UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
of the
SECURITIES EXCHANGE ACT OF 1934
Date of Event: Requiring Report: April 15, 2002
Delta Capital Technologies, Inc.
-------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
000-27407 98-0187705
(Commission File Number) (IRS Employer Identification Number) 98-0187705
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98-0187705
(Address of principal executive offices)
5550 14B Avenue Suite 205Delta, British Columbia
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CANADA V4M2G6
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(Registrant's telephone number, including area code)
(604)943-6422
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On April 15, 2002, Delta Capital Technologies Inc.'s ("Company") wholly owned
subsidiary Homelands Security Inc.("Homelands") entered into a Stock Purchase
Agreement ("Agreement") with Interglobe Investigation Services Inc.
("Interglobe") wherein Homelands agreed to issue to Philip Moriarity,
Interglobe's sole shareholder, 950,000 restricted shares of Homelands common
stock in exchange for acquiring Interglobe as a wholly owned subsidiary of
Homelands. This number of Homeland shares issued to the shareholders of
Interglobe equals approximately 49% of the issued and outstanding shares of
Homelands. The Company's financial statements have been consolidated with those
of Interglobe as a result of the Agreement.
The Company intends to manage Interglobe's operations in a manner similar to
that followed by Interglobe. A copy of the Agreement between Homelands and
Interglobe is attached hereto. Philip Moriarity was appointed to the board of
directors of Homelands subsequent to the acquisition of Interglobe and remains
an officer of both Homelands and Interglobe. The Agreement did not require
either Homelands or Interglobe to change or modify their currently existing
board of directors or officers. The parties to the Agreement have specified
that the shares of the Homelands' common stock issued to Philip Moriarity will
be restricted from any sale or transfer into any public market that might
develop for a period of two years from the closing date of the Agreement and
that the share certificates will bear a restrictive legend to that effect.
Interglobes historical financial statements are stated in Canadian dollars,
the historical reporting currency for Interglobe. The historical financial
statements have been prepared in accordance with Canadian Generally Accepted
Accounting Practices.
ITEM 7. Financial Statements and Exhibits
Pro forma financial statements are attached as Exhibit 2, as
required.
EXHIBIT PAGE NO. DESCRIPTION
1 4 Stock Purchase Agreement dated April 15, 2002
2 14 Year-end December 31, 2001, audited financial
statements for Interglobe Investigations Inc. ,
Pro-forma financial statements, consolidating
Delta Capital Technologies Inc. with Interglobe
Investigations Services, Inc.
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: July 9, 2002
Delta Capital Technologies, Inc.
/s/ Darwyn Ross
BY: -----------------------
Darwyn Ross, President
STOCK PURCHASE AND SALE AGREEMENT
Between Homelands Security Inc.,
a wholly owned subsidiary of Delta Capital Technologies, Inc.
and the
Shareholders of Interglobe Investigation Services, Inc.
March 8, 2002
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Exhibit 1
STOCK PURCHASE AND SALE AGREEMENT
THIS STOCK PURCHASE AND SALE AGREEMENT (this "Agreement"), dated effective as of
March 8, 2002 is by and among, Interglobe Investigation Services Inc., a British
Columbia corporation ("Interglobe "), the shareholders of Interglobe who have
executed this Agreement as Shareholders ("Shareholders") and Homelands Security
Inc., a Nevada corporation ("Homelands").
RECITALS
A. Interglobe is a privately held, non-reporting corporation with its principal
operations located in Vancouver, British Columbia, Canada.
B. Homelands is a wholly owned non-reporting subsidiary of Delta Capital
Technologies, Inc a publicly held, reporting corporation, with its principal
operations located in Vancouver, British Columbia, Canada.
C. Shareholders desire to sell and Homelands desires to purchase all of the
outstanding shares of Interglobe pursuant to the terms and conditions of this
Agreement.
AGREEMENT
In consideration of the foregoing recitals and the mutual promises
contained herein, Homelands, Interglobe and the Shareholders hereby agree as
follows:
1. Purchase and Sale of Shares.
1.1 Property Subject to the terms and conditions of this Agreement, Shareholders
agree to sell and assign to Homelands on the Closing Date (as defined below),
free and clear of all mortgages, security interests, liens, pledges, adverse
claims and other encumbrances, (a) all of the outstanding shares of stock of
Interglobe as set forth on Exhibit A attached hereto (collectively, the
"Shares"). In exchange for the Shares, Homelands agrees to issue 950,000 shares
of Homelands common stock to the Shareholders on the Closing Date pro rata in
accordance with their respective holdings of the shares on the date hereof.
