UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the Fiscal Quarter Ended September 30, 2002
or
[ ] Transitional report under Section 13 or 15(d) of the Exchange Act
Commission File No. 000-26635
Daliprint, Inc.
---------------
(Name of Small Business Issuer in its Charter)
Delaware 13-4031362
- ------------------------------ -------------------------------------
State or other jurisdiction of I.R.S. Employer Identification Number
incorporation or organization
317 Madison Avenue, Suite 2310, New York, New York 10017
--------------------------------------------------------
(Address of principal executive office)
Issuer's telephone number: (212) 949-9696
--------------
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) been
subject to such filing requirements for the past ninety (90) days.
Yes X No
---------- -----------
State the number of shares outstanding of each of the issuers classes of common
equity, as of the latest practical date: As of November 12, 2002, there were
2,545,000 shares of Common Stock, par value $.001 per share, outstanding
Transitional Small Business Disclosure Format (check one):
Yes No X
---------- -----------
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.
DALIPRINT, INC.
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
December 31, 2001 and September 30, 2002 and 2001 (unaudited)
- --------------------------------------------------------------------------------
Page
FINANCIAL STATEMENTS
Balance Sheet 1
Statements of Operations 2
Statements of Stockholders' Equity 3
Statements of Cash Flows 4
Notes to Financial Statements 5 - 6
DALIPRINT, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
December 31, 2001 and September 30, 2002 (unaudited)
- --------------------------------------------------------------------------------
ASSETS
September 30, December 31,
2002 2001
------------- ------------
(unaudited)
Assets
Cash $ 1,987 $ 4,805
Prepaid expenses 201 909
-------- --------
Total assets $ 2,188 $ 5,714
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accrued expenses 1,987 2,136
-------- --------
Total current liabilities 1,987 2,136
-------- --------
Stockholders' equity
Preferred stock, $0.001 par value
5,000,000 shares authorized
no shares issued and outstanding -- --
Common stock, $0.001 par value
40,000,000 shares authorized
2,545,000 (unaudited) and 2,545,000 shares issued
and outstanding 2,545 2,545
Additional paid-in capital 42,055 42,055
Contributed capital - stock warrants outstanding 2,813 2,813
Deficit accumulated during the development stage (47,212) (43,835)
-------- --------
Total stockholders' equity 201 3,578
-------- --------
Total liabilities and stockholders' equity $ 2,188 $ 5,714
======== ========
The accompanying notes are an integral part of these financial statements.
1
DALIPRINT, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
For the Three and Nine Months Ended September 30, 2002 and 2001 (unaudited) and
for the Period from October 6, 1998 (Inception) to September 30, 2002
(unaudited)
- --------------------------------------------------------------------------------
For the
Period from
For the For the October 6,
Three Months Ended Nine Months Ended 1998
September 30, September 30, (Inception) to
----------------------------- ----------------------------- September 30,
2002 2001 2002 2001 2002
----------- ----------- ------------ ----------- -----------
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Operating expenses $ 769 $ 3,147 $ 3,377 $ 9,455 $ 47,212
----------- ----------- ------------ ----------- -----------
Net loss $ (769) $ (3,147) $ (3,377) $ (9,455) $ (47,212)
=========== =========== ============ =========== ===========
Basic and diluted
Loss per common
share $ (0.00) $ (0.00) $ (0.00) $ (0.00) $ (0.02)
=========== =========== ============ =========== ===========
Weighted-average
common shares
outstanding 2,545,000 2,490,000 2,545,000 2,490,000 2,341,790
=========== =========== ============ =========== ===========
The accompanying notes are an integral part of these financial statements.
