SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended February 28, 1999
[ ] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from _________ to ___________
Commission file number 33-55254-15
GRANDEUR, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
NEVADA 87-0438451
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
1801 McGill College, Suite 1330,
Montreal, Quebec Canada H3A 2N4
(Address of Principal Executive Offices) (Zip Code)
(Issuer's Telephone Number, Including Area Code) (514) 282-9000
Indicate by a check mark whether the issuer (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the issuer was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. [X] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares of each of the issuer's classes of common
equity, as of the latest practicable date:
Class Outstanding as of February 28, 1999
- -------------------------- -----------------------------------
$.001 PAR VALUE CLASS A 13,848,300 SHARES
COMMON STOCK
PART I
FINANCIAL INFORMATION
ITEM 1. Financial Statements.
The accompanying unaudited financial statements (pages F-1 through F-3)
have been prepared in accordance with the instructions to Form 10-QSB and,
therefore, do not include all information and footnotes necessary for a complete
presentation of financial position, results of operations, cash flows and
stockholders' deficit in conformity with generally accepted accounting
principles. In the opinion of management, all adjustments considered necessary
for a fair presentation of the results of operation and financial position have
been included and all such adjustments are of a normal recurring nature.
Operating results for the nine months ended February 28, 1999 are not
necessarily indicative of the results that can be expected for the year ending
May 31, 1999.
ITEM 2. Management's Plan of Operation.
Pursuant to an Agreement made and entered into on February 25th 1998
Grandeur Inc. (the "Company") issued and delivered on February 26, 1998,
12,848,300 shares of its Common Stock bearing a restrictive legend to 3127575
Canada Inc., a Canadian Corporation, in exchange for which issuance, it acquired
all of the outstanding shares of 3127575 Canada Inc. Through 3127575 Canada
Inc., the Company has become the exclusive licensee of the del-ID technology for
personal identification by means of electronic scanning of finger
characteristics. 3127575 Canada Inc., obtained these exclusive rights by the
Exclusive License Agreement dated November 12, 1997 between it and Pierre de
Lanauze, inventor of the del-ID technology.
The transaction was exempt from the registration requirements of the
Securities Act of 1933 by virtue of Section 4(2) thereof. Also, because the
12,848,300 shares were issued solely to non-U.S. persons, the transaction
qualified for exemption under Rules 901 et seq.
of Regulation S.
Following the above transaction the former shareholders of 3127575 Canada
Inc. owned 92.78% of the outstanding shares of the Company.
The del-ID technology permits precise and positive authentication of
the identity of any living individual and is applicable to a wide range of
financial transactions where authentication of the individual is necessary to
eliminate fraud and other improper use of services. The del-ID system collects
biological data from the finger image of the individual and transfers the image
to a unique electronic signature called the "del-gram". The del-gram is not a
digitized bitmap image of the finger, but a synthesized subset of biological
data sufficient to identify the individual.
Patent protection is currently pending for the del-ID system in the
United States. The International Preliminary Examination Report was issued in
accordance with the Patent Cooperation Treaty application (PCT) that included 82
countries. The Examiner has recognized and acknowledged the inventive step, the
novelty and the industrial applicability by accepting all of the 11 claims
represented by the technology.
In April 1998, 3127575 Canada Inc. signed an agreement with the "Centre
de Recherche en Informatique de Montreal (CRIM)" for a scientific evaluation of
the technology. The evaluation holds two topics. The primary one covers
theoretical and accurate applications. The secondary covers the implementation
of a study in a controlled laboratory environment. Here are the following
details of the laboratory :
- - The basic analysis of the technology ( technical specifications).
- - Practical applications in simulated commercial environment such as banking,
telephony, e-commerce etc.
The primary topic analysis has been done by the CRIM in collaboration
with a major American University. The positive results have been published and
shall be available soon on the delSecur web site at delsecur.com.
The secondary topic is presently in the making and will be done in
collaboration with majors firms who are well recognized in their fields of
activity. These majors firms will sponsor part of the implementation costs of
the laboratory studies. For the time frame and more details about this section,
we refer the reader to the delSecur web site.
Commercial applications of the del-ID technology are numerous and
include access to the information highway/internet, identification of employees
working from a home office and requiring access to certain databases or
informations, health cards, social insurance cards, drivers' licenses, passport
control encryptions and access to confidential files, control of payment by
debit or credit payment systems such as credit cards, smartcards, authentication
of oral telephone ordering, access control to sensitive areas, hotel room
access, cellular and digital telephone controls, automobile entry and
protection, census and election control, door locks, vault locks, residential
alarm system controls, timesheet management, student file management and many
others.
The Company expects to encounter substantial competition in the
business in which it proposes to engage. It is likely that the competing
entities will have significantly greater experience, resources, facilities,
contacts and managerial expertise than the Company and will, consequently, be in
a better position than the Company to obtain access to and to engage in the
proposed business. Therefore it is to our advantage to associate ourselves to
such major firms by gaining credibility and recognition. This enables us to use
their know how, their resources and networking.
The Company will not manufacture del-ID cards or card readers directly.
This will tend to minimize the capital requirements of the Company, its
principal activities being limited to marketing the del-ID system to
manufacturers and/or users internationally. Anticipated sources of revenue are
license fees payable by government agencies and corporate entities for the right
to manufacture, use or sell cards and card readers incorporating the del-ID
system, as well as royalty payments by such entities for each card and reader
employed in a del-ID system. We anticipate the first commercial revenue in
twelve months from the present.
As of February 28, 1999, the Company's balance sheet showed an
accumulated deficit of $2,755,822, an increase of $868,978 during the nine
months. Operations to date have been financed principally by loans from senior
management and others. Additional unsecured loan facilities continue to be
available and are believed by management to be
sufficient to finance operations over the next several months, pending the
anticipated initial receipt of contract revenues during the second half of the
1999 fiscal year. No financing involving the issuance of additional shares is
presently contemplated.
The Company had a net loss of $204,562 for the three months ended
February 28, 1999 and a $868,978 loss for the nine months then ended.
The Company will continue to seek marketing opportunities for product
licensing with governmental agencies and corporate entities on a world-wide
basis.
As the Company will be engaged in securing licensing contracts for use
of its existing del-ID technology, no significant expansion of the physical
plant, equipment or number of employees is foreseen for the period of the next
twelve months.
PART II
OTHER INFORMATION
ITEM 6. Exhibits and Report on Form 8-K
None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized
Grandeur, Inc.
Date: 13 April 1999 By:
------------------------------ ---------------------------------
Pierre de Lanauze, President,
Chairman of the Board and Director
GRANDEUR INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
(expressed in Canadian dollars)
(Unaudited)
February 28,
1999
----------------------
ASSETS
CURRENT ASSETS
Cash $ 0
Sales taxes receivable 93,309
Prepaid expenses 34,899
Receivable-related party (non-interest bearing) 131,186
Receivable - officer (non-interest bearing) 372,345
----------------------
TOTAL CURRENT ASSETS 631,739
OTHER ASSETS
Property and equipment 184,996
License from related party 1
184,997
----------------------
$ 816,736
======================
LIABILITIES & DEFICIT
CURRENT LIABILITIES
Bank overdraft $ 32,013
Accounts payable 374,332
Accrued liabilities 44,105
Payable-related party (non-interest bearing) 214,812
Payable - officer 1,413,300
Loan payable 271,487
----------------------
TOTAL CURRENT LIABILITIES 2,350,049
Deferred income 7,411
STOCKHOLDERS' DEFICIT
Common Stock $.001 par value:
Authorized - 100,000,000 shares
Issued and outstanding 13,848,300 shares 19,715
Additional paid-in capital 1,195,383
Deficit accumulated during the development stage (2,755,822)
----------------------
TOTAL STOCKHOLDERS' DEFICIT (1,540,724)
----------------------
$ 816,736
======================
F - 1
GRANDEUR INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(expressed in Canadian dollars)
(Unaudited)
Three Months Ended Nine Months Ended From
February 28, February 28, inception to
1999 1998 1999 1998 2/28/99
------------- ------------- ------------- -------------- ---------------
Net sales $ 0 $ 0 $ 0 $ 0 $ 0
Cost of sales 0 0 0 0 0
------------- ------------- ------------- -------------- ---------------
GROSS PROFIT 0 0 0 0 0
Other income 0 0 0 0 8,000
Depreciation and amortization 16,534 0 44,099 50,512 134,045
Interest expense 9,200 0 17,200 7,900 42,376
Research and development 26,931 0 255,228 62,581 490,554
General and administrative expenses 151,897 0 552,451 503,992 2,053,581
------------- ------------- ------------- -------------- ---------------
204,562 0 868,978 624,985 2,720,556
------------- ------------- ------------- -------------- ---------------
NET LOSS $ (204,562) $ 0 $ (868,978) $ (624,985) $ (2,712,556)
============= ============= ============= ============== ===============
Net income (loss) per weighted
average share $ (.01) $ .00 $ (.06) $ (.62)
============= ============= ============= ==============
Weighted average number of common
shares used to compute net income
(loss) per weighted average share 13,848,300 1,000,000 13,848,300 1,000,000
============= ============= ============= ==============
F - 2
GRANDEUR INC. AND SUBSIDIARY
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(expressed in Canadian dollars)
(Unaudited)
From
Nine Months Ended February 28, Inception to
1999 1998 2/28/99
--------------- --------------- ----------------
OPERATING ACTIVITIES
Net (loss) $ (868,978) $ (624,985) $ (2,712,556)
Adjustments to reconcile net (loss) to cash used
by operating activities:
Depreciation 44,099 50,512 134,045
Provision on common control company advances 0 0 290,402
Changes in assets and liabilities:
Sales tax receivable 39,344 (40,335) (93,309)
Prepaid expenses (28,079) (25,344) (34,899)
Officer loan 14,762 (215,860) (372,345)
Accounts payable 279,714 141,977 374,332
Accrued liabilities (54,095) 78,487 44,105
Payable - related party 68,605 35,776 214,812
Deferred income 7,411 0 7,411
--------------- --------------- ----------------
NET CASH USED
BY OPERATING ACTIVITIES (497,217) (599,772) (2,148,002)
INVESTING ACTIVITIES
Receivable - related party 6,463 112,067 (421,588)
Purchase of property & equipment (50,601) (117,858) (319,041)
--------------- --------------- ----------------
NET CASH USED
BY INVESTING ACTIVITIES (44,138) (5,791) (740,629)
FINANCING ACTIVITIES
Loan 168,500 115,000 581,850
Loan repayment (162,136) 0 (310,363)
Loan from shareholder 0 370,033 2,085,250
Increase in bank overdraft 32,013 39,869 32,013
Increase in paid-in capital 499,781 0 499,781
Sale of stock 0 0 100
--------------- --------------- ----------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 538,158 524,902 2,888,631
--------------- --------------- ----------------
DECREASE IN CASH
AND CASH EQUIVALENTS (3,197) (80,661) 0
Cash and cash equivalents at beginning of year 3,197 80,661 0
--------------- --------------- ----------------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 0 $ 0 $ 0
=============== =============== ================
Cash paid for interest $ 14,200 $ 7,900 $ 33,944
=============== =============== ================
F - 3