UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
Pursuant to Rule 13a-16 or 15-d 16 of
The Securities Exchange Act of 1934
FOR THE PERIOD ENDED: June 30, 2000
COMMISSION FILE NUMBER: 0-30314
DEALCHECK.COM INC.
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(Exact name of Registrant as specified in its charter)
ONTARIO, CANADA
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(Jurisdiction of Incorporation)
65 Queen Street West, Suite 1905, Ontario, Canada M5H 2M5
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(Address of principal executive Offices)
(416) 860 0211
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant files or will file annual report
under cover Form 20F or 40F:
Form 20F X Form 40F
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Indicate by check mark whether the registrant by furnishing the information
contained in the Form is also thereby furnishing the information to Commission
to Rule 12g3-2(h) under the Securities Act of 1934:
Yes No X
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The number of shares outstanding of the Registrant's common stock as of June 30,
2000 is 4,049,316
1
DEALCHECK.COM INC.
Dealcheck.com Inc. has elected to provide quarterly financial and other
information generally comparable to that required to be provided by United
States Issuers on Form 10-Q. This report relates to the period of three months
ended June 30, 2000.
INDEX
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Page No.
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PART 1- FINANCIAL INFORMATION
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Item 1. Financial Statements 3-7
Consolidated Balance Sheets - June 30, 2000 and 3
1999 (unaudited) and March 31, 2000 (audited)
Consolidated Statements of operations and Deficit 4
(unaudited) for the three months ended June 30, 2000
and 1999
Consolidated Statements of Changes in Financial 5
Position (unaudited) for the three months ended
June 30, 2000 and 1999
Notes to Financial Statements 6-7
Item 2 Management discussion and Analysis of Financial 7-12
Condition and Results of Operations
PART 11- OTHER INFORMATION
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Item 1 Legal Proceedings 12
Item 2 Changes in Securities 12
Item 3 Default Upon Senior Securities 12
Item 4 Submission of matters to a vote of Security 12
Item 5 Other Information 12
Signature
2
DEALCHECK.COM INC.
CONSOLIDATED BALANCE SHEET
(CANADIAN DOLLARS)
JUNE 30, 2000 AND 1999
===========================================================================================
JUNE 30 March 31 June 30
2000 2000 1999
(UNAUDITED) (AUDITED) (UNAUDITED)
===========================================================================================
ASSETS
CURRENT
Cash $ 335,239 $ 425,968 $ 11,806
Short-term Investments 618,876 697,274 64,914
Advances to directors, non-interest bearing 89,993 -
Amounts receivable and prepaid expenses 491,380 580,198 23,041
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1,535,488 1,703,440 99,761
LONG-TERM INVESTMENTS 803,761 782,687
WEB SITES 13,000 10,000 9,435
CAPITAL ASSETS 58,595 46,805 55,812
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$ 2,410,844 $ 2,542,932 $ 165,008
===========================================================================================
LIABILITIES
CURRENT
Accounts payable and accrued liabilities $ 47,862 $ 40,549 $ 22,016
Note payable 23,250
Other Advances, non-interest
bearing 222,739 179,763 109,632
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270,601 220,312 154,898
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SHAREHOLDERS' EQUITY
CAPITAL STOCK 19,660,724 19,660,724 16,109,063
DEFICIT (17,520,481) (17,338,104) (16,098,953)
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2,140,243 2,322,620 10,110
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$ 2,410,844 $ 2,542,932 $ 165,008
===========================================================================================
3
DEALCHECK.COM INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
(CANADIAN DOLLARS)
FOR THE THREE MONTHS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)
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2000 1999
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INCOME
INTEREST 3,220 -
NET EXCHANGE GAIN 32,441
NET GAIN ON INVESTMENTS 11,631 -
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47,292
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EXPENSES
TRAVEL, PROMOTION AND CONSULTING 162,486 111,491
PROFESSIONAL FEES 18,000 8,187
PROJECTS DEVELOPMENT COSTS 12,000 -
BANK CHARGES AND INTEREST 462 -
RENT 7,578 6,860
TELEPHONE, INTERNET AND COURIER 3,210 6,632
TRANSFER AGENTS FEES 1,017 2,973
SHAREHOLDERS INFORMATION 12,038 3,500
AMORTIZATION 6,060 5,185
OFFICE AND GENERAL 6,818 6,478
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229,669 151,306
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NET LOSS FOR PERIOD (182,377) (151,306)
DEFICIT AT BEGINNING OF PERIOD (17,338,104) (15,947,647)
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DEFICIT AT END OF PERIOD $(17,520,481) $(16,098,953)
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NET LOSS PER SHARE $ (0.04) $ (0.07)
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APPROVED ON BEHALF OF THE BOARD
