10SB12G/A: Registration of securities for small business [Section 12(g)]
Published on November 10, 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)
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
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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
ITEM 1 - DESCRIPTION OF BUSINESS
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PART I
ITEM 1 - DESCRIPTION OF BUSINESS
SUMMARY
DELTA CAPITAL TECHNOLOGIES, INC. ("Delta Capital") was incorporated under the
laws of Delaware on March 4, 1998. Delta Capital originally had authorized share
capital of 1,500 common shares with a par value of $0.001. On April 27, 1998
Delta Capital 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 Delta Capital 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 November 5, 1999 there were
14,100,000 common shares of Delta Capital issued and outstanding. Delta
Capital's principal business office and registered and records office is at
Suite 255, 999 - 8th St. SW Calgary, AB T2R 1J5 Canada.
Delta Capital is in the business of providing e-Business software and support
services.
Between March 4, 1998 and June 1, 1999 Delta Capital's focus was directed
towards assessing various potential acquisition targets. in the Internet and
related fields. During that period Delta Capital spent minimal funds conducting
its assessment of various businesses. Funds required for administration of Delta
Capital during fiscal years ended December 31, 1998 and subsequent months came
from monies raised from initial investors.
SOFTWARE
On June 1, 1999 Delta Capital 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. AltaCo was incorporated on April 16, 1999
and changed its name to Delta Enterprise Technologies (Canada) Inc. effective
September 29, 1999. The rights were acquired pursuant to a License Agreement
dated June 1, 1999 between Delta Capital and AltaCo, as amended by a Letter
Agreement dated September 2, 1999 (the "License Agreement"). 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. The License Agreement allows Delta Capital to distribute licenses
for the Software through sub-licenses
The License Agreement requires Delta Capital to pay to AltaCo a non-refundable
lump sum license fee of $50,000 by November 1, 1999, $45,800 of which has
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already been paid by Delta Capital. Under the License Agreement, Delta Capital
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, Delta
Capital may renew the License Agreement for an unlimited term for the sum of one
($1.00) dollar. AltaCo acquired its rights to the Software from SiCom Solutions
Inc., an Alberta, Canada based private company ("SiCom") on identical terms to
the License Agreement.
SHAREHOLDINGS
Delta Capital's significant shareholdings in AltaCo provide it with the ability
to have a significant influence on the operations of AltaCo. Pursuant to an
agreement dated June 1, 1999 between Delta Capital and AltaCo (the "Share
Exchange Agreement") Delta Capital agreed to issue to AltaCo 5,000,000 shares of
Delta Capital in exchange for 5,000,000 shares of AltaCo. Delta Capital has
attributed an indeterminate value for the 5,000,000 shares issued to AltaCo.
Management is of the view that the proper way to value the 5,000,000 Delta
Capital shares is to equate such shares to the value of the 5,000,000 AltaCo
shares received in exchange. However, the value of the 5,000,000 AltaCo shares
cannot be determined at this stage and therefore the value of the 5,000,000
Delta Capital shares cannot be presently determined. The exchange of the shares
was completed on September 9, 1999. As a result of the shares of AltaCo issued
to Delta Capital pursuant to the Share Exchange Agreement, Delta Capital became
the second largest single shareholder of AltaCo holding 35.71% of the issued and
outstanding shares of AltaCo.
Paul Davis, the President , CEO and Director of Delta Capital, AltaCo and SiCom
does not directly own any shares of Delta Capital but personally owns 48.21% of
the issued and outstanding shares of AltaCo and 62.82% of SiCom. Kevin Wong, a
Director of Delta Capital and Vice President Technology and Director of AltaCo
does not directly own any shares of Delta Capital but personally owns 16.07% of
the issued and outstanding shares of AltaCo and 8.8% of SiCom. Rajesh Taneja a
Director of Delta Capital and Vice President Marketing of AltaCo owns 300,000
shares of Delta Capital.
Delta Capital has adopted a policy whereby directors are required to disclose
any interest they have in proposed transactions or in entities with which Delta
Capital is proposing to do business. These directors must abstain from voting on
any directors' resolutions approving the proposed transactions. In addition, the
general principals of corporate law require a director to act in the best
interests of the shareholders of the company on whose board the director sits.
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As a result of the overlap of the directorship and the shareholdings of
Management in Delta Capital, AltaCo and SiCom, certain conflicts may develop
amongst Management of those companies. It is anticipated that in the future
AltaCo will be engaged by Delta Capital to further develop the Software based on
industry competitive rates. To the extent that certain members of Management of
Delta Capital do not own shares in Delta Capital but do own shares in AltaCo and
SiCom potential conflicts could develop. A transaction between Delta Capital and
AltaCo could have the effect of Management having a bias in favour of AltaCo in
the transaction as a result of Management's shareholdings in AltaCo. Similarly,
as a result of Management's shareholdings in SiCom, Management could potentially
have a bias towards SiCom in any transaction between AltaCo and SiCom.
As President and CEO, and Director of Delta Capital, AltaCo and SiCom, Paul
Davis has an obligation to act in the best interests of the shareholders of each
of those companies. As a result of owning shares in AltaCo but not owning shares
of Delta Capital, his shareholding interest in AltaCo may conflict with his
obligation to act in the best interests of Delta Capital and AltaCo.
The potential conflicts of Management referred to above is, however, mitigated
to some extent as a result of the 5,000,000 shares of Delta Capital held by
AltaCo. To the extent that Delta Capital is successful, the 5,000,000 shares of
Delta Capital held by AltaCo will increase in value. In such event the value of
the AltaCo shares held by Messrs. Davis and Wong will also increase since the
5,000,000 Delta Capital shares represents a major asset of AltaCo. On that basis
the interests of Messrs. Davis and Wong in AltaCo is consistent with their
interests in Delta Capital. In any event, any decision made by any of the
directors of Delta Capital or AltaCo must be made in accordance with their
duties and obligations to deal fairly and in good faith with those companies.
