UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Report of Event occurring on February 26, 1998
Commission File No. 33-55254-15
GRANDEUR, INC.
NEVADA 87-043851
(State or other jurisdiction (I.R.S. Employer Identification of
incorporation or organization) Number)
1800 E. Sahara, Suite 107
LAS VEGAS, NEVADA 89104
(Address of principal executive offices)
Registrant's telephone number, including area code (702) 693-5744
AMENDMENT NO. 1
The undersigned registrant hereby amends the following items, financial
statements, exhibits, or other portions of its CURRENT REPORT on Form 8-K/A
dated March 9, 1998 as follows:
Attached are unaudited financial statements as of February 28, 1998 and
audited financial statements as of May 31, 1997, 1996, and 1995 for
3127575 Canada Inc., a subsidiary that was acquired on February 26,
1998. Pro forma information on a consolidated basis would be the same
as the separate statements of the subsidiary as the Registrant had no
assets or operations for the periods presented.
1
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Grandeur, Inc.
(Registrant)
Date: August 11, 1998 By: /s/
Pierre DeLanauze
President and Director
Grandeur, Inc.
2
3127575 Canada Inc.
(a development stage enterprise)
FINANCIAL STATEMENTS
May 31, 1997, May 31,1996 and
May 31, 1995
(expressed in Canadian dollars)
April 9, 1998
AUDITORS' REPORT
To the Board of Directors of
3127575 Canada Inc.
(a development stage enterprise)
We have audited the balance sheet of 3127575 Canada Inc. (a development stage
enterprise) as at May 31, 1997, May 31, 1996 and May 31, 1995 and the statements
of loss and deficit and changes in financial position for each of the years in
the three-year period ended May 31, 1997. 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 Canadian generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the company as at May 31, 1997, May 31, 1996
and May 31, 1995 and the results of its operations and the changes in its
financial position for each of the years in the three-year period ended May 31,
1997 in accordance with generally accepted accounting principles in Canada.
/s/ Price Waterhouse
Chartered Accountants
3127575 CANADA INC.
(a development stage enterprise)
BALANCE SHEET
(expressed in Canadian dollars)
May 31 May 31 May 31 February 28
1995 1996 1997 1998
-----------------------------------------------------------------------
(unaudited)
Assets
Current assets
Cash $ 811 $ 82 $ 80,661 $ -
Sales taxes receivable - - 71,731 112,066
Prepaid expenses - - 62,020 87,364
Advances to a common control 49,289 52,792 228,722 116,655
company, without interest
(Note 3)
Shareholder loan, without interest - 17,381 233,241
-----------------------------------------------------------------------
50,100 52,874 460,515 549,326
Capital assets (Note 4) - - 119,734 187,080
Other asset
License (Note 5) - - - 1
-----------------------------------------------------------------------
$ 50,100 $ 52,874 $ 580,249 $ 736,407
-----------------------------------------------------------------------
Liabilities
Current liabilities
Bank overdraft $ - $ - $ - $ 39,869
Accounts payable and accrued - 3,000 61,332 281,796
liabilities
Advances from a common control - - 101,912 137,688
company, without interest
Due to a shareholder (Note 5) - - - 1,413,300
-----------------------------------------------------------------------
- 3,000 163,244 1,872,653
Long-term debt (Note 6) 50,000 50,000 239,350 354,350
Loan from a shareholder, without - - 1,000,000 -
interest or repayment terms
Share Capital and Deficit
Share capital (Note 7) 100 100 100 100
Deficit - (226) (822,445) (1,490,696)
-----------------------------------------------------------------------
100 (126) (822,345) (1,490,596)