2. Closing Date; Delivery.
2.1 Closing Date. The closing of the purchase and sale of the Shares (the
"Closing") will be held at the offices of Homelands, at 10:00 a.m. on April 15,
2002, or at such earlier date as may be agreed in writing by Interglobe ,
Shareholders and Homelands (the "Closing Date").
2.2 Deliveries at Closing.
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(a) Deliveries of Shareholders to Homelands. At the Closing, if the conditions
precedent set forth in Section 5.2 are fulfilled in reasonable satisfaction,
Shareholders will deliver to Homelands (1) stock certificates or other documents
of title representing all of the shares of stock held of record or beneficially
owned in Interglobe on the Closing Date, duly endorsed by the Shareholders for
transfer to Homelands. Shareholders and Interglobe will also deliver such other
documents and instruments as Homelands may reasonably request to confirm that
the Shareholders and Interglobe have performed all of their obligations and
fulfilled all of the conditions of this Agreement.
(b) Deliveries of Homelands to Shareholders. At the Closing, if the conditions
precedent set forth in Section 5.1 are fulfilled in reasonable satisfaction,
Homelands will deliver to the Shareholders stock certificates representing
950,000 shares of Homelands's Common Stock, par value $0.001 issued in the
respective names of the Shareholders. Homelands will also deliver such other
documents and instruments as the Shareholders may reasonably request to confirm
that Homelands has performed all of its obligations and fulfilled all of the
conditions of this Agreement.
3. Representations and Warranties of Interglobe . Shareholders and Interglobe
hereby represent and warrant to Homelands that:
3.1 Organization, Standing and Authority of Interglobe .
(a) Organization. Interglobe is a corporation duly organized and validly
existing under the laws of the Province of British Columbia and is in good
standing as a domestic corporation under the laws of said Province.
(b) Charter Documents. Interglobe has furnished counsel for Homelands with true
and complete copies of its Articles of Incorporation, as amended to date, and
its Bylaws as currently in effect.
(c) Corporate Power. Interglobe has all requisite corporate power to enter into
this Agreement and to carry out and perform its obligations hereunder.
(d) Authorization for Agreement. The execution and performance of this Agreement
by Interglobe has been duly authorized by its Board of Directors. Upon execution
and delivery of this Agreement on behalf of Interglobe , this Agreement will
constitute the valid and legally binding obligation of Interglobe , enforceable
in accordance with its terms and conditions. The execution, delivery and
performance of this Agreement and compliance with the provisions hereof by
Interglobe does not and will not conflict with, or result in a breach or
violation of the terms, conditions or provisions of, or constitute a default
under, or result in the creation or imposition of any lien pursuant to the terms
of, Interglobe 's Articles of Incorporation, as amended, Interglobe 's current
Bylaws, or any statute, law, rule or regulation or any order, judgment, decree,
indenture, mortgage lease or other agreement or instrument to which Interglobe
is subject.
(e) Financial Statements. The unaudited financial statements of Interglobe as
of December 31, 2001, are attached hereto as Exhibit B (the "Financial
Statements"). The
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Financial Statements present fairly the financial condition of Interglobe as of
the periods covered in conformity with generally accepted accounting principles
applied on a basis consistent with preceding periods.
(f) Material Changes. Since December 31, 2001, there have been no material
adverse changes in the financial condition of Interglobe from that shown on the
Financial Statements as of such date except to the extent that Interglobe has
entered into a loan agreement in an amount of $105,000 CDN attached hereto as
Exhibit C (the "Loan Agreement").
3.2 Financial and Operating Status of Interglobe .
(a) Tax Returns. Interglobe has duly filed all federal, provincial and local tax
returns required to be filed by it, and all taxes, assessments and penalties set
forth in such returns have been timely and fully paid or adequately reserved
against in the Financial Statements. None of Interglobe 's tax returns have ever
been audited by any governmental taxing authority.
(b) Contracts and Commitments. Interglobe has no written or oral contracts or
commitments involving any obligation, consideration or expenditure, outside the
purchase of normal inventory items in quantities in accordance with previous
practices except as set forth in the Schedule of Disclosures attached hereto as
Exhibit D. Interglobe has delivered to Homelands's counsel true, complete and
correct copies of all such contracts and commitments, together with all
amendments thereto, all of which are listed on the Schedule of Disclosures, and
all such contracts are in full force and effect in the form delivered.
Interglobe has set forth in the Schedule of Disclosures (i) all insurance
policies in force on the date hereof; (ii) the names and locations of all banks
and other depositories in which it has accounts or safe deposit boxes and the
names of persons authorized to sign checks, drafts or other instruments drawn
thereon or to have access thereof; (iii) all mortgages, promissory notes, deeds
of trust, loan or credit agreements or similar agreements, or modifications
thereof, to which it is a party and all amounts thereof; and (iv) all accounts
receivable of Interglobe as of December 31, 2001 and as reflected in the
Financial Statements(v) all security licenses.
