sole director and officer owns approximately 92% of our outstanding shares of
common stock. Such concentrated control will make the market for our shares
highly illiquid. Therefore, it will be difficult for investors to resell their
shares if they are not able to find purchasers for their shares of our common
stock.
5
Because we lack a public market for shares of our common stock, the
offering price of the shares will be arbitrarily determined by the selling
security holders. Therefore, investors may lose all or part of their investment
if the price of their shares is too high.
Our common stock is not publicly traded and we do not participate in the
OTC Electronic Bulletin Board, an electronic quotation medium for securities
traded outside the Nasdaq Stock Market. We cannot guaranty that an active
public market for our stock will develop or be sustained. No market makers
currently buy or sell our securities. Therefore, the offering price of shares
of our common stock may be arbitrarily determined by the selling security
holders. Accordingly, purchasers may lose all or part of their investments if
the price of their shares is too high. A purchase of our stock in this offering
would be unsuitable for a person who cannot afford to lose his entire
investment.
Forward Looking Statements. Except for historical information, the
discussion in this registration statement contains some forward-looking
statements that involve risks and uncertainties. These statements may refer to
M-GAB's future plans, objectives, expectations and intentions. These statements
may be identified by the use of the words such as "expect," "anticipate,"
"believe," "intend," "plan" and similar expressions. M-GAB's actual results
could differ materially from those anticipated in such forward-looking
statements.
6
USE OF PROCEEDS
M-GAB does not realize any proceeds from the sale of the shares by the
selling security holders. M-GAB has already received and is utilizing the
proceeds received from those shares sold in private placements in its business.
The net proceeds to M-GAB (assuming an offering price of $0.10 per share
and potential sales commissions of up to 10% of the gross proceeds) from the
sale of the shares which we intend to offer to new investors would be a maximum
of $180,000.
These proceeds would be received from time to time as sales of these shares
are made by us. As set forth in the following table, we will use those proceeds
primarily for payment of existing expenses and working capital for operations.
We intend to use the proceeds in the following order of priority:
Assumed Offering (1) Maximum Offering
Description of Use Amount Percent Amount Percent
__________________ ___________________________________ __________________
Existing Expenses $ 25,000 25.0% $ 25,000 13.9%
Working Capital. . . . 75,000 75.0% $155,000 86.1%
--------------------- --------- -------- --------
Total . . . . . . . $ 100,000 100.0% $180,000 100.0%
--------------------- --------- -------- --------
(1) Assumes that we only raise $100,000 in this offering. This offering is
conducted on a best efforts basis with no minimum, therefore, we could
raise less than $100,000.
The above budgeted amounts are only for initial working purposes since we
do not know how much we will need to spend on these items. Even if we are able
to sell the maximum shares, we do not know how long these funds will last, and
we have no other plans for raising additional funds. The portion of the any
net proceeds not immediately required will be invested in certificates of
deposit or similar short-term interest bearing instruments.
DETERMINATION OF OFFERING PRICE
There is no established public market for the shares we are registering.
Our management has established the price of $0.10 per share based upon their
estimates of the market value of M-GAB and the price at which potential
investors might be willing to purchase the shares offered.
7
DILUTION
We are registering for sale to new investors up to 2,000,000 shares at
$0.10 per share. Our founding shareholders, Sadie, LLC, Mr. Berg and Mr.
Lebrecht, paid $0.0001 per share for their shares, and other existing
shareholders whose shares are being registered for resale paid $0.10 per share
for their shares. The following table sets forth on a pro forma basis at June
30, 2002, the differences between existing stockholders and new investors with
respect to the number of shares of common stock purchased from M-GAB, the total
consideration paid to M-GAB, and the average price paid per share (assuming a
proposed public offering price of $0.10 per share).
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE PRICE
AMOUNT PERCENT AMOUNT PERCENT PER SHARE
------- ------- ------- ------- --------------
Founding
Stockholders 6,000,000 74.9% $ 600 less than 1% $0.0001
=======
Existing
Stockholders 13,000 less than 1% $ 1,300 less than 1% $ 0.10
=======
New Investors 2,000,000 25.0% $ 200,000 99.1% $ 0.10
---------- ------------ ---------- ------------- =======
Total 8,013,000 100% $ 201,900 100%
========== ============ ========== =============
The difference between the public offering price per share of common stock
and the net tangible book value per share of common stock after this offering
constitutes the dilution to investors in this offering. M-GAB has already
realized the dilution from the shares registered for selling shareholders. Net
tangible book value per share is determined by dividing the net tangible book
value (total assets less intangible assets and total liabilities) by the number
of outstanding shares of common stock. The dilution calculations we have set
forth in this section reflect an offering price of $0.10 per share.
As of June 30, 2002, M-GAB had a net tangible book deficit of ($8,692) or
($0.00014) per share of issued and outstanding common stock. After giving
effect to the sale of the shares proposed to be offered in the maximum offering
of 2,000,000 shares, the net tangible book value at that date would have been
$171,308 or $0.021 per share. This represents an immediate increase in net
tangible book value of $0.021 per share to existing shareholders and an
immediate dilution of $0.079 per share to new investors.
The following table illustrates such per share dilution:
Proposed public offering price (per share) $ 0.10
Net tangible book value per share
at June 30, 2002 ($0.00014)
Increase in net tangible book value per
share attributable to the proceeds of
the maximum offering $ 0.021
-----
Pro forma net tangible book value per share
after the offering $0.021
------
Dilution to new investors $ 0.079
======
8
SELLING SECURITY HOLDERS
The following table provides information with respect to shares offered by
the selling stockholders:
SELLING STOCKHOLDER SHARES SHARES BEFORE PERCENT BEFORE SHARES AFTER PERCENT AFTER
FOR SALE OFFERING OFFERING OFFERING OFFERING (1)
____________________ _________ _____________ ______________ ____________ _____________
Brian A. Lebrecht (2) . . . . . 450,000 450,000 7.5% -0- 0%
Jeff R. Horrocks. . . . . . . . 1,250 1,250 *% -0- 0%
Peggy J. Horrocks . . . . . . . 1,250 1,250 *% -0- 0%
Kip K. & Jennifer S.
Conner JT 1,000 1,000 *% -0- 0%
Thomas E. Judd. . . . . . . . . 1,000 1,000 *% -0- 0%
Craig V. Butler . . . . . . . . 1,000 1,000 *% -0- 0%
Steve Lee . . . . . . . . . . . 1,000 1,000 *% -0- 0%
Tamara R. Willmann. . . . . . . 1,000 1,000 *% -0- 0%
Jeffrey S. Willmann . . . . . . 1,000 1,000 *% -0- 0%
Scott Boruta. . . . . . . . . . 1,000 1,000 *% -0- 0%
Robert Bird . . . . . . . . . . 1,250 1,250 *% -0- 0%
Elaine A. Bird. . . . . . . . . 1,250 1,250 *% -0- 0%
Jeffrey Smith . . . . . . . . . 1,000 1,000 *% -0- 0%
_________ __________ ______ _________ _____
Total . . . . . . . . . . . 463,000 463,000 7.5% -0- 0%
--------- ---------- ------ --------- -----
* Less than 1%
(1) Based on 8,013,000 shares outstanding, which includes the 2,000,000
shares offered for sale to new investors by M-GAB in this offering.
(2) Mr. Lebrecht is legal counsel to M-GAB.
