================================================================================
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
AMENDMENT NO. 8
GENERAL FORM FOR REGISTRATION OF SECURITIES
Pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934
DELTA CAPITAL TECHNOLOGIES, INC.
(Name of Small Business Issuer in its Charter)
<TABLE>
<CAPTION>
<S> <C>
Delaware, USA 98-0187705
(State of Other jurisdiction of incorporation or organization) (IRS Employer ID No.)
</TABLE>
SUITE 255, 999 - 8TH STREET, SW
CALGARY, ALBERTA T2R 1J5 CANADA
(Address of Principal Executive Offices)
(403) 244-7300
(Issuer's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of each exchange on which registered
------------------- -----------------------------------------
Common Shares N/A
Securities registered pursuant to Section 12(g) of the Act: Common Shares with a
par value of $0.001
Exhibit index is included on page 46 .
================================================================================
<PAGE>
2
FORM 10-SB
For the Fiscal Year Ended December 31, 1998
And Period Ended September 30, 1999
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
ITEM 1 - DESCRIPTION OF BUSINESS
Summary..............................................................................4
Software.............................................................................4
Shareholdings........................................................................5
Research and Development.............................................................6
Delta Capital's Products.............................................................6
Delta Capital's Marketing Program....................................................7
Delta Capital's Competition..........................................................9
Acquisition of Trade Names...........................................................9
Employees............................................................................10
Risk Factors.........................................................................10
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION.............................................................13
Marketing Program....................................................................14
ITEM 3 - DESCRIPTION OF PROPERTY.......................................................16
ITEM 4 - SECURITY OWNERSHIP OF CERTAIN BENEFICAL OWNERS
AND MANAGEMENT
Security Ownership of Certain Beneficial Owners......................................17
ITEM 5 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS...........................................................18
ITEM 6 - EXECUTIVE COMPENSATION........................................................19
Pension Plans........................................................................19
Compensation of Directors............................................................19
Executive Compensation...............................................................19
Option Grants in Last Fiscal Year....................................................20
ITEM 7 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................................20
ITEM 8 - DESCRIPTION OF SECURITIES
Common Stock.........................................................................22
Transfer Agent and Registrar.........................................................22
PART II
ITEM 1 - MARKET PLACE AND DIVIDENDS OF DELTA CAPITAL'S
COMMON EQUITY AND OTHER SHAREHOLDER MATTERS
Market Information...................................................................22
Dividend Policy......................................................................23
Options Exercised....................................................................23
Warrants Exercised...................................................................23
ITEM 2 - LEGAL PROCEEDINGS.............................................................23
ITEM 3 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE...........................................23
</TABLE>
<PAGE>
3
<TABLE>
<CAPTION>
<S> <C>
ITEM 4 - RECENT SALES OF UNREGISTERED SECURITIES.......................................23
ITEM 5 - INDEMNIFICATION OF DIRECTORS AND OFFICERS.....................................24
FINANCIAL STATEMENTS...................................................................25
EXHIBITS...............................................................................44
SIGNATURES.............................................................................44
</TABLE>
<PAGE>
4
PART I
ITEM 1 - DESCRIPTION OF BUSINESS
SUMMARY
DELTA CAPITAL TECHNOLOGIES, INC. ("Delta Capital") was incorporated under the
laws of Delaware on March 4, 1998. Delta Capital originally had authorized share
capital of 1,500 common shares with a par value of $0.001. On April 27, 1998
Delta Capital filed an amendment to its Certificate of Incorporation increasing
its share capital to 25,000,000 common shares with a par value of $0.001 per
share. On March 15, 1999 Delta Capital underwent a one for four stock split
bringing the total number of shares issued and outstanding from 2,200,000 to
8,800,000 shares issued and outstanding. As at January 10, 2000 there were
13,800,000 common shares of Delta Capital issued and outstanding. Delta
Capital's principal business office and registered and records office is at
Suite 255, 999 - 8th St. SW Calgary, AB T2R 1J5 Canada.
Delta Capital is in the business of providing e-Business software and support
services.
Between March 4, 1998 and June 1, 1999 Delta Capital's focus was directed
towards assessing various potential acquisition targets in the Internet and
related fields. During that period Delta Capital spent minimal funds conducting
its assessment of various businesses. Funds required for administration of Delta
Capital during fiscal years ended December 31, 1998 and subsequent months came
from monies raised from initial investors.
SOFTWARE
On June 1, 1999 Delta Capital acquired the rights to an exclusive worldwide
license to the relBuilder Enterprise Suite of business intelligent e-Commerce
and e-Business software (the "Software") from 827109 Alberta Ltd. ("AltaCo"), an
Alberta, Canada based private company. AltaCo was incorporated on April 16, 1999
and changed its name to Delta Enterprise Technologies (Canada) Inc. effective
September 29, 1999. The rights were acquired pursuant to a License Agreement
dated June 1, 1999 between Delta Capital and AltaCo, as amended by a Letter
Agreement dated September 2, 1999 (the "License Agreement"). The Software
application includes modules for e-Commerce, e-Project Management, e-Customer
Services, e-Document Assembly, e-Contact Management, e-Business Intelligence and
e-Back office and a Core Technology which models business rules and
relationships. The License Agreement allows Delta Capital to distribute licenses
for the Software through sub-licenses.
The License Agreement requires Delta Capital to pay to AltaCo a non-refundable
lump sum license fee of $50,000 by November 1, 1999, which has been paid by
Delta Capital. Under the License Agreement, Delta Capital is required to pay a
royalty payment of 15% of net sales with minimum amounts of C$50,000 in the
first year, C$200,000 in the second year, and C$300,000 in the third year (the
"Royalty Payments"). The term of the License Agreement is for three years
commencing June 1, 1999 and upon expiration of the term, Delta Capital may renew
the License Agreement for an unlimited term for the sum of one ($1.00) dollar.
AltaCo acquired its rights to the Software from SiCom Solutions Inc., an
Alberta, Canada based private company ("SiCom") on identical terms to the
License Agreement.
<PAGE>
5
SHAREHOLDINGS
Pursuant to an agreement dated June 1, 1999 between Delta Capital and AltaCo
(the "Share Exchange Agreement") Delta Capital agreed to issue to AltaCo
5,000,000 shares of Delta Capital in exchange for 5,000,000 shares of AltaCo.
Delta Capital has attributed a value of $0.50 per share for the 5,000,000 shares
issued to AltaCo based on the attributed value of $0.50 per share for each of
the 5,000,000 AltaCo shares acquired. Management is of the view that the proper
way to value the 5,000,000 Delta Capital shares is to equate such shares to the
value of the 5,000,000 AltaCo shares received in exchange. However, the value of
the 5,000,000 AltaCo shares cannot be determined at this stage and therefore the
value of the 5,000,000 Delta Capital shares cannot be presently determined. The
exchange of the shares was completed on September 9, 1999. As a result of the
shares of AltaCo issued to Delta Capital pursuant to the Share Exchange
Agreement, Delta Capital became the second largest single shareholder of AltaCo
holding 35.71% of the issued and outstanding shares of AltaCo. Delta Capital's
significant shareholdings in AltaCo provide it with the ability to have a
significant influence on the operations of AltaCo.
Paul Davis, the President , CEO and Director of Delta Capital, AltaCo and SiCom
does not directly own any shares of Delta Capital but personally owns 48.21% of
the issued and outstanding shares of AltaCo and 62.82% of SiCom. Kevin Wong, a
Director of Delta Capital and Vice President Technology and Director of AltaCo
does not directly own any shares of Delta Capital but personally owns 16.07% of
the issued and outstanding shares of AltaCo and 8.8% of SiCom. Rajesh Taneja a
Director of Delta Capital and Vice President Marketing of AltaCo owns no shares
of Delta Capital.
Delta Capital has adopted a policy whereby directors are required to disclose
any interest they have in proposed transactions or in entities with which Delta
Capital is proposing to do business. These directors must abstain from voting on
any directors' resolutions approving the proposed transactions. In addition, the
general principals of corporate law require a director to act in the best
interests of the shareholders of the company on whose board the director sits.
As a result of the overlap of the directorship and the shareholdings of
Management in Delta Capital, AltaCo and SiCom, certain conflicts may develop
amongst Management of those companies. It is anticipated that in the future
AltaCo will be engaged by Delta Capital to further develop the Software based on
industry competitive rates. To the extent that certain members of Management of
Delta Capital do not own shares in Delta Capital but do own shares in AltaCo and
SiCom potential conflicts could develop. A transaction between Delta Capital and
AltaCo could have the effect of Management having a bias in favour of AltaCo in
the transaction as a result of Management's shareholdings in AltaCo. Similarly,
as a result of Management's shareholdings in SiCom, Management could potentially
have a bias towards SiCom in any transaction between AltaCo and SiCom.
As President and CEO, and Director of Delta Capital, AltaCo and SiCom, Paul
Davis has an obligation to act in the best interests of the shareholders of each
of those companies. As a result of owning shares in AltaCo but not owning shares
of Delta Capital, his shareholding interest in AltaCo may conflict with his
obligation to act in the best interests of Delta Capital and AltaCo.
<PAGE>
6
The potential conflicts of Management referred to above is, however, mitigated
to some extent as a result of the 5,000,000 shares of Delta Capital held by
AltaCo. To the extent that Delta Capital is successful, the 5,000,000 shares of
Delta Capital held by AltaCo will increase in value. In such event the value of
the AltaCo shares held by Messrs. Davis and Wong will also increase since the
5,000,000 Delta Capital shares represents a major asset of AltaCo. On that basis
the interests of Messrs. Davis and Wong in AltaCo is consistent with their
interests in Delta Capital. In any event, any decision made by any of the
directors of Delta Capital or AltaCo must be made in accordance with their
duties and obligations to deal fairly and in good faith with those companies.
RESEARCH AND DEVELOPMENT
To date, Delta Capital has relied on research and development of the Software
previously funded by SiCom. Delta Capital has not, to date, provided AltaCo with
additional funding over and above Delta Capital's royalty payment obligations
provided for in the License Agreement. Accordingly, none of the costs associated
with research and development of the Software have, to date, been borne by Delta
Capital's customers. As the licensee of the Software , it will be Delta
Capital's responsibility to fund and direct future development of the Software.
It is anticipated that Delta Capital will engage AltaCo to continue to develop
the Software on a fair market, fee for services basis, under direction from
Delta Capital. Similarly, it is anticipated that AltaCo will provide support
services to Delta Capital to ensure effective implementation of the Software at
Delta Capital's client sites. Delta Capital will pay AltaCo fees based on
industry average rates for the services it is provided.
DELTA CAPITAL'S PRODUCTS
The Software consists of a software engine called the "relBuilder" which is the
Core Technology for a suite of six enterprise-class applications which permit
companies and organizations to engage in e-Business. These applications are
fully developed and are currently marketed as product release number 1.5.
The Software applications are as follows:
1. ENTERPRISE COMMERCE APPLICATION: Delta Capital's Enterprise e-Commerce
Application provides merchants with the ability to conduct online sales
and merchandizing activities over the Internet. The Enterprise
e-Commerce Application has features which permit merchants to implement
cross-selling, up-selling, comparative shopping and other merchandizing
techniques designed to enhance their business. This technology can
operate on a standalone basis or can enhance other e-Commerce
solutions.
2. BACK OFFICE APPLICATION: The Back Office Application integrates
existing general ledger, accounts receivable and payable, inventory,
warehouse and other related back office functions with the Core
Technology utilizing IBM's new "San Francisco" software architecture.
