AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 18, 2002
Registration No. 333-90618
U.S. Securities and Exchange Commission Washington, D.C. 20549
Pre-Effective Amendment No. 3
to FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
INFOTEC BUSINESS SYSTEMS, INC.
(Name of small business issuer in its charter)
NEVADA 7380 98-0358149
(State or other jurisdiction of (Primary Standard (I.R.S. Employer
incorporation or organization) Industrial Identification
Classification Code No)
Number)
444 Columbia Street E.
New Westminster, British Columbia, V3L 3W9, CANADA
(604) 777-1707
(Address and telephone number of principal executive offices)
Nevada Agency & Trust Company
50 West Liberty Street, Suite 880
Reno, Nevada, 89501
(775) 322-0626
(Name, address and telephone number of agent for service)
___________________________
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration
Statement.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number
of the earlier effective registration statement for the same offering.
|__|____________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |__|____________
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |__|____________
If delivery of the prospectus is expected to be made pursuant to Rule
434, check the following box.
|__|____________
CALCULATION OF REGISTRATION FEE
Title of each Proposed Proposed
class of maximum maximum
securities Amount to be offering price aggregate offering Amount of
to be registered registered per unit (1) price (2) registration fee (2)
Common Stock 1,200,000 $0.05 $60,000 $5.52
shares
(1) Based on last sales price on May 14, 2002 and the anticipated price
selling security holders will offer and sell their shares of common stock.
(2) Estimated solely for the purpose of calculating the registration fee
in accordance with Rule 457 under the Securities Act.
Note: Specific details relating to the fee calculation shall be furnished
in notes to the table, including references to provisions of Rule 457
(Section 230.457 of this chapter) relied upon, if the basis of the
calculation is not otherwise evident from the information presented in
the table. If the filing fee is calculated pursuant to Rule 457(o) under
the Securities Act, only the title of the class of securities to be
registered, the proposed maximum aggregate offering price for that class
of securities and the amount of registration fee needed to appear in the
Calculation of Registration Fee table. Any difference between the dollar
amount of securities registered for such offerings and the dollar amount
of securities sold may be carried forward on a future registration
statement pursuant to Rule 429 under the Securities Act.
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states that
this registration statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until the
registration statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with
the Securities and Exchange Commission. These securities may not be sold
nor may offers to buy be accepted prior to the time the registration
statement becomes effective. This prospectus shall not constitute an
offer to sell or the solicitation of an offer to buy nor shall there be
any sale of these securities in any state in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such state.
SUBJECT TO COMPLETION, Dated October 18, 2002
PROSPECTUS
INFOTEC BUSINESS SYSTEMS, INC.
(A Development Stage Company)
444 Columbia Street E.
New Westminster, British Columbia V3L 3W9, Canada
(604) - 777-1707
1,200,000 SHARES OF COMMON STOCK
----------------
This prospectus covers the 1,200,000 shares of common stock of Infotec
Business Systems, Inc. being offered by certain selling security holders.
We will not receive any proceeds from the sale of the shares by the
selling security holders.
There is presently no public market for our shares. The selling security
holders will offer and sell the shares of common stock at $.05 per share
until our shares are quoted on the OTC Bulletin Board and thereafter at
prevailing market prices or privately negotiated prices.
The purchase of the securities offered through this prospectus involves
a high degree of risk. You should purchase shares only if you can afford
a complete loss of your investment. See section entitled "Risk Factors"
on pages 4 - 6.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON
THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
- ----------------
The Date of This Prospectus Is: __________, 2002.
TABLE OF CONTENTS
PART I PROSPECTUS
Page No.
PROSPECTUS SUMMARY.................................................... 3
RISK FACTORS.......................................................... 4
Need for Additional Financing......................................... 4
Dilution from Additional Financing.................................... 4
No Market for Our Common Stock........................................ 4
Lack of Operating History............................................. 4
Doubt as to Our Ability to Continue as a Going Concern................ 4
Marketable Product.................................................... 5
Part Time Management.................................................. 5
Competition........................................................... 5
Customer Base......................................................... 5
Program Errors and Defects............................................ 5
Rapid Technology Change............................................... 5
Management Control.................................................... 6
Penny Stock Rules..................................................... 6
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS............. 7
USE OF PROCEEDS....................................................... 7
SELLING SECURITY HOLDERS.............................................. 7
PLAN OF DISTRIBUTION.................................................. 10
LEGAL PROCEEDINGS..................................................... 11
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.......... 11
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT............................................................ 12
DESCRIPTION OF SECURITIES............................................. 13
INTEREST OF NAMED EXPERTS AND COUNSEL................................. 13
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES........................................ 14
ORGANIZATION WITHIN LAST FIVE YEARS................................... 14
DESCRIPTION OF BUSINESS............................................... 14
PLAN OF OPERATION..................................................... 22
DESCRIPTION OF PROPERTY............................................... 26
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS........................ 26
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.............. 28
EXECUTIVE COMPENSATION................................................ 29
AVAILABLE INFORMATION................................................. 30
REPORTS TO SECURITY HOLDERS........................................... 30
FINANCIAL STATEMENTS..................................................F-1
PART II INFORMATION NOT REQUIRED IN PROSPECTUS
INDEMNIFICATION OF DIRECTORS AND OFFICERS............................II-1
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION..........................II-1
RECENT SALES OF UNREGISTERED SECURITIES..............................II-1
EXHIBITS.............................................................II-2
UNDERTAKINGS.........................................................II-3
2
PROSPECTUS SUMMARY
Infotec Business Systems, Inc.
Infotec Business Systems, Inc. is a corporation formed under
the laws of the State of Nevada, whose principal executive offices
are located at 444 Columbia Street E., New Westminster, British
Columbia, V3L 3W9 Canada. Our telephone number is (604) 777-1707.
Our Business and Business Strategy
We are a development stage company and have not as yet engaged
in revenue producing activities. Our business plan is to develop
and commercialize a system that provides customers with remote
access via the Internet to their software applications and
corporate data. Customers will also have access to a suite of
integrated business productivity applications which we are
developing for contact, document, time and project management. We
plan to market our virtual office as a service to businesses in the
U.S. and Canada. We plan to develop our virtual office system as
easy to use, functional, responsive and integrated and to focus on
the needs of small and medium businesses. The virtual office
system will be located on our servers and network infrastructure.
For each business we will create a virtual office complete with
email, calendar and scheduling, task and project management,
client, document, time, project and task management. In addition,
businesses will be able to run their existing software from within
their virtual office. Users will access their virtual office
securely from any computer that has Internet access. While using
their virtual office, users can work with programs they are
familiar with and also with our own business productivity
application programs. Our approach is to provide integration of
the various components of our system and our users' data and
documents.
Our plan is to earn revenue from monthly services fees, usage
fees and consulting.
We acquired the prior development and pilot implementation of
the virtual office system in October 2001 and have continued
development and testing since that time. Our development plan
calls for completion of the virtual office system, a web and
demonstration site, the development of an internal management
information system and network infrastructure. To complete our
plan we will need to hire additional staff and consultants and
invest in certain equipment and software licenses.
We incurred a loss in the amount of $114,048 for the period
from incorporation to July 31, 2002. At July 31, 2002, our
working capital was $12,952. Our business plan calls for spending
of approximately $432,206, inclusive of $6,129 already spent, over
the next twelve month period. Accordingly, we do not have
sufficient resources to proceed with our business plan at this time
without additional financing.
Securities Being Offered 1,200,000 shares of common stock.
Securities Issued
And to be Issued 4,500,000 shares of common stock are
issued and outstanding as of the date
of this prospectus. All of the common
stock to be sold under this prospectus
will be sold by existing stockholders.
Use of Proceeds We will not receive any proceeds from
the sale of the common stock by the
selling stockholders.
3
References in this registration statement to Infotec, us, we,
the company and our, are to Infotec Business Systems, Inc. or our
wholly owned subsidiary Infotec Business Solutions, Inc. and not to
our selling stockholders.
RISK FACTORS
An investment in us involves a high degree of risk. You
should carefully consider the risks described below and the other
information in this prospectus before investing. If any of the
following risks occur, our business, operating results and
financial condition could be seriously harmed. Our value could
decline due to any of these risks, and you could lose all or part
of your investment.
We need additional financing and there is no assurance it can be
obtained, which will likely prevent us from ever becoming
profitable.
We currently have insufficient capital to meet our business
plan. We cannot assure you that we will be able to raise capital
or develop sufficient revenues. In the absence of financing and
obtaining additional capital, it is doubtful that we will be able
to continue operations, which means that you will not be able to
recover your investment in our shares of common stock.
Any additional financing may significantly dilute your equity
interest in our stock.
We hope to raise additional financing in the future. Even if
we are able to obtain capital, any financing will likely involve a
dilution of the interest of our stockholders upon the issuance of
additional shares of common stock and other securities. Given our
weak economic state, the terms upon which capital may be available
could well involve substantial dilution to our stockholders, which
may reduce significantly the value of your investment in our
shares.
Because there is currently no market for our common stock,
investors may find it extremely difficult to resell their shares
and should not expect liquidity.
There is currently no market for our common stock. We
anticipate applying for trading of our common stock on the OTC
Bulletin Board upon the effectiveness of this registration
statement of which this prospectus forms part. We cannot assure
you that our common stock will be traded on the bulletin board or,
if traded, that a market will materialize. In the absence of a
public market for our common stock, an investment in our shares
would be considered illiquid. Even if a public market is
established, it is unlikely a liquid market will develop.
Investors seeking liquidity in a security should not purchase our
common stock.
Because we have no operating history, you may find it difficult to
evaluate our company.
We are presently in the process of developing a virtual office
system that will be required to complete our business plan. We
have not yet earned any revenues and we will not be able to earn
any revenues until development of our virtual office system is
complete. Accordingly, we have no operating history from which
investors can evaluate our future business prospects or
management's performance. As a result, you have no reliable means
to determine whether you should make an investment in our company.
Because of our financial condition and because we have not been
able to complete our business plan and develop revenues, our
financial statements disclose that there is substantial doubt as to
our ability to continue as a going concern.
As at July 31, 2002, we had $12,952 of working capital on
hand. Our business plan calls for significant expenses in
connection with the development of our virtual office system. In
addition, we anticipate that revenues, if any, from operations will
not be realized until sometime after development of our virtual
office system is complete. Because of our financial condition and
these circumstances, our financial statements disclose there is
substantial doubt as to our ability to continue as a going concern.
It is not possible at this time to predict the outcome of these
matters and whether we will ever become financially viable and
develop revenues sufficient to achieve any level of profitability.
As a result, investors who acquire our common shares must recognize
that they may loose their entire
4
investment.
If we are unable to develop a marketable product, our ability to
generate revenue would be limited.
The virtual office system, management information system, web
site and system demonstration are currently in the development
stage. In order to commence sales, we will have to complete devel
opment. We will also have to complete testing of both our virtual
office system, our web site and demonstration site prior to
commencing commercial operations in order to ensure that the system
is functioning properly and is capable of being marketed to the
public. If we are unable to complete development of a commercial
system, we will not be able to market our service or earn any
revenues.
We rely on our President who does not devote his full business time
to our business. If our President is not available, we may not be
able to implement our business plan and investors may loose their
entire investment.
We have only two directors and we rely principally on Mr.
Robert Danvers our President for his entrepreneurial skills and
experience and to implement our business plan. Presently Mr.
Danvers does not devote full time and attention to our affairs
which could result in delays in implementing our business plan.
Moreover, we do not have an employment agreement with any of our
directors or officers including Mr. Danvers. Accordingly, if Mr.
Danvers does not continue to manage our affairs, or devote
sufficient amounts of his business time to enable us to implement
our business plan, our business would likely fail and you may loose
your entire investment.
We face intensive competition within the online application
services industry and do not have sufficient resources to compete
effectively.
We face competition from a wide range of competitors in the
online application services industry. These companies include
large, well established and financially stronger companies several
of which are able to write and develop their own software and
middleware which we rely on for support of our virtual office. As
we have indicated previously, we have only limited resources to
compete and may never have sufficient funds to be able to develop
our applications and market our office offerings so that we may
become a factor in this industry. These competitive disadvantages
represent another factor which may cause investors in our stock to
loose the value of their investment.
If we are not able to develop a customer base, we will have limited
prospects for generating revenues.
If we are not able to achieve a customer base, then we will
not be able to achieve revenues. Establishing a base of customers
will require that we undertake marketing efforts that are
successful in bringing users to our virtual office system that will
pay to use our system. If we are not successful in developing a
customer base as a result of our marketing efforts, then our
ability to generate revenue would be severely limited.
If our systems contain programming errors or defects, it would
adversely affect our reputation and cause us to loose customers.
The development of our virtual office requires that we
undertake system integration and computer programming. There is a
risk that the system integration and software programming that we
complete as part of the development process will contain errors and
defects including errors and defects in the system's security
subsystem that we will not be able to discover until we commence
operations. Our virtual office system may develop system errors or
defects or security failures that cause harm to our users' data.
Problems experienced by users and loss of users' data and business
processes will adversely impact our reputation and ability to earn
revenues, to retain existing customers or to develop new customers.
If we are not able to adapt to rapid technology change and develop
new products, we may not be able to attract or retain customers and
we will be unable to stay in business.
We will be required to update and refine the virtual office
system, web and demonstration site once we complete development in
order to address technological change. The market for systems such
as ours is characterized by rapid technological changes, frequent
new product introductions and changes in consumer requirements. We
may be unable to respond quickly or effectively to these
5
developments, as we may not have sufficient resources or money
required to develop or acquire new technologies or to introduce new
services capable of addressing these developments. If we are
unable to update and refine our technology and services once
development is complete in response to technological change, then
we may not be able to attract or retain customers and we will not
be able to stay in business.
Because Robert Danvers, our President controls approximately 73% of
our outstanding common stock, he will control and make corporate
decisions and investors will have limited ability to affect
corporate decisions.