9
PLAN OF DISTRIBUTION
M-GAB, through its officers and directors, intends to offer up to 2,000,000
shares at a price of $0.10 per share to potential investors. M-GAB has not at
this point engaged any broker/dealers licensed by the National Association of
Securities Dealers, Inc. for the sale of these shares and presently has no
intention to do so. If M-GAB engaged any broker/dealers, they may be acting as
underwriters for the offering of these shares.
Our officers and directors intend to seek to sell the common stock to be
sold by M-GAB in this offering by contacting persons with whom they have had
prior contact who have expressed interest in M-GAB, and by seeking additional
persons who may have interest through various methods such as mail, telephone,
and email. Any solicitations by mail or email will be preceded by or
accompanied by a copy of this Prospectus. M-GAB does not intend to offer the
securities over the Internet or through general solicitation or advertising.
Our officers and directors are relying on an exemption from registration as a
broker-dealer pursuant to Rule 3a4-1 of the Securities Exchange Act of 1934 in
that they are not statutorily disqualified, are not associated with a broker or
dealer, are not receiving compensation related to these transactions, and
performs substantial other duties for M-GAB.
We anticipate that a market maker will apply to have our common stock
traded on the over-the-counter bulletin board. If successful, the selling
stockholders will be able to sell their shares referenced under "Selling
Securityholders" from time to time on the over-the-counter bulletin board in
privately negotiated sales, or on other markets, at prevailing market rates. If
our common stock is not listed on the over-the-counter bulletin board, the
selling stockholders will sell their shares in privately negotiated
transactions. Any securities sold in brokerage transactions will involve
customary brokers' commissions. Mr. Berg has agreed that he will not sell any
of his shares until at least thirty days after the termination of this offering.
After the thirty day lock-up period, Mr. Berg may sell all of his stock in a
private transaction, or he may sell up to 1% of our total outstanding stock
(currently 60,130 shares) every 90 days in the open market pursuant to Rule 144.
In accordance with Regulation M under the Securities Exchange Act of 1934,
which was adopted to prevent manipulation of a stock price during a registered
offering, neither M-GAB, Mr. Berg, Mr. Lebrecht, nor any of the selling
stockholders may buy or sell any of our common stock while we, or they, are
selling stock in this offering. None of the selling stockholders will engage in
any short selling of our securities.
LEGAL PROCEEDINGS
We are not a party to or otherwise involved in any legal proceedings.
10
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS
The following table sets forth the names and ages of the current directors
and executive officers of the Company, the principal offices and positions with
the Company held by each person and the date such person became a director or
executive officer of the Company. The executive officers of the Company are
elected annually by the Board of Directors. The directors serve one-year terms
until their successors are elected. The executive officers serve terms of one
year or until their death, resignation or removal by the Board of Directors.
Unless described below, there are no family relationships among any of the
directors and officers.
Name Age Position(s)
---- --- -----------
Carl M. Berg 33 Chairman of the Board, President,
Secretary, and Treasurer (2001)
CARL M. BERG has served as our sole director and officer since our
inception. He also currently serves as a company executive with Sandlot
Corporation, a startup subscription management software company. Sandlot is
involved in managing subscription-based e-commerce. Mr. Berg has directed
business initiatives as the Business Development Manager, which have resulted in
growth of the company from 10 to 75 employees worldwide with offices in the U.S.
and Windsor, United Kingdom. Prior to Sandlot Corporation, from 1992 to 1999
Mr. Berg served in various management positions in the technology division of
Ameritech Corporation. His roles varied from the overall management of library
automation implementation projects to directing the implementation division of
roughly 75 technical staff. Job titles included Project Coordinator, Project
Manager and Director of Implementation.
11
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of August 30, 2002, certain information
with respect to the Company's equity securities owned of record or beneficially
by (i) each Officer and Director of the Company; (ii) each person who owns
beneficially more than 5% of each class of the Company's outstanding equity
securities; and (iii) all Directors and Executive Officers as a group.
Percent of Percent of Percent of
Name and Address of Amount and Nature of Class Before Class After Class After
Title of Class Beneficial Owner Beneficial Ownership Offering (1) Offering (2) Offering (3)
- --------------- ---------------------- --------------------- ------------- ------------- -------------
Common
Stock Carl M. Berg (4) 5,550,000 92.3% 69.3% 63.7%
Common
Stock Brian A. Lebrecht (5) 450,000 7.5% 5.6% 0%
--------------------- ------------- ------------- -------------
All Officers and
Directors as a Group
(1 Person) 5,550,000 92.3% 69.3% 63.7%
===================== ============= ============== ============
(1) Based on 6,013,000 shares outstanding.
(2) Based on 8,013,000 shares outstanding.
(3) Based on 8,013,000 shares outstanding, and further assuming that Mr.
Lebrecht sells 450,000 shares registered in this offering.
(4) Includes 3,000,000 shares held of record by Sadie, LLC, an entity
wholly-owned and controlled by Mr. Berg. Mr. Berg is our sole director
and officer.
(5) Mr. Lebrecht is President of The Lebrecht Group, APLC, which serves as
our securities counsel.
There are no current arrangements which will result in a change in control.
12
DESCRIPTION OF SECURITIES
Our authorized capital stock consists of 100,000,000 shares of common
stock, par value $0.001, and 5,000,000 shares of preferred stock, par value
$0.001. As of August 30, 2002, there are 6,013,000 shares of our common stock
issued and outstanding, and no shares of preferred stock issued or outstanding.
COMMON STOCK. Each shareholder of our common stock is entitled to a pro
rata share of cash distributions made to shareholders, including dividend
payments. The holders of our common stock are entitled to one vote for each
share of record on all matters to be voted on by shareholders. There is no
cumulative voting with respect to the election of our directors or any other
matter. Therefore, the holders of more than 50% of the shares voted for the
election of those directors can elect all of the directors. The holders of our
common stock are entitled to receive dividends when and if declared by our Board
of Directors from funds legally available therefore. Cash dividends are at the
sole discretion of our Board of Directors. In the event of our liquidation,
dissolution or winding up, the holders of common stock are entitled to share
ratably in all assets remaining available for distribution to them after payment
of our liabilities and after provision has been made for each class of stock, if
any, having any preference in relation to our common stock. Holders of shares
of our common stock have no conversion, preemptive or other subscription rights,
and there are no redemption provisions applicable to our common stock.
DIVIDEND POLICY. We have never declared or paid a cash dividend on our
capital stock. We do not expect to pay cash dividends on our common stock in the
foreseeable future. We currently intend to retain our earnings, if any, for use
in our business. Any dividends declared in the future will be at the discretion
of our Board of Directors and subject to any restrictions that may be imposed by
our lenders.
PREFERRED STOCK. We are authorized to issue 5,000,000 shares of preferred
stock, par value $0.001, of which no such shares are issued and outstanding. We
have not designated the rights and preferences of our preferred stock. The
availability or issuance of these shares could delay, defer, discourage or
prevent a change in control.
STOCK OPTION PLAN. On May 15, 2001, our directors and shareholders
approved the M-GAB, Inc. 2001 Stock Option Plan, effective June 1, 2001. The
plan offers selected employees, directors, and consultants an opportunity to
acquire our common stock, and serves to encourage such persons to remain
employed by us and to attract new employees. The plan allows for the award of
stock and options, up to 600,000 shares of our common stock. Following the
effectiveness of this registration statement, we intend to register with the
Commission the shares of common stock covered by the plan. We have not issued
any options or stock awards under the plan.