TERENCE ROBINSON DIRECTOR
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KAM SHAH DIRECTOR
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DEALCHECK.COM INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CANADIAN DOLLARS)
FOR THE THREE MONTHS ENDED JUNE, 2000 AND 1999
(UNAUDITED)
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2000 1999
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OPERATING ACTIVITIES
Net loss $(182,377) $(151,306)
Amortization 6,060 5,185
Write-off of investment -
Write-off of web site development costs -
Net gain on investments (11,631) -
Amounts receivable and prepaid expenses (400,356) 5,185
Accounts payable and accrued liabilities 7,313 (45,406)
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(580,991) (151,957)
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INVESTING ACTIVITIES
Purchase of capital assets (17,850) (2,620)
Refund of subscription advance 489,173 -
Investments 68,956 -
Web site development costs (3,000) -
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537,279 (2,620)
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FINANCING ACTIVITIES
Net advances 42,976 102,015
Net advances to directors (89,993) -
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(47,017) 102,015
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INCREASE (DECREASE) IN CASH DURING PERIOD (90,729) (52,562)
CASH AT BEGINNING OF PERIOD 425,968 64,368
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CASH AT END OF PERIOD $ 335,239 $ 11,806
==================================================================
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DEALCHECK.COM INC.
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)
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1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in Canada
for interim information and with the instructions to Form 10Q and Rule 10-1 of
the United States Securities Act of 1933 or Regulation S-X. Accordingly, they do
not include all the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments consisting of normal recurring accruals and certain
adjustments to reserves and allowances considered necessary for a fair
presentation have been included. Operating results for the three months ended
June 30, 2000 are not necessarily indicative of the results that may be expected
for the year ending March 31, 2001.
2. DIFFERENCE BETWEEN ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN CANADA AND
THOSE IN THE UNITED STATES
WEB SITE COSTS
The costs of developing the commercial web sites are allowed to be deferred
under the Canadian Generally Accepted Accounting Principles. However, these
costs should be expensed under US GAAP. Accordingly, under the US GAAP, net
loss for period would be $185,377 (1999: $160,741). Total assets would be
$2,397,844 (1999: $155,573) and deficit would be $17,533,481 (1999: $
16,108,388).
INVESTMENTS
Investments in marketable equity securities that are classified as short-term
investments under Canadian GAAP, are grouped into trading and available-for-sale
categories and accounted for at fair value under the US GAAP. Unrealized
holding gains or losses on trading securities are included in the income.
Unrealized holding gains and losses on available-for-sale securities are
included in shareholders' equity.
Investments in equity securities that are classified as long term investments
under the Canadian GAAP, are accounted for at fair value under the US GAAP.
Unrealized holding gains and losses are included in shareholders' equity.
No significant adjustment would be required in the net loss for year, total
assets and deficit under the US GAAP.
RECENT ACCOUNTING DEVELOPMENT
In June 1998, the Financial Accounting Standard Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities". In June 1999, the FASB issued SFAS No.
137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of
the effective date of FASB Statement No. 133", which deferred the required date
of adoption of SFAS No. 133 for one year, to fiscal years beginning after June
15, 2000. This Standard is applicable for the Corporation's 2001 fiscal year.
The adoption of SFAS No. 137 had no material impact on its financial position,
results of operations or cash flows for the three months ended June 30,
2000.
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DEALCHECK.COM INC.
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)
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3. RELATED PARTY TRANSACTIONS
The following is a summary of related party transactions and balances:
(a) A consulting fee of $44,406 (1999 - $45,955) was charged by a
shareholder under an agreement dated April 1, 1997
(b) Consulting fees paid to directors during the period were $ 63,000 (1999
- $19,577)
(c) Expenses reimbursed to directors during the year were $30,016 (1999 -
$803)
(d) Transactions with companies under the common directors
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2000 1999
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Expenses recovered at cost $ 2,913 $ 5,430
Funds advanced during year 85,000 5,430
Balance due from 139,365 14,924
Expenses relating to the shared premises and consultants were recharged to
the affiliated entities at cost.