Mr. Robert Danvers owns or controls approximately 73% of the
outstanding shares of our common stock. Accordingly, he will have
almost complete influence in determining the outcome of all
corporate transactions and business decisions. The interests of
Mr. Danvers may differ from the interests of the other
stockholders, and since he has the ability to control most
decisions through his control of our common stock, our investors
will have limited ability to affect decisions made by management.
Because we are subject to the "penny stock" rules, the tradeability
of our common stock will be limited which may make it more
difficult for investors to sell their shares.
We are subject to "penny stock" regulations and even if a
market for our common stock ever develops, unless the trading price
of our common stock is $5.00 per share or more, then trading in
our common stock would be subject to the requirements of Rule 15g-9
under the Securities Exchange Act. Under this rule, additional
sales practice requirements are imposed on broker-dealers who sell
such securities to persons other than established customers and
accredited investors (generally those with assets in excess of
$1,000,000 or annual income exceeding $200,000 or $300,000 together
with a spouse). For transactions covered by these rules, the
broker-dealer must make a special suitability determination for the
purchase of such securities and have received the purchaser's
written consent to the transaction prior to the purchase.
Additionally, for any transaction involving a penny stock, unless
exempt, the rules require the delivery, prior to the transaction,
of a disclosure schedule prescribed by the Commission relating to
the penny stock market. The broker-dealer also must disclose the
commissions payable to both the broker-dealer and the registered
representative and current quotations for the securities. Finally,
monthly statements must be sent disclosing recent price information
on the limited market in penny stocks. Consequently, the "penny
stock" rules may restrict the ability of broker-dealers to sell our
shares of common stock. The market price of our shares would
likely suffer as a result. A market in our common stock may never
develop due to these factors.
6
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements under "Prospectus Summary", "Risk
Factors", "Plan of Operation", "Description of Business", and
elsewhere in this prospectus constitute forward-looking statements.
In some cases, you can identify forward-looking statements by
terminology such as "may", "will", "should", "expects", "plans",
"anticipates", "believes", "estimated", "predicts", "potential", or
"continue" or the negative of such terms or other comparable
terminology. These statements are only predictions and involve
known and unknown risks, uncertainties, and other factors that may
cause our actual results, levels of activity, performance, or
achievements to be materially different from any future results,
levels of activity, performance, or achievements expressed or
implied by such forward-looking statements. These factors include,
among other things, those listed under "Risk Factors" and elsewhere
in this prospectus. Although we believe that the expectations
reflected in the forward-looking statements are reasonable, factors
previously noted could cause our actual results to differ
materially from those contained in any forward looking statements.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the common
stock offered through this prospectus by the selling stockholders.
SELLING SECURITY HOLDERS
The selling stockholders named in this prospectus are offering
all of the 1,200,000 shares of common stock offered through this
prospectus. The shares include the following:
1. 1,200,000 shares of our common stock that the selling
stockholders acquired from us in an offering that was exempt from
registration under Regulation S of the Securities Act of 1933 and
completed on May 14, 2002.
The following table provides information regarding the
beneficial ownership of our common stock held by each of the
selling stockholders, including:
1. the number of shares owned by each prior to this
offering;
2. the total number of shares that are to be offered
for each;
3. the total number of shares that will be owned by
each upon completion of the offering;
4. the percentage owned by each; and
5. the identity of the beneficial holder of any entity
that owns the shares.
Total number Total shares
Shares shares to to be owned Percent
owned be offered upon owned upon
prior for selling completion completion
Selling to this security of this of this
security holder offering holders offering offering
account
- ------------------------------------------------------------------------------
Albert Amar
1546 Hope Road
North Vancouver, BC
V7P 1W 92,000 2,000 NIL NIL
Robert Cherniack
301 - 4838 Fraser St.
Vancouver, BC V5V 4H4 90,000 90,000 NIL NIL
7
TABLE IS CONTINUED FROM PAGE 7
Total number Total shares
Shares shares to to be owned Percent
owned be offered upon owned upon
prior for selling completion completion
Selling to this security of this of this
security holder offering holders offering offering
account
- ------------------------------------------------------------------------------
Stephen Bass
120-6450 East Boulevard
North Vancouver, BC
V6M 3V9 90,000 90,000 NIL NIL
Evelyn Cable
1400 - 400 Burrard Street
Vancouver, BC V6C 3G2 86,000 86,000 NIL NIL
Doreen Danvers
315 - 7122 Mary Ave.
Burnaby, BC 5E 4N23 2,000 2,000 NIL NIL
Morris Ergas
840 Younette Drive
West Vancouver, BC V7T 1S9 2,000 2,000 NIL NIL
Carol Hill
5537 Marine Drive
West Vancouver, BC V7W 2R4 30,000 30,000 NIL NIL
Peter Hill
5537 Marine Drive
West Vancouver, BC V7W 2R4 90,000 90,000 NIL NIL
Faouzi Kossentini
506 - 1323 Homer Street
Vancouver, BC V6B 5T1 2,000 2,000 NIL NIL
Phillip Levy
10771 Swinton Crescent
Richmond, BC V7A 3T2 2,000 2,000 NIL NIL
Debra MacArthur
8170 Muirfield Cres.
Whistler, BC V0N 1B8 95,000 95,000 NIL NIL
Maxwell Capital Inc.
1400 - 400 Burrard Street
Vancouver, BC V6C 3G2 85,000 85,000 NIL NIL
Beneficial owner: Bram Solloway
Susan Miller
4060 Goldie Court
North Vancouver, BC V7G 2P490,000 90,000 NIL NIL
Sheila Milstein
3062 Spencer Drive
West Vancouver, BC V7V 3C7 2,000 2,000 NIL NIL
Alberto Moscona
701 - 2288 Bellvue Ave.
West Vancouver, BC V7V 1C6 90,000 90,000 NIL NIL
8
TABLE IS CONTINUED FROM PAGE 8
Total number Total shares
Shares shares to to be owned Percent
owned be offered upon owned upon
prior for selling completion completion
Selling to this security of this of this
security holder offering holders offering offering
account
- ------------------------------------------------------------------------------
Carolynne Newcombe
11B - 6128 Patterson Ave.
Burnaby, BC V5H 4P3 2,000 2,000 NIL NIL
Lita Nuguid
10 - 10980 No. 2 Road
Richmond, BC V7E 2E3 90,000 90,000 NIL NIL
Richard Paisley
2221 Inglewood Ave.
West Vancouver, BC V7V 1Z7 2,000 2,000 NIL NIL
Neil Pollock
3938 Braemar Place.
North Vancouver, BC V7N 4M8 2,000 2,000 NIL NIL
Julius Roitman
1530 Boundry Road
Burnaby, BC V5K 4V4 90,000 90,000 NIL NIL
Alan Sacks
3625 Bluebonnet Road
North Vancouver, BC V7R 4C9 2,000 2,000 NIL NIL
Bram Solloway
5476 Monte Bre Crescent
West Vancouver, BC V7W 3A7 95,000 95,000 NIL NIL
Maureen Solloway
5476 Monte Bre Crescent
West Vancouver, BC V7W 3A7 4,000 4,000 NIL NIL
Robert Thompson
102 - 1040 Hamilton Street
Vancouver, BC V6B 2R9 60,000 60,000 NIL NIL
Barrie Weiner
605 - 815 Hornby Street
Vancouver, BC V6Z 2E6 95,000 95,000 NIL NIL
Except as otherwise noted in this list, the named party
beneficially owns and has sole voting and investment power over all
shares or rights to these shares. The numbers in this table assume
that none of the selling stockholders sells shares of common stock
not being offered in this prospectus or purchases additional shares
of common stock, and assumes that all shares offered are sold. The
percentages are based on 4,500,000 shares of common stock
outstanding on the date hereof.
Other than Bram Solloway and Doreen Danvers, none of the
selling stockholders or their beneficial owners (a) has had a
material relationship with us other than as a stockholder at any
time within the past three years; or (b) has ever been an officer
or director of ourselves or any of our predecessors or affiliates.
Mr. Bram Solloway is the beneficial owner of Maxwell Capital
Corporation. Mr. Solloway was our Secretary and Treasurer during
the period November 1, 2001 to May 20, 2002. Doreen Danvers is the
mother of Robert Danvers. None of the selling stockholders is a
broker-dealer or an affiliate of a broker-dealer to our knowledge.
9
PLAN OF DISTRIBUTION
The selling shareholders will offer and sell their shares at
$0.05 per share until our shares are quoted on the OTC Bulletin
Board or a national securities exchange and thereafter at
prevailing market prices or privately negotiated prices. The
initial offering is based on recent sales at $0.05 per share in May
2002. Our common stock is presently not traded on any market or
securities exchange, although a market maker has informed us of its
interest to file an application for us to become eligible for
quotation on the OTC Bulletin Board. The selling shareholders may
sell our common stock in the over-the-counter market, or on any
securities exchange on which our common stock is or becomes listed
or traded, in negotiated transactions or otherwise, at market
prices existing at the time of sale, at prices related to existing
market prices, through Rule 144 transactions or at negotiated
prices. Usual and customary or specifically negotiated brokerage
fees or commissions may be paid by the selling security holders in
connection with sales of securities. The shares will not be sold
in an underwritten public offering.
The selling security holders may sell the securities in one or
more of the following methods:
- in the "pink sheets" or in the over-the-counter market or
on such exchanges on which our shares may be listed from time-to-
time;
- in transactions other than on such exchanges or in the
over-the-counter market, or a combination of such transactions,
including sales through brokers, acting as principal or agent,
sales in privately negotiated transactions, or dispositions for
value by any selling security holder to its partners or members,
subject to rules relating to sales by affiliates; or
- through the issuance of securities by issuers other than
us, convertible into, exchangeable for, or payable in our shares.
Although not expected, if the selling stockholders enter into
an agreement after effectiveness, to sell their shares to a broker-
dealer as principal and the broker-dealer is acting as an
underwriter, then Infotec will file a post-effective amendment to
the registration statement, of which this prospectus is a part,
identifying the broker-dealer, providing the required information
on the plan of distribution and revising the disclosure in the
prospectus. In addition we will also file such agreement as an
exhibit to the registration statement.
In making sales, brokers or dealers used by the selling
security holders may arrange for other brokers or dealers to
participate. The selling security holders and others through whom
such securities are sold may be "underwriters" within the meaning
of the Securities Act for the securities offered, and any profits
realized or commission received may be considered underwriting
compensation.
At the time a particular offer of the securities is made by or
on behalf of a selling security holder, to the extent required, a
prospectus is to be delivered. The prospectus will include the
number of shares of common stock being offered and the terms of the
offering, including the name or names of any underwriters, dealers
or agents, the purchase price paid by any underwriter for the
shares of common stock purchased from the selling security holder,
and any discounts, commissions or concessions allowed or reallowed
or paid to dealers, and the proposed selling price to the public.
In the event that shares of selling security holders listed in this
prospectus are transferred to other persons and parties by way of
gift, devise, pledge or other testamentary transfer, we will file a
prospectus supplement to identify the new selling security holders.
We have told the selling security holders that the anti-
manipulative rules under the Securities Exchange Act of 1934,
including Regulation M, may apply to their sales in the market.
With certain exceptions, Regulation M precludes any selling
security holders, any affiliated purchasers and any broker-dealer
or other person who participates in the distribution from bidding
for or purchasing, or attempting to induce any person to bid for or
purchase any security which is the subject of the distribution
until the entire distribution is complete. Regulation M also
prohibits any bids or purchase made in order to stabilize the price
of a security in connection with an at the market offering such as
this offering. We have provided each of the selling security
holders with a copy of these rules. We have also told the selling
security holders of the need for delivery of copies of this
prospectus in connection with any sale of securities that are
registered by this prospectus. All of the foregoing may affect the
marketability of our common stock.
10
We are bearing all costs relating to the registration of the
common stock and will pay these costs from cash in priority to our
operating expenses. The selling stockholders, however, will pay
any commissions or other fees payable to brokers or dealers in
connection with any sale of the common stock.
Penny Stock Rules
We are subject to "penny stock" regulations under Rule 15g-9
under the Securities Exchange Act. If a market for our common
stock ever develops, we will remain subject to this rules unless
the trading price of our common stock is not less than $5.00 per
share. The penny stock rules require a broker-dealer, prior to
transaction in a penny stock not otherwise exempt from the rules,
to deliver a standardized risk disclosure document that provides
information about penny stocks and the nature and level of risks in
the penny stock market. The broker-dealer must also provide the
customer with current bid and offer quotations for the penny stock,
the compensation of the broker-dealer and its salesperson in the
transaction, and, if the broker-dealer is the sole market maker,
the broker-dealer must disclose this fact and the broker-dealer's
presumed control over the market, and monthly account statements
showing the market value of each penny stock held in the customer's
account. In addition, broker-dealers who sell these securities to
persons other than established customers and "accredited investors"
must make a special written determination that the penny stock is a
suitable investment for the purchaser and receive the purchaser's
written agreement to the transaction.
LEGAL PROCEEDINGS
We are not currently a party to any material litigation, nor
to the knowledge of management, is there any material litigation
threatened or contemplated against us.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following table sets forth the names, positions and the
ages of our directors and executive officers. Directors are
elected at our annual meeting of stockholders and serve for a one
year term or until removed from office in accordance with our
bylaws or their successors are elected and qualify. Officers are
appointed by the board of directors and their terms of office are,
except to the extent governed by employment contract, at the
direction of the board of directors. Directors do not currently
receive any compensation for their services in acting as directors.
Director
Name Age Position Since
- --------------------------------------------------------------------
Robert Danvers 49 Chief Executive Officer, 2001
President and Director
Stephen Jackson 48 Secretary, Treasurer and
Director 2002
Robert Danvers, our founder, has served as the our President,
Chief Executive Officer, Secretary and Treasurer from August 30,
2001 to November 1, 2001 and thereafter to date as a director,
President and Chief Executive Officer. Since 1982, Mr. Danvers has
provided business consulting services to development businesses and
public reporting companies principally in the field of financial
management and business information systems. For the preceding
five years, Mr. Danvers has served as President and a director of
Danby Financial Management Corp. and Danby Technologies Corpora
tion. These businesses operate respectively in the fields of
financial management and information systems consulting.
Mr. Robert Danvers may be considered a promoter within the
meaning of the federal securities laws.
Stephen Jackson has served as a director since April 12, 2002
and our Secretary and Treasurer since May 20, 2002. Mr. Jackson
has been active in general consulting to business; private,
corporate and publicly reporting since 1980, He is a past director
of the British Columbia Taxi Association. He served during 2000
through 2002 as a director and President, Secretary and Treasurer
of Phoenix Star
11
Ventures, Inc. (formerly wowtown.com, Inc.), a
Delaware reporting company trading on the OTC Bulletin Board,
involved at that time in establishing an Internet based local
resource guide. During the period 1995 through 1997, Mr. Jackson
served as Vice President Investor Relations for Athabaska Gold
Resources Ltd., a Canadian reporting company involved in mineral
exploration, then trading on the Toronto Stock Exchange and
Breckenridge Resources Ltd., a Canadian reporting company involved
in mineral exploration, then trading on the Vancouver Stock
Exchange. During 1998 and 1999 Mr. Jackson consulted for the
Vancouver International Airport Authority.
Officers of the company do not devote their full time and
attention to our affairs. We estimate that Mr. Danvers devotes
approximately 60% of his time to our business and Mr. Jackson less
than 20%. There are no family relationships between any of our
directors, executive officers and/or directors, nominees therefore
or significant employees.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding
our common stock beneficially owned as of the date of this
prospectus, by:
(i) each stockholder known by us to be the beneficial
owner of five (5%) percent or more of our outstanding
common stock;
(ii) each of the our executive officers and directors;
and
(iii) all executive officers and directors as a group.
As at the date hereof, there were 4,500,000 shares of our
common stock issued and outstanding.
Name and Address of Amount and Nature of Percent
Beneficial Owner (1) Beneficial Owner (2) of Class
Robert Danvers (3),(4),(5)3,274,000 72.8%
Danby Technologies
Corporation 1,180,000 26.2%
Chantal Trudeau 450,000 10.0%
Simon Danvers 450,000 10.0%
Nicholas Danvers 450,000 10.0%
Stephen Jackson 6,000 0.1%
----------------------------
All Executive Officers
and Directors as a group
(2 persons) 3,280,000 72.9%
_____________________
(1) Unless otherwise indicated the address of each of the listed
beneficial owners identified is 444 Columbia Street E, New
Westminster, BC V3L 3W9.
(2) Under securities law, a person is considered a "beneficial
owner" of a security if that person has or shares power to vote or
direct the voting of such security or the power to dispose of such
security. A person is also considered to be a beneficial owner of
any securities of which the person has a right to acquire
beneficial ownership within 60 days.
(3) Includes 450,000 common shares held in the name of Chantal
Trudeau. Robert Danvers is the spouse of Chantal Trudeau. Each
disclaims beneficial ownership of the shares beneficially owned by
the other.
(4) Includes 900,000 common shares held in the name of Danby
Investment Corp., a British Columbia corporation on behalf of Simon
Danvers as to 450,000 common shares and Nicholas Danvers as to
450,000 common shares. Simon Danvers and Nicholas Danvers are the
minor children of Robert Danvers and Chantal Trudeau. Simon
Danvers and Nicholas Danvers shares are held in trust by Danby
Investment Corp. for their benefit. Robert Danvers is the
President and sole shareholder of Danby Investment Corp. As trustee,
Robert Danvers has full direction and control of the shares held
beneficially for Simon Danvers and Nicholas Danvers.
(5) Includes 1,180,000 common shares held in the name of Danby
Technologies Corporation, a British Columbia corporation. Robert
Danvers is the President and sole shareholder of Danby Technologies
Corporation.
Change of Control
12
There are currently no arrangements known to us, which will or
in the future could, result in a change of control.
DESCRIPTION OF SECURITIES
General
The following description of our capital stock is a summary of
the material terms and is subject to and qualified in its entirety
by our articles of incorporation, our bylaws and Nevada Law. Our
authorized capital stock consists of 75,000,000 shares consisting
of two classes of stock as follows:
Common Stock
Our articles of incorporation authorize the issuance of
50,000,000 shares of common stock, par value $0.001. Each holder
of common stock is entitled to one vote for each share held on all
matters properly submitted to the stockholders for their vote.
Cumulative voting for the election of directors is not permitted by
the articles of incorporation.
Holders of outstanding shares of common stock are entitled to
such dividends as may be declared from time to time by the board of
directors out of legally available funds and, in the event of
liquidation, dissolution or winding up of the our affairs. In the
event that any of the aforementioned situations occur holders are
entitled to receive, ratably, our net assets available to
stockholders after distribution is made to the preferred
stockholders, if any, who are given preferred rights upon liquida
tion. Holders of outstanding shares of common stock have no
preemptive, conversion or redemptive rights. To the extent that
additional shares of our common stock are issued, the relative
interests of then existing stockholders may be diluted.
As of the date of this prospectus, there were 4,500,000 shares
of our common stock issued and outstanding, held by thirty-one
(31) stockholders of record.
Preferred Stock
Our articles of incorporation authorize the issuance of
25,000,000 shares of preferred stock, par value $0.001. Our board
of directors is authorized to issue the preferred stock from time
to time in series and is further authorized to establish such
series, to fix and determine the variations in the relative rights
and preferences as between series, to fix voting rights, if any,
for each series, and to allow for the conversion of preferred stock
into common stock. No preferred stock has been issued by us.
INTERESTS OF NAMED EXPERTS AND COUNSEL
No expert or counsel named in this prospectus as having
prepared or certified any part of this prospectus or having given
an opinion upon the validity of the securities being registered or
upon other legal matters in connection with the registration or
offering of the common stock was employed on a contingency basis,
or had, or is to receive, in connection with the offering, a
substantial interest, direct or indirect, in the registrant or any
of its parents or subsidiaries. Nor was any such person connected
with the registrant or any of its parents or subsidiaries as a
promoter, managing or principal underwriter, voting trustee,
director, officer, or employee.
Adorno & Yoss, P.A., our independent legal counsel, has
provided an opinion on the legality of the issuance of the
securities being offered herein.
The financial statements included in this prospectus and
registration statement have been audited by Morgan & Company,
Chartered Accountants, to the extent and for the period set forth
in their report appearing elsewhere herein and in the registration
statement, and are included in reliance upon such report given upon
the authority of said firm as experts in auditing and accounting.
DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR SECURITIES
ACT LIABILITIES
13
Our directors and officers are indemnified as provided by the
Nevada Revised Statutes and our articles of incorporation and
bylaws. We have been advised that in the opinion of the Securities
and Exchange Commission indemnification for liabilities arising
under the Securities Act is against public policy as expressed in
the Securities Act, and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities is
asserted by one of our directors, officers, or controlling persons
in connection with the securities being registered, we will, unless
in the opinion of our legal counsel the matter has been settled by
controlling precedent, submit the question of whether such
indemnification is against public policy to a court of appropriate
jurisdiction. We will then be governed by the court's decision.
ORGANIZATION WITHIN LAST FIVE YEARS
We were incorporated under the laws of the State of Nevada on
August 30, 2001, and are in the early developmental stage.
Effective October 3, 2001, we entered into an agreement to acquire
the prior development, designs and pilot implementation of a
virtual office system from Danby Technologies Corporation in
consideration for a purchase price of $60,000, due December 31,
2002 and a royalty on our net revenues from the system or products
or services which use the system. Royalties are determined at the
rate of 2% of net revenues until the amount paid or payable
aggregates $250,000 and thereafter, at the rate of 1%. Management
believes that this royalty rate is favorable in relationship to the
software licensing fees normally paid in transactions of this sort.
In May 2002, we issued Danby Technologies Corporation and a
staff member an aggregate of 1,200,000 common shares in settlement
of the principal amount of $60,000 due under the terms of the
purchase agreement of October 3, 2001. Mr. Danvers, our President,
Chief Executive Officer and director beneficially owns Danby
Technologies Corporation. Since 1997, Danby Technologies Cor
poration has provided computer and network system consulting and
development services and has undertaken internal development of a
number of software development projects. The virtual office system
is one of Danby Technologies Corporation's development projects
which include developments for the travel and entertainment
industries, labour and information management and online accounting
systems. Mr. Danvers has been our sole promotor since inception.
Except as previously described, we have not been involved
in any bankruptcy, receivership or similar proceeding, nor
have we been involved in any material reclassification,
merger, consolidation, or purchase or sale of a significant
amount of assets not in the ordinary course of business.
DESCRIPTION OF BUSINESS
Business of Issuer
Our plan is to provide as our principal product, a "virtual
office" service for small and medium businesses for which we would
charge fees, including those for set up and for monthly usage. We
are currently in the development stage and have not as yet engaged
in revenue producing activities. Our current objective is to
complete development of our product including the establishment of
a commercial service and to market it.
We refer to our project as a "virtual office" or the "virtual
office system" and use the terms in our business description to
indicate our proposed service offering. A virtual office is
essentially a network computer system or server, similar to those
found in most business offices. These servers provide the business
with software applications, security, network communications and a
central data store. The distinguishing or differing feature of a
virtual office system is that instead of the business establishing
and maintaining its own network computer system in its office, the
applications, security, communications and data store are
maintained on our servers which are physically located in our
office. Customers share our network computer system with other
virtual office customers. The virtual office is accessed securely
by a businesses' properly authorized employees, advisors and
customers (we refer to these as "users") via the Internet, using a
simple Internet browser on their computer workstation. Our virtual
office system will not require specialized software to be installed
on the computer our customer uses to access our system. We also
refer to the term "online" in our business description to indicate
a service or business process that is accessible via the Internet,
24 hours a day.
A virtual office provides:
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- A ready to use network computer system, complete with
common business software applications and features for full
operation of a business. A business can be set up and using its
virtual office after the virtual office provider registers users,
establishes passwords and file system access and completes other
related administrative procedures.
- Management by the virtual office provider who is
responsible for maintenance, administration and software upgrades
and for providing uninterrupted service to users.
- User access to their virtual office at any time, from any
place where a users' computer has access to the Internet.
- Users with access to a central source for their business
data, files and communications and provides the ability for users
to work together and collaborate on projects or daily tasks.
Business can capture information centrally as it is created and
have it available to authorized persons in real time.
- A businesses' management and its other users with the
ability to locate their business information quickly and in the
context of their work.
Management identified the virtual office as a service that
exhibits strong commercial potential for reasons including:
- the increasing availability and reducing cost of high-
speed Internet connections;
- the cost of deploying computer software and computer
systems;
- the cost of maintaining computer systems and providing
system help;
- the trend toward employees working away from their primary
office;
- the cost of experienced system managers; and
- the large market represented by small and medium
businesses.
The Virtual Office
To be successful and attract users, the business model that we
have created requires us to:
* develop and commercialize a system that is easy to use,
responsive, provides functionality customers are seeking and is
cost effective;
* provide assistance, training and support to our
customers so they are able to gain maximum benefit from
our virtual office system;
* provide a robust system capable of handling many
users simultaneously without affecting other users; and
* provide privacy and security for our customer's data
and their communications to and from our system.
We believe our ultimate success will be measured by the extent our
customers use our system and derive value from it. A summary of
the proposed features and infrastructure supporting the virtual
office and of our current development and future plans follows.
Features
The proposed virtual office system is currently designed to
include the following capabilities or functionality:
- Email, calendar, address book, to-do lists and reminders
Each user will have fully enabled email including a personal name
and address book and the ability to use folders to categorize e-
mails, a personal to-do list and personal reminders. Calendars
allow for appointments and recurring meetings. We have
demonstrated these capabilities in our pilot.
- Group calendar and schedule
15
Each user within a company will have the ability if permissions
have been granted to make appointments and meetings with other
members of the company and to determine available time, book
meeting rooms and other resources company-wide. We have dem
onstrated these capabilities in our pilot.
- Web site
We will host our customers' web site and Internet domain as an
integral part of their virtual office. We have demonstrated these
capabilities in our pilot.
- Data storage and access, document sharing, cut and paste
Each of our clients will be provided with disk storage space for
their data and business applications. Our virtual office will
provide the ability to segregate data in directory structures and
to have different permissions applied. Our system will provide
users with the ability to transfer data to and from our system to
their local machines and will also allow most of our client's
applications to share data through the system's clipboard. We have
demonstrated these capabilities in our pilot.
- Business productivity applications:
Each of our customers will be provided with a suite of business
productivity programs which integrate with the other features of
the virtual office. The following productivity application modules
will be offered:
Client and contact management - includes the ability
to maintain contacts throughout the business which are
accessible from a user's email and from other
productivity application modules. Provides businesses
with the ability to track contacts made via telephone,
email, include scanned in letters or other
correspondence, prepare client notes and maintain dis
cussions. The contact information is readily
accessible with views and reports and the ability to
search headings within the information maintained.
Document and resource management - provides a common
store, management, access control and the ability to
categorize and to view summaries and list of
documents. The document management application will
provide a review cycle including the notification of
reviewers, document versioning to segregate changes
and the ability to attach comments, review notes and
discussions to draft documents. Users will also have
the ability to develop and separately post documents
related to their business as resources such as policy
and procedures manuals, benefits manuals, marketing
materials reference materials, how-to information, and
just about any other file or information that a
business may use as a common resource. The resource
section of this module stores and provides easy access
to information in the manner of a corporate library.
Task and project management - includes the ability to
track projects and tasks throughout the business.
Reports and views will allow staff and management to
see the ongoing progress of work and for management to
track and assign tasks. This module will allow
detailed work requests to be tied to customer quotes
and files and to be available to the assigned staff
member in a view of work assignments and to managers
in views of completed and incomplete jobs or tasks.
Time, expense tracking and billing - working in
conjunction with our other modules, particularly the
task and project tracking, business will have the
ability to enable time tracking including time
associated with jobs and tasks. This module will
provide for approval of time records and the
association with a customer, job or internal task. It
will also allow expenses associated with customer work
and billings to be tracked, approved and ultimately
billed. Users can bill and track receipts based on
time, expense and job records developed. In addition
to printing of invoices, our users will be able to
send electronic invoices via email and automated
billing through direct charging to major charge cards.
All of our proposed productivity applications will be
integrated and have the ability to share information.
We will enable within these productivity applications,
the ability to control user access and the ability to
control creation, change or deletion of information in
our modules.
All productivity applications will be search-enabled
so users can search for relevant documents by headers
and by the content of the document or information
itself. The features of the business productivity
applications have not been demonstrated in our pilot
and require development.
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- Local printing
Users of the virtual office will be able to print to virtually any
local or network printer. We have demonstrated this capability
in our pilot.
- Backup and security
Our system will provide security for our users' data and their
communication into and out of the virtual office. We will use
encryption for any communication between our servers and client
machines. To protect from system failures, we will provide a data
backups on a daily and weekly rotation. Clients will be able to
request additional backups of their data and offsite storage
through backups to CDROM. We have demonstrated these capabilities
in our pilot.
- Run user applications
Users will have the ability to run their existing Win32, Linux and
UNIX commercial software as part of their virtual office.
Businesses will be able to run their existing software within our
system and access such applications through most Internet browsers.
Applications we host for clients will be able to access all data
files maintained in our system, which the user is authorized to
access, or on a user's computer hard drive or shared hard drive.
We will establish support policies for user applications based on
our testing and on our client's needs. We envision supporting only
certain applications which would include a selection of the most
popular software applications. We have demonstrated these
capabilities in our pilot.
- Help desk, maintenance and upgrades
To enable our users to realize the benefits of our virtual office
system and to enable them to use all its features, we will provide
users with a web based help system and tutorial and access to our
help desk staff who can interact with users over the Internet
through our system to determine user issues and problems. We
expect to additionally provide context driven help on the main user
entry points in our productivity applications and to build a help
database providing general information on using the system,
frequently asked questions as well as providing a forum for
customers to contact our staff to resolve technical problems they
may encounter. We plan to include a general tutorial for first
time customers to familiarize them with the system and setting up
of their office. These features have not been demonstrated in our
pilot and require development.
Internal Systems
The virtual office is composed of three components or layers
which we describe as the hardware and operating system layer, the
middleware layer and the business processes layer.
Hardware and Operating System
Our virtual system will require network servers and operating
system software. We will also require internet connections and an
internal network. Our virtual office will require approximately
eight servers and will require networking and full interoperation.
The operating system layer is responsible for all hardware and
storage operations and for all network communications and authenti-
cation of users. We use a combination of servers running UNIX,
Linux and Windows. We will require licenses for the UNIX and
Windows operating system software from their respective suppliers
once our system is available for commercial sale however, we are not
currently required to pay such fees during our developement Phase.
Operating system software is priced per server with additional fees
for each user. We are able to acquire the operating system
licenses readily without lead time, in the normal course of
business.
Middleware Software
On our servers, we run middleware software to provide
specialized functionality such as firewall, web management,
database, name services, security, mail and communications.
Middleware is the term we use to describe the system services and
development environment upon which our virtual office is developed.
Middleware is generally implemented as a software server. We use a
combination of public domain middleware for which we pay no license
fees and commercial middleware for which we pay licensing fees
which are generally priced per server with additional fees for each
user. We will be required to pay such fees once our system is available
for commercial sale but we are currently not required to pay such fees
in our developement phase. We are able to acquire the required middleware
licenses readily without lead time, in the normal course of business.
17
Business Processes
Our virtual office is developed and implemented in this layer.
There are no additional licensing fees or charges applicable to our
own development. Where we include modules or programs in our
virtual office which others have written, we may be required to pay
licensing or royalty fees to the author of such program or module.
We will also develop and implement our internal management
information system in this layer, consisting of system sign-up and
tracking of client installations, change orders, service calls,
customization requests, other services and overall usage of the
system. Our management information system will need to provide
real-time information on the status of client orders and system
usage and provide automated billing and accounting.
Current and Planned Development
In September, 2001, we entered into an agreement to acquire
the prior development, designs and pilot implementation of a
virtual office system from Danby Technologies Corporation, a
company owned by Robert Danvers. Danby Technologies developed the
original design and implementation methodology for the virtual
office and a pilot or test implementation of the virtual office
over the period of approximately two years from the Fall of 1999
through to our acquisition in September, 2001.
At the time of our acquisition the pilot included an
established and configured Internet connected computer system with
the operating system and middleware software required to operate
the virtual office. The pilot was operational and capable of
demonstrating the virtual office concept including: the ability to
support multiple users accessing from multiple locations over the
Internet with reasonable speed and robustness; email, calendar,
address book, to-do lists and reminders; group calendar and
schedule; data storage and access, document sharing, cut and paste;
local printing; backup and security; running many user
applications; customer web site. The pilot also contained two
small test models demonstrating some limited features of the
business productivity applications including the ability to
generate timesheets, resource materials and business contacts.
We acquired Danby Technologies' designs, methods and know-how
for a virtual office and a plan for the development of a commercial
virtual office which is the subject of our business and our plan of
operation and development. We also acquired the right to use or
reestablish the pilot of the virtual office as we saw fit. We did
not acquire any hardware and only acquired the software code for
the preliminary model of the business productivity applications as
well as any software code or scripts developed to operate the
virtual office components of the pilot. Under the terms of our
agreement, we paid Danby Technologies $60,000 to reimburse their
paid development costs. Reimbursed costs did not include any
affiliate fees, charges or mark-ups.
The pilot of the virtual office is currently installed on
Danby Technologies' servers. We share their servers, under the
terms of an engagement with them since October 3, 2001. Our part
time technical staff are also provided currently under this
engagement. For the provision of their servers, network and
internet access and for the provision of part-time technical
services (one staff member for approximately 20 hours per month) we
pay Danby Technologies the sum of $3,000 per month. The technical
staff member provided by Danby Technologies is under our direction
and provides us with the technical expertise necessary to manage,
maintain and modify our system and also as a resource for technical
support in the development of our virtual office system. Our
engagement with Danby Technologies is on a month basis, renewable
automatically unless cancelled by either party with 30 days notice
in writing. We are able to install our pilot or our commercial
virtual office system, when completed, on our own equipment at such
time as it is acquired.
In October 2001, we incorporated a wholly-owned British
Columbia corporation for future Canadian marketing and to provide
us with the ability to operate a physical business presence to con
duct our testing and further development work. We plan to conduct
our U.S. business through our U.S. incorporated company, Infotec
Business Systems, Inc. We anticipate we will operate the first
commercial installation of our virtual office from our subsidiary's
premises in New Westminster, British Columbia, Canada.
Since our acquisition in late September 2001, management and
our part time staff have continued to implement our business plan.
We have focused our limited resources to test and improve the
design, features and implementation of the virtual office system.
Our testing has been assisted by some clients of Danby Financial
Management Corp. and Danby Technologies Corporation, companies
controlled by our President, who have participated informally with
us to test our pilot system's capabilities. Other than as noted
18
above, we pay no fees for any participants in such tests. During
the period from October 2001 through to July 31, 2002 we incurred
development related costs totalling $29,618 composed of $14,808 for
part time technical services and $14,808 for equipment rental. Our
testing and development has focused on:
- testing various commercial software applications for their
ability to operate in our virtual office;
- developing and testing the prototype business
productivity applications; and
- testing the use of the pilot system by different
companies.
Our testing and development activities have been principally
conducted by our staff and were ongoing from October 2001 through
to May 2002. During this same period we enabled a small number of
companies totalling five users who were not affiliates of our officers
or directorsto test Internet access to the pilot and the operation
of a limited number of applications including email, accounting,
one customer provided application and the pilot's features for
local printing and file sharing. Testing by the outside
parties was informal and limited to their needs and interests.
Our staff also tested additional commercial software
applications and also different versions of the same commercial
software to determine their ability to coexist with other
commercial software applications and operate in the pilot virtual
office. During the winter of 2001/2002 we developed additional
models of the business productivity applications which were then
tested by our staff for functionality and operation in the virtual
office. In the spring of 2002 we began to research and experiment
with new commercial middleware to enable us to improve the system's
ability to provide customer segregation with the email, calenders,
group calender and schedule functions and the business productivity
applications. In the summer of 2002, we commenced upgrading our
pilot's operating system and middleware software to demonstrate and
test the middleware software's customer segregation capabilities.
Our testing and additional research since October 2001 have
provided the following:
- a better determination of the commercial software
applications that we will support and that a customer can
run in their virtual office;
- a demonstration of multiple user access to the pilot and
to selected commercial software applications and email
functions;
- a better approach and design for the development of our
business productivity applications; and
- new commercial middleware software which will enable us
to maintain better segregation and privacy for our
customers' email, calenders, group calender and schedule
and the business productivity applications to shield their
data and activities using these features from view by
other customers who share the virtual office.
Our business plan can be summarized in four principal
categories as outlined below. We estimate the development period
required to complete a commercial implementation of the virtual
office would be four months at an estimated cost of $184,200. At
present we do not have sufficient funds to engage additional
employees or contractors and to proceed with our development plan.
Continuation of development and ultimately the marketing of our
proposed product is conditional upon our obtaining additional
funding. While we are unable to proceed with substantial
development or our virtual office system without additional
funding, we believe we would not be considered to be a blank cheque
company as defined under applicable securities rules and
regulations as we have a business and plan which we are following
for the development and commercialization of our product and we
have no intent or plan to engage in a merger or acquisition with an
unidentified company or companies.
We have set forth estimates of the costs and time frame to
complete the elements of our business plan under Plan of Operation
which immediately follows this discussion.
1. Virtual Office System
We currently have a pilot implementation of our virtual office
and have developed designs for its commercialization. Our existing
pilot currently comprises the principal functionality of the
virtual office system, as outlined above. However, it is not
complete and it is not a commercial installation. We will need to
undertake additional development including:
- - rewriting the software for the business productivity
application modules which we described in detail under the
subheading titled Features;
19
- - developing our help system;
- - conducting the related interoperation and testing of
these functions and modules; and
- - training staff to provide support to customers.
We will also need to install the components of our virtual
office system on production or commercial network servers, when
acquired.
2. Internal Systems
We currently have no hardware of our own, and have not yet
acquired any operating system or middleware software licenses.
However, we currently rent a shared Internet connected network sys
tem from Danby Technologies Corporation which provides us with the
hardware we require for our pilot. The operating system and
middleware software layers in which we operate our pilot are avail
able to us for testing and development without charge. Our
business plan calls for us to acquire our own network servers and
operating system and middleware software. We will also need to
undertake additional work to install the operating system and
middleware software and to conduct related interoperation and
testing.
We have not as yet developed our internal management
information system for the virtual office. We will need to
undertake additional development including design, software
writing, testing and training staff in its use.
3. Development of Web Site and Virtual Office Demonstration
For marketing of our service, our plan includes the
development of a web site and web-based demonstration of our
virtual office system. Our web site will incorporate information
about ourselves and our products and services. The demonstration
will allow potential customers the ability to tryout the features
and usability of our virtual office prior to purchasing.
We have not commenced development of these components. We
plan to outsource the development of the web site to a firm with
expertise in designing web sites and have identified companies that
have the capability to complete this development. We have not as
yet identified the environment or method for developing the system
demonstration, nor have we identified companies or individuals that
have the ability to complete such a system demonstration.
4. Marketing of the Virtual Office
Our objective will be to commence marketing upon completion of
development of the virtual office system, internal systems, web
site and demonstration system. Our marketing strategy is proposed
to be directed toward small and medium sized businesses located in
the U.S. or Canada with the following attributes:
* employees and contractors working away from the office;
* home office market; and
* rapidly growing and start-up enterprises requiring
scalable computer systems.
We plan to outsource the development of our marketing,
including the development of logos, art and design work for our
brochures and web site. We also expect to outsource our marketing
functions for the launch of our virtual office and ongoing
marketing functions for the foreseeable future. We believe an
independent marketing team, paid under a fair commission program
with channels for reporting customer contacts will provide the best
value and allow our management to concentrate on developing and
managing the virtual office system. We have established a wholly-
owned subsidiary in Canada for marketing in that country.
Revenue Sources
The successful implementation of our business model will
enable us to generate revenues from:
- setup or implementation fees;
- monthly system fees;
- monthly system usage fees;
- consulting and training fees; and
20
- customizing fees;
Intellectual Property
We currently plan to market our product as the "Infotec
Virtual Office" although we have not yet applied for such a
registered trademark and there is no assurances that such mark
would be available that we would be granted such mark. We have
obtained the right to use the Internet domain names
www.infotecbusinesssystem.com, infotecbusinessstrategies.com and
infoteconlineoffice.com. We do not have and cannot acquire any
property rights in an Internet address.
To protect our rights to intellectual property, we will rely
on a combination of trademark, copyright law, trade secret
protection, and confidentially agreements although we do not have
confidentiality agreements signed in every instance.
Our virtual office system requires some commercial computer
software written and owned by others for which we are required to
pay licensing fees.
Competition
We will compete with numerous providers of online or Internet
accessible business applications and services companies, many of
which have far greater financial and other resources than we do.
Many of these companies have established histories and
relationships in providing online applications or systems that
enable them to attract talent, marketing support, the interest of
decision makers and financing. Moreover, proven track records are
of paramount consideration in selecting vendors.
We plan to compete through the development of an integrated,
fully managed and easy to use "virtual office" as a complete online
system for small and medium businesses. We also plan to
aggressively market the virtual office through successful
marketers.
While our management team has significant business experience,
we, as a company, have no proven track record in the online
services industry. We can provide no assurance that we will be
able to successfully complete development of a commercial system or
compete in this industry.
Government Regulations
Due to the increasing popularity and use of the Internet, it
is possible that a number of laws and regulations may be adopted
with respect to the Internet generally, covering issues such as
user privacy, pricing, and characteristics and quality of products
and services. Similarly, the growth and development of the market
for Internet commerce may prompt calls for more stringent consumer
protection laws that may impose additional burdens on those
companies conducting business over the Internet. The adoption of
any such laws or regulations may decrease the growth of commerce
over the Internet, increase our cost of doing business or otherwise
have a harmful effect on our business.
Currently, governmental regulations have not materially
restricted the use or expansion of the Internet. However, the legal
and regulatory environment that pertains to the Internet is
uncertain and may change. New and existing laws may cover issues
that include:
* Sales and other taxes;
* User privacy;
* Pricing controls;
* Characteristics and quality of products and services;
* Consumer protection;
* Cross-border commerce;
* Libel and defamation;
* Copyright, trademark and patent infringement; and
* Other claims based on the nature and content of Internet
materials.
These new laws may impact our ability to develop and market
our virtual office system in accordance with our business plan.
We may have to qualify to do business in other jurisdictions.
If we commence our virtual office business, we anticipate that our
sales and our customers will be in multiple states and foreign coun
tries. As our customers may be resident in such states and foreign
countries, such jurisdictions may claim that we are required to
21
qualify to do business as a foreign company in each such state and
foreign country. Failure to qualify as a foreign company in a
jurisdiction where required, could subject us to fines, penalties
or other prosecutions.
Research and Development Expenditures
We have not expended any money on research and development.
We have however spent $60,000 on expenses associated with the
acquisition of prior development costs and plan to expend in the
next 12 month period the sum of $184,200 on expenses associated
with the development of our proposed virtual office system.
We expect to continue to develop our virtual office system and
expect to devote a significant proportion of our revenues and
capital funds to developing enhancements to our virtual office
system and maintaining our competitive positioning.
Environmental Regulations
We are not aware of any environmental laws that will be
applicable to the operation of our business.
Employees
We currently have no full-time employees, one part-time
employee and one part-time contractor. Mr. Robert Danvers, our
President and Chief Executive Officer is a part-time employee. Mr.
Tim Sproule, a consultant with Danby Technologies Corporation and
available to us under the terms of our engagement with them, is a
part-time consultant. As prospects and circumstances warrant, we
will engage additional full-time and part-time employees, as well
as consultants, to perform required services.
PLAN OF OPERATION
Current Operation Development
In furtherance of our business model:
- In October 2001, we acquired the prior development and
pilot implementation of the virtual office from Danby Technologies
Corporation, a company controlled by our founder and President.
Danby Technologies Corporation developed the original plans and
pilot implementation over a period of approximately two years prior
to our acquisition.
- In October 2001, we organized a wholly-owned British
Columbia, Canada corporation to enable us to conduct our
development and to service the Canadian market after commer
cialization of our virtual office system. We have additionally
rented office space from Danby Technologies Corporation since
October 2001 for our testing and ultimately for marketing in
Canada.
- We have engaged Mr. Tim Sproule through our engagement of
Danby Technologies Corporation, on a part-time basis since October
2001 to provide computer and system services on a monthly basis and
to act as our technical consultant. Mr. Sproule is a computer
system specialist with extensive experience with system management,
programming and development. As a consultant, Mr. Sproule has
managed large UNIX based distributed systems and played a key role
in project developments.
- In October, 2001, we engaged Danby Technologies
Corporation to provide an Internet accessible server-based system.
This hardware, network infrastructure and internet connectivity has
enabled us to maintain our pilot implementation of the virtual
office system and continue development and testing.
- Stephen Jackson joined as a member of our board of
directors in April 2002. Mr. Jackson is a businessman, engaged in
providing business consulting to private and public companies since
1980.
22
Since our acquisition of prior development, pilot and designs,
we have continued to progress our development plan focusing on
continued testing in a live business environment with multiple
users. We have also updated our designs for a commercial virtual
office system. Our testing the scale-up and usability of the
virtual office system has confirmed development issues and provided
opportunities for improving our proposed product. We are currently
upgrading our pilot system to incorporate new software and designs.
Our objective with these upgrades are to provide better segregation
of our customers' data; to ensure privacy of our users activities;
and to improve administration of user identities and system
permissions. We will test the upgraded pilot to confirm it meets
these objectives.
Our plan of operations for the twelve months following the
date of this registration statement is to complete the following
objectives within the time period specified, subject to our
obtaining funding for the development and marketing of our virtual
office system:
* Complete development of the virtual office system;
* Complete development of our internal systems;
* Complete development of our web and demonstration site;
and
* Market our virtual office system;
To accomplish our objectives, we will need to undertake
significant development work and will accordingly need to hire
additional employees, contractors and further, engage consultants
to enable us to undertake marketing. Our plan is to hire such
employees and consultants directly and not through Danby
Technologies. We expect however to continue to draw on the skills
of Danby Technologies staff in addition to the staff we plan to
employ or engage directly until such hiring or engagements are
completed and staff training is completed. Progress in development
and the hiring of additional staff is conditional upon our
obtaining financing.
The projected time to complete each of the elements of our
plan of operations and its anticipated cost are discussed
below:
1. Complete Development of Virtual Office System
We are currently testing and upgrading the pilot virtual
office system however we require additional design, programming and
testing to develop a commercial version of our virtual office
system. The principal focus of this development includes extensive
software development to write the software for the business
productivity applications and development of the help and user
support systems. We anticipate this development could be completed
within a four month period after we obtain funding. We anticipate
that the development costs will be approximately $60,000 and will
consist primarily of payments to consultants for programming and
software development services and the cost of help desk training
and staff management. We have included in this budget the amount
of $10,000 for the services of Danby Technologies' staff.
2. Complete Development of Our Network Infrastructure
We anticipate that upgrading of our network system and
Internet infrastructure, including additional security features and
the development of our internal management information system to be
completed over a three month period during the development of the
virtual office at a budgeted cost of $12,500. To complete our
infrastructure for commercial operations, we estimate software
licensing costs of approximately $29,700 will be required. We also
anticipate that costs for the acquisition of additional equipment,
prepayments for high speed internet connection services and other
costs including fees for the development and implementation of this
infrastructure will be approximately $62,000.
3. Complete Development of Web and Demonstration Site
We plan to commence development of our web site and web-based
system demonstration during the final month of the virtual office
development program. Provided funds are available, we anticipate
that this component could be completed in a period of less than 45
days. We anticipate development costs will be approximately
$20,000.
4. Marketing
We plan to undertake the development of a logo and other art
and to develop a look and feel for our brochures and web site and
which we will incorporate into an advertising and marketing
23
campaign once the development of our virtual office system and web
site are approaching completion. We anticipate that initial
marketing expenses, including travel for the first year will be
approximately $75,000. We anticipate that the marketing materials
and campaign would be designed by an outside marketing consulting
firm.
Employees and Consultants
We currently have no full-time employees, one part-time
employee, Mr. Robert Danvers, our President and Chief Executive
Officer and one part-time contractor, Mr. Tim Sproule, who is
available to us under our engagement with Danby Technologies
Corporation. Our full-time employee and consulting positions are
not expected to exceed six persons in the near future, including
Mr. Robert Danvers, our President, a technical and systems manager,
an administration assistant, a senior programmer and two technical
support staff. We will contract with other consultants for
specialized development to the extent required. The cost of
employees or consultants over the next twelve months has been
estimated as $106,000. We have included in this budget the amount
of $5,000 monthly for eight months for the provision of technical
services from Danby Technologies. The estimated cost of employees
or consultants engaged in development and marketing has been
included in the estimates contained within other items of this
plan.
Working Capital Requirements
In addition to the above, we will incur additional expenses on
account of overhead and administration. These costs will include
fees payable for rent, office expenses, travel, legal and
accounting services. We anticipate spending approximately $44,000
on these expenditures over the next twelve months. In addition to
the amounts noted above, we are seeking an additional amount of
funding aggregating approximately $50,000 for unalocated working
capital.
Results of Operations
We have not yet engaged in any revenue-producing activities,
nor are we a party to any binding agreements that will generate
revenues. Due to our lack of revenue-production to date, and our
lack of contractual commitments to generate revenue, there is no
basis at this time for investors to make an informed determination
as to the prospects for our future success. For similar reasons,
our auditors have included in their report covering our financial
statements for the period from incorporation to April 30, 2002,
that there is substantial doubt about our ability to continue as a
going concern.
For the period from incorporation August 30, 2001 through
April 30, 2002 we incurred a deficit of $92,438. Our principal
areas of expenditure during the period were for prior development
costs of $60,000, rent and occupancy costs of $10,500, system
rental of $10,308 and technical subcontracts of $10,308. As at
April 30, 2002, we had a working capital deficit of $85,438.
Through April 30, 2002, we funded our operations through a
combination of supplier finance and the sale of our equity
securities. In October 2001, we completed the sale of 2,100,000
shares of common stock for proceeds to us of $7,000. The sale of
these shares was effected off-shore, pursuant to SEC rules,
regulations and interpretations, including Regulation S.
Subsequent to April 30, 2002 we completed the sale of an
additional 1,200,000 shares of common stock resulting in net
proceeds to us of $60,000 and settled the $60,000 debt due to Danby
Technologies Corporation under the terms of the October 3, 2001
purchase agreement by the issuance of 1,200,000 shares of our
common stock. The sale of these shares was effected off-shore,
pursuant to SEC rules, regulations and interpretations, including
Regulation S. For the three month period through July 31, 2002 we
incurred a deficit of $21,610. Our principal areas of expenditure
during the period were for occupancy costs of $4,500, system rental
of $4,500 and technical subcontracts of $4,500. As at July 31, 2002
we had working capital of $12,952.
Financial Plan & Operation
Our plan as outlined above anticipates we will spend $432,206,
inclusive of $6,129 already spent to July 31, 2002, over the next
twelve month period pursuing our stated plan of operations composed
of the following:
Complete Development of Virtual Office System $ 60,000
Complete Development of Our Network Infrastructure 104,200
24
Complete Development of Web and Demonstration Site 20,000
Marketing 75,000
Employees and Consultants (post development) 106,000
Operating expenses 44,000
Costs of this offering 23,006
$432,206
--------
Of these expenditures, we anticipate that approximately
$282,000, inclusive of $6,129 already spent to July 31, 2002, will
be spent within the next six month period.
The funds available to us currently are insufficient to carry
out our plan of operations and complete our development program
and, as we will be unable to generate revenues until such time as
development is completed, we will require additional financing in
order to pursue our plan of operations and our business plan. As
at July 31, 2002 we had current assets net of non-related amounts
payable of $20,396 which are sufficient to pay the remaining costs
of the offering estimated at $16,877. After providing for payment
of the costs of this offering and $3,519 for amounts payable to
related parties, we have no funds on hand to pay the remaining
amounts payable to related parties at July 31, 2002 of $3,925 or
the costs of our development plan without additional funding. We
have been advised by Danby Technologies that they will not seek
payment of the $3,925 referred to previously or fees charged or
chargeable under the terms of our engagement with them dated October
3, 2001 for the months of August through December 2002 until
March, 2003, unless we raise substantial funds prior to that
time.
Our financial plan requires us to seek additional capital in
the private and/or public equity markets. This additional capital
may be provided by the sale of equity or debt securities, or
through the issuance of debt instruments. If we receive additional
funds through the issuance of equity securities, however, our
existing stockholders may experience significant dilution. If we
issue new securities, they may contain certain rights, preferences
or privileges that are senior to those of our common stock.
Moreover, we may not be successful in obtaining additional
financing when needed or on terms favorable to our stockholders.
As we have no commitments from any third parties to provide addi
tional equity or debt funding, we cannot provide any assurance that
we will be successful in attaining such additional funding.
Our current operations are budgeted at approximately $5,800
per month or a total of $70,000 over the next twelve month period.
In the absence of third-party funding, we expect to obtain interim
funding for our current level of operations through a combination
of supplier finance, principally from Danby Technologies
Corporation and from loans or advances from our management,
affiliates and existing stockholders. Where we determine that the
available funding is insufficient to maintain our current
operations, we will reduce our expenditures accordingly. We
estimate that in the absence of the costs for our office, shared
network computers and part-time technical services, our budget over
the next twelve month period would not exceed $16,000. We expect
our management, affiliates and current stockholders would support
this minimum budget over the next twelve month period. Although
management has indicated a willingness to provide additional
financing for such limited operations, we have no written
commitments for funding and accordingly we can provide no assur
ances that additional funding, as required, will be available to us
or be available to us upon acceptable terms. If we receive no
additional funding, we will eventually have to cease operations.
It is our objective to carry out our plan and successfully market
our product. We have developed reduced budgets as outlined above
to allow us the opportunity to maintain limited operations while we
seek proper funding. If we are unable to obtain additional funding
to conduct our development program, it is not our plan to seek
other business opportunities including acquiring or merging with a
private company unless such an acquisition or merger was with a
strategic business partner or business that strengthened and
furthered our business plan as outlined in this registration
statement.
We anticipate incurring continuing operating losses for the
foreseeable future. We base this expectation, in part, on the fact
that we will incur substantial operating expenses in completing our
development program and do not anticipate earning any revenues
until after development is completed and marketing has commenced.
Our future financial results are also uncertain due to a number of
factors, some of which are outside our control. These factors
include, but are not limited to:
(a) our ability to develop a commercially marketable virtual
office system with the features and functionality sought by our
potential customers;
(b) our ability to successfully market our virtual
office system to potential customers;
25
(c) our ability to charge fees for use of our virtual
office system that will enable us to generate revenues
that exceed our operating costs; and
(d) the introduction and availability of competing
services.
As a result of the material uncertainties discussed above
regarding our financial position and our ability to carry out
our business plan and market our proposed service, persons who
cannot afford a complete loss of their investment should not
purchase our securities.
We believe the above discussion contains a number of
forward-looking statements. Our actual results and our actual
plan of operations may differ materially from what is stated
above. Factors which may cause our actual results or our
actual plan of operations to vary include, among other things,
decisions of our board of directors not to pursue a specific
course of action based on its reassessment of the facts or new
facts, changes in the application hosting business or general
economic conditions and those other factors identified in this
prospectus.
DESCRIPTION OF PROPERTY
We do not own or lease any real property. Our principal
executive offices and our subsidiary's development facilities are
located in property of Danby Technologies Corporation, a company
controlled by Mr. Robert Danvers, our President and a director, at
444 Columbia Street E., New Westminster, B.C. V3L 3W9. We pay
$1,500 per month, for our office rent at this location under a
month to month agreement renewable automatically unless cancelled
by either party on 30 days written notice.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Except as set forth below, there have been no material
transactions, series of similar transactions, currently proposed
transactions, or series of similar transactions, to which we are or
will be a party, in which the amount involved exceeded $60,000 and
in which any of our directors or executive officers, any security
holder who is known by us to own of record or beneficially more
than five percent of our common stock, any promoter, or any member
of the immediate family of any of the foregoing persons, had a
material interest.
Mr. Robert Danvers may be considered a promoter within the
meaning of the federal securities laws.
During the year ended April 30. 2002:
We acquired from Danby Technologies Corporation, a company
owned and controlled by Robert Danvers, the prior
development, designs and implementations for a virtual
office system for the reimbursement of $60,000 of Danby
Technologies Corporation's prior out of pocket development
expenses and a royalty on future sales of 2%, to an
aggregate $250,000 and thereafter at the rate of 1% of net
revenues.
We issued 2,100,000 common shares in a private transaction
at the price of $0.00333 per share to Mr. Robert Danvers,
Mr. Danvers spouse, Chantal Trudeau and their minor
children Nicholas and Simon Danvers for an aggregate
consideration of $7,000.
We rented our office premise for our British Columbia
subsidiary and our executive offices from Danby
Technologies Corporation at the rate of $1,500 per month
on a month to month basis. In the period from
incorporation to April 30, 2002, we incurred rental
charges aggregating $10,500 of which the outstanding
balance was $7,971 at April 30, 2002.
We engaged Danby Technologies Corporation as contractor to
provide us with a shared internet enabled network system
for deploying and testing our development and to provide
professional staff to maintain our implementation and
undertake development. Fees of $3,000 per month are based
on fees Danby Technologies Corporation charges other firms
for comparable services. In the period from incorporation
to April 30, 2002, we incurred fees related to systems and
professional fees aggregating $20,616 of which the
outstanding balance was $20,616 at April 30, 2002.
26
Danby Technologies Corporation, incurred various operating
expenses on our behalf, aggregating $70 during the period
from incorporation to April 30, 2002. The outstanding
balance of which was $70 at April 30, 2002.
Danby Financial Management Corp., a company controlled by
Robert Danvers, incurred various operating expenses on our
behalf, aggregating $825 during the period from
incorporation to April 30, 2002. The outstanding balance
of which was nil at April 30, 2002.
Subsequent to the year ended April 30. 2002:
We issued 1,180,000 common shares to Danby Technologies
Corporation and 20,000 to a member of their staff in settlement
of the principal amount of $60,000 due Danby Technologies
Corporation under the October 3, 2001 purchase agreement.
In the three month period to July 31, 2002, under the
terms of our engagement with Danby Technologies
Corporation, we incurred fees related to office and
systems rent and professional fees aggregating $13,500 of
which the outstanding balance was $6,104 at July 31, 2002.
Danby Technologies Corporation, and Danby Financial
Management Corp., incurred various operating expenses on
our behalf, aggregating $138 and $37 respectively during
the three month period ended July 31, 2002. The
outstanding balance due for expenses was $214 and $40
respectively at July 31, 2002 which includes unpaid amounts
from April 30, 2002 and the three month period ended July
31, 2002 and reflect applicable currency translation
adjustments.
We engaged S.C. Jackson & Associates, a company controlled
by Stephen Jackson a director, to provide marketing
related consulting services. We incurred fees and related
expenses aggregating $1,125 of which the outstanding
balance was $1,125 at July 31, 2002.
At this time we have not formulated any corporate policies
for entering into transactions with affiliated parties.
Members of our management team are not employed by us on a
full-time basis. They are involved in other business activities
and may, in the future become involved in other businesses. If a
specific business opportunity becomes available, such persons may
face a conflict in selecting between our business and their other
business interests. We do not have and do not intend in the future
to formulate a policy for the resolution of such conflicts. We
currently have no agreements with members of our management team.
We have not determined when an employment agreement would be
entered into with Robert Danvers, our President however we have
determined to review entering into an agreement after a public
market for our common shares develops.
27
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
No Public Market for Common Stock
There is presently no public market for our common stock. We
anticipate applying for trading of our common stock on the OTC
Bulletin Board upon the effectiveness of the registration statement
of which this prospectus forms a part. However, we can provide no
assurance that our shares will be traded on the bulletin board or,
if traded, that a public market will materialize.
We understand that, in 2003, subject to approval of the
Securities and Exchange Commission, The NASD intends to phase out
the OTC Bulletin Board, and replace it with the "Bulletin Board
Exchange" or "BBX". As proposed, the BBX will include an
electronic trading system to allow order negotiation and automatic
execution. The NASD has indicated its belief that the BBX will
bring increased speed and reliability to trade execution, as well
as improve the overall transparency of the marketplace. Specific
criteria for listing on the BBX have not yet been announced, and
the BBX may provide for listing criteria which we do not meet. If
the OTC Bulletin Board is phased out and we do not meet the
criteria established by the BBX, there may be no transparent market
on which our securities may be included. In that event, investors
may have difficulty buying and selling our securities and the
market for our securities may be adversely affected thereby.
Holders of Our Common Stock
As of the date of this registration statement, we had thirty-
one (31) registered stockholders.
Rule 144 Shares
A total of 3,300,000 shares of our common stock will be
available for resale to the public after October 6, 2003,
(2,094,000 shares), April 12, 2004 (6,000 shares) and May 13, 2004
(1,200,000 shares) in accordance with the volume and trading
limitations of Rule 144 of the Act. In general, under Rule 144 as
currently in effect, a person who has beneficially owned shares of
a company's common stock for at least one year is entitled to sell
within any three month period a number of shares that does not
exceed the greater of:
1. 1% of the number of shares of our common stock then
outstanding which, in our case, will equal approximately 45,000
shares as of the date of this prospectus; or
2. the average weekly trading volume of our common stock
during the four calendar weeks preceding the filing of a notice on
form 144 with respect to the sale.
Sales under Rule 144 are also subject to manner of sale
provisions and notice requirements and to the availability of
current public information about us.
Under Rule 144(k), a person who is not one of our affiliates
at any time during the three months preceding a sale, and who has
beneficially owned the shares proposed to be sold for at least 2
years, is entitled to sell shares without complying with the manner
of sale, public information, volume limitation or notice provisions
of Rule 144.
As of the date of this prospectus, persons who are our
affiliates hold 3,280,000 shares that may be sold pursuant to Rule
144 after October 6, 2003, April 12, 2004 and May 13, 2004.
Stock Option Grants
To date, we have not granted any stock options.
Registration Rights
We have not granted registration rights to the selling
stockholders or to any other persons.
Dividends
There are no restrictions in our articles of incorporation or
bylaws that prevent us from declaring dividends. The Nevada
Revised Statutes, however, do prohibit us from declaring dividends
where,
28
after giving effect to the distribution of the dividend:
1. We would not be able to pay our debts as they become due
in the usual course of business; or
2. Wur total assets would be less than the sum of our
total liabilities plus the amount that would be needed to
satisfy the rights of stockholders who have preferential
rights superior to those receiving the distribution.
We have not declared any dividends, and we do not plan to
declare any dividends in the foreseeable future.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information relating to all
compensation awarded to, earned by or paid by us during each of the
preceding three fiscal years to: (a) all individuals serving as our
Chief Executive Officer in the fiscal year ended April 30, 2002;
and (b) each of our executive officers who earned more than
$100,000 during the fiscal year ended April 30, 2002:
Other Securities
Annual Underlying All
Name and Fiscal Compen- Options/ LTIP Other
Principal Position Year Salary Bonus sation SARs (#)Payouts Compensation
Robert Danvers 2002 - - - - - -
President, CEO
Stephen Jackson 2002 - - - - - -
Secretary,
Treasurer
Option Grants in Last Fiscal Year
We did not grant any stock options to the executive officers
during our most recent fiscal year ended April 30, 2002. We have
also not granted any stock options to executive officers since
April 30, 2002.
Compensation of Directors
There are no standard arrangements pursuant to which directors
are compensated for any services provided as director. No
additional amounts are payable to directors for committee
participation or special assignments performed for and on our
behalf through to April 30, 2002.
Employment Contracts and Termination of Employment
and Change-in-Control Arrangements
There are no employment contracts, compensatory plans or
arrangements, including payments to be received from us, with
respect to any of our directors or executive officers which would
in any way result in payments to any such person because of his or
her resignation, retirement or other termination of employment with
us, any change in control of us, or a change in the person's
responsibilities following such a change in control.
29
AVAILABLE INFORMATION
Availability of Additional Information
We have filed a registration statement on form SB-2 under the
Securities Act of 1933 with the Securities and Exchange Commission
with respect to the shares of our common stock offered through this
prospectus. This prospectus is filed as a part of that
registration statement and does not contain all of the information
contained in the registration statement and exhibits. Statements
contained in the registration statement are summaries of the
material terms of the referenced contracts, agreements or documents
and are not necessarily complete. In each instance, we refer you
to the copy of the contracts or other documents filed as exhibits
to this registration statement, and the statements we have made in
this prospectus are qualified in their entirety by reference to the
referenced contracts, agreements or documents.
The registration statement, including all exhibits, may be
inspected without charge at the SEC's Public Reference Room at 450
Fifth Street, N.W. Washington, D.C. 20549. Copies of these
materials may also be obtained from the SEC's Public Reference at
450 Fifth Street, N.W., Room 1024, Washington D.C. 20549, upon the
payment of prescribed fees. You may obtain information on the
operation of the Public Reference Room by calling the SEC at 1-800-
SEC-0330.
The registration statement, including all exhibits, has been
filed with the SEC through the Electronic Data Gathering, Analysis
and Retrieval system. Following the effective date of the
registration statement, we will become subject to the reporting
requirements of the Exchange Act and in accordance with these
requirements, will file annual, quarterly and special reports, and
other information with the SEC. We also intend to furnish our
stockholders with annual reports containing audited financial
statements and other periodic reports as we think appropriate or as
may be required by law. This registration statement and other
filings made by us with the SEC through its Electronic Data
Gathering, Analysis and Retrieval Systems are publicly available
through the SEC's site on the World Wide Web located at
http//www.sec.gov.
REPORTS TO SECURITY HOLDERS
We will voluntarily send a report annually to stockholders
including our annual audited financial statements.
30
FINANCIAL STATEMENTS Page
Annual Audited Financial Statements
Independent Auditors' Report F-2
Consolidated Financial Statements
Consolidated Balance Sheet F-3
Consolidated Statement of Operations F-4
Consolidated Statement of Cash Flows F-5
Consolidated Statement of
Stockholders' Deficiency F-6
Notes to the Consolidated Financial Statements F-7 - F-10
Interim Financial Statements to July 31, 2002
Consolidated Interim Financial Statements
Consolidated Balance Sheet F-11
Consolidated Statement of Operations F-12
Consolidated Statement of Stockholders' Equity F-13
Consolidated Statement of Cash Flows F-14
Notes to the Consolidated Interim Financial
Statements F-15 - F-17
F-1
INFOTEC BUSINESS SYSTEMS, INC.
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2002
(Stated in U.S. Dollars)
AUDITORS' REPORT
To the Shareholders
Infotec Business Systems, Inc.
(A development stage company)
We have audited the consolidated balance sheet of Infotec
Business Systems, Inc. (a development stage company) as at
April 30, 2002 and the consolidated statements of
operations, cash flows, and stockholders' deficiency for the
period from August 30, 2001 (date of inception) to April 30,
2002. These consolidated financial statements are the
responsibility of the Company's management. Our
responsibility is to express an opinion on these
consolidated financial statements based on our audit.
We conducted our audit in accordance with United States
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 consolidated financial statements
present fairly, in all material respects, the financial
position of the Company as at April 30, 2002 and the results
of its operations and cash flows for the period from August
30, 2001 (date of inception) to April 30, 2002 in accordance
with United States generally accepted accounting principles.
The accompanying consolidated 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 1(c). These consolidated
financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
Vancouver, B.C. "Morgan & Company"
May 27, 2002 Chartered Accountants
F-2
INFOTEC BUSINESS SYSTEMS, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
APRIL 30, 2002
(Stated in U.S. Dollars)
ASSETS
Current
Cash $ 2,066
Amounts receivable 2,094
Prepaid expenses 633
------
$ 4,793
------
LIABILITIES
Current
Accounts payable - related company $ 90,227
Accounts payable - other 4
------
90,231
------
STOCKHOLDERS' DEFICIENCY
Capital Stock
Authorized:
50,000,000 common shares, par value $0.001 per share
25,000,000 preferred shares, par value $0.001 per
share
Issued and outstanding:
2,100,000 common shares at April 30, 2002 2,100
Additional paid-in capital 4,900
Deficit Accumulated During The Development Stage (92,438)
-------
(85,438)
-------
$ 4,793
-------
Nature Of Operations (Note 1)
F-3
INFOTEC BUSINESS SYSTEMS, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF OPERATIONS
PERIOD FROM AUGUST 30, 2001 (DATE OF INCEPTION) TO APRIL 30,2002
(Stated in U.S. Dollars)
- ---------------------------------------------------------------
Expenses
Office and miscellaneous $ 1,322
Rent and occupancy 10,500
Equipment rental 10,308
Software development costs 70,308
-------
Loss For The Period $(92,438)
-------
Basic Loss Per Share $ (0.05)
-------
Weighted Average Number Of Shares Outstanding 1,745,679
---------
F-4
INFOTEC BUSINESS SYSTEMS, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
PERIOD FROM AUGUST 30, 2001 (DATE OF INCEPTION) TO APRIL 30,2002
(Stated in U.S. Dollars)
Cash Flows From Operating Activities
Loss for the period $ (92,438)
Changes in non-cash working capital balances related
to operations:
Prepaid expenses (633)
Amounts receivable (2,094)
Accounts payable - related company 90,227
Accounts payable - other 4
------
(4,934)
------
Cash Flows From Financing Activity
Issuance of share capital 7,000
------
Increase In Cash During The Period 2,066
Cash, Beginning Of Period -
------------
Cash, End Of Period $ 2,066
------------
F-5
INFOTEC BUSINESS SYSTEMS, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY
APRIL 30, 2002
(Stated in U.S. Dollars)
ADDITIONAL
COMMON STOCK PAID-IN
SHARES AMOUNT CAPITAL DEFICIT TOTAL
- -------------------------------------------------------------------------
October 2002 -
Issued for cash 2,100,000 $ 2,100 $ 4,9008 $(92,438) $ (85,438)
Balance, April 30, 2,100,000 $ 2,100 $ 4,9008 $(92,438) $ (85,438)
2002
F-6
INFOTEC BUSINESS SYSTEMS, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2002
(Stated in U.S. Dollars)
1.NATURE OF OPERATIONS
a)Organization
The Company was incorporated in the State of Nevada,
U.S.A. on August 30, 2001. The Company's wholly owned
subsidiary, Infotec Business Strategies, Inc., was
incorporated under the laws of the Province of British
Columbia on October 1, 2001.
b)Development Stage Activities
The Company is engaged in the development of internet
accessible ("online") systems for conducting business
processes in real time. The development is currently
focused on a "virtual office" system for small and
medium businesses which provides remote users with
access via a web browser to their software
applications, corporate data storage and integrated
business applications for contact management, time and
project management, and client management.