RESEARCH AND DEVELOPMENT
To date, Delta Capital has relied on research and development of the Software
previously funded by SiCom. Delta Capital has not, to date, provided AltaCo with
additional funding over and above Delta Capital's royalty payment obligations
provided for in the License Agreement. Accordingly, none of the costs associated
with research and development of the Software have, to date, been borne by Delta
Capital's customers. As the licensee of the Software , it will be Delta
Capital's responsibility to fund and direct future development of the Software.
It is
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anticipated that Delta Capital will engage AltaCo to continue to develop the
Software on a fair market, fee for services basis, under direction from Delta
Capital. Similarly, it is anticipated that AltaCo will provide support services
to Delta Capital to ensure effective implementation of the Software at Delta
Capital's client sites. Delta Capital will pay AltaCo fees based on industry
average rates for the services it is provided.
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DELTA CAPITAL'S PRODUCTS
The Software consists of a software engine called the "relBuilder" which is the
Core Technology for a suite of six enterprise-class applications which permit
companies and organizations to engage in e-Business. These applications are
fully developed and are currently marketed as product release number 1.5.
The Software applications are as follows:
1. ENTERPRISE COMMERCE APPLICATION: Delta Capital's Enterprise e-Commerce
Application provides merchants with the ability to conduct online sales
and merchandizing activities over the Internet. The Enterprise
e-Commerce Application has features which permit merchants to implement
cross-selling, up-selling, comparative shopping and other merchandizing
techniques designed to enhance their business. This technology can
operate on a standalone basis or can enhance other e-Commerce
solutions.
2. 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" software architecture.
3. ENTERPRISE DOCUMENT ASSEMBLY APPLICATION: The Document Assembly
Application is a content manager and document assembly tool that
maximizes re-use of corporate information by bringing together data
that is usually scattered across company-wide systems.
4. 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.
This technology integrates with such leading software asMicrosoft
Exchange or Lotus Notes to provide project-based calendaring and
scheduling. The Project Management Application provides a real-time
graphical presentation of underlying data
5. ENTERPRISE CUSTOMER SERVICE APPLICATION: The Customer Service
Application has the ability to map complex call requirements, implement
sophisticated operational logic and can integrate with a web server.
This allows web-based customer self-service or call center operations
from within the office environment to across the globe.
6. ENTERPRISE CONTACT MANAGEMENT APPLICATION: The Contact Management
Application integrates with leading directory servers such as Microsoft
Exchange and
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Lotus Notes to enable highly complex mapping of names, addresses,
companies, contact information, corporate hierarchies, active and
non-active projects, and histories.
DELTA CAPITAL'S MARKETING PROGRAM
PARTNER PROGRAM
Delta Capital has commenced building a network of e-Commerce and e-Business
knowledgeable consultants and solutions providers throughout North America.
Delta Capital plans to provide a products and services package directed toward
established consultants - known as Partners - who agree to utilize Delta
Capital's software in providing e-Commerce and e-Business solutions for their
clients Delta Capital plans to penetrate the top 23 American and Canadian
markets through its Partner Program over the course of the next 18 months with
its first target markets being Seattle and Vancouver. Delta Capital is currently
pursuing vertical markets in Education, Oil and Gas, and Manufacturing.
Delta Capital has currently developed two partners in the consulting field for
its Partnership Program. The partners are Khyber Pass Distributing, an
entertainment consulting company and Matradyne Corporation, a marketing business
consultancy. Both of these partners have entered into agreements with Delta
Capital to re-market Delta Capital's Software and implement it for e-Commerce or
e-Business purposes with their clients. Based partly on experience gained from
these relationships and partly from norms established by standard industry
remarketing practices, Delta Capital is planning its first quarter Year 2000
rollout of software and services.
The Partner Program also includes development of relationships with internet
service providers ("ISP") to provide them with the tools and capabilities to
enable their clients to do business over the Internet. To that effect, Delta
Capital recently entered into its first such sub-licensing agreement with
Imaginet Communication Group Inc., a company which offers Internet access and
web hosting services in Canada and the USA through its rapidly growing Imaginet
ISP Franchise Network.
DIRECT CLIENTS
In anticipation of Delta Capital fully launching its Partner Program, it has
developed direct relationships with six client/customer companies: Shaw
Communications Inc., a cable company; Fairplay Network, a retail organization;
Chevron Canada Resources, an oil company; Oil & Gas Trading Partners Network, an
oil and gas industry information initiative; Rand Worldwide Inc., an integrated
manufacturing company and the I-School Network, an interactive education network
system based in Calgary, Alberta. The direct sale of the software and service
package is designed to develop examples of Delta Capital's technology at work.
These examples will then be used as proof of performance when Delta Capital
rolls out its product and service offering in the year 2000.
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Delta Capital is not dependent upon any single customer or client for its future
success.
STRATEGIC ALLIANCES
In addition to its Partner Program, Delta Capital has developed and will
continue to develop strategic alliances with various entities. Typically the
strategic alliances result in Delta Capital marketing another company's products
or Delta Capital utilizing other companies' software products within the
company's product line. Not only does this establish a business relationship,
but it also facilitates a sharing of information and an exchange of ideas
between the parties.
Delta Capital has a strategic alliance with BCE-Emergis of Montreal, to remarket
various credit card clearing services. In accordance with its arrangement with
BCE-Emergis, Delta Capital includes BCE-Emergis' credit card clearing services
technology as part of Delta Capital's product. Detla Capital pays BCE-Emergis a
fee for use of BCE-Emergis' technology and includes such costs in the cost of
Delta Capital's products.
Smart Technologies Inc.of Calgary, has an agreement with AltaCo to include that
company's "Smart Ideas" concept mapping tools as a part of the standard user
interface options of the relBuilder software engine as marketed by Delta
Capital. Smart Technologies Inc.'s technology is included or "imbedded" as part
of Delta Capital's technology. Delta Capital pays Smart Technology Inc. a fee
for use of Smart Technology Inc.'s technology and includes such costs in the
cost of Delta Capital's product.
As Delta Capital's business develops, it is anticipated that it will utilize the
services and product offerings of industry leaders in enhancing Delta Capital's
product/service offering while at the same time encouraging use of the
relBuilder core technology and software suite. These future alliances will be
contract-based agreements aimed at enhancing Delta Capital's position in the
marketplace by leveraging the knowledge, expertise and sales networks of the
parties with whom it forms alliances to the mutual benefit of both.