(c) Employees. Interglobe does not have any collective bargaining agreements
with any of its employees. Interglobe is not a party to any contract with any of
its employees, consultants, advisors, sales representatives, distributors or
customers that is not terminable by Interglobe without liability, penalty or
premium on 30 days' notice, except as otherwise set forth in the Schedule of
Disclosures.
(d) Benefits. Interglobe does not have any health, dental, pension, retirement,
or other benefit programs for its employees or in which its employees
participate, except as set forth in the Schedule of Disclosures.
(e) Inventory. All inventory of Interglobe is saleable and in good condition,
the value of which as of December 31, 2001 has been written down or reserved to
amounts
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not in excess of realizable market value.
(f) Equipment. All equipment of Interglobe is in good order and repair except
minor defects which do not materially interfere with the continued use of such
equipment.
(g) Litigation. There is no action, proceeding or investigation pending or, to
the knowledge of Interglobe , threatened against Interglobe , or any of
Interglobe 's property or assets which might result in any material and adverse
change in the property, assets or financial condition of Interglobe , nor, to
the knowledge of Interglobe , is there any basis for any such action, proceeding
or investigation. To the best knowledge of Interglobe it is in compliance in all
material respects with all laws and regulations applicable to it, its properties
and businesses.
4. Representations and Warranties of Homelands. Homelands hereby represents and
warrants to Interglobe and the Shareholders that the matters set forth in the
following subsections of this Section 4 are true and correct.
4.1 Corporate Organization
(a) Organization. Homelands is a corporation duly organized, validly existing
and in good standing under the laws of the State of Nevada.
(b) Financial Statements. The Annual report under Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the fiscal year ended December 31, 2001,
which includes the audited consolidated financial statements of Homelands parent
company, Delta Capital Technologies, Inc. are attached hereto as Exhibit E (the
"Delta Capital Technologies, Inc. Financial Statements"). The Delta Capital
Technologies, Inc. Financial Statements present fairly the financial condition
of Homelands parent company as of the periods covered in conformity with
generally accepted accounting principles applied on a basis consistent with
preceding periods.
(c) Material Changes. Since the last quarterly Homelands Financial Statements,
there have been no material changes in the financial condition of Homelands from
that shown on the Homelands Financial Statements as of such date.
(d) Reporting Status. Homelands is not public or a reporting company under
Section 13 or 15(d) of the Securities Exchange Act of 1934. None of the
information contained in any of the reports filed by Homelands pursuant to
Section 13 of such statute contains any misstatement of a material fact or omits
any information required to make the information contained therein not
materially misleading.
4.2 Due Execution and Enforceability. The execution, delivery and performance of
this Agreement and the other agreements between the parties hereto referred to
herein by and on behalf of Homelands have been duly and validly authorized by
the Homelands Board of Directors.
8
5. Conditions to Closing.
5.1 Conditions to Obligations of Homelands. The obligations of Homelands to
purchase the Shares at the Closing and to consummate any other transaction
contemplated by this Agreement are subject to the fulfillment to Homelands's
satisfaction on or prior to the Closing date of the following conditions, any of
which may be waived in whole or in part by Homelands.
(a) Representation and Warranties True at Closing. The representations and
warranties made by the Shareholders and Interglobe in Section 3 above shall be
true and correct in all material respects on and as of the Closing Date with the
same force and effect as if they had been made and given on and as of the
Closing Date, and the Shareholders and Interglobe shall have performed and
complied with all agreements and obligations to be performed by it under this
Agreement on or prior to the Closing.
(b) Authorization. Interglobe shall have obtained all Board of Directors
approval necessary to authorize its participation in the transaction described
in this Agreement.
(c) No Adverse Change. Prior to the Closing there shall not have occurred any
loss or destruction of any material part of the assets of Interglobe or any
material and adverse change in the financial condition, properties, business or
operation of Interglobe from that shown in the Financial Statements.
(d) Documents and Instruments Satisfactory. All documents and instruments to be
provided by Interglobe and the Shareholders in connection with the transactions
contemplated by this Agreement must be satisfactory in form and substance to
counsel for Homelands.
5.2 Conditions to Obligations of Interglobe and Its Shareholders. The
obligations of the Shareholders and Interglobe to consummate this Agreement and
carry out and perform their obligations hereunder are subject to the
satisfaction of all of the following conditions unless waived by Shareholders.