TRANSFER AGENT. The transfer agent for our common stock is Interwest
Transfer Company, Inc., 1981 East Murray Holladay Road, Suite 100, Salt Lake
City, Utah 84117, telephone number (801) 272-9294.
INTERESTS OF NAMED EXPERTS AND COUNSEL
Brian A. Lebrecht is the President of The Lebrecht Group, APLC, which
serves as our legal counsel. Mr. Lebrecht is the owner of 450,000 shares of our
common stock and is a selling shareholder in this offering.
13
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
Article X of our Articles of Incorporation provides that, to the fullest
extent permitted by law, no director or officer shall be personally liable to
the Corporation or its shareholders for damages for breach of any duty owed to
the Corporation or its shareholders. In addition, the Corporation shall have
the power, in its Bylaws or in any resolution of its stockholders or directors,
to indemnify the officers and directors of this Corporation against any
liability as may be determined to be in the best interests of this Corporation,
and in conjunction therewith, to buy, at this Corporation's expense, policies of
insurance.
Our bylaws do not further address indemnification, and there are no
resolutions of our shareholders or directors which address indemnification.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (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.
14
DESCRIPTION OF BUSINESS
INTRODUCTION
M-GAB Development Corporation, a Florida corporation, was incorporated in
the State of Florida on March 27, 2001.
We intend to develop, market and distribute an interactive travel brochure
that will contain images and video of world-class destination resorts, as well
as remote vacation getaway locations such as Lake Powell and the Grand Canyon.
We currently have no agreements with any resorts or destinations to provide this
service. We intend to generate revenues from both the production of our product
(paid by the destination resort or location) and from the sale of our product on
a subscription basis via the Internet (paid by existing Internet web sites).
In our opinion, we believe that destination resorts and locations will
desire to have their properties featured using our travel brochure as a way to
increase interest in their location, and through our relationships hope to form
with major Internet web sites, as a way to increase their overall Internet
exposure. We have not yet conducted any market research to support our opinion.
In our opinion, we believe that existing Internet sites that provide
travel-related products and services, such as Yahoo.com, Expedia.com, American
Express Travel, and the major airlines, will subscribe to our products to
enhance their Internet presence, improve their customer service, retain existing
customers, and increase sales revenues by providing their customers the
opportunity to take a "virtual vacation" and experience exotic locales from our
client's website. As above, we have not yet conducted any market research to
support our opinion.
We have not begun any market research or operations. We will not begin any
market research or operations until after we are able to raise capital in this
offering. After the termination of this offering, we cannot determine how long
it will take to begin operations until after our market research is completed.
We do not have an estimated time that operations will begin, that revenues will
be generated, or when we might be profitable.
MARKET RESEARCH
After completion of this offering, management will engage in market
research to fully determine the demand for our travel brochures, and the cost of
producing them. Until such time, we will not enter into discussions or
agreements with any resorts, destinations, video producers, or Internet
companies. In addition, until our market research is completed, we will not be
able to determine our needs for office space, equipment, and employees.
Our sole officer and director, Mr. Berg, intends to oversee the market
research. It is anticipated that one or more market research companies may be
retained to conduct research and interpret its results, and we have allocated a
significant portion of the use of proceeds from this offering for that purpose.
We have not entered into discussions or agreements with any market research
companies at this time.
COMPETITION
We have not yet commenced operations, and are entering into a very
competitive marketplace. Internet content providers are numerous, and our
ability to profitably negotiate and enter into agreements with major web site
and Internet portal operators will have a material impact on our operations and
future profitability. We believe that the product we have to offer is unique
and will be attractive to both web site operators and the resort operators,
however, our product can be easily duplicated.
15
MANUFACTURING
We do not intend to produce or manufacture any of our products. We intend
to contract with third parties to produce our video brochures and house them for
distribution over the Internet. We do not currently have any agreements for the
production, storage, or distribution of our video brochures. We hope that,
through our anticipated contracts for video production, we will be able to have
produced a video product that is high quality, three-dimensional, includes both
sound and video, and is interactive to its user (i.e., the user can control what
images he is viewing by moving the mouse on his computer). We will not begin
discussions or negotiations with potential video producers until after we have
completed this offering, and completed our market research. We do not have an
estimated time as to when we will have reached an agreement with one or more
video producers, or when production of the first video will begin.
KEY CUSTOMERS AND AGREEMENTS
In order to be successful, we believe we will have to enter into agreements
with property owners and operators or tourist organizations representing
desirable locations. Simultaneously, we believe we will have to negotiate and
enter into agreements with major web site and Internet portal operators to
display our brochures.
Our success is dependent on our ability to enter into key agreements as
described above. We currently do not have any such agreements. Our management
believes, however, that they can develop relationships with key property
operators and web site owners, however we can make no guaranty of our success.
In the event we are unable to develop these key relationships, our business will
likely fail.
We will not begin discussions or negotiations with potential customers
until after we have completed this offering, and completed our market research.
We do not have an estimated time as to when we will have reached an agreement
with one or more customers, when production of the first video will begin, or
when we will first generate revenues from our products.
We do not have, nor do we intend to obtain, any patents or trademarks of
our own. As we develop brand recognition, we may apply for trademark and
service mark protection.
GOVERNMENT APPROVALS AND REGULATION
We are not subject to any government regulation. Further, we are not
subject to any environmental laws or regulations.
RESEARCH AND DEVELOPMENT
We have not spent any material amount of time or money on research and
development, and do anticipate doing so in the future.
16
EMPLOYEES
Other than our current sole director and officer, we do not have any
employees because our business has not commenced operations. We will not have
any additional employees until after completion of this offering and completion
of our market research. We do not have an estimate of how many employees will
be necessary, what their compensation expense will be, or when we will expect to
hire them.
17
MANAGEMENT'S PLAN OF OPERATION
Until the effectiveness of this registration statement, management
anticipates that M-GAB will engage in very little business activity, will not
hire any employees, and will not enter into any material contracts. As a
result, our cash requirements will be minimal, related only to the cost of
maintaining the company in good standing. Our two primary shareholders, Mr.
Berg and Mr. Lebrecht, have agreed to advance funds to us to fund these minimal
cash requirements.
Upon the effectiveness of this registration statement, management intends
to seek to have a market maker file an application to list our securities on the
OTC Bulletin Board, and management intends raise additional capital through the
sale of securities registered in this offering.
Even if we are successful in raising the full $200,000 under this offering,
our management does not know how long this will satisfy our cash requirements
because we do not know how much it will cost to finance our business plan. Cash
will be used to pay existing obligations and for working capital. We currently
have no plans for raising additional capital. It is not anticipated that
current management will be paid a salary during the next twelve months.
Management does not anticipate that we will engage in any material product
research and development because we will utilize existing technology in the
production of our video brochures and viewers will view the brochures on
existing web sites.
Management does not anticipate that we will purchase a plant or significant
equipment because we will enter into agreements with existing video producers
for our video brochures.
Management anticipates that we will need to hire employees to oversee the
production of videos by third-party video producers at locations around the
world and to negotiate agreements with major web site operators to show the
brochures. Management does not currently have an estimate as to how many
employees will be required.
Our financial statements have been prepared assuming we will continue as a
going concern. Because we have not generated any revenues to date and have
minimal capital resources, our auditors included an explanatory paragraph in
their report raising substantial doubt about our ability to continue as a going
concern.
DESCRIPTION OF PROPERTY
During our pre-operating period, we utilize the office of our founder, Carl
M. Berg, under a verbal agreement where we do not pay rent or reimburse him for
the minimal expenses incurred. When we are successful in raising sufficient
capital to begin executing our business plan, we will identify and lease
appropriate office space.
18
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On April 20, 2001, our founder, Carl M. Berg, purchased 2,550,000 shares of
common stock for $255.00. On April 20, 2001, Sadie, LLC, an entity wholly-owned
and controlled by Mr. Berg, purchased 3,000,000 shares of common stock for
$300.00. Also on April 20, 2001, Brian A. Lebrecht, our legal counsel,
purchased 450,000 shares of common stock for $45.00. The total purchase price
from these transactions was $600.00. If we are successful in receiving $0.10
per share as contemplated in this offering, the value of the shares acquired
April 20, 2001 would be $300,000.
Mr. Berg and Mr. Lebrecht have, from time to time, advanced us funds to
cover certain expenses. The amount of these advances has not exceeded, and is
not expected to exceed, $10,000. These advances do not bear interest, and
although they have no maturity date, are expected to be repaid as soon as
reasonably possible.
On October 4, 2001, Mr. Berg executed a Lock-Up Agreement wherein he agreed
not to sell any of his shares of common stock until at least thirty days after
the termination of this offering.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Our securities are not listed for trading on any exchange or quotation
service. We are not required to comply with the timely disclosure policies of
any exchange or quotation service. The requirements to which we would be
subject if our securities were so listed typically included the timely
disclosure of a material change or fact with respect to our affairs and the
making of required filings. Although we are not required to deliver an annual
report to security holders, we intend to provide an annual report to our
security holders, which will include audited financial statements.
There are no outstanding options or warrants to purchase, or securities
convertible into, shares of our common stock. We have agreed to register, under
the Securities Act of 1933 for sale by selling security holders, 13,000 shares
of our common stock acquired by twelve shareholders in a private placement.
None of our outstanding common stock can be sold pursuant to Rule 144 under the
Securities Act. The number of holders of record of shares of our common stock
is fourteen (14).
We are registering a total of 463,000 shares of our common stock for sale
by the selling shareholders, and in addition we are registering 2,000,000 shares
of our common stock for sale to new investors at $0.10 per share.
There have been no cash dividends declared on our common stock. Dividends
are declared at the sole discretion of our Board of Directors.
The Securities Enforcement and Penny Stock Reform Act of 1990 requires
additional disclosure relating to the market for penny stocks in connection with
trades in any stock defined as a penny stock. The Commission has adopted
regulations that generally define a penny stock to be any equity security that
has a market price of less than $5.00 per share, subject to a few exceptions
which we do not meet. Unless an exception is available, the regulations require
the delivery, prior to any transaction involving a penny stock, of a disclosure
schedule explaining the penny stock market and the risks associated therewith.
19
EXECUTIVE COMPENSATION
None of our employees are subject to a written employment agreement, and we
have not paid compensation to any employees, executive officers, or directors
for services rendered to us.
On May 15, 2001, our directors and shareholders approved the M-GAB, Inc.
2001 Stock Option Plan, effective June 1, 2001. The plan offers selected
employees, directors, and consultants an opportunity to acquire our common
stock, and serves to encourage such persons to remain employed by us and to
attract new employees. The plan allows for the award of stock and options, up
to 600,000 shares of our common stock. Following the effectiveness of this
registration statement, we intend to register with the Commission the shares of
common stock covered by the plan. We have not issued any options or stock
awards under the plan.
Our Directors do not receive compensation for serving as a Director, but
they are entitled to reimbursement for their travel expenses.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
There have been no disagreements with our accountants required to be
disclosed pursuant to Item 304 of Regulation S-B.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for M-GAB
by The Lebrecht Group, APLC. Brian A. Lebrecht, the President of The Lebrecht
Group, APLC, is presently the beneficial owner of 450,000 shares of M-GAB common
stock which are being registered for resale in this registration statement.
AVAILABLE INFORMATION
M-GAB is not subject to the reporting requirements of the Securities
Exchange Act of 1934. M-GAB has filed with the Securities and Exchange
Commission a registration statement on Form SB-2, together with all amendments
and exhibits thereto, under the Securities Act of 1933 with respect to the
common stock offered hereby. This prospectus does not contain all of the
information set forth in the registration statement and the exhibits and
schedules thereto. Statements contained in this prospectus as to the contents
of any contract or other document referred to are not necessarily complete and
in each instance reference is made to the copy of such contract or other
document filed as an exhibit to the registration statement, each such statement
being qualified in all respects by such reference.
Copies of all or any part of the registration statement may be inspected
without charge or obtained from the Public Reference Section of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549 and its public reference
facilities in New York, New York and Chicago, Illinois, upon the payment of the
fees prescribed by the Commission. The registration statement is also available
through the Commission's web site at the following address: http://www.sec.gov.
20
EXPERTS
Our financial statements as of December 31, 2001 and for the period from
inception (March 27, 2001) through December 31, 2001 included in the prospectus
which is part of a registration statement have been so included in reliance on
the report of Manuel J. Ramirez of Ramirez International Financial and
Accounting Services, Inc., a Professional CPA Corporation, given on the
authority of said firm as experts in auditing and accounting.
FINANCIAL STATEMENTS
Index to Financial Statements
Independent Auditors' Report F-1
Balance Sheet as of December 31, 2001 F-2
Statement of Operations from Inception (March 27, 2001)
through December 31, 2001 F-3
Statement of Stockholders Equity from Inception
(March 27, 2001) through December 31, 2001 F-4
Statement of Cash Flows from Inception
(March 27, 2001) through December 31, 2001 F-5
Notes to the Financial Statements F-6 - F-8
Unaudited Balance Sheet as of June 30, 2002 F-9
Unaudited Statement of Operations for the three months
ended June 30, 2001 and 2002, the six months ended
June 30, 2002, and for the period from Inception
(March 27, 2001) through June 30, 2001 and
June 30, 2002 F-10
Unaudited Statement of Stockholders Equity from
Inception (March 27, 2001) through June 30, 2002 F-11
Unaudited Statement of Cash Flows for the six months
ended June 30, 2002 and the period from Inception
(March 27, 2001) through June 30, 2001 and 2002 F-12
Notes to Unaudited Financial Statements F-13 - F-15
21
M-GAB DEVELOPMENT CORPORATION
(A FLORIDA DEVELOPMENT STAGE CORPORATION)
TABLE OF CONTENTS
PAGE
Independent Auditors' Report 1
Audited Financial Statements:
Balance Sheet 2
Statement of Operations 3
Statement of Stockholders' Equity 4
Statement of Cash Flows 5
Notes to Financial Statements 6-8
INDEPENDENT AUDITORS' REPORT
To: The Board of Directors
of M-GAB DEVELOPMENT CORPORATION
We have audited the accompanying balance sheet of M-GAB DEVELOPMENT CORPORATION
(a Florida Development Stage corporation) as of December 31, 2001 and the
related statements of operations, stockholders' equity and cash flows for the
period from Inception (March 27, 2001) through December 31, 2001. These
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides 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 M-GAB DEVELOPMENT CORPORATION
as of December 31, 2001 and the results of its operations and cash flows for the
period from Inception (March 27, 2001) through December 31, 2001, in conformity
with generally accepted accounting principles.
The accompanying statements have been prepared assuming the Company will
continue as a going concern. As discussed in Note 4, to the financial
statements, the Company has minimal capital resources presently available to
meet obligations that normally can be expected to be incurred by similar
companies, and with which to carry out its planned activities. These conditions
raise substantial doubt about its ability to continue as a going concern.
Management's plans regarding those matters also are described in Note 4. The
financial statements do not include any adjustments that might result form the
outcome of this uncertainty.
RAMIREZ INTERNATIONAL
March 9, 2001
Irvine, California
F-1
M-GAB DEVELOPMENT CORPORATION
(A FLORIDA DEVELOPMENT CORPORATION)
BALANCE SHEET
12/31/01
-------------
ASSETS
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ -
--------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . $ -
========
LIABILITIES AND EQUITY
Accounts payable and accrued liabilities . . . . . . . . . . . . $ 3,476
Commitments and contingencies (See Note 4) . . . . . . . . . . . -
Shareholders' equity:
Preferred stock, $0.001 par value;
5,000,000 shares authorized;. -
No shares issued or outstanding at December 31, 2001
Common stock, $0.001 par value;
100,000,000 shares authorized; . 6,013
6,013,000 shares issued and outstanding at
December 31, 2001
Additional paid in capital .. . . . . . . . . . . . . . . . . 10,086
Deficit accumulated during development . . . . . . . . . . . (19,575)
--------
Total shareholders' equity . . . . . . . . . . . . . . . . . . . (3,476)
--------
Total Liabilities and Shareholders' Equity . . . . . . . . . . . $ -
========
The accompanying notes are an integral part of these statements.
F-2
M-GAB DEVELOPMENT CORPORATION
(A FLORIDA DEVELOPMENT CORPORATION)
STATEMENT OF OPERATIONS
INCEPTION
MARCH 27, 2001
THROUGH
DECEMBER 31, 2001
--------------
Revenue $ -
Costs and expenses - Organization costs 19,575
-----------
Net Loss $ (19,575)
===========
Net loss per share available to common stockholders
Basic and Diluted $ (0.00)
Weighted average number of common shares outstanding 5,490,570
The accompanying notes are an integral part of these statements.
F-3
M-GAB DEVELOPMENT CORPORATION
(A FLORIDA DEVELOPMENT STAGE CORPORATION)
STATEMENT OF STOCKHOLDERS' EQUITY
DEFICIT
ADDITIONAL ACCUMULATED
COMMON STOCK PAID-IN DURING
SHARES PAR VALUE CAPITAL DEVELOPMENT TOTAL
---------- ------------- --------------- -------------- ------
Founder Stock, $0.0001 per share,
issued April 20, 2001. . . . .. . . 6,000,000 $ 6,000 $ (5,400) $ - $ 600
Common Stock, $0.10 per share,
issued August 8, 2001.. .. . . . . 12,000 12 1,188 1,200
Common Stock, $0.10 per share,
issued August 24, 2001.. .. . . .. 1,000 1 99 100
Contributed capital-services 14,199 14,199
Net loss (19,575) (19,575)
--------- ------------- --------------- -------------- -------
Balance, December 31, 2001 . . . . . 6,013,000 $ 6,013 $ 10,086 $(19,575) $ (3,476)
========= ============= ================ ============== =======
The accompanying notes are an integral part of these statements.
F-4
M-GAB DEVELOPMENT CORPORATION
(A FLORIDA DEVELOPMENT STAGE CORPORATION)
STATEMENT OF CASH FLOWS
INCEPTION
MARCH 27, 2001
THROUGH
DECEMBER 31, 2001
----------------
Cash flows from operating activities -
Net loss $ (19,575)
Adjustments to reconcile net loss to cash
used in operating activities - -
Contributed capital for services rendered at no charge 14,199
Changes in assets and liabilities -
Increase in payables 3,476
--------
Cash used in operating activities (1,900)
Cash flows from investing activities - -
--------
Cash provided by investing activities -
Cash flows from financing activities -
Proceeds from issuance of common stock 1,900
--------
Cash provided by financing activities 1,900
Net increase in cash -
Cash, beginning of the period -
--------
Cash, end of the period $ -
========
Supplemental information -
No amounts were paid for interest or taxes during the period.
The accompanying notes are an integral part of these statements.
F-5
M-GAB DEVELOPMENT CORPORATION
(A FLORIDA DEVELOPMENT STAGE CORPORATION)
NOTES TO FINANCIAL STATEMENTS
1. NATURE OF OPERATIONS AND ACCOUNTING POLICIES
-------------------------------------------------
NATURE OF OPERATIONS. The Company incorporated in Florida on March 27, 2001.
The fiscal year end of the Company is December 31. Planned principal operations
of the Company have not yet commenced; activities to date have been limited to
forming the Company, developing its business plan, and obtaining initial
capitalization. Initially, the Company will focus its efforts to develop,
market and distribute a digitally processed interactive travel brochure (virtual
portal) that will contain images and full 3-D video of world-class destinations
as well as remote getaway locations. The technology will be licensed and sold
on a subscription basis via the Internet to commercial and consumer markets.
PRINCIPLES OF ACCOUNTING. The accompanying financial statements have been
prepared in conformity with generally accepted accounting principles.
ACCOUNTING ESTIMATES. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results may differ from those estimates.
SHARES ISSUED IN EXCHANGE FOR SERVICES. The fair value of shares issued in
exchange for services rendered to the Company is determined by the Company's
officers and directors, as there is currently no market for the Company's stock.
As of December 31, 2001, no shares have been issued for services.
CASH AND CASH EQUIVALENTS. The Company includes cash on deposit and short-term
investments with original maturities less than ninety days as cash and cash
equivalents in the accompanying financial statements.
ORGANIZATION COSTS. Organization costs, primarily professional fees, of
approximately $19,575 have been charged against operating income.
RESEARCH AND DEVELOPMENT. Research and development costs are expensed as
incurred as required by Statement of Financial Accounting Standards No. 2,
"Accounting for Research and Development Costs." As of December 31, 2001, no
costs had been incurred.
STOCK-BASED COMPENSATION. In accordance with the provisions of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," (FAS 123), the Company has elected to follow Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees,"
(APB 25) and related interpretations in accounting for its employee stock option
plans. Under APB 25, if the exercise price of the Company's employee stock
options equals or exceeds the fair value of the underlying stock on the date of
grant, no compensation is recognized. As of December 31, 2001, no options had
been issued for services.
INCOME TAXES. The Company has made no provision for income taxes because of
financial statement and tax losses since its inception. A valuation allowance
has been used to offset the recognition of any deferred tax assets due to the
uncertainty of future realization. The use of any tax loss carryforward
benefits may also be limited as a result of changes in Company ownership.
FAIR VALUE OF FINANCIAL INSTRUMENTS. The Company considers all liquid
interest-earning investments with a maturity of three months or less at the date
of purchase to be cash equivalents. Short-term investments generally mature
between three months and six months from the purchase date. All cash and
short-term investments are classified as available for sale and are recorded at
market using the specific identification method; unrealized gains and losses are
reflected in other comprehensive income. Cost approximates market for all
classifications of cash and short-term investments; realized and unrealized
gains and losses were not material.
