<PAGE> 1
- --------------------------------------------------------------------------------
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------------------------------------
FORM 10-KSB
[X] Annual Report Pursuant to Section 13 of 15(d) of the Securities Exchange
Act of 1934
For the fiscal year ended December 31, 1999
DELTA CAPITAL TECHNOLOGIES, INC.
Delaware, USA 98-0187705
(State of Other jurisdiction of (IRS Employer ID No.)
incorporation or organization)
SUITE 255, 999 - 8TH STREET, SW
CALGARY, ALBERTA T2R 1J5 CANADA
(Address of Principal Executive Offices)
(403) 244-7300
(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Act: None
Securities registered under Section 12(g) of the Act:
Common Stock with a par value of $0.001
(Title of Class)
Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past
90 days. Yes [X] No [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB [ ]
The Issuer's revenues for the most recent fiscal year was nil.
The aggregate market value of the Common Stock of the Registrant held by
non-affiliates of the Registrant on February 1, 2000, based on the
average closing bid and asked price of the Common Stock as quoted on the OTC
Bulletin Board on such date, was approximately $14,630,815.
The number of shares of the Registrant's Common Stock outstanding as of March
28, 2000 was 14,100,000 shares.
Documents incorporated by reference are contained in Item 13 of this Form
10-KSB.
- --------------------------------------------------------------------------------
<PAGE> 2
2
DELTA CAPITAL TECHNOLOGIES, INC.
ANNUAL REPORT ON FORM 10-KSB
TABLE OF CONTENTS
PART I
ITEM 1 - DESCRIPTION OF BUSINESS ........................................... 3
ITEM 2 - DESCRIPTION OF PROPERTY............................................ 10
ITEM 3 - LEGAL PROCEEDINGS.................................................. 10
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................ 10
PART II
ITEM 5 - MARKET FOR COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS....................................... 10
ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
OF OPERATION...................................................... 12
ITEM 7 - FINANCIAL STATEMENTS............................................... 14
ITEM 8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE............................ 15
PART III
ITEM 9 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
ACT............................................................... 15
ITEM 10 - EXECUTIVE COMPENSATION............................................ 15
ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT................................................... 16
ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.................... 17
ITEM 13 - EXHIBITS AND REPORTS ON FORM 8-K.................................. 18
<PAGE> 3
3
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 March 28, 2000 there were
14,100,000 common shares of Delta Capital issued and outstanding. Delta
Capital's principal business office and registered and records office is at
Suite 255, 999 - 8th St. SW Calgary, AB T2R 1J5 Canada.
Delta Capital is in the business of providing e-Business software and support
services.
Between March 4, 1998 and June 1, 1999 Delta Capital's focus was directed
towards assessing various potential acquisition targets in the Internet and
related fields. During that period Delta Capