UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] Annual report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the fiscal year ended December 31, 2002
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 (No fee required) for the transition period from__ to __.
Delta Capital Technologies, Inc.
(Name of Small Business Issuer in Its Charter)
elaware 98-0187705
(State or Other Jurisdiction (I.R.S. Employer Identification No.)
of Incorporation or Organization)
(604) 312-0663
(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Exchange Act:
Title of Each Class Name of each Exchange on Which Registered ------------------- ----------------------------------------- Common Stock ($0.001 Par Value) None |
Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes T No
Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B not contained in this form, and if no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB [ ].
The issuer's total consolidated revenues for the year ended December 31, 2002, were $74,345
The aggregate market value of the registrant's common stock, $0.001 par value (the only class of voting stock), held by non-affiliates was approximately $223,840 based on the average closing bid and asked prices for the common stock on May 21, 2001.
At May 21, 2003, the number of shares outstanding of the registrant's common stock, $0.001 par value (the only class of voting stock), was 7,961,353
TABLE OF CONTENTS
PART I
Item 1. Description of Business............................................................... 1
Item 2. Description of Property ...............................................................7
Item 3. Legal Proceedings......................................................................7
Item 4. Submission of Matters to a Vote of Security-Holders................................... 7
PART II
Item 5. Market for Common Equity and Related Stockholder Matters ......................... 7
Item 6. Management's Discussion and Analysis or Plan of Operation .......................... 9
Item 7. Financial Statements .................................................................10
Item 8. Changes in and Disagreements With Accountants on Accounting and Financial
Disclosure ...........................................................................11
PART III
Item 9. Directors and Executive Officers......................................................11
Item 10. Executive Compensation................................................................12
Item 11. Security Ownership of Certain Beneficial Owners and Management .............. 12
Item 12. Certain Relationships and Related Transactions........................................13
Item 13. Exhibits, List and Reports on Form 8-K................................................13
Item 14. Controls and Procedures...............................................................18
Signatures..............................................................................................19
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
General
As used herein the term "Company" refers to Delta Capital Technologies, Inc., a
Delaware corporation and its subsidiaries and predecessors, unless the context
indicates otherwise. The Company was incorporated under the laws of the State of
Delaware on March 4, 1998.
On June 1, 1999, the Company acquired the rights to an exclusive worldwide
license to the relBuildeR(TM) Enterprise Suite of business intelligent
e-Commerce and e-Business software (the "Software") from 827109 Alberta Ltd.
("AltaCo"), an Alberta, Canada based private company. The rights were acquired
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 Software application included 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. On April 19, 2000 the Company acquired The
Matridigm Corporation, an Alberta, Canada-based strategic marketing and
communications company with special high-tech expertise. Management believed
that the acquisition of The Matridigm Corporation and its marketing expertise
were critical to the Company's attempts to successfully penetrate both United
States and international markets. On October 27, 2000, due to problems that
arose from implementing the Company's planned operations, the decision was made
to discontinue the development and licensing of the relBUILDER (TM) software
that had been licensed to Delta Enterprise Technologies (Canada) Ltd. of
Calgary, Alberta ("Delta E"). Further, to the discontinuation, the Company
agreed with Delta E to cancel their five million (5,000,000) shares (15,000,000
post 3:1 forward split) share exchange.
On February 26, 2001, the Company entered into a Stock Exchange Agreement with
the shareholders of Au-Online. Com., Inc., an online retailer of jewelry. The
terms of the agreement were never consummated and the parties subsequently
agreed to a mutual termination of obligations.
On May 4, 2001, the Company entered into a Stock Purchase and Sale Agreement
with the shareholders of UMDN, Inc., a Delaware corporation ("UMDN") whereby the
Company acquired all of the issued and outstanding common shares of UMDN or
3,500,000 shares and the right to exercise 200,000 options to purchase
additional common shares, in exchange for 1,000,000 shares of the Company's
common stock. The shareholders of UMDN retained 1,050,000 shares of preferred
class A shares each of which was convertible into ten (10) shares of common
stock upon the occurrence of certain events. UMDN is a marketing company that
enrolls members of large affinity groups, unions and/or associations within a
networking service in order to leverage their buying power to elicit proprietary
discounts from both local and national businesses. The network is created
through local discount networks, national providers and strategic partners. The
local network is where members of affinity groups, unions, and/or associations
receive substantial savings on products or services in a branded environment, on
a contractual basis, such as for cellular service or insurance. UDMN's primary
revenue was from the business sector through charging flats fees for membership.
UMDN hoped to generate secondary revenue from permitting strategic partners
access to its captive consumer groups on an exclusive basis. UMDN's strategic
partners paid UMDN a percentage of all revenue derived from accessing its
network. The Company intended to do business by providing networking services
for small to medium sized businesses through UMDN.
On November 1, 2001, the Company terminated its relationship with UMDN. The
Company and UMDN executed an agreement that allowed both companies to
independently develop and complete their respective corporate objectives. As
part of that agreement, the Company and UMDN unwound the Stock Purchase and Sale
Agreement.
On March 12, 2002, the Company's wholly - owned subsidiary, Homelands Security,
Inc. ("Homelands") acquired all the issued and outstanding shares of InterGlobe
Investigation Services, Ltd ("Interglobe") from the owners in exchange for nine
hundred and fifty thousand (950,000) shares of Homelands.
InterGlobe, a British Columbia company, was incorporated in 1995 as a Vancouver
based investigation and security consulting company licensed by the Attorney
General in the province of British Columbia. InterGlobe provides investigation
services to corporations and individuals that include security consulting, loss
prevention, forensic computing, VIP and executive safety, criminal harassment
(stalking crimes) protection, investigating international crime, due diligence,
homicides, abductions, missing persons, canine bomb detection, narcotics,
security and other protection services. InterGlobe owns its own investigative
equipment and can transport its services overnight to remote locations.
InterGlobe has a strong customer service organization that focus' on client
results and has earned a reputation through client satisfaction and media
profiling.
On January 1, 2003 Homelands acquired all the existing and outstanding shares of
Dolphin Investigations Ltd. ("Dolphin") in exchange for three hundred thousand
shares (300,000) shares of Homelands. The acquisition of Dolphin reduced the
Company's interest in Homelands to that of a minority interest holder.
Current Operations
The Company is currently a holding company with a minority interest in
Homelands. The Company's intention is to act as a diversified holding company
that will own both majority and minority interests in various business
operations that will be acquired primarily with the Company's common stock.
Selection of a Business
The Company anticipates that businesses for possible acquisition will be
referred by various sources, including its officers and directors, professional
advisors, securities broker-dealers, venture capitalists, members of the
financial community, and others who may present unsolicited proposals. The
Company will not engage in any general solicitation or advertising for a
business opportunity, and will rely on personal contacts of its officers and
directors and their affiliates, as well as indirect associations between them
and other business and professional people. By relying on "word of mouth", the
Company may be limited in the number of potential acquisitions it can identify.
While it is not presently anticipated that the Company will engage unaffiliated
professional firms specializing in business acquisitions or reorganizations,
such firms may be retained if management deems it in the best interest of the
Company.
Compensation to a finder or business acquisition firm may take various forms,
including one-time cash payments, payments based on a percentage of revenues or
product sales volume, payments involving issuance of securities (including those
of the Company), or any combination of these or other compensation arrangements.
Consequently, the Company is currently unable to predict the cost of utilizing
such services.
The Company will not restrict its search to any particular business, industry,
or geographical location, and management reserves the right to evaluate and
enter into any type of business in any location. The Company may participate in
a newly organized business venture or a more established company entering a new
phase of growth or in need of additional capital to overcome existing financial
problems. Participation in a new business venture entails greater risks since in
many instances the management of such a venture will not have proved its
ability, the eventual market of such venture's product or services will likely
not be established, and the profitability of the venture will be unproved and
cannot be predicted accurately. If the Company participates in a more
established firm with existing financial problems, it may be subjected to risk
because the financial resources of the Company may not be adequate to eliminate
or reverse the circumstances leading to such financial problems.
In seeking a business venture, the decision of management will not be controlled
by an attempt to take advantage of any anticipated or perceived appeal of a
specific industry, management group, product, or industry, but will be based on
the business objective of seeking long-term capital appreciation in the real
value of the Company.
The analysis of new businesses will be undertaken by or under the supervision of
the officers and directors. In analyzing prospective businesses, management will
consider, to the extent applicable, the available technical, financial, and
managerial resources; working capital and other prospects for the future; the
nature of present and expected competition; the quality and experience of
management services which may be available and the depth of that management; the
potential for further research, development, or exploration; the potential for
growth and expansion; the potential for profit; the perceived public recognition
or acceptance of products, services, or trade or service marks; name
identification; and other relevant factors. It is anticipated that the results
of operations of a specific firm may not necessarily be indicative of the
potential for the future because of the requirement to substantially shift
marketing approaches, expand significantly, change product emphasis, change or
substantially augment management, and other factors.
The Company will analyze all available factors and make a determination based on
a composite of available facts, without reliance on any single factor. The
period within which the Company may participate in a business cannot be
predicted and will depend on circumstances beyond the Company's control,
including the availability of businesses, the time required for the Company to
complete its investigation and analysis of prospective businesses, the time
required to prepare appropriate documents and agreements providing for the
Company's participation, and other circumstances.
Acquisition of a Business
In implementing a structure for a particular business acquisition, the Company
may become a party to a merger, consolidation, or other reorganization with
another corporation or entity; joint venture; license; purchase and sale of
assets; or purchase and sale of stock, the exact nature of which cannot now be
predicted. Notwithstanding the above, the Company does not intend to participate
in a business through the purchase of minority stock positions. On the
consummation of a transaction, it is likely that the present management and
shareholders of the Company will not be in control of the Company. In addition,
a majority or all of the Company's directors may, as part of the terms of the
acquisition transaction, resign and be replaced by new directors without a vote
of the Company's shareholders.
In connection with the Company's acquisition of a business, the present
shareholders of the Company, including officers and directors, may, as a
negotiated element of the acquisition, sell a portion or all of the Company's
common stock held by them at a significant premium over their original
investment in the Company. As a result of such sales, affiliates of the entity
participating in the business reorganization with the Company would acquire a
higher percentage of equity ownership in the Company. Although the Company's
present shareholders did not acquire their shares of common stock with a view
towards any subsequent sale in connection with a business reorganization, it is
not unusual for affiliates of the entity participating in the reorganization to
negotiate to purchase shares held by the present shareholders in order to reduce
the amount of shares held by persons no longer affiliated with the Company and
thereby reduce the potential adverse impact on the public market in the
Company's common stock that could result from substantial sales of such shares
after the business reorganization. Public investors will not receive any portion
of the premium that may be paid in the foregoing circumstances. Furthermore, the
Company's shareholders may not be afforded an opportunity to approve or consent
to any particular stock buy-out transaction.
