10SB12G: Registration of securities for small business [Section 12(g)]
Published on September 21, 1999
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
Pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934
DELTA CAPITAL TECHNOLOGIES, INC.
(Name of Small Business Issuer in its Charter)
Delaware, USA 98-0187705
(State of Other jurisdiction of (IRS Employer ID No.)
incorporation or organization
SUITE 255, 999 - 8TH STREET, SW
CALGARY, ALBERTA T2R 1J5 CANADA
(Address of Principal Executive Offices)
(403) 244-7300
(Issuer's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(g) of the Act:
Title of Each Class Name of each exchange on which registered
---------------------- -----------------------------------------
Common Shares N/A
Securities registered pursuant to Section 12(g) of the Act: Common Shares with a
par value of $0.001 --------------------
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Exhibit index is included on page 27.
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FORM 10-SB
For the Fiscal Year Ended December 31, 1998
And Period Ended July 31, 1999
TABLE OF CONTENTS
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PART I
ITEM 1 - DESCRIPTION OF BUSINESS
SUMMARY
DELTA CAPITAL TECHNOLOGIES, INC. ("Delta" or the "Company") was incorporated
under the laws of Delaware on March 4, 1998. The Company originally had
authorized share capital of 1,500 common shares with a par value of $0.001,
however, on April 27, 1998 the Company filed an amendment to its Certificate of
Incorporation increasing its share capital to 25,000,000 common shares with a
par value of $0.001 per share. On March 15, 1999 the Company underwent a one for
four stock split bringing the total number of shares issued and outstanding from
2,200,000 to 8,800,000 shares issued and outstanding. As at September 8, 1999
there were 14,100,000 common shares of the Company issued and outstanding. The
Company's principal business office and registered and records office is at
Suite 255, 999 - 8th St. SW Calgary, AB T2R 1J5 Canada.
The Company is in the business of providing e-Business software and support
services.
Between March 4, 1998 and June 1, 1999 the Company's focus was directed towards
assessing various potential acquisition targets consisting of companies involved
in the development of businesses and technologies in the Internet related field.
During that period the Company spent minimal funds conducting its assessment of
various businesses and the funds required for administration of the Company
during fiscal years ended December 31, 1998 and subsequent months came from
funds raised from initial investors.
On June 1, 1999 the Company acquired the rights to an exclusive worldwide
license to the relBuilder Enterprise Suite of business intelligent e-Commerce
and e-Business software (the "Software") from 827109 Alberta Ltd. ("AltaCo"), an
Alberta, Canada based private company pursuant to a License Agreement dated June
1, 1999 between the Company and AltaCo, as amended by a Letter Agreement dated
September 2, 1999 (the "License Agreement"). The License Agreement allows the
Company to distribute licenses for the Software through sub-licenses. The
Company is responsible for the funding, the creation and management of a
distribution network for the Software, the ongoing development of the Software
and any future products or services it acquires. The License Agreement ,
requires the Company to pay to AltaCo a non-refundable lump sum license fee of
$50,000 by November 1, 1999, $20,000 of which has already been paid by the
Company. The Software application includes modules for e-Commerce, e-Project
Management, e-Customer Services, e-Document Assembly, e-Contact Management,
e-Business Intelligence and e-Back office and a Core Technology which models
business rules and relationships. Under the License Agreement, the Company is
required to pay a royalty payment of 15% of net sales with minimum amounts of
C$50,000 in the first year, C$200,000 in the second year, and C$300,000 in the
third year (the "Royalty Payments"). The term of the License Agreement is for
three years commencing June 1, 1999 and upon expiration of the term, the Company
may renew the License Agreement for an unlimited term for the sum of one ($1.00)
dollar.
AltaCo acquired its rights to the Software pursuant to a Licensing Agreement
dated June 1, 1999, as amended by Letter Agreement dated September 2, 1999,
between AltaCo and SiCom
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Solutions Inc. ("SiCom"), a company incorporated pursuant to the Alberta
Business Corporations Act (the "SiCom License Agreement"). The terms of the
SiCom License Agreement mirror the terms of the License Agreement and require
AltaCo to pay C$50,000 to SiCom as a non-refundable license fee by November 1,
1999, C$20,000 of which has already been paid. Under the SiCom License
Agreement, AltaCo is required to pay SiCom royalty payments in the amount of 15%
of net sales with minimum amounts of C$50,000 in the first year, C$200,000 in
the second year and C$300,000 in the third year. The term of the SiCom License
Agreement is for three years commencing June 1, 1999 and upon execution of the
term, AltaCo may renew the SiCom License Agreement for an unlimited term for the
sum of one ($1.00) dollar.
Pursuant to an agreement dated June 1, 1999 between the Company and AltaCo (the
"Share Exchange Agreement") the Company agreed to issue to AltaCo 5,000,000
shares of the Company in exchange for 5,000,000 shares of AltaCo. The exchange
of the shares was completed on September 9, 1999.
As a result of the shares of AltaCo issued to the Company pursuant to the Share
Exchange Agreement, the Company became the largest single shareholder of AltaCo,
which will continue with the research, and development of the Software and its
application.
THE PRODUCTS
The Software has three distinct areas of business.
o the "Store Front", or traditional marketing, advertising,
merchandising and customer attraction processes.
o the "Front Office", where the customer does business, retrieves
information, receives customer service, and downloads products and
upgrades.
o the "Back Office", where a customer manages its financial affairs,
inventory, warehousing, manufacturing and engineering.
The Software includes a Front Office solution for prospects, customers, and
sales- and support-oriented information management that is geared to a
customer-focused information system dedicated to communication with the client
company's Back Office business systems. Effective communication between Front
Offices and Back Offices is accomplished through a secure information exchange
hub that is Electronic Data Interchange-capable (EDI-capable). The Front Office
systems create EDI data and post it to a secure e-mail box. The Back Office
systems fetch and deliver secure mail to the electronic data interchange. The
common information for both Front Office and Back Office users is managed as
part of the Basic Business Information system (BBI). Security of the BBI is
managed through the relational database and the establishment of roles
(customer, guest, sales person) and responsibilities (read, update, print). All
AltaCo products are integrated with various high-end software applications for
Back Office accounting and financing, document management systems, and Store
Front builders.
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APPLICATIONS
The relBuilder e-Business suite includes six key enterprise-class applications:
ENTERPRISE COMMERCE APPLICATION: Whether for online or in-store sales, the
Company's enterprise e-Commerce application provides merchants with the ability
to effortlessly implement cross selling, up selling, product dependencies,
product interactions, comparative shopping, competitive shopping, and consumer
shopping assistance wizards. Using this application, merchants and organizations
have the ability to apply the technology to the on-line and in-store
presentation of product information that begins the customer relationship before
human contact is made. This technology can operate on a standalone basis or can
enhance other leading e-Commerce solutions.
BACK OFFICE APPLICATION: The Back Office Application integrates existing general
ledger, accounts receivable and payable, inventory, warehouse and other related
back office functions with the Core Technology utilizing IBM's new "San
Francisco" architecture.
ENTERPRISE DOCUMENT ASSEMBLY APPLICATION: The Document Assembly Application is a
powerful content manager and document assembly tool that maximizes re-use of
corporate information by bringing together data that is usually scattered across
the enterprise in countless systems. The assembly of data can be used for
everything from contract building, to information portal construction and
management, to dynamic document creation and presentation.
ENTERPRISE PROJECT MANAGEMENT APPLICATION: The Project Management Application is
equipped to handle cross-project resource analysis, cross-project roll-ups of
complex costing and estimating functions and integrates with leading GroupWare
(such as Microsoft Exchange or Lotus Notes) to provide project-based calendaring
and scheduling. The Application provides a real-time graphical presentation of
underlying data, and the user interface changes to intelligently reflect
additions or deletions in the data.
ENTERPRISE CUSTOMER SERVICE APPLICATION: The Customer Service Application has
the ability to map complex call requirements, implement sophisticated
operational logic and can even integrate with a web server to allow for
web-based customer self-service or call center operations within an office, a
community or across the globe.
ENTERPRISE CONTACT MANAGEMENT APPLICATION: The Contact Management Application
integrates with leading directory servers (such as Microsoft Exchange, Lotus
Notes, and Netscape Directory Server) to enable highly complex mapping of names,
addresses, companies, contact information, corporate hierarchies, active and
non-active projects, and histories.
MARKET POTENTIAL
To progress through the stages of e-Business evolution, management of the
company believes that companies need innovative products and professional
services to help them along. According to leading research firms, worldwide
demand for e-Business related software products will experience up to four times
the growth from now to year 2002, when it will reach $20 billion (USD)/year.
Similarly, the e-Business related services markets will reach an
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estimated $300 billion (USD)/year. (Sources: International Data corporation, The
Gartner Group, The Yankee Group, and Information Week)
MARKETING STRATEGY
The marketing plan is characterized by "the whole being greater than the sum of
the parts". The Company's marketing strategy will be to build the business from
two perspectives, focusing simultaneously upon both the mass-market of micro
companies, and upon those larger corporations who were far-sighted and
innovative enough to anticipate and prepare for the emerging trend towards of
e-Business-intelligent solutions. The plan is predicated upon Delta's ability to
offer a range of pertinent, target-specific skills at affordable prices, while
providing excellent personal and corporate growth for its partners and team
members. The e-Commerce mass-market sector of the Company's activities is
designed to provide assisted integration of e-Commerce to an existing web site,
and it permits Delta's clients to either carry out the conversion in-house,
using their own personnel, or to use a Commercial Service Provider ("CSP").
Delta personnel anticipate that as soon as a client becomes comfortable with
e-Commerce, the ensuing move to the extended services of e-Business will follow.
Delta's marketing and implementation strategy is prepared for that anticipated
growth, and the Company has staff and experienced consultants who are skilled in
Enterprise e-Business Intelligence and familiar with the growing Enterprise
Project Management marketplace.
The marketing strategy has three distinct but connected opportunities:
o To capitalize on the e-Commerce marketplace as it enters the mass-market
phase with the same explosive growth as the Website wave of 1997-98.
o To exploit the emerging e-Business marketplace, using the full Enterprise
Business Management Suite and (PSO) Professional Service Organization
methods. This will entail Core Technology marketing of the Enterprise
Business Management Suite as a software engine technology for industry
leaders.
o To coordinate and amalgamate and influence all marketing programs use the
Enterprise Business Management Suite as the software foundation. The
marketing plan objective is to offer a continuum of applications software
and services, a migration path for early e-Business adopters, and multiple
entry points for any business from micro-businesses to Fortune 500
companies.
Each marketing program requires a different level of technical and marketing
expertise. The programs include:
o A Direct Marketing program where Delta will set-up or acquire full service
e-Business and e-Commerce groups in strategic worldwide locations. The
Direct Marketing model uses Professional Service Organization (PSO) methods
and will manage an in-house Commercial Service Provider (CSP).
o A Network-Franchise model designed to exploit a niche in the Internet
Service Provider (ISP) market permitting the building of a more profitable
network by converting the ISPs to Commercial Service Providers (CSPs). The
resulting network will become the
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distribution channel for the Enterprise Business Management Suite and other
Delta technology acquisitions.
o Core Technology - (OEM) Original Equipment Manufacturing, where the
Enterprise Business Management Suite is on its way to becoming an imbedded
technology in a bigger software solutions.
Target Market: Professional Service Organizations (PSO)
While the objective of the PSO market is to work with Fortune 1000 companies for
the obvious market recognition, Delta's marketing plan also calls for entry into
the equally significant but broader-based marketplace called Trading Partner
Networks (TPNs). TPNs have the full spectrum of companies, from large Fortune
1000 to Fortune 1,000,000, that supply or do trade amongst themselves. TPNs
cover the gamut of industry, including oil and gas suppliers and operators,
industrial manufacturers, home builders, renovators and maintenance companies,
and product distribution companies.
The Personal Service Organizations (PSO) market, while numerically smaller,
generates larger numbers of client and server licenses, and requires larger and
more detailed maintenance-upgrades and much larger technical integration
services.
(PSO) personnel will use Delta products to build a clearer idea or concept with
their customers through implementation and support. The objective is customer
self-sufficiency, not customer dependency. The difference Delta makes, as
compared to competitors such as Razorfish, IXL and Scient, is that Delta owns
the Enterprise Business Management Software foundation that it uses in the
professional services engagement process. Delta will deliver more than an
e-Business site; it will use the PSO's professional services to deliver a
technology-supported process, along with the necessary training and integration
to make the client company self-sufficient in the use of business-intelligent
software and systems. One of the techniques Delta employs includes the use of
dedicated web space (in the form of a project portal) to coordinate ideas,
estimates, decisions and progress, and to encourage client participation using
Delta's product and its call center to manage suggestions, improvements and
feedback.
Target Market Channels: Commercial Service Providers (CSP)
Delta's marketing strategy is characterized by a tight focus on two significant
targets:
PARTNER PROGRAM: Delta is building a network of e-Commerce and e-Business
knowledgeable consultants and solutions providers. The Partner Program will roll
out a products and services package through established contacts and clients in
key North American markets. The Partner Program relies upon the high number of
consultants with local appeal, clients and expertise. This program has both a
strategic geographic and a vertical market focus. On a geographic basis, Delta
plans to penetrate the top 23 American and Canadian markets through its Partner
Program over the course of the next 24 months with its first target markets
being Seattle and Vancouver. Delta is currently pursuing vertical markets such
as Healthcare, Education, Software Development, Oil and Gas, and Industrial
Manufacturing. This program also envisions a Network-Franchise model designed to
exploit a niche in the Internet Service Provider (ISP) market permitting the
building of a more profitable network by converting the ISPs to Commercial
Service Providers (CSPs). The resulting network will
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become the distribution channel for the Enterprise Business Management Suite and
other Delta technology acquisitions.
CORE TECHNOLOGY PROGRAM: Delta is working with key allies and is seeking
additional affiliations with major e-Commerce and e-Business organizations to
market its relBuilder technology. Delta believes there is substantial further
opportunity to pursue this Core Technology marketing strategy. The marketing of
the Core Technology began with the company's IBM "San Francisco" technology Fast
Start award and the participation in the June 1999 "Java One" conference where
significant contacts were made with IBM, Sun Microsystems, Oracle and other
companies with the potential to form strong strategic alliances.
The strategy is predicated upon Delta's ability to offer a range of pertinent,
target-specific software and services at affordable prices, while providing
excellent personal and corporate growth for its partners and team members.
Target Market Channels: Electronic Business Management
While the Internet offers incredible opportunity to get a message to a potential
customer there is still a very real "gap" between the excitement and promise of
the Internet and measurable business and commercial reality. The Delta business
process model has three distinct areas in which the company intends to address
and resolve this situation, eliminating that gap completely:
o the Store Front, or traditional marketing, advertising, merchandising
and customer attraction processes.
o the Front Office, where the customer does business, retrieves
information, receives customer service, and downloads products and
upgrades.
o the Back Office, where the company manages its financial affairs,
inventory, warehousing, manufacturing, and engineering.
Delta has identified a need to combine the power of the systems between the
Front Office and existing Back Office business applications software. The
Enterprise Business Management Suite bridges "The Gap" by providing Front Office
systems for managing, organizing and distributing information in support of
customer sales and support processes, and a method for the Front Office software
to link to the Back Office.
While management software is not new, Delta's unique software, when compared
with that of competitors such as SAP, Oracle, Baam, PeopleSoft and Seagates, has
a more attractive price point and has the additional customer advantages of
being faster and offering a higher degree of security. Delta's product range
will appeal to a much broader and prolific target market than competitive
products, thanks to its more versatile, state-of-the-art design and its ease of
integration with existing systems.
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An analysis of data provided by the US department of Trade & Commerce indicates
that the target market which Delta was formed to exploit represents one million
businesses in the U.S. and Canada, roughly 20% of the five million businesses in
operation.
Typically, new client companies in the mass market micro business range
represent a revenue opportunity to Delta of $10K to $15K in their first year,
growing to $50K the following year and then to $75K per year in their third year
of operation. This results in an overall market potential, which ranges from
roughly $10 billion per year, growing to over $60 billion annually within three
years, as more companies acquire Internet technology and become more
sophisticated with their electronic business programs.
It is clear that the Company's strategy of offering a unique set of products,
services and integration solutions to an electronic business marketplace, which
is expanding exponentially, in both the horizontal and vertical directions,
positions it strategically to achieve a high, level of financial success.
Target Market Channels: Other Equipment Manufacturers (OEM)
The OEM market builds client and server licenses bundled with their product
software and/or hardware. OEM manufacturers include companies like Oracle, Sun,
IBM or Microsoft. The Core Technology marketing slot within this framework is
potentially a very lucrative opportunity, but it entails a very real need for
Delta to establish working contracts with entities like IBM, Sun, Microsoft,
Oracle and a host of software integrators, and marketing to such mammoth groups
requires patience, persistence and timing. Given all of those, however, the
actual investment in time and money is expected to be modest, and part of an
overall technology branding exercise. The win for Delta can be enormous if the
company's technology is adopted and used by a big-name organization. Management
believes there is no impediment to pursuing the Core Technology marketing
strategy. None of the company's current financial projections envisions a win in
this particular marketing venture.
The marketing of the Delta Core Technologies began in earnest with the company's
IBM San Francisco Fast Start win, and its participation in the June, 1999, Java
One conference, where company representatives made excellent contacts within
IBM, Sun Microsystems and Oracle, leading to more in-depth meetings during the
ensuing quarter. (Refer to the technology section for additional details.)
Competition
Unlike its competition, Delta has adopted a corporate policy of accommodating
itself to each Client company's existing Back Office systems, selectively
integrating those systems on the web, rather than replacing the entire Back
Office and Front Office systems. This approach translates into client loyalty
through long-term, high-value, reference-generating relationships. Also unlike
its competition, Delta does more than just offer e-Business services to its
clients. The key to Delta's approach is the facility it affords its clients to
use Delta's own high-level, broad-appeal, enterprise-scale, innovative, and
powerful e-Business software. Delta's software has been designed with
off-the-shelf, plug-and-play, mass-market appeal in mind, and that translates
into explosive, multi-billion-dollar revenue growth potential for Delta, as the
demand for e-Business products escalates.
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Client benefits from using Delta software and services include: New competitive
advantages in the coming millennium by means of:
o expanded global markets
o greatly enhanced customer service levels
o cost efficiencies
o increased operational leverage
o a better understanding of complex business environments.
Delta's software, and its services, is designed for rapid implementation times
and low total costs of ownership, yielding maximum returns on investment for
Delta's clients.
An analysis of the following major players in the (ERP) Enterprise Resource
Planning industry is:
Microforum (TSE:MCF), IXL (NASD:IIXL), Razorfish (NSAD:RAZF), Scient
(NASD:SCNT), Proxicom (NASD:PXCM). These e-Business solutions providers, unlike
Delta, do not have a developed product that they use to implement e-Business.
Their focus is in developing a compelling Front Office solution and then
implementing several consulting stages to define and create the Back Office
application through custom development. A custom development process is
extremely costly and time intensive, and that makes a partnership with Delta,
for a plug in and play solution, highly desirable.
One or more States may seek to impose sales and tax collection obligations on
out-of-state companies conducting e-commerce that engage in or facilitate
electronic commerce. These proposals, if adopted, could substantially impair the
growth of electronic commerce and could adversely affect the Company's
opportunity to derive financial benefit from these activities.
Employees
The Company currently has two employees who are each paid $3,000 per month plus
expenses pursuant to verbal agreements entered into with the Company that
commenced on June 15, 1999. The Company also currently has two individuals under
contracts pursuant to which one individual receives Cdn $2,500 per month
pursuant to a contract which commenced June 15, 1999 and the other individual
receives Cdn $7,500 a month pursuant to a contract which commenced July 15,
1999.
Risk Factors
As with any business at this stage of development, there are uncertainties
pertaining to the future operations of the Company and the nature of the
Company's business involves certain elements of risk including the following:
Limited Operating History
The Company is progressing beyond the start-up stage. The Company was
incorporated on March 4, 1998, and has a limited operating history. All revenue
projections and other financial projections must be considered speculative.
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New and Developing Technologies/Market Conditions
The e-Commerce/e-Business marketplaces, along with vertical applications, have
been identified as significant emerging market segments. Should these markets
segments not develop in the manner expected, or should they fail to develop as
quickly as anticipated, the Company's business, sales, finances and operating
results could be materially and adversely affected.
Reliance on Partners
The revenues of the Company, pertaining to product sales, are dependent to a
large degree on the ability of its strategic partners to generate transaction
volumes and provide new products to the Company.
Company is a New Venture. The Company is a relatively new venture and lacks
significant operating history. Because of its limited operating history the
Company may lack stability and unforeseen problems may arise which will hinder
or stifle the Company's operations and its potential growth.
Future Funding May Be Required. The Company has had only minimal revenues. In
the future the Company may require additional funding to continue operations and
to have sufficient working capital to implement its marketing plan. Future
funding may be accomplished through the sale of equity securities or some form
of borrowing, such as promissory notes. No assurance can be given that the
Company will be able to obtain future funding at all or on terms and conditions
acceptable to the Company. No assurance can be given that the Company will
operate profitably in the future or that its products and services will be
accepted in the marketplace.
Dependence Upon Key Personnel. The Company is substantially dependent upon the
efforts and abilities of its officers, Paul Davis and Kevin Wong. The loss of
the services of either of these individuals would materially and adversely
affect the operations and financial condition of the Company. At present, the
Company has no key-man life insurance on its officers or key personnel. On
August 30, 1999, an insurance company was contacted for a quote on key-man
insurance for Mr. Davis and Mr. Wong.
Experience of Management. Management of the Company has only limited business
experience. Also, Management has no experience in operating a public company. In
implementing a successful marketing plan for the Company's services, management
lacks experience. Additional management skills and knowledge will be required to
operate the Company's business profitably if sales volumes and revenues
increase, and the number of employees increase.
Risk of Obsolescence. The Company's products and services may become obsolete as
others develop products and procedures.
Competition
The market for e-commerce is intensely competitive, evolving and subject to
rapid technological change. Intensity of competition is likely to increase in
the future. Increased
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competition from new competitors is likely to result in loss of market share,
which could negatively impact the Company's business. Competitors vary in size,
and in scope and breadth of the products and services offered and the Company
may receive competition from several major enterprise software developers. In
addition, because there are relatively low barriers to entry in this market,
additional competition from other established and emerging companies may
develop.
Many current and potential competitors have longer operating histories,
significantly greater financial, technical, marketing and other resources than
the Company, significantly greater name recognition, and a larger base of
customers. In addition, many of the competitors have well-established
relationships with clients and potential clients, and have extensive knowledge
of the industry. Current and potential competitors have established or may
establish cooperative relationships among themselves or with third parties to
increase the ability of their products to address customer needs. Accordingly,
it is possible that new competitors, or alliances among competitors, may emerge
and rapidly acquire significant market share.
Risks of Growth and Expansion. The Company's anticipated growth may place a
significant strain on the Company's administrative, operational and financial
resources and increase demands on its systems and controls. As the Company
increases its service offerings and expands its targeted markets, there will be
additional demands on the Company's customer support, sales and marketing and
administrative resources and network infrastructure. There can be no assurance
that the Company's operating and financial control systems and infrastructure
will be adequate to maintain and effectively monitor future growth. The failure
to continue to upgrade the administrative, operating and financial control
systems or the emergence of unexpected expansion difficulties could materially
adversely affect the Company.
Adverse Effect of Rapid Technological Change and Service. The telecommunications
industry has been characterized by rapid technological change, frequent new
service introductions and evolving industry standards. The Company believes that
its future success will depend on its ability to anticipate such changes, and to
offer on a timely basis services that meet these evolving standards. There can
be no assurance that the Company will have sufficient resources to make
necessary investments or to introduce new services that would satisfy an
expanded range of customer needs.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Management discussion and analysis of financial condition and results of
operations for the period ended July 31, 1998 compared to period ended July 31,
1999
Delta Capital Technologies, Inc.'s ("Delta or the "Company") is at an early
stage. It has successfully achieved its first major objective: the acquisition
of Internet technologies and is now developing those technologies in readiness
for the marketplace. It plans to commence significant marketing of its
technologies early in the year 2000. Starting with its incorporation in March
1998, Delta's modest expenditures were made in support of finding appropriate
internet technologies and, as well, for audit, income tax returns and meeting
various
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regulatory requirements. Substantially all the cash required for operations
during fiscal years ended December 31, 1998 and 1999 came from investors.
On June 1, 1999, Delta acquired the rights to an exclusive worldwide license to
the "relBuilder" Enterprise Suite of business intelligent e-Commerce and
e-Business software from 827109 Alberta Ltd. ("AltaCo"), an Alberta,
Canada-based private company. The software application includes modules for
e-Commerce, e-Back office, e-Document Assembly, e-Project management, e-Customer
Services and e-Contact Management, e-Business Intelligence and as well as a core
Technology which models business rules and relationships. Under the License
Agreement, Delta will pay AltaCo 15% royalty payments in the minimum amount of
C$100,000 in the first year, C$200,000 in the second year, and C$300,000 in the
third year.
The software may be sub-licensed under the terms of AltaCo's "End-User Licensing
Agreement."
Delta acquired a substantial interest in the AltaCo for the purpose of directing
the on-going research and development and ensuring long-term support for the
relBuilder Enterprise Suite as part of Delta's worldwide distribution plan.
AltaCo is the master distributor and integrator of the software in Canada. The
Licensing Agreement allows Delta to acquire the intellectual property for the
software upon meeting the royalty obligations.
While Delta believes the rel-Builder software suite is in many aspects unique,
there are many competitors or potential competitors that have some combination
of longer operating histories, significantly greater financial, technical,
marketing and other resources. Many of these companies have well-established
relationships with potential e-Business clients and have extensive knowledge of
the industry. Accordingly, it is possible that new competitors, or alliances
among competitors, may emerge and rapidly acquire significant market share.
However, Management feels confident, given growth projections for e-Commerce and
e-Business worldwide, that Delta can gain enough market share to develop a
successful business. There are many different definitions as to the size of this
market. Delta has developed a conservative estimate in defining the marketplace,
based on a variety of research sources (including International Data
Corporation, The Gartner Group, The Yankee Group and Information Week).
Worldwide demand for e-Business related software products will grow four times
through the year 2000 when it will reach $20 billion per annum. Similarly the
e-Business related services market is estimated to grow to more than $200
billion in the same period.
It is Management's view that virtually all businesses in future will have
e-Commerce or e-Business requirements and that the nature of the conduct of
business will be fundamentally changed. In particular, business-to-business
sales will move more dramatically upward than the more highly visible web-based
retailers who dominate so much of the popular media today. Indeed, according to
Forrester Research, the combined revenue of every single U.S. retailer on the
net was $7.8 billion in 1998 while businesses sold $43 billion worth of goods to
each other over the Web in 1998. In four years, Forrester projects
business-to-business sales will reach $1.3 trillion and it is this market that
Delta seeks to serve with its software and support services offering.
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DELTA PRODUCTS
The relBuilder e-Business suite includes six key enterprise-class applications:
ENTERPRISE COMMERCE APPLICATION: Whether for online or in-store sales, the
Company's enterprise e-Commerce application provides merchants with the ability
to effortlessly implement cross selling, up selling, product dependencies,
product interactions, comparative shopping, competitive shopping, and consumer
shopping assistance wizards. Using this application, merchants and organizations
have the ability to apply the technology to the on-line and in-store
presentation of product information that begins the customer relationship before
human contact is made. This technology can operate on a standalone basis or can
enhance other leading e-Commerce solutions.
BACK OFFICE APPLICATION: The Back Office Application integrates existing general
ledger, accounts receivable and payable, inventory, warehouse and other related
back office functions with the Core Technology utilizing IBM's new "San
Francisco" architecture.
ENTERPRISE DOCUMENT ASSEMBLY APPLICATION: The Document Assembly Application is a
powerful content manager and document assembly tool that maximizes re-use of
corporate information by bringing together data that is usually scattered across
the enterprise in countless systems. The assembly of data can be used for
everything from contract building, to information portal construction and
management, to dynamic document creation and presentation.
ENTERPRISE PROJECT MANAGEMENT APPLICATION: The Project Management Application is
equipped to handle cross-project resource analysis, cross-project roll-ups of
complex costing and estimating functions and integrates with leading GroupWare
(such as Microsoft Exchange or Lotus Notes) to provide project-based calendaring
and scheduling. The Application provides a real-time graphical presentation of
underlying data, and the user interface changes to intelligently reflect
additions or deletions in the data.
ENTERPRISE CUSTOMER SERVICE APPLICATION: The Customer Service Application has
the ability to map complex call requirements, implement sophisticated
operational logic and can even integrate with a web server to allow for
web-based customer self-service or call center operations within an office, a
community or across the globe.
ENTERPRISE CONTACT MANAGEMENT APPLICATION: The Contact Management Application
integrates with leading directory servers (such as Microsoft Exchange, Lotus
Notes, and Netscape Directory Server) to enable highly complex mapping of names,
addresses, companies, contact information, corporate hierarchies, active and
non-active projects, and histories.
REVENUE
There was no revenue for fiscal year ended December 31, 1998 or for the period
ended July 31, 1999.
15
GENERAL AND ADMINISTRATION EXPENSE
Expenses in the fiscal year ended December 31, 1998 were $39,281.00, largely due
to operating and regulatory filing expenses associated with coming to trade on
the OTC:BB in March, 1999. Delta, from time to time, issues shares of its common
stock for services. 200,000 shares were issued for the fiscal year ended
December 31, 1998 at an expense of $207.00 to Delta. Expenses for the period
ended July 31, 1999 were $48,639.00, primarily due to the acquisition of the
exclusive worldwide license from AltaCo as described above
NET LOSS FROM OPERATIONS
Net loss from operations in fiscal 1998 was $39,281.00 and $48,629.00 for the
period ended July 31, 1999. The Company is currently selling its software and
services to a limited and restricted market as it continues to develop its
product line in advance of major marketing efforts.
LOSS ON ABANDONMENT OF EQUIPMENT
(Not applicable)
LITIGATION SETTLEMENT
The Company is currently not in litigation and does not anticipate any
litigation will arise as a result of its activities
NET LOSS
(as per discussion re net loss from operations)
ACCOUNTS RECEIVABLE
(as per annual statements)
PROPERTY AND EQUIPMENT, NET
(as per annual statements)Computer, Cell Phone, Pager, Software
PREPAID RENT
(as per annual statements)
EMPLOYEE RECEIVABLE
(as per annual statements)
INTANGIBLE ASSETS
The Company is developing a software and services package that is largely
dependent upon marketplace acceptance for its value. The software code and human
capital that has gone into developing its package is an intangible asset of
significant importance to the company.
ACCOUNTS PAYABLE
(as per annual statements)
16
ACCRUED PAYABLES
(as per annual statements)
ACCRUED LIABILITIES
(as per annual statements)
CURRENT ASSETS
(as per annual statements)
PROPERTY AND EQUIPMENT, NET
(as per annual statements)
CONVERTIBLE DEMAND NOTES PAYABLE - RELATED PARTIES
(as per annual statements)
COMMON STOCK & CAPITAL IN EXCESS OF PAR
(as per annual statements)
ACCUMULATED DEFICIT
(as per annual statements)
LIQUIDITY AND CAPITAL RESOURCES
(as per annual statements)
YEAR 2000 ISSUES
The Company has no significant Year 2000 issues.
NEED FOR ADDITIONAL FINANCING
The Company anticipates that it will require additional investment to complete
development of its software and considerable additional capital to mount an
effective marketing program in its key US target markets. The amount of
additional funding is not yet known.
ITEM 3 - DESCRIPTION OF PROPERTY
Pursuant to the License Agreement the Company relies on AltaCo for the ongoing
development, technical assistance, training and maintenance associated with the
Company's use and licensing of the Software. Accordingly, the Company has not,
to date, required its own premises to carry on business and therefore neither
owns nor leases business premises. AltaCo has a verbal agreement with SiCom
whereby AltaCo carries on business free of charge at premises leased by SiCom
(the "Leased Premises") in Calgary. Alberta. The leased premises consist of
approximately 2,537 square feet on the second floor of an office building
situated at 999 - 8th Street, S.W., Calgary, Alberta. The verbal agreement
between SiCom and AltaCo is part of a proposed agreement in principal between
those two companies, pursuant to which they intend in the future to enter into a
business combination by way of merger, amalgamation or take-over which will
result in those companies being combined into one entity "(Amalco"). If that
happens, it is intended that Amalco will continue to be responsible for the
Leased Premises in accordance with the terms of the lease that SiCom is
currently a party to. The Company intends on acquiring its own leased premises
in the near
17
future as it begins to undertake business pursuant to its rights under the
License Agreement but as of this date the Company has not acquired leased
premises.
ITEM 4 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of September 13, 1999 information with
respect to the beneficial ownership by each person who is known to the Company
to be the beneficial owner of more than 5% of the Company's common shares, by
each director and executive officer and by all executive officers and directors
as a group. All persons named below have sole voting and investment power over
their shares except as otherwise noted. The Company's common stock is the only
class of voting securities outstanding.
(1) Mr. Davis owns 6,750,000 shares of the 14,100,000 issued shares of AltaCo
and the shares identified represent his beneficial ownership of the
5,000,000 Delta shares issued to AltaCo.
(2) Mr. Wong owns 2,250,000 shares of the 14,100,000 issued shares of AltaCo
and the shares identified represent his beneficial ownership of the
5,000,000 Delta shares issued to AltaCo.
(3) Ms. Miller holds an option to purchase, adjusted for stock splits, 200,000
shares of the Company exercisable at US$0.0075 per share. The option
expires December 31, 1999.
The above individuals are the only key personnel presently associated with the
Company and although none of the individuals will be spending all of their time
working for the Company, each will spend as much time as is necessary.
18
The 5,000,000 shares issued to AltaCo, the 800,000 shares issued to T. Davis
Capital Corp. and the 300,000 shares issued to Rajesh Taneja are subject to
Federal Securities Laws Rule 144, and thus have restrictions on their resale for
a minimum of one year from the date of issuance. At that point they may be
subject to even further restrictions based on the regulations and requirements
set forth in Rule 144.
ITEM 5 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following table identifies the Company's directors and executive officers as
of September 8, 1999:
Directors are elected at the Company's annual general meeting of shareholders or
may be appointed by existing directors between annual general meetings of
shareholders and hold office until they resign or their successors are elected.
The Company's officers are appointed by the board of directors and serve at the
pleasure of the board. Following is a summary of the occupation of the Directors
and Executive Officers of the Company over the last five years:
PAUL DAVIS, (P.Eng.), President and Director, is the founder and President of
SiCom Solutions Inc. He has a background in management, sales, software
development and application integration, and is creator of the Software. Mr.
Davis has had extensive experience, including: a supervisory roll at Auto-trol
Technology Ltd., a CAD/CAM, GIS and document management company, and a
Membership at the Alberta Research Council. Mr. Davis was President and CEO of
Calgary-based HPC (High Performance Computing) Centre until mid 1996. He has a
Bachelor's Degree in Applied Science in Electrical Engineering from the
University of British Columbia, 1974.
RAJESH TANEJA, Vice President Marketing and Director, is the founder and Chief
Executive Officer of Clear Choice Media. Mr. Taneja has been directly involved
in the sales and implementation of network operations for large enterprises,
including security for military networks and communications companies. For the
past 5 years, Mr. Taneja has concentrated the majority of his activities on
developing technologies for the Internet, including secure virtual private
networks, intranets, extranets, web site and application design, web site
hosting, large scale file mirroring, and network security. To date, Mr. Taneja
has been involved in over 200 Internet related projects throughout the world.
KEVIN WONG, Vice President Technology and Director, graduated in April 1997 from
the University of Windsor, Faculty of Law, as a specialist in Intellectual
Property, Corporate and Commercial law. Mr. Wong has also completed four years
towards a Bachelor of Commerce at the University of Calgary, specializing in
human resources and accounting. Mr. Wong has done extensive research into
Java-based multi-tier client/server financial and
19
telecommunications systems, and he heads the initiative to integrate the Java,
IBM's "San Francisco", API applications Programming Interface and other core
technologies of Delta's products.
JUDY MILLER, Secretary and Director, has been President and Director of J.A.M.