Funds advanced are repayable on demand and carry an interest of 5% p.a.
Balances as at year end are included in "Amounts Receivable and prepaid
expenses"
4. COMPARATIVE FIGURES
Certain of the comparative figures have been reclassified to comply with
the current period's presentation.
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
The following discussion and analysis should be read in conjunction with the
consolidated (unaudited) financial statements of the Company, which have been
prepared in accordance with generally accepted accounting principles ("GAAP") in
Canada. A summary of material adjustments to conform to U.S. GAAP is set out in
Note 2 to the consolidated (unaudited) financial statements.
RESULTS OF OPERATIONS
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Three months ended June 30 2000 1999
-------------in 000' CDN$-------------
Income 47 - -
Expenses 230 151
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Net Loss for period 183 151
Deficit at end of period 17,520 16,099
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Income consisted of interest earned of $3,220, exchange gain of $32,441 and net
gain on investments of $11,631
Exchange gain mainly resulted from translation of monetary assets and
liabilities in U.S. dollar into Canadian Dollar at the rate at June 30, 2000.
Decline in the value of Canadian Dollar in comparison to the U.S. Dollar from
$1.4494 CDN$ to $1 US at March 31, 2000 to $1.4802 CDN at June 30, 2000 resulted
in the net exchange gain on conversion.
Net gain on investments is net of realized losses during the three months ended
June 30, 2000 of $120,433 and a net holding gain of $132,064. On short term
investments mainly in marketable securities.
The major components of expenses are as follows:
TRAVEL, PROMOTION AND CONSULTING -
Three months ended June 30 2000 1999
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Travel, meals and entertainment 27,877 837
Consulting 134,467 110,654
Promotion 142 -
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162,486 111,491
============================================
% of operating expenses 70% 74%
During the first quarter ended June 30, 2000, the management focused its
attention entirely on seeking long term business opportunities, while at the
same time monitoring investments made during the fiscal year 2000. These efforts
involved significant traveling during the previous fiscal year's first quarter;
management was formulating the new business strategy and as a result had no
major travel costs.
Consulting costs include a consulting fee of $44,406 (quarter ended June 30,
1999: $45,955) charged by a shareholder under a Consulting agreement. The
services provided included arranging non-interest bearing working capital funds,
introduction to business opportunities and public relations. The Company signed
an Investor relation agreement with a Canadian private company for a one year
term at a fee of US$10,000 per month plus expenses. A total fee of $44,406 was
charged by this company for the three months ended June 30, 2000 and is included
in the Consulting fee. The investor relations firm will handle the financial
communications for the Company. Other consulting fees of $45,655 in the quarter
ended June 30, 2000 related to fees paid for general IT, management and
corporate services. During the quarter ended June 30, 1999, total fee of $
64,699 was incurred for similar services.
PROFESSIONAL FEES
Professional fees in the first quarter of fiscal 2001 were $18,000 compared to
$8,187 in the first quarter of fiscal 2000. The significant increase in fee was
due mainly to significant increase in the business activities and in completing
the review process of the registration statement with Securities and Exchange
Commission to acquire fully reporting company status and maintain the Company's
listing on the OTC bulletin board of NASDAQ.
PROJECTS DEVELOPMENT COSTS
Total costs were $12,000 in the first quarter of fiscal 2001. There were no such
costs in the prior period. The costs related to the design and development of
the Company's web site. Further details of the various projects are given in
the Investment section under "Liquidity and Capital Requirements".
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OTHER OPERATING COSTS
Other operating costs in the first quarter of fiscal 2001 were 37,183, which
included $10,020 related entirely to the legal and other costs incurred in
connection with the Registration Statement of the Company with SEC. No such
costs were incurred in the fiscal 2000 first quarter. The other operating costs
were $27,163 compared to $31,628 in the first quarter of fiscal 2000. These
costs include rent, telephone, Internet, transfer agents fees and other general
and administration costs and reflects the management's continued attention to
keeping these costs to minimum.
LIQUIDITY AND CAPITAL REQUIREMENTS
CASH AND WORKING CAPITAL
Cash on hand at June 30, 2000 was $335,239 compared to $11,806 at June 30, 1999.