-----------------------------------------------------------------------
$ 50,100 $ 52,874 $ 580,249 $ 736,407
-----------------------------------------------------------------------
Approved by the Board Director Director
3127575 CANADA INC.
(a development stage enterprise)
STATEMENT OF LOSS AND DEFICIT
(expressed in Canadian dollars)
Year ended Year ended Year ended Nine-month
May 31 May 31 May 31 period ended
February 28
1995 1996 1997 1998
-----------------------------------------------------------------------
(unaudited)
Revenue
Interest $ - $ 5,000 $ - $ -
Management income - 3,000 - -
-----------------------------------------------------------------------
- 8,000 - -
Expenses
Research and development costs - - 135,348 62,581
Salaries and fringe benefits - - 110,561 237,057
Publicity - - 17,208 12,119
Travel and entertainment - - 8,976 28,619
Repairs on and lease of vehicles - - 17,442 30,688
Rent - - 59,897 49,836
Heat and electricity - - 1,762 1,348
Repairs and maintenance - - 28,580 -
Insurance and license - - 31,497 14,717
Office expenses - - 20,642 19,643
Professional fees - 3,000 75,904 100,576
Interest on long-term debt - 5,044 - 7,900
Bank charges - 182 2,871 9,389
Provision on common control - - 290,402 -
company advances
Amortization of capital assets - - 21,129 50,512
-----------------------------------------------------------------------
- 8,226 822,219 624,985
-----------------------------------------------------------------------
Net loss - (226) (822,219) (624,985)
Deficit at beginning of period - - 226 822,445
Amount from contributed - - - 43,266
surplus (Note 8)
-----------------------------------------------------------------------
Deficit at end of period $ - $ 226 $ 822,445 $ 1,490,696
-----------------------------------------------------------------------
3127575 CANADA INC.
(a development stage enterprise)
STATEMENT OF CHANGES IN FINANCIAL POSITION
(expressed in Canadian dollars)
Year ended Year ended Year ended Nine-month
May 31 May 31 May 31 period ended
February 28
1995 1996 1997 1998
-----------------------------------------------------------------------
(unaudited)
Operating activities
Net loss $ - $ (226) $ (822,219) $ (624,985)
Items not affecting cash
Amortization of capital assets - - 21,129 50,512
Provision on common control - - 290,402 -
company advances
-----------------------------------------------------------------------
- (226) (510,688) (574,473)
Changes in non-cash operating - 3,000 9,112 (25,299)
working capital
-----------------------------------------------------------------------
- 2,774 (501,576) (599,772)
Financing activities
Long-term debt 50,000 - 239,350 115,000
Repayment of long-term debt - - (50,000) -
Loan from a shareholder - - 1,000,000 370,033
Due to a shareholder - - - 1,413,300
Repayment of loan to a shareholder - - - (1,370,033)
Increase in contributed surplus - - - 1,370,033
Share issues 100 - - -
-----------------------------------------------------------------------
50,100 - 1,189,350 1,898,333
Investing activities
Advances from a common control (49,289) (3,503) (466,332) 112,067
company
Additions to capital assets - - (140,863) (117,858)
License - - - (1,413,300)
-----------------------------------------------------------------------
(49,289) (3,503) (607,195) (1,419,091)
-----------------------------------------------------------------------
Increase (decrease) in cash during 811 (729) 80,579 (120,530)
the period
Cash, beginning of period - 811 82 80,661
-----------------------------------------------------------------------
Cash (bank overdraft), end of period $ 811 $ 82 $ 80,661 $ (39,869)
-----------------------------------------------------------------------
3127575 CANADA INC.
(a development stage enterprise)
NOTES TO FINANCIAL STATEMENTS
For the three-year period ended May 31, 1997
(All information as at and for the nine-month period ended February 28, 1998
is unaudited.)
(expressed in Canadian dollars)
1 Incorporation and nature of operations
3127575 Canada Inc., a development stage enterprise, was incorporated
under the Canada Business Corporations Act on March 13, 1995 and
operates under the name of DelSecur. The company is involved in the
research, development and commercialization of the "DEL ID" project.
2 Significant accounting policies
The financial statements are expressed in Canadian dollars and have been
prepared in accordance with accounting principles generally accepted in
Canada.
Capital assets and amortization
Capital assets are recorded at cost. Amortization is calculated using
the declining balance method at a rate of 30% for computer equipment.
The carrying value of the capital assets is evaluated whenever
significant events or changes occur that might indicate an impairment
through comparison of the carrying value to the net recoverable amount.