Corporate Consultants Inc. since March 1994, which provides a variety of
services including office management and administration, meeting and special
event planning, office redesign/relocation, and fund raising. Mrs. Miller has 25
years as Executive Assistant to the Chairman of the Board of a leading
development company in Alberta, a major transportation company in Vancouver and
a company listed on the Vancouver Stock Exchange.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, officers, and persons who own more than ten percent of a registered
class of the Company's equity securities, to file with the SEC initial reports
of ownership on Form 3 and reports of changes in ownership of common stock and
other equity securities of the Company on Form 4 and/Form 5. Officers, directors
and greater-than-ten-percent shareholders are required by SEC regulations to
furnish the Company with copies of all Section 16(a) reports on Forms 3, 4, and
5 as they are filed.
The Company has assisted the reporting officers, directors and
greater-than-ten-percent shareholders in bringing their Section 16(a) reports
current and has provided information to help the Company's officers, directors
and greater-than-ten-percent shareholders in complying with their reporting
obligations.
ITEM 6 - EXECUTIVE COMPENSATION
The following compensation information relates to amounts paid to the Chief
Executive Officer for the preceding three (3) years. No director or executive
officer received compensation in excess of $100,000 in 1998.
Note: There were no compensation payments to Chief Executive Officer for
preceding 3 yrs.
(1) The Company does not have a Chief Executive Officer but for the purposes
of disclosure hereunder Mr. Davis, as President, is deemed to be the Chief
Executive Officer.
PENSION PLANS
The Company does not have defined benefit pension plan that provides annual
benefits to any Executive Officers.
20
COMPENSATION OF DIRECTORS
None of the Directors receive Director's fees.
EXECUTIVE COMPENSATION
The Vice President Marketing and Corporate Secretary received US$3,000.00 and
US$2,000.00, respectively, during 1998. No other Executive Officers of the
Company received any reportable salary or bonus during 1998.
The following table sets forth as to each named Executive Officer certain
information concerning the grant of options during the year ended January 31,
1999:
OPTION GRANTS IN LAST FISCAL YEAR
Pursuant to a verbal agreement among the board of directors of the Company,
Judith Miller was granted a stock option to purchase 200,000 common shares of
the Company at a price of US$0.0075 per common share until August 26, 1999. On
August 11, 1999, by way of written consent resolution, the board of directors
extended the stock option expiration date from August 26, 1999 to December 31,
1999. On September 15, 1999 the terms of the stock option agreement were reduced
to writing.
ITEM 7 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company is subject to various conflicts of interest arising out of its
relationships with its Executive Officers, Directors and shareholders, including
conflicts related to the arrangements by which the Company acquired certain of
is assets, as described below are conducted as arm's-length transactions and
were in the best interest of the Company. The Company intends to continue to
exercise its best business judgement and discretion in involving any such
conflicts between the Company and others with respect to these and all other
matters, and the Company believes that it will generally be able to resolve such
conflicts on an equitable basis.
Pursuant to the Share Exchange Agreement, the Company issued 5,000,000 common
shares to AltaCo and in exchange was issued 5,000,000 common shares of AltaCo.
Paul Davis, President and Director of the Company and President and Director of
AltaCo, holds 6,750,000 shares of AltaCo and 3,140,857 shares of SiCom. Mr.
Davis receives $6,000.00 per month as an employee of AltaCo.
Kevin Wong, Director of the Company and is Director and Vice-President
Technology of AltaCo. Mr. Wong owns 2,250,000 shares of AltaCo and 440,000
shares of SiCom and he receives C$4,000 per month as an employee of the AltaCo.
21
Rajesh Taneja, Director of the Company and is Vice-President Marketing of
AltaCo. Mr. Taneja owns 300,000 shares of the Company and he receives C$3,000
per month as an employee of the Company.
Judy Miller, Director and Secretary of the Company owns 96,000 shares of the
Company and has an option to purchase 200,000 shares of the Company for $0.0075
per share exercisable until December 31, 1999. Ms. Miller originally
participated in a private placement for 24,000 shares of the Company at $.001
per share prior to the consolidation of the Company's shares on a 4:1 basis. The
Company paid Ms. Miller US$2,000 in November, 1998 for administrative services
and pursuant to a verbal consulting contract effective June 15, 1999 receives
C$2,500 per month from the Company.
ITEM 8 - DESCRIPTION OF SECURITIES
COMMON STOCK
The Company originally had authorized share capital of 1,500 common shares with
a par value of $0.001 but subsequently increased its share capital to 25,000,000
common shares with a par value of $0.001 per share. On March 15, 1999 the
Company underwent a one for four stock split increasing its issued and
outstanding to 8,800,000 common shares. As at September 10, 1999 there were
14,100,000 common shares of the Company issued and outstanding.
TRANSFER AGENT AND REGISTRAR
The Company's Transfer Agent is Signature Stock Transfer in Dallas, Texas.
PART II
ITEM 1 - MARKET PLACE AND DIVIDENDS ON THE COMPANY'S COMMON EQUITY AND OTHER
SHAREHOLDER MATTERS
MARKET INFORMATION
The Company's common stock is currently traded on the National Association of
Securities Dealers Inc. Automated Quotation System's Bulletin Board, using the
stock symbol "DCTG." Only a limited public trading market exists for the
Company's outstanding stock, and there can be no assurance that an active public
market will develop. The Company's common stock commenced trading in March 1999
and the highest and lowest prices for the Company's common stock during the
calendar quarter ended June 30, 1999 and the closing bid price on such date is
as follows:
22
Delta Capital Technologies Inc. (Monthly Summary of Trades):
Dividend Policy
The Company has not paid any cash dividends on its common stock and does not
anticipate paying any cash dividends in the foreseeable future. The Company
currently intends to retain future earnings, if any, to fund the development and
growth of its business. Any future determination to pay cash dividends will be
at the discretion of the board of directors and will be dependent upon the
Company's financial condition, operating results, capital requirements,
applicable contractual restrictions and other factors as the board of directors
deems relevant.
OPTIONS EXERCISED
None of the Company's previously granted stock options have been exercised.
WARRANTS EXERCISED
To date the Company has not issued any share purchase warrants.
ITEM 2 - LEGAL PROCEEDINGS
There are no material legal proceedings to which the Issuer is a party nor to
the best of the knowledge of management, are any material legal proceedings
contemplated.
ITEM 3 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no disagreements between the Company and its accountants since
the Company's inception in March of 1998.
ITEM 4 - RECENT SALES OF UNREGISTERED SECURITIES
During April of 1998, the Company issued to T. Davis Capital Corp. 200,000
shares of restricted common stock as repayment of the $206.95 incorporating
expenses paid on the Company's behalf by T. Davis Capital Corp. This share
issuance was exempt from registration under Section 4(2) of the Securities
Exchange Act of 1934 and the appropriate restrictive legend was placed on the
share certificate issued.
23
During April, 1998 the Company sold 2,000,000 shares of unrestricted common
stock, and received $60,000. This offering was a private placement and the
Company was exempt from registration under the Exchange Act. Further the Company
was eligible under Securities and Exchange Commission Rule 504, which allowed
the shares sold in this private placement to be issued without restrictive
legend. The recipients of these shares, primarily being the Company friends,
relatives and business associates of the Company's officers, directors and
investors, represented their intention to acquire the shares for investment
purposes only, and not with a view to resale or distribution.
