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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
Pursuant to Section 12(b) or (g) of the Securities Exchange
Act of 1934
DELTA CAPITAL TECHNOLOGIES, INC.
(Name of Small Business Issuer in its Charter)
Delaware, USA 98-0187705
(State of Other jurisdiction of (IRS Employer ID No.)
incorporation or organization)
SUITE 255, 999 - 8TH STREET, SW
CALGARY, ALBERTA T2R 1J5 CANADA
(Address of Principal Executive Offices)
(403) 244-7300
(Issuer's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(g) of the Act:
Title of Each Class Name of each exchange on which registered
Common Shares N/A
Securities registered pursuant to Section 12(g) of the Act: Common Shares with a
par value of $0.001
Exhibit index is included on page 24 .
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2
FORM 10-SB
For the Fiscal Year Ended December 31, 1998
And Period Ended July 31, 1999
TABLE OF CONTENTS
ITEM 1 - DESCRIPTION OF BUSINESS
Summary..............................................................................4
The Company's Market.................................................................5
The Company's Products...............................................................6
The Company's Marketing Program......................................................7
The Company's Competition............................................................8
Employees............................................................................9
Risk Factors.........................................................................9
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION.....................................................12
ITEM 3 - DESCRIPTION OF PROPERTY.......................................................14
ITEM4 - SECURITY OWNERSHIP OF CERTAIN BENEFICAL OWNERS
AND MANAGEMENT
Security Ownership of Certain Beneficial Owners......................................14
ITEM 5 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS...................................................15
ITEM 6 - EXECUTIVE COMPENSATION........................................................16
Pension Plans........................................................................17
Compensation of Directors............................................................17
Executive Compensation...............................................................17
Option Grants in Last Fiscal Year....................................................17
ITEM 7 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................................18
ITEM 8 - DESCRIPTION OF SECURITIES
Common Stock.........................................................................18
Transfer Agent and Registrar.........................................................18
PART II
ITEM 1 - MARKET PLACE AND DIVIDENDS OF THE COMPANY'S
COMMON EQUITY AND OTHER SHAREHOLDER MATTERS
Market Information...................................................................19
Dividend Policy......................................................................19
Options Exercised....................................................................19
Warrants Exercised...................................................................20
ITEM 2 - LEGAL PROCEEDINGS.............................................................20
ITEM 3 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE...................................20
ITEM 4 - RECENT SALES OF UNREGISTERED SECURITIES.......................................20
ITEM 5 - INDEMNIFICATION OF DIRECTORS AND OFFICERS.....................................21
3
FINANCIAL STATEMENTS...................................................................22
EXHIBITS...............................................................................22
SIGNATURES.............................................................................23
4
PART I
ITEM 1 - DESCRIPTION OF BUSINESS
SUMMARY
DELTA CAPITAL TECHNOLOGIES, INC. ("Delta" or the "Company") was incorporated
under the laws of Delaware on March 4, 1998. The Company originally had
authorized share capital of 1,500 common shares with a par value of $0.001,
however, on April 27, 1998 the Company filed an amendment to its Certificate of
Incorporation increasing its share capital to 25,000,000 common shares with a
par value of $0.001 per share. On March 15, 1999 the Company underwent a one for
four stock split bringing the total number of shares issued and outstanding from
2,200,000 to 8,800,000 shares issued and outstanding. As at October 13, 1999
there were 14,100,000 common shares of the Company issued and outstanding. The
Company's principal business office and registered and records office is at
Suite 255, 999 - 8th St. SW Calgary, AB T2R 1J5 Canada.
The Company is in the business of providing e-Business software and support
services.
Between March 4, 1998 and June 1, 1999 the Company's focus was directed towards
assessing various potential acquisition targets consisting of companies involved
in the development of businesses and technologies in the Internet related field.
During that period the Company spent minimal funds conducting its assessment of
various businesses and the funds required for administration of the Company
during fiscal years ended December 31, 1998 and subsequent months came from
funds raised from initial investors.
On June 1, 1999 the Company acquired the rights to an exclusive worldwide
license to the relBuilder Enterprise Suite of business intelligent e-Commerce
and e-Business software (the "Software") from 827109 Alberta Ltd. ("AltaCo"), an
Alberta, Canada based private company pursuant to a License Agreement dated June
1, 1999 between the Company and AltaCo, as amended by a Letter Agreement dated
September 2, 1999 (the "License Agreement"). The License Agreement allows the
Company to distribute licenses for the Software through sub-licenses. The
Company is responsible for the funding, the creation and management of a
distribution network for the Software, the ongoing development of the Software
and any future products or services it acquires. The License Agreement ,
requires the Company to pay to AltaCo a non-refundable lump sum license fee of
$50,000 by November 1, 1999, $45,800 of which has already been paid by the
Company. The Software application includes modules for e-Commerce, e-Project
Management, e-Customer Services, e-Document Assembly, e-Contact Management,
e-Business Intelligence and e-Back office and a Core Technology which models
business rules and relationships. Under the License Agreement, the Company is
required to pay a royalty payment of 15% of net sales with minimum amounts of
C$50,000 in the first year, C$200,000 in the second year, and C$300,000 in the
third year (the "Royalty Payments"). The term of the License Agreement is for
three years commencing June 1, 1999 and upon expiration of the term, the Company
may renew the License Agreement for an unlimited term for the sum of one ($1.00)
dollar.
5
AltaCo acquired its rights to the Software from SiCom Solutions Inc., an
Alberta, Canada based private company ("SiCom") on identical terms to the
License Agreement.
Pursuant to an agreement dated June 1, 1999 between the Company and AltaCo (the
"Share Exchange Agreement") the Company agreed to issue to AltaCo 5,000,000
shares of the Company in exchange for 5,000,000 shares of AltaCo. The Company
has attributed a value of Cdn$0.50 per share for the 5,000,000 shares issued to
AltaCo, based on the attributed value of $0.50 per share for each of the
5,000,000 AltaCo shares acquired. The exchange of the shares was completed on
September 9, 1999. As a result of the shares of AltaCo issued to the Company
pursuant to the Share Exchange Agreement, the Company became the second largest
single shareholder of AltaCo holding 35.71% of the issued and outstanding shares
of AltaCo. The Company's significant shareholdings in AltaCo provides it with
the ability to have a significant influence on the operations of AltaCo. The
Company has adopted a policy whereby directors are required to disclose any
interest they have in proposed transactions or in entities with which the
Company is proposing to do business and for such directors to abstain from
voting on any directors' resolutions approving the proposed transactions. In
addition the general principals of corporate law require a director to act in
the best interests of the shareholders of the company on whose board the
director sits.
Paul Davis, the President , CEO and Director of the Company, AltaCo and SiCom
personally owns 48.21% of the issued and outstanding shares of AltaCo. Kevin
Wong, a Director of the Company and Vice President Technology and Director of
AltaCo, personally owns 16.07% of the issued and outstanding shares of AltaCo.
Rajesh Taneja is a Director of the Company and Vice President Marketing and
Director of AltaCo.
Pursuant to an agreement dated July, 1999 between the Company and Rajesh Taneja,
the Company agreed to issue 300,000 common shares to Mr. Taneja in lieu of
payment in the amount of $3,000 for Mr. Taneja's rights and ownership to the
British Columbia sole proprietorship company names "Clear Choice Media" and
"Clear Choice Technologies". The Company acquired the rights to the names
because management felt that the names would be valuable for future marketing of
software.
AltaCo will continue to develop the Software on a fair market, fee for services
basis, under direction from the Company. Similarly, AltaCo will provide support
services to the Company to ensure effective implementation of software at the
Company's client sites. The Company will pay AltaCo fees based on industry
average rates for the services it is provided. To date, the Company has relied
on research development of the Software previously funded by SiCom and has not
provided AltaCo with additional funding for the further research and development
of the Software. Accordingly, none of the costs associated with research and
development of the Software have been borne by the Company's customers.
THE COMPANY'S MARKET
The Company's acquisition of the rights to market the Software gives the Company
access to a large and rapidly growing software/services market segment as
businesses convert more of their sales, management and information processes to
utilize the Internet. The Software is aimed at serving the needs of these
businesses by providing appropriate software. The Company provides support
services through its relationship with AltaCo support services.