Net working capital at June 30, 2000 was approx. $1.3 million compared to a
deficit of approx. $55,000 in the working capital at June 30, 1999.
Significant improvement in the liquidity of the Company was the result of a
successful private placement of approx. $3.3 million in the fiscal 2000.
Trade and Notes payables at June 30, 2000 were $47,862 compared to $ 45,266 at
June 30, 1999.
The net cash spent on operations during three months ended June 30, 2000 was
$187,948 compared to $146,121 during the three months ended June 30, 1999.
Increased spending in the quarter ended June 30, 2000 was mainly related to
increased travel and promotion costs to pursue investment and business
opportunities, web site projects development costs and increased professional
costs as explained earlier.
INVESTMENTS
The Company continued to follow the business investment strategy established
during the fiscal 200o during the three months ended June 30, 2000.
The funds available from the private placement were invested as follows at the
end of June 30, 2000:
June 30, 2000 March 31, 2000
Short term investments 618,876 697,274
Advances 491,380 489,173
Internet projects 13,000 10,000
Long term investments 803,761 782,687
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$ 1,927,017 $ 1,979,134
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SHORT TERM INVESTMENTS
Short term investments mainly comprised marketable securities of $ 404,559 and
an investment of $214,317 in World Vacation Club.com Inc. (WVC)
The investment in WVC is carried from the fiscal 2000. As explained in detail in
the M D & A accompanying the audited financial statements for the fiscal 2000,
the Company is actively seeking buyers to dispose off this investment based on
the legal opinion it received. The WVC has recently appointed a new president
and is seeking additional equity funds. The management is actively pursuing
opportunities to find buyers or possibly to sell back to WVC the entire
investment at least at cost.
9
The Company invested in Developersnetwork.com (DN) during the fiscal 2000 by way
of convertible debentures. As at March 31, 2000, total amount invested was
$36,741. In May 2000, the Company received the full amount back with interest
and also received, by way of a compensation for early settlement, an option to
purchase 50,000 common shares of DN at $1 per share exercisable within two
years.
ADVANCES
As at March 31, 2000, the Company held a subscription advance of $ 489,173 for
the acquisition of common shares of Idealab.com from a private investor. The
Company later decided against this acquisition and recovered the amount in full
in May 2000.
Advances given during the three months ended June 30, 2000 included the
following two major advances to companies, which may be the potential
acquisition targets:
Realtimememories.com Inc. Amount advanced $ 148,060
First Empire Entertainment.com Inc. Amount advanced $ 114,250
Advances to Realtimememories.com were fully received with interest in July 2000.
The Company also received a facilitation fee of US$ 10,000 in cash and 75,000
common shares in that company and 75,000 warrants at $0.50 each exercisable by
2002.
First Empire Entertainment.com Inc. (First Empire) is a Canadian public company
whose main business is entertainment. The Company's first project is the
development and production of "The Count of Monte Cristo", a live theatrical
musical production, adapted from the novel of the same name. First Empire
acquired the rights to the adaptation from a Toronto based writer and lyricist.
First Empire initiated two previews, one in Toronto and the other in New York.
It will be seeking additional funds to commence a workshop leading to a full
blown road shows. Dealcheck.com Inc. will likely convert its advances into
shares of First Empire.
INTERNET PROJECTS
The current investment is in the design and development of IRCheck.com, a web
site which will provide a comprehensive data base of investors relation firms to
facilitate an informed decision for the prospective public companies desiring to
outsource its investors relation and media relation work to an independent firm.
The Company spent $10,000 up to March 31, 2000 in getting the web site design
completed by an independent design firm. It incurred further $3,000 in hiring
consultants to collate and develop contents and have to date gathered
information on about 500 IR firms in North America. The web site development
work is in progress and the commercial launch is expected in November 2000. The
Company expects to spend further about $ 50,000 on web site and content
development and further $100,000 on marketing. Revenue is expected from the
listing fee to be charged to IR firms and other sponsorship on the site. No
significant revenue is expected until the end of the fiscal 2001.
LONG TERM INVESTMENTS
As part of the Company's Internet strategy, the Company invested in certain new
and emerging Internet businesses that have demonstrated significant potential
for growth in the long run. While these investments reflect only a small
fraction of the investee companies' equity, the management believes that they
are likely to provide much higher return on the investment and offer
opportunities for synergistic business relationship among the other companies
and projects within the Company's portfolio.