CORE TECHNOLOGY PROGRAM
Delta Capital will seek affiliations with major e-Commerce and e-Business
organizations to market its relBuilder core technology. Exposure of Delta
Capital's core technology began with Delta Capital's IBM "San Francisco"
technology Fast Start award and participation in the June 1999 Java One
conference. It has continued with Delta Capital's technical team, assisted by
IBM Rochester, Maryland based San Francisco and porting centre teams,
successfully completing certain tests of the relBuilder software suite. The
tests conducted were those types of tests typically conducted by IBM in
assessing software capabilities. Delta Capital Technologies has no formal
relationship with IBM at the time of this filing. It has entered into
discussions with
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IBM to establish co-marketing and co-development opportunities within IBM's
umbrella of e-Business initiatives. While management is confident about the
development of this relationship, there is no assurance that any agreement will
result from these discussions.
DELTA CAPITAL'S COMPETITION
Delta Capital's software and services offering crosses over many business
boundaries and encounters a variety of competitors which serve various segments
of the marketplace. There is no known direct competitor with both an intelligent
e-Business engine technology and a suite of fully integrated e-business
applications. Delta Capital's management believes that its proprietary
relBuilder software engine combined with its six enterprise-class applications
provide it with the capability and flexibility to effectively exploit selected
target markets as discussed in the marketing section. Alternatively, Delta
Capital can work with established marketplace players to enhance their software
and services offerings through sub-licensing its relBuilder core technology,
also as discussed in the marketing section.
The Software named "Knowledge Broker" from Black Pearl Software uses
relationship modeling and classic analytical business intelligence to indicate
trends and opportunities in a manner similar to those functions as found in
Delta Capital's relBuilder software suite. While Knowledge Broker has much in
common with Delta Capital's products.Knowledge Broker does not have e-business
modules which match Delta Capital's six enterprise-class applications.
There are many large companies and organizations which provide competition in
the provision of software competitive to Delta Capital's six enterprise-class
applications. IBM is a major and active e-Business force under its WebSphere
e-Business Solutions banner. Microforum Inc. Scient Corporation, Razorfish Inc.,
Proxicom Inc., and a variety of middle market companies provide software
solutions combined with consulting services and, as such, are competitors in
various segments of the market. Specialist companies, led by Blue Martini
Software, have developed e-Commerce and e-Catalogue implementations to produce
sophisticated Internet-based merchandizing and sales programs.
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ACQUISITION OF TRADE NAMES
Pursuant to an agreement dated July, 1999 between Delta Capital and Rajesh
Taneja, Delta Capital agreed to issue 300,000 common shares to Mr. Taneja in
lieu of payment in the amount of $3,000 for Mr. Taneja's rights and ownership to
the British Columbia sole proprietorship company names "Clear Choice Media" and
"Clear Choice Technologies". Delta Capital acquired the rights to the names from
Mr. Taneja who is a director of Delta Capital because management felt that the
names would be valuable for future marketing of software.
EMPLOYEES
Delta Capital currently has two full time employees who are each paid $3,000 per
month plus expenses pursuant to verbal agreements entered into with Delta
Capital that commenced on June 15, 1999. Delta Capital also currently has two
part time 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. The Cdn $2,500 part time employee spends 50% of her
time on Delta Capital administration and the balance of her time providing
administrative services to non-competitive clients through her wholly owned
company called J.A.M. Corporate Consultants Inc. The Cdn $7,500 individual
spends 75% of his time on Delta Capital business and the balance consulting to
non-competitive companies.
RISK FACTORS
Delta Capital's business is subject to numerous risks, including the following:
LIMITED OPERATING HISTORY AND MINIMAL REVENUE AND ASSETS MAY RESULT IN LOSSES
AND DIFFICULTY IN OBTAINING FINANCING: Delta Capital has had limited operating
history, has received minimal revenue from operations and has minimal assets.
Delta Capital will, in all likelihood, sustain operating expenses in excess of
revenues until it is better established and will therefore require additional
funding to continue operations and to have sufficient working capital to sustain
operations. Because Delta Capital has minimal assets it may be difficult or even
impossible for Delta Capital to obtain debt financing at this stage in Delta
Capital's development. No assurances can be given that Delta Capital will
operate profitably in the future or that it will be able to obtain further
financing.
WITHOUT FURTHER FINANCING DELTA CAPITAL MAY CEASE TO BE A GOING CONCERN. Delta
Capital will need additional working capital to be successful in its planned
activity and continuation of Delta Capital as a going concern is dependent upon
obtaining the working capital necessary. Management of Delta Capital has
developed a strategy which it believes will accomplish the objective of
obtaining further financing through additional equity funding, and long term
financing, which will enable Delta Capital to operate in the future. Although
Management believes it will be able to obtain such funding for Delta Capital
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there is no assurance they will be successful in order to keep Delta Capital
operating as a going concern.
NEW AND DEVELOPING TECHNOLOGIES/MARKET CONDITIONS MAY RESULT IN PROJECTIONS NOT
BEING ACHIEVED: The e-Commerce/e-Business marketplaces, along with vertical
applications, have been identified by Management as significant emerging market
segments with substantial projected growth potential. Should these market
segments not develop in the manner expected, or should they fail to develop as
quickly as anticipated, Delta Capital's business, sales, finances and operating
results could be materially and adversely affected resulting in Delta Capital
being less profitable than anticipated.
STRATEGIC PARTNERS MAY NOT PRODUCE ANTICIPATED SALES: The revenues of Delta
Capital pertaining to product sales, are dependent to a large degree on the
ability of its strategic partners to generate transaction volumes and provide
new markets for products of Delta Capital. Delta Capital generates sales by
supplying strategic partners with products and services that the partners market
to their customers. If Delta Capital's strategic partners are unsuccessful in
their businesses or if a substantial number of Delta Capital's strategic
partners cease doing business with Delta Capital, Delta Capital will sell fewer
products and services to strategic partners and Delta Capital's revenue will be
impacted negatively.