6
THE COMPANY'S PRODUCTS
The Software consists of a software engine (the relBuilder) which is the core
technology for a suite of six enterprise-class applications which permit
companies and organizations to engage in e-Business. These applications are
fully developed and are currently marketed as product release number 1.5.
The Software applications are as follows:
1. ENTERPRISE COMMERCE APPLICATION: The Company's Enterprise e-Commerce
Application provides merchants with the ability to implement cross
selling, up selling, product dependencies, product interactions,
comparative shopping, competitive shopping, and consumer shopping
assistance wizards. Using this application, merchants and organizations
have the ability to apply the technology to the on-line and in-store
presentation of product information that begins the customer
relationship. This technology can operate on a standalone basis or can
enhance other e-Commerce solutions.
2. BACK OFFICE APPLICATION: The Back Office Application integrates
existing general ledger, accounts receivable and payable, inventory,
warehouse and other related back office functions with the Core
Technology utilizing IBM's new "San Francisco" software architecture.
3. ENTERPRISE DOCUMENT ASSEMBLY APPLICATION: The Document Assembly
Application is a content manager and document assembly tool that
maximizes re-use of corporate information by bringing together data
that is usually scattered across company-wide systems. The assembly of
data can be used for everything from contract building, to information
portal construction and management, to dynamic document creation and
presentation.
4. ENTERPRISE PROJECT MANAGEMENT APPLICATION: The Project Management
Application is equipped to handle cross-project resource analysis,
cross-project roll-ups of complex costing and estimating functions and
integrates with leading GroupWare (such as Microsoft Exchange or Lotus
Notes) to provide project-based calendaring and scheduling. The Project
Management Application provides a real-time graphical presentation of
underlying data, and the user interface changes to intelligently
reflect additions or deletions in the data.
5. ENTERPRISE CUSTOMER SERVICE APPLICATION: The Customer Service
Application has the ability to map complex call requirements, implement
sophisticated operational logic and can integrate with a web server to
allow for web-based customer self-service or call center operations
from within the office environment to across the globe.
6. ENTERPRISE CONTACT MANAGEMENT APPLICATION: The Contact Management
Application integrates with leading directory servers (such as
Microsoft Exchange and Lotus Notes) to enable highly complex mapping of
names, addresses, companies, contact information, corporate
hierarchies, active and non-active projects, and histories.
7
THE COMPANY'S MARKETING PROGRAM
PARTNER PROGRAM: The Company has commenced building a network of e-Commerce and
e-Business knowledgeable consultants and solutions providers throughout North
America. The Company is providing a products and services package directed
toward established consultants (ie. "partners") who in turn integrate the
Company's Software into software provided by the consultants to provide their
clients with various forms of Internet-related business, technical or marketing
assistance. This program has both a strategic geographic and a vertical market
focus. The Company plans to penetrate the top 23 American and Canadian markets
through its Partner Program over the course of the next 18 months with its first
target markets being Seattle and Vancouver. The Company is currently pursuing
vertical markets in Education, Oil and Gas, and Manufacturing.
The Company has currently developed two partners in the consulting field for its
Partnership Program (Khyber Pass Distributing, an entertainment consulting
company; and Matradyne Corporation, a marketing business consultancy) which have
entered into agreements with the Company to re-market the Company's Software and
implement it for e-Commerce or e-Business purposes with their clients. Based
partly on experience gained from these relationships and partly from norms
established by standard industry remarketing practices, the Company is planning
its first quarter Year 2000 rollout of software and services.
The Partnership Program also includes development of relationships with internet
service providers ("ISP") to provide them with the tools and capabilities to
enable their clients to do business over the Internet. To that effect, the
Company recently entered into its first such sub-licensing agreement with
Imaginet Communication Group Inc., a company which offers Internet access and
web hosting services in Canada and the USA through its rapidly growing Imaginet
ISP Franchise Network.
STRATEGIC ALLIANCES
In addition to its Partner Program the Company has developed and will continue
to develop strategic alliances with various entities. Typically the strategic
alliances result in the Company marketing another company's products or the
Company utilizing other companies' software products within the company's
products which facilitates a sharing of its information and an exchange of ideas
between the parties.
The Company has a strategic alliance with BCE-Emergis, Montreal, to remarket
various credit card clearing services. It also has an agreement with Smart
Technologies Inc., Calgary, to include that company's "Smart Ideas" concept
mapping tools as a part of the standard user interface options of its relBuilder
software. As the Company's business develops, it is anticipated that it will
utilize the services and product offerings of industry leaders in enhancing the
Company's product/service offering while at the same time encouraging use of the
relBuilder core technology and software suite. These future alliances will be
contracted-based agreements aimed at enhancing the Company's position in the
marketplace by leveraging the knowledge, expertise and sales networks of the
parties with whom it forms alliances to the mutual benefit of both.
8
CORE TECHNOLOGY PROGRAM: The Company will seek affiliations with major
e-Commerce and e-Business organizations to market its relBuilder core
technology. Exposure of the Company's core technology began with the company's
IBM "San Francisco" technology Fast Start award and participation in the June
1999 Java One conference. It has continued with the Company's technical team,
assisted by IBM Rochester, Maryland based San Francisco and porting centre
teams, successfully completing enterprise scalability testing of the relBuilder
software suite.
DEPENDENCY: The Company is not dependent upon any single partner, strategic
alliance or client. The Company's "Partner Program" has three companies involved
(Imaginet Communication Group Inc.; Khyber Pass Distribution; and Matradyne
Corporation).; the Company has two companies with which it has strategic
alliances (BCE Emergis and Smart Technologies Inc.) and it is seeking to develop
core technology affiliations. Delta also currently works directly with a further
six client/customer companies which use the Company's software and services
offering: Shaw Communications Inc., a cable company; Fairplay Network, a retail
organization; Chevron Canada Resources, an oil company; Oil & Gas Trading
Partners Network, an oil and gas industry information initiative; Rand Worldwide
Inc., an integrated manufacturing company and the I-School Network, an
interactive education network system based in Calgary, Alberta. The Company has
not entered into any formal affiliations to market its core technology as of
this filing.
THE COMPANY'S COMPETITION
The Company's software and services offering crosses over many business
boundaries and encounters a variety of competitors which serve various segments
of the marketplace. There is no known direct competitor with both an intelligent
e-Business engine technology and a suite of fully integrated e-business
applications. The Company's management believes that its proprietary relBuilder
software engine combined with its six enterprise-class applications provide it
with the capability and flexibility to effectively exploit selected target
markets as discussed in the marketing section. Alternatively, the Company can
work with established marketplace players to enhance their software and services
offerings through sub-licensing its relBuilder core technology, also as
discussed in the marketing section.
The Software named "Knowledge Broker" from Black Pearl Software uses
relationship modeling and classic analytical business intelligence to indicate
trends and opportunities in a manner similar to those functions as found in the
Company's relBuilder software suite. While Knowledge Broker has much in common
with the Company's products, but Knowledge Broker does not have e-business
modules which match the Company's six enterprise-class applications.
There are many large companies and organizations which provide competition in
the provision of software competitive to the Company's six enterprise-class
applications. IBM is a major and active e-Business force under its WebSphere
e-Business Solutions banner. Microforum Inc. (TSE:MCF), Scient Corporation
(NASD:SCNT), Razorfish Inc. (NASD:RAZF), Proxicom Inc. (NASD:PXCM) and a variety
of middle market companies provide software solutions combined with consulting
services and, as such, are competitors in various segments of the market.
Specialist companies, led by Blue Martini Software, have developed e-Commerce
and e-Catalogue implementations to produce sophisticated Internet-based
merchandizing and sales programs.
9
EMPLOYEES
The Company currently has two full time employees who are each paid $3,000 per
month plus expenses pursuant to verbal agreements entered into with the Company
that commenced on June 15, 1999. The Company also currently has two part time
individuals under contracts pursuant to which one individual receives Cdn $2,500
per month pursuant to a contract which commenced June 15, 1999 and the other
individual receives Cdn $7,500 a month pursuant to a contract which commenced
July 15, 1999. The Cdn $2,500 part time employee spends 50% of her time on
Company administration and the balance of her time providing administrative
services to non-competitive clients through her wholly owned company called
J.A.M. Corporate Consulting Inc. The Cdn $7,500 individual spends 75% of his
time on Company business and the balance consulting to non-competitive
companies.