F-6
1. NATURE OF OPERATIONS AND ACCOUNTING POLICIES (CONTINUED)
--------------------------------------------------------------
NET LOSS PER COMMON SHARE. Basic loss per common share (Basic EPS) excludes
dilution and is computed by dividing net loss available to common shareholders
(the numerator) by the weighted average number of common shares outstanding (the
denominator) during the period. Diluted loss per common share (Diluted EPS) is
similar to the computation of Basic EPS except that the denominator is increased
to include the number of additional common shares that would have been
outstanding if the dilutive potential common shares had been issued. In
addition, in computing the dilutive effect of convertible securities, the
numerator is adjusted to add back the after-tax amount of interest recognized in
the period associated with any convertible debt. The computation of Diluted EPS
does not assume exercise or conversion of securities that would have an
anti-dilutive effect on net loss per share. All potential common shares are
anti-dilutive; therefore, Basic EPS equals Diluted EPS.
2. STOCKHOLDERS' EQUITY
---------------------
FOUNDERS' STOCK. The Company issued 6,000,000 shares of common stock on April
20, 2001 for cash totaling $600.
STOCK-BASED COMPENSATION. The Company did not issue nor did it recognize
stock-based compensation from Inception, March 27, 2001, through December 31,
2001.
PRIVATE PLACEMENT MEMORANDUM. On June 1, 2001, the Company began offering
100,000 shares of common stock at $0.10 per share pursuant to a Private
Placement Memorandum. Through December 31, 2001, a total of 13,000 shares were
sold for $1,300 cash. All proceeds from the offering are to be used for
pre-incorporation expenditures, consulting fees and working capital.
STOCK OPTION PLAN. The Company's Board and shareholders approved a Stock Option
Plan, effective June 1, 2001. The plan limits the aggregate number of shares
available to 600,000. Each award under the plan will be evidenced by a Stock
Purchase Agreement; each agreement will establish the vesting requirements and
the maximum term of the options granted. As of December 31, 2001, no options
had been granted.
CONTRIBUTED CAPITAL. The Company's president elected to forego a salary during
the early developmental stages. Additionally, he does not charge the Company
for the use of his home office. The Company estimates the value of these
services at $1,500 and has recorded contributed capital and the related
organizational expense in the accompanying financial statements.
The Company's corporate counsel has elected to provide professional services to
the Company free of charge; however, the Company must reimburse him for all out
of pocket costs. The value of contributed services, determined based on hours
incurred, were $12,699 and has been recorded as organizational costs (and
contributed capital) in the accompanying financial statements.
3. RELATED PARTY TRANSACTIONS
----------------------------
LEGAL SERVICES. The Company has engaged a shareholder as its corporate counsel.
All out of pocket costs are billed as incurred; billings to date total $1,360.
See "Contributed Capital" and "Stockholder Loans and Advances" for more
information about transactions with the Company's corporate counsel.
STOCKHOLDERS LOANS AND ADVANCES. From time to time, certain Company
stockholders loan or advance monies to the Company. Loans bear interest at
rates established at the time of the loan; advances bear no interest. While
these loans and advances have no maturity dates, they are expected to be repaid
as early as practicable. At December 31, 2001, the Company's corporate counsel
had advanced $3,476 for organizational costs. See Note 5 for subsequent events.
F-7
4. COMMITMENTS, CONTINGENCIES, RISKS AND UNCERTAINTIES
-------------------------------------------------------
GOING CONCERN CONTINGENCY. The Company has minimal capital resources presently
available to meet obligations that normally can be expected to be incurred by
similar companies, and with which to carry out its planned activities. These
factors raise doubt about the Company's ability to continue as a going concern.
Management is seeking additional equity financing to fund planned operations;
management believes actions currently being taken provide the opportunity for
the Company to continue as a going concern. However, there is no assurance that
the Company will be able to obtain such financing. The accompanying financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
5. SUBSEQUENT EVENTS
------------------
STOCKHOLDERS LOANS AND ADVANCES. As of March 9 2002, the Company's corporate
counsel advanced $7,976 to the Company to cover certain corporate expenses. The
advance bears no interest and is due as soon as practicable.
F-8
M-GAB DEVELOPMENT CORPORATION
(A FLORIDA DEVELOPMENT STAGE CORPORATION)
UNAUDITED BALANCE SHEET
06/30/02
--------
ASSETS
Cash $ -
_________
Total Assets $ -
=========
LIABILITIES AND EQUITY
Accounts payable and accrued liabilities $ 8,692
Commitments and contingencies (See Note 4) -
Shareholders' equity:
Preferred stock, $0.001 par value;
5,000,000 shares authorized; -
No shares issued or outstanding at June 30, 2002
Common stock, $0.001 par value;
100,000,000 shares authorized; 6,013
6,013,000 shares issued and outstanding at June 30, 2002
Additional paid in capital 14,075
Deficit accumulated during development (28,780)
________
Total shareholders' equity (8,692)
________
Total Liabilities and Shareholders' Equity $ -
===========
The accompanying notes are an integral part of these statements.
F-9
M-GAB DEVELOPMENT CORPORATION
(A FLORIDA DEVELOPMENT STAGE CORPORATION)
UNAUDITED STATEMENT OF OPERATIONS
INCEPTION INCEPTION
THREE MONTHS THREE MONTHS SIX MONTHS 03/27/01 03/27/01
ENDED ENDED ENDED THROUGH THROUGH
06/30/02 06/30/01 06/30/02 06/30/01 06/30/02
_________________________________________________________________________________
Revenue $ - $ - $ - $ - $ -
Costs and expenses -
Organization costs $ 2,031 $ 308 $ 9,205 $ 308 28,780
_____________ _____________ ____________ ____________ ___________
Net Loss $ (2,031) $ (308) $ (9,205) $ (308) $ (28,780)
============= ============= ============ ============ ===========
Net loss per share available
to common stockholders
Basic and Diluted $ (0.00) $ (0.00) $ (0.00) $ (0.00) $ (0.00)
Weighted average number of
common shares outstanding 6,013,000 4,681,319 6,013,000 4,484,211 5,709,207
The accompanying notes are an integral part of these statements.
F-10
M-GAB DEVELOPMENT CORPORATION
(A FLORIDA DEVELOPMENT STAGE CORPORATION)
UNAUDITED STATEMENT OF STOCKHOLDERS' EQUITY
DEFICIT
ADDITIONAL ACCUMULATED
COMMON STOCK PAID-IN DURING
SHARES PAR VALUE CAPITAL DEVELOPMENT TOTAL
__________ ___________ ____________ _____________ __________
Founder stock, $0.0001 per share,
issued April 20, 2001 6,000,000 $ 6,000 $ (5,400) $ - $ 600
Common stock, $0.10 per share,
issued August 8, 2001 12,000 12 1,188 1,200
Common stock, $0.10 per share,
issued August 24, 2001 1,000 1 99 100
Contributed capital-services 14,199 14,199
Net Loss (19,575) (19,575)
__________ ___________ ____________ _____________ __________
Balance, December 31, 2001 6,013,000 $ 6,013 $ 10,086 $ (19,575) $ (3,476)
========== =========== ============ ============= ==========
Contributed capital-services 2,549 2,549
Net loss (7,174) (7,174)
__________ ___________ ____________ _____________ __________
Balance, March 31, 2002 6,013,000 $ 6,013 $ 12,635 $ (26,749) $ (8,101)
Contributed capital-services 1,440 1,440
Net Loss (2,031) (2,031)
__________ ___________ ____________ _____________ __________
Balance, June 30, 2002 6,013,000 $ 6,013 $ 14,075 $ (28,780) $ (8,692)
========== =========== ============ ============= ==========
The accompanying notes are an integral part of these statements.