DEPENDENCE UPON KEY PERSONNEL: Success of Delta Capital depends to a significant
degree upon the continued contribution of its Management. Current Management
have been involved in the development of the Software from the first stages of
its development. Management's intimate knowledge of the Software, together with
its vision of how the Software should be developed in the future, makes Delta
Capital's future success highly dependant on current Management. Because the
computer software industry exists in a rapidly changing environment, it is
important for key personnel to have a historic appreciation of the evolution of
a given piece of software in the context of a provider's corporate strategy.
Management believes that customers of Delta Capital's products make their
purchase decisions based on existing capabilities of the software and also
because they believe Delta Capital has personnel that is capable of upgrading
and causing the Software to be further developed in the future. Loss of current
personnel may result in customers losing confidence in Delta Capital's future
capability to deliver competitive Software in the future.
At present Delta Capital has no key-man life insurance on its key personnel.
Further, at present, Delta Capital does not have written employment contracts
with its key personnel and accordingly Delta Capital would not be able to
contractually prevent key personnel from leaving Delta Capital. Although Delta
Capital does not believe that any of its key personnel are considering
retirement or planning on leaving Delta Capital for other reasons, there is no
assurance that one or more of the key personnel won't leave Delta Capital in the
future.
LACK OF EXPERIENCE OF MANAGEMENT COULD LESSEN PROFITABILITY: Management of Delta
Capital has only limited business experience in running an operating company
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and Management has no experience in operating a public company. In implementing
a successful marketing plan for Delta Capital's services, management lacks
experience which could result in Delta Capital being less efficient with its use
of funds than if Management had more experience. Additional management skills
and knowledge will be required to operate Delta Capital's business profitably if
sales volumes and revenues increase, and the number of employees increase.
Although Management intends to acquire more experienced personnel in the future
as Delta Capital grows, until that occurs Delta Capital may be less profitable.
RISK OF OBSOLESCENCE: Unless Delta Capital can continue to successfully develop
and upgrade the Software,, the Software may become obsolete compared with other
software which is introduced to the market place, Because software evolves
rapidly it is important for producers to be constantly refining and upgrading
their software products to remain competitive. Although Management believes that
Delta Capital's personnel have the required talent to cause the Software to
remain competitive, there is no assurance that the Software will not become
obsolete.
POTENTIAL CONFLICTS OF INTEREST MAY ARISE: Paul Davis, the President , CEO and
Director of Delta Capital, AltaCo and SiCom does not directly own any shares of
Delta Capital but personally owns 48.21% of the issued and outstanding shares of
AltaCo and 62.82% of SiCom. Kevin Wong, a Director of Delta Capital and Vice
President Technology and Director of AltaCo does not directly own any shares of
Delta Capital but personally owns 16.07% of the issued and outstanding shares of
AltaCo and 8.8% of SiCom. Rajesh Taneja a Director of Delta Capital and Vice
President Marketing of AltaCo owns 300,000 shares of Delta Capital.
As a result of the overlap of the directorship and the shareholdings of
Management in Delta Capital, AltaCo and SiCom, certain conflicts may develop
amongst Management of those companies. It is anticipated that in the future
AltaCo will be engaged by Delta Capital to further develop the Software based on
industry competitive rates. To the extent that certain members of Management of
Delta Capital do not own shares in Delta Capital but do own shares in AltaCo and
SiCom potential conflicts could develop. A transaction between Delta Capital and
AltaCo could have the effect on Management, as a result of its shareholdings in
AltaCo, having a bias in favour of AltaCo in the transaction. Similarly, as a
result of Management's shareholdings in SiCom, Management could potentially have
a bias towards SiCom in any transaction between AltaCo and SiCom.
As President and CEO, and Director of Delta Capital, AltaCo and SiCom, Paul
Davis has an obligation to act in the best interests of the shareholders of each
of those companies. As a result of owning shares in AltaCo but not owing shares
of Delta Capital, his shareholding interest in AltaCo may conflict with his
obligation to act in the best interests of Delta Capital and AltaCo.
COMPETITION MAY RESULT IN LOWER MARKET SHARE AND LOWER PROFITABILITY: 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 competition from new competitors is likely to result in loss
of market share, which could negatively impact Delta Capital's business.
Competitors vary in size, and in scope and breadth of the
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products and services offered and Delta Capital 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
Delta Capital. As well, many other companies have significantly greater name
recognition and a larger base of customers. Many 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 which may
result in lower sales of the Software resulting in Delta Capital being less
profitable.
GROWTH AND EXPANSION MAY TAX DELTA CAPITAL'S RESOURCES RESULTING IN CUSTOMER
DISSATISFACTION: Delta Capital's anticipated growth may place a significant
strain on Delta Capital's administrative, operational and financial resources
and increase demands on its systems and controls. As Delta Capital increases its
service offerings and expands its targeted markets, there will be additional
demands on Delta Capital's customer support, sales and marketing and
administrative resources and network infrastructure. There can be no assurance
that Delta Capital'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 result in
customer dissatisfaction with attendant loss of sales.
DELTA CAPITAL'S STOCK DEEMED TO BE A PENNY STOCK WHICH MAY RESULT IN DECREASED
LIQUIDITY: The Securities and Exchange Commission adopted Rule 15g-9 which
established the definition of a "penny stock", for purposes relevant to Delta
Capital, as any equity security that has a market price of less than $5.00 per
share or with an exercise price of less than $5.00 per share, subject to certain
exceptions.
For any transaction involving a penny stock, unless exempt the rules require:
(i) that a broker or dealer approve a person's account for transactions in penny
stocks; and (ii) the broker or dealer receive from the investor a written
agreement to the transaction, setting forth the identity and quantity of the
penny stock to be purchased. In order to approve a person's account for
transactions in penny stocks, the broker or dealer must: (i) obtain financial
information and investment experience and objectives of the person; and (ii)
make a reasonable determination that the transaction in penny stocks are
suitable for that person and that person had sufficient knowledge and experience
in financial matters to be capable of evaluating the risks of transactions in
penny stocks. The broker or dealer must also deliver, prior to any transaction
in a penny stock, a disclosure schedule prepared by the Commission relating to
the penny stock market, which, in highlight form, (i) sets forth the basis on
which the broker or dealer made the suitability determination; and (ii) that the
broker or dealer received a signed, written agreement from the investor prior to
the transaction.