RISK FACTORS
The Company's business is subject to numerous risks, including the following:
LIMITED OPERATING HISTORY AND MINIMAL REVENUE AND ASSETS MAY RESULT IN LOSSES
AND DIFFICULTY IN OBTAINING FINANCING: The Company has had limited operating
history, has received minimal revenue from operations and has minimal assets.
The Company will, in all likelihood, sustain operating expenses in excess of
revenues until it is better established and will therefore require additional
funding to continue operations and to have sufficient working capital to sustain
operations. Because the Company has minimal assets it may be difficult or even
impossible for the Company to obtain debt financing at this stage in the
Company's development. No assurances can be given that the Company will operate
profitably in the future or that it will be able to obtain further financing.
WITHOUT FURTHER FINANCING THE COMPANY MAY CEASE TO BE A GOING CONCERN. The
Company will need additional working capital to be successful in its planned
activity and continuation of the Company as a going concern is dependent upon
obtaining the working capital necessary and Management of the Company has
developed a strategy, which it believes will accomplish this objective through
additional equity funding, and long term financing, which will enable the
Company to operate in the future. Although Management believes it will be able
to obtain such funding for the Company there is no assurance they will be
successful in order to keep the Company operating as a going concern.
NEW AND DEVELOPING TECHNOLOGIES/MARKET CONDITIONS MAY RESULT IN PROJECTIONS NOT
BEING ACHIEVED: The e-Commerce/e-Business marketplaces, along with vertical
applications, have been identified by Management as significant emerging market
segments with substantial projected growth potential. Should these market
segments not develop in the manner expected, or should they fail to develop as
quickly as anticipated, the Company's business, sales, finances and operating
results could be materially and adversely affected resulting in the Company
being less profitable than anticipated.
STRATEGIC PARTNERS MAY NOT PRODUCE ANTICIPATED SALES: The revenues of the
Company pertaining to product sales, are dependent to a large degree on the
ability of its strategic partners to generate transaction volumes and provide
new markets for products of the Company. The Company generates sales by
supplying strategic partners with products and
10
services that the partners market to their customers. If the Company's strategic
partners are unsuccessful in their businesses or if a substantial number of the
Company's strategic partners cease doing business with the Company, the Company
will sell fewer products and services to strategic partners and the Company's
revenue will be impacted negatively.
DEPENDENCE UPON KEY PERSONNEL: Success of the Company depends to a significant
degree upon the continued contribution of its Management. Current Management
have been involved in the development of the Software from the first stages of
its development and their intimate knowledge of the Software together with their
vision of how the Software should be developed in the future makes this
Company's future success highly dependant on current Management. Because the
computer software industry exists in a rapidly changing environment it is
important for key personnel to have a historic appreciation of the evolution of
a given piece of software in the context of a provider's corporate strategy.
Management believes that customers of the Company's products are based on
existing capabilities, but also purchase products based on their belief that the
Company has the personnel that is capable of upgrading and causing the Software
to be further developed in the future. Loss of current personnel may result in
customers losing confidence in the Company's future capability to deliver
competitive Software in the future. At present the Company has no key-man life
insurance on its key personnel. Further, at present, the Company does not have
written employment contracts with its key personnel and accordingly the Company
would not be able to contractually prevent a member of key personnel from
leaving the Company. Although the Company does not believe that any of its key
personnel are considering retirement or planning on leaving the Company for
other reasons, there is no assurance that one or more of the key personnel won't
leave the Company in the near future.
LACK OF EXPERIENCE OF MANAGEMENT COULD LESSEN PROFITABILITY: Management of the
Company has only limited business experience in running an operating company and
Management has no experience in operating a public company. In implementing a
successful marketing plan for the Company's services, management lacks
experience which could result in the Company being less efficient with its use
of funds than if Management had more experience. Additional management skills
and knowledge will be required to operate the Company's business profitably if
sales volumes and revenues increase, and the number of employees increase.
Although Management intends on acquiring more experienced personnel in the
future as the Company grows, until more experienced personnel are hired the
Company may be less profitable.
RISK OF OBSOLESCENCE: Unless the Company can continue to successfully develop
and upgrade the Software over time, the Software may become obsolete compared
with other software which is introduced to the market place, Because software
evolves rapidly it is important for producers to be constantly refining and
upgrading their software products to remain competitive. Although Management
believes that the Company's personnel have the required talent to cause the
Software to remain competitive, there is no assurance that the Software will not
become obsolete.
COMPETITION MAY RESULT IN LOWER MARKET SHARE AND LOWER PROFITABILITY: The market
for e-commerce is intensely competitive, evolving and subject to rapid
technological change. Intensity of competition is likely to increase in the
future. Increased competition from new competitors is likely to result in loss
of market share, which could negatively impact the Company's business.
Competitors vary in size, and in scope and breadth of the products and
11
services offered and the Company may receive competition from several major
enterprise software developers. In addition, because there are relatively low
barriers to entry in this market, additional competition from other established
and emerging companies may develop.
Many current and potential competitors have longer operating histories,
significantly greater financial, technical, marketing and other resources than
the Company, significantly greater name recognition, and a larger base of
customers. In addition, many of the competitors have well-established
relationships with clients and potential clients, and have extensive knowledge
of the industry. Current and potential competitors have established or may
establish cooperative relationships among themselves or with third parties to
increase the ability of their products to address customer needs. Accordingly,
it is possible that new competitors, or alliances among competitors, may emerge
and rapidly acquire significant market share which may result in lower sales of
the Software resulting in the Company being less profitable.
GROWTH AND EXPANSION MAY TAX THE COMPANY'S RESOURCES RESULTING IN CUSTOMER
DISSATISFACTION: The Company's anticipated growth may place a significant strain
on the Company's administrative, operational and financial resources and
increase demands on its systems and controls. As the Company increases its
service offerings and expands its targeted markets, there will be additional
demands on the Company's customer support, sales and marketing and
administrative resources and network infrastructure. There can be no assurance
that the Company's operating and financial control systems and infrastructure
will be adequate to maintain and effectively monitor future growth. The failure
to continue to upgrade the administrative, operating and financial control
systems or the emergence of unexpected expansion difficulties could result in
customer dissatisfaction with attendant loss of sales.
COMPANY'S STOCK DEEMED TO BE A PENNY STOCK WHICH MAY RESULT IN DECREASED
LIQUIDITY: The Securities and Exchange Commission adopted Rule 15g-9 which
established the definition of a "penny stock", for purposes relevant to the
Company, as any equity security that has a market price of less than $5.00 per
share or with an exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt the rules
require: (i) that a broker or dealer approve a person's account for transactions
in penny stocks; and (ii) the broker or dealer receive from the investor a
written agreement to the transaction, setting forth the identity and quantity of
the penny stock to be purchased. In order to approve a person's account for
transactions in penny stocks, the broker or dealer must: (i) obtain financial
information and investment experience and objectives of the person; and (ii)
make a reasonable determination that the transaction in penny stocks are
suitable for that person and that person had sufficient knowledge and experience
in financial matters to be capable of evaluating the risks of transactions in
penny stocks. The broker or dealer must also deliver, prior to any transaction
in a penny stock, a disclosure schedule prepared by the Commission relating to
the penny stock market, which, in highlight form, (i) sets forth the basis on
which the broker or dealer made the suitability determination; and (ii) that the
broker or dealer received a signed, written agreement from the investor prior to
the transaction. Disclosure also has to be made about the risks of investing in
penny stock in both public offering and in secondary trading, and about
commissions payable to both the broker-dealer and the registered representative,
current quotations for the securities and the rights and remedies available to
an investor in cases of fraud in penny stock transactions. Finally, monthly
statements have to be sent disclosing recent price information for the penny
stock held in the account and information on the limited market in penny stocks.
As a result of the penny stock trading restrictions brokers or potential
investors may be
12
reluctant to trade in the Company's securities which may result in less
liquidity for the Company's stock.