F-11
M-GAB DEVELOPMENT CORPORATION
(A FLORIDA DEVELOPMENT STAGE CORPORATION)
UNAUDITED STATEMENT OF CASH FLOWS
INCEPTION INCEPTION
SIX 03/27/01 03/27/01
MONTHS THROUGH THROUGH
06/30/02 06/30/01 06/30/02
___________ ___________ ____________
Cash flows from operating activities -
Net loss $ (9,205) $ (308) $ (28,780)
Adjustments to reconcile net loss to cash
used in operating activities - - -
Contributed capital for services
rendered at no charge 3,989 - 18,188
Changes in assets and liabilities -
Increase in payables 5,216 25 8,692
___________ ___________ ____________
Cash used in operating activities - (283) (1,900)
Cash flows from investing activities - - - -
___________ ___________ ____________
Cash provided by investing activities - - -
Cash flows from financing activities -
Proceeds from issuance of common stock - 600 1,900
___________ ___________ ____________
Cash provided by financing activities - 600 1,900
Net increase in cash - 317 -
Cash, beginning of the period - - -
___________ ___________ ____________
Cash, end of the period $ - $ 317 $ -
=========== =========== ============
Supplemental information -
No amounts were paid for interest or taxes during the period.
The accompanying notes are an integral part of these statements.
F-12
M-GAB DEVELOPMENT CORPORATION
(A FLORIDA DEVELOPMENT STAGE CORPORATION)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
1. NATURE OF OPERATIONS AND ACCOUNTING POLICIES
-------------------------------------------------
NATURE OF OPERATIONS. The Company incorporated in Florida on March 27, 2001.
The fiscal year end of the Company is December 31. Planned principal operations
of the Company have not yet commenced; activities to date have been limited to
forming the Company, developing its business plan, and obtaining initial
capitalization. Initially, the Company will focus its efforts to develop,
market and distribute a digitally processed interactive travel brochure (virtual
portal) that will contain images and full 3-D video of world-class destinations
as well as remote getaway locations. The technology will be licensed and sold
on a subscription basis via the Internet to commercial and consumer markets.
PRINCIPLES OF ACCOUNTING. The accompanying financial statements have been
prepared in conformity with generally accepted accounting principles.
ACCOUNTING ESTIMATES. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results may differ from those estimates.
SHARES ISSUED IN EXCHANGE FOR SERVICES. The fair value of shares issued in
exchange for services rendered to the Company is determined by the Company's
officers and directors, as there is currently no market for the Company's stock.
As of June 30, 2002, no shares have been issued for services.
CASH AND CASH EQUIVALENTS. The Company includes cash on deposit and short-term
investments with original maturities less than ninety days as cash and cash
equivalents in the accompanying financial statements.
ORGANIZATION COSTS. Organization costs, primarily professional fees, of
approximately $28,780 have been charged against operating income.
RESEARCH AND DEVELOPMENT. Research and development costs are expensed as
incurred as required by Statement of Financial Accounting Standards No. 2,
"Accounting for Research and Development Costs." As of June 30, 2002, no costs
had been incurred.
STOCK-BASED COMPENSATION. In accordance with the provisions of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," (FAS 123), the Company has elected to follow Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees,"
(APB 25) and related interpretations in accounting for its employee stock option
plans. Under APB 25, if the exercise price of the Company's employee stock
options equals or exceeds the fair value of the underlying stock on the date of
grant, no compensation is recognized. As of June 30, 2002, no options had been
issued for services.
INCOME TAXES. The Company has made no provision for income taxes because of
financial statement and tax losses since its inception. A valuation allowance
has been used to offset the recognition of any deferred tax assets due to the
uncertainty of future realization. The use of any tax loss carryforward
benefits may also be limited as a result of changes in Company ownership.
F-13
1. NATURE OF OPERATIONS AND ACCOUNTING POLICIES (CONTINUED)
--------------------------------------------------------------
FAIR VALUE OF FINANCIAL INSTRUMENTS. The Company considers all liquid
interest-earning investments with a maturity of three months or less at the date
of purchase to be cash equivalents. Short-term investments generally mature
between three months and six months from the purchase date. All cash and
short-term investments are classified as available for sale and are recorded at
market using the specific identification method; unrealized gains and losses are
reflected in other comprehensive income. Cost approximates market for all
classifications of cash and short-term investments; realized and unrealized
gains and losses were not material.
NET LOSS PER COMMON SHARE. Basic loss per common share (Basic EPS) excludes
dilution and is computed by dividing net loss available to common shareholders
(the numerator) by the weighted average number of common shares outstanding (the
denominator) during the period. Diluted loss per common share (Diluted EPS) is
similar to the computation of Basic EPS except that the denominator is increased
to include the number of additional common shares that would have been
outstanding if the dilutive potential common shares had been issued. In
addition, in computing the dilutive effect of convertible securities, the
numerator is adjusted to add back the after-tax amount of interest recognized in
the period associated with any convertible debt. The computation of Diluted EPS
does not assume exercise or conversion of securities that would have an
anti-dilutive effect on net loss per share. All potential common shares are
anti-dilutive; therefore, Basic EPS equals Diluted EPS.
2. STOCKHOLDERS' EQUITY
---------------------
FOUNDERS' STOCK. The Company issued 6,000,000 shares of common stock on April
20, 2001 for cash totaling $600.
STOCK-BASED COMPENSATION. The Company did not issue nor did it recognize
stock-based compensation from Inception, March 27, 2001, through June 30, 2002.
PRIVATE PLACEMENT MEMORANDUM. On June 1, 2001, the Company began offering
100,000 shares of common stock at $0.10 per share pursuant to a Private
Placement Memorandum. All proceeds from the offering are to be used for
pre-incorporation expenditures, consulting fees and working capital. Through
June 30, 2002, a total of 13,000 shares were sold for $1,300 cash.
STOCK OPTION PLAN. The Company's Board and shareholders approved a Stock Option
Plan, effective June 1, 2001. The plan limits the aggregate number of shares
available to 600,000. Each award under the plan will be evidenced by a Stock
Purchase Agreement; each agreement will establish the vesting requirements and
the maximum term of the options granted. As of June 30, 2002, no options had
been granted.
CONTRIBUTED CAPITAL. The Company's president elected to forego a salary during
the early developmental stages. Additionally, he does not charge the Company
for the use of his home office. The Company estimates the value of these
services, since inception, at $1,900 and has recorded contributed capital and
the related organizational expense in the accompanying financial statements.
The Company's corporate counsel has elected to provide professional services to
the Company free of charge; however, the Company must reimburse him for all out
of pocket costs. The value of contributed services, since inception, determined
based on hours incurred, were $16,288 and has been recorded as organizational
costs (and contributed capital) in the accompanying financial statements.