The 2,000,000 shares of the Company were issued to the following in the
indicated amounts:
During March, 1999 the 2,200,000 shares of the Company, which were issued at
that time, were split on a four for one basis resulting in 8,800,000 shares
being issued and outstanding.
During September, 1999 the Company issued to Rajesh Taneja 300,000 shares of
restricted common stock in lieu of $3,000 as payment for the rights and
ownership to the British Columbia sole proprietor company names "Clear Choice
Media" and "Clear Choice Technologies". This share issuance was exempt from
registration under Section 4(2) of the Securities Exchange Act of 1934. The
appropriate restrictive legend was placed on the share certificate issued.
During September, 1999 the Company issued to AltaCo 5,000,000 shares of
restricted common stock to acquire 5,000,000 shares of AltaCo. This share
issuance was exempt from registration under Section 4(2) of the Securities
Exchange Act of 1934. The appropriate restrictive legend was placed on the share
certificate issued.
The Company is registering all of its issued and outstanding shares of its
capital stock with a par value of $0.001 per share. From inception through
September 10, 1999 the Company has not issued or sold unregistered shares of its
common stock.
24
ITEM 5- INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware (the "DECL")
provides, in general, that a corporation incorporated under the laws of the
State of Delaware, such as the Company, may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding (other than a derivative action by or in
the right of the Corporation) by reason of the fact that such person is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another enterprise, against expenses (including attorney's fees), judgement,
fines and amounts paid in settlement actually and reasonably incurred by such
person in connection with such action, suit or proceeding if such person acted
in good faith an in a manner such person reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe such persons's
conduct unlawful. In the case of a derivative action, a Delaware corporation may
indemnify any such person against expenses (including attorney's fees) actually
and reasonably incurred by such person in connection with the defense or
settlement of such action or suit if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification shall be made in
respect to any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the
court determines such person is fairly and reasonably entitled to indemnify for
such expenses.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company understands that in the
opinion of the Securities Exchange Commission, such indemnification is against
public policy as expresses in the Act and is therefore unenforceable.
FINANCIAL STATEMENTS:
1. Report of Independent Certified Public Accountants dated September 10,
1999
Audited Consolidated Financial Statements:
2. Balance Sheets as at July 31, 1999 and December 31, 1998
3. Statement of Operations for seven months ended July 31, 1999, the
period from March 4, 1998 (date of inception) to December 31, 1998 and
the period from March 4, 1998 to July 31, 1999
4. Statement of Changes in Stockholders' Equity for the period from March
4, 1998 to July 31, 1999
5. Statement of Cash Flows for the seven months ended July 31, 1999, the
period from March 4, 1998 to December 31, 1998 and the period from
March 4, 1998 to July 31, 1999
6. Notes to Financial Statements
25
EXHIBITS:
2(a) License Agreement between the Company and 827109 Alberta Ltd. dated
June 1, 1999
2(b) License Agreement between SiCom Solutions Inc. and 827109 Alberta Ltd.
dated June 1, 1999
2(c) Letter from 827109 Alberta Ltd. to Delta Capital Technologies Inc.
dated September 2, 1999 acknowledging receipt of the $20,000 payment
and granting a three month extension of the $30,000 payment to
November 1, 1999
2(d) Letter from SiCom Solutions Inc. to 827109 Alberta Ltd. dated
September 2, 1999 acknowledging receipt of the $20,000 payment and
granting a three month extension of the $30,000 payment to November 1,
1999 3(ii) By-Laws of the Company dated April 23, 1998
3(ii) By Laws dated April 23, 1998
4 See Exhibit 3(ii) for By-Laws
10(a) Share Exchange Agreement between the Company and 827109 Alberta Ltd.
dated June 1, 1999
10(b) Stock Option Agreement between the Company and Judith Miller,
Corporate Secretary and Director of the Company dated September 15,
1999
27 Financial Data Schedule
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has caused this registration to be signed on its behalf by
the undersigned, thereunder duly authorized, on the ______ day of September
1999.
DELTA CAPITAL TECHNOLOGIES, INC.
Per:
/s/ Paul Davis
-------------------------------------
President and Chief Executive Officer
BOARD OF DIRECTORS
DELTA CAPITAL TECHNOLOGIES, INC.
VANCOUVER, B.C. CANADA
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have audited the accompanying balance sheets of Delta Capital Technologies,
Inc. (a development stage company) at July 31, 1999, and December 31, 1998 and
the statement of operations, stockholders' equity, and cash flows for the seven
months ended July 31, 1999 and the period from March 4, 1998 to December 31,
1998 and the period from March 4, 1998 (date of inception) to July 31, 1999.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the over all financial statements
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Delta Capital Technologies,
Inc. at July 31, 1999, and December 31, 1998 and the results of operations, and
cash flows for the seven months ended July 31, 1999 and the period from March 4,
1998 to December 31, 1998 and the period from March 4, 1998 (date of inception)
to July 31, 1999, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company is in the development
stage and will need additional working capital for its planned activity, which
raises substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are described in Note 7. These
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Salt Lake City, Utah /s/ Andersen Andersen & Strong
September, 10, 1999 ------------------------------
Andersen Andersen & Strong
A member of ACF International with affiliated offices worldwide
DELTA CAPITAL TECHNOLOGIES, INC.
(DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
JULY 31, 1999 AND DECEMBER 31, 1998
================================================================================
JULY 31 DEC 31
1999 1998
---- ----
ASSETS
CURRENT ASSETS
Cash $ 1,169 $ 20,926
-------- --------
Total Current Assets 1,169 20,926
-------- --------
PROPERTY AND EQUIPMENT-net of accumulated depreciation 564 -
-------- --------
MARKETING LICENSE-net of amortization-Note 3 11,637 -
-------- --------
$ 13,370 $ 20,926
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable-Note 4 $ 26,165 $ -
Accounts payable 14,918 -
-------- --------
Total Current Liabilities 41,083 -
-------- --------
STOCKHOLDERS' EQUITY
Common stock
25,000,000 shares authorized, at $0.001 par value;
8,800,000 shares issued and outstanding 8,800 8,800
Capital in excess of par value 51,407 51,407
Deficit accumulated during the development stage (87,920) (39,281)
------- -------
Total Stockholders' Equity (27,713) 20,926
------- ------
$ 13,370 $ 20,926
======== ========
The accompanying notes are an integral part of these financial statements.
DELTA CAPITAL TECHNOLOGIES, INC.
(DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
FOR THE SEVEN MONTHS ENDED JULY 31, 1999 AND THE PERIOD FROM
MARCH 4, 1998 TO DECEMBER 31, 1998 AND THE PERIOD FROM
MARCH 4, 1998 (DATE OF INCEPTION) TO JULY 31, 1999
================================================================================
JUL 31 DEC 31, MAR 4, 1998
1999 1998 TO JUL 31, 1999
------ ---- ---------------
REVENUES $ - $ - $ -
EXPENSES 48,639 39,281 87,920
-------- -------- --------
NET LOSS $(48,639) $(39,281) $(87,920)
======== ======== ========
NET LOSS PER COMMON SHARE
Basic $ - $ -
-------- ---------
Diluted $ - $ -
======== =========
AVERAGE OUTSTANDING SHARES
Basic 8,800,000 8,800,000
--------- ---------
Diluted 9,000,000 9,000,000
========= =========
The accompanying notes are an integral part of these financial statements.
DELTA CAPITAL TECHNOLOGIES, INC.
(DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM MARCH 4, 1998 (DATE OF INCEPTION)
TO JULY 31, 1999
================================================================================
The accompanying notes are an integral part of these financial statements.
DELTA CAPITAL TECHNOLOGIES, INC.
(DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE SEVEN MONTHS ENDED JULY 31, 1999 AND THE PERIOD FROM
MARCH 4, 1998 TO DECEMBER 31, 1998 AND THE PERIOD FROM
MARCH 4, 1998 (DATE OF INCEPTION) TO JULY 31, 1999
================================================================================
DELTA CAPITAL TECHNOLOGIES, INC.
(DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. ORGANIZATION
The Company was incorporated under the laws of the State of Delaware on March 4,
1998 with authorized common stock of 25,000,000 shares at $0.001 par value. On
March 15, 1999 the Company completed a forward stock split of four shares for
each outstanding share. This report has been prepared using after stock split
shares from inception.
The Company was organized for the purpose of the acquisition of a license to
market a software computer program. See note 3.
The Company is in the development stage.
Since its inception the Company has completed a Regulation D offering of
8,000,000 after stock split shares of its capital stock for cash of $60,000.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Methods
- ------------------
The Company recognizes income and expenses based on the accrual method of
accounting.
Dividend Policy
- ---------------
The Company has not yet adopted a policy regarding payment of dividends.
Income Taxes
- ------------
On December 31, 1998, the Company had a net operating loss carry forward of
$39,281. The tax benefit from the loss carry forward has been fully offset by a
valuation reserve because the use of the future tax benefit is doubtful, since
the Company has no operations on which to project future net profits.
The loss carryforward will expire in the year 2019.
Earnings (Loss) Per Share
- -------------------------
Earnings (Loss) per share amounts are computed based on the weighted average
number of shares actually outstanding in accordance with FASB No. 128.
Cash and Cash Equivalents
- -------------------------
The Company considers all highly liquid instruments purchased with a maturity,
at the time of purchase, of less than three months, to be cash equivalents.
DELTA CAPITAL TECHNOLOGIES, INC.
(DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
Foreign Currency Translation
- ----------------------------
Part of the transactions of the Company were completed in Canadian dollars and
have been translated to US dollars as incurred, at the exchange rate in effect
at the time, and therefore, no gain or loss from the translation is recognized.
Amortization of a Capitalized Marketing License
- -----------------------------------------------
The Company amortizes the marketing license over its estimated useful life of
three years. Any remaining unamortized capitalized costs will be expensed if it
is shown to have an impairment in value or proven to be of no value. All royalty
payments will be expensed. See Note 3.
Financial Instruments
- ---------------------
The carrying amounts of financial instruments, including cash, equipment,
marketing license, and accounts payable, are considered by management to be
their estimated fair values. These values are not necessarily indicative of the
amounts that the Company could realized in current market exchange.
Estimates and Assumptions
- -------------------------
Management uses estimates and assumptions in preparing financial statements in
accordance with generally accepted accounting principles. Those estimates and
assumptions affect the reported amounts of the assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and
expenses. Actual results could vary from the estimates that were assumed in
preparing these financial statements.
3. PURCHASE OF MARKETING LICENSE
On June 1, 1999 the Company acquired a world wide license to market computer
software known as reIBuilder.e-suite of e-business software from 827109 Alberta
LTD and SiCom Solution Inc. (Canadian corporations). The software is used in
various business fields to aid in the development of internet businesses and
technologies which provides for competitive shopping, maximizing re-use of
corporate information by bringing together data which is usually scattered
across many systems.
The terms of the agreement is for three years and includes an initial payment of
$50,000cn which is due anytime before November 1, 1999, of which $20,000cn has
been paid, and royalty payments of 15% of the net sales with a minimum amount of
$50,000cn for the first year and $200,000cn for the second year and $300,000cn
for the third year. The agreement can be cancelled by notice after a 30 day
default by either party or automatically terminates if any royalty payment is
more than 60 days past due. The agreement can be renewed at the end of three
years for an unlimited time by the payment of $1cn.
DELTA CAPITAL TECHNOLOGIES, INC.
(DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
3. PURCHASE OF MARKETING LICENSE - continued
The amounts paid or to be paid toward the purchase price of $50,000cn are
capitalized and amortized over 3 years, the estimated useful life of the
license, or a shorter period if the value of the license is determined to be
impaired.
All of the parties to the agreement have certain common officers and they
believe the contract amount of $50,000cn for the purchase of the license was a
fair value.
At the report date the Company did not have the working capital necessary to
begin the marketing activity.
4. NOTES PAYABLE
The Company has the following short term notes payable outstanding.
Name Date of Note Term Interest Amount
- ---- ------------ ---- -------- ------
Smart Communications Inc. June 30, 1999 one year 6% 20,000
Bonanza Management July 31, 1999 90 days 12% 6,081
5. STOCK OPTIONS
On August 26, 1998 the Company issued stock options to purchase 200,000 common
shares to an officer at .0075 per share which will expire December 31, 1999. The
options were given as compensation for prior services and on the option date
were considered to have no fair value.
6. RELATED PARTY TRANSACTIONS
Related parties have acquired 28% of the common stock issued.
The Company purchased the marketing license outlined in note 3 from related
parties.
7. GOING CONCERN
The Company will need additional working capital to be successful in its planned
activity and continuation of the Company as a going concern is dependent upon
obtaining the working capital necessary and the management of the Company has
developed a strategy, which it believes will accomplish this objective through
additional equity funding, and long term financing, which will enable the
Company to operate in the future.
DELTA CAPITAL TECHNOLOGIES, INC.
(DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
8. SUBSEQUENT EVENTS
On September 9, 1999 the Company acquired 36% of the outstanding stock of
827109 Alberta LTD by the issuance of 5,000,000 common shares of the Company.
It is the intent of 827109 Alberta LTD to acquire all of the outstanding stock
of SiCom Solutions Inc. (parties to the license purchase contract above) in a
stock for stock exchange, and by using the acquired shares of the Company as
part of the consideration, to be completed by December 31, 1999.
On September 9, 1999 the company issued 300,000 common shares of its stock for
the exclusive rights to the trade names "Clear Choice Media and "Clear Choice
Technologies".
After the completion of the above stock issues the outstanding stock of the
Company amounted to 14,100,000 shares.
INDEX TO EXHIBITS
EXHIBIT DESCRIPTION
2(a) License Agreement between the Company and 827109 Alberta Ltd.
dated June 1, 1999
2(b) License Agreement between SiCom Solutions Inc. and 827109
Alberta Ltd. dated June 1, 1999
2(c) Letter from 827109 Alberta Ltd. to Delta Capital Technologies
Inc. dated September 2, 1999 acknowledging receipt of the
$20,000 payment and granting a three month extension of the
$30,000 payment to November 1, 1999
2(d) Letter from SiCom Solutions Inc. to 827109 Alberta Ltd. dated
September 2, 1999 acknowledging receipt of the $20,000 payment
and granting a three month extension of the $30,000 payment to
November 1, 1999
3(ii) By-Laws of the Company dated April 23, 1998
4 See Exhibit 3(ii) for By-Laws
10(a) Share Exchange Agreement between the Company and 827109 Alberta
Ltd. dated June 1, 1999
10(b) Stock Option Agreement between the Company and Judith Miller,
Corporate Secretary and Director of the Company dated September
15, 1999
27 Financial Data Schedule
The above noted Exhibits have been incorporated into the Form 10-SB by
reference.
27