2
DALIPRINT, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY
For the Period from October 6, 1998 (Inception) to September 30, 2002
(unaudited)
- --------------------------------------------------------------------------------
Contributed Deficit
Capital - Accumulated
Common Stock Additional Stock during the
-------------------------- Paid-In Warrants Development
Shares Amount Capital Outstanding Stage Total
---------- ---------- ---------- ---------- ---------- ----------
Balance, October 6, 1998 (inception) -- $ -- $ -- $ -- $ -- $ --
Issuance of common stock 2,020,000 2,020 2,580 4,600
Net loss (1,238) (1,238)
---------- ---------- ---------- ---------- ---------- ----------
Balance, December 31, 1998 2,020,000 2,020 2,580 -- (1,238) 3,362
Issuance of common stock 150,000 150 33,600 33,750
Issuance of stock warrants 2,813 2,813
Net loss (12,320) (12,320)
---------- ---------- ---------- ---------- ---------- ----------
Balance, December 31, 1999 2,170,000 2,170 36,180 2,813 (13,558) 27,605
Issuance of common stock 170,000 170 2,280 2,450
Issuance and exercise of stock warrants 150,000 150 2,150 2,300
Net loss (17,688) (17,688)
---------- ---------- ---------- ---------- ---------- ----------
Balance, December 31, 2000 2,490,000 2,490 40,610 2,813 (31,246) 14,667
Issuance of common stock 55,000 55 1,445 1,500
Net loss (12,589) (12,589)
---------- ---------- ---------- ---------- ---------- ----------
Balance, December 31, 2001 2,545,000 2,545 42,055 2,813 (43,835) 3,578
Net loss (unaudited) (3,377) (3,377)
---------- ---------- ---------- ---------- ---------- ----------
Balance, September 30, 2002 (unaudited) 2,545,000 $ 2,545 $ 42,055 $ 2,813 $ (47,212) $ 201
========== ========== ========== ========== ========== ==========
The accompanying notes are an integral part of these financial statements.
3
DALIPRINT, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 2002 and 2001 (unaudited) and
for the Period from October 6, 1998 (Inception) to September 30, 2002
(unaudited)
- --------------------------------------------------------------------------------
For the
Period from
For the October 6,
Nine Months Ended 1998
September 30, (Inception) to
----------------------- September 30,
2002 2001 2002
-------- -------- --------
(unaudited) (unaudited) (unaudited)
Cash flows from operating activities
Net loss $ (3,377) $ (9,455) $(47,212)
Adjustments to reconcile net loss to net cash
used in operating activities
Stock warrants outstanding -- -- 2,813
Issuance of common stock for services
rendered -- -- 3,950
Shares committed to be issued for services
rendered -- 1,500 --
Exercise of warrants issued for services
rendered -- -- 800
Change in
Prepaid expenses 708 1,809 (201)
Accrued expenses (149) 53 1,987
-------- -------- --------
Net cash used in operating activities (2,818) (6,093) (37,863)
-------- -------- --------
Cash flows from financing activities
Cash received for common stock -- -- 39,850
-------- -------- --------
Net cash provided by financing activities -- -- 39,850
-------- -------- --------
Net increase (decrease) in cash (2,818) (6,093) 1,987
Cash, beginning of period 4,805 12,955 --
-------- -------- --------
Cash, end of period $ 1,987 $ 6,862 $ 1,987
======== ======== ========
The accompanying notes are an integral part of these financial statements.
4
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Line of Business
---------------------------------
Daliprint, Inc. (the "Company") was incorporated on October 6, 1998 in
the State of Delaware. The Company is in the development stage, and its
intent is to operate as a capital market access corporation and to
acquire one or more existing businesses through merger or acquisition.
The Company has had no significant business activity to date. Operating
expenses incurred to date consist primarily of legal and accounting
fees.
Basis of Presentation
---------------------
The Company has been in the development stage since its inception on
October 6, 1998. The Company has incurred losses from operations. These
factors raise substantial doubt about the Company's ability to continue
as a going concern.
Start-Up Costs
--------------
Start-up costs include legal and professional fees. In accordance with
Statement of Position 98-5, "Costs of Start-Up Activities," these costs
have been expensed as incurred.
Estimates
---------
The preparation of the Company's financial statements in conformity
with generally accepted accounting principles requires the Company's
management to make estimates and assumptions that affect the amounts
reported in these financial statements and accompanying notes. Actual
results could differ from those estimates.
Loss per Share
--------------
The Company utilizes Statements of Financial Accounting Standards
("SFAS") No. 128, "Earnings per Share." Basic loss per share is
computed by dividing the loss available to common stockholders by the
weighted-average number of common shares outstanding. Diluted loss per
share is computed similar to basic loss per share except that the
denominator is increased to include the number of additional common
shares that would have been outstanding if the potential common shares
had been issued and if the additional common shares were dilutive.
Because the Company has incurred net losses, basic and diluted loss per
share are the same.