F-14
3. RELATED PARTY TRANSACTIONS
----------------------------
LEGAL SERVICES. The Company has engaged a shareholder as its corporate counsel.
All out of pocket costs are billed as incurred; billings to date total $1,485.
See "Contributed Capital" and "Stockholder Loans and Advances" for more
information about transactions with the Company's corporate counsel.
STOCKHOLDERS LOANS AND ADVANCES. From time to time, certain Company
stockholders loan or advance monies to the Company. Loans bear interest at
rates established at the time of the loan; advances bear no interest. While
these loans and advances have no maturity dates, they are expected to be repaid
as early as practicable. At June 30, 2002, the Company's corporate counsel had
advanced $8,101 for organizational costs.
4. COMMITMENTS, CONTINGENCIES, RISKS AND UNCERTAINTIES
-------------------------------------------------------
GOING CONCERN CONTINGENCY. The Company has minimal capital resources presently
available to meet obligations that normally can be expected to be incurred by
similar companies, and with which to carry out its planned activities. These
factors raise doubt about the Company's ability to continue as a going concern.
Management is seeking additional equity financing to fund planned operations;
management believes actions currently being taken provide the opportunity for
the Company to continue as a going concern. However, there is no assurance that
the Company will be able to obtain such financing. The accompanying financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
F-15
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article X of our Articles of Incorporation provides that, to the fullest
extent permitted by law, no director or officer shall be personally liable to
the Corporation or its shareholders for damages for breach of any duty owed to
the Corporation or its shareholders. In addition, the Corporation shall have
the power, in its Bylaws or in any resolution of its stockholders or directors,
to indemnify the officers and directors of this Corporation against any
liability as may be determined to be in the best interests of this Corporation,
and in conjunction therewith, to buy, at this Corporation's expense, policies of
insurance.
Our bylaws do not further address indemnification, and there are no
resolutions of our shareholders or directors which address indemnification.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (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.
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
We will pay all expenses in connection with the registration and sale of
the common stock by the selling security holders. The estimated expenses of
issuance and distribution are set forth below:
Registration Fees . . . . . . . Approximately $ 780.52
Transfer Agent Fees . . . . . . Approximately $ 500.00
Costs of Printing and Engraving Approximately $ 500.00
Legal Fees. . . . . . . . . . . Approximately $2,500.00
Accounting Fees . . . . . . . . Approximately $2,500.00
Total $6,780.52
---------
RECENT SALES OF UNREGISTERED SECURITIES
On April 20, 2001, we issued 2,550,000 shares of our common stock,
restricted in accordance with Rule 144 of the Securities Act of 1933, to Carl M.
Berg, our founder and an accredited investor, in exchange for consideration of
$255. In addition, we issued 3,000,000 shares of common stock, restricted in
accordance with Rule 144, to Sadie, LLC, an entity wholly-owned and controlled
by Mr. Berg, in exchange for consideration of $300. The issuances were exempt
from registration pursuant to Section 4(2) of the Securities Act.
On April 20, 2001, we issued 450,000 shares of our common stock, restricted
in accordance with Rule 144 of the Securities Act of 1933, to Brian A. Lebrecht,
an accredited investor, in exchange for consideration of $45. The issuance was
exempt from registration pursuant to Section 4(2) of the Securities Act.
In August of 2001, we issued an aggregate of 13,000 shares of our common
stock, restricted in accordance with Rule 144 of the Securities Act of 1933, to
twelve (12) non-accredited investors, in exchange for total consideration of
$1,300. The issuances were exempt from registration pursuant to Rule 504 of
Regulation D promulgated under the Securities Act.
II-1
On May 15, 2001, our directors and shareholders approved the M-GAB, Inc.
2001 Stock Option Plan, effective June 1, 2001. The plan allows for the award
of stock and options, up to 600,000 shares of our common stock. The plan was
adopted under, and awards and issuances thereunder will be exempt from
registration pursuant to, Rule 701 of the Securities Act of 1933. We have not
issued any options or stock awards under the plan.
EXHIBITS
Exhibit No. Description
- ----------- ------------
3.1+ Articles of Incorporation of M-GAB Development Corporation
3.2+ Bylaws of M-GAB Development Corporation
4.1+ M-GAB, Inc. 2001 Stock Option Plan
4.2+ Lock-Up Agreement
5.1 Legal Opinion of The Lebrecht Group, APLC
23.1 Consent of Ramirez International Financial and Accounting
Services, Inc., a Professional CPA Corporation
23.2 Consent of The Lebrecht Group, APLC (included in Exhibit 5.1)
+ previously filed
UNDERTAKINGS
A. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to our directors, officers and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by us of expenses incurred or paid by
our director, officer or controlling person in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, we will, unless in
the opinion of our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
II-2
B. We hereby undertake:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) Reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information
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) 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) (Section 230.424(b) of Regulation S-B) if, in the
aggregate, the changes in volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
Registration Statement; and
(iii) Include any additional or changed material information on the
plan of distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time to
be the initial bona fide offering.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
II-3
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that is 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 its behalf by the undersigned, thereunto duly
authorized, in the City of Draper, State of Utah, on September 11, 2002.
M-GAB Development Corporation,
a Florida corporation
/s/ Carl M. Berg
________________________________
By: Carl M. Berg
Its: President
In accordance with the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates stated.
/s/ Carl M. Berg
__________________________ September 11, 2002
By: Carl M. Berg
Its: President, Secretary, Treasurer,
principal financial officer,
principal accounting officer, and
Sole Director
II-4
YOU MAY RELY ON THE INFORMATION
CONTAINED IN THIS PROSPECTUS. WE HAVE
NOT AUTHORIZED ANYONE TO PROVIDE
INFORMATION DIFFERENT FROM THAT
CONTAINED IN THIS PROSPECTUS. NEITHER
THE DELIVERY OF THIS PROSPECTUS
NOR SALE OF COMMON STOCK MEANS THAT
INFORMATION CONTAINED IN THIS
PROSPECTUS IS CORRECT AFTER THE DATE
OF THIS PROSPECTUS. THIS PROSPECTUS
IS NOT AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY THESE
SHARES OF THE COMMON STOCK IN ANY
CIRCUMSTANCES UNDER WHICH THE OFFER
OR SOLICITATION IS UNLAWFUL.
_________________ 2,463,000 SHARES
TABLE OF CONTENTS
Page
----
Prospectus Summary 2 M-GAB DEVELOPMENT
Risk Factors 3 CORPORATION
Use of Proceeds 7
Determination of Offering Price 7
Dilution 8
Selling Stockholders 9
Plan of Distribution 10
Legal Proceedings 10
Management 11
Principal Stockholders 12
Description of Securities 13
Interests of Experts and Counsel 13
Business 15
Management's Plan of Operation 18
Description of Property 18 -------------------------
Certain Transactions 19 PROSPECTUS
Market for Common Equity 19 -------------------------
Executive Compensation 20
Changes in Accountants 20
Legal Matters 20
Available Information 20 September 12, 2002
Experts 21
Index to Consolidated Financial
Statements 21
Dealer Prospectus Delivery Obligation.
Until October 23, 2002; all dealers that
effect transactions in these securities,
whether or not participating in this offering,
may be required to deliver a prospectus. This
is in addition to the dealers' obligation
to deliver a Prospectus when acting as
underwriters and with respect to their unsold
allotments or subscriptions.