YEAR 2000 RISK: The Company's internally used computers and products produced or
licensed by the Company are "Y2K" compliant and do not represent a risk for
users. To the extent that the Company may be exposed to possible year 2000
failures of its trading partners, the Company's staff and the staff of AltaCo
have been educated on the Year 2000 problem and an inquiry program as to the
readiness of trading partners has been initiated. Although the Company has used
its best efforts to ensure that any contracted technology deliverables to the
Company are "Y2K" compliant, the Company cannot be sure that all outside
organizations beyond its control which impact or may impact the Company's
business, will be Y2K compliant by December 31, 1999.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
Management discussion and analysis of financial condition and results of
operations for the period ended July 31, 1998 compared to the period ended July
31, 1999.
Delta Capital Technologies Inc. ("Delta or the Company") is at an early stage.
It has successfully achieved its first objective: the acquisition of Internet
technologies and is now developing plans to take these technologies to market.
It plans to commence significant marketing activities in the first quarter of
2000. During the period under review, Delta's modest expenditures have been made
in support of finding appropriate Internet technologies and, as well, for audit,
income tax returns and meeting various regulatory requirements. Substantially
all cash required for operations has come from investors.
On June 1, 1999, Delta acquired the exclusive worldwide license to the
relBuilder Enterprise Suite of intelligent e-Commerce and e-Business software
from 827109 Alberta Ltd. (AltaCo), an Alberta, Canada-based private company.
Under the agreement, Delta will pay AltaCo fifteen percent (15%) royalty
payments in the minimum amount of C$100,000 in the first year, C$200,000 in the
second year and C$300,000 in the third year.
The software may be sub-licensed under terms of the agreement.
The Company's marketing program involves the development of a variety of
different types of relationships with the entities with which the Company does
business as follows:
1. the Partner Program which involves the Company providing products and
services to establish customers (ie. "partners") who in turn integrate
the Company's Software with other software and provide their clients
with various forms of Internet-related business, technical or marketing
assistance. The Company currently has three partners who perform this
function: Khyber Pass Distributing, an entertainment consulting
company; Metradyne Corporation, a marketing business consultancy; and
Imaginet Communications Group Inc., an Internet services provider;
2. strategic alliances which typically involves the Company marketing
another company's products or the Company utilizing other companies'
software products within the Company's product. The Company currently
has strategic alliances with BCE Emergis of Montreal and Smart
Technologies Inc. of Calgary;
13
3. core technology affiliations pursuant to which the Company will seek to
establish relationships with major e-Commerce and e-Business
organizations to market its core Software technology. The Company is
currently working towards establishing core technology affiliations
with IBM but as of the date of this filing has not established a formal
relationship;
4. relationships which result in clients/customers utilizing the Software.
The Company currently works directly with six companies which use the
Company's Software and services (Shaw Communications Inc., Fairplay
Network, Chevron Canada Resources, Oil and Gas Trading Partners
Network, Rand Worldwide Inc. and I-School Network.
A) Plan of Operation:
a) The Company anticipates modest revenues over the next 12
months and anticipates continuing losses from operations as
it introduces its relBuilder software and services offering
to the marketplace. Based on the current costs associated
with operating the Company, Delta will require US$240,000
financing through the end of 1999. Delta plans to raise
additional funds during the next 12 months in the amount of
approximately US$2.5 million through equity financing,
participation in a major industry software/hardware company's
support program and debt financing to finance its operations.
It is management's view that virtually all businesses in
future will have e-Commerce/e-Business requirements and that
the nature and conduct of business in general will be
fundamentally changed. In a marketplace where the demand for
Internet software and services is growing rapidly, a trend
which is expected to continue for the foreseeable future,
Delta's goal is to spend the next 12 months establishing its
distribution and sales channels, negotiating its partnership
arrangements and working to gain strategic partners to
utilize Delta's core technology relBuilder software. Delta
management anticipates positive cash flow in the fourth
quarter of its upcoming fiscal year.
b) Delta will perform market research in the next 12 months help
gauge marketplace acceptance of its software and services.
Delta will not undertake any product development in the
coming 12 months. However, AltaCo will continue development
of the relBuilder software suite. Delta will purchase from
AtlaCo, services at fair market rates to ensure continued
development of software and provision of support services.
Delta will purchase from AtlaCo, services at fair market
rates to ensure continued development of software and
provision of support services. Delta will be AltaCo's single
largest client and, as such, Delta's purchase of services
from AltaCo will represent substantially all its business. It
is Delta's intention, as described above, to utilize the
services of AltaCo's nine employees for the continued
development of software and for support services functions.
Delta will also re-license back to AltaCo certain of its
rights under Delta's worldwide license to permit AltaCo to
undertake marketing initiatives in certain Canadian markets
and market segments as seems appropriate to Delta.
Specifically, Delta will encourage AltaCo to market the
relBuilder software in the Alberta, Canada, marketplace,
where AltaCo is based and to work with certain industries and
organizations, as yet undefined, where it is felt that AltaCo
is better positioned to service marketplace needs and
requirements.
14
c) Delta management does not anticipate any material plant or
equipment purchases in the next 12 months.
d) Delta management anticipates that it will add approximately
10 employees in the coming year, including personnel with
specialized technology financial experience as well as
specific industry sales experience.
e) Although management does not anticipate Y2K problems,
management does recognize that there are risks associated
with dealing with other parties who may not be Y2K compliant.
ITEM 3 - DESCRIPTION OF PROPERTY
The Company does not own any properties but utilizes, without charge and under a
verbal agreement, premises leased by AltaCo which consist of approximately 2,537
square feet on the second floor of an office building situated at 999 - 8th
Street, S.W., Calgary, Alberta. The Company will give consideration to acquiring
its own leased premises in the future if warranted but as of this date the
Company has not acquired leased premises and there are no specific plans to do
so.
ITEM 4 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of October 13, 1999 information with respect
to the beneficial ownership by each person who is known to the Company to be the
beneficial owner of more than 5% of the Company's common shares, by each
director and executive officer and by all executive officers and directors as a
group. All persons named below have sole voting and investment power over their
shares except as otherwise noted. The Company's common stock is the only class
of voting securities outstanding.
----------------------------------------------- -------------------------- ---------------------------------
NAME, MUNICIPALITY OF RESIDENCE AND OFFICE COMMON SHARES PERCENTAGE OF
HELD BENEFICIALLY OWNED COMMON SHARES
DIRECTLY OR INDIRECTLY
----------------------------------------------- -------------------------- ---------------------------------
Paul Davis(1) 5,000,000 35.71%
8 Stratton Place SW
Calgary, Alberta T3H 1T6
President and Director
----------------------------------------------- -------------------------- ---------------------------------
Kevin Wong(2) 803,571 5.74 %
341 - 33rd Avenue NE
Calgary, Alberta T2E 2H9
Director
----------------------------------------------- -------------------------- ---------------------------------
Rajesh Taneja 300,000 2.14 %
#104, 10668 - 138th Street
Surrey, BC V3T 4K5
Director
----------------------------------------------- -------------------------- ---------------------------------
15
----------------------------------------------- -------------------------- ---------------------------------
Judith Miller(3) 246,000 1.76 %
B201 - 1331 Homer Street
Vancouver, BC V6B 5M5
Secretary/Treasurer and Director
----------------------------------------------- -------------------------- ---------------------------------
T. Davis Capital Corp. 800,000 5.71%
5167 Galway Drive
Delta, BC V4M 2R4
----------------------------------------------- -------------------------- ---------------------------------
All Officers and Directors as a Group 7,149,571 51.06 %
----------------------------------------------- -------------------------- ---------------------------------
(1) Mr. Davis owns 6,750,000 shares of the 14,100,000 issued shares of AltaCo
and the shares identified represent his beneficial ownership of the
5,000,000 Delta shares issued to AltaCo.
(2) Mr. Wong owns 2,250,000 shares of the 14,100,000 issued shares of AltaCo
and the shares identified represent his beneficial ownership of the
5,000,000 Delta shares issued to AltaCo.
(3) Included in this figure are stock options entitling Ms. Miller to purchase
200,000 shares of the Company exercisable at US$0.0075 per share. The
option expires December 31, 1999.