3. ENTERPRISE DOCUMENT ASSEMBLY APPLICATION: The Document Assembly
Application is a content manager and document assembly tool that
maximizes re-use of corporate information by bringing together data
that is usually scattered across company-wide systems.
<PAGE>
7
4. ENTERPRISE PROJECT MANAGEMENT APPLICATION: The Project Management
Application is equipped to handle cross-project resource analysis,
cross-project roll-ups of complex costing and estimating functions.
This technology integrates with such leading software asMicrosoft
Exchange or Lotus Notes to provide project-based calendaring and
scheduling. The Project Management Application provides a real-time
graphical presentation of underlying data
5. ENTERPRISE CUSTOMER SERVICE APPLICATION: The Customer Service
Application has the ability to map complex call requirements, implement
sophisticated operational logic and can integrate with a web server.
This allows web-based customer self-service or call center operations
from within the office environment to across the globe.
6. ENTERPRISE CONTACT MANAGEMENT APPLICATION: The Contact Management
Application integrates with leading directory servers such as Microsoft
Exchange and Lotus Notes to enable highly complex mapping of names,
addresses, companies, contact information, corporate hierarchies,
active and non-active projects, and histories.
DELTA CAPITAL'S MARKETING PROGRAM
PARTNER PROGRAM
Delta Capital has commenced building a network of e-Commerce and e-Business
knowledgeable consultants and solutions providers throughout North America.
Delta Capital plans to provide a products and services package directed toward
established consultants known as Partners - who agree to utilize Delta Capital's
software in providing e-Commerce and e-Business solutions for their clients
Delta Capital plans to penetrate the top 23 American and Canadian markets
through its Partner Program over the course of the next 18 months with its first
target markets being Seattle and Vancouver. Delta Capital is currently pursuing
vertical markets in Education, Oil and Gas, and Manufacturing.
Delta Capital has currently developed two partners in the consulting field for
its Partnership Program. The partners are Khyber Pass Distributing, an
entertainment consulting company and Matradyne Corporation, a marketing business
consultancy. Both of these partners have entered into agreements with Delta
Capital to re-market Delta Capital's Software and implement it for e-Commerce or
e-Business purposes with their clients. Based partly on experience gained from
these relationships and partly from norms established by standard industry
remarketing practices, Delta Capital is planning its first quarter Year 2000
rollout of software and services.
The Partner Program also includes development of relationships with internet
service providers ("ISP") to provide them with the tools and capabilities to
enable their clients to do business over the Internet. To that effect, Delta
Capital recently entered into its first such sub-licensing agreement with
Imaginet Communication Group Inc., a company which offers Internet access and
web hosting services in Canada and the USA through its rapidly growing Imaginet
ISP Franchise Network.
<PAGE>
8
DIRECT CLIENTS
In anticipation of Delta Capital fully launching its Partner Program, it has
developed direct relationships with six client/customer companies: Shaw
Communications Inc., a cable company; Fairplay Network, a retail organization;
Chevron Canada Resources, an oil company; Oil & Gas Trading Partners Network, an
oil and gas industry information initiative; Rand Worldwide Inc., an integrated
manufacturing company and the I-School Network, an interactive education network
system based in Calgary, Alberta. The direct sale of the software and service
package is designed to develop examples of Delta Capital's technology at work.
These examples will then be used as proof of performance when Delta Capital
rolls out its product and service offering in the year 2000. Delta Capital is
not dependent upon any single customer or client for its future success.
STRATEGIC ALLIANCES
In addition to its Partner Program, Delta Capital has developed and will
continue to develop strategic alliances with various entities. Typically the
strategic alliances result in Delta Capital marketing another company's products
or Delta Capital utilizing other companies' software products within the
company's product line. Not only does this establish a business relationship,
but it also facilitates a sharing of information and an exchange of ideas
between the parties.
Delta Capital has a strategic alliance with BCE-Emergis of Montreal, to remarket
various credit card clearing services. In accordance with its arrangement with
BCE-Emergis, Delta Capital includes BCE-Emergis' credit card clearing services
technology as part of Delta Capital's product. Detla Capital pays BCE-Emergis a
fee for use of BCE-Emergis' technology and includes such costs in the cost of
Delta Capital's products.
Smart Technologies Inc.of Calgary, has an agreement with AltaCo to include that
company's "Smart Ideas" concept mapping tools as a part of the standard user
interface options of the relBuilder software engine as marketed by Delta
Capital. Smart Technologies Inc.'s technology is included or "imbedded" as part
of Delta Capital's technology. Delta Capital pays Smart Technology Inc. a fee
for use of Smart Technology Inc.'s technology and includes such costs in the
cost of Delta Capital's product.
As Delta Capital's business develops, it is anticipated that it will utilize the
services and product offerings of industry leaders in enhancing Delta Capital's
product/service offering while at the same time encouraging use of the
relBuilder core technology and software suite. These future alliances will be
contract-based agreements aimed at enhancing Delta Capital's position in the
marketplace by leveraging the knowledge, expertise and sales networks of the
parties with whom it forms alliances to the mutual benefit of both.
CORE TECHNOLOGY PROGRAM
Delta Capital will seek affiliations with major e-Commerce and e-Business
organizations to market its relBuilder core technology. Exposure of Delta
Capital's core technology began
<PAGE>
9
with Delta Capital's IBM "San Francisco" technology Fast Start award and
participation in the June 1999 Java One conference. It has continued with Delta
Capital's technical team, assisted by IBM Rochester, Maryland based San
Francisco and porting centre teams, successfully completing certain tests of the
relBuilder software suite. The tests conducted were those types of tests
typically conducted by IBM in assessing software capabilities. Delta Capital
Technologies has no formal relationship with IBM at the time of this filing. It
has entered into discussions with IBM to establish co-marketing and
co-development opportunities within IBM's umbrella of e-Business initiatives.
While management is confident about the development of this relationship, there
is no assurance that any agreement will result from these discussions.
DELTA CAPITAL'S COMPETITION
Delta Capital's software and services offering crosses over many business
boundaries and encounters a variety of competitors which serve various segments
of the marketplace. There is no known direct competitor with both an intelligent
e-Business engine technology and a suite of fully integrated e-business
applications. Delta Capital's management believes that its proprietary
relBuilder software engine combined with its six enterprise-class applications
provide it with the capability and flexibility to effectively exploit selected
target markets as discussed in the marketing section. Alternatively, Delta
Capital can work with established marketplace players to enhance their software
and services offerings through sub-licensing its relBuilder core technology,
also as discussed in the marketing section.
The Software named "Knowledge Broker" from Black Pearl Software uses
relationship modeling and classic analytical business intelligence to indicate
trends and opportunities in a manner similar to those functions as found in
Delta Capital's relBuilder software suite. While Knowledge Broker has much in
common with Delta Capital's products.Knowledge Broker does not have e-business
modules which match Delta Capital's six enterprise-class applications.
There are many large companies and organizations which provide competition in
the provision of software competitive to Delta Capital's six enterprise-class
applications. IBM is a major and active e-Business force under its WebSphere
e-Business Solutions banner. Microforum Inc. Scient Corporation, Razorfish Inc.,
Proxicom Inc., and a variety of middle market companies provide software
solutions combined with consulting services and, as such, are competitors in
various segments of the market. Specialist companies, led by Blue Martini
Software, have developed e-Commerce and e-Catalogue implementations to produce
sophisticated Internet-based merchandizing and sales programs.
ACQUISITION OF TRADE NAMES
Pursuant to an agreement dated July, 1999, as amended December 3, 1999, between
Delta Capital and Rajesh Taneja, Delta Capital agreed to pay Mr. Taneja $3,000
for his rights and ownership to the British Columbia sole proprietorship company
names "Clear Choice Media" and "Clear Choice Technologies". Delta Capital
acquired the rights to the names from Mr. Taneja who is a director of Delta
Capital because management felt that the names would be valuable for future
marketing of software.
<PAGE>
10
EMPLOYEES
Delta Capital currently has two full time employees who are each paid $3,000 per
month plus expenses pursuant to verbal agreements entered into with Delta
Capital that commenced on June 15, 1999. Delta Capital also currently has two
part time individuals under contracts pursuant to which one individual receives
Cdn $2,500 per month pursuant to a contract which commenced June 15, 1999 and
the other individual receives Cdn $7,500 a month pursuant to a contract which
commenced July 15, 1999. The Cdn $2,500 part time employee spends 50% of her
time on Delta Capital administration and the balance of her time providing
administrative services to non-competitive clients through her wholly owned
company called J.A.M. Corporate Consultants Inc. The Cdn $7,500 individual
spends 75% of his time on Delta Capital business and the balance consulting to
non-competitive companies.
RISK FACTORS
Delta Capital's business is subject to numerous risks, including the following:
LIMITED OPERATING HISTORY AND MINIMAL REVENUE AND ASSETS MAY RESULT IN LOSSES
AND DIFFICULTY IN OBTAINING FINANCING: Delta Capital has had limited operating
history, has received minimal revenue from operations and has minimal assets.
Delta Capital will, in all likelihood, sustain operating expenses in excess of
revenues until it is better established and will therefore require additional
funding to continue operations and to have sufficient working capital to sustain
operations. Because Delta Capital has minimal assets it may be difficult or even
impossible for Delta Capital to obtain debt financing at this stage in Delta
Capital's development. No assurances can be given that Delta Capital will
operate profitably in the future or that it will be able to obtain further
financing.
WITHOUT FURTHER FINANCING DELTA CAPITAL MAY CEASE TO BE A GOING CONCERN. Delta
Capital will need additional working capital to be successful in its planned
activity and continuation of Delta Capital as a going concern is dependent upon
obtaining the working capital necessary. Management of Delta Capital has
developed a strategy which it believes will accomplish the objective of
obtaining further funding through additional equity funding and long term
financing, which will enable Delta Capital to operate in the future. Although
Management believes it will be able to obtain such funding for Delta Capital
there is no assurance they will be successful in order to keep Delta Capital
operating as a going concern.
NEW AND DEVELOPING TECHNOLOGIES/MARKET CONDITIONS MAY RESULT IN PROJECTIONS NOT
BEING ACHIEVED: The e-Commerce/e-Business marketplaces, along with vertical
applications, have been identified by Management as significant emerging market
segments with substantial projected growth potential. Should these market
segments not develop in the manner expected, or should they fail to develop as
quickly as anticipated, Delta Capital's business, sales, finances and operating
results could be materially and adversely affected resulting in Delta Capital
being less profitable than anticipated.
STRATEGIC PARTNERS MAY NOT PRODUCE ANTICIPATED SALES: The revenues of Delta
Capital pertaining to product sales, are dependent to a large degree on the
ability of its strategic partners to generate transaction volumes and provide
new markets for products of Delta Capital. Delta Capital generates sales by
supplying strategic partners with products and services that the partners market
to their customers. If Delta Capital's strategic partners are unsuccessful in
their businesses or if a substantial number of Delta Capital's strategic
partners cease doing business with Delta Capital, Delta Capital will sell fewer
products and services to strategic partners and Delta Capital's revenue will be
impacted negatively.
<PAGE>
11
DEPENDENCE UPON KEY PERSONNEL: Success of Delta Capital depends to a significant
degree upon the continued contribution of its Management. Current Management
have been involved in the development of the Software from the first stages of
its development. Management's intimate knowledge of the Software, together with
its vision of how the Software should be developed in the future, makes Delta
Capital's future success highly dependant on current Management. Because the
computer software industry exists in a rapidly changing environment, it is
important for key personnel to have a historic appreciation of the evolution of
a given piece of software in the context of a provider's corporate strategy.