Income Taxes
------------
The Company uses the asset and liability method of accounting for
income taxes. The asset and liability method accounts for deferred
income taxes by applying enacted statutory rates in effect for periods
in which the difference between the book value and the tax bases of
assets and liabilities are scheduled to reverse. The resulting deferred
tax asset or liability is adjusted to reflect changes in tax laws or
rates. Because the Company is in the development stage and has incurred
a loss from operations, no benefit is realized for the tax effect of
the net operating loss carryforward due to the uncertainty of its
realization.
Recently Issued Accounting Pronouncements
-----------------------------------------
In April 2002, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64,
Amendment of FASB Statement No. 13, and Technical Corrections." SFAS
No. 145 updates, clarifies, and simplifies existing accounting
pronouncements. This statement rescinds SFAS No. 4, which required all
gains and losses from extinguishment of debt to be aggregated and, if
material, classified as an extraordinary item, net of related income
tax effect. As a result, the criteria in Accounting Principles
Bulletin ("APB") No. 30 will now be used to classify those gains and
losses. SFAS No. 64 amended SFAS No. 4 and is no longer necessary as
SFAS No. 4 has been rescinded. SFAS No. 44 has been rescinded, as it
is no longer necessary. SFAS No. 145 amends SFAS No. 13 to require
that certain lease modifications that have economic effects similar to
sale-leaseback transactions be accounted for in the same manner as
sale-lease transactions. This statement also makes technical
corrections to existing pronouncements. While those corrections are
not substantive in nature, in some instances, they may change
accounting practice.
5
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recently Issued Accounting Pronouncements (continued)
-----------------------------------------
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." This statement addresses
financial accounting and reporting for costs associated with exit or
disposal activities and nullifies Emerging Issues Task Force ("EITF")
Issue No. 94-3, "Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain Costs
Incurred in a Restructuring)." This statement requires that a liability
for a cost associated with an exit or disposal activity be recognized
when the liability is incurred. Under EITF Issue 94-3, a liability for
an exit cost, as defined, was recognized at the date of an entity's
commitment to an exit plan. The provisions of this statement are
effective for exit or disposal activities that are initiated after
December 31, 2002 with earlier application encouraged.
NOTE 2 - WARRANTS OUTSTANDING
On April 19, 1999, warrants to purchase 51,000 shares of the Company's
common stock, par value $0.001, were issued to the placement agent at
an exercise price of $0.255 per share. The shares vest immediately and
can be exercised within seven years from the date of issuance of the
warrants. The fair value of the warrants at the date of issuance was
approximately $2,813 based on the fair value of the placement agent's
services, less cash paid. As of September 30, 2002, the warrants were
still outstanding.
NOTE 3 - ISSUANCE OF COMMON STOCK
On November 5, 2001, the Company issued 55,000 shares of common stock
valued at $1,500 for certain professional services rendered, which were
not related to raising capital.
On August 8, 2000, the Company issued 170,000 shares of common stock
valued at $2,450 under various agreements with several consultants in
return for certain professional services rendered, which were not
related to raising capital.
NOTE 4 - RESTRICTED STOCK
2,170,000 shares of common stock issued to the President and other
stockholders are subject to a Lockup and Registration Rights Agreement.
Under the terms of the agreement, these shares cannot be sold, pledged,
assigned, or otherwise transferred or hypothecated (a) for a period of
six months after the registration of the common stock and merger and
(b) to the extent of 50% of the shares of the Company, for a period of
12 months following the consummation of the merger. An additional
44,853 shares of common stock are restricted securities as defined in
The Securities Act of 1933.
NOTE 5 - EXERCISE OF WARRANTS ISSUED
On June 26, 2000, pursuant to a consulting agreement, warrants to
purchase a total of 150,000 shares of the Company's common stock, par
value $0.001, were issued to various consultants at an exercise price
of $0.01 per share. In September 2000, holders of these warrants
exchanged the warrants for 150,000 shares of common stock, the
consideration for which was the fair value of their services, valued at
$800, and a cash payment of $1,500.
NOTE 6 - RELATED PARTY TRANSACTIONS
The Company utilizes office space of a law firm owned by its
President/Director. The Company does not pay any rent for such office
space. The President/Director also provides certain administrative
services at no charge to the Company.
6
Item 2. Plan of Operation.