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Disclosure also has to be made about the risks of investing in penny stock in
both public offering and in secondary trading, and about commissions payable to
both the broker-dealer and the registered representative, current quotations for
the securities and the rights and remedies available to an investor in cases of
fraud in penny stock transactions. Finally, monthly statements have to be sent
disclosing recent price information for the penny stock held in the account and
information on the limited market in penny stocks. As a result of the penny
stock trading restrictions, brokers or potential investors may be reluctant to
trade in Delta Capital's securities which may result in less liquidity for Delta
Capital's stock.
YEAR 2000 RISK: Delta Capital's internally used computers and products produced
or licensed by Delta Capital are "Y2K" compliant and do not represent a risk for
users. To the extent that Delta Capital may be exposed to possible year 2000
failures of its trading partners, Delta Capital's staff and the staff of AltaCo
have been educated on the Year 2000 problem and an inquiry program as to the
readiness of trading partners has been initiated. Although Delta Capital has
used its best efforts to ensure that any contracted technology deliverables to
Delta Capital are "Y2K" compliant, Delta Capital cannot be sure that all outside
organizations beyond its control which impact or may impact Delta Capital's
business, will be Y2K compliant by December 31, 1999.
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 the period ended July
31, 1999.
Delta Capital is at an early stage. It has successfully achieved its first
objective: the acquisition of Internet technologies and is now developing plans
to take these technologies to market. It plans to commence significant marketing
activities in the first quarter of 2000. During the period under review, Delta
Capital's modest expenditures have been made in support of finding appropriate
Internet technologies and, as well, for audit, income tax returns and meeting
various regulatory requirements. Substantially all cash required for operations
has come from investors.
On June 1, 1999, Delta Capital acquired the exclusive worldwide license to the
relBuilder Enterprise Suite of intelligent e-Commerce and e-Business software
from 827109 Alberta Ltd. (AltaCo), an Alberta, Canada-based private company.
Under the agreement, Delta Capital will pay AltaCo fifteen percent (15%) royalty
payments in the minimum amount of C$50,000 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 terms of the agreement.
MARKETING PROGRAM
Delta Capital's marketing program involves the development of a variety of
different types of relationships with the entities with which Delta Capital does
business as follows:
17
1. PARTNER PROGRAM, an initiative program which involves Delta Capital
providing products and services to established customers (ie.
"partners") who in turn integrate Delta Capital's Software with other
software and provide their clients with various forms of
Internet-related business, technical or marketing assistance. Delta
Capital currently has three partners who perform this function: Khyber
Pass Distributing, an entertainment consulting company; Metradyne
Corporation, a marketing business consultancy; and Imaginet
Communications Group Inc., an Internet services provider;
2. STRATEGIC ALLIANCES exist which involve Delta Capital marketing another
company's products or Delta Capital utilizing other companies' software
products within Delta Capital's product. Delta Capital currently has
strategic alliances with BCE Emergis of Montreal and through AltaCo
with Smart Technologies Inc. of Calgary., The services/software of BCE
Emergis and Smart Technologies Inc. are embedded in the relBuilder
software and services offered by Delta Capital and passed on to its
customers.
3. CORE TECHNOLOGY AFFILIATIONS are included in Delta Capital's plans.
Delta Capital will seek to establish relationships with major
e-Commerce and e-Business organizations to market its core Software
technology. Delta Capital is currently working towards establishing a
core technology affiliation with IBM, as described previously, but as
of the date of this filing has not established a formal relationship.
It has entered into discussions with IBM to establish co-marketing and
co-development opportunities within IBM's umbrella of e-Business
initiatives. While management is confident about the development of
this relationship, there is no assurance that any agreement will result
from these discussions.
4. DIRECT RELATIONSHIPS Delta Capital currently works directly with six
companies which use Delta Capital's Software and services: Shaw
Communications Inc., a cable company; Fairplay Network, a retail
organization; Chevron Canada Resources, an oil company; Oil and Gas
Trading Partners Network, an oil and gas industry information
initiative; Rand Worldwide Inc., an integrated manufacturing company;
and I-School Network, an interactive education network system based in
Calgary, Alberta. The direct sale of the software and service package
is designed to develop examples of Delta Capital's technology at work.
These examples will then be used as proof of performance when Delta
Capital rolls out its product and service offering in the year 2000.
A) Plan of Operation:
a) Delta Capital anticipates modest revenues over the next 12 months
and anticipates continuing losses from operations as it introduces
its relBuilder software and services offering to the marketplace.
Based on the current costs associated with operating Delta
Capital, Delta Capital will require US$240,000 financing through
the end of 1999. Delta Capital plans to raise additional funds
during the next 12 months in the amount of approximately US$2.5
million through equity financing, participation in a major
industry
18
software/hardware company's support program and debt financing to
finance its operations.
b) It is management's view that virtually all businesses in future
will have e-Commerce/e-Business requirements and that the nature
and conduct of business in general will be fundamentally changed.
In a marketplace where the demand for Internet software and
services is growing rapidly, a trend which is expected to continue
for the foreseeable future, Delta Capital's goal is to spend the
next 12 months establishing its distribution and sales channels,
negotiating its partnership arrangements and working to gain
strategic partners to utilize Delta Capital's core technology
relBuilder software. Delta Capital management anticipates positive
cash flow in the fourth quarter of its upcoming fiscal year.
c) Delta Capital will perform market research in the next 12
months to help gauge marketplace acceptance of its software and
services. Delta Capital will not directly undertake any product
development in the coming 12 months. However, it is anticipated
that AltaCo will continue development of the relBuilder software
suite under direction from Delta Capital.
d) It is planned that in future Delta Capital will purchase from
AtlaCo, services at fair market rates to ensure continued
development of the Software and provision of support services.
Delta Capital will re-license back to AltaCo certain of its rights
under Delta Capital's worldwide license to permit AltaCo to
undertake marketing initiatives in certain Canadian markets and
market segments as seems appropriate to Delta Capital.
Specifically, Delta Capital will encourage AltaCo to market the
relBuilder software in the Alberta, Canada, marketplace where
AltaCo is based. Delta Capital will encourage AltaCo to work with
certain industries and organizations, as yet undefined, where it
is felt that AltaCo is better positioned to service marketplace
needs and requirements.
19
e) Delta Capital management does not anticipate any material plant or
equipment purchases in the next 12 months.
f) Delta Capital management anticipates that it will add
approximately 10 employees in the coming year, including personnel
with specialized technology, financial experience andspecific
industry sales experience.
g) Although management does not anticipate Y2K problems, management
does recognize that there are risks associated with dealing with
other parties who may not be Y2K compliant. Management has
assessed Delta Capital's state of readiness for year 2000 issues
and has determined that, to the extent possible, Delta Capital is
prepared. Management believes that it has already increased the
necessary costs associated with being Y2K compliant in that Delta
Capital utilizes equipment and software that has been developed
after the Y2K problem became apparent. Delta Capital will continue
to reduce the risk of Y2K problems as much as possible by
continuing to deal with suppliers who Delta Capital believes is
also Y2K compliant.
B) Results from Operations:
a) Revenue
There was no revenue for fiscal year ended December 31, 1998 or
for the period ended July 31, 1999.
b) 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 Capital.
Expenses for the period ended July 31, 1999 were $48,639.00,
primarily due to the acquisition of the exclusive worldwide
license from AltaCo.
c) 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. Delta Capital is
currently selling software and services to a limited and
restricted market as it continues to develop its product line in
advance of major marketing efforts.
ITEM 3 - DESCRIPTION OF PROPERTY
Delta Capital does not own any properties but utilizes, without charge and under
a verbal agreement, premises leased by AltaCo which consist of approximately
2,537 square feet on the second floor of an office building situated at 999 -
8th Street, S.W., Calgary, Alberta. Delta Capital will give consideration to
acquiring its own
20
leased premises in the future if warranted but as of this date Delta Capital has
not acquired leased premises and there are no specific plans to do so.
Delta Capital maintains a United States mailing address at Suite 806 - 1904 -
3rd Avenue, Seattle, Washington 98101. Delta Capital also maintains a mailing
address in British Columbia, Canada at Suite B201 - 1331 Homer Street,
Vancouver, British Columbia, Canada. There are no office premises of Delta
Capital associated with either the Seattle mailing address or the Vancouver
mailing address.
ITEM 4 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of November 5, 1999 information with respect
to the beneficial ownership by each person who is known to Delta Capital to be
the beneficial owner of more than 5% of Delta Capital'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. Delta Capital's common stock is the only class
of voting securities outstanding.
(1) Mr. Davis owns 6,750,000 shares of the 14,000,000 issued shares of AltaCo
and the shares identified represent his beneficial ownership of the
5,000,000 Delta Capital shares issued to AltaCo. Mr. Davis does not
directly own any shares in Delta Capital.
21
(2) Mr. Wong owns 2,250,000 shares of the 14,000,000 issued shares of AltaCo
and the shares identified represent his beneficial ownership of the
5,000,000 Delta Capital shares issued to AltaCo. Mr. Wong does not
directly own any shares in Delta Capital.
(3) Included in this figure are stock options entitling Ms. Miller to purchase
200,000 shares of Delta Capital exercisable at US$0.0075 per share. The
option expires December 31, 1999.
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. After holding the Delta Capital
shares for one year the aforesaid shareholders, including those that are
affiliates of Delta Capital may, provided Delta Capital is up to date in its
filing and reporting requirements, sell, in a three month period, the greater of
(a) 1% of the Delta Capital shares outstanding as shown by the most recent
report or statement published by Delta Capital, or (b) the average weekly
reported trading volume in Delta Capital shares on all securities exchanges or
automated quotation systems during the four calendar weeks preceding such sale.
After holding their shares for two years non-affiliates can sell their shares
without adherence to the volume limitations, but affiliates must still adhere to
the volume limitations.
ITEM 5 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following table identifies Delta Capital's directors and executive officers
as of October 13, 1999:
Directors are elected at Delta Capital'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.
Delta Capital'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 Delta Capital over the last five years:
PAUL DAVIS, President, CEO and Director of Delta Capital founded, in October,
1996, SiCom Solutions Inc. which developed the Software. Since SiCom's inception
Mr. Davis has been responsible for developing SiCom's business model,
integration strategy, partnership and financing. In the period 1994 to October,
1996 Mr. Davis was President and CEO of HPCC High Performance Computing Centre
("HPCC"), a Calgary, Alberta based private company. During this employment with
HPCC Mr. Davis' responsibility was to develop high performance computing and
advanced applications associated with high-speed networking. In 1994 Mr. Davis
received his Bachelor of Applied
22
Science, Electrical Engineering with a specialty in computing technology and
power engineering.
RAJESH TANEJA, Director of Delta Capital, has, over the last five years,
provided technical and sales support to a variety of companies involved in the
computer software industry or to companies utilizing products provided by the
computer software industry. Mr. Taneja founded Clear Choice Media in 1998 and
has served as its Chief Executive Officer since its inception. He has served as
President and senior web designer for Clear Choice Technologies since 1997 and
served as senior inter/intranet engineer for Metasoft Systems Inc. from 1997 to
1999. Mr. Taneja provided technical support to Raptor Capital Corporation from
1997 to 1999; served as technical manager of Cross Systems Inc. from 1996 to
1997 and was technical and sales manager of the Trumpet Tech Group of Companies
Inc. in 1996. Mr. Taneja was President of Tin Webdesigner and New Media from
1995 to 1999 and from 1994 to 1995 he held the position of Senior Network
Implementation and Support Staff with Combit Net/FX, a company which provided
networking and software implementation to a variety of clients including the
Government of India.
KEVIN WONG, Director of Delta Capital, has been Vice President and Director of
SiCom Solutions Inc. since 1997 where he developed the technical information and
inception model for the Software. In the 4 years prior to April, 1997, Mr. Wong
attended University during which time he obtained a law degree from the
University of Windsor, Ontario.