Research and development costs
Research costs, which include all costs incurred to establish
technological feasibility, are charged to operations in the year in
which they are incurred.
Development costs are evaluated for deferral and subsequent
amortization. As at May 31, 1997, the company has not deferred any
development costs.
License
Amortization of the capitalized license will commence at such time as
related sales revenues are generated.
The carrying value of the license is evaluated whenever significant
events or changes occur that might indicate an impairment through
comparison of the carrying value to the net recoverable amount.
Use of estimates
The financial statements have been prepared in conformity with generally
accepted accounting principles and, as such, include amounts based on
informed estimates and judgements of management with consideration given
to materiality. Actual results could differ from those estimates.
3127575 CANADA INC.
(a development stage enterprise)
NOTES TO FINANCIAL STATEMENTS ...continued
For the three-year period ended May 31, 1997
(All information as at and for the nine-month period ended February 28, 1998
is unaudited.)
(expressed in Canadian dollars)
3 Advances to a common control company
May 31 May 31 May 31 February 28
1995 1996 1997 1998
-----------------------------------------------------------------------
(unaudited)
Balance, beginning of period $ - $ 49,289 $ 52,792 $ 519,124
Advances during the period 49,289 3,503 466,332 -
Charges net of payments - - - (112,067)
-----------------------------------------------------------------------
49,289 52,792 519,124 407,057
Provision on common - - (290,402) (290,402)
control company advances
-----------------------------------------------------------------------
Balance, end of period $ 49,289 $ 52,792 $ 228,722 $ 116,655
-----------------------------------------------------------------------
4 Capital assets
May 31, 1997
Cost Accumulated Net book
amortization value
-----------------------------------------------------
Computer equipment $ 140,863 $ 21,129 $ 119,734
-----------------------------------------------------
February 28, 1998
Cost Accumulated Net book
amortization value
-----------------------------------------------------
(unaudited)
Computer equipment $ 258,721 $ 71,641 $ 187,080
-----------------------------------------------------
3127575 CANADA INC.
(a development stage enterprise)
NOTES TO FINANCIAL STATEMENTS ...continued
For the three-year period ended May 31, 1997
(All information as at and for the nine-month period ended February 28, 1998
is unaudited.)
(expressed in Canadian dollars)
5 License
On November 12, 1997, the shareholder of the company and owner of an
invention consisting of an apparatus and method, including related
software, for scanning and storing an optical representation of a
finger's capillary lines has entered into an agreement with the company
whereby he has granted to the company the exclusive right to
commercialize the invention which shall include, among other things,
manufacturing and marketing the invention under the terms and conditions
contained therein for the consideration of US$1,000,000 (CDN$1,413,300).
This transaction was measured at its carrying value of $1. The excess of
the consideration received and the carrying value was recorded against
contributed surplus and deficit.
6 Long-term debt
May 31 May 31 May 31 February 28
1995 1996 1997 1998
-----------------------------------------------------------------------
(unaudited)
Bank loan guaranteed by the $ 50,000 $ 50,000 $ - $ -
Societe de Developpement
Industriel du Quebec and
by a general mortgage on
debts, bearing interest
at the prime rate plus 1 3/4%,
repaid in 1997
Loan bearing interest at a - - 239,350 354,350
monthly rate of 0.5% to 1%,
without specific repayment
terms
-----------------------------------------------------------------------
$ 50,000 $ 50,000 $ 239,350 $ 354,350
-----------------------------------------------------------------------
3127575 CANADA INC.
(a development stage enterprise)
NOTES TO FINANCIAL STATEMENTS ...continued
For the three-year period ended May 31, 1997
(All information as at and for the nine-month period ended February 28, 1998
is unaudited.)
(expressed in Canadian dollars)
7 Share capital
May 31 May 31 May 31 February 28
1995 1996 1997 1998
-----------------------------------------------------------------------
(unaudited)
Authorized
Unlimited number of
Class A voting, participating
shares, entitled to dividends,
without par value, convertible
at the option of the management
of the company and of the majority
Class D shareholders on the
basis of one Class A share
for one Class D share
Unlimited number of Class B
share, voting, participating,
entitled to dividends, without
par value
3127575 CANADA INC.
(a development stage enterprise)
NOTES TO FINANCIAL STATEMENTS ...continued
For the three-year period ended May 31, 1997
(All information as at and for the nine-month period ended February 28, 1998
is unaudited.)