The 5,000,000 shares issued to AltaCo, the 800,000 shares issued to T. Davis
Capital Corp. and the 300,000 shares issued to Rajesh Taneja are subject to
Federal Securities Laws Rule 144, and thus have restrictions on their resale for
a minimum of one year from the date of issuance. At that point they may be
subject to even further restrictions based on the regulations and requirements
set forth in Rule 144.
ITEM 5 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following table identifies the Company's directors and executive officers as
of October 13, 1999:
--------------------------- ----------- ---------------------------------------------------------------------
Name Age Position
--------------------------- ----------- ---------------------------------------------------------------------
Paul Davis 48 President, CEO and Director since June 4, 1999
--------------------------- ----------- ---------------------------------------------------------------------
Kevin Wong 26 Director since June 4, 1999
--------------------------- ----------- ---------------------------------------------------------------------
Rajesh Taneja 29 Director since June 4, 1999
--------------------------- ----------- ---------------------------------------------------------------------
Judith Miller 59 Corporate Secretary and Director since April 28, 1998
--------------------------- ----------- ---------------------------------------------------------------------
Directors are elected at the Company's annual general meeting of shareholders or
may be appointed by existing directors between annual general meetings of
shareholders and hold office until they resign or their successors are elected.
The Company's officers are appointed by the board of directors and serve at the
pleasure of the board. Following is a summary of the occupation of the Directors
and Executive Officers of the Company over the last five years:
16
PAUL DAVIS, President, CEO and Director of the Company founded, in October,
1996, SiCom Solutions Inc. which developed the Software. Since SiCom's inception
Mr. Davis has been responsible for developing SiCom's business model,
integration strategy, partnership and financing. In the period 1994 to October,
1996 Mr. Davis was President and CEO of HPCC High Performance Computing Centre
("HPCC"), a Calgary, Alberta based private company. During this employment with
HPCC Mr. Davis' responsibility was to develop high performance computing and
advanced applications associated with high-speed networking. In 1994 Mr. Davis
received his Bachelor of Applied Science, Electrical Engineering with a
specialty in computing technology and power engineering.
RAJESH TANEJA, Director of the Company, has, over the last five years, provided
technical and sales support to a variety of companies involved in the computer
software industry or to companies utilizing products provided by the computer
software industry. Mr. Taneja founded Clear Choice Media in 1998 and has served
as its Chief Executive Officer since its inception. He has served as President
and senior web designer for Clear Choice Technologies since 1997 and served as
senior inter/intranet engineer for Metasoft Systems Inc. from 1997 to 1999. Mr.
Taneja provided technical support to Raptor Capital Corporation from 1997 to
1999; served as technical manager of Cross Systems Inc. from 1996 to 1997 and
was technical and sales manager of the Trumpet Tech Group of Companies Inc. in
1996. Mr. Taneja was President of Tin Webdesigner and New Media from 1995 to
1999 and from 1994 to 1995 he held the position of Senior Network Implementation
and Support Staff with Combit Net/FX, a company which provided networking and
software implementation to a variety of clients including the Government of
India.
KEVIN WONG, Director of the Company, has been Vice President and Director of
SiCom Solutions Inc. since 1997 where he developed the technical information and
inception model for the Software. In the 4 years prior to April, 1997, Mr. Wong
attended University during which time he obtained a law degree from the
University of Windsor, Ontario.
JUDY MILLER, Secretary and Director of the Company, has been President and
Director of J.A.M. Corporate Consultants Inc. ("JAM") since March 1994. JAM,
which is wholly owned by Ms. Miller, is a private company incorporated pursuant
to the laws of British Columbia, provides a variety of services including office
management and administration, meeting and special event planning, office
redesign/relocation, and fund raising. Ms. Miller is the sole employee of JAM
and accordingly is responsible for providing JAM's services.
The above individuals are the only key personnel presently associated with the
Company.
ITEM 6 - EXECUTIVE COMPENSATION
The following compensation information relates to amounts paid to the Chief
Executive Officer for the preceding three (3) years. No director or executive
officer received compensation in excess of $100,000 in 1998.
- ------------------------ ---------------------------- -------------------------------------------------- -----------
ANNUAL COMPENSATION LONG TERM COMPENSATION
--------------------------------------- ---------- -----------
AWARDS PAYOUTS
OTHER SECURITIES RESTRICTED
ANNUAL UNDER SHARES OR LTIP ALL OTHER
NAME AND PRINCIPAL YEAR COMPEN- OPTIONS RESTRICTED PAY-OUTS COMPENSATION
POSITION ENDING SALARY BONUS SATION GRANTED SHARE UNITS
- ------------------------ --------- --------- -------- ----------- ------------- ------------- ---------- -----------
Paul Davis 1998 Nil Nil Nil Nil Nil Nil Nil
President (1)
- ------------------------ --------- --------- -------- ----------- ------------- ------------- ---------- -----------
Note: There were no compensation payments to Chief Executive Officer for
preceding 3 yrs.
(1) The Company does not have a Chief Executive Officer but for the purposes
of disclosure hereunder Mr. Davis, as President, is deemed to be the Chief
Executive Officer.
17
PENSION PLANS
The Company does not have a defined benefit pension plan that provides annual
benefits to any Executive Officers.
COMPENSATION OF DIRECTORS
None of the Directors receive Director's fees.
EXECUTIVE COMPENSATION
The Vice President Marketing and Corporate Secretary received US$3,000.00 and
US$2,000.00, respectively, during 1998. No other Executive Officers of the
Company received any reportable salary or bonus during 1998.
The following table sets forth as to each named Executive Officer certain
information concerning the grant of options during the year ended January 31,
1999:
OPTION GRANTS IN LAST FISCAL YEAR
- ---------------------- ---------------------- ---------------------- --------------------- ---------------------
NAME NUMBER OF SECURITIES % OF TOTAL OPTIONS EXERCISE OR EXPIRATION DATE
UNDERLYING OPTIONS GRANTED TO EMPLOYEES BASE PRICE
GRANTED IN FISCAL YEAR
- ---------------------- ---------------------- ---------------------- --------------------- ---------------------
Judith Miller 200,000 200,000 US$0.0075 Dec. 31, 1999
- ---------------------- ---------------------- ---------------------- --------------------- ---------------------
Pursuant to a verbal agreement among the board of directors of the Company,
Judith Miller was granted a stock option to purchase 200,000 common shares of
the Company at a price of US$0.0075 per common share until August 26, 1999. On
August 11, 1999, by way of written consent resolution, the board of directors
extended the stock option expiration date from August 26, 1999 to December 31,
1999. On September 15, 1999 the terms of the stock option agreement were reduced
to writing.
ITEM 7 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company is subject to various conflicts of interest arising out of its
relationships with its Executive Officers, Directors and shareholders,
including conflicts related to the arrangements by which the Company acquired
certain of is assets, as described below are conducted as arm's-length
transactions and were in the best interest of the Company. The Company intends
to continue to exercise its best business judgement and discretion in involving
any such conflicts between the Company and others with respect to these and all
other matters, and the Company believes that it will generally be able to
resolve such conflicts on an equitable basis.
18
Paul Davis, President and Director of the Company and President and Director of
AltaCo, holds 6,750,000 shares of AltaCo and 3,140,857 shares of SiCom. Mr.
Davis receives $6,000.00 per month as an employee of AltaCo.
Kevin Wong, Director of the Company and is Director and Vice-President
Technology of AltaCo. Mr. Wong owns 2,250,000 shares of AltaCo and 440,000
shares of SiCom and he receives C$4,000 per month as an employee of the AltaCo.
Rajesh Taneja, Director of the Company and is Vice-President Marketing of
AltaCo. Mr. Taneja owns 300,000 shares of the Company and he receives C$3,000
per month as an employee of the Company.
Judy Miller, Director and Secretary of the Company owns 96,000 shares of the
Company and has an option to purchase 200,000 shares of the Company for $0.0075
per share exercisable until December 31, 1999. Ms. Miller originally
participated in a private placement for 24,000 shares of the Company at $.001
per share prior to the consolidation of the Company's shares on a 4:1 basis. The
Company paid Ms. Miller US$2,000 in November, 1998 for administrative services
and pursuant to a verbal consulting contract effective June 15, 1999 receives
C$2,500 per month from the Company.