Management believes that customers of Delta Capital's products make their
purchase decisions based on existing capabilities of the software and also
because they believe Delta Capital has personnel that is capable of upgrading
and causing the Software to be further developed in the future. Loss of current
personnel may result in customers losing confidence in Delta Capital's future
capability to deliver competitive Software in the future.
At present Delta Capital has no key-man life insurance on its key personnel.
Further, at present, Delta Capital does not have written employment contracts
with its key personnel and accordingly Delta Capital would not be able to
contractually prevent key personnel from leaving Delta Capital. Although Delta
Capital does not believe that any of its key personnel are considering
retirement or planning on leaving Delta Capital for other reasons, there is no
assurance that one or more of the key personnel won't leave Delta Capital in the
future.
LACK OF EXPERIENCE OF MANAGEMENT COULD LESSEN PROFITABILITY: Management of Delta
Capital has only limited business experience in running an operating company and
Management has no experience in operating a public company. In implementing a
successful marketing plan for Delta Capital's services, management lacks
experience which could result in Delta Capital being less efficient with its use
of funds than if Management had more experience. Additional management skills
and knowledge will be required to operate Delta Capital's business profitably if
sales volumes and revenues increase, and the number of employees increase.
Although Management intends to acquire more experienced personnel in the future
as Delta Capital grows, until that occurs Delta Capital may be less profitable.
RISK OF OBSOLESCENCE: Unless Delta Capital can continue to successfully develop
and upgrade the Software,, the Software may become obsolete compared with other
software which is introduced to the market place, Because software evolves
rapidly it is important for producers to be constantly refining and upgrading
their software products to remain competitive. Although Management believes that
Delta Capital's personnel have the required talent to cause the Software to
remain competitive, there is no assurance that the Software will not become
obsolete.
POTENTIAL CONFLICTS OF INTEREST MAY ARISE: Paul Davis, the President , CEO and
Director of Delta Capital, AltaCo and SiCom does not directly own any shares of
Delta Capital but personally owns 48.21% of the issued and outstanding shares of
AltaCo and 62.82% of SiCom. Kevin Wong, a Director of Delta Capital and Vice
President Technology and Director of AltaCo does not directly own any shares of
Delta Capital but personally owns 16.07% of the issued and outstanding shares of
AltaCo and 8.8% of SiCom. Rajesh Taneja is a Director of Delta Capital and is
Vice President Marketing of AltaCo but owns no shares of either of those
companies.
<PAGE>
12
As a result of the overlap of the directorship and the shareholdings of
Management in Delta Capital, AltaCo and SiCom, certain conflicts may develop
amongst Management of those companies. It is anticipated that in the future
AltaCo will be engaged by Delta Capital to further develop the Software based on
industry competitive rates. To the extent that certain members of Management of
Delta Capital do not own shares in Delta Capital but do own shares in AltaCo and
SiCom potential conflicts could develop. A transaction between Delta Capital and
AltaCo could have the effect on Management, as a result of its shareholdings in
AltaCo, having a bias in favour of AltaCo in the transaction. Similarly, as a
result of Management's shareholdings in SiCom, Management could potentially have
a bias towards SiCom in any transaction between AltaCo and SiCom.
As President and CEO, and Director of Delta Capital, AltaCo and SiCom, Paul
Davis has an obligation to act in the best interests of the shareholders of each
of those companies. As a result of owning shares in AltaCo but not owing shares
of Delta Capital, his shareholding interest in AltaCo may conflict with his
obligation to act in the best interests of Delta Capital and AltaCo.
COMPETITION MAY RESULT IN LOWER MARKET SHARE AND LOWER PROFITABILITY: The market
for e-commerce is intensely competitive, evolving and subject to rapid
technological change. Intensity of competition is likely to increase in the
future. Increased competition from new competitors is likely to result in loss
of market share, which could negatively impact Delta Capital's business.
Competitors vary in size, and in scope and breadth of the products and services
offered and Delta Capital may receive competition from several major enterprise
software developers. In addition, because there are relatively low barriers to
entry in this market, additional competition from other established and emerging
companies may develop.
Many current and potential competitors have longer operating histories,
significantly greater financial, technical, marketing and other resources than
Delta Capital. As well, many other companies have significantly greater name
recognition and a larger base of customers. Many competitors have
well-established relationships with clients and potential clients, and have
extensive knowledge of the industry. Current and potential competitors have
established or may establish cooperative relationships among themselves or with
third parties to increase the ability of their products to address customer
needs. Accordingly, it is possible that new competitors, or alliances among
competitors, may emerge and rapidly acquire significant market share which may
result in lower sales of the Software resulting in Delta Capital being less
profitable.
GROWTH AND EXPANSION MAY TAX DELTA CAPITAL'S RESOURCES RESULTING IN CUSTOMER
DISSATISFACTION: Delta Capital's anticipated growth may place a significant
strain on Delta Capital's administrative, operational and financial resources
and increase demands on its systems and controls. As Delta Capital increases its
service offerings and expands its targeted markets, there will be additional
demands on Delta Capital's customer support, sales and marketing and
administrative resources and network infrastructure. There can be no assurance
that Delta Capital's operating and financial control systems and infrastructure
will be adequate to maintain and effectively monitor future growth. The failure
to continue to upgrade the administrative, operating and financial control
systems or the emergence of unexpected expansion difficulties could result in
customer dissatisfaction with attendant loss of sales.
<PAGE>
13
DELTA CAPITAL'S STOCK DEEMED TO BE A PENNY STOCK WHICH MAY RESULT IN DECREASED
LIQUIDITY: The Securities and Exchange Commission adopted Rule 15g-9 which
established the definition of a "penny stock", for purposes relevant to Delta
Capital, as any equity security that has a market price of less than $5.00 per
share or with an exercise price of less than $5.00 per share, subject to certain
exceptions.
For any transaction involving a penny stock, unless exempt the rules require:
(i) that a broker or dealer approve a person's account for transactions in penny
stocks; and (ii) the broker or dealer receive from the investor a written
agreement to the transaction, setting forth the identity and quantity of the
penny stock to be purchased. In order to approve a person's account for
transactions in penny stocks, the broker or dealer must: (i) obtain financial
information and investment experience and objectives of the person; and (ii)
make a reasonable determination that the transaction in penny stocks are
suitable for that person and that person had sufficient knowledge and experience
in financial matters to be capable of evaluating the risks of transactions in
penny stocks. The broker or dealer must also deliver, prior to any transaction
in a penny stock, a disclosure schedule prepared by the Commission relating to
the penny stock market, which, in highlight form, (i) sets forth the basis on
which the broker or dealer made the suitability determination; and (ii) that the
broker or dealer received a signed, written agreement from the investor prior to
the transaction.
Disclosure also has to be made about the risks of investing in penny stock in
both public offering and in secondary trading, and about commissions payable to
both the broker-dealer and the registered representative, current quotations for
the securities and the rights and remedies available to an investor in cases of
fraud in penny stock transactions. Finally, monthly statements have to be sent
disclosing recent price information for the penny stock held in the account and
information on the limited market in penny stocks. As a result of the penny
stock trading restrictions, brokers or potential investors may be reluctant to
trade in Delta Capital's securities which may result in less liquidity for Delta
Capital's stock.
YEAR 2000 RISK: Delta Capital's internally used computers and products produced
or licensed by Delta Capital are "Y2K" compliant and accordingly, no Y2K
problems were experienced with the change to the year 2000. Although Delta
Capital has not, to date, experienced any Y2K problems with its trading
partners, to the extent that Delta Capital may be exposed to possible year 2000
failures of its trading partners, Delta Capital's staff and the staff of AltaCo
have been educated on the Year 2000 problem. Although Delta Capital has used its
best efforts to ensure that any contracted technology deliverables to Delta
Capital are "Y2K" compliant, and to date there are no known Y2K problems, Delta
Capital cannot be sure that all outside organizations beyond its control which
impact or may impact Delta Capital's business have not or will not in the future
experience Y2K related problems.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
Management discussion and analysis of financial condition and results of
operations for the period ended July 31, 1998 compared to the period ended July
31, 1999.
<PAGE>
14
Delta Capital is at an early stage. It has successfully achieved its first
objective: the acquisition of Internet technologies and is now developing plans
to take these technologies to market. It plans to commence significant marketing
activities in the first quarter of 2000. During the period under review, Delta
Capital's modest expenditures have been made in support of finding appropriate
Internet technologies and, as well, for audit, income tax returns and meeting
various regulatory requirements. Substantially all cash required for operations
has come from investors.
On June 1, 1999, Delta Capital acquired the exclusive worldwide license to the
relBuilder Enterprise Suite of intelligent e-Commerce and e-Business software
from 827109 Alberta Ltd. (AltaCo), an Alberta, Canada-based private company.
Under the agreement, Delta Capital will pay AltaCo fifteen percent (15%) royalty
payments in the minimum amount of C$50,000 in the first year, C$200,000 in the
second year and C$300,000 in the third year. The software may be sub-licensed
under terms of the agreement.
MARKETING PROGRAM
Delta Capital's marketing program involves the development of a variety of
different types of relationships with the entities with which Delta Capital does
business as follows:
1. PARTNER PROGRAM, an initiative progran which involves Delta Capital
providing products and services to established customers (ie.
"partners") who in turn integrate Delta Capital's Software with other
software and provide their clients with various forms of
Internet-related business, technical or marketing assistance. Delta
Capital currently has three partners who perform this function: Khyber
Pass Distributing, an entertainment consulting company; Metradyne
Corporation, a marketing business consultancy; and Imaginet
Communications Group Inc., an Internet services provider;
2. STRATEGIC ALLIANCES exist which involve Delta Capital marketing another
company's products or Delta Capital utilizing other companies' software
products within Delta Capital's product. Delta Capital currently has
strategic alliances with BCE Emergis of Montreal and through AltaCo
with Smart Technologies Inc. of Calgary., The services/software of BCE
Emergis and Smart Technologies Inc. are embedded in the relBuilder
software and services offered by Delta Capital and passed on to its
customers.
3. CORE TECHNOLOGY AFFILIATIONS are included in Delta Capital's plans.
Delta Capital will seek to establish relationships with major
e-Commerce and e-Business organizations to market its core Software
technology. Delta Capital is currently working towards establishing a
core technology affiliation with IBM, as described previously, but as
of the date of this filing has not established a formal relationship.
It has entered into discussions with IBM to establish co-marketing and
co-development opportunities within IBM's umbrella of e-Business
initiatives. While management is confident about the development of
this relationship, there is no assurance that any agreement will result
from these discussions.
4. DIRECT RELATIONSHIPS Delta Capital currently works directly with six
companies which use Delta Capital's Software and services: Shaw
Communications Inc., a cable
<PAGE>
15
company; Fairplay Network, a retail organization; Chevron Canada
Resources, an oil company; Oil and Gas Trading Partners Network, an oil
and gas industry information initiative; Rand Worldwide Inc., an
integrated manufacturing company; and I-School Network, an interactive
education network system based in Calgary, Alberta. The direct sale of
the software and service package is designed to develop examples of
Delta Capital's technology at work. These examples will then be used as
proof of performance when Delta Capital rolls out its product and
service offering in the year 2000.
A) Plan of Operation:
a) Delta Capital anticipates modest revenues over the next 12 months
and anticipates continuing losses from operations as it introduces
its relBuilder software and services offering to the marketplace.
Delta Capital plans to raise additional funds during the next 12
months in the amount of approximately US$2.5 million through
equity financing, participation in a major industry
software/hardware company's support program and debt financing to
finance its operations.
b) It is management's view that virtually all businesses in future
will have e-Commerce/e-Business requirements and that the nature
and conduct of business in general will be fundamentally changed.
In a marketplace where the demand for Internet software and
services is growing rapidly, a trend which is expected to continue
for the foreseeable future, Delta Capital's goal is to spend the
next 12 months establishing its distribution and sales channels,
negotiating its partnership arrangements and working to gain
strategic partners to utilize Delta Capital's core technology
relBuilder software. Delta Capital management anticipates positive
cash flow in the fourth quarter of its upcoming fiscal year.
c) Delta Capital will perform market research in the next 12 months
to help gauge marketplace acceptance of its software and services.
Delta Capital will not directly undertake any product development
in the coming 12 months. However, it is anticipated that AltaCo
will continue development of the relBuilder software suite under
direction from Delta Capital.
d) It is planned that in future Delta Capital will purchase from
AtlaCo, services at fair market rates to ensure continued
development of the Software and provision of support services.
Delta Capital will re-license back to AltaCo certain of its rights
under Delta Capital's worldwide license to permit AltaCo to
undertake marketing initiatives in certain Canadian markets and
market segments as seems appropriate to Delta Capital.
Specifically, Delta Capital will encourage AltaCo to market the
relBuilder software in the Alberta, Canada, marketplace where
AltaCo is based. Delta Capital will encourage AltaCo to work with
certain industries and organizations, as yet undefined, where it
is felt that AltaCo is better positioned to service marketplace
needs and requirements.
e) Delta Capital management does not anticipate any material plant or
equipment purchases in the next 12 months.
f) Delta Capital management anticipates that it will add
approximately 10 employees in the coming year, including personnel
with specialized technology, financial experience andspecific
industry sales experience.
<PAGE>
16
g) Although Delta Capital has not experienced any Y2K problems to
date and management does not anticipate Y2K problems, management
does recognize that there still may be risks associated with
dealing with other parties who were not Y2K compliant. Delta
Capital will continue to reduce any possible future risk of Y2K
problems as much as possible by continuing to deal with suppliers
who Delta Capital believes were Y2K compliant.
B) Results from Operations:
a) Revenue
There was no revenue for fiscal year ended December 31, 1998 or
for the period ended September 30, 1999.
b) General and Administration Expense
Expenses in the fiscal year ended December 31, 1998 were
$39,281.00, largely due to operating and regulatory filing
expenses associated with coming to trade on the OTC:BB in March,
1999. Delta, from time to time, issues shares of its common stock
for services. 200,000 shares were issued for the fiscal year ended
December 31, 1998 at an expense of $207.00 to Delta Capital.
Expenses for the period ended September 30, 1999 were $111,575.
c) Net Loss from Operations
Net loss from operations in fiscal 1998 was $39,281.00 and
$393,107 for the period ended September 30, 1999, primarily as a
result of the amortization treatment of the investment in AltaCo.
Delta Capital plans to sell software and services to a limited and
restricted market as it continues to develop its product line in
advance of major marketing efforts.
ITEM 3 - DESCRIPTION OF PROPERTY
Delta Capital does not own any properties but utilizes, without charge and under
a verbal agreement, premises leased by AltaCo which consist of approximately
2,537 square feet on the second floor of an office building situated at 999 -
8th Street, S.W., Calgary, Alberta. Delta Capital will give consideration to
acquiring its own leased premises in the future if warranted but as of this date
Delta Capital has not acquired leased premises and there are no specific plans
to do so.
Delta Capital maintains a United States mailing address at Suite 806 - 1904 -
3rd Avenue, Seattle, Washington 98101. Delta Capital also maintains a mailing
address in British
<PAGE>
17
Columbia, Canada at Suite B201 - 1331 Homer Street, Vancouver, British Columbia,
Canada. There are no office premises of Delta Capital associated with either the
Seattle mailing address or the Vancouver mailing address.
ITEM 4 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of January 10, 2000 information with respect
to the beneficial ownership by each person who is known to Delta Capital to be
the beneficial owner of more than 5% of Delta Capital's common shares, by each
director and executive officer and by all executive officers and directors as a
group. All persons named below have sole voting and investment power over their
shares except as otherwise noted. Delta Capital's common stock is the only class
of voting securities outstanding.
<TABLE>
<CAPTION>
<S> <C> <C>
============================================================================================
NAME, MUNICIPALITY OF RESIDENCE AND OFFICE COMMON SHARES PERCENTAGE OF
HELD BENEFICIALLY OWNED COMMON SHARES
DIRECTLY OR INDIRECTLY
--------------------------------------------------------------------------------------------
Paul Davis(1) 5,000,000 36.23%
8 Stratton Place SW
Calgary, Alberta T3H 1T6
President and Director
--------------------------------------------------------------------------------------------
Kevin Wong(2) 803,571 5.82%
341 - 33rd Avenue NE
Calgary, Alberta T2E 2H9
Director
--------------------------------------------------------------------------------------------
Rajesh Taneja Nil Nil
#104, 10668 - 138th Street
Surrey, BC V3T 4K5
Director
--------------------------------------------------------------------------------------------
Judith Miller(3) 296,000 2.14%
B201 - 1331 Homer Street
Vancouver, BC V6B 5M5
Secretary/Treasurer and Director
--------------------------------------------------------------------------------------------
T. Davis Capital Corp. 800,000 5.80%
5167 Galway Drive
Delta, BC V4M 2R4
--------------------------------------------------------------------------------------------
All Officers and Directors as a Group 6,899,571 49.99%
============================================================================================
</TABLE>
(1) Mr. Davis owns 6,750,000 shares of the 14,000,000 issued shares of AltaCo
and the shares identified represent his beneficial ownership of the
5,000,000 Delta Capital shares issued to AltaCo. Mr. Davis does not
directly own any shares in Delta Capital.
(2) Mr. Wong owns 2,250,000 shares of the 14,000,000 issued shares of AltaCo
and the shares identified represent his beneficial ownership of the
5,000,000 Delta Capital shares issued to AltaCo. Mr. Wong does not
directly own any shares in Delta Capital.
(3) Included in this figure are stock options entitling Ms. Miller to purchase
200,000 shares of Delta Capital exercisable at US$0.0075 per share. The
option expires March 31, 2000.
The 5,000,000 shares issued to AltaCo and the 800,000 shares issued to T. Davis
Capital Corp. are subject to Federal Securities Laws Rule 144, and thus have
restrictions on their resale for a
<PAGE>
18
minimum of one year from the date of issuance. After holding the Delta Capital
shares for one year the aforesaid shareholders, including those that are
affiliates of Delta Capital may, provided Delta Capital is up to date in its
filing and reporting requirements, sell, in a three month period, the greater of
(a) 1% of the Delta Capital shares outstanding as shown by the most recent
report or statement published by Delta Capital, or (b) the average weekly
reported trading volume in Delta Capital shares on all securities exchanges or
automated quotation systems during the four calendar weeks preceding such sale.
After holding their shares for two years non-affiliates can sell their shares
without adherence to the volume limitations, but affiliates must still adhere to
the volume limitations.
ITEM 5 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following table identifies Delta Capital's directors and executive officers
as of January 10, 2000:
<TABLE>
<CAPTION>
<S> <C> <C>
-------------------------------------------------------------------------------------------------------------
NAME AGE POSITION
-------------------------------------------------------------------------------------------------------------
Paul Davis 48 President, CEO and Director since June 4, 1999
-------------------------------------------------------------------------------------------------------------
Kevin Wong 26 Director since June 4, 1999
-------------------------------------------------------------------------------------------------------------
Rajesh Taneja 29 Director since June 4, 1999
-------------------------------------------------------------------------------------------------------------
Judith Miller 59 Corporate Secretary and Director since April 28, 1998
-------------------------------------------------------------------------------------------------------------
</TABLE>
Directors are elected at Delta Capital's annual general meeting of shareholders
or may be appointed by existing directors between annual general meetings of
shareholders and hold office until they resign or their successors are elected.
Delta Capital's officers are appointed by the board of directors and serve at
the pleasure of the board. Following is a summary of the occupation of the
Directors and Executive Officers of Delta Capital over the last five years:
PAUL DAVIS, President, CEO and Director of Delta Capital founded, in October,
1996, SiCom Solutions Inc. which developed the Software. Since SiCom's inception
Mr. Davis has been responsible for developing SiCom's business model,
integration strategy, partnership and financing. In the period 1994 to October,
1996 Mr. Davis was President and CEO of HPCC High Performance Computing Centre
("HPCC"), a Calgary, Alberta based private company. During this employment with
HPCC Mr. Davis' responsibility was to develop high performance computing and
advanced applications associated with high-speed networking. In 1994 Mr. Davis
received his Bachelor of Applied Science, Electrical Engineering with a
specialty in computing technology and power engineering.
RAJESH TANEJA, Director of Delta Capital, has, over the last five years,
provided technical and sales support to a variety of companies involved in the
computer software industry or to companies utilizing products provided by the
computer software industry. Mr. Taneja founded Clear Choice Media in 1998 and
has served as its Chief Executive Officer since its inception. He has served as
President and senior web designer for Clear Choice Technologies since 1997 and
served as senior inter/intranet engineer for Metasoft Systems Inc. from 1997 to
1999. Mr. Taneja provided technical support to Raptor Capital Corporation from
1997 to 1999; served as technical manager of Cross Systems Inc. from 1996 to
1997 and was technical and sales manager of the Trumpet Tech Group of Companies
Inc. in 1996. Mr.
<PAGE>
19
Taneja was President of Tin Webdesigner and New Media from 1995 to 1999 and from
1994 to 1995 he held the position of Senior Network Implementation and Support
Staff with Combit Net/FX, a company which provided networking and software
implementation to a variety of clients including the Government of India.
KEVIN WONG, Director of Delta Capital, has been Vice President and Director of
SiCom Solutions Inc. since 1997 where he developed the technical information and
inception model for the Software. In the 4 years prior to April, 1997, Mr. Wong
attended University during which time he obtained a law degree from the
University of Windsor, Ontario.
JUDY MILLER, Secretary and Director of Delta Capital, has been President and
Director of J.A.M. Corporate Consultants Inc. ("JAM") since March 1994. JAM,
which is wholly owned by Ms. Miller, is a private company incorporated pursuant
to the laws of British Columbia, provides a variety of services including office
management and administration, meeting and special event planning, office
redesign/relocation, and fund raising. Ms. Miller is the sole employee of JAM
and accordingly is responsible for providing JAM's services.
The above individuals are the only key personnel presently associated with Delta
Capital.
ITEM 6 - EXECUTIVE COMPENSATION
The following compensation information relates to amounts paid to the Chief
Executive Officer for the preceding three (3) years. No director or executive
officer received compensation in excess of $100,000 in 1998.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG TERM COMPENSATION
--------------------------------------------------------------------
AWARDS PAYOUTS
OTHER SECURITIES RESTRICTED
ANNUAL UNDER SHARES OR LTIP ALL OTHER
NAME AND PRINCIPAL YEAR COMPEN- OPTIONS RESTRICTED PAYOUTS COMPEN-
POSITION ENDING SALARY BONUS SATION GRANTED SHARE UNITS SATION
- --------------------------------------------------------------------------------------------------------------------------
Paul Davis 1998 Nil Nil Nil Nil Nil Nil Nil
President (1) 1999 Nil Nil Nil Nil Nil Nil Nil
- --------------------------------------------------------------------------------------------------------------------------
Note: There were no compensation payments to Chief Executive Officer for preceding 3 yrs.