(a) Representations and Warranties True at Closing. The representations and
warranties made by Homelands in this Agreement shall be true and correct in all
material respects on and as of the Closing Date with the same force and effect
as if they had been made and given on as of the Closing Date. Homelands shall
have performed and complied in all material respects with all agreements and
obligations to be performed by it under this Agreement on or before the Closing
Date.
(b) Authorization. Homelands shall have obtained all Board of Directors
approval necessary to authorize its participation in the transaction described
in this agreement.
(c) No Adverse Change. Prior to the Closing there shall not have occurred any
material and adverse change in the financial condition, properties, business or
operations of Homelands since the date of this Agreement.
9
(e) Documents and Instruments Satisfactory. All documents and instruments to be
provided by Homelands in connection with the transactions contemplated by this
Agreement must be satisfactory in form and substance to counsel for Shareholders
and Interglobe .
(f) Due Diligence Satisfactory. Shareholders and Interglobe have received all of
the information reasonably requested by them from Homelands in connection with
this transaction, and, based on its due diligence investigation, are satisfied
with the financial and operating condition of Homelands.
6. Covenants and Agreements of Interglobe .
6.1 Access to Information. From and after the date of this Agreement and until
the Closing, Shareholders agree that the authorized representatives of Homelands
shall have access during normal business hours to the properties, facilities,
books, records, contracts and documents of Interglobe and Interglobe shall
furnish or cause to be furnished to the authorized representatives of Homelands
copies of all documents and all information with respect to the affairs and
businesses of Interglobe that Homelands's representatives may reasonably
request. Homelands shall keep all such information confidential and shall not
use the same for any purpose or disclose the same to any other person or entity
pending the consummation of the transactions contemplated hereby.
6.2 Conduct of Business Pending the Closing. Unless expressly consented to by
Homelands or otherwise permitted or required under this Agreement, from and
after the date of this Agreement and until the Closing or the termination or
abandonment of this Agreement as provided herein:
(a) Business in the Ordinary Course. Interglobe will (i) conduct its business
only in the ordinary course in the same manner as before date of this Agreement,
(ii) will not institute any unusual or novel methods of manufacture, purchase,
sale, lease, service, accounting or operation, (iii) will not grant any increase
in the rate of pay or other benefits or compensation of any officers or
employees, and (iv) will not enter into, amend or terminate any contract or
commitment not in the usual and ordinary course of business and consistent with
Interglobe 's past practice.
(b) Indebtedness. Interglobe will not (i) incur or assume or guarantee any
indebtedness other than indebtedness incurred in the usual and ordinary course
of business for goods or services or pursuant to existing commitments or
agreements previously disclosed in writing to Homelands under this Agreement, or
(ii) enter into, execute or deliver any agreement or writing to the release or
settlement of claims, except as otherwise provided by this Agreement.
(c) Corporate Structure. Interglobe will not (i) amend its articles of
incorporation or bylaws or change its officers or directors or (ii) issue any
additional capital stock or other securities or grant any warrants, options or
rights to purchase or acquire any capital stock or other securities of
Interglobe , or (iii) merge or consolidate with any other corporation or acquire
all or substantially all of the stock, business or assets of any other person or
entity or sell, assign or transfer substantially all of its assets or
outstanding securities to any other person or entity.
(d) Dividends and Capital Stock. Interglobe will not (i) declare or pay any
dividend or
10
make any stock split or stock dividend or other distribution with respect to its
capital stock, or (ii) directly or indirectly redeem, purchase or otherwise
acquire for value any of its capital stock.
(e) Banking Relationships. No change will be made affecting Interglobe 's
banking relationships and Interglobe shall open no new bank or other deposit
accounts.
(f) Insurance. Interglobe will maintain in full force and effect all policies of
insurance now in effect and will give all notices and present all claims under
all policies in a timely fashion.
(g) Licenses: Interglobe will maintain in full force and effect all related
security licenses now in effect.