During the last two years the Company has not been a party to and it is not
proposed that the Company will be a party to any transactions in which any
director, nominee for election as a director, executive officer, beneficial
owner of greater than 5% of the Company's common shares or any member of the
immediate family of such persons had or is to have a direct or indirect material
interest except the following:
a) the Share Exchange Agreement;
b) the License Agreement;
c) the purchase of the trade names "Clear Choice Media" and "Clear
Choice Technologies" from Rajesh Taneja for 300,000 shares;
d) the verbal agreement pursuant to which the Company utilizes the
leased space in Calgary, Alberta; and
e) stock option agreement with Judith Miller.
ITEM 8 - DESCRIPTION OF SECURITIES
COMMON STOCK
The Company originally had authorized share capital of 1,500 common shares with
a par value of $0.001 but subsequently increased its share capital to 25,000,000
common shares with a par value of $0.001 per share. On March 15, 1999 the
Company underwent a one for four stock split increasing its issued and
outstanding to 8,800,000 common shares. As at October 13, 1999 there were
14,100,000 common shares of the Company issued and outstanding.
TRANSFER AGENT AND REGISTRAR
The Company's Transfer Agent is Signature Stock Transfer in Dallas, Texas.
19
PART II
ITEM 1 - MARKET PLACE AND DIVIDENDS ON THE COMPANY'S COMMON EQUITY AND OTHER
SHAREHOLDER MATTERS
MARKET INFORMATION
The Company's common stock is currently traded on the National Association of
Securities Dealers Inc. Automated Quotation System's Bulletin Board, using the
stock symbol "DCTG." Only a limited public trading market exists for the
Company's outstanding stock, and there can be no assurance that an active public
market will develop. The Company's common stock commenced trading in March 1999
and the highest and lowest prices for the Company's common stock during the
calendar quarter ended June 30, 1999 and the closing bid price on such date is
as follows:
Delta Capital Technologies Inc. (Monthly Summary of Trades):
- -------------------- ------------------ ------------------- ------------------ ------------------ --------------
Date High Low Close Volume Trades
- -------------------- ------------------ ------------------- ------------------ ------------------ --------------
Oct/99 2.40 2.00 2.10 210,000 41
- -------------------- ------------------ ------------------- ------------------ ------------------ --------------
Sept/99 2.60 2.00 2.10 209,000 43
- -------------------- ------------------ ------------------- ------------------ ------------------ --------------
Aug/99 3.00 2.20 2.42 98,400 19
- -------------------- ------------------ ------------------- ------------------ ------------------ --------------
July/99 3.10 2.40 2.98 58,500 27
- -------------------- ------------------ ------------------- ------------------ ------------------ --------------
June/99 3.00 2.07 3.00 55,500 36
- -------------------- ------------------ ------------------- ------------------ ------------------ --------------
May/99 - - - - -
- -------------------- ------------------ ------------------- ------------------ ------------------ --------------
April/99 - - - - -
- -------------------- ------------------ ------------------- ------------------ ------------------ --------------
Mar/99 3.00 2.15 3.00 8,000 10
- -------------------- ------------------ ------------------- ------------------ ------------------ --------------
These quotations reflect inter-dealer prices without retail work-up, mark-down
or commission and may not represent actual transactions.
As of the date of this Registration Statement, the Company has 33 registered
shareholders which included Cede & Co. holding 1,959,000 shares. Because Cede &
Co. is an intermediary, the Company does not know how many beneficial
shareholders are included in the shares held in the name of Cede & Co.
DIVIDEND POLICY
The Company has not paid any cash dividends on its common stock and does not
anticipate paying any cash dividends in the foreseeable future. The Company
currently intends to retain future earnings, if any, to fund the development and
growth of its business. Any future determination to pay cash dividends will be
at the discretion of the board of directors and will be dependent upon the
Company's financial condition, operating results, capital requirements,
applicable contractual restrictions and other factors as the board of directors
deems relevant.
OPTIONS EXERCISED
None of the Company's previously granted stock options have been exercised.
20
WARRANTS EXERCISED
To date the Company has not issued any share purchase warrants.
ITEM 2 - LEGAL PROCEEDINGS
There are no material legal proceedings to which the Issuer is a party nor to
the best of the knowledge of management, are any material legal proceedings
contemplated.
ITEM 3 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no disagreements between the Company and its accountants since
the Company's inception in March of 1998.
ITEM 4 - RECENT SALES OF UNREGISTERED SECURITIES
During April of 1998, the Company issued to T. Davis Capital Corp. 200,000
shares of restricted common stock as repayment of the $206.95 incorporating
expenses paid on the Company's behalf by T. Davis Capital Corp. This share
issuance was exempt from registration under Section 4(2) of the Securities
Exchange Act of 1934 and the appropriate restrictive legend was placed on the
share certificate issued.
During April, 1998 the Company sold 2,000,000 shares of unrestricted common
stock, and received $60,000. This offering was a private placement and the
Company was exempt from registration under the Exchange Act. Further the Company
was eligible under Securities and Exchange Commission Rule 504, which allowed
the shares sold in this private placement to be issued without restrictive
legend. The recipients of these shares, primarily being the Company friends,
relatives and business associates of the Company's officers, directors and
investors, represented their intention to acquire the shares for investment
purposes only, and not with a view to resale or distribution.
The 2,000,000 shares of the Company were issued to the following in the
indicated amounts:
- ------------------------------------------ ------------------- -------------------------------- ----------------
NAME NUMBER NAME NUMBER
OF SHARES OF SHARES
- ------------------------------------------ ------------------- -------------------------------- ----------------
Bonanza Management Ltd. 100,000 Hutchinson, Janet 100,000
- ------------------------------------------ ------------------- -------------------------------- ----------------
Brookes, Heather 14,000 Ivancoe, Joseph 100,000
- ------------------------------------------ ------------------- -------------------------------- ----------------
Brookes, Ken 50,000 Ivancoe, Leigh 100,000
- ------------------------------------------ ------------------- -------------------------------- ----------------
Butchart, Terry 10,000 Johnson, Edward 14,000
- ------------------------------------------ ------------------- -------------------------------- ----------------
Butchart, Jodi 9,000 Johnson, Linda 105,000
- ------------------------------------------ ------------------- -------------------------------- ----------------
Charban, Emil 95,000 Miller, Judith 24,000
- ------------------------------------------ ------------------- -------------------------------- ----------------
Clemis, Barry 90,000 Mizener, Doreen 20,000
- ------------------------------------------ ------------------- -------------------------------- ----------------
Connors, Melissa 105,000 Polymenkas, Nicky 100,000
- ------------------------------------------ ------------------- -------------------------------- ----------------
Crawford, Mark 105,000 Smart Communications 105,000
- ------------------------------------------ ------------------- -------------------------------- ----------------
Delaney, Gail 19,000 Smeds, Sven 95,000
- ------------------------------------------ ------------------- -------------------------------- ----------------
21
- ------------------------------------------ ------------------- -------------------------------- ----------------
NAME NUMBER NAME NUMBER
OF SHARES OF SHARES
- ------------------------------------------ ------------------- -------------------------------- ----------------
Delaney, Greg 150,000 Smith, Guy 105,000
- ------------------------------------------ ------------------- -------------------------------- ----------------
Forgie, Ross 100,000 Smith, Richard 100,000
- ------------------------------------------ ------------------- -------------------------------- ----------------
Gallant, Richard 95,000 T. Davis Capital Corp. 200,000
- ------------------------------------------ ------------------- -------------------------------- ----------------
Gardiner, Thomas 90,000
- ------------------------------------------ ------------------- -------------------------------- ----------------
During March, 1999 the 2,200,000 shares of the Company, which were issued at
that time, were split on a four for one basis resulting in 8,800,000 shares
being issued and outstanding.
During September, 1999 the Company issued to Rajesh Taneja 300,000 shares of
restricted common stock in lieu of $3,000 as payment for the rights and
ownership to the British Columbia sole proprietor company names "Clear Choice
Media" and "Clear Choice Technologies". This share issuance was exempt from
registration under Section 4(2) of the Securities Exchange Act of 1934. The
appropriate restrictive legend was placed on the share certificate issued.