(expressed in Canadian dollars)
7 Share capital ...continued
May 31 May 31 May 31 February 28
1995 1996 1997 1998
-----------------------------------------------------------------------
(unaudited)
Unlimited number of Class C shares,
voting, non-participating, not
entitled to dividends and redeemable
at the option of the company at
the paid-up capital, without par
value
Unlimited number of Class D shares,
non-voting, non-participating,
entitled to a non-cumulative
monthly dividend of 1% of the
redeemable value as described
hereinafter, ranking in priority
to Class A, B, E, F and G shares,
redeemable at the option of the
holder at the paid-up capital
plus an amount equal to the
difference between their paid-up
capital and the fair market value
of Class A shares upon their
exchange for Class D shares,
without par value
Unlimited number of Class E
shares, non-voting,
non-participating, entitled
to a non-cumulative monthly
dividend of 1% of the
redeemable value described
hereinafter, ranking in
priority to Class A, B, F
and G shares, redeemable at
the option of the holder at
the paid-up capital plus an
amount equal to the difference
between the fair market value
received on the issuance of
Class E shares and the paid-up
capital, without par value
3127575 CANADA INC.
(a development stage enterprise)
NOTES TO FINANCIAL STATEMENTS ...continued
For the three-year period ended May 31, 1997
(All information as at and for the nine-month period ended February 28, 1998
is unaudited.)
(expressed in Canadian dollars)
7 Share capital ...continued
May 31 May 31 May 31 February 28
1995 1996 1997 1998
-----------------------------------------------------------------------
(unaudited)
Unlimited number of Class F
shares, non-voting,
non-participating, entitled
to a $1 non-cumulative
dividend, ranking in priority to
Class A, B and G shares,
redeemable at the option of
the holder at the paid-up
capital plus declared but
unpaid dividends, without
par value
Unlimited number of Class G
shares, non-voting,
non-participating, entitled
to a $1 non-cumulative
dividend, ranking in priority
to Class A and B shares,
redeemable at the option of
the company at the paid-up
capital plus declared but
unpaid dividends, without
par value
Issued
100 Class B shares $ 100 $ 100 $ 100 $ 100
-----------------------------------------------------------------------
8 Contributed surplus
May 31 May 31 May 31 February 28
1995 1996 1997 1998
-----------------------------------------------------------------------
(unaudited)
Balance, beginning of period $ - $ - $ - $ -
Add: Shareholder loan * - - - 1,370,033
Deduct: License (Note 5) - - - (1,413,299)
-----------------------------------------------------------------------
- - - (43,266)
Amount transferred to deficit - - - 43,266
-----------------------------------------------------------------------
Balance, end of period $ - $ - $ - $ -
-----------------------------------------------------------------------
3127575 CANADA INC.
(a development stage enterprise)
NOTES TO FINANCIAL STATEMENTS ...continued
For the three-year period ended May 31, 1997
(All information as at and for the nine-month period ended February 28, 1998
is unaudited.)
(expressed in Canadian dollars)
8 Contributed surplus ...continued
* From June 1997 to February 24, 1998, further advances were made by
the shareholder totalling $370,033. On February 24, the shareholder
contributed the full amount of the loan outstanding of $1,370,033 to
capital. Accordingly, the amount has been accounted for as
contributed surplus.
9 Income tax
The company has accumulated losses for income tax purposes totalling
approximately $1,079,000 for which the benefits have not been recognized
in the financial statements. These losses can be deducted from future
years' taxable income and expire as follows:
2004 $566,000
2005 $513,000
10 Related party transactions
During the period, the company made some transactions with two companies
owned by the same shareholder.