JUDY MILLER, Secretary and Director of Delta Capital, has been President and
Director of J.A.M. Corporate Consultants Inc. ("JAM") since March 1994. JAM,
which is wholly owned by Ms. Miller, is a private company incorporated pursuant
to the laws of British Columbia, provides a variety of services including office
management and administration, meeting and special event planning, office
redesign/relocation, and fund raising. Ms. Miller is the sole employee of JAM
and accordingly is responsible for providing JAM's services.
The above individuals are the only key personnel presently associated with Delta
Capital.
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.
23
(1) Delta Capital 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
Delta Capital does not have a defined benefit pension plan that provides annual
benefits to any Executive Officers.
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 Delta
Capital 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 Delta Capital,
Judith Miller was granted a stock option to purchase 200,000 common shares of
Delta Capital 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
Delta Capital 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 Delta Capital acquired certain of
is assets, as described below are conducted as arm's-length transactions and
were in the best interest of Delta Capital. Delta Capital intends to continue to
exercise its best business judgement and discretion in involving any such
conflicts between Delta Capital and others with respect to these and all other
matters, and
24
Delta Capital believes that it will generally be able to resolve such conflicts
on an equitable basis.
Paul Davis, President and Director of Delta Capital 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 Delta Capital 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.
Rajesh Taneja, Director of Delta Capital and is Vice-President Marketing of
AltaCo. Mr. Taneja owns 300,000 shares of Delta Capital and he receives C$3,000
per month as an employee of Delta Capital.
Judy Miller, Director and Secretary of Delta Capital owns 96,000 shares of Delta
Capital and has an option to purchase 200,000 shares of Delta Capital for
$0.0075 per share exercisable until December 31, 1999. Ms. Miller originally
participated in a private placement for 24,000 shares of Delta Capital at $.001
per share prior to the consolidation of Delta Capital's shares on a 4:1 basis.
Delta Capital 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 Delta Capital.
During the last two years Delta Capital has not been a party to and it is not
proposed that Delta Capital will be a party to any transactions in which any
director, nominee for election as a director, executive officer, beneficial
owner of greater than 5% of Delta Capital's common shares or any member of the
immediate family of such persons had or is to have a direct or indirect material
interest except the following:
(a) Share Exchange Agreement:
Pursuant to the Share Exchange Agreement dated June 1, 1999
Delta Capital issued 5,000,000 common shares to AltaCo in
exchange for 5,000,000 common shares of AltaCo. Paul Davis,
President and Director of Delta Capital is President and
Director of AltaCo and owns approximately 48.21% of the issued
capital of AltaCo. Mr. Davis receives $6,000 per month as an
employee of AltaCo. Kevin Wong, a Director of Delta Capital and
a Director and officer of AltaCo owns approximately 16.07% of
the issued capital of AltaCo and receives C$4,000 per month as
an employee of AltaCo. Rajesh Taneja, a Director of Delta
Capital and an officer of AltaCo owns 300,000 shares of Delta
Capital and receives C$3,000 per month as an employee of Delta
Capital.
25
(b) License Agreement:
Pursuant to the License Agreement dated June 1, 1999 Delta
Capital acquired the worldwide marketing rights to the Software
from AltaCo. In accordance with the terms of the License
Agreement Delta Capital is required to make certain royalty
payments to AltaCo. Paul Davis, Kevin Wong and Rajesh Taneja
hold the positions and shareholdings in Delta Capital and AltaCo
referred to in paragraph (a) above.
(c) Purchase of Trade Names:
By agreement dated July, 1999 Delta Capital purchased the trade
names "Clear Choice Media" and "Clear Choice Technologies" from
Rajesh Taneja for 300,000 shares of Delta Capital. Mr. Taneja is
a Director and employee of Delta Capital.
(d) Verbal Lease Agreement:
Pursuant to a verbal agreement between Delta Capital and AltaCo,
Delta Capital utilizes, without charge, premises leased by
AltaCo in Calgary, Alberta.
(e) Stock Option Agreement:
Judith Miller, a Director and officer of Delta Capital, entered
into an agreement with Delta Capital dated September 15, 1999
pursuant to which Ms. Miller received a stock option to purchase
200,000 shares of Delta Capital exercisable at US$0.0075 per
share until December 31, 1999.
ITEM 8 - DESCRIPTION OF SECURITIES
COMMON STOCK
Delta Capital 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
Delta Capital underwent a one for four stock split increasing its issued and
outstanding to 8,800,000 common shares. As at November 5, 1999 there were
14,100,000 common shares of Delta Capital issued and outstanding.
TRANSFER AGENT AND REGISTRAR
Delta Capital's Transfer Agent is Signature Stock Transfer in Dallas, Texas.
26
PART II
ITEM 1 - MARKET PLACE AND DIVIDENDS ON DELTA CAPITAL'S COMMON EQUITY AND OTHER
SHAREHOLDER MATTERS
MARKET INFORMATION
Delta Capital'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 Delta
Capital's outstanding stock, and there can be no assurance that an active public
market will develop. Delta Capital's common stock commenced trading in March
1999 and the highest and lowest prices for Delta Capital's common stock during
the calendar quarter ended June 30, 1999 and the closing bid price on such date
is as follows:
Delta Capital Technologies Inc. (Monthly Summary of Trades):
These quotations reflect inter-dealer prices without retail work-up, mark-down
or commission and may not represent actual transactions.
As of the date of this Registration Statement, Delta Capital has 33 registered
shareholders which included Cede & Co. holding 1,959,000 shares. Because Cede &
Co. is an intermediary, Delta Capital does not know how many beneficial
shareholders are included in the shares held in the name of Cede & Co.
DIVIDEND POLICY
Delta Capital has not paid any cash dividends on its common stock and does not
anticipate paying any cash dividends in the foreseeable future. Delta Capital
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 Delta
Capital's financial condition, operating results, capital requirements,
applicable contractual restrictions and other factors as the board of directors
deems relevant.
OPTIONS EXERCISED
None of Delta Capital's previously granted stock options have been exercised.
WARRANTS EXERCISED
To date Delta Capital has not issued any share purchase warrants.
27
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 Delta Capital and its accountants since
Delta Capital's inception in March of 1998.