</TABLE>
(1) Delta Capital does not have a Chief Executive Officer but for the purposes
of disclosure hereunder Mr. Davis, as President, is deemed to be the Chief
Executive Officer.
PENSION PLANS
Delta Capital does not have a defined benefit pension plan that provides annual
benefits to any Executive Officers.
COMPENSATION OF DIRECTORS
None of the Directors receive Director's fees.
<PAGE>
20
EXECUTIVE COMPENSATION
The Vice President Marketing and Corporate Secretary received US$3,000.00 and
US$2,000.00, respectively, during 1998. No other Executive Officers of Delta
Capital received any reportable salary or bonus during 1998.
The following table sets forth as to each named Executive Officer certain
information concerning the grant of options during the year ended December 31,
1998:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
NAME NUMBER OF % OF TOTAL EXERCISE OR EXPIRATION DATE
SECURITIES OPTIONS GRANTED BASE PRICE
UNDERLYING TO EMPLOYEES IN
OPTIONS GRANTED FISCAL YEAR
- --------------------------------------------------------------------------------------------------------------------------
Judith Miller 200,000 200,000 US$0.0075 March 31, 2000
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
On August 26, 1998, by verbal agreement among the board of directors of Delta
Capital, Judith Miller was granted a stock option to purchase 50,000 common
shares of Delta Capital at an exercise price of $0.03 per share exercisable for
one year. The options were granted prior to the shares of Delta Capital having
been approved for trading. In March 1999 Delta Capital 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 Delta Capital extended the expiration date of the stock options to December
31, 1999 and on September 15, 1999 the verbal agreement was reduced to writing.
On December 30, 1999, the board of directors of Delta Capital 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. The options were given as compensation for prior services and were
considered to have no value on the date of grant because the stock of Delta
Capital had no established market value at that time.
ITEM 7 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Delta Capital is subject to various conflicts of interest arising out of its
relationships with its Executive Officers, Directors and shareholders, including
conflicts related to the arrangements by which Delta Capital acquired certain of
is assets, as described below are conducted as arm's-length transactions and
were in the best interest of Delta Capital. Delta Capital intends to continue to
exercise its best business judgement and discretion in involving any such
conflicts between Delta Capital and others with respect to these and all other
matters, and Delta Capital believes that it will generally be able to resolve
such conflicts on an equitable basis.
Paul Davis, President and Director of Delta Capital and President and Director
of AltaCo, holds 6,750,000 shares of AltaCo and 3,140,857 shares of SiCom. Mr.
Davis receives $6,000.00 per month as an employee of AltaCo.
Kevin Wong, Director of Delta Capital and is Director and Vice-President
Technology of AltaCo. Mr. Wong owns 2,250,000 shares of AltaCo and 440,000
shares of SiCom and he receives C$4,000 per month as an employee of the AltaCo.
<PAGE>
21
Rajesh Taneja, Director of Delta Capital and is Vice-President Marketing of
AltaCo. Mr. Taneja receives C$3,000 per month as an employee of Delta Capital.
Judy Miller, Director and Secretary of Delta Capital owns 96,000 shares of Delta
Capital and has an option to purchase 200,000 shares of Delta Capital for
$0.0075 per share exercisable until March 31, 2000. Ms. Miller originally
participated in a private placement for 24,000 shares of Delta Capital at $.001
per share prior to the consolidation of Delta Capital's shares on a 4:1 basis.
Delta Capital paid Ms. Miller US$2,000 in November, 1998 for administrative
services and pursuant to a verbal consulting contract effective June 15, 1999
receives C$2,500 per month from Delta Capital.
During the last two years Delta Capital has not been a party to and it is not
proposed that Delta Capital will be a party to any transactions in which any
director, nominee for election as a director, executive officer, beneficial
owner of greater than 5% of Delta Capital's common shares or any member of the
immediate family of such persons had or is to have a direct or indirect material
interest except the following:
(a) Share Exchange Agreement:
Pursuant to the Share Exchange Agreement dated June 1, 1999 Delta
Capital issued 5,000,000 common shares to AltaCo in exchange for
5,000,000 common shares of AltaCo. Paul Davis, President and
Director of Delta Capital is President and Director of AltaCo and
owns approximately 48.21% of the issued capital of AltaCo. Mr.
Davis receives $6,000 per month as an employee of AltaCo. Kevin
Wong, a Director of Delta Capital and a Director and officer of
AltaCo owns approximately 16.07% of the issued capital of AltaCo
and receives C$4,000 per month as an employee of AltaCo. Rajesh
Taneja, a Director of Delta Capital and an officer of AltaCo
receives C$3,000 per month as an employee of Delta Capital.
(b) License Agreement:
Pursuant to the License Agreement dated June 1, 1999 Delta Capital
acquired the worldwide marketing rights to the Software from
AltaCo. In accordance with the terms of the License Agreement
Delta Capital is required to make certain royalty payments to
AltaCo. Paul Davis, Kevin Wong and Rajesh Taneja hold the
positions and shareholdings in Delta Capital and AltaCo referred
to in paragraph (a) above.
(c) Purchase of Trade Names:
By agreement dated July, 1999, as amended December 3, 1999, Delta
Capital purchased the trade names "Clear Choice Media" and "Clear
Choice Technologies" from Rajesh Taneja for $3,000. Mr. Taneja is
a Director and employee of Delta Capital.
(d) Verbal Lease Agreement:
Pursuant to a verbal agreement between Delta Capital and AltaCo,
Delta Capital utilizes, without charge, premises leased by AltaCo
in Calgary, Alberta.
<PAGE>
22
(e) Stock Option Agreement:
Judith Miller, a Director and officer of Delta Capital, entered
into a verbal agreement with Delta Capital on August 26, 1998
pursuant to which Ms. Miller received a stock option to purchase
50,000 shares of Delta Capital exercisable at US$0.03 per share
for a period of one year. In March, 1999 Delta Capital 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 Delta
Capital 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 Delta Capital 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.
ITEM 8 - DESCRIPTION OF SECURITIES
COMMON STOCK
Delta Capital originally had authorized share capital of 1,500 common shares
with a par value of $0.001 but subsequently increased its share capital to
25,000,000 common shares with a par value of $0.001 per share. On March 15, 1999
Delta Capital underwent a one for four stock split increasing its issued and
outstanding to 8,800,000 common shares. As at January 10, 2000 there were
13,800,000 common shares of Delta Capital issued and outstanding.
TRANSFER AGENT AND REGISTRAR
Delta Capital's Transfer Agent is Signature Stock Transfer in Dallas, Texas.
PART II
ITEM 1 - MARKET PLACE AND DIVIDENDS ON DELTA CAPITAL'S COMMON EQUITY AND OTHER
SHAREHOLDER MATTERS
MARKET INFORMATION
Delta Capital's common stock is currently traded on the National Association of
Securities Dealers Inc. Automated Quotation System's Bulletin Board, using the
stock symbol "DCTG." Only a limited public trading market exists for Delta
Capital's outstanding stock, and there can be no assurance that an active public
market will develop. Delta Capital's common stock commenced trading in March
1999 and the highest and lowest prices for Delta Capital's common stock during
the months from March, 1999 to January 7, 2000 and the closing bid price on such
dates are as follows:
<PAGE>
23
Delta Capital Technologies Inc. (Monthly Summary of Trades):
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
DATE HIGH LOW CLOSE VOLUME TRADES
- --------------------------------------------------------------------------------------------------------------------------
Jan./00 2.10 1.10 2.08 74,000 7
- --------------------------------------------------------------------------------------------------------------------------
Dec./99 3.00 2.00 2.08 388,500 58
- --------------------------------------------------------------------------------------------------------------------------
Nov/99 2.40 2.00 2.00 351,700 51
- --------------------------------------------------------------------------------------------------------------------------
Oct/99 2.40 2.00 2.15 580,400 86
- --------------------------------------------------------------------------------------------------------------------------
Sept/99 2.60 2.00 2.10 209,000 43
- --------------------------------------------------------------------------------------------------------------------------
Aug/99 3.00 2.20 2.42 98,400 19
- --------------------------------------------------------------------------------------------------------------------------f
July/99 3.10 2.40 2.98 58,500 27
- --------------------------------------------------------------------------------------------------------------------------
June/99 3.00 2.07 3.00 55,500 36
- --------------------------------------------------------------------------------------------------------------------------
May/99 - - - - -
- --------------------------------------------------------------------------------------------------------------------------
April/99 - - - - -
- --------------------------------------------------------------------------------------------------------------------------
Mar/99 3.00 2.15 3.00 8,000 10
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
These quotations reflect inter-dealer prices without retail work-up, mark-down
or commission and may not represent actual transactions.
As of the date of this Registration Statement, Delta Capital has 33 registered
shareholders which included Cede & Co. holding 1,959,000 shares. Because Cede &
Co. is an intermediary, Delta Capital does not know how many beneficial
shareholders are included in the shares held in the name of Cede & Co.
DIVIDEND POLICY
Delta Capital has not paid any cash dividends on its common stock and does not
anticipate paying any cash dividends in the foreseeable future. Delta Capital
currently intends to retain future earnings, if any, to fund the development and
growth of its business. Any future determination to pay cash dividends will be
at the discretion of the board of directors and will be dependent upon Delta
Capital's financial condition, operating results, capital requirements,
applicable contractual restrictions and other factors as the board of directors
deems relevant.
OPTIONS EXERCISED
None of Delta Capital's previously granted stock options have been exercised.
WARRANTS EXERCISED
To date Delta Capital has not issued any share purchase warrants.
ITEM 2 - LEGAL PROCEEDINGS
There are no material legal proceedings to which the Issuer is a party nor to
the best of the knowledge of management, are any material legal proceedings
contemplated.
ITEM 3 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no disagreements between Delta Capital and its accountants since
Delta Capital's inception in March of 1998.
<PAGE>
24
ITEM 4 - RECENT SALES OF UNREGISTERED SECURITIES
During April of 1998, Delta Capital issued to T. Davis Capital Corp. 200,000
shares of restricted common stock as repayment of the $206.95 incorporating
expenses paid on Delta Capital's behalf by T. Davis Capital Corp. This share
issuance was exempt from registration under Section 4(2) of the Securities
Exchange Act of 1934 and the appropriate restrictive legend was placed on the
share certificate issued.
During April, 1998 Delta Capital sold 2,000,000 shares of unrestricted common
stock, and received $60,000. This offering was a private placement and Delta
Capital was exempt from registration under the Exchange Act. Further Delta
Capital was eligible under Securities and Exchange Commission Rule 504, which
allowed the shares sold in this private placement to be issued without
restrictive legend. The recipients of these shares, primarily being Delta
Capital friends, relatives and business associates of Delta Capital's officers,
directors and investors, represented their intention to acquire the shares for
investment purposes only, and not with a view to resale or distribution.