Statements contained in this Plan of Operation of this Quarterly Report
on Form 10-QSB include "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933 as amended (the "Securities Act") and
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). Forward-looking statements involve known and unknown risks, uncertainties
and other factors which could cause the actual results of the Company (sometimes
referred to as "we", "us" or the "Company"), performance (financial or
operating) or achievements expressed or implied by such forward-looking
statements not to occur or be realized. Such forward-looking statements
generally are based upon the Company's best estimates of future results, general
merger and acquisition activity in the marketplace, performance or achievement,
current conditions and the most recent results of operations. Forward-looking
statements may be identified by the use of forward-looking terminology such as
"may," "will," "project," "expect," "believe," "estimate," "anticipate,"
"intends," "continue", "potential," "opportunity" or similar terms, variations
of those terms or the negative of those terms or other variations of those terms
or comparable words or expressions. (See the Company's Form 10SB and Annual
report on Form 10-KSB for the fiscal year ended December 31, 2001 for a
description of certain of the known risks and uncertainties of the Company.)
General
Our plan is to seek, investigate, and if such investigation warrants,
consummate a merger or other business combination, purchase of assets or other
strategic transaction (i.e. Merger) with a corporation, partnership, limited
liability company or other business entity (a "Merger Target") desiring the
perceived advantages of becoming a publicly reporting and publicly held
corporation. At this time, we have no binding agreement to enter into a Merger
with any specific business or company. We will not restrict our search to any
specific business, industry, or geographical location, and may participate in
business ventures of virtually any kind or nature. Discussion of proposed plan
of operation and Mergers under this caption and throughout this Annual Report is
purposefully general and is not meant to restrict our virtually unlimited
discretion to search for and enter into potential business opportunities. While
we maintain as low an overhead as possible, we also have minimal capital that
may not be sufficient to satisfy our cash requirements during the next 12
months.
Our auditors have included an explanatory paragraph in their report for
the year ended December 31, 2001, indicating that certain conditions raise
substantial doubt regarding our ability to continue as a going concern. The
financial statements included in this Form 10-QSB do not include any adjustment
to asset values or recorded amounts of liability that might be necessary in the
event we are unable to continue as a going concern. If we are in fact unable to
continue as a going concern, shareholders may lose their entire investment in
our common stock.
We may seek a Merger with an entity which only recently commenced
operations, or a developing company in need of additional funds to expand into
new products or markets or seeking to develop a new product or service, or an
established business which may be experiencing financial or operating
difficulties and needs additional capital which is perceived to be easier to
raise by a public company. Indeed, our most common merger candidates are often
companies that lack the ability to conduct an IPO, or whose business industry is
not well received by the investment banking community. In some instances, a
Merger may involve entering into a transaction with a corporation which does not
need substantial additional cash but which desires to establish a public trading
market for its common stock. We may purchase assets and establish wholly-owned
subsidiaries in various businesses or purchase existing businesses as
subsidiaries.
Selecting a Merger Target will be complex and involve a high degree of
risk. Because of general economic conditions, rapid technological advances being
made in some industries, and shortages of available capital, management believes
that there are numerous entities seeking the benefits of being a publicly-traded
corporation. Many potential Merger Targets are in industries that have
essentially not presented well in the conventional IPO market, regardless of
their financial success, and suffer from low initial valuations. The perceived
benefits of being a publicly traded corporation may include facilitating or
improving the terms on which additional equity financing may be sought,
providing liquidity (subject to restrictions of applicable statutes and
regulations) for the principals of a business, creating a means for providing
incentive stock options or similar benefits to key employees, providing
7
liquidity (subject to restrictions of applicable statutes and regulations) for
all stockholders, and other items. Potential Merger Targets may exist in many
different industries and at various stages of development, all of which will
make the task of comparative investigation and analysis of such Merger Targets
extremely difficult and complex.
We don't have sufficient capital with which to provide the owners of
Merger Targets significant cash or other assets. We believe we can offer owners
of Merger Targets the opportunity to acquire a controlling ownership interest in
a public company at substantially less cost than is required to conduct an
initial public offering. Nevertheless, we have not conducted any specific market
research and we are not aware of statistical data which would support the
perceived benefits of a Merger or acquisition transaction for the owners of a
Merger Target.
We also believe that finding a suitable Merger Target willing to enter
into a Merger with us may depend on the existence of a public trading market for
our Common Stock. There is presently no public trading market for the Company's
Common Stock and there is no assurance that one can be developed.