In the event sales of shares by present shareholders of the Company, including
officers and directors, is a negotiated element of a future acquisition, a
conflict of interest may arise because directors will be negotiating for the
acquisition on behalf of the Company and for sale of their shares for their own
respective accounts. Where a business opportunity is well suited for acquisition
by the Company, but affiliates of the business opportunity impose a condition
that management sell their shares at a price which is unacceptable to them,
management may not sacrifice their financial interest for the Company to
complete the transaction. Where the business opportunity is not well suited, but
the price offered management for their shares is attractive, management will be
tempted to effect the acquisition to realize a substantial gain on their shares
in the Company. Management has not adopted any policy for resolving the
foregoing potential conflicts, should they arise, and does not intend to obtain
an independent appraisal to determine whether any price that may be offered for
their shares is fair. Stockholders must rely, instead, on the obligation of
management to fulfill its fiduciary duty under state law to act in the best
interests of the Company and its stockholders.
It is anticipated that any securities issued in any such reorganization would be
issued in reliance on exemptions from registration under applicable federal and
state securities laws. In some circumstances, however, as a negotiated element
of the transaction, the Company may agree to register such securities either at
the time the transaction is consummated, under certain conditions, or at
specified times thereafter. Although the terms of such registration rights and
the number of securities, if any, which may be registered cannot be predicted,
it may be expected that registration of securities by the Company in these
circumstances would entail substantial expense to the Company. The issuance of
substantial additional securities and their potential sale into any trading
market which may develop in the Company's securities may have a depressive
effect on such market.
While the actual terms of a transaction to which the Company may be a party
cannot be predicted, it may be expected that the parties to the business
transaction will find it desirable to structure the acquisition as a so-called
"tax-free" event under sections 351 or 368(a) of the Internal Revenue Code of
1986, (the "Code"). In order to obtain tax-free treatment under section 351 of
the Code, it would be necessary for the owners of the acquired business to own
80% or more of the voting stock of the surviving entity. In such event, the
shareholders of the Company would retain less than 20% of the issued and
outstanding shares of the surviving entity. Section 368(a)(1) of the Code
provides for tax- free treatment of certain business reorganizations between
corporate entities where one corporation is merged with or acquires the
securities or assets of another corporation. Generally, the Company will be the
acquiring corporation in such a business reorganization, and the tax-free status
of the transaction will not depend on the issuance of any specific amount of the
Company's voting securities. It is not uncommon, however, that as a negotiated
element of a transaction completed in reliance on section 368, the acquiring
corporation issue securities in such an amount that the shareholders of the
acquired corporation will hold 50% or more of the voting stock of the surviving
entity. Consequently, there is a substantial possibility that the shareholders
of the Company immediately prior to the transaction would retain less than 50%
of the issued and outstanding shares of the surviving entity. Therefore,
regardless of the form of the business acquisition, it may be anticipated that
stockholders, immediately prior to the transaction, will experience a
significant reduction in their percentage of ownership in the Company.
Notwithstanding the fact that the Company is technically the acquiring entity in
the foregoing circumstances, generally accepted accounting principles will
ordinarily require that such transaction be accounted for as if the Company had
been acquired by the other entity owning the business and, therefore, will not
permit a write-up in the carrying value of the assets of the other company.
The manner in which the Company participates in a business will depend on the
nature of the business, the respective needs and desires of the Company and
other parties, the management of the business, and the relative negotiating
strength of the Company and such other management.
The Company will participate in a business only after the negotiation and
execution of appropriate written agreements. Although the terms of such
agreements cannot be predicted, generally such agreements will require specific
representations and warranties by all of the parties thereto, will specify
certain events of default, will detail the terms of closing and the conditions
which must be satisfied by each of the parties prior to such closing, will
outline the manner of bearing costs if the transaction is not closed, will set
forth remedies on default, and will include miscellaneous other terms.
Operation of Business After Acquisition
The Company's operation following its acquisition of a business will be
dependent on the nature of the business and the interest acquired. The Company
is unable to predict whether the Company will be in control of the business or
whether present management will be in control of the Company following the
acquisition. It may be expected that the business will present various risks,
which cannot be predicted at the present time.
Governmental Regulation
It is impossible to predict the government regulation, if any, to which the
Company may be subject to until it has acquired an interest in a business. The
use of assets and/or conduct of businesses which the Company may acquire could
subject it to environmental, public health and safety, land use, trade, or other
governmental regulations and state or local taxation. In selecting a business in
which to acquire an interest, management will endeavor to ascertain, to the
extent of the limited resources of the Company, the effects of such government
regulation on the prospective business of the Company. In certain circumstances,
however, such as the acquisition of an interest in a new or start-up business
activity, it may not be possible to predict with any degree of accuracy the
impact of government regulation. The inability to ascertain the effect of
government regulation on a prospective business activity will make the
acquisition of an interest in such business a higher risk.
Competition
The Company will be involved in intense competition with other business
entities, many of which will have a competitive edge over the Company by virtue
of their stronger financial resources and prior experience in business.
Employees
The Company is currently a holding company with no employees. Executive
officers, who are not compensated for time contributed to the Company, devote
only such time to the affairs of the Company as they deem appropriate, which is
estimated to be approximately 20 hours per month per person. Management of the
Company expects to use consultants, attorneys, and accountants as necessary, and
does not anticipate a need to engage any full-time employees.
Reports to Security Holders
The Company's annual report will contain audited financial statements. The
Company is not required to deliver an annual report to security holders and will
not voluntarily deliver a copy of the annual report to the security holders. The
Company files all of its required information with the Securities and Exchange
Commission ("SEC").
The public may read and copy any materials that are filed by the Company with
the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The public may obtain information on the operation of
the Public Reference Room by calling the SEC at 1-800-SEC-0330. The statements
and forms filed by the Company with the SEC have also been filed electronically
and are available for viewing or copy on the SEC maintained Internet site that
contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC. The Internet address
for this site can be found at http://www.sec.gov.
Board of Directors Committees
The board of directors has not yet established an audit committee or a
compensation committee. An audit committee typically reviews, acts on and
reports to the board of directors with respect to various auditing and
accounting matters, including the recommendations and performance of independent
auditors, the scope of the annual audits, fees to be paid to the independent
auditors, and internal accounting and financial control policies and procedures.
Certain stock exchanges currently require companies to adopt formal written
charter that establishes an audit committee that specifies the scope of an audit
committee's responsibilities and the means by which it carries out those
responsibilities. In order to be listed on any of these exchanges, we will be
required to establish an audit committee.
The board of directors has not yet established a compensation committee.
Directors currently are not reimbursed for out-of-pocket costs incurred in
attending meetings and no director receives any compensation for services
rendered as a director. It is likely that we will adopt a provision for
compensating directors in the future.
ITEM 2. DESCRIPTION OF PROPERTY
The Company currently maintains its offices at Suite 440-375 Water Street,
Vancouver, B.C., Canada V6B 5C6.The office space is owned by Mr. Tutschek, one
of our officers and directors. The Company pays no rent for the use of this
address. The Company does not believe that it will need to maintain an office at
any time in the foreseeable future in order to carry out the plan of operation
described herein.
ITEM 3. LEGAL PROCEEDINGS
No material developments occurred during the quarter ended December 31, 2002,
with respect to pending litigation. For more information on legal proceedings,
see the Company's Form 10KSB for the year ended December 31, 2001.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of the period covered by this report.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock is quoted on the Electronic Bulletin Board under the
symbol, "DCTN." Trading in the common stock in the over-the-counter market has
been limited and sporadic and the quotations set forth below are not necessarily
indicative of actual market conditions. Further, these prices reflect
inter-dealer prices without retail mark-up, mark-down, or commission, and may
not necessarily reflect actual transactions. The high and low bid prices for the
common stock for each quarter of the fiscal years ended December 31, 2001 and
2002 and the first quarter of 2003 are as follows:
------------------ --------------- ------------------
Quarter ended High Low
------------------ --------------- ------------------
------------------ --------------- ------------------
3/31/01* $0.125 $0.0156
------------------ --------------- ------------------
6/30/01 $0.05 $0.01
------------------ --------------- ------------------
9/30/01 $0.05 $0.01
------------------ --------------- ------------------
12/31/01 $$0.01 $0.00
------------------ --------------- ------------------
3/31/02** $0.62 $0.13
------------------ --------------- ------------------
6/28/02 $0.20 $0.19
------------------ --------------- ------------------
9/30/02 $0.14 $0.14
------------------ --------------- ------------------
12/31/02 $0.10 $0.07
------------------ --------------- ------------------
3/31/03 $0.08 $0.05
* Adjusted to reflect 3:1 forward stock split effective on January 12, 2001. **
Adjusted to reflect 1:100 reverse stock split effective on January 4, 2002.
Record Holders
As of May 21, 2003, there were approximately 111 shareholders of record holding
a total of 7,961,353 shares of common stock. The holders of the common stock are
entitled to one vote for each share held of record on all matters submitted to a
vote of stockholders. Holders of the common stock have no preemptive rights and
no right to convert their common stock into any other securities. There are no
redemption or sinking fund provisions applicable to the common stock.
Dividends
The Company has not declared any cash dividends since inception and does not
anticipate paying any dividends in the foreseeable future. The payment of
dividends is within the discretion of the board of directors and will depend on
the Company's earnings, capital requirements, financial condition, and other
relevant factors. There are no restrictions that currently limit the Company's
ability to pay dividends on its common stock other than those generally imposed
by applicable state law.
Recent Sales of Unregistered Securities
The following is a list of all unregistered securities sold by the Company
within the period covered by this report, including, where applicable, the
identity of the person who purchased the securities, title of the securities,
and the date sold.
On November 11,2002 the Company issued 143,682 shares of common stock at $0.10
per share as settlement for debt in the amount of $14,682 to Jam Corporate
Consultants a British Columbia Corporation, pursuant to Regulation "S" (Rules
901-905) adopted pursuant to the Securities Act of 1933.
On November 11,2002 the Company issued 100,000 shares of common stock at $0.10 per share
to Judy Miller a citizen and resident of Canada for services rendered to the
Company, pursuant to Regulation "S" (Rules 901-905) adopted pursuant to the
Securities Act of 1933.
On December 6,2002 the Company issued 250,000 shares of common stock at $0.09
per share to Integrity Securities Inc. for investor relations services, pursuant
to Regulation "S" (Rules 901-905) adopted pursuant to the Securities Act of 1933
On December 7, 2002, the Company issued 114,857 shares of common stock at $0.09
per share for cash to David Chin a resident of the United Sates of America for
cash, pursuant to Regulation "S" (Rules 901-905) adopted pursuant to the
Securities Act of 1933
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This report contains forward-looking statements within the meaning of Section
27A of the Securities Act and Section 21E of the Securities Exchange Act. Words
such as "expects," "anticipates," "intends," "plans," "believes," "seeks,"
"estimates," and other similar expressions or variations of such words are
intended to identify these forward-looking statements. Additionally, statements
concerning future matters such as the development of new products, enhancements
or technologies, possible changes in legislation and other statements regarding
matters that are not historical fact are forward-looking statements.
Forward-looking statements involve risks and uncertainties. Actual results could
differ materially from those projected in the forward-looking statements.
Factors that could cause of contribute to such differences include, but are not
limited to, availability of financial resources adequate for short-, medium- and
long-term needs, demand for our products and services and market acceptance, as
well as those factors discussed in this "ITEM 6, Management's Discussion and
Analysis or Plan of Operations" and elsewhere in this report.
Plan of Operations
During the next 12 months, the Company intends to continue its attempts to
increase its holdings through an acquisition or merger. The Company does not
have sufficient capital to operate over the next fiscal year without a
substantial infusion of operating capital. It will be necessary for the Company
to either borrow funds to operate or generate operating funds through the sale
of equity in the Company or its subsidiaries. There can be no assurance that the
Company will be able to generate sufficient income from either borrowing, the
sale of equity, or a combination thereof to allow it to operate its business
during the coming year. Unless the Company is successful in raising additional
operating capital, it will not have sufficient funds to operate during the
balance of the fiscal year.
Results of Operations
The Company recorded $74,345 in revenues for the fiscal year ended December 31,
2002 and $27,530 for the year ended December 31, 2001. The Company's revenue
increased as a result of the Company's wholly owned subsidiary's ("Homelands,
Inc.") operation of Interglobe Investigation Services Ltd
Losses
Net loss for the year ended December 31, 2002 was $594,419 compared to a net
loss of $679,793 in the year ended December 31, 2001. The $85,374 decrease in
net loss was primarily attributable to a reduction in consulting fees paid.
The Company expects that it may continue to incur losses until such time as it
acquires profitable operations.
Expenses
General and administrative expenses for the year ended December 31, 2002, were
$562,799 compared to $693,312 for the year ended December 31, 2001. The decrease
in general and administrative expenses was the result of downsizing of the
Company's operations.
Depreciation and amortization expense for the year ended December 31, 2002 were
$6,838 compared to $0 for the year ended December 31, 2001.
Impact of Inflation
The Company believes that inflation may have a negligible effect on future
operations. The Company believes that it may be able to offset inflationary
increases in the cost of sales by increasing sales and improving operating
efficiencies.
Liquidity and Capital Resources
Cash used by operations was $241,911 for the year ended December 31, 2002, and
cash used by operations was $133,384 for the year ended December 31, 2001
Cash flows provided by financing activities was $221,945 for the year ended
December 31, 2002 and $133,787 for the year ended December 31, 2001
Cash flows provided by investing activities was $23,149 for the year ended
December 31, 2002 compared to $0 for the year ended December 31, 2001.
A total of 913,736 shares under the Company's 2002 Benefit Plan were issued to
four consultants in lieu of cash for services rendered..
Capital Expenditures
The Company made no significant capital expenditures on property or equipment
over the periods covered by this report.
Income Tax Expense (Benefit)
The Company has experienced losses and as a result has net operating loss carry
forwards available to offset future taxable income.
ITEM 7. FINANCIAL STATEMENTS
The Company's financial statements for the fiscal years ended December 31, 2002
and 2001 are attached hereto as pages 1 through 13.
DELTA CAPITAL TECHNOLOGIES, INC.
CONSOLIDATED FINANCIAL REPORT
DECEMBER 31, 2002
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C O N T E N T S
Page
INDEPENDENT AUDITORS' REPORT......................................................................................1
FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET....................................................................................2
CONSOLIDATED STATEMENTS OF OPERATIONS.........................................................................3
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY....................................................4
CONSOLIDATED STATEMENTS OF CASH FLOWS.........................................................................5
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS...........................................................6 - 13
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PETERSON SULLIVAN PLLC
601 UNION STREET SUITE 2300 SEATTLE WA 98101 (206) 382-7777 FAX 382-7700
CERTIFIED PUBLIC ACCOUNTANTS
1
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders
Delta Capital Technologies, Inc.
We have audited the accompanying consolidated balance sheet of Delta Capital
Technologies, Inc. and Subsidiaries as of December 31, 2002, and the related
consolidated statements of operations, changes in stockholders' equity, and cash
flows for the years ended December 31, 2002 and 2001. 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 auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
from material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. 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 consolidated financial position of Delta Capital
Technologies, Inc. and Subsidiaries as of December 31, 2002, and the
consolidated results of their operations and their cash flows for the years
ended December 31, 2002 and 2001, in conformity with accounting principles
generally accepted in the United States.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has experienced recurring losses from
operations and has a net capital deficiency that raises substantial doubt about
its ability to continue as a going concern. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
May 16, 2003
|
The accompanying notes are an integral part of these financial statements
DELTA CAPITAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
December 31, 2002
ASSETS
Current Assets
Cash $ 3,635
Accounts receivable 9,620
Loan receivable, related party 10,551
-------------------
Total current assets 23,806
Furniture and Equipment, net of $22,553
of accumulated depreciation 18,004
-------------------
$ 41,810
===================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Accounts payable $ 398,997
Notes payable, stockholders 78,016
Notes payable 22,265
Loans payable 27,766
Advances from related parties 63,071
Other 2,500
-------------------
Total current liabilities 592,615
Minority Interests
Stockholders' Equity (Deficit)
Common stock, $.001 par value, 25,000,000 shares
authorized; 5,463,714 issued and outstanding 5,464
Additional paid-in capital 7,135,064
Accumulated deficit (7,691,333)
-------------------
(550,805)
-------------------
$ 41,810
===================
|
DELTA CAPITAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 2002 and 2001
2002 2001
------------------- -------------------
Revenues
$
Marketing services - $ 27,530
Investigative services 74,345
Expenses
General and administrative 562,799 693,312
Interest expense 6,900 14,011
Depreciation 6,838
Goodwill impairment 92,227
------------------- -------------------
668,764 707,323
------------------- -------------------
Net loss $ (594,419) $ (679,793)
=================== ===================
Basic and diluted loss per share $ (0.15) $ (1.10)
=================== ===================
|
DELTA CAPITAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the Years Ended December 31, 2002 and 2001
Additional
Common Stock Paid-in Accumulated
----------------------------------
Shares Amount Capital Deficit Total
------------- ----------------- ----------------------------------------------
Balance, December 31, 2000 53,179,512 $ 53,179 $ 6,039,552 $(6,417,121) $ (324,390)
Issuance of common stock for services 16,890,845 16,891 443,276 460,167
Issuance of common stock for payment
of debt 1,555,315 1,556 52,210 53,766
Cash received from exercise of stock
options 600,000 600 900 1,500
Issuance of common stock in exchange
for Subsidiary 1,000,000 1,000 49,000 50,000
Cancellation of common stock (1,000,000) (1,000) 1,000
One hundred-for-one reverse stock spli(71,503,415) (71,504) 71,504
Net loss for the year (679,793) (679,793)
------------- ----------------- ----------------------------------------------
Balance, December 31, 2001 722,257 722 6,657,442 (7,096,914) (438,750)
Issuance of common stock for services 1,817,418 1,817 180,281 182,098
Issuance of common stock for cash 1,492,857 1,493 146,307 147,800
Issuance of common stock for payment
of debt 1,102,552 1,103 109,500 110,603
Common stock issuable 328,630 329 32,534 32,863
Issuance of subsidiary stock for cash 9,000 9,000
Net loss for the year (594,419) (594,419)
------------- ----------------- ----------------------------------------------
Balance, December 31, 2002 5,463,714 $ 5,464 $ 7,135,064 $(7,691,333) $ (550,805)
============= ================= ==============================================
|
The accompanying notes are an integral part of these financial statements
DELTA CAPITAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2002 and 2001
2002 2001
-------------------- --------------------
Cash Flows From Operating Activities
Net loss $ (594,419) $ (679,793)
Adjustments to reconcile net loss to net cash
used in operating activities
Goodwill impairment 92,227
Depreciation 6,838
Issuance of common stock for services and expenses 182,098 510,167
Change in operating assets and liabilities, net of
effects from purchase of subsidiary
Accounts receivable (6,556)
Deposits 3,268 (3,268)
Accounts payable 81,273 39,510
Other 2,500
-------------------- --------------------
Net cash used in operating activities (232,771) (133,384)
Cash Flows From Investing Activities
Cash acquired in purchase of subsidiary 26,082
Purchase of furniture and equipment (2,933)
Net increase in loan receivable, related party (9,140)
-------------------- --------------------
Net cash provided by investing activities 14,009
Cash Flows From Financing Activities
Net proceeds from debt, related parties 25,200 132,287
Net proceeds from debt 7,082
Proceeds from issuance of common stock 180,663 1,500
Proceeds from issuance of subsidiary's stock for cash 9,000
-------------------- --------------------
Net cash provided by financing activities 221,945 133,787
-------------------- --------------------
Net increase in cash 3,183 403
Cash, beginning of year 452 49
-------------------- --------------------
Cash, end of year $ 3,635 $ 452
==================== ====================
No cash payments for interest or income taxes were made in 2002 or 2001.
|
6
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1. The Company and Summary of Significant Accounting Policies
Delta Capital Technologies, Inc. ("the Company") was incorporated in March
1998. The Company is a holding company that was formed to acquire both majority
and minority interests in various business operations.
The Company was in the development stage until April 2002, when its subsidiary,
Homelands Security Inc. ("Homelands"), a Nevada corporation, acquired all the
issued and outstanding shares of InterGlobe Investigation Services, Inc.
("InterGlobe") in exchange for 950,000 shares of Homelands' stock. InterGlobe's
operations are the Company's primary source of revenue. InterGlobe provides
investigation services to corporations and individuals primarily in Western
Canada that include security consulting, protection services and other
investigative services. See Note 9 for additional information on this
acquisition.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its majority-owned subsidiaries. Significant intercompany accounts and
transactions have been eliminated.
Going Concern
As shown in the financial statements, the Company incurred a net loss of
$594,419 and $679,793 in 2002 and 2001. Further, the Company has net deficiency
in capital of $550,805 as of December 31, 2002, and has virtually no working
capital. These factors raise concerns about the Company's ability to continue as
a going concern.
The Company is seeking other acquisitions but it will need additional working
capital to be successful in any future business activities. Therefore,
continuation of the Company as a going concern is dependent upon engaging in
active business operations and obtaining additional working capital. Management
is presently engaged in seeking additional working capital equity funding and
plans to continue to invest in other businesses with funds obtained. However, if
its efforts are unsuccessful, the Company may have to cease operations.
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 the above objectives and is unable to operate for the coming year.
|
Foreign Operations and Currency Translation The Company translates foreign assets and liabilities of its Canadian subsidiaries at the rate of exchange at the balance sheet date. Revenues and expenses are translated at the average rate of exchange throughout the year. Gains or losses from these translations, if significant, are reported as a separate component of other comprehensive income, until all or a part of the investment in the subsidiaries is sold or liquidated. At December 31, 2002 and 2001, there were no material gains or losses on foreign currency translations. Translation adjustments, if any, will not recognize the effect of income tax because the Company expects to reinvest the amounts indefinitely in operations. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the local functional currency are included in "General and administrative" in the consolidated statements of operations. Such amounts were not material in 2002 or 2001. Revenue Recognition Marketing and investigative services revenue is recognized as services are performed, the fees are fixed and determinable, collectibility is probable, and no significant Company obligations with regard to the services remain. Stock-Based Compensation The Company has a 2002 Benefit Plan, which is described more fully in Note 10. The Company accounts for the plan under the recognition and measurement principles of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations. Accordingly, compensation cost for stock options granted to employees will be measured as the excess, if any, of the quoted market price of the Company's stock at the date of the grant over the amount an employee is required to pay for the stock. Compensation cost for stock options granted to non-employees will be measured using the Black-Scholes valuation model at the date of grant multiplied by the number of options granted. In accordance with APB No. 25, the Company records compensation costs only for stock options issued to non-employees. No options have been issued under this plan. Warrants At December 31, 2002, the Company had outstanding warrants to purchase 443,487shares of the Company's common stock at prices ranging from $0.15 to $0.25 per share. The warrants were exercisable on issuance and expire at various dates through December 2004. |
Taxes on Income
The Company accounts for income taxes in accordance with the liability method.
Under the liability method, deferred assets and liabilities are recognized based
upon anticipated future tax consequences attributable to differences between
financial statement carrying amounts of assets and liabilities and their
respective tax bases. The Company establishes a valuation allowance to the
extent that it is more likely than not that deferred tax assets will not be
receivable against future taxable income.
Reverse Stock Split
During December 2001, the Board of Directors approved a one hundred-for-one
reverse stock split of the common stock. Par value of the common stock remained
$.001 per share. The effect of the stock split has been recognized in all share
and per share data in the accompanying consolidated financial statements, and
notes to the financial statements. Shareholders' equity accounts have been
restated to reflect the reclassification of an amount equal to the par value of
the decrease in issued common shares from the common stock account to additional
paid-in capital.
Earnings Per Share
Basic loss per share is computed by dividing net income or loss available to
common shareholders by the weighted average number of common shares outstanding
in the period. Diluted earnings per share takes into consideration common shares
outstanding (computed under basic earnings per share) and potentially dilutive
common shares. The weighted average number of shares was 3,836,349 and 615,672
for the years ended December 31, 2002 and 2001, respectively. Warrants were not
included in the computation of diluted earnings per share for all periods
presented because they were anti-dilutive.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Comprehensive Income
The Company had no items of other comprehensive income in 2002 or 2001.
New Accounting Pronouncements
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities" ("SFAS 146"), which addresses financial
accounting and reporting for costs associated with exit or disposal activities.
SFAS 146 will be applied prospectively and is effective for exit or disposal
activities initiated after December 31, 2002. The Company believes that the
adoption of SFAS 146 will have no material impact on its financial condition or
results of operations.
|
Fair Value of Financial Instruments
Financial instruments consist of cash, accounts receivable, loans receivable and
accounts payable, and notes, loans and advances payable. The fair value of these
financial instruments approximates their carrying amounts due to their
short-term nature and market rates of interest.
Cash
Cash includes the checking accounts and a certificate of deposit held at banks
in the United States and in Canada.
Accounts Receivable
Accounts receivable consists of amounts due from customers located primarily in
Western Canada. The Company considers accounts greater than 30 days old to be
past due. The Company uses the allowance method for recognizing bad debts. When
an account is deemed uncollectible, it is generally written off against the
allowance. The Company generally does not require collateral for its accounts
receivable. At December 31, 2002, management believes no allowance for
uncollectible accounts is necessary. A receivable from one company comprises 42%
of accounts receivable at December 31, 2002.
Furniture and Equipment
Furniture and equipment are recorded at cost and are depreciated using the
straight-line method over the estimated useful lives of the related assets,
ranging from three to five years. Maintenance and repairs are charged to expense
as incurred. Significant renewals and betterments are capitalized.
Statement of Financial Accounting Standard ("SFAS") No. 144, "Accounting for
Impairment or Disposal of Long-Lived Assets," became effective for years
beginning after December 15, 2001. The Company has adopted this statement in
2002, and the application of this pronouncement has not had a material effect on
the Company's financial position, cash flows or results of operations.
Note 2. Income Taxes
The reconciliation of income tax computed at the federal statutory rate to
income tax expense is as follows:
December 31
------------------------------------------
2002 2001
------------------- ------------------
Tax at statutory rate $ (202,000) $ (231,000)
Impairment of goodwill 31,400
Change in valuation allowance for deferred
tax asset 170,600 231,000
------------------- ------------------
$ $
Income tax expense - -
=================== ==================
|
The Company's deferred tax asset is as follows:
December 31,
2002
-------------------
-------------------
Deferred tax asset, from net operating loss carryforward $ 1,291,000
Less valuation allowance (1,291,000)
-------------------
-------------------
$
Income tax expense -
===================
The Company's U.S. net operating loss carryforwards will expire $405,000 in
2022, $684,000 in 2021, $2,526,000 in 2020, $143,000 in 2019, and $39,000 in
2018. The Company has approximately $75,000 of net operating loss carryforwards
for Canadian income purposes that will expire years beginning 2005 through 2009.
Note 3. Notes Payable to Stockholders
Note payable to a stockholder, due on demand, including interest at 6%, secured by $ 67,338
all assets and revenues of InterGlobe
Note payable to a stockholder, due July 2003, including interest at 6%, secured by
all assets and revenues of the Company, convertible to common stock of the Company
at $0.10 per share 10,678
-------------------
-------------------
$ 78,016
===================
Note 4. Notes Payable
Note payable to an unrelated company, due on demand, including interest at 6%, $ 20,000
unsecured
Note payable to an individual, due July 2003, including interest at 6%, secured by
all assets and revenues of the Company, convertible to common stock of the Company
at $0.10 per share 2,265
-------------------
-------------------
$ 22,265
===================
Note 5. Loans Payable and Advances from Related Parties
The Company had various loans and advances payable at December 31, 2002. The
advances from related parties of $63,071 are due on demand and are non-interest
bearing. These advances are due to an officer and shareholder of one of the
Company's subsidiaries. Loans payable are unsecured, due on demand and bear
interest at 12%.
|
Note 6. Related Party Transactions
The Company has a loan receivable from a company that is owned by an officer and
stockholder of one of the Company's subsidiaries. The loan is non-interest
bearing, unsecured and due on demand.
During 2002, the Company issued 300,000 shares to three individuals for services
in their capacity as directors of the Company.
Note 7. Supplemental Disclosures With Respect to Statements of Cash Flows
Significant noncash transactions include:
o The Company issued shares of common stock as payment of debt totaling $110,603 and $53,766 in 2002 and 2001, respectively.
o The Company issued 1,817,418 and 168,908 shares of common stock in exchange
for consulting services in 2002 and 2001, respectively. The shares were
valued at market on the issuance date.
o In 2001, the Company issued 1,000,000 (pre-reverse split) shares of its
common stock valued at fair market value at date of acquisition of $50,000
to acquire another company. The Company reacquired these shares in exchange
for the acquired company's shares resulting in a nonmonetary loss of
approximately $50,000.
Note 8. Legal Proceedings
A company filed suit against the Company for services and expenses it claimed
were owed by the Company. A court entered judgment against the Company in the
sum of CDN$174,257. The total of this judgment (US$109,806) has been recorded as
a liability included in accounts payable as of December 31, 2002, $83,406 of
which has been recorded as an expense in 2002, included in general and
administrative expenses.
In October 2000, a former employee of Delta Capital Technologies, Inc. filed a
claim asking for approximately CDN$22,600 for unpaid expenses and salary and
vacation pay, and CDN$40,000 in general damages based upon a claim of
unreasonable termination of employment. The Company has denied liability.
Settlement negotiations are ongoing. The Company has offered a settlement but
has had no contact with the former employee since 2000. The financial statements
do not include a liability for this claim as no amount is reasonably estimable.
|
Note 9. Acquisition of a Company
Effective April 15, 2002, Homelands, purchased 100% of the outstanding shares of
stock of InterGlobe, a British Columbia corporation, in exchange for 950,000
shares of Homelands common stock. The purchase was made because the Company
believes it can enhance InterGlobe's ability to raise capital and improve its
operations. As a result of this transaction, the Company's ownership of
Homelands was reduced to 51.3%. This acquisition has been accounted for under
the purchase method. Due to this acquisition, the Company recorded $92,227 of
goodwill which is the amount that the liabilities exceeded the assets acquired.
Subsequent to the purchase, management of the Company determined that the
goodwill related to this acquisition was impaired and recognized the loss from
impairment in 2002.
The following table summarizes the estimated fair values of the assets acquired
and liabilities assumed at the date of acquisition.
2002
-------------------
-------------------
Current assets $ 30,556
Capital assets 21,909
Goodwill 92,227
-------------------
-------------------
Total assets acquired 144,692
Current liabilities 69,230
Long-term liabilities 75,462
-------------------
-------------------
Total liabilities assumed 144,692
-------------------
-------------------
$
Net assets acquired -
===================
From April 15, 2002, forward, the Company's consolidated statement of operations
includes the revenue and expenses of InterGlobe. Combining InterGlobe's
operating results for the year ended December 31, 2002 and 2001, with those of
the Company results in the following pro forma data.
2002 2001
------------------- ------------------
Revenue $ 93,715 $ 160,679
Expenses 743,150 850,765
------------------- ------------------
------------------- ------------------
Pro forma net loss $ (649,435) $ (690,086)
=================== ==================
=================== ==================
Pro forma loss per share $ (0.17) $ (1.12)
=================== ==================
This pro forma information may not be indicative of the actual results of the
acquisition. The pro forma information is based on the historical financial
statements of the Company and InterGlobe and has been prepared to illustrate the
effects of the combination of the Company and InterGlobe as if the combination
occurred January 1, 2001.
The pro forma information is based on available information and certain
assumptions that management believes are reasonable. It should be read in
connection with the historical financial statements of the Company and
InterGlobe.
|
Note 10. Stock-Based Compensation
In 2002, the Company issued an aggregate of 913,736 shares of its common stock
to non-employees under its 2002 Benefit Plan (the "2002 Plan"), all of which
shares were registered under the Securities Act of 1933. The total number of
shares reserved and available for all types of grants under the 2002 Plan is
1,000,000. Total compensation expense in connection with these issuances is an
aggregate of $91,374. Shares issued are recorded at fair value at the date of
issuance.
Note 11. Subsequent Events
On January 1, 2003, Homelands acquired all the existing and outstanding shares
of Dolphin Investigations Ltd. ("Dolphin") in exchange for three hundred
thousand shares (300,000) of Homelands. The acquisition of Dolphin reduced the
Company's interest in Homelands to that of a minority interest holder. The
Company will account for their acquisition using the purchase method. The
Company has not determined the purchase price allocation or the amount of
resulting goodwill, if any.
On January 1st ,2003 Mr. Ken Maude was appointed to the board of directors of the Company.
On January 1st ,2003 Mr. Christopher Humble was appointed to the board of directors of the Company.
On January 7, 2003, the Company issued 100,000 shares of its common stock to
each of the following three individuals: Martin Tutschek, Ken Maude and
Christopher Humble for services rendered. The Company relied upon section 4(2)
of the Securities Act of 1933 in an isolated private transaction by the Company
which did not involve a public offering. The Company made this offering based on
the following factors: (1) The issuance was an isolated private transaction by
the Company which did not involve a public offering; (2) there were only three
offerees who were issued stock for consulting services; (3) the offerees did not
resell the stock but have continued to hold it since the date of issue; (4)there
were no subsequent or contemporaneous public offerings of the stock; (5) the
stock was not broken down into smaller denominations; and (6) the negotiations
for the sale of the stock took place directly between the offerees and the
Company.
In March 2003, the Company entered into an agreement to purchase for $50,000 the
license to promote, sell and deploy the Triton product line of non-depository,
indoor cash dispensers. The Company has not yet determined whether this
intangible asset will have a finite life for purposes of amortizing the cost.
On March 7, 2003, the Company issued 1,235,570 shares of its common stock to 2
individuals for cash. The individuals all reside in British Columbia, Canada.
The Company issued the shares in reliance upon Regulation S of the Securities
Act of 1933.
On March 28,2003 the Company issued 1,262,069 shares of its common stock to 4
individuals for cash. The individuals all reside in British Columbia, Canada.
The Company issued the shares in reliance upon Regulation S of the Securities
Act of 1933.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Name Age Position(s) and Office(s)
Martin Tutschek 42 President and Secretary
Ken Maude 64 Director
Christopher Humble 54 Director
Darwin C. B. Ross 42 Director
Martin Tutschek, Age 42
Mr. Tutschek born and raised in Vancouver B.C., Canada and graduated in 1983
from the University of Texas. In his current capacity he is a director and Chief
Financial Officer of Forum National Investments Ltd. an Over the Counter
Bulletin Board company (FMNIF OTC/BB) formerly Intravelnet.com. FMNIF's current
business focus is as a leisure travel and information services company. The
Company is in the business of developing, marketing, and providing travel club
and houseboat vacation club packages. Some of the Company's operations include:
a rapidly growing travel club (http://www.snowbirdvacations.com) with over
10,000 dues paying families in North America linked to the Company's network of
thousands of participating resorts and other travel service providers; a
houseboat Vacation Club providing vacation intervals to its members; a fleet of
houseboats used to service the Vacation Club; and an ocean going luxury yacht
for the small ship cruise market (Vancouver _ Alaska).
Prior to Joining FMNIF in October of 2001, Mr. Tutschek was employed by
Trader.com International for 4 four years; his most recent tenure as Manager
Business Development US operations. His primary role was the analysis,
identification and implementation of complimentary business opportunities and
the creation of the business and marketing plan for Trader.com US operations.
Prior to being promoted to this position he severed as Director of Circulation
North American Operations responsible for the delivery of over 120 weekly
publications.
Ken F. Maude, Age : 64 Ken graduated in 1964 from the University of British
Columbia with a Bachelor of Arts degree and is a Certified General Accountant.
Ken started his career as a comptroller with Sears. For the past 32 years he has
been the sole proprietor and operator of " Maude & Associates _ Certified
General Accountants, which specializes in providing tax advice for Canadian and
Foreign companies. He has been involved with start-up and emerging companies for
many years and has been instrumental in assisting them source capital.
Christopher H. Humble, Age _ 54, Certified General Accountant, Currently President & CEO of Business Transformations Inc.
Business Transformations is a full-service, business advisory consulting firm
specializing in providing short and long-term growth solutions for Emerging
Growth, Canadian companies. The company is quite unique in that it also offers
support to clients who wish to enter the USA marketplace.
Consulting expertise include: Business Plan Assessment, which incorporates the
composition of plans or the full assessment of current business plans, strategic
planning, and goal setting; Business Management, which includes contract
negotiations with banks, distributors, strategic alliances and key customers;
Market Development, market research, competitive analysis, market assessment,
marketing plans and strategy, including implementation, communications and
public relations; Organizational Development, including workflow and operations
analysis, crisis management which incorporates growth and reduction strategies;
Financial Management, which incorporates the raising of capital and securing
appropriate investors, franchising, licensing, distribution, and negotiations,
including transactions and businesses-for-sale management and finally, Human
Resource Management, which includes executive and board-level recruitment,
governance and board advisory services.
Darwyn C. B. Ross, Age 42 Mr. Ross is currently a practicing barrister and
solicitor in Manitoba where he is a partner at the law firm of Patterson Ross.
Mr. Ross has served as an officer and director of many publicly traded companies
and has been engaged in the real estate and oil and gas industries for a number
of years. As both principal and investor, Mr. Ross has been engaged in the
preliminary financings of a variety of business ventures and has participated in
multiple public financings.
Compliance with Section 16(a) of the Exchange Act
Based solely upon a review of Forms 3, 4 and 5 furnished to the Company, the
Company is aware of four persons who during the fiscal year ended December 31st
, 2002 were directors, officers, or beneficial owners of more than ten percent
of the common stock of the Company, and who failed to file, on a timely basis,
reports required by Section 16(a) of the Securities Exchange Act of 1934 during
such transitional year as follows:
Mr. Tutschek was appointed to the board of directors of the Company in October,
2000. Mr Tutschek was appointed the President of the Company on July 31st 2002.
Mr. Tutschek failed to file a Form 3 in a timely manner. Mr. Tutschek further
failed to timely file a Form 5 for the year ended December 31, 2002.
Mr. Ross was appointed to the board of directors of the Company in October,
2000. Mr Ross resigned as the President of the Company on July 31st , 2002. Mr.
Ross failed to file a Form 3 in a timely manner. Mr. Ross further failed to
timely file a Form 5 for the year ended December 31st , 2002.
ITEM 10. EXECUTIVE COMPENSATION
Executive Compensation
No compensation in excess of $100,000 was awarded to, earned by, or paid to any
executive officer of the Company during the years 2002, 2001 and 2000. The
following table provides summary information for each of the last three fiscal
years concerning cash and non cash compensation paid or accrued by the Company
to or on behalf of the president.
SUMMARY COMPENSATION TABLE
--------------------------- --------------------------------- --------------------------------------------------------
Annual Compensation Long Term Compensation
--------------------------- --------------------------------- --------------------------------------------------------
------------------------------------------------------------- ----------------------------- --------------------------
Awards Payouts
------------------------------------------------------------- ----------------------------- --------------------------
------------------- ------- -------- ------- ---------------- -------------- ------------- ---------- ----------------
Name and year salary Bonus Other Annual Restricted Securities LTIP All Other
Principal Position Compensation Stock Awards Underlying Payouts Compensation
Options
Sars #
------------------- ------- -------- ------- ---------------- -------------- ------------- ---------- ----------------
Martin Tutschek 2002 - - - 100,000 - - -
President
2001 - - - - - - -
2000 - - - - - - -
------------------- ------- -------- ------- ---------------- -------------- ------------- ---------- ----------------
Compensation of Directors
The Company's directors are not currently compensated.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the ownership of
the Company's common stock as of May 21, 2003, with respect to: (i) each person
known to the Company to be the beneficial owner of more than five percent of the
Company's common stock; (ii) all directors; and (iii) directors and executive
officers of the Company as a group. The notes accompanying the information in
the table below are necessary for a complete understanding of the figures
provided below. As of May 21, 2003, there were 7,961,353 shares of common stock
issued and outstanding.
------------------------------ ------------------------------------ --------------------------- ---------------
Title of Class Name and Address of Beneficial Amount and Nature Percent of
Owner of Beneficial Ownership class
------------------------------ ------------------------------------ --------------------------- ---------------
Common Stock Martin Tutschek
($0.001 par value) Suite 440-375 Water Street
Vancouver, B.C., Canada 2.51%
V6B 5C6. 200,000
------------------------------ ------------------------------------ --------------------------- ---------------
Common Stock Ken Maude
($0.001 par value) 303 -1130 West Pender Vancouver,
B.C. Canada 1.25%
V6E 4A4 100,000
------------------------------ ------------------------------------ --------------------------- ---------------
Common Stock Christopher Humble
($0.001 par value) 312 -151 St. Andrews Street,
Victoria, B.C., Canada 1.25%
V8V 2M9 100,000
------------------------------ ------------------------------------ --------------------------- ---------------
------------------------------ ------------------------------------ --------------------------- ---------------
Common Stock Darwyn Ross
($0.001 par value) 331 Addington Drive
Red Deer, Alberta, Canada 1.25%
T4R 3H7 100,000
------------------------------ ------------------------------------ --------------------------- ---------------
------------------------------ ------------------------------------ --------------------------- ---------------
Common Stock All officers and directors as a 500,000 6.26%
($0.001 par value) group
------------------------------ ------------------------------------ --------------------------- ---------------
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Judith Miller, a director and officer of the Company, entered into a verbal
agreement with The Company on August 26, 1998 pursuant to which Ms. Miller
received a stock option to purchase 50,000 shares of the Company's common stock,
exercisable at US$0.03 per share for a period of one year. In March, of 1999 the
Company completed a forward stock split of 4 to 1 which increased the options
granted to 200,000 shares at an exercise price of US$0.0075 per share. On August
11, 1999 the board of directors of The Company extended the expiration date of
the stock options to December 31, 1999 and on September 15, 1999 the verbal
stock option agreement was reduced to writing. On December 30, 1999, the board
of directors of The Company approved a resolution to extend the expiration date
of the stock options to March 31, 2000 and the extension was reduced to writing
pursuant to a letter dated January 7, 2000. By consent resolution dated March
16, 2000 the stock option expiration date was extended again to March 31, 2001.
On March 30, 2001, Ms. Miller exercised her option and purchased 400,000 shares
of the Company's stock for $1,500.00 ($0.0075 per share).
ITEM 13. EXHIBITS AND REPORTS ON FORM 8_K
(a) Exhibits. Exhibits required to be attached by Item 601 of Regulation S_B are
listed in the Index to Exhibits beginning on page 24 of this Form 10-KSB, which
is incorporated herein by reference.
(b) Reports on Form 8-K. The Company no reports on Form 8-K during the period covered by this report.
ITEM 14. CONTROLS AND PROCEDURES
The Company's president acts both as the Company's chief executive officer and
chief financial officer ("Certifying Officer") and is responsible for
establishing and maintaining disclosure controls and procedures for the Company.
The Certifying Officer has concluded (based on his evaluation of these controls
and procedures as of a date within 90 days of the filing of this report) that
the design and operation of the Company's disclosure controls and procedures (as
defined in Rule 13a-14(c) under the Securities Exchange Act of 1934) are
effective. No significant changes were made in the Company's internal controls
or in other factors that could significantly affect those controls subsequent to
the date of the evaluation, including any corrective actions with regard to
slight deficiencies and material weaknesses. Due to the Certifying Officer's
dual role as chief executive officer and chief financial officer, the Company
has no segregation of duties related to internal controls.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized, this 21st day of May 2003.
Delta Capital Technologies, Inc.
/s/ Martin Tutschek
By: Martin Tutschek, President and Chief Financial Officer
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Signature Title Date
/s/ Martin Tutschek
Martin Tutschek, President and Chief Financial Officer 05/23/03
/s/ Christopher Humble
Christopher Humble, Director 05/23/03
/s/ Ken Maude
Ken Maude, Director 05/23/03
/s/ Darwyn Ross
Darwyn Ross, Director 05/23/03
CERTIFICATION PURSUANT TO RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934,
AS AMENDED, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Martin Tutschek, president and chief financial officer of Delta Capital Technologies, Inc. certify that:
1. I have reviewed this annual report on Form 10-KSB of Delta Capital Technologies, Inc.;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. I am responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and have:
a) Designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to me by others within those entities, particularly during the
period in which this annual report is being prepared; b) Evaluated the
effectiveness of the registrant's disclosure controls and procedures as of a
date within 90 days prior to the filing date of this annual report (the
"Evaluation Date"); and c) Presented in this annual report my conclusions about
the effectiveness of the disclosure controls and procedures based on my
evaluation as of the Evaluation Date;
5. I have disclosed, based on my most recent evaluation, to the registrant's
auditors and the audit committee of registrant's board of directors (or persons
performing the equivalent functions): a) All significant deficiencies in the
design or operation of internal controls which could adversely affect the
registrant's ability to record, process, summarize and report financial data and
have identified for the registrant's auditors any material weaknesses in
internal controls; and b) Any fraud, whether or not material, that involves
management or other employees who have a significant role in the registrant's
internal controls; and
6. I have indicated in this annual report whether or not there were significant
changes in internal controls or in other factors that could significantly affect
internal controls subsequent to the date of my most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: May 23, 2003
/s/ Martin Tutschek
Martin Tutschek, president and chief financial officer
INDEX TO EXHIBITS
EXHIBIT PAGE
NO. NO. DESCRIPTION
--- -----------
3(i) * Articles of Incorporation dated March 4, 1998.
(Incorporated by reference from Form 10SB
filed with the SEC on January 5, 2000.)
3(ii) * Amended Articles of Incorporation
dated April 23, 1998. (Incorporated
by reference from Form 10SB filed
with the SEC on January 5, 2000.)
3(iii) * By-Laws of Delta Capital dated April 23, 1998.
(Incorporated by reference from Form 10SB filed
with the SEC on January 5, 2000.)
3(iv) 27 Amended Articles of Incorporation dated January 4, 2002.
Material Contracts
10(iii) * Share Exchange Agreement dated February 26, 2001 between Delta
Capital Technologies, Inc. and Shareholders of Au-Online.Com, Inc.
(Incorporated by reference from Form 10QSB filed
with the SEC on May 21, 2001.)
10(iv) * Stock Purchase and Sale Agreement dated May 4, 2001 between Delta
Capital Technologies, Inc. and Shareholders of UMDN, Inc. (Incorporated by reference from Form 10-QSB filed
with the SEC on May 21, 2001.)
10(iv) * Agreement rescinding Purchase and Sale Agreement of May 4, 2001,dated
October 31, 2001. . (Incorporated by reference from the 10-QSB filed with
the SEC on June 6, 2002.)
10(i) * Debt Settlement Agreement dated January 8, 2002 between Delta
Capital Technologies,Inc. and Bayside Management Corp. . (Incorporated
by reference from the 10-QSB filed with the SEC on June 6, 2002.)
10(ii) * Debt Settlement Agreement dated January 9, 2002 between Delta Capital
Technologies, Inc. and Churchill Resource Group, Inc. . (Incorporated by
reference from the 10-QSB filed with the SEC on June 6, 2002.)
10(iii) * Debt Settlement Agreement dated January 9, 2002 between Delta Capital
Technologies, Inc. and BP Equity Management Corp. . (Incorporated by
reference from the 10-QSB filed with the SEC on June 6, 2002.)
10(iv) * Debt Settlement Agreement dated January 9, 2002 between Delta Capital
Technologies, Inc. and Jeff Young. . (Incorporated by reference from the
10-QSB filed with the SEC on June 6, 2002.)
10(v) * Debt Settlement Agreement dated January 10, 2002 between Delta Capital
Technologies, Inc. and Bonanza Mgmt. LTD. . (Incorporated by reference
from the 10-QSB filed with the SEC on June 6, 2002.)
10(vi) * Debt Settlement Agreement dated January 10, 2002 between Delta Capital
Technologies, Inc. and Peter Kent Carasquero. . (Incorporated by
reference from the 10-QSB filed with the SEC on June 6, 2002.)
10(vii) * Debt Settlement Agreement dated January 10, 2002 between Delta Capital
Technologies, Inc. and Hospitality Financial Services LTD. .
(Incorporated by reference from the 10-QSB filed with the SEC on June 6,
2002.)
10(viii) * Fee Agreement dated January 2002 between Delta Capital Technologies,
Inc. and Kent Carasquero . (Incorporated by reference from the 10-QSB
filed with the SEC on June 6, 2002.)
10(ix) * Stock Purchase and Sale Agreement dated March 8, 2002 between Delta
Capital Technologies, Inc. and Homelands Security Inc. (Incorporated by reference from the 10-QSB filed
with the SEC on June 6, 2002.)
10(x) * Debt Settlement Agreement dated November 11, 2002 between Delta
Capital Technologies, Inc. and Jam Corporate Consultants Ltd.
10(xi) 24 License Agreement between Delta Capital Technologies, Inc. and
Net Cash Services. Inc.
99.1 33 Certification Pursuant to 18 U.S.C. Section 1350, Section 906 of the Sarbanes-Oxley Act of 2002.
STATE of DELAWARE
CERTIFICATE of AMENDMENT of
CERTIFICATE of INCORPORATION
of
DELTA CAPITAL TECHNOLOGIES, INC.
* First: That at a meeting of the Board of Directors of Delta Capital
Technologies, Inc., held December 20, 2001, resolutions were duly adopted
setting forth proposed amendments of the Certificate of Incorporation of said
corporation, declaring said amendment to be advisable and resulting in the entry
of Shareholder Consents to Action without a Meeting by 50.22% of the holders of
the issued and outstanding shares of the corporation, said corporation thereby
approving the proposed actions. The resolution setting forth the proposed
amendment is as follows:
Resolved, that the Certificate of Incorporation of the Corporation be amended by
changing the fourth paragraph, so that, as amended, the fourth paragraph of the
said Certificate of Incorporation shall be and read as follows: "The amount of
total authorized shares of stock of this corporation is 25,000,000 shares with a
par value of $0.001 per share."
* Second: The necessary number of shares as required by statute were voted in
favor of the amendment.
* Third: That the said amendment were duly adopted in accordance with the
provisions of Section 228 of the General Corporation Law of the State of
Delaware.
* Fourth: That the capital of said corporation shall not be reduced under or by
reason of said amendment.
IN WITNESS WHEREOF, said Delta Capital Technologies, Inc. has caused this certificate to be signed by its Secretary this 4th day
of January, 2002
BY: /s/ Judy A. Miller
------------------------------------------
Judy A. Miller, Secretary and Director
LICENCE AGREEMENT
THIS AGREEMENT is dated for reference the 1st day of March 2003.
BETWEEN:
DELTA CAPITAL TECHNOLOGIES, INC., a company duly incorporated under the laws of Delaware and
having offices located at Suite 440 - 375 Water Street, Vancouver, B.C., Canada V6B 5C6
(hereinafter called the "Purchaser")
OF THE FIRST PART
AND:
NET CASH SERVICES, INC. a company duly incorporated within the Province of British Columbia having
an office located at 8948 Corona Place, Burnaby, British Columbia, NV3J 7A5
(hereinafter together called the "Vendor" or `Principal")
OF THE SECOND PART
WHEREAS:
A. The Vendor has a license to sell and deploy the Triton product line of non-depository, indoor cash dispensers.
B. Vendor has the right to enter into this Agreement and assign its license to the Purchaser as long as Purchaser
agrees to abide by and continue to uphold the terms and conditions set forth in the "Pricing Agreement Agreement" (Schedule
"A");
C. Based upon the representations and warranties set forth herein, the
Purchaser has agreed to purchase from the Vendor and the Vendor has
agreed to sell to the Purchaser, on the terms and conditions set forth
herein, all Rights to sales and marketing of the Triton product line of
non-depository, indoor cash dispensers for the sum of $50,000 USD (the
"Purchase Price")
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
aforesaid agreements and the mutual covenants and conditions herein contained,
the Purchaser covenants and agrees with the Vendor, and the Vendor covenants and
agrees with the Purchaser as follows:
SECTION 1.
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions
For all purposes of this Agreement:
(a) "Closing Date" means the 31st day of March, 2003, or such other date as the Parties hereto may mutually agree;
(b) "Exchange" means the Over-The-Counter Bulletin Board Quote System.
(c) "Purchase Price" means, Fifty Thousand USD;
(d) "Purchaser" means DELTA CAPITAL TECHNOLOGIES, INC.
(e) "Vendor" or "Vendors" means NET CASH SERVICES, INC.
SECTION 1.2 Interpretation
For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
(a) "This Agreement" means this Agreement and all Schedules attached hereto;
(b) Any reference in this Agreement to a designated "Article",
"Section", "Schedule" or other subdivision refers to the
designated Article, Section, Schedule or other subdivision of
this Agreement;
(c) The headings used in this Agreement are for convenience only
and do not form a part of this Agreement and are not intended
to interpret, define or limit the scope, extent or intent of
this Agreement or any provision hereof;
(d) The words "herein" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to
any particular Article, Section or other subdivision of this Agreement;
(e) Unless otherwise stipulated herein, all references to currency
are deemed to mean lawful money of the United States of
America and all amounts to be calculated or paid pursuant to
this Agreement are to be calculated in lawful money of the
United States of America;
(f) The word "including", when following any general statement
term or matter, is not to be construed to limit such general
statement, term or matter to the specific items or matters set
forth immediately following such work or to similar items or
matters, whether or not non-limited language (such as "without
limitation" or "but not limited to" or words of similar
import) is used with reference thereto but rather refers to
all other items or matters that could reasonably fall within
the broadest possible scope of such general statement, term or
matter;
(g) Any reference to a statute includes and, unless otherwise
specified herein, is a reference to such statute and to the
regulations made pursuant thereto, with all amendments made
thereto and in force from time to time, and to any statute or
regulations that may be passed which has the effect of
supplementing or superseding such statute or such regulation;
(h) Words importing the masculine gender include the feminine or neuter gender and words in the singular include the
plural, and vice versa; and
(i) "Person" means an individual, corporation, body corporate,
partnership, joint venture, association, trust or
unincorporated organization or any trustee, executor,
administrator or other legal representative.
SECTION 1.3 Schedules
The following are the Schedules to this Agreement, and are incorporated herein
by reference:
Schedule "A": Pricing Agreement
Schedule "B": License to sell the Triton product line of
non-depository, indoor cash dispensers.
SECTION 2.
PURCHASE AND SALE
SECTION 2.1 Purchase and Sale
A. Based upon the representations, warranties and
covenants of the parties herein contained and subject
to the conditions herein contained, the Purchaser
hereby purchases and the Vendor hereby sells the
rights to Market and Sell, the Triton product line of
non-depository, indoor cash dispensers.
B Consideration
In consideration of the purchase and sale herein contemplated and in complete
satisfaction of the purchase price for the Technology Licence the Purchaser
shall:
(a) Advance Fifty Thousand (USD $50,000) for the Marketing and Sales Licence rights to the Triton product line of
non-depository, indoor cash dispensers.
SECTION 3.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER
SECTION 3.1 Purchaser's Representations and Warranties
The Purchaser represents and warrants to The Vendor as continuing
representations and warranties which are true and correct on the date hereof or,
if any such representation and warranty is expressed to be made and given in
respect of a particular date other than the date hereof, then such
representation and warranty shall be true and correct on such date, and all
representations and warranties herein shall be true and correct on each day
thereafter to and including the Closing Date with the same effect as if made and
given on and as of each such day, that:
(a) The Purchaser is a company duly incorporated, validly existing
and in good standing under the laws of Delaware and has the
necessary corporate capacity and is fully qualified in each
jurisdiction in which it carries on business or holds assets
to carry on the business which it now carries on and to hold
the assets which it now holds;
(b) The Purchaser holds all permits, licenses, consents and
authorities issued by any government or governmental authority
which are necessary in connection with the operation of its
business and of the ownership of its business and of the
ownership of its properties and assets;
(c) The Purchaser has not declared or paid any dividends of any
kind nor declared nor made any other distributions or any kind
whatsoever including, without limitation, by way of redemption
or repurchase of the Purchaser's Common Shares or reduction of
capital;
(d) There has been no material adverse change in the financial
condition and position of the Purchaser and no damage, loss
destruction or other change in circumstances materially
affecting the business, property or assets of the Purchaser or
its right or capacity to carry on business since the date of
the Financial Statements of the Purchaser;
(e) The Purchaser has not engaged in any transaction nor made any
disbursement or assumed or incurred any liability or
obligation or made any commitment, including, without
limitation, any forward purchase commitment or similar
obligation, to make any expenditure which would materially
adversely affect its operations, property, assets or financial
condition;
(f) The Purchaser has not purchased, leased or acquired or agreed
to purchase, lease or acquire, any additional property or
assets and has not sold, transferred, disposed, mortgaged,
pledged, charged, leased or otherwise encumbered, or agreed to
sell, transfer, dispose of, mortgage, pledge, charge, lease or
otherwise encumber, any of its property or assets other than
those acquired by it or sold, disposed of or encumbered by it
in the course of its normal and ordinary day to day business;
(g) The Purchaser has not waived or surrendered any right of substantial value and has not made any gift of money or of
any of its property or assets;
(h) The Purchaser has carried on its business in the normal course;
(i) Other than previously disclosed by the Purchaser to The
Vendor, The Purchaser does not have outstanding any continuing
contractual obligations whatsoever relating to or affecting
the conduct of its business or any of its property or assets
or for the purchase, sale or leasing of any property other
than those contracts entered into by it in the course of its
normal and ordinary day to day business;
(j) Other than previously disclosed by the Purchaser to The Vendor
and the Principals, there are no management contracts or
consulting contracts to which the Purchaser is a party or by
which it is bound, no amount is payable or has been agreed to
be paid by the Purchaser to any person as remuneration,
pension, bonus, share of profits or other similar benefit, and
no director, officer or member, or former director, officer or
member, of the Purchaser, nor any associate or affiliate of
any such person, has any claims of any nature against, or is
indebted to the Purchaser;
(k)
The Purchaser is not in default under or in breach of, or would, after notice
or lapse of time or both, be in default under or in breach of, and neither this
Agreement nor the consummation of the transactions contemplated hereby will
conflict with, constitute a default under, result in a breach of, entitle any
person or company to a right of termination under, or result in the creation or
imposition of any lien, encumbrance or restriction of any nature whatsoever upon
or against the property or assets of the Purchaser under its constating
documents, any contract, agreement, indenture or other instrument to which it is
a party or by which it is bound, any law, judgment, order, writ, injunction or
decree of any court, administrative agency or other tribunal or any regulation
of any governmental authority, and all such contracts, agreements, indentures,
or other instruments are in good standing and the Purchaser is entitled to all
benefits thereunder;
(l) There are no actions, suits proceedings or investigations
pending to the knowledge of the Purchaser, threatened against
or affecting the Purchaser, at law or in equity, before or by
any court, administrative agency or other tribunal or any
governmental authority, other than as previously disclosed to
the Principal;
(m) The Purchaser has good and marketable title or leasehold title
to all of its properties and assets shown or reflected in the
Financial Statements of the Purchaser and such properties and
assets are free and clear of any liens, charges or
encumbrances;
(n) The Financial Statements of the Purchaser are true and correct
in every material respect, were prepared in accordance with
generally accepted accounting principles and fairly reflect
the business, property, assets and financial position of the
Purchaser as at the date of the Financial Statements of the
Purchaser and the results of its operations for the period
then ended and there are no liabilities of the Purchaser,
contingent or otherwise, not reflected in the Financial
Statements of the Purchaser;
(o) There are no contractual obligations of the Purchaser
considered onerous by the Purchaser which have not been
disclosed to the Principal and the Purchaser has no
information or knowledge of facts pertaining to the Purchaser
which, if known to The Vendor, might reasonably be expected to
deter The Vendor from completing the transactions contemplated
hereby;
(p) That no change will occur in the constating documents or Articles of the Purchaser from the date hereof to the
Closing Date; and
(q) The Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware and is duly qualified as a foreign corporation in all
jurisdictions in which the failure to so qualify would have a
material adverse effect on the Company and its subsidiaries
taken as a whole. The Company is not an investment company
subject to reporting requirements of the Investment Company
Act of 1940. The Company is not a development stage company
that either has no specific business plan or purpose or has
indicated that its business is to engage in a merger or
acquisition with an unidentified company or companies, or
other entity or person.
SECTION 3.2 Covenants of the Purchaser
The Purchaser covenants and agrees with the Vendor that:
(a) The Purchaser will, both before and after the Closing Date,
execute and do all such further deeds, things and assurances
as may be required in the reasonable opinion of the Vendor's
counsel for more perfectly consummating the transactions
contemplated herein;
(b) If required by the Regulatory Authorities or considered
necessary or appropriate by the Purchaser's Counsel, the
Purchaser will forthwith take steps to convene either an
annual general meeting or an extraordinary general meeting of
its shareholders at the earliest opportunity and shall use its
best efforts to obtain the approval by the shareholders of the
terms of this Agreement;
SECTION 3.3 Negative Covenants
The Purchaser further covenants and agrees with the Principal
and The Vendor that it will not, prior to the Closing Date,
except with the prior written consent of The Vendor;
(a) Make or assume any commitment, obligation or liability which
is outside of the usual and ordinary course of the business of
the Purchaser and for the purpose of carrying on the same, but
the Purchaser will operate its properties and carry on its
business as heretofore and will maintain all of its
properties, rights and assets in good order and repair;
(b) Declare or pay any dividends on its common shares or make any other distributions or appropriations of profits or
capital;
SECTION 4.
CONDITIONS
SECTION 4.1 Purchaser's Conditions
The obligations of the Purchaser to complete the transactions
contemplated hereby are subject to the following conditions
(which are for the exclusive benefit of the Purchaser) having
been satisfied or expressly waived in writing by the
Purchaser:
(a) Prior to the Closing Date the Purchaser shall not have become
aware of any breach of any of the covenants, warranties or
representations of the Vendor set forth in PARTS 5 and 6
hereof;
(b) All of the covenants and agreements of the Vendor to be
observed or performed on or before the Closing Date pursuant
to the terms hereof shall have been duly observed or
performed; and
(c) Such documents and other materials (including any materials
requested for the Purchaser's due diligence purposes) in form
and content necessary to transfer the specific Sales and
Marketing Licence from the Vendors to the Purchaser as
Purchaser's counsel considers appropriate shall have been
delivered by the Vendors to the Purchaser.
SECTION 4.2 Vendor's Conditions
The obligations of the Vendor to complete the transactions
contemplated hereby are subject to the following conditions
(which are for the exclusive benefit of the Vendor) having
been satisfied or expressly waived in writing by the Vendor:
(a) That this Agreement and all documents prepared in connection
with this Agreement have been duly executed and authorized and
are valid and binding on the Purchaser in accordance with
their terms;
(b) All consents, approvals and authorizations of the Regulatory
Authorities required in connection with the transactions
herein contemplated have been obtained and are in full force;
(c) Prior to or on the Closing Date the Vendors shall not have become aware of any breach of any of the warranties and
representations of the Purchaser set forth in Section 3;
(d) All of the covenants and agreements of the Purchaser to be observed or performed on or before the Closing Date
pursuant to the terms hereof shall have been duly observed or performed;
(e) The Purchaser has delivered to the Vendors on the Closing Date all of the documents required to be delivered
hereunder; and
(f) The transactions contemplated by this Agreement shall have
been approved by those Regulatory Authorities having
jurisdiction on conditions reasonably acceptable to the
Vendors.
SECTION 4.3 Closing Documents
On the Closing Date the Vendor shall deliver to the Purchaser
and the Purchaser shall deliver to the Vendor, the documents
and other materials as more particularly set forth in Schedule
"A" and "B" attached hereto and forming a part hereof.
SECTION 5.
COVENANTS OF THE PRINCIPAL & VENDOR
SECTION 5.1 Vendor's and Principal's Covenants
SECTION 5.2 The Principal and the Vendor hereby covenant
and agree with The Purchaser that:
(a) The Vendor is the sole and exclusive owner of any and all
Licence rights as set forth in Schedule "A" and that the
Vendor has validly obtained and is duly vested with the right
to sell licence and that the Vendor has full right and
authority to enter into this Agreement;
SECTION 6.
REPRESENTATIONS AND WARRANTIES
SECTION 6.1 Vendor's Representations and Warranties
The Vendor represents and warrants to the Purchaser as continuing
representations and warranties, which are true and correct on the date hereof
or, if any such representation and warranty is expressed to be made and given in
respect of a particular date other than the date hereof, then such
representation and warranty shall be true and correct on such date, and all
representations and warranties herein shall be true and correct on each day
thereafter to and including the Closing Date with the same effect as if made and
given on and as of each such day, that:
(a) The Vendor will ensure that any applicable trade names are
transferred to the Purchaser in connection with the Licence
contemplated hereby, and that if deemed advisable, the Vendor
will obtain registration of such trade names or trade styles;
(b) The Vendor holds all permits, licenses, consents and
authorities issued by any government or governmental authority
which are necessary in connection with the operation of its
business and of the ownership of its business and of the
ownership of its properties and assets;
(c) There has been no material adverse change in the financial
condition and position of the Vendor and no damage, loss
destruction or other change in circumstances materially
affecting the Technology or the Vendor's right or capacity to
carry on business since the date of the last Financial
Statements of the Vendor;
(d) The Vendor has not engaged in any transaction nor made any
disbursement or assumed or incurred any liability or
obligation or made any commitment, that has not already been
disclosed to Purchaser including, without limitation, any
forward purchase commitment or similar obligation, to make any
expenditure which would materially adversely affect the
License;
(e) Other than as set forth herein, the Vendor has not purchased,
leased or acquired or agreed to purchase, lease or acquire,
any additional property or assets and has not sold,
transferred, disposed, mortgaged, pledged, charged, leased or
otherwise encumbered, or agreed to sell, transfer, dispose of,
mortgage, pledge, charge, lease, license, sub-license or
otherwise encumber, any of its property or assets other than
those acquired by it or sold, disposed of or encumbered by it
in the course of its normal and ordinary day to day business;
(f) The Vendor has carried on its business in the normal course;
(g) The Vendor does not have outstanding any continuing
contractual obligations whatsoever relating to or affecting
the Technology other than those contracts entered into by it
in the course of its normal and ordinary day to day business;
(h) The Vendor is not in default under or in breach of, or would,
after notice or lapse of time or both, be in default under or
in breach of, and neither this Agreement nor the consummation
of the transactions contemplated hereby will conflict with,
constitute a default under, result in a breach of, entitle any
person or company to a right of termination under, or result
in the creation or imposition of any lien, encumbrance or
restriction of any nature whatsoever upon or against the
License.
(i) There are no actions, suits proceedings or investigations
pending to the knowledge of the Vendor or the Principal,
threatened against or affecting the Vendor, at law or in
equity, before or by any court, administrative agency or other
tribunal or any governmental authority;
(j) The Vendor has good and marketable title to the License.
(k) With respect to the Technology, there are no contractual
obligations of the Vendor considered onerous by the Vendor or
the Principal, acting reasonably, which have not been
disclosed to the Purchaser and the Principal and the Vendor
have no information or knowledge of facts pertaining to the
Vendor which, if known to the Purchaser, might reasonably be
expected to deter the Purchaser from completing the
transactions contemplated hereby;
SECTION 7.
TERMINATION
SECTION 7.1 Method of Termination. This Agreement may be terminated by
either Party hereto if and only if the other Party (the
"Defaulting Party") is in material breach of any of its
obligations hereunder and fails to remedy such breach within
60 days following receipt by the Defaulting Party of written
notice from the non-defaulting Party advising of such breach.
SECTION 7.2 Event of Default. This Agreement will automatically terminate if
the Purchaser becomes insolvent, bankrupt ----------------- or subject to the
provisions of the Winding-up Act, Company Creditors Arrangement Act or
Bankruptcy Act, including but without limitation, if any composition,
arrangement, proposal or petition under the bankruptcy laws is entered into or
filed by or against it or if a receiver, receiver-manager or trustee in
bankruptcy or similar officer is appointed to take charge of the Purchaser's
affairs or if dissolution proceedings are commenced by or against the Purchaser
or if the Purchaser goes into liquidation, either voluntarily or under an order
of a court of competent jurisdiction, of if it makes a general assignment for
the benefit of creditors or otherwise acknowledges its insolvency.
SECTION 7.3 Confidential Information. Upon any termination of this
Agreement, the Purchaser will forthwith return to the Vendor
all documents, instruments, drawings, plans or other materials
containing confidential information relating to the
Technology, whether such confidential material is in its
possession or in the possession of any licensee or any other
person.
SECTION 8.
GENERAL
SECTION 8.1 Survival of Covenants, Representations and Warranties. The
covenants, representations and warranties of the Purchaser and
the Vendor contained herein or in certificates or documents
delivered pursuant to or in connection with this Agreement
will survive the completion of this Agreement and,
notwithstanding the completion of the transactions
contemplated in this Agreement, will continue in full force
and effect from and after the date of this Agreement.
SECTION 8.2 Indemnity to The Purchaser. Without prejudicing any other remedy available to the Purchaser at law or in
--------------------------
equity, the Vendor covenants and agrees on demand to indemnify and hold
harmless the Purchaser from and against all losses, judgments, amounts paid in
settlement of actions or claims, liabilities (whether accrued, actual,
contingent or otherwise), claims, costs, deficiencies, damages, expenses
(including but not limited to legal fees and disbursements on a solicitor and
his own client basis), demands and injury in any manner accruing from, arising
out of or with respect to or relating to any representation or warranty of the
Vendor contained herein being untrue or incorrect or its failure to observe or
perform any of its obligations pursuant to this Agreement or any other agreement
or instrument executed and delivered by it pursuant to this Agreement.
SECTION 8.3 Notices. Every notice, request, demand, direction or other
communication required or permitted to be given pursuant to
this Agreement by any party to another will be deemed to be
well and sufficiently given if in writing and delivered or
transmitted by facsimile to the parties at the addresses first
above written or to such other address as is specified by the
particular party by notice to the others, and any such notice
shall be deemed to be received on the day of such delivery.
SECTION 8.4 Amendment or Termination. Except as otherwise provided
herein, this Agreement may not be amended or terminated except
by an instrument in writing executed by both parties hereto.
SECTION 8.5 Transfer or Assignment. This Agreement and the rights hereunder may not be transferred or assigned by any
----------------------
party without the written consent of both parties.
SECTION 8.6 Further Agreements. The Parties hereto agree that they
will prepare, execute and deliver such further or other
agreements as may be necessary or expedient to give effect to
the transactions contemplated hereunder.
SECTION 8.7 Governing Law. This Agreement is and will be deemed to
have been made in Nevada and for all purposes will be governed
exclusively by and construed and enforced in accordance with
the laws prevailing in Delaware and British Columbia and the
rights and remedies of the parties will be determined in
accordance with those laws.
SECTION 8.8 Cumulative Remedies. The rights of the parties provided in
this Agreement are cumulative and no exercise or enforcement
by the parties of any right or remedy under this Agreement
will preclude the exercise or enforcement by the parties of
any other right or remedy under this Agreement or otherwise
available to the parties at law or in equity.
SECTION 8.9 Counterparts. This Agreement may be executed in any number
of counterparts with the same effect as if both parties to
this Agreement had signed the same document and all
counterparts will be construed together and constitute one and
the same instrument.
SECTION 8.10 Time. Time is of the essence in the performance of each obligation under this Agreement.
----
SECTION 8.11 Further Assurances. The parties hereto will execute and
deliver all such further documents and instruments and do all
such further acts and things as any other party reasonably
requests to evidence, carry out and give full effect to the
terms, conditions, intent and meaning of this Agreement.
Enurement. This Agreement will enure to the benefit of and be binding on the
respective successors and permitted assignees of both
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parties.
IN WITNESS WHEREOF this Agreement has been executed by the parties hereto on the
day and date first above written.
THE COMMON SEAL OF )
DELTA CAPITAL TECHNOLOGIES, INC. )
was hereunto affixed in the )
presence of: )
) C/S
)
Authorized Signatory )
THE COMMON SEAL OF
NET CASH SERVICES, INC. )
was hereunto affixed in the presence of: )
)
) C/S
-----------------------------------------------------------
Authorized Signatory )
EXHIBIT 99.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the annual report of the Delta Capital Technologies, Inc.
("Company") on Form 10-KSB for the period ending December 31, 2002 as filed with
the Commission on the date hereof, I, Martin Tutschek, president and chief
financial officer of the Company, certify, pursuant to 18 U.S.C. section 1350,
as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) This 10-KSB complies with the requirements of section 13 (a) or 15 (d) of the Securities Exchange Act; and
(2) The financial information contained in this Form 10-KSB fairly presents, in
all material respects, the financial condition and result of operations of the
Company.
/s/ Martin Tutschek
Martin Tutschek, President and Chief Financial Officer
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