The 2,000,000 shares of Delta Capital were issued to the following in the
indicated amounts:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
NAME NUMBER NAME NUMBER
OF SHARES OF SHARES
- --------------------------------------------------------------------------------------------------------------------------
Bonanza Management Ltd. 100,000 Hutchinson, Janet 100,000
- --------------------------------------------------------------------------------------------------------------------------
Brookes, Heather 14,000 Ivancoe, Joseph 100,000
- --------------------------------------------------------------------------------------------------------------------------
Brookes, Ken 50,000 Ivancoe, Leigh 100,000
- --------------------------------------------------------------------------------------------------------------------------
Butchart, Terry 10,000 Johnson, Edward 14,000
- --------------------------------------------------------------------------------------------------------------------------
Butchart, Jodi 9,000 Johnson, Linda 105,000
- --------------------------------------------------------------------------------------------------------------------------
Charban, Emil 95,000 Miller, Judith 24,000
- --------------------------------------------------------------------------------------------------------------------------
Clemis, Barry 90,000 Mizener, Doreen 20,000
- --------------------------------------------------------------------------------------------------------------------------
Connors, Melissa 105,000 Polymenkas, Nicky 100,000
- --------------------------------------------------------------------------------------------------------------------------
Crawford, Mark 105,000 Smart Communications 105,000
- --------------------------------------------------------------------------------------------------------------------------
Delaney, Gail 19,000 Smeds, Sven 95,000
- --------------------------------------------------------------------------------------------------------------------------
Delaney, Greg 150,000 Smith, Guy 105,000
- --------------------------------------------------------------------------------------------------------------------------
Forgie, Ross 100,000 Smith, Richard 100,000
- --------------------------------------------------------------------------------------------------------------------------
Gallant, Richard 95,000 T. Davis Capital Corp. 200,000
- --------------------------------------------------------------------------------------------------------------------------
Gardiner, Thomas 90,000
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
During March, 1999 the 2,200,000 shares of Delta Capital, which were issued at
that time, were split on a four for one basis resulting in 8,800,000 shares
being issued and outstanding.
During September, 1999 Delta Capital issued to AltaCo 5,000,000 shares of
restricted common stock to acquire 5,000,000 shares of AltaCo. This share
issuance was exempt from registration under Section 4(2) of the Securities
Exchange Act of 1934. The appropriate restrictive legend was placed on the share
certificate issued.
<PAGE>
25
ITEM 5 - INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware (the "DECL")
provides, in general, that a corporation incorporated under the laws of the
State of Delaware, such as Delta Capital, may indemnify any person who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding (other than a derivative action by or in
the right of the Corporation) by reason of the fact that such person is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another enterprise, against expenses (including attorney's fees), judgement,
fines and amounts paid in settlement actually and reasonably incurred by such
person in connection with such action, suit or proceeding if such person acted
in good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe such persons
conduct unlawful. In the case of a derivative action, a Delaware corporation may
indemnify any such person against expenses (including attorney's fees) actually
and reasonably incurred by such person in connection with the defense or
settlement of such action or suit if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification shall be made in
respect to any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the
court determines such person is fairly and reasonably entitled to indemnify for
such expenses.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers or persons controlling Delta
Capital pursuant to the foregoing provisions, Delta Capital understands that in
the opinion of the Securities Exchange Commission, such indemnification is
against public policy as expressed in the Act and is therefore unenforceable.
FINANCIAL STATEMENTS:
1. Report of Independent Certified Public Accountants dated
September 10, 1999
2. Balance Sheets as at July 31, 1999 and December 31, 1998
3. Statement of Operations for seven months ended July 31, 1999,
the period from March 4, 1998 (date of inception) to December
31, 1998 and the period from March 4, 1998 to July 31, 1999
4. Statement of Changes in Stockholders' Equity for the period
from March 4, 1998 to July 31, 1999
5. Statement of Cash Flows for the seven months ended July 31,
1999, the period from March 4, 1998 to December 31, 1998 and
the period from March 4, 1998 to July 31, 1999
6. Notes to Financial Statements
7. Balance Sheets as at September 30, 1999 and December 31, 1998
<PAGE>
26
8. Statement of Operations for nine months ended
September 30, 1999, the period from March 4, 1998
(date of inception) to December 31, 1998 and the
period from March 4, 1998 to September 30, 1999
9. Statement of Changes in Stockholders' Equity for the
period from March 4, 1998 to September 30, 1999
10. Statement of Cash Flows for the seven months ended
July 31, 1999, the period from March 4, 1998 to
December 31, 1998 and the period from March 4, 1998
to July 31, 1999
11. Notes to Financial Statements
<PAGE>
27
ANDERSEN ANDERSEN & STRONG, L.C.
CERTIFIED PUBLIC ACCOUNTANTS AND BUSINESS CONSULTANTS
941 EAST 3300 SOUTH, SUITE 202
SALT LAKE CITY, UTAH 84106
TELEPHONE (801) 486-0096
FAX (801) 486-0098
Board of Directors
Delta Capital Technologies, Inc.
Vancouver, BC Canada
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have audited the accompanying balance sheets of Delta Capital Technologies,
Inc. (a development stage company) at July 31, 1999 and December 31, 1998 and
the statement of operations, stockholders' equity, and cash flows for the seven
months ended July 31, 1999 and the period from March 4, 1998 to December 31,
1998 and the period from March 4, 1998 (date of inception) to July 31, 1999.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the 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 financial position of Delta Capital Technologies,
Inc. at July 31, 1999, and December 31, 1998 and the results of operations, and
cash flows for the seven months ended July 31, 1999 and the period from March 4,
1998 to December 31, 1998 and period from March 4, 1998 (date of inception) to
July 31, 1999, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company is in the development
stage and will need additional working capital for its planned activity, which
raises substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are described in Note 7. These
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Salt Lake City, Utah
September 10, 1999 /s/ Andersen Andersen & Strong
<PAGE>
28
DELTA CAPITAL TECHNOLOGIES, INC.
(DEVELOPMENT STATE COMPANY)
BALANCE SHEETS
JULY 31, 1999 AND DECEMBER 31, 1998
================================================================================
<TABLE>
<CAPTION>
JULY 31, DEC. 31,
1999 1998
---- ----
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $1,169 $20,926
---------- -------
Total Current Assets 1,169 20,926
---------- -------
PROPERTY AND EQUIPMENT - net of accumulated depreciation 564 -
---------- -------
OTHER ASSETS
Marketing license - net of amortization - Note 3 31,908 -
Investment - net of amortization - Note 4 2,361,111 -
Trade mark - net of amortization - Note 5 3,000 -
---------- -------
LIABILITIES AND STOCKHOLDERS' EQUITY $2,397,752 $20,926
========== =======
CURRENT LIABILITIES
Contract payable - license and royalties - Note 3 $20,270 $ -
Notes payable - Note 6 26,165 -
Accrued royalties - Note 3 1,877 -
-
Accounts payable 17,918
---------- -------
Total Current Liabilities 66,230 -
---------- -------
STOCKHOLDERS' EQUITY
Common Stock
25,000,000 shares authorized, at $0.001 par value;
13,800,000 shares issued and outstanding 13,800 8,800
Capital in excess of par value 2,546,407 51,407
Deficit accumulated during the development stage (228,685) (39,281)
---------- -------
Total Stockholders' Equity (2,397,752) 20,926
----------- ------
$2,397,752 $20,926
========== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
29
DELTA CAPITAL TECHNOLOGIES, INC.
(DEVELOPMENT STATE COMPANY)
STATEMENT OF OPERATIONS
FOR THE SEVEN MONTHS ENDED JULY 31, 199 AND THE PERIOD
FROM MARCH 4, 1998 TO DECEMBER 31, 1998 AND THE
PERIOD FROM MARCH 4, 1998 (DATE OF INCEPTION) TO JULY 31, 1999
================================================================================
<TABLE>
<CAPTION>
JULY 31, DEC. 31, MARCH 4, 1999
1999 1998 TO JULY 31, 1999
---- ---- ----------------
<S> <C> <C> <C>
REVENUES $ - $ - $ -
---- ---- ----
EXPENSES
Administrative 46,761 39,281 86,042
Amortization - license and royalties - Note 3 1,877 - 1,877
Amortization - investment - Note 4 138,889 - 138,889
Accrued royalties - Note 3 1,877 - 1,877
===== = =====
NET LOSS $(189,404) $(39,281) $(228,685)
========== ========= ==========
NET LOSS PER COMMON SHARE
Basic $(0.015) $ -
-------- ---
Diluted $(0.015) $ -
-------- ---
AVERAGE OUTSTANDING SHARES
Basic 12,370,000 8,800,000
---------- ---------
Diluted 12,570,000 9,000,000
---------- ---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
30
DELTA CAPITAL TECHNOLOGIES, INC.
(DEVELOPMENT STATE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM MARCH 4, 1998
TO JULY 31, 1999
================================================================================
<TABLE>
<CAPTION>
COMMON STOCK CAPITAL IN
------------------------- EXCESS OF ACCUMULATED
SHARES AMOUNT PAR VALUE DEFICIT
------ ------ --------- -------
<S> <C> <C> <C> <C>
Balance March 4, 1998 (date of inception) - $ - $ - $ -
Issuance of common stock for services
At $0.0002 - March 1998 800,000 800 (593) -
Issuance of common stock for cash
At $0.0075 - June 1998 8,000,000 8,000 52,000 -
Net operating loss for the period March 4,
1998 to December 31, 1998 - - - (39,291)
--------- ----- ------ -------
Balance December 31, 1998 8,800,000 8,800 51,407 (39,281)
Issuance of common stock for 36% of
outstanding stock AltaCo - at $0.50 - 5,000,000 5,000 2,495,000 -
June 1, 1999 - Note 4
Net operating loss for the seven months
Ended July 31, 1999 - - - (189,404)
--------- ----- ------ -------
BALANCE JULY 31, 1999 13,800,000 $13,800 $2,546,407 $(228,685)
========== ======= ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
31
DELTA CAPITAL TECHNOLOGIES, INC.
(DEVELOPMENT STATE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE SEVEN MONTHS ENDED JULY 31, 1999 AND THE PERIOD FROM
MARCH 4, 1998 DECEMBER 31, 1998 AND THE PERIOD FROM MARCH 4, 1998
(DATE OF INCEPTION) TO JULY 31, 1999
================================================================================
<TABLE>
<CAPTION>
JULY 31, DEC. 31, MARCH 4, 1999
1999 1998 TO JULY 31, 1999
---- ---- ----------------
<S> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss $(189,404) $(39,281) $(228,685)
Adjustments to reconcile net loss to net cash
provided by operating activities
Issuance of common capital stock for expenses - 207 207
Amortization of license agreement and investment -
Note 3 and 4 140,766 - 140,766
Changes in accounts payable 15,002 - 15,001
Accrued royalties - Note 3 1,877 - 1,877
-------- -------- --------
Net (decrease) in Cash from Operations (31,759) (39,074) (70,834)
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of marketing license (13,514) (13,514)
Purchase of office equipment (564) - (564)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loans 26,081 - 26,081
Proceeds from issuance of common stock - 60,000 60,000
-------- -------- --------
Net Increase (Decrease) in Cash (19,756) 20,926 1,169
Cash at Beginning of Period 20,925 - -
-------- -------- --------
Cash at End of Period $1,169 $20,926 $1,169
======== ======== ========
NON CASH OPERATING ACTIVITIES
Issuance of 800,000 shares common stock for expenses $207
----
Issuance of 5,000,000 shares common capital stock for 36% of outstanding stock
of AltaCo 2,500,000
---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
32
DELTA CAPITAL TECHNOLOGIES, INC.
(DEVELOPMENT STATE COMPANY)
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. ORGANIZATION
The Company was incorporated under the laws of the State of Delaware on
March 4, 1998 with authorized common stock of 25,000,000 shares at $0.001
par value. On March 15, 1999, the Company completed a forward stock split
of four shares for each outstanding share. This report has been prepared
using after stock split shares from inception.
The Company was organized for the purpose of the acquisition of a license
to market a software computer program. See note 3.
The Company is in the development stage.
Since its inception, the Company has completed a Regulation D offering of
8,000,000 after stock split shares of its capital stock for cash of
$60,000.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Methods
The Company recognizes income and expenses based on the accrual method of
accounting.
Dividend Policy
The Company has not yet adopted a policy regarding payment of dividends.
Income Taxes
On December 31, 1998, the Company had a net operating loss carry forward of
$39,281. The tax benefit from the loss carry forward has been fully offset
by a valuation reserve because the use of the future tax benefit is
doubtful, since the Company has no operations on which to project future
net profits.
The loss carry forward will expire in the year 2019.
Earnings (Loss) Per Share
Earnings (loss) per share amounts are computed based on the weighted
average number of shares actually outstanding in accordance with FASB No.
128.
<PAGE>
33
DELTA CAPITAL TECHNOLOGIES, INC.
(DEVELOPMENT STATE COMPANY)
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
Cash and Cash Equivalents
The Company considers all highly liquid instruments purchased with a
maturity, at the time of purchase, of less than three months, to be cash
equivalents.
Foreign Currency Translation
Part of the transactions of the Company were completed in Canadian dollars
and have been translated to US dollars as incurred, at the exchange rate in
effect at the time, and therefore, no gain or loss from the translations is
recognized.
Amortization of a Capitalized Marketing License
The Company amortizes the marketing license over its estimated useful life
of three years. Any remaining unamortized capitalized costs will be
expensed if it is shown to have an impairment in value or proven to be of
no value. See note 3.
Financial Instruments
The carrying amounts of financial instruments, including cash, equipment,
marketing license, and accounts payable, are considered by management to be
their estimated fair values. These values are not necessarily indicative of
the amounts that the Company could realize in a current market exchange.
Estimates and Assumptions
Management uses estimates and assumptions in preparing financial statements
in accordance with generally accepted accounting principles. Those
estimates and assumptions affect the reported amounts of the assets and
liabilities, the disclosure of contingent assets and liabilities, and the
reported revenues and expenses. Actual results could vary from the
estimates that were assumed in preparing these financial statements.
3. PURCHASE OF MARKETING LICENSE
On June 1, 1999 the Company acquired a worldwide license to market computer
software known as relBuilder e-Suite of e-Business software from AltaCo (a
Canadian corporation). The software is used in various business fields to
aid in the development of internet businesses and technologies, which
provides for competitive shopping, maximizing re-use of corporate
information by bringing together data which is usually scattered across
many systems.
<PAGE>
34
DELTA CAPITAL TECHNOLOGIES, INC.
(DEVELOPMENT STATE COMPANY)
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
The term of the license agreement is for three years and includes a
purchase price of $50,000 Cdn. which is due anytime before November 1,
1999, of which $20,000 Cdn. had been paid by July 31, 1999, and royalty
payments of 15% of the net sales with a minimum amount of $50,000 Cdn. for
the first year and $200,000 Cdn. for the second year, and $300,000 Cdn. for
the third year. The agreement can be canceled by notice after a 30-day
default by either party or automatically terminates if any royalty payment
is more than 60 days past due which will result in a loss of prior payments
and a cancellation of any future liability. The agreement can be renewed at
the end of three years for an unlimited time by the payment of $1 Cdn.
The purchase price of the marketing license of $50,000 Cdn. was capitalized
and amortized over 3 years, at the rate of $16,667 Cdn. each year, the
estimated useful life of the license, or a shorter period if the value of
the license is determined to be impaired. The royalties to be paid under
the agreement will be expensed.
All of the parties to the agreement have certain common officers and
managers.
At the report date, the Company did not have the working capital necessary
to begin the marketing activity.
4. INVESTMENT
On June 1, 1999, the Company acquired 36% of the outstanding stock of
AltaCo (a corporation organized in Canada in April 1999) by the exchange of
5,000,000 common shares between each Company. AltaCo obtained the software
outlined in note 3 from SiCom Solutions Inc. (a Canadian corporation) under
the same terms and conditions as that given to the Company and except for
this transaction, AltaCo does not have any assets or operations. Although
AlaCo had no assets, the shares received were recorded on the books of the
Company at $0.50 per share, amounting to $2,500,000, basedon an estimated
trading value of the Company shares, and is considered by management to be
the fair value of the investment. The amount will be amortized over three
years, the life of the license agreement outlined in note 3.
The company has common officers and managers with AltaCo and SiCom
Solutions Inc.
5. PURCHASE OF TRADE MARK
By an agreement in July 1999 and amended in December 1999, the Company
purchased the trade names "Clear Choice Media" and "Clear Choice
Technologies" for $3,000. The trademark will be amortized over a ten-year
period or sooner if there is an impairment of value.
<PAGE>
35
DELTA CAPITAL TECHNOLOGIES, INC.
(DEVELOPMENT STATE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
6. NOTES PAYABLE
The Company has the following short-term notes payable outstanding.
<TABLE>
<CAPTION>
NAME DATE OF NOTE TERM INTEREST AMOUNT
---- ------------ ---- -------- ------
<S> <C> <C> <C> <C>
Smart Communications Inc. June 30, 1999 One year 6% 20,000
Bonanza Management July 31, 1999 90 days 12% 6,081
</TABLE>
7. RELATED PARY TRANSACTIONS
Related parties have acquired 36% of the common stock issued.
The Company purchased the marketing license outlined in note 3 from related
parties.
8. STOCK OPTIONS
On August 26, 1998, by verbal agreement, the Company issued stock options
to purchase 50,000 common shares to an officer at $0.03 per share that had
an expiration date of August 26, 1999 and on August 11, 1999 the expiration
date of the options was extended to December 31, 1999. The options were
granted prior to the shares of the Company having been approved for
trading. In March 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 $0.0075 per share. On September 15, 1999 the verbal agreement was
reduced to writing. The options were given as compensation for prior
services and were considered to have no value on the option date because
the stock of the Company had no established market value.
9. GOING CONCERN
The Company will need additional working capital to be successful in its
planned activity and to service its current debt for the coming year and
therefore continuation of the Company as a going concern is dependent upon
obtaining the additional working capital necessary to accomplish its
objective. Management has developed a strategy, which it believes will
accomplish this objective and is presently engaged in seeking various
sources of additional working capital including equity funding through a
private placement, long term financing, and completion of negotiations to
access development and marketing support from a major hardware/software
company which has a program designed to further e-Commerce and e-Business
ventures, and increased revenues from sales which will enable the company
to operate for the coming year.
<PAGE>
36
DELTA CAPITAL TECHNOLOGIES, INC.
(DEVELOPMENT STATE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
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
company year.
<PAGE>
37
DELTA CAPITAL TECHNOLOGIES, INC.
(DEVELOPMENT STATE COMPANY)
BALANCE SHEETS
SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
================================================================================
<TABLE>
<CAPTION>
Unaudited
Sept. 30, 1999 Dec. 31, 1998
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 10,500 $ 20,926
Accounts receivable - related party 6,487 --
----------- -----------
Total Current Assets 16,987 20,926
----------- -----------
PROPERTY AND EQUIPMENT - net of accumulated depreciation 545 --
----------- -----------
OTHER ASSETS
Marketing license - net of amortization - Note 3 30,031 --
Investment - net of amortization - Note 4 2,222,222 --
Trade mark - net of amortization - Note 5 2,950 --
----------- -----------
$ 2,272,735 $ 20,926
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable - Note 6 $ 132,965 $ --
Accrued royalties - Note 3 3,754 --
Accounts payable 8,197
-----------
Total Current Liabilities 144,916 --
----------- -----------
STOCKHOLDERS' EQUITY
Common Stock
25,000,000 shares authorized, at $0.001 par value;
13,800,000 shares issued and outstanding 13,800 8,800
Capital in excess of par value 2,546,407 51,407
Deficit accumulated during the development stage (432,388) (39,281)
----------- -----------
Total Stockholders' Equity (2,127,819) 20,926
----------- -----------
$ 2,272,735 $ 20,926
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
38
DELTA CAPITAL TECHNOLOGIES, INC.
(DEVELOPMENT STATE COMPANY)
STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND THE PERIOD FROM
MARCH 4, 1998 TO DECEMBER 31, 1998 AND THE PERIOD FROM
MARCH 4, 1998 (DATE OF INCEPTION) TO SEPTEMBER 30, 1999
================================================================================
<TABLE>
<CAPTION>
Unaudited
Sept. 30 Dec. 31, March 4, 1999
1999 1998 to Sept. 30, 1999
<S> <C> <C> <C>
REVENUES $ -- $ -- $ --
------------ ------------ ------------
EXPENSES
Administrative 107,821 39,281 147,102
Amortization - license agreement - Note 3 3,754 -- 3,754
Amortization - investment - Note 4 277,778 -- 277,778
ACCRUED ROYALTIES - NOTE 3 3,754 -- 3,754
------------ ============ ------------
NET LOSS $ (393,107) $ (39,281) $ (432,388)
============ ============ ============
NET LOSS PER COMMON SHARE
Basic $ (0.034) $ --
------------ ------------
Diluted $ (0.033) $ --
------------ ------------
AVERAGE OUTSTANDING SHARES
Basic 11,600,000 8,800,000
------------ ------------
Diluted 11,800,000 9,000,000
------------ ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
39
DELTA CAPITAL TECHNOLOGIES, INC.
(DEVELOPMENT STATE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM MARCH 4, 1998 (DATE OF INCEPTION)
TO SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
Capital in
Excess of Accumulated
Common Stock Par Value Deficit
Shares Amount
<S> <C> <C> <C> <C>
Balance March 4, 1998 (date of inception) -- $ -- $ -- $ --
Issuance of common stock for services
At $0.0002 - March 1998 800,000 800 (593) --
Issuance of common stock for cash
At $0.0075 - June 1998 8,000,000 8,000 52,000 --
Net operating loss for the period March 4,
1998 to December 31, 1998 -- -- -- (39,291)
----------- ----------- ----------- -----------
Balance December 31, 1998 8,800,000 8,800 51,407 (39,281)
Issuance of common stock for 36% of
outstanding stock AltaCo - at $0.50 - 5,000,000 5,000 2,495,000 --
June 1, 1999 - Note 4
Net operating loss for the seven months
Ended July 31, 1999 -- -- -- (393,107)
----------- ----------- ----------- -----------
BALANCE SEPTEMBER 30, 1999 13,800,000 $ 13,800 $ 2,546,407 $ (432,388)
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
40
DELTA CAPITAL TECHNOLOGIES, INC.
(DEVELOPMENT STATE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE SEVEN MONTHS ENDED JULY 31, 1999 AND THE PERIOD FROM MARCH 4, 1998
DECEMBER 31, 1998 AND THE PERIOD FROM MARCH 4, 1998 (DATE OF INCEPTION)
TO JULY 31, 1999
<TABLE>
<CAPTION>
July 31, Dec. 31, March 4, 1999
1999 1998 To July 31,
1999
<S> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss $ (393,107) $ (39,281) $ (432,388)
Adjustments to reconcile net loss to net cash
provided by operating activities
Issuance of common capital stock for expenses -- 207 207
Amortization of license agreement and investment -
Note 3 and 4 277,847 -- 277,847
Changes in accounts receivable (6,487) -- (6,487)
Changes in accounts payable 10,435 -- 10,435
Accrued royalties - Note 3 3,754 -- 3,754
----------- ----------- -----------
Net (decrease) in Cash from Operations (107,558) (39,074) (146,632)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of marketing license (33,785) (33,785)
Purchase of office equipment (564) -- (564)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loans 131,481 -- 131,481
Proceeds from issuance of common stock -- 60,000 60,000
----------- ----------- -----------
Net Increase (Decrease) in Cash (10,426) 20,926 10,500
Cash at Beginning of Period 20,926 -- --
----------- ----------- -----------
Cash at End of Period $ 10,500 $ 20,926 $ 10,500
=========== =========== ===========
NON CASH OPERATING ACTIVITIES
Issuance of 800,000 shares common stock for expenses $ 207
-----------
Issuance of 5,000,000 shares common capital stock for 36% of outstanding
stock of AltaCo 2,500,000
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
41
DELTA CAPITAL TECHNOLOGIES, INC.