We will not restrict our search to any specific kind of Merger Target,
and we may merge with an entity which is in its preliminary or development
stage, which is already in operation, or in essentially any stage of its
corporate life. It is impossible to predict at this time the status of any
business in which we may become engaged, in that such business may need to seek
additional capital, may desire to have its shares publicly traded, or may seek
other perceived advantages which we may offer. However, we do not intend to
obtain funds in one or more private placements to finance the operation of any
acquired business opportunity until such time as we have successfully
consummated such a Merger, if ever.
Selection and Evaluation of Merger Targets
Our management, which currently consists of Mr. Prestiano, will have
complete discretion and flexibility in identifying and selecting a prospective
Merger Target. In connection with its evaluation of a prospective Merger Target,
management anticipates that it will conduct a due diligence review which will
encompass, among other things, meeting with incumbent management and inspection
of facilities, as well as a review of financial, legal and other information
which will be made available to us.
Under the Federal securities laws, public companies must furnish
stockholders certain information about significant acquisitions, which
information may require audited financial statements for an acquired company
with respect to one or more fiscal years, depending upon the nature of the
specific acquisition. Likewise, the Merger Target after the merger will be
subject to similar rules. Consequently, we will only be able to effect a Merger
with a prospective Merger Target that has available audited financial statements
or has financial statements which can be audited. If after a Merger the Company
fails to comply with these rules, the stockholders may be adversely affected
because we may not be able to file registration statements or raise capital
until satisfactory audits are obtained.
The time and costs required to select and evaluate a Merger Target
(including conducting a due diligence review) and to structure and consummate
the Merger (including negotiating relevant agreements and preparing requisite
documents for filing pursuant to applicable securities laws and corporation
laws) cannot presently be ascertained with any degree of certainty. Mr.
Prestiano, our current executive officer and sole director intends to devote
only a small portion of his time to our affairs and, accordingly, consummation
of a Merger may require a greater period of time than if our management devoted
his full time to our affairs. We have engaged third party consultants to assist
us in the evaluation and due diligence review of potential Merger Targets. To
date, these third party consultants have been paid only in securities of the
Company, but we may be required to hire new consultants and/or pay such persons
cash or other securities of the Company to carry out our business plan.
We will seek potential Merger Targets from all known sources and
anticipate that various prospective Merger Targets will be brought to our
attention from various non-affiliated sources, including securities
broker-dealers, investment bankers, venture capitalists, bankers, other members
of the financial community and affiliated sources, including, possibly, our
executive officer, director and his affiliates. While we have not yet
ascertained how, if at all, we will advertise and promote our company, we may
elect to publish advertisements in financial or trade publications seeking
potential business acquisitions. Such an advertisement may only be made pursuant
to an exemption under the Securities Act. While we do not presently anticipate
engaging the services of professional firms that specialize in finding business
acquisitions on any formal basis, we may engage such firms in the future, in
which event we may pay a finder's fee or other compensation. In no event,
however, will we pay a finder's fee or commission to our current officer and
director or any entity with which he is affiliated for such service. Moreover,
in no event shall we issue any of our securities to any officer, director or
affiliate of the Company, or any of their respective affiliates or associates,
in connection with activities designed to locate a Merger Target.
8
In analyzing prospective Merger Targets, management may consider, among
other factors, such matters as;
o the available technical, financial and managerial resources;
o working capital and other financial requirements;
o the current Wall Street and other market and analyst's valuations of
similarly situated companies;
o history of operation, if any;
o prospects for the future;
o present and expected competition;
o the quality and experience of management services which may be available
and the depth of that management;
o the potential for further research, development or exploration;
o specific risk factors not now foreseeable but which then may be anticipated
to impact the proposed activities of the company;
o the potential for growth or expansion;
o the potential for profit;
o the perceived public recognition or acceptance of products, services or
trades; and
o name recognition.
Merger opportunities in which we may participate will present certain
risks, many of which cannot be adequately identified prior to selecting a
specific opportunity. Our stockholders must, therefore, depend on management to
identify and evaluate such risks. The investigation of specific Merger
opportunities and the negotiation, drafting and execution of relevant
agreements, disclosure documents and other instruments will require substantial
management time and attention and substantial costs for accountants, attorneys
and others. If a decision is made not to participate in a specific Merger
opportunity the cost therefore incurred in the related investigation would not
be recoverable. To help offset this and minimize expense we have employed
several consultants, who have received stock compensation only, to perform due
diligence and assist us in evaluating Merger Targets. Furthermore, even if an
agreement is reached for the participation in a specific Merger opportunity, the
failure to consummate that transaction may result in our loss of the related
costs incurred.