During September, 1999 the Company issued to AltaCo 5,000,000 shares of
restricted common stock to acquire 5,000,000 shares of AltaCo. This share
issuance was exempt from registration under Section 4(2) of the Securities
Exchange Act of 1934. The appropriate restrictive legend was placed on the share
certificate issued.
ITEM 5- INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware (the "DECL")
provides, in general, that a corporation incorporated under the laws of the
State of Delaware, such as the Company, may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding (other than a derivative action by or in
the right of the Corporation) by reason of the fact that such person is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another enterprise, against expenses (including attorney's fees), judgement,
fines and amounts paid in settlement actually and reasonably incurred by such
person in connection with such action, suit or proceeding if such person acted
in good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe such persons
conduct unlawful. In the case of a derivative action, a Delaware corporation may
indemnify any such person against expenses (including attorney's fees) actually
and reasonably incurred by such person in connection with the defense or
settlement of such action or suit if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification shall be made in
respect to any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the
court determines such person is fairly and reasonably entitled to indemnify for
such expenses.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing
22
provisions, the Company understands that in the opinion of the Securities
Exchange Commission, such indemnification is against public policy as expressed
in the Act and is therefore unenforceable.
FINANCIAL STATEMENTS:
1. Report of Independent Certified Public Accountants
dated September 10, 1999
Audited Consolidated Financial Statements:
2. Balance Sheets as at July 31, 1999 and December 31,
1998
3. Statement of Operations for seven months ended July
31, 1999, the period from March 4, 1998 (date of
inception) to December 31, 1998 and the period from
March 4, 1998 to July 31, 1999
4. Statement of Changes in Stockholders' Equity for the
period from March 4, 1998 to July 31, 1999
5. Statement of Cash Flows for the seven months ended
July 31, 1999, the period from March 4, 1998 to
December 31, 1998 and the period from March 4, 1998
to July 31, 1999
6. Notes to Financial Statements
EXHIBITS:
3(i) Articles of Incorporation dated March 4, 1998
together with Amended Articles of Incorporation dated
April 23, 1998
3(ii) By-Laws of the Company dated April 23, 1998
4 See Exhibit 3(ii) for By-Laws
10(a) License Agreement between the Company and 827109
Alberta Ltd. dated June 1, 1999
10(b) License Agreement between SiCom Solutions Inc. and
827109 Alberta Ltd. dated June 1, 1999
10(c) Letter from 827109 Alberta Ltd. to Delta Capital
Technologies Inc. dated September 2, 1999
acknowledging receipt of the $20,000 payment and
granting a three month extension of the $30,000
payment to November 1, 1999
23
10(d) Letter from SiCom Solutions Inc. to 827109 Alberta
Ltd. dated September 2, 1999 acknowledging receipt of
the $20,000 payment and granting a three month
extension of the $30,000 payment to November 1, 1999
27 Financial Data Schedule
99(a) Share Exchange Agreement between the Company and
827109 Alberta Ltd. dated June 1, 1999
99(b) Stock Option Agreement between the Company and Judith
Miller, Corporate Secretary and Director of the
Company dated September 15, 1999
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has caused this registration to be signed on its behalf by
the undersigned, thereunder duly authorized, on the ______ day of September
1999.
DELTA CAPITAL TECHNOLOGIES, INC.
Per:
"Paul Davis"
---------------------------------------
Paul Davis
President and Chief Executive Officer
DELTA CAPITAL TECHNOLOGIES, INC.
FINANCIAL STATEMENTS AND REPORT
OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
JULY 31, 1999 AND DECEMBER 31, 1998
Board of Directors
Delta Capital Technologies, Inc.
Vancouver, B.C. Canada
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have audited the accompanying balance sheets of Delta Capital Technologies,
Inc. (a development stage company) at July 31, 1999, and December 31, 1998 and
the statement of operations, stockholders' equity, and cash flows for the seven
months ended July 31, 1999 and the period from March 4, 1998 to December 31,
1998 and the period from March 4, 1998 (date of inception) to July 31, 1999.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with 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 over all financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Delta Capital Technologies,
Inc. at July 31, 1999, and December 31, 1998 and the results of operations, and
cash flows for the seven months ended July 31, 1999 and the period from March 4.
1998 to December 31, 1998 and the period from March 4, 1998 (date of inception)
to July 31, 1999, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company is in the development
stage and will need additional working capital for its planned activity, which
raises substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are described in Note 7 . These
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Salt Lake City, Utah
September 10 , 1999
DELTA CAPITAL TECHNOLOGIES, INC.
(DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
JULY 31, 1999 AND DECEMBER 31, 1998
=================================================================================================
JULY 31 DEC 31
1999 1998
---- ----
ASSETS
CURRENT ASSETS
Cash $ 1,169 $ 20,926
-------- --------
Total Current Assets 1,169
20,926
PROPERTY AND EQUIPMENT - net of accumulated depreciation 564 --
-------- --------
MARKETING LICENSE - net of amortization - Note 3 11,637 --
-------- --------
$ 13,370 $ 20,926
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable - Note 4 $ 26,165 $ --
Accounts payable 14,918
-------- --------
Total Current Liabilities
41,083 --
-------- --------
STOCKHOLDERS' EQUITY
Common stock
25,000,000 shares authorized, at $0.001 par value;
8,800,000 shares issued and outstanding - Note 8 8,800 8,800
Capital in excess of par value 51,407 51,407
Deficit accumulated during the development stage (87,920) (39,281)
-------- --------
Total Stockholders' Equity (27,713) 20,926
-------- --------
$ 13,370 $ 20,926
======== ========
The accompanying notes are an integral part of these financial statements.
DELTA CAPITAL TECHNOLOGIES, INC.
(DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
FOR THE SEVEN MONTHS ENDED JULY 31, 1999 AND THE PERIOD FROM
MARCH 4, 1998 TO DECEMBER 31, 1998 AND THE PERIOD FROM
MARCH 4, 1998 (DATE OF INCEPTION) TO JULY 31, 1999
================================================================================
JUL 31, DEC 31, MAR 4, 1998
1999 1998 TO JUL 31,1999
---- ---- --------------
REVENUES $ -- $ -- $ --
EXPENSES 48,639 39,281 87,920
---------- ---------- --------
NET LOSS $ (48,639) $ (39,281) $(87,920)
========== ========== ========
NET LOSS PER COMMON SHARE
Basic $ -- $ --
---------- ----------
Diluted $ -- $ --
---------- ----------
AVERAGE OUTSTANDING SHARES
Basic 8,800,000 8,800,000
---------- ----------
Diluted 9,000,000 9,000,000
---------- ----------
The accompanying notes are an integral part of these financial statements.
DELTA CAPITAL TECHNOLOGIES, INC.
(DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM MARCH 4, 1998 (DATE OF INCEPTION)
TO JULY 31, 1999
================================================================================================
COMMON STOCK CAPITAL IN
------------------- EXCESS OF ACCUMULATED
SHARES AMOUNT PAR VALUE DEFICIT
------ ------ --------- -------
BALANCE MARCH 4, 1998 (date of inception) -- $ -- $ -- $ --
Issuance of common stock for services
at $.0002 - March 1998 800,000 800 (593) --
Issuance of common stock for cash
at $.0075 - June 1998 8,000,000 8,000 52,000 --
Net operating loss for the period March 4,
1998 to December 31, 1998 -- -- -- (39,281)
--------- ------ ------- --------
BALANCE DECEMBER 31, 1998 8,800,000 8,800 51,407 (39,281)
Net operating loss for the seven months
ended July 31, 1999 -- -- -- (48,639)
--------- ------ ------- --------
BALANCE JULY 31, 1999 8,800,000 $8,800 $51,407 $(87,920)
========= ======= ======= ========
The accompanying notes are an integral part of these financial statements.
DELTA CAPITAL TECHNOLOGIES, INC.
(DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE SEVEN MONTHS ENDED JULY 31, 1999 AND THE PERIOD FROM
MARCH 4, 1998 TO DECEMBER 31, 1998 AND THE
PERIOD FROM MARCH 4, 1998 (DATE OF INCEPTION) TO JULY 31, 1999
============================================================================================================
JUL 31, DEC 31, MAR 4, 1998
1999 1998 TO JUL 31, 1999
---- ---- ---------------
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss (48,639) $ (39,281) $(87,921)
Adjustments to reconcile net loss to
net cash provided by operating
activities
Issuance of common capital stock for expenses -- 207 207
Amortization 1,878 -- 1,878
Changes in accounts payable 15,002 -- 15,002
-------- -------- --------
Net (decrease) in Cash From Operations (31,759) (39,074) (70,834)
-------- -------- --------
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of marketing license (13,514) (13,514)
Purchase of office equipment (564) -- (564)
-------- -------- --------
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from loans 26,081 -- 26,081
Proceeds from issuance of common stock -- 60,000 60,000
-------- -------- --------
Net Increase (Decrease) in Cash (19,756) 20,926 1,169
Cash at Beginning of Period 20,925 -- --
-------- -------- --------
Cash at End of Period $ 1,169 $ 20,926 $ 1,169
======== ======== ========
NON CASH OPERATING ACTIVITIES
Issuance of 800,000 shares common capital stock for expenses $ 207
-------
The accompanying notes are an integral part of these financial statements.
DELTA CAPITAL TECHNOLOGIES, INC.
(DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
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1. ORGANIZATION
The Company was incorporated under the laws of the State of Delaware on March 4,
1998 with authorized common stock of 25,000,000 shares at $0.001 par value. On
March 15, 1999 the Company completed a forward stock split of four shares for
each outstanding share. This report has been prepared using after stock split
shares from inception.
The Company was organized for the purpose of the acquisition of a license to
market a software computer program. See note 3.
The Company is in the development stage.
Since its inception the Company has completed a Regulation D offering of
8,000,000 after stock split shares of its capital stock for cash of $60,000.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Methods
The Company recognizes income and expenses based on the accrual method of
accounting.
Dividend Policy
The Company has not yet adopted a policy regarding payment of dividends.
Income Taxes
On December 31, 1998, the Company had a net operating loss carry forward of
$39,281. The tax benefit from the loss carry forward has been fully offset by a
valuation reserve because the use of the future tax benefit is doubtful, since
the Company has no operations on which to project future net profits.
The loss carryforward will expire in the year 2019.
Earnings (Loss) Per Share
Earnings (loss) per share amounts are computed based on the weighted average
number of shares actually outstanding in accordance with FASB No. 128.
Cash and Cash Equivalents
The Company considers all highly liquid instruments purchased with a maturity,
at the time of purchase, of less than three months, to be cash equivalents.
DELTA CAPITAL TECHNOLOGIES, INC.
(DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
Foreign Currency Translation
Part of the transactions of the Company were completed in Canadian dollars and
have been translated to US dollars as incurred, at the exchange rate in effect
at the time, and therefore, no gain or loss from the translations is recognized.
Amortization of a Capitalized Marketing License
The Company amortizes the marketing license over its estimated useful life of
three years. Any remaining unamortized capitalized costs will be expensed if it
is shown to have an impairment in value or proven to be of no value. All royalty
payments will be expensed. See Note 3.
Financial Instruments
The carrying amounts of financial instruments, including cash, equipment,
marketing license, and accounts payable, are considered by management to be
their estimated fair values. These values are not necessarily indicative of the
amounts that the Company could realize in a current market exchange.
Estimates and Assumptions
Management uses estimates and assumptions in preparing financial statements in
accordance with generally accepted accounting principles. Those estimates and
assumptions affect the reported amounts of the assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and
expenses. Actual results could vary from the estimates that were assumed in
preparing these financial statements.
3. PURCHASE OF MARKETING LICENSE
On June 1, 1999 the Company acquired a world wide license to market computer
software known as relBuilder.e-suite of e-business software from 827109 Alberta
LTD.(a Canadian corporation). The software is used in various business fields to
aid in the development of internet businesses and technologies which provides
for competitive shopping, mazimizing re-use of corporate information by bringing
together data which is usually scattered across many systems.
The terms of the agreement is for three years and includes an intitial payment
of $50,000 cn which is due anytime before November 1, 1999, of which $20,000cn
has been paid, and royalty payments of 15% of the net sales with a minimum
amount of $50,000 cn for the first year and $200,000 cn for the second year and
$300,000cn for the third year. The agreement can be cancelled by notice after a
30 day default by either party or automatically terminates if any royalty
payment is more than 60 days past due. The agreement can be renewed at the end
of three years for an unlimited time by the payment of $1cn.
DELTA CAPITAL TECHNOLOGIES, INC.
(DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
3. PURCHASE OF MARKETING LICENSE - continued
The amounts paid and to be paid toward the purchase price of $50,000cn are
capitalized and amortized over 3 years, at the rate of $16,667cn each year, the
estimated useful life of the license, or a shorter period if the value of the
license is determined to be impaired.
All of the parties to the agreement have certain common officers and they
believe the contract amount of $50,000cn for the purchase of the license is a
fair value.
At the report date the Company did not have the working capital necessary to
begin the marketing activity.
4. NOTES PAYABLE
The Company has the following short term notes payable outstanding.
Name Date of Note Term Interest Amount
---- ------------ ---- -------- ------
Smart Communications Inc. June 30, 1999 one year 6% 20,000
Bonanza Management July 31, 1999 90 days 12% 6,081
5. STOCK OPTIONS
On August 26, 1998 the Company issued stock options to purchase 200,000 common
shares to an officer at .0075 per share which will expire December 31, 1999. The
options were given as compensation for prior services and on the option date
were considered to have no fair value.
6. RELATED PARTY TRANSACTIONS
Related parties have acquired 28 % of the common stock issued.
The Company purchased the maketing license outlined in note 3 from related
parties.
DELTA CAPITAL TECHNOLOGIES, INC.
(DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
7. GOING CONCERN
The Company will need additional working capital to be successful in its planned
activity and to service its current debt for the coming year and therefore
continuation of the Company as a going concern is dependent upon obtaining the
additional working capital necessary to accomplish its objective. Management has
developed a strategy, which it believes will accomplish this objective and is
presently engaged in seeking various sources of additional working capital
including equity funding through a private placement, long term financing, and
completion of negotiations to access development and marketing support from a
major hardware/sofware company which has a program designed to further
e-Commerce and e-Business ventures, and increased revenues from sales which will
enable the Company to operate for the coming year.
The accompanying financial statements do not include any adjustments to the
recorded assets or liabilities that might be necessary should the Company fail
in any of above objectives and is unable to operate for the coming year.
8. SUBSEQUENT EVENTS
On September 9, 1999 the Company acquired 36% of the outstanding stock of 827109
Alberta LTD (a Canadian corporation) by the issuance of 5,000,000 common shares
of the Company. The only asset held by 827109 Alberta LTD is the rights to the
computer software outlined in note 3 and is reported in their financial
statements with no value.
On September 9, 1999 the company issued 300,000 common shares of its stock for
the exclusive rights to the trade names "Clear Choice Media and "Clear Choice
Technologies"
After the completion of the above stock issues the outstanding stock of the
Company amounted to 14,100,000 shares.
24
INDEX TO EXHIBITS
EXHIBIT DESCRIPTION
3(i) Articles of Incorporation dated March 4, 1998
together with Amended Articles of Incorporation dated
April 23, 1998
3(ii) By-Laws of the Company dated April 23, 1998
4 See Exhibit 3(ii) for By-Laws
10(a) License Agreement between the Company and 827109
Alberta Ltd. dated June 1, 1999
10(b) License Agreement between SiCom Solutions Inc. and
827109 Alberta Ltd. dated June 1, 1999
10(c) Letter from 827109 Alberta Ltd. to Delta Capital
Technologies Inc. dated September 2, 1999
acknowledging receipt of the $20,000 payment and
granting a three month extension of the $30,000
payment to November 1, 1999
10(d) Letter from SiCom Solutions Inc. to 827109 Alberta
Ltd. dated September 2, 1999 acknowledging receipt of
the $20,000 payment and granting a three month
extension of the $30,000 payment to November 1, 1999
27 Financial Data Schedule
99(a) Share Exchange Agreement between the Company and
827109 Alberta Ltd. dated June 1, 1999
99(b) Stock Option Agreement between the Company and Judith
Miller, Corporate Secretary and Director of the
Company dated September 15, 1999