There has not been any major change in the Company's portfolio during the three
months ended June 30, 2000. The major investment is in a private company
- -Dataloom Inc, where the Company's investment stood at $739,365 - about 31% of
the total assets of the Company.
The Company's investment comprises 500,000 Series B preferred stock convertible
at the Company's option at any time, into equal number of Common shares of
Dataloom Inc. The company's holding, if converted now would represent
approximately 5% equity interest in Dataloom Inc.
10
Dataloom Inc. was formed as a corporation in August 1999 in the State of
Washington, US for the purpose of providing state-of-the-art web based business
service solutions for small office home office enterprises. Dataloom, Inc. has
developed a framework to deploy an exceptional information management solution
for small to medium enterprise users (SME's). Comprising a full suite of
powerful web-available applications and information management systems, this
solution changes the way on-the-go professionals conduct business--anytime,
anywhere, from any Internet connected device.
Dataloom's application services framework (xLoom) utilizes XML (Extensible
Markup Language) and a proprietary Application Services Directory that enables
web-based application interfaces to be delivered to any wired or wireless device
in real time. xLoom enables a new generation of fast, flexible productivity
tools.
While the company's investment does not entitle the Company to exercise any
influence over the management of Dataloom Inc., the management remains in close
contact with the management of Dataloom Inc. to ensure its investment value is
not impaired. The Management was informed by Dataloom Inc. that it had
attracted certain high profile investors and had recently negotiated agreements
with major Japanese Companies to launch its products in the Japanese market, and
also that Dataloom Inc. currently received sufficient advances from its signed
contracts to support its operating requirements.
CAPITAL EXPENDITURE
The Company spent $17,850 on capital assets; mainly comprising computers,
during the three months ended June 30, 2000 compared to $2,620 during the three
months ended June 30, 1999. The increased capital expenditure was due to the web
projects and additional consultants.
FUTURE CAPITAL REQUIREMENT
The management plans to make couple of strategic acquisitions during fiscal 2001
mainly from the disposal of its short-term investments, advances and /or from
the cash flow from exercise of the warrants attached to the Units under the
fiscal 2000 private placement. It will also focus on fully developing
IRCheck.com site and ensure its commercial launch during the fiscal year 2001.
The management estimates that its working capital requirements to remain at
around $500,000 for the next nine months, which it hopes to cover from the funds
raised in the private placement during the fiscal 2000. The management believes
that the ten private placement investees will exercise their warrants during the
fiscal 2001, which could generate further cash of about $4.5 million (approx. $3
million US).
In the event warrants are not exercised or further capital is not raised, the
Company may dispose of part or all of its investment in Dataloom Inc. It is the
intention of the management to keep enough liquidity to meet its operating
requirements for the following eighteen months.
FORWARD LOOKING STATEMENTS.
The foregoing Management's Discussion and Analysis contains "forward looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Act of 1934, as amended, and as
contemplated under the Private Securities Litigation Reform Act of 1995,
including statements regarding, among other items, the Company's business
strategies, continued growth in the Company's markets, projections, and
anticipated trends in the Company's business and the industry in which it
operates. The words "believe," "expect," "anticipate," "intends," "forecast,"
"project," and similar expressions identify forward-looking statements. These
forward-looking statements are based largely on the Company's expectations and
are subject to a number of risks and uncertainties, certain of which are beyond
the Company's control. The Company cautions that these statements are further
qualified by important factors that could cause actual results to differ
materially from those in the forward looking statements, including, among
others, the following: reduced or lack of increase in demand for the Company's
products, competitive pricing pressures, changes in the market price of
ingredients used in the Company's products and the level of expenses incurred in
the Company's operations. In light of these risks and uncertainties, there can
be no assurance that the forward-looking information contained herein will in
fact transpire or prove to be accurate. The Company disclaims any intent or
obligation to update "forward looking statements".
11
PART 11 OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
There are no material legal proceedings in progress or to the knowledge of the
Company, pending or threatened to which the Company is a party or to which any
of its properties is subject.
ITEM 2 CHANGES IN SECURITIES
None
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
None
ITEM 5 OTHER INFORMATION
None
SIGNATURES
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PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED
----------------------------
TERENCE ROBINSON
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CHAIRMAN & CEO
DEALCHECK.COM INC.
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