There can be no assurance that we will find a suitable Merger Target.
If no such Merger Target is found, no return on an investment in our securities
will be realized, and there will not, most likely, be a market for the Company's
stock.
Consultants Retained To Assist In Mergers
In order to assist us in reviewing and evaluating Merger Targets, we
have retained certain consultants. These consultants received only securities of
the Company as compensation and may be reimbursed for certain out of pocket
expenses incurred at our request. We may be required to retain additional
consultants for cash consideration if the need should arise, and we will be
limited, by cash on hand in doing so.
Structuring of a Merger
As a general rule, Federal and state tax laws and regulations have a
significant impact upon the structuring of Mergers. We will evaluate the
possible tax consequences of any prospective Merger and will endeavor to
structure a Merger so as to achieve the most favorable tax treatment to us, the
Merger Target and our respective stockholders. There can be no assurance that
the Internal Revenue Service or relevant state tax authorities will ultimately
assent to our tax treatment of a particular consummated Merger. To the extent
the Internal Revenue Service or any relevant state tax authorities ultimately
prevail in recharacterizing the tax treatment of a Merger, there may be adverse
tax consequences to us, the Merger Target and our respective stockholders. Tax
considerations as well as other relevant factors will be evaluated in
determining the precise structure of a particular Merger.
We may utilize available cash and equity securities in effecting a
Merger. Although we have no commitments as of this date to issue any shares of
Common Stock or options or warrants, except for additional securities that we
will issue for certain professional services, other than those already issued in
the offering of our common stock pursuant to Regulation D promulgated under the
Securities Act of 1933 (the "Private Placement"), we
9
will likely issue a substantial number of additional shares in connection with
the consummation of a Merger, probably in most cases equal to nine or more times
the amount held by our stockholders prior to the Merger. This will leave current
stockholders with approximately 10% or less of the post-Merger company. We also
may decide to issue preferred stock, with rights, voting privileges, liquidation
and dividend preferences that are senior to the Common Stock, in connection with
a Merger or obtaining financing therefore, although we have no present plans to
do so. We may have to effect reverse stock splits prior to or immediately after
any Merger. To the extent that such additional shares are issued, dilution to
the interests of our stockholders will occur. Additionally, in connection with a
Merger, a change in control will occur which may affect, among other things, our
ability to utilize net operating loss carry-forwards, if any.
We may need to borrow funds to effect a Merger. However, our limited
resources and lack of operating history may make it difficult to do so. The
amount and nature of our borrowings will depend on numerous considerations,
including our capital requirements, potential lenders' evaluation of our ability
to meet debt service on borrowings and the then prevailing conditions in the
financial markets, as well as general economic conditions. We have no
arrangements with any bank or financial institution to secure financing and
there can be no assurance that such arrangements if required or otherwise
sought, would be available on terms commercially acceptable or otherwise in our
best interests. Our inability to borrow funds required to effect or facilitate a
Merger, or to provide funds for an additional infusion of capital into a Merger
Target, may have a material adverse effect on our financial condition and future
prospects, including our ability to effect a Merger. To the extent that debt
financing ultimately proves to be available, any borrowings may subject us to
various risks traditionally associated with indebtedness, including the risks of
interest rate fluctuations and insufficiency of cash flow to pay principal and
interest. Furthermore, a Merger Target may have already incurred debt financing
and, therefore, we will assume all the risks inherent thereto.
Merger Target
We are, and may continue to be, subject to intense competition in the
business of seeking a Merger with a Merger Target. Such competition is from
other entities having business strategies similar to ours. Many of these
entities, including venture capital partnerships and corporations, other blind
pool companies, large industrial and financial institutions, small business
investment companies and wealthy individuals, are well-established and have
extensive experience in connection with identifying and effecting Mergers
directly or through affiliates. Many of these competitors possess greater
financial, technical, human and other resources than us and there can be no
assurance that we will have the ability to compete successfully. Our financial
resources will be limited in comparison to those of many of our competitors.
This inherent competitive limitation may compel us to select certain less
attractive Merger prospects. There can be no assurance that such prospects will
permit us to achieve our stated business objectives.
Equipment and Employees
We have no operating business and thus no equipment and no employees
other than our president, who does not receive a salary. We do not expect to
acquire any equipment or employees. We do not intend to develop our own
operating business but instead hope to effect a Merger with a Merger Target.