7. Covenants and Agreements of Homelands.
7.1 Homelands shall not, nor shall it cause, permit or suffer Interglobe to, in
each case without the prior majority consent of the shareholders of Homelands:
7.1.2 elect as directors of Interglobe any more than three individuals, one of
whom shall be Phillip Moriarty or persons designated by him or remove any such
directors so elected,
7.2.2 sell, hypothecate, liquidate or otherwise dispose of all or any
significant portion of the assets of Interglobe or any interest therein;
7.2.3 merge or consolidate Interglobe with any other person or entity or enter
into any plan or agreement with respect thereto;
7.2.4 enter into any agreement between Interglobe and Homelands, or between
Interglobe and any person or entity controlled by Homelands, any person or
entity controlling Homelands or any person or entity under common control with
Homelands (any person or entity controlling, controlled by or under common
control with Homelands is referenced herein as a "Homelands Affiliate");
7.2.5 issue any shares of the capital stock of Interglobe or any shares or other
securities convertible into or exchangeable or exercisable for such shares of
capital stock except to the extent contemplated by Section 7.6 hereof and except
to the extent such shares or other securities are issued in connection with a
public distribution thereof in a transaction or series of transactions approved
by the Board of Directors of Interglobe ;
7.2.7 incur any indebtedness of Interglobe for borrowed money, either directly
or as guarantor of any obligations of Homelands or any Homelands Affiliate;
7.2.8 adopt any plan or petition any court or governmental agency for the
dissolution of Interglobe ; or
7.2.9 take any action of Interglobe or permit or suffer the occurrence of any
action of Interglobe that is otherwise within the prerogatives of the Board of
Directors of a corporation organized under the laws of the Province of British
Columbia.
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8. Miscellaneous.
8.1 Successors and Assigns. This Agreement and the terms and conditions
contained herein are binding upon, and will inure to the benefit of, the parties
hereto and their respective representatives, executors, administrators, heirs,
successors and assigns, but, except as otherwise specifically provided herein,
neither this Agreement nor any rights or obligations hereunder may be assigned,
directly, indirectly, voluntarily or involuntarily, except by operation or law,
by any party to this Agreement.
8.2 Governing Law; Severability. This Agreement will be governed by and
construed in accordance with the laws of the State of Nevada. If any provision
of this Agreement is found to be invalid, illegal or unenforceable in any
respect, such provision will be enforced to the maximum extent possible and the
remaining provisions of this Agreement will continue unaffected.
8.3 Waivers. No waiver by any party hereto of any term or condition of this
Agreement will be effective unless set forth in a writing signed by such party.
No waiver of any provision of this Agreement will be deemed a waiver of any
other provision, or constitute a continuing waiver unless otherwise expressly
provided in writing by the waiving party. No failure or delay on the part of any
party in exercising any right, power or privilege under this Agreement will
operate as a waiver thereof, nor will a single or partial exercise thereof
preclude any other or further exercise of any other rights, powers or
privileges.
8.4 Entire Agreement; Modifications. This Agreement, together with the exhibits
and schedules attached hereto, each of which is incorporated herein by this
reference, constitutes the entire agreement among the parties hereto pertaining
to the subject matter hereof and supersedes in its entirety all prior and
contemporaneous agreements, understandings, negotiations and discussions between
the parties (specifically including without limitation the letter of intent
dated February 28, 2002 and executed by Homelands and Interglobe in connection
with this Agreement), whether oral or written, with respect to the subject
matter of this Agreement. No supplement, modification or amendment to this
Agreement will be binding unless executed in writing by Interglobe ,
Shareholders and Homelands.
8.5 Notices. All notices and other communications required or permitted under
this Agreement will be in writing and may be hand delivered, mailed by
first-class mail, postage prepaid, or sent via facsimile. Unless otherwise
agreed to in writing by the parties, such notices and other communications shall
be addressed as follows:
If to Homelands:
Darwyn Ross, Director
Homelands Security, Inc.
1403 East, 900 South
Salt Lake City
Utah, 84105
If to Interglobe :
Philip Moriarty, President
Interglobe Investigation Services Inc.
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Interglobe Investigation Services, Inc.
708-1155 West Pender Street
Vancouver, B.C.
V6E 2P4
8.6 Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original and all of which together shall
constitute one instrument.
8.7 Headings; References. Headings used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.
8.8 Expenses. Homelands shall timely pay all of the fees and expenses,
including, without limitation, the fees and expenses of counsel and accountants
incurred by itself in the negotiation, preparation and execution of this
Agreement and in the consummation of the transactions contemplated hereby.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
dates set forth below, to be effective for all purposes as of the date first
written above.
Interglobe Investigation Services, Inc., a British Columbia corporation
By:___________________________
Philip Moriarty, President
Homelands Security, Inc., a Nevada corporation
By:_____________________________
Darwyn Ross
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AUDITOR'S REPORT
To the Shareholder
I have audited the balance sheet of Interglobe Investigation Services Inc. as at
December 31, 2001 and the statements of loss and deficit and cash flows for the
year then ended. These financial statements are the responsibility of the
company's management. My responsibility is to express an opinion on these
financial statements based on my audit.
I conducted my audit in accordance with Canadian generally accepted auditing
standards. Those standards require that I plan and perform an audit to obtain
reasonable assurance 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.