The Company is in the development stage; therefore,
recovery of its assets is dependent upon future events,
the outcome of which is indeterminable. In addition,
successful completion of Infotec Business Systems,
Inc.'s development program and its transition,
ultimately to the attainment of profitable operations
is dependent upon obtaining adequate financing to
fulfil its development activities and achieve a level
of sales adequate to support its cost structure.
c)Going Concern
The Company will need additional working capital to be
successful in its planned development activities and to
service its current liabilities 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 and long term financing.
F-7
INFOTEC BUSINESS SYSTEMS, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2002
(Stated in U.S. Dollars)
2.SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements of the Company has
been prepared in accordance with generally accepted
accounting principles in the United States. Because a
precise determination of many assets and liabilities is
dependent upon future events, the preparation of
consolidated financial statements for a period
necessarily involves the use of estimates which have been
made using careful judgement.
The consolidated financial statements have, in
management's opinion, been properly prepared within
reasonable limits of materiality, and within the
framework of the significant accounting policies
summarized below:
a)Consolidation
These consolidated financial statements include the
accounts of the Company and its wholly owned Canadian
subsidiary, Infotec Business Strategies, Inc.
b)Software Development Costs
Software development costs are charged to expense as
incurred unless the development project meets the
criteria under United States generally accepted
accounting principles for capitalization.
Capitalization of software development costs begins
upon the establishment of technological feasibility and
ceases when the product is available for general
release. The Company has no capitalized software
development costs at April 30, 2002.
c)Development Stage Company
The Company is a development stage company as defined
in the Statements of Financial Accounting Standards No.
7. The Company is devoting substantially all of its
present efforts to establish a new business and none of
its planned principal operations have commenced. All
losses accumulated since inception have been considered
as part of the Company's development stage activities.
d)Income Taxes
The Company has adopted Statement of Financial
Accounting Standards No. 109 - "Accounting For Income
Taxes" (SFAS 109). This standard requires the use of
an asset and liability approach for financial
accounting and reporting on income taxes. If it is
more likely than not that some portion, or all if a
deferred tax asset, will not be realized, a valuation
allowance is recognized.
F-8
INFOTEC BUSINESS SYSTEMS, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2002
(Stated in U.S. Dollars)
2.SIGNIFICANT ACCOUNTING POLICIES (Continued)
e)Foreign Currency Translation
The operations of the Company's subsidiary, Infotec
Business Strategies, Inc., are located in Vancouver,
Canada and its functional currency is the Canadian
dollar. The consolidated financial statements have
been translated using the current method whereby the
assets and liabilities are translated at the year end
exchange rate, capital accounts at the historical
exchange rate, and revenues and expenses at the average
exchange rate for the period.
f)Financial Instruments
The Company's financial instruments consist of cash,
amounts receivable, prepaid expenses and accounts
payable.
Unless otherwise noted, it is management's opinion that
this Company is not exposed to significant interest or
credit risks arising from these financial instruments.
The fair value of these financial instruments
approximate their carrying values, unless otherwise
noted.
g)Basic Loss Per Share
Basic loss per share is calculated using the weighted
average number of common shares outstanding during the
period.
3.COMMITMENT
Pursuant to a purchase agreement dated October 3, 2001,
the Company acquired computer software development costs
for the consideration of $60,000, and a royalty of 2% on
the net sales revenue of any product or service that uses
all or any portion of the software until the amount paid
totals $250,000, after which the royalty drops to 1%.
The royalty is payable quarterly following the first
commercial sale of products or services.
The software development costs were acquired from Danby
Technologies Corporation ("Danby"), a company controlled
by a majority shareholder, and was recorded at Danby's
historical cost base.
F-9
INFOTEC BUSINESS SYSTEMS, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2002
(Stated in U.S. Dollars)
4.RELATED PARTY TRANSACTIONS
During the period, the Company entered into transactions
(recorded at exchange values) with related parties as
follows:
i) The Company engages Danby Technologies Corporation to
provide a shared internet enabled network system for
deploying and testing, and to provide professional
staff to maintain implementation and undertake
development. In the period from inception to April 30,
2002, the Company has incurred fees related to systems
rental aggregating $20,616.
ii)The Company rents its office premise from Danby
Technologies Corporation at the rate of $1,500 per
month on a month to month basis. In the period from
inception to April 30, 2002, the Company has incurred
rental charges aggregating $10,500.
5.SUBSEQUENT EVENTS
a)Subsequent to April 30, 2002, the Company entered into
a debt settlement agreement whereby it settled the
$60,000 arising from the purchase of software
development costs by the issuance of 1,200,000 common
shares at a price of $0.05 per share.
b)Subsequent to April 30, 2002, the Company completed a
private placement of 1,200,000 common shares at $0.05
per share, resulting in proceeds to the Company of
$60,000.
F-10
INFOTEC BUSINESS SYSTEMS, INC.
(A Development Stage Company)
Consolidated Balance Sheet
(Unaudited)
July 31, 2002
- --------------------------------------------------------------
Assets
Current assets
Cash $ 19,512
Amounts receivable 535
Prepaid expenses and other current assets 641
- --------------------------------------------------------------
$ 20,688
- --------------------------------------------------------------
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued liabilities $ 292
Accounts payable - related 7,444
- --------------------------------------------------------------
Total current liabilities 7,736
Stockholders' equity
Share capital
Authorized
25,000,000 preferred shares with $0.001 par value
50,000,000 common shares with $0.001 par value
Issued
4,500,000 common shares 4,500
Additional paid-in capital 122,500
Deficit accumulated during the development stage (114,048)
- --------------------------------------------------------------
Total stockholders' equity 12,952
- --------------------------------------------------------------
$ 20,688
- --------------------------------------------------------------
F-11
The Accompanying Notes are an Integral
Part of These Financial Statements
INFOTEC BUSINESS SYSTEMS, INC.
(A Development Stage Company)
Consolidated Statements of Operations
(Unaudited)
_________________________________________________________________
Period from
Three August
Month 30, 2001
period ended (inception)
July 31,to July 31,
2002 2002
--------------------------
Operating Expenses
Administration costs $ 1,481 $ 2,803
Professional fees 5,629 5,629
Consulting 1,000 1,000
Rent and occupancy 4,500 15,000
Equipment rental 4,500 14,808
Software development costs 4,500 74,808
- -----------------------------------------------------------
Total operating expenses 21,610 114,048
Net (Loss) $(21,610) $(114,048)
- -----------------------------------------------------------
Net (loss) per share -
Basic and Diluted $ (0.01) $ (0.04)
- -----------------------------------------------------------
Weighted average shares
of common stock outstanding 4,173,913 2,669,552
- -----------------------------------------------------------
F-12
The Accompanying Notes are an Integral
Part of These Financial Statements
INFOTEC BUSINESS SYSTEMS, INC.
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity
(Unaudited)
____________________________________________________________________
Common Stock
--------------------------- Deficit
Additional Accumulated During
Number of Paid-in the Development
Shares Amount Capital Stage Total
- --------------------------------------------------------------------------
Initial
capitalization
October, 2001
for cash 2100000 $2100 $4900 $ $7,000
Net (loss) (92,438) (92,438)
- --------------------------------------------------------------------------
Balance as of
April 30, 2002 2100000 2100 4900 (92,438) (85,438)
Shares issued for:
Settlement of
accounts
payable 1200000 1200 58,800 60,000
Private
placement 1200000 1200 58,800 60,000
Net (loss) (21,610) (21,610)
- --------------------------------------------------------------------------
Balance as of
July 31,2002 4500000 $4,500 $122,500 $(114,048) $ 12,952
- --------------------------------------------------------------------------
F-13
The Accompanying Notes are an Integral
Part of These Financial Statements
INFOTEC BUSINESS SYSTEMS, INC.
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Unaudited)
Period from
Three August
Month 30, 2001
period ended (inception)
July 31, to July 31,
2002 2002
--------------------------
Cash flows from operating activities
Net Loss $(21,610) $(114,048)
Changes in non-cash
working capital, net (20,944) 49,114
- ---------------------------------------------------------------
(42,554) (64,934)
Cash flows from financing activities
Proceeds from issuance of common stock 60,000 67,000
- ---------------------------------------------------------------
60,000 67,000
- ---------------------------------------------------------------
Increase in cash in the period 17,446 2,066
Cash - beginning of period 2,066 -
- ---------------------------------------------------------------
Cash - end of period $ 19,512 2,066
- ---------------------------------------------------------------
Supplementary cash flow information
Shares issued to settle
accounts payable - related $60,000 $60,000
- ---------------------------------------------------------------
F-14
The Accompanying Notes are an Integral
Part of These Financial Statements
INFOTEC BUSINESS SYSTEMS, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Unaudited)
________________________________________________________________________
NOTE 1: INTERIM FINANCIAL DATA
The accompanying unaudited consolidated financial statements have
been prepared in accordance with generally accepted accounting
principles for interim financial information and the instructions to
form 10-QSB. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles
for complete financial statements. All adjustments that, in the
opinion of management, are necessary for the fair presentation of the
results of operations for the interim periods have been made and are
of a recurring nature unless otherwise disclosed herein. The results
of operations for the three month period ended July 31, 2002 are not
necessarily indicative of the results that will be realized for a
full year. For further information, refer to the Company's audited
financial statements and notes thereto for the fiscal year ended
April 30, 2002.
NOTE 2: ORGANIZATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
a)Organization and Nature of Business
These financial statements include the accounts of Infotec Business
Systems, Inc. (the "Company") and its wholly owned subsidiary Infotec
Business Strategies, Inc.
b) Development Stage Activities
The Company is engaged in the development of internet accessible
("online") systems for conducting business processes in real time. The
development is currently focused on a "virtual office" system for small
and medium businesses which provides remote users with access via a web
browser to their software applications, corporate data storage and
integrated business applications for contact management, time and
project management, and client management.
The Company is in the development stage; therefore, recovery of its
assets is dependent upon future events, the outcome of which is
indeterminable. In addition, successful completion of Infotec Business
Systems, Inc.'s development program and its transition, ultimately to
the attainment of profitable operations is dependent upon obtaining
adequate financing to fulfil its development activities and achieve a
level of sales adequate to support its cost structure.
c) Principals of Consolidation
The consolidated financial statements include the accounts of the
Company and its subsidiary. All material intercompany transactions and
balances have been eliminated upon consolidation
d) Software Development Costs
Software development costs are charged to expense as incurred unless the
development project meets the criteria under United States generally
accepted accounting principles for capitalization. Capitalization of
software development costs begins upon the establishment of
technological feasibility and ceases when the product is available for
general release. The Company has no capitalized software development
costs at April 30, 2002.
F-15
INFOTEC BUSINESS SYSTEMS, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Unaudited )
________________________________________________________________________
NOTE 2: ORGANIZATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
e) Development Stage Company
The Company is a developed stage company as defined in the Statements of
Financial Accounting Standards No. 7. The Company is devoting
substantially all of its present efforts to establish a new business and
none of its planned principal operations have commenced. All losses
accumulated since inception have been considered as part of the
Company's development stage activities.
f) Foreign Currency Translation
The operations of the Company's subsidiary, Infotec Business Strategies,
Inc., are located in Vancouver, Canada and its functional currency is
the Canadian dollar. The consolidated financial statements have been
translated using the current method whereby the assets and liabilities
are translated at the year end exchange rate, capital accounts at the
historical exchange rate, and revenues and expenses at the average
exchange rate for the period.
g) Financial Instruments
The Company's financial instruments consist of cash, amounts receivable,
prepaid expenses and accounts payable.
Unless otherwise noted, it is management's opinion that this Company is
not exposed to significant interest or credit risks arising from these
financial instruments. The fair value of these financial instruments
approximate their carrying values, unless otherwise noted.
h) Net Loss per Share
Basic and diluted net loss per share represents net loss divided by the
weighted average number of shares outstanding for the period.
NOTE 3: GOING CONCERN
The financial statements have been presented on the basis that the
Company is a going concern, which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business.
The Company reported a net loss of $114,048 since inception to July 31,
2002. At July 31, 2002, the Company had working capital of $12,952
The Company will need additional working capital to be successful in its
planned development activity and to service its current liabilities 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 and long
term financing.
F-16
INFOTEC BUSINESS SYSTEMS, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
(Unaudited )
________________________________________________________________________
NOTE 3: GOING CONCERN (continued)
The financial statements do not include any adjustments to reflect the
possible future effects on the recoverability and classification of
assets or the amounts and classifications of liabilities that may result
from the outcome of this uncertainty.