Expenses for the Nine Months Ended September 30, 2002
Net cash used in operating activities for the nine months ended
September 30, 2002 was $2,818, as compared to $6,093 for the nine months ended
September 30, 2001. The Company did not have other sources or uses of cash
during the nine months ended September 30, 2002. Accordingly cash on hand
decreased by $2,818 for the nine months ended September 30, 2002 to $1,987. The
Company's total liabilities and stockholders' equity as of September 30, 2002
was reduced by $3,526 to $2,188, as compared to total liabilities and
stockholders' equity of $5,714 at the fiscal year end December 31, 2001.
Expenses of approximately $3,377 for the nine months ended September
30, 2002 resulted primarily from accounting/auditing, legal, and general
administrative expenses relating to the Company's annual and periodic public
disclosure and reporting requirements. As discussed above, the Company will
incur substantial expenses, including expenses for professional and other
consulting services, when it seeks to negotiate and enter into a Merger.
10
There can be no assurances that the Company will have sufficient funds
to complete a Merger or to maintain its status as a publicly reporting company.
Additionally, there can be no assurances that the Company will be able to raise
additional funds to complete a Merger or to maintain its status as a publicly
reporting company. In the event that the Company is unable to remain current in
the filing of its periodic reports with the Securities and Exchange Commission
then the perceived value of the Company as a capital market access corporation
will be greatly diminished.
Controls and Procedures under the Sarbanes-Oxley Act of 2002
Within 90 days prior to the date of this quarterly report on Form
10-QSB for the third quarter ended September 30, 2002, the Company's President,
acting as its principal executive officer and principal financial officer,
carried out an evaluation of the effectiveness of the design and operation of
the Company's disclosure controls and procedures pursuant to Rule 13a-14 of the
Securities Exchange Act of 1934. Based upon that evaluation, the President
concluded that the Company's disclosure controls and procedures are effective in
timely alerting him to material information relating to the Company required to
be included in the Company's periodic SEC filings. There were no significant
changes in internal controls or in other factors that could significantly affect
internal controls subsequent to the date of the President's most recent
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit Number Description
- -------------- -----------
4.1 Form of Subscription Supplement, Lock-Up and Registration
Rights Agreement executed by investors in the December 1998
Private Placement. (1)
4.2 Form of Subscription Agreement executed by investors in the
Private Placement. (1)
4.3 Placement Agent's Warrant Agreement between Algiers
Resources, Inc., Balstron Corporation, Daliprint, Inc.,
Hartscup Corporation, Mayall Partners, Inc., PSLRA, Inc.,
Regal Acquisitions Inc., Spacial Corporations, Voyer One,
Inc., Voyer Two, Inc. and CMI, dated as of April 19, 1999
relating to issue of Placement Agent Warrants to purchase
$51,000 Shares of Common Stock. (1)
4.4 Consulting Agreement dated as of June 26, 2000, between
Algiers Resources, Inc., Balstron Corporation, Daliprint,
Inc., Hartscup Corporation, Mayall Partners, Inc., PSLRA,
Inc., Regal Acquisitions Inc., Spacial Corporations, Voyer
One, Inc., Voyer Two, Inc. and CMI (the "Consultant"). (2)
4.5 Form of Warrant Agreement relating to warrants issued to
Consultant. (3)
10.0 Placement Agent Agreement between each of Algiers Resources,
Inc., Balstron Corporation, Daliprint, Inc., Hartscup
Corporation, Mayall Partners, Inc., PSLRA, Inc., Regal
Acquisitions Inc., Spacial Corporations, Voyer One, Inc.,
Voyer Two, Inc. and Tradeway Securities, Inc. as Placement
Agent. (1)
99.1 * Certification of James A. Prestiano
- ------------------------------------
(1) Incorporated by reference from the Company's Form 10-KSB, for fiscal year
ended December 31, 1999.
(2) Incorporated by reference from Exhibit 4.1 to the Company's Registration
Statement on Form S-8 (SEC File No. 333-41916), filed on July 20, 2000.
11
(3) Incorporated by reference from Exhibit 4.2 to the Company's Registration
Statement on Form S-8 (SEC File No. 333-41916), filed on July 20, 2000.
* Filed Herewith.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended September 30,
2002.
12
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
DALIPRINT, INC.
Date: November 13, 2002 By /s/ James A. Prestiano
--------------------------------
James A. Prestiano, President,
Secretary and Chief Financial
Officer
13