ITEM 4 - RECENT SALES OF UNREGISTERED SECURITIES
During April of 1998, Delta Capital issued to T. Davis Capital Corp. 200,000
shares of restricted common stock as repayment of the $206.95 incorporating
expenses paid on Delta Capital'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.
During April, 1998 Delta Capital sold 2,000,000 shares of unrestricted common
stock, and received $60,000. This offering was a private placement and Delta
Capital was exempt from registration under the Exchange Act. Further Delta
Capital 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 Delta
Capital friends, relatives and business associates of Delta Capital'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 Delta Capital were issued to the following in the
indicated amounts:
28
During March, 1999 the 2,200,000 shares of Delta Capital, 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 Delta Capital 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 Delta Capital 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.
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 Delta Capital, 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 and 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
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.
29
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers or persons controlling Delta
Capital pursuant to the foregoing provisions, Delta Capital understands that in
the opinion of the Securities Exchange Commission, such indemnification is
against public policy as expressed 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
DELTA CAPITAL TECHNOLOGIES, INC.
FINANCIAL STATEMENTS AND REPORT
OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
JULY 31, 1999 AND DECEMBER 31, 1998
[LETTERHEAD]
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 statement 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
September 10 , 1999
/s/ Andersen, Andersen & Strong
DELTA CAPITAL TECHNOLOGIES, INC.
(DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
JULY 31, 1999 AND DECEMBER 31, 1998
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)
STATEMENT 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
The accompanying notes are an integral part of these financial statements.
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 translations 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 realize in a 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 relBuilder.e-suite of e-business software from AltaCo (a
Canadian corporation). 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
$50,000 cn 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
$50,000 cn for the first year and $200,000 cn for the second year and $300,000cn
for the third year. All royalties will be expensed as paid. The agreement can be
canceled 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 and to be paid toward the purchase price of $50,000cn are
capitalized and amortized over 3 years, at the rate of $16,667cn each year, 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 is a
fair value. See Note 8
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.
DELTA CAPITAL TECHNOLOGIES, INC.
(DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
7. GOING CONCERN
The Company will need additional working capital to be successful in its planned
activity and to service its current debt 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, long term financing, and
completion of negotiations to access development and marketing support from a
major hardware/software company which has a program designed to further e-
Commerce and e-Business ventures, and increased revenues from sales which will
enable the Company to operate for the coming year.
The accompanying financial statements do not include any adjustments to the
recorded assets or liabilities that might be necessary should the Company fail
in any of above objectives and is unable to operate for the coming year.
8. SUBSEQUENT EVENTS
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" and was recorded at an estimated fair value of $3,000 which will
be amortized over its useful life of ten years or less if it is shown to have an
impairment in value.
On September 9, 1999 the Company acquired 36% of the outstanding stock of AltaCo
(a Canadian corporation) by the issuance of 5,000,000 common shares of the
Company. AltaCo was organized in March 1999. The only asset held by AltaCo is
the rights to the computer software outlined in note 3 and is reported in their
financial statements with no value. AltaCo obtained the software from SiCom
Solutions Inc.(a Canadian corporation) under the same terms and conditions as
outlined in note 3. The value of the shares issued was undeterminable and was
recorded on the books of the Company with no value.
After the completion of the above stock issues the outstanding stock of the
Company amounted to 14,100,000 shares.
The Company has a common business purpose with AltaCo and SiCom and each has
certain common officers who own significant common capital stock in each
company.
Included in the following are summary unaudited combined proforma financial
statements of the Company, AltaCo, and SiCom Solutions Inc. The fiscal year of
the Company and AltaCo is December 31 and SiCom Solutions Inc. is September 30.
The following statements are prepared from the historical records of each
company assuming a fiscal year of September 30 for each and includes the capital
stock issued as outlined above.
DELTA CAPITAL TECHNOLOGIES, INC.
(DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
8. SUBSEQUENT EVENTS - continued
The proforma information presented is not necessarily indicative of that which
would have been attained had the transaction occurred at an earlier date or for
each company if reported separately. All material intercompany accounts and
transactions have been eliminated. Non-controlling interests represents minority
shareholders' proportionate share of the equity in SiCom Solutions Inc. and
AltaCo.
UNAUDITED COMBINED PRO FORMA BALANCE SHEETS
SEPTEMBER 30, 1999
UNAUDITED COMBINED PRO FORMA
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1999
UNAUDITED COMBINED PRO FORMA
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1998
EXHIBITS:
3(I)(i) Articles of Incorporation dated March 4, 1998 together with
Amended Articles of Incorporation dated April 23, 1998
3(ii) By-Laws of Delta Capital dated April 23, 1998
4 See Exhibit 3(ii) for By-Laws
10(a) License Agreement between Delta Capital and 827109 Alberta
Ltd. dated June 1, 1999
10(b) License Agreement between SiCom Solutions Inc. and 827109
Alberta Ltd. dated June 1, 1999
10(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
10(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
27 Financial Data Schedule
99(a) Share Exchange Agreement between Delta Capital and 827109
Alberta Ltd. dated June 1, 1999
99(b) Stock Option Agreement between Delta Capital and Judith
Miller, Corporate Secretary and Director of Delta Capital
dated September 15, 1999
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 8th day of November, 1999.
DELTA CAPITAL TECHNOLOGIES, INC.
Per:
/s/ Paul Davis
----------------------------------------
President and Chief Executive Officer
INDEX TO EXHIBITS
EXHIBIT DESCRIPTION
3(i) Articles of Incorporation dated March 4, 1998 together with
Amended Articles of Incorporation dated April 23, 1998
3(ii) By-Laws of Delta Capital dated April 23, 1998
4 See Exhibit 3(ii) for By-Laws
10(a) License Agreement between Delta Capital and 827109 Alberta
Ltd. dated June 1, 1999
10(b) License Agreement between SiCom Solutions Inc. and 827109
Alberta Ltd. dated June 1, 1999
10(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
10(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
27 Financial Data Schedule
99(a) Share Exchange Agreement between Delta Capital and 827109
Alberta Ltd. dated June 1, 1999
99(b) Stock Option Agreement between Delta Capital and Judith
Miller, Corporate Secretary and Director of Delta Capital
dated September 15, 1999