NOTE 4: COMMITMENT
Pursuant to a purchase agreement dated October 3, 2001, the Company
acquired computer software development costs for the consideration of
$60,000, and a royalty of 2% on the net sales revenue of any product
or service that uses all or any portion of the software until the
amount paid totals $250,000, after which the royalty drops to 1%.
The royalty is payable quarterly following the first commercial sale
of products or services.
The software development costs were acquired from Danby Technologies
Corporation ("Danby"), a company controlled by a majority shareholder,
and was recorded at Danby's historical cost base.
NOTE 5: SHARE CAPITAL
a)The Company entered into a debt settlement agreement whereby it
settled the $60,000 arising from the purchase of software development
costs by the issuance of 1,200,000 common shares at a price of $0.05
per share.
b) The Company completed a Regulation "S" private placement of
1,200,000 common shares at $0.05 per share, resulting in proceeds to the
Company of $60,000.
NOTE 6: RELATED PARTY TRANSACTIONS
During the period, the Company entered into transactions (recorded at
exchange values) with related parties as follows:
i) The Company engages Danby Technologies Corporation to provide a
shared internet enabled network system for deploying and testing, and to
provide professional staff to maintain implementation and undertake
development. In the three month period to July 31, 2002, the Company
has incurred fees related to systems rental aggregating $9,000.
ii) The Company rents its office premise from Danby Technologies
Corporation at the rate of $1,500 per month on a month to month basis.
In the three month period to July 31, 2002, the Company has incurred
rental charges aggregating $4,500.
iii) During the three month period ended July 31, 2002, the Company
engaged a company controlled by a director to provide marketing
consulting services for $1,000.
F-17
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Nevada General Corporation Law permits the indemnification of
directors, employees, officers and agents of Nevada corporations.
Our articles of incorporation and bylaws provide that we indemnify
our directors and officers to the fullest extent permitted by the
Nevada General Corporation Law. Insofar as indemnification for
liabilities arising under the Securities Act may be permitted to
directors, officers or persons controlling us pursuant to the
foregoing provisions, we are advised that, in the opinion of the
Securities and Exchange Commission, such indemnification is against
public policy as expressed in the Securities Act and is therefore
unenforceable.
As authorized by the Nevada General Corporation Law, our
articles of incorporation provide that none of our directors shall
be personally liable to us or our shareholders for monetary damages
for breach of fiduciary duty as a director, except liability for:
- acts or omissions which involve intentional misconduct,
fraud or a knowing violation of law; or
- the payment of dividends in violation of the Nevada
Revised Statutes.
This provision limits our rights and the rights of our
shareholders to recover monetary damages against a director for
breach of the fiduciary duty of care except in the situations
described above. This provision does not limit our rights or the
rights of any shareholder to seek injunctive relief or rescission
if a director breaches his duty of care. These provisions will not
alter the liability of directors under federal securities laws.
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated costs of this offering are as follows:
Securities and Exchange Commission
registration fee $5.52
Federal Taxes NIL
State Taxes and Fees NIL
Transfer Agent Fees 1,000.00
Accounting fees and expenses 5,000.00
Legal fees and expenses 15,000.00
Blue Sky fees and expenses 2,000.00
Miscellaneous NIL
_________
Total $ 23,005.52
All amounts are estimates other than the Commission's
registration fee. As at July 31, 2002 $6,129 of these expenses had
been incurred and are reflected in the operating loss for the
quarter then ended.
We are paying all expenses of the offering listed above. No
portion of these expenses will be borne by the selling
stockholders. The selling stockholders, however, will pay any
other expenses incurred in selling their common stock, including
any brokerage commissions or costs of sale.
RECENT SALES OF UNREGISTERED SECURITIES
We issued 2,100,000 shares of common stock on October 11, 2001
to Mr. Robert Danvers, Mrs. Chantal Trudeau and their minor
children. Mr. Danvers is our President and a director. Mrs.
Trudeau
II-1
is the spouse of Mr. Danvers. These shares were issued
pursuant to Section 4(2) of the Securities Act of 1933 at a price
of $0.00333 per share, for total proceeds of $7,000. The 2,100,000
shares of common stock are restricted shares as defined in the
Securities Act. Mr. Danvers and Mrs. Trudeau were knowledgeable,
had access to all relevant information in relation to the company
and had the financial capacity to sustain an investment in the
company.
On May 13, 2002, we converted liabilities amounting to $60,000
through the issuance of 1,200,000 shares, at a price of $0.05 per
share, to 2 persons being Danby Technologies Corporation as to 1,180,000
shares and to an associate of Danby Technologies as to 20,000 shares at
their direction. These shares were issued pursuant to Rule 903 of
Regulation S (i.e., Category 3) of the Securities Act. Each purchaser
represented to us in the subscription agreement that he was a non-U.S.
person as defined in Regulation S. We did not engage in a distribution
of this offering in the United States. Each purchaser represented his
intention to acquire the securities for investment only and not with a
view toward distribution. Each purchaser represented to us that he
will resell such securities only in accordance with the provisions of
Regulation S which prohibit sales to or for the benefit of a U.S.
person, pursuant to registration under the Act, or pursuant to an
available exemption from registration and agrees not to engage in
hedging transactions with regard to such securities unless in
compliance with the Act. Appropriate legends were affixed to the
stock certificate issued to each purchaser in accordance with
Regulation S which, among other things, precludes transfers except
as provided above. The purchasers had access to financial and
other information about us and were afforded the opportunity to ask
questions concerning our operations and the terms of the debt
conversion. Each subscription agreement precluded transfer except
under the above conditions. No registration rights were granted to
any of the purchasers.
We completed an offering of 1,200,000 shares of our common
stock at a price of $0.05 per share to a total of 25 purchasers on
May 14, 2002. The total amount received from this offering was
$60,000. We completed the offering pursuant to Rule 903 of
Regulation S (i.e., Category 3) of the Securities Act. Each
purchaser represented to us in the subscription agreement that he
was a non-U.S. person as defined in Regulation S. We did not
engage in a distribution of this offering in the United States.
Each purchaser represented his intention to acquire the securities
for investment only and not with a view toward distribution. Each
purchaser represented to us that he will resell such securities
only in accordance with the provisions of Regulation S which
prohibit sales to or for the benefit of a U.S. person, pursuant to
registration under the Act, or pursuant to an available exemption
from registration and agrees not to engage in hedging transactions
with regard to such securities unless in compliance with the Act.
Appropriate legends were affixed to the stock certificate issued to
each purchaser in accordance with Regulation S which, among other
things, precludes transfers except as provided above. Each
purchaser was given adequate access to sufficient information about
us to make an informed investment decision. None of the securities
were sold through an underwriter and accordingly, there were no
underwriting discounts or commissions involved. Each subscription
agreement precluded transfer except under the above conditions. No
registration rights were granted to any of the purchasers.
We did not utilize an underwriter for any of the foregoing.
Other than the securities mentioned or referenced above, we have
not issued or sold any securities since incorporation.
EXHIBITS
Number Description of exhibit
3.1 Articles of Incorporation (1)
3.2 Bylaws (1)
4.1 Regulation "S" Securities Subscription Agreement (2)
5.1 Opinion of Adorno & Yoss, P.A., with consent to use (4)
10.1 Purchase Agreement with Danby Technologies Corporation (2)
10.2 Debt Settlement Agreement with Danby Technologies Corporation(1)
10.4 Deferral of Engagement fees by Danby Technologies Corporation (4)
II-2
21 Subsidiaries of the Issuer (1)
23.1 Consent of Morgan and Company, Chartered Accountants (4)
23.2 Consent of Adorno & Yoss, P.A. (See Exhibit 5.1)(4)
________
_______________
(1) Incorporated by reference, filed with the
corresponding exhibit number as an exhibit to the company's
Registration Statement on Form SB-2 filed with the Securities and
Exchange Commission on June 17, 2002.
(2) Incorporated by reference, filed with the
corresponding exhibit number as an exhibit to the company's
Amended Registration Statement on Form SB-2 filed with the
Securities and Exchange Commission on August 19, 2002.
(3) Incorporated by reference, filed with the corresponding
exhibit number as an exhibit to the company's Amended Registration
Statement on Form SB-2 filed with the Securities and Exchange
Commission on October 1, 2002.
(4) Filed herewith.
UNDERTAKINGS
The undersigned registrant hereby undertakes:
1.To file, during any period in which we offer or sell
securities, a post-effective amendment to this
registration statement:
(i) To include any prospectus
required by Section 10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any
facts or events which, individually or together, repre
sent a fundamental change in the information in the
registration statement, and Notwithstanding the
foregoing, and increase or decrease in volumes of
securities offered (if the total dollar value of
securities offered would not exceed that which was
registered) and any deviation from the low or high end
of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to rule 424(b) if, in the
aggregate, the changes in the volume and price
represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective
registration statement; and
(iii) To include any additional or changed
material information on the plan of distribution.
2.That, for the purpose of determining any liability
under the Securities Act, each such post-effective
amendment shall be deemed to be a new registration
statement relating to the securities offered herein, and
the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
3.To remove from registration by means of a post-
effective amendment any of the securities being registered
hereby which remain unsold at the termination of the
offering.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to our directors, officers and
controlling persons pursuant to the provisions above, or otherwise,
we have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy
as expressed in the Securities Act, and is, therefore,
unenforceable.
In the event that a claim for indemnification against such
liabilities, other than the payment by us of expenses incurred or
paid by one of our directors, officers, or controlling persons in
the successful defense of any action, suit or proceeding, is
asserted by one of our directors, officers, or controlling persons
in connection with the securities being registered, we will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification is against
public policy as expressed in the Securities Act, and we will be
governed by the final adjudication of such issue.
SIGNATURES
II-3
In accordance with the requirements of the Securities Act of
1933, the registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form SB-
2 and authorized this amendment to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized,
in the City of New Westminster, British Columbia, Canada, on
October 17, 2002.
Infotec Business Systems, Inc.
(Registrant)
By:___/s/Robert Danvers________
Robert Danvers
President
In accordance with the requirements of the Securities Act of
1933, this amendment to the registration statement has been signed
by the following persons in the capacities and on the dates stated.
Signature Title Date___________
- ----------------------------------------------------------------------------
________/s/Robert Danvers ___ President, Chief Executive October 17, 2002
Robert Danvers Officer and Director
(Principal Executive,Financial and
Accounting Officer)
________/s/Stephen Jackson___ Secretary, Treasurer and
Stephen Jackson Director October 17, 2002
II-4
EXHIBIT 5.1
Adorno & Yoss
A PROFESSIONAL ASSOCIATION
350 East Las Olas Boulevard, Suite 1700
Fort Lauderdale, Florida 33301
Telephone (954) 763-1200
www.adorno.com
Facsimile (954) 766-7800
October 17,2002.
Infotec Business Systems, Inc.
444 Columbia
New Westminster, B.C. V3Z 3W9
Re: Registration Statement on Form SB-2; Infotec
Business Systems, Inc. (the "Infotec"), 1,200,000 Shares of
Common Stock
Gentlemen:
This opinion is submitted pursuant to the applicable
rules of the Securities and Exchange Commission with respect
to the registration by Infotec of 1,200,000 shares of Common
Stock, par value $.001 per share (the "Common Stock"), to be
sold by the Selling Security Holders designated in the
Registration Statement. The shares of Common Stock to be
sold consist of up to 1,200,000 shares of Common Stock
currently outstanding
In our capacity as counsel to Infotec, we have examined
the original, certified, conformed, photostat or other
copies of Infotec's Certificate of Incorporation, By-Laws,
instruments, agreements, exhibits and corporate minutes
provided to us by Infotec. In all such examinations, we have
assumed the genuineness of all signatures on original
documents, and the conformity to originals or certified
documents of all copies submitted to us as conformed,
photostat or other copies. In passing upon certain
corporate records and documents of Infotec, we have
necessarily assumed the correctness and completeness of the
statements made or included therein by Infotec, and we
express no opinion thereon.
Based upon and in reliance of the foregoing, we are of
the opinion that the outstanding shares of Common Stock are
validly issued, fully paid and non-assessable.
We hereby consent to the use of this opinion in the
Registration Statement on Form SB-2 to be filed with the
Commission.
Very truly yours,
ADORNO & YOSS, P.A.
/s/ADORNO & YOSS, P.A.
JMS/bb
EXHIBIT 10.4
Danby Technologies Corporation
444 COLUMBIA ST. E., NEW WESTMINSTER, B.C. V3L 3W9
TELEPHONE (604) 777-1707 FACSIMILE (604) 777-8801
SYSTEM SOLUTION SPECIALISTS
INFOTEC BUSINESS SYSTEMS, INC October 10, 2002
INFOTEC BUSINESS STRATEGIES, INC
Suite 880 - 50 West Liberty Street
RENO, NV 89501
Dear Sirs:
RE: DEFERRAL OF ENGAGEMENT FEES
This letter will confirm our advice to you that we will continue
to provide facilities and services pursuant to our engagement
dated October 3, 2001 through to December 31, 2002 and that will
not seek or exercise our rights to payment of fees due to us there
under in the aggregate amount of $26,425 (U.S. Dollars) nor charge
interest thereon until March 31, 2003 or such earlier time as you
raise substantial funds which you determine to be sufficient to
enable you to meet your current liabilities and obligations and
maintain operations.
Yours truly,
DANBY TECHNOLOGIES CORPORATION
/s/ROBERT I. DANVERS
- ------------------------------------------------------
ROBERT I. DANVERS, President
23.1 Auditor's Consent
MORGAN & COMPANY
INDEPENDENT AUDITORS' CONSENT
We consent to the use in the amended Registration Statement of
Infotec Business Systems, Inc. on Form SB-2 of our Auditors'
Report, dated May 27, 2002, on the consolidated balance sheet of
Infotec Business Systems, Inc. as at April 30, 2002, and the
related consolidated statement of operations, consolidated
statement of cash flows and consolidated statement of
stockholders' equity for the period from inception on August 30,
2001 to April 30, 2002.
In addition, we consent to the reference to us under the heading
"Interests Of Named Experts And Counsel" in the Registration
Statement.
Vancouver, Canada /s/"Morgan & Company"
October 17, 2002 Chartered Accountants