May 31 May 31 May 31 February 28
1995 1996 1997 1998
-------------------------------------------------------
(unaudited)
Expenses $ - $ - $ 458,300 $ 116,128
-------------------------------------------------------
These transactions occurred in the normal course of the company's
activities and are measured at fair value, which represents the exchange
value.
11 Contingency
An application was filed by a shareholder of Delsynchro Inc., a common
control company, who has requested authorization from the Court to
institute proceedings on behalf of Delsynchro Inc. requesting the Court
to declare Delsynchro Inc. owner of the invention known as "DEL ID" and
the related rights.
Management believes that the resolution of the litigations in which
Delsynchro Inc. is involved would not have a material adverse effect on
the financial condition or results of operations of 3127575 Canada Inc.
3127575 CANADA INC.
(a development stage enterprise)
NOTES TO FINANCIAL STATEMENTS ...continued
For the three-year period ended May 31, 1997
(All information as at and for the nine-month period ended February 28, 1998
is unaudited.)
(expressed in Canadian dollars)
12 Financial instruments
Fair value
Due to their short-term maturity, the carrying values of certain
financial instruments were assumed to approximate their fair values. The
financial instruments include: sales taxes receivable, advances to a
common control company and shareholder loan included in current assets,
bank overdraft, accounts payable and accrued liabilities, advances from
a common control company and due to a shareholder included in current
liabilities, and long-term debt and loan from a shareholder included in
long-term liabilities.
The fair value of these financial instruments is not significantly
different than their carrying amounts.
Interest rate risk
The company's exposure to interest rate risk is as follows:
Sales taxes receivable Non-interest bearing
Advances to a common control company Non-interest bearing
Shareholder loan Non-interest bearing
Accounts payable and accrued liabilities Non-interest bearing
Advances from a common control company Non-interest bearing
Due to a shareholder Non-interest bearing
Long-term debt Monthly rate of 0.5% to 1%
Loan from a shareholder Non-interest bearing
Credit risk
The company's exposure to credit risk is as indicated by the carrying
amounts of the financial assets.
The company may be exposed to losses in the future if the debtors fail
to pay. Significant portions of amounts receivable are from related
parties.
13 Subsequent event
On February 26, 1998 all of the issued and outstanding shares of the
company were acquired by Grandeur Inc., a U.S. development stage company
incorporated as a Nevada corporation.
3127575 CANADA INC.
(a development stage enterprise)
NOTES TO FINANCIAL STATEMENTS ...continued
For the three-year period ended May 31, 1997
(All information as at and for the nine-month period ended February 28, 1998
is unaudited.)
(expressed in Canadian dollars)
14 United States generally accepted accounting principles
The financial statements have been prepared in accordance with generally
accepted accounting principles in Canada (Canadian GAAP) which, in the
case of 3127575 Canada Inc., conform in all material respects with GAAP
in the United States (U.S. GAAP), except as set forth below.
Statement of operations
Under Canadian GAAP, income taxes are accounted for using the deferral
method whereas under U.S. GAAP, the liability method would be used.
Under U.S. GAAP, 3127575 Canada Inc. would have recognized a deferred
tax asset of $410,000 on net operating loss carryforwards. In addition,
3127575 Canada Inc. would have created a valuation allowance equal to
this deferred tax asset to bring down its value to nil. Consequently,
there are no material differences on net earnings with respect to income
taxes.
Change in financial position
Under U.S. GAAP, the following amounts would be reported:
May 31 May 31 May 31 February 28
1995 1996 1997 1998
-------------------------------------------------------------------
(unaudited)
Net cash provided by (used
in)
Operating activities $ - $ 2,774 $ (448,784) $ (599,772)
Financing activities 50,100 - 1,189,350 524,902
Investing activities (49,289) (3,503) (659,987) (5,791)
-------------------------------------------------------------------
Net increase (decrease) $ 811 $ (729) $ 80,579 $ (80,661)
in cash
--------------------------------------------------------------------------
Under U.S. GAAP, the statement of changes in financial position would
reconcile the opening balance of cash and cash equivalents to the amount
of cash and cash equivalents at the end of the year without regard to
bank overdraft not constituting cash equivalents. Consequently, under
U.S. GAAP, the variation in bank overdraft not considering cash
equivalents would be disclosed as a financing activity. Such amount is
$39,869 for the nine-month period ended February 28, 1998.
Canadian GAAP allows the disclosure of a subtotal of the amount of cash
provided by operating activities before cash provided by non-cash
operating working capital items. U.S. GAAP requires a statement of
changes in financial position without subtotal.
3127575 CANADA INC.
(a development stage enterprise)
NOTES TO FINANCIAL STATEMENTS ...continued
For the three-year period ended May 31, 1997
(All information as at and for the nine-month period ended February 28, 1998
is unaudited.)
(expressed in Canadian dollars)
14 United States generally accepted accounting principles...continued
Under U.S. GAAP, the statement of changes in financial position would
not present transactions that are non-cash. Such elements would be
presented in a note of changes in financial position. During the
nine-month period ended February 28, 1998, the repayment of loan from a
shareholder, the increase in contributed surplus, the acquisition of a
license and the related due to a shareholder were non-cash transactions.
The net change in non-cash operating working capital items is as
follows:
May 31 May 31 May 31 February 28
1995 1996 1997 1998
----------------------------------------------------------
(unaudited)
Sales taxes receivable $ - $ - $ (71,731) $ (40,335)
Prepaid expenses - - (62,020) (25,344)
Shareholder loan - - (17,381) (215,860)
Trade accounts payable - - 43,585 141,977
Accrued liabilities - 3,000 14,747 78,487
Advances from a common - - 101,912 35,776
control company
----------------------------------------------------------
$ - $ 3,000 $ 9,112 $ (25,299)
----------------------------------------------------------
Other disclosures
The disclosure of the following amounts is required under U.S. GAAP:
May 31 May 31 May 31 February 28
1995 1996 1997 1998
--------------------------------------------------------------------------
(unaudited)
Trade accounts payable $- $- $43,585 $185,562
Accrued liabilities - 3,000 17,747 96,234
--------------------------------------------------------------------------
$- $3,000 $61,332 $281,796
--------------------------------------------------------------------------
3127575 CANADA INC.
(a development stage enterprise)
NOTES TO FINANCIAL STATEMENTS ...continued
For the three-year period ended May 31, 1997
(All information as at and for the nine-month period ended February 28, 1998
is unaudited.)
(expressed in Canadian dollars)
14 United States generally accepted accounting principles...continued
Development stage enterprise disclosure
Statement of loss and deficit
Year ended Nine-month
May 31 period ended
1997 February 28
1998
-------------------------------------
(unaudited)
Cumulative revenue $ 8,000 $ 8,000
-------------------------------------
Cumulative expenses $830,445 $1,455,430
-------------------------------------
Cumulative net loss $822,445 $1,447,430
-------------------------------------
Statement of changes in financial position
Year ended Nine-month
May 31 period ended
1997 February 28
1998
-------------------------------------
(unaudited)
Operating activities $ (446,010) $(1,045,782)
-------------------------------------
Financing activities $1,239,450 $ 1,764,352
-------------------------------------
Investing activities $ (712,779) $ (718,570)
-------------------------------------
Balance sheet and statement of loss and deficit
The deficit should read "Deficit accumulated during the development
stage".
3127575 CANADA INC.
(a development stage enterprise)
NOTES TO FINANCIAL STATEMENTS ...continued
For the three-year period ended May 31, 1997
(All information as at and for the nine-month period ended February 28, 1998
is unaudited.)
(expressed in Canadian dollars)
14 United States generally accepted accounting principles...continued
Unaudited interim financial statement presentation
The unaudited interim balance sheet as of February 28, 1998 and the
unaudited interim statements of loss and deficit and changes in
financial position for the nine months ended February 28, 1998 have been
prepared in accordance with generally accepted accounting principles for
interim financial information. Accordingly, they do not include all of
the information and notes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting only of normal recurring
adjustments) considered necessary for a fair presentation have been
included. The results for the nine-month period ended February 28, 1998
are not necessarily indicative of the results that may be expected for
the year ending May 31, 1998.