(DEVELOPMENT STATE COMPANY)
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. ORGANIZATION
The Company was incorporated under the laws of the State of Delaware on March 4,
1998 with authorized common stock of 25,000,000 shares at $0.001 par value. On
March 15, 1999, the Company completed a forward stock split of four shares for
each outstanding share. This report has been prepared using after stock split
shares from inception.
The Company was organized for the purpose of the acquisition of a license to
market a software computer program. See note 3.
The Company is in the development stage.
Since its inception, the Company has completed a Regulation D offering of
8,000,000 after stock split shares of its capital stock for cash of $60,000.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ACCOUNTING METHODS
The Company recognizes income and expenses based on the accrual method of
accounting.
DIVIDEND POLICY
The Company has not yet adopted a policy regarding payment of dividends.
INCOME TAXES
On December 31, 1998, the Company had a net operating loss carry forward of
$39,281. The tax benefit from the loss carry forward has been fully offset by a
valuation reserve because the use of the future tax benefit is doubtful, since
the Company has no operations on which to project future net profits.
The loss carry forward will expire in the year 2019.
EARNINGS (LOSS) PER SHARE
Earnings (loss) per share amounts are computed based on the weighted average
number of shares actually outstanding in accordance with FASB No. 128.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid instruments purchased with a maturity,
at the time of purchase, of less than three months, to be cash equivalents.
FOREIGN CURRENCY TRANSLATION
Part of the transactions of the Company were completed in Canadian dollars and
have been translated to US dollars as incurred, at the exchange rate in effect
at the time, and therefore, no gain or loss from the translations is recognized.
AMORTIZATION OF A CAPITALIZED MARKETING LICENSE
The Company amortizes the marketing license over its estimated useful life of
three years. Any remaining unamortized capitalized costs will be expensed if it
is shown to have an impairment in value or proven to be of no value. See note 3.
<PAGE>
42
DELTA CAPITAL TECHNOLOGIES, INC.
(DEVELOPMENT STATE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
FINANCIAL INSTRUMENTS
The carrying amounts of financial instruments, including cash, equipment,
marketing license, and accounts payable, are considered by management to be
their estimated fair values. These values are not necessarily indicative of the
amounts that the Company could realize in a current market exchange.
ESTIMATES AND ASSUMPTIONS
Management uses estimates and assumptions in preparing financial statements in
accordance with generally accepted accounting principles. Those estimates and
assumptions affect the reported amounts of the assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and
expenses. Actual results could vary from the estimates that were assumed in
preparing these financial statements.
3. PURCHASE OF MARKETING LICENSE
On June 1, 1999 the Company acquired a worldwide license to market computer
software known as relBuilder e-Suite of e-Business software from AltaCo (a
Canadian corporation). The software is used in various business fields to aid in
the development of internet businesses and technologies, which provides for
competitive shopping, maximizing re-use of corporate information by bringing
together data which is usually scattered across many systems.
The term of the license agreement is for three years and includes a purchase
price of $50,000 Cdn. which is due anytime before November 1, 1999, of which
$20,000 Cdn. had been paid by July 31, 1999, and royalty payments of 15% of the
net sales with a minimum amount of $50,000 Cdn. for the first year and $200,000
Cdn. for the second year, and $300,000 Cdn. for the third year. The agreement
can be canceled by notice after a 30-day default by either party or
automatically terminates if any royalty payment is more than 60 days past due
which will result in a loss of prior payments and a cancellation of any future
liability. The agreement can be renewed at the end of three years for an
unlimited time by the payment of $1 Cdn.
The purchase price of the marketing license of $50,000 Cdn. was capitalized and
amortized over 3 years, at the rate of $16,667 Cdn. each year, the estimated
useful life of the license, or a shorter period if the value of the license is
determined to be impaired.
The royalties to be paid under the agreement will be expensed.
All of the parties to the agreement have certain common officers and managers.
At the report date, the Company did not have the working capital necessary to
begin the marketing activity.
4. INVESTMENT
On June 1, 1999, the Company acquired 36% of the outstanding stock of AltaCo (a
corporation organized in Canada in April 1999) by the exchange of 5,000,000
common shares between each Company. AltaCo obtained the software outlined in
note 3 from SiCom Solutions Inc. (a Canadian corporation) under the same terms
and conditions as that given to the Company and except for this transaction,
AltaCo does not have any assets or operations. Although AltaCo had no assets,
the shares received were recorded on the books of the Company at $0.50 per
share, amounting to $2,500,000, basedon an estimated trading value of the
Company shares, and is considered by management to be the fair value of the
investment. The amount will be amortized over three years, the life of the
license agreement outlined in note 3.
The company has common officers and managers with AltaCo and SiCom Solutions
Inc.
<PAGE>
43
DELTA CAPITAL TECHNOLOGIES, INC.
(DEVELOPMENT STATE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
5. PURCHASE OF TRADE MARK
By an agreement in July 1999 and amended in December 1999, the Company purchased
the trade names "Clear Choice Media" and "Clear Choice Technologies" for $3,000.
The trademark will be amortized over a ten-year period or sooner if there is an
impairment of value.
6. NOTES PAYABLE
The Company has the following short-term notes payable outstanding.
NAME DATE OF NOTE TERM INTEREST AMOUNT
---- ------------ ---- -------- ------
Smart Communications Inc. June 30, 1999 One year 6% 112,681
Bonanza Management July 31, 1999 90 days 12% 20,284
7. RELATED PARY TRANSACTIONS
Related parties have acquired 36% of the common stock issued.
The Company purchased the marketing license outlined in note 3 from related
parties.
8. STOCK OPTIONS
On August 26, 1998, by verbal agreement, the Company issued stock options to
purchase 50,000 common shares to an officer at $0.03 per share that had an
expiration date of August 26, 2999 and on August 11, 1999 the expiration date of
the options was extended to December 31, 1999. The options were granted prior to
the shares of the Company having been approved for trading. In March 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 $0.0075 per share. On
September 15, 1999 the verbal agreement was reduced to writing. The options were
given as compensation for prior services and were considered to have no value on
the option date because the stock of the Company had no established market
value.
9. GOING CONCERN
The Company will need additional working capital to be successful in its planned
activity and to service its current debt for the coming year and therefore
continuation of the Company as a going concern is dependent upon obtaining the
additional working capital necessary to accomplish its objective. Management has
developed a strategy, which it believes will accomplish this objective and is
presently engaged in seeking various sources of additional working capital
including equity funding through a private placement, long term financing, and
completion of negotiations to access development and marketing support from a
major hardware/software company which has a program designed to further
e-Commerce and e-Business ventures, and increased revenues from sales which will
enable the company to operate for the coming year.
The accompanying financial statements do not include any adjustments to the
recorded assets or liabilities that might be necessary should the Company fail
in any of the above objectives and is unable to operate for the company year.
<PAGE>
44
EXHIBITS:
3(i) Articles of Incorporation dated March 4, 1998 together
with Amended Articles of Incorporation dated April 23,
1998
3(ii) By-Laws of Delta Capital dated April 23, 1998
4 See Exhibit 3(ii) for By-Laws
10(a) License Agreement between Delta Capital and 827109
Alberta Ltd. dated June 1, 1999
10(b) License Agreement between SiCom Solutions Inc. and
827109 Alberta Ltd. dated June 1, 1999
10(c) Letter from 827109 Alberta Ltd. to Delta Capital
Technologies Inc. dated September 2, 1999
acknowledging receipt of the $20,000 payment and
granting a three month extension of the $30,000
payment to November 1, 1999
10(d) Letter from SiCom Solutions Inc. to 827109 Alberta
Ltd. dated September 2, 1999 acknowledging receipt of
the $20,000 payment and granting a three month
extension of the $30,000 payment to November 1, 1999
27 Financial Data Schedule
99(a) Share Exchange Agreement between Delta Capital and
827109 Alberta Ltd. dated June 1, 1999
99(b) Stock Option Agreement between Delta Capital and
Judith Miller, Corporate Secretary and Director of
Delta Capital dated September 15, 1999
99(c) Letter from Delta Capital to Judith Miller date
January 7, 2000
99(d) Non-Distribution Agreement between Delta Capital and
Rajesh Taneja dated July 28, 1999
99(e) Letter from Rajesh Taneja dated December 3, 1999
regarding acquisition of company names by Delta
Capital.
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has caused this registration to be signed on its behalf by
the undersigned, thereunder duly authorized, on the 14th day of January, 2000.
<PAGE>
45
DELTA CAPITAL TECHNOLOGIES, INC.
Per:
/s/ Paul Davis
-------------------------------------
President and Chief Executive Officer
INDEX TO EXHIBITS
EXHIBIT DESCRIPTION
3(i)* Articles of Incorporation dated March 4, 1998 together
with Amended Articles of Incorporation dated April 23,
1998
3(ii)* By-Laws of Delta Capital dated April 23, 1998
4* See Exhibit 3(ii) for By-Laws
10(a)* License Agreement between Delta Capital and 827109
Alberta Ltd. dated June 1, 1999
10(b)* License Agreement between SiCom Solutions Inc. and
827109 Alberta Ltd. dated June 1, 1999
10(c)* Letter from 827109 Alberta Ltd. to Delta Capital
Technologies Inc. dated September 2, 1999
acknowledging receipt of the $20,000 payment and
granting a three month extension of the $30,000
payment to November 1, 1999
10(d)* Letter from SiCom Solutions Inc. to 827109 Alberta
Ltd. dated September 2, 1999 acknowledging receipt of
the $20,000 payment and granting a three month
extension of the $30,000 payment to November 1, 1999
27** Financial Data Schedule
99(a)* Share Exchange Agreement between Delta Capital and
827109 Alberta Ltd. dated June 1, 1999
99(b)* Stock Option Agreement between Delta Capital and
Judith Miller, Corporate Secretary and Director of
Delta Capital dated September 15, 1999
99(c)** Letter from Delta Capital to Judith Miller dated
January 7, 2000
99(d)** Non-Distribution Agreement between Delta Capital and
Rajesh Taneja dated July 28, 1999
99(e) Letter from Rajesh Taneja dated December 3, 1999
regarding acquisitions of Names by the company.
* to view this Exhibit please refer to 10SB Amendment No. 6 filed
January 5, 2000.
** to view this Exhibit please refer to 10SB Amendment No. 7 filed
January 11, 2000
RAJESH TANEJA
Suite 104 - 10668 - 138th Street, Surrey, BC V3T 4K5
December 3, 1999
VIA FACSIMILE
Delta Capital Technologies Inc.
Suite 255 - 999 - 8th Street South West
Calgary, Alberta
Dear Sirs:
RE: DELTA CAPITAL TECHNOLOGIES INC. (THE "COMPANY")
This will confirm my agreement to accept $3,000 cash in consideration of the
acquisition by the Company of the names "Clear Choice Media" and "Clear Choice
Technologies".
Accordingly, I confirm that you may cancel the 300,000 shares of the Company
which were previously issued to me as consideration for the names.
Yours truly,
/s/ Rajesh Taneja
RAJESH TANEJA