In my opinion, these financial statements present fairly, in all material
respects, the financial position of the company as at December 31, 2001 and the
results of its operations and cash flows for the year then ended in accordance
with generally accepted accounting principles. As required by the Company Act of
British Columbia, I report that in my opinion, these principles have been
applied on a basis consistent with that of the preceding period.
Douglas R. Myrdal, Inc. Burnaby, B.C.
Chartered Accountant March 22, 2002
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AUDITOR'S REPORT
To the Shareholder
I have audited the balance sheet of Interglobe Investigation Services Inc.
as at December 31, 2000 and the statements of loss and deficit and cash flows
for the year then ended. These financial statements are the responsibility of
the company's management. My responsibility is to express an opinion on these
financial statements based on my audit.
I conducted my audit in accordance with Canadian generally accepted
auditing standards. Those standards require that I plan and perform an audit to
obtain reasonable assurance 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.
In my opinion, these financial statements present fairly, in all material
respects, the financial position of the company as at December 31, 2000 and the
results of its operations and cash flows for the year then ended in accordance
with generally accepted accounting principles. As required by the Company Act of
British Columbia, I report that in my opinion, these principles have been
applied on a basis consistent with that of the preceding period.
Douglas R. Myrdal, Inc. Burnaby, B.C.
Chartered Accountant March 22, 2002
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INTERGLOBE INVESTIGATION SERVICES INC.
BALANCE SHEET
As at December 31, 2001
2001 2000
ASSETS
Current Assets
Cash and cash equivalents $ 33,787 $ 17,297
Accounts receivable 4,914 5,854
------------------- --------------------
38,701 23,151
Capital Assets (Notes 1, 3) 34,939 20,639
------------------- --------------------
$ 73,640 $ 43,790
=================== ====================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities $ 35,909 $ 12,756
Due to related party (Note 4) 4,000 -
Shareholder loan (Note 5) 67,735 54,932
------------------- --------------------
107,644 67,688
Loans Payable (Note 6) 25,339 19,502
------------------- --------------------
132,983 87,190
Shareholders' Equity
Share capital (Note 7) 1 1
Deficit (59,344) (43,401)
(59,343) (43,400)
------------------- --------------------
$ 73,640 $ 43,790
=================== ====================
Approved on behalf of the Director:
__________________________ Director
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.
INTERGLOBE INVESTIGATION SERVICES INC.
STATEMENT OF LOSS AND DEFICIT
For the year ended December 31, 2001
2001 2000
Revenue
Fees $ 153,841 $ 150,116
Canine income 48,070 13,398
Miscellaneous income 4,324 1,154
206,235 164,668
-------------------- ------------------
Expenses
Advertising and promotion 27,008 20,410
Automobile 21,029 9,250
Bad debts - 93
Bank charges and interest 839 682
Depreciation 7,865 6,053
Equipment supplies and accessories 4,407 4,010
Insurance 7,909 4,005
Licenses, dues and subscriptions 2,701 3,601
Management fees - -
Office 6,002 5,938
Professional fees 10,997 48,000
Rent and property taxes 27,054 23,785
Repairs and maintenance 5,626 465
Research and development 911 766
Subcontract 31,985 33,609
Supplies 3,770 2,459
Telephone and utilities 10,239 10,182
Travel 3,586 3,038
Wages and benefits 50,250 6,259
222,178 182,605
-------------------- ------------------
Loss for year (15,943) (17,937)
Deficit, beginning of year (43,401) (25,464)
-------------------- ------------------
Deficit, end of year $ (59,344) $ (43,401)
==================== ==================
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INTERGLOBE INVESTIGATION SERVICES INC.
STATEMENT OF CASH FLOWS
For the year ended December 31, 2001
2001 2000
CASH PROVIDED BY (USED FOR)
Operations
Loss for year $ (15,943) $ (17,937)
Non-cash items
Depreciation 7,865 6,053
------------------- -------------------
(8,078) (11,884)
Changes in other non-cash operating working capital
Accounts receivable 940 (5,475)
Accounts payable and accrued liabilities 23,153 (4,380)
16,015 (21,739)
------------------- -------------------
Investments
Capital assets (22,165) -
------------------- -------------------
Financing
Cheques issued in excess of cash - (38,778)
Due to related party 4,000 -
Shareholder loan 12,803 52,782
Loans payable 5,837 19,502
22,640 33,506
------------------- -------------------
Increase (decrease) in cash 16,490 11,767
Cash and cash equivalents, beginning of period 17,297 5,530
------------------- -------------------
Cash and cash equivalents, end of period $ 33,787 $ 17,297
=================== ===================
17
INTERGLOBE INVESTIGATION SERVICES INC.
NOTES TO FINANCIAL STATEMENTS
For the year ended December 31, 2001
Note 1 Significant Accounting Policies
a) Capital assets
Capital assets are recorded at cost. Depreciation of capital
assets is recorded in the accounts as follows:
Equipment 20% Diminishing balance
Office equipment 20% Diminishing balance
Office furniture 20% Diminishing balance
Automobile 30% Diminishing balance
Computer software 100% Diminishing balance
In the year of acquisition only one-half the normal rate is
applied.
b) Financial instruments
The company's financial instruments consist of cash and cash
equivalents, accounts receivable, accounts payable, and
shareholder loan. It is management's opinion that the company
is not exposed to significant interest, currency or credit
risks arising from these financial instruments.
c) Canadian and United States generally accepted accounting
principles
These financial statements have been prepared in accordance
with Canadian generally accepted accounting principles.
However, there are no material differences with generally
accepted accounting principles of the United States.
18
INTERGLOBE INVESTIGATION SERVICES INC.
NOTES TO FINANCIAL STATEMENTS
For the year ended December 31, 2001
Note 2 Future Income Tax Assets
Future income tax assets are the value of the income tax benefits
that arise in respect of the carry forward of unused accumulated tax
losses. The income tax benefit is equal to the statutory income tax
rate of approximately 18% (December 31, 2000 - 20%) applied to
accumulated tax losses of approximately $103,000 (December 31, 2000 -
$118,000). $28,000 of tax losses expired in 2001 and continue to
expire over the next seven years unless utilized. The Company is
unsure whether they will be able to utilize these losses in the
future. Therefore, no provision has been made in the accounts for
these losses.
Note 3 Capital Assets
------------------ ----------------- -------------------
2001 2000
------------------------------------ -------------------
Net Book Net Book
Cost Value Value
------------------ ----------------- -------------------
Equipment $ 24,395 $ 11,197 $ 13,996
Office equipment 5,914 1,921 2,401
Office furniture 182 94 118
Automobile 29,096 21,727 4,124
Computer software 313 - -
$ 59,900 $ 34,939 $ 20,639
19
Note 4 Due to related party
The amount due to related party, Interglobe Canine Services Ltd.,
bears no interest and has no stated terms of repayment. Interglobe
Canine Services Ltd. is owned by the shareholder of the Company.
Note 5 Shareholder Loan
The shareholder loan bears no interest and has no stated terms of
repayment.
Note 6 Loan Payable
The loan payable bears interest at 6% per annum and is repayable to
Greystone Mercantile Bank on January 1, 2003 with interest.
Note 7 Share Capital
Authorized
1,000,000 common shares without par value
Issued 100 common shares 2001 2000
$ 1 $ 1
================= =========++==========
20
Unaudited Pro forma Condensed Combined Balance Sheet
March 31, 2002
Assets Delta Capital Interglobe Pro Forma Adjustments Pro Forma
Historical Investigative ---------
Services Historical Combined
------------------- --------
PurchaseGoodwill Impairment
Current Assets
Cash $ $ $ $ $
- 26,081 - - 26,081
Account receivable, net - 9,397 - - 9,397
Prepaid expenses 21,000 - - - 21,000
Due from related company - 9,275 - - 9,275
Loans receivable - 1,568 - - 1,568
Other assets 3,268 -
--------------------------------------------------------------------------
3,268
- -----
Total Current Assets 24,268 46,321 - - 70,589
Property and equipment
Property and equipment, at cost - 37,365 - - 37,365
Less accumulated depreciation 16,854 - -
----------------------------------------------------------------------------------------
16,854
------
Property and Equipment, net - 20,511 - - 20,511
Goodwill - - 31,414 (31,414) -
--------------------------------- ---------------
$ 24,268$ 66,832$ 31,414$ (31,414)$ 91,100
----------------------------------------------------------------------------------------
See notes to unaudited pro forma condensed combined financial statements
21
Unaudited Pro forma Condensed Combined Balance Sheet
March 31, 2002
LIABILITIES AND Delta Interglobe Pro Forma Adjustments Pro Forma
Capital Investigative
SHAREHOLDER'S Historical Services Combined
Historical
EQUITY
Purchase Goodwill Impairment
Current Liabilities
Checks issued in excess of $ $ -$ $ $ 2,560
cash 2,560 - -
In banks
Account payable and other 266,406 34,293 - - 300,699
liabilities
Notes payable 42,636 - - - 42,636
Notes payable - stockholders 1,000 35,522 - - 36,522
---------------------------------------------------------------------
Total Current Liabilities 312,602 69,815 - - 382,417
Notes Payable - 28,431 - 28,431
Shareholder's Equity
Common Stock 3,604 1 (1) - 3,604
Additional paid in capital 6,943,963 - - 6,943,963
Retained deficit (7,235,901) (31,415) 31,415 (31,414) (7,267,315)
---------------------------------------------------------------------
(288,334) (31,414) 31,414 (31,414) (319,748)
---------------------------------------------------------------------
$ 24,268 66,832$ 31,414$ (31,414)$ 91,100
---------------------------------------------------------------------
See notes to unaudited pro forma condensed combined financial statements
22
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Three Months Ended March 31, 2002
Interglobe
Delta Investigative Pro Pro
Capital Services Forma Forma
Historical Historical Adjustments Combined
===================== --------------------- -------------------- --------------------
Revenues
Services $ - $ 28,983 $ - $ 28,983
------------------- -------------------- ------------------- -------------------
- 28,983 - 28,983
Costs and expenses
General and administrative 138,987 21,687 - 160,674
Depreciation and amortization 1,388 1,388
Goodwill impairment - - 37,322 37,322
------------------- -------------------- ------------------- -------------------
138,987 23,075 37,322 199,384
------------------- -------------------- ------------------- -------------------
Net income (loss) $ (138,987) $ 5,908 $ (37,322) $ (170,401)
------------------- -------------------- ------------------- -------------------
Basic and diluted income (loss) $ (0.10) $ 59.08 $ (0.12)
per common share ------------------- -------------------- -------------------
Weighted average number of shares 1,457,284 100 1,457,284
outstanding ------------------- -------------------- -------------------
See notes to unaudited pro forma condensed combined financial statements
23
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended December 31, 2001
Interglobe
Delta Investigative Pro Pro
Capital Services Forma Forma
Historical Historical Adjustments Combined
--------------------- ---------------------- -------------------- ----------------------
Revenues
Services $ 27,530 $ 126,989 $ - $ 154,519
Other - 2,719 - 2,719
------------------- ------------------ ------------------- -------------------
27,530 129,708 - 157,238
Costs and expenses
General and administrative 693,312 133,950 - 827,262
Depreciation and amortization - 4,946 - 4,946
Interest 14,011 839 - 14,850
Goodwill write-off - - 43,400 43,400
------------------- ------------------ ------------------- -------------------
707,323 139,735 43,400 890,458
------------------- ------------------ ------------------- -------------------
Net loss $ (679,793) $ (10,027) $ (43,400) $ (733,220)
------------------- ------------------ ------------------- -------------------
Basic and diluted loss per $ (1.10) $ (100.27) $ (1.19)
common share ------------------- ------------------ -------------------
Weighted average number of 615,672 100 615,672
shares outstanding ------------------- ------------------ -------------------
------------------- ------------------ -------------------
See notes to unaudited pro forma condensed combined financial statements
24
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS
(1) On April 15, 2002, Homelands Security Inc. (Homelands), a subsidiary of
Delta Capital Technologies, Inc. (Delta Capital), acquired 100% of the
outstanding shares of stock of Interglobe Investigation Services, Inc.
(Interglobe), a privately held Canadian company, in exchange for 950,000 shares
of Homelands' common stock. As a result of this transaction, Delta Capital's
ownership of Homelands was reduced to 51.3%.
(2) The unaudited pro forma condensed combined balance sheet as of March
31, 2002 and the pro forma statements of operations for the three months ended
March 31, 2002 and the year ended December 31, 2002 are based on historical
financial statements of the Delta Capital and Interglobe. The unaudited pro
forma condensed combined balance sheet as of March 31, 2002 gives effect to the
combination of Delta Capital and Interglobe as if it had occurred as of March
31, 2002. The unaudited pro forma condensed combined statement of operations for
the three months ended March 31, 2002 has been prepared to illustrate the
effects of the combination of Delta Capital and Interglobe as if the combination
occurred January 1, 2002. The unaudited pro forma condensed combined statement
of operations for the year ended December 31, 2001 has been prepared to
illustrate the effects of the combination of Delta Capital and Interglobe as if
the combination occurred January 1, 2001.
The pro forma condensed combined financial statements may not be
indicative of the actual results of the acquisition. The pro forma
adjustments are based upon available information and certain
assumptions that management believes are reasonable. The accompanying
unaudited pro forma condensed combined financial statements should be
read in connection with the historical financial statements of Delta
Capital.
(3) For purposes of this presentation, the historical financial statements
of Interglobe have been restated from Canadian dollars to U.S. dollars to
conform to the reporting currency of Delta Capital. The conversion rate used was
Cdn$1 = US$0.62708.
(4) Pro forma adjustments include the effect of the following:
Recognition of goodwill on the acquisition of Interglobe.
Write off / impairment loss of goodwil recorded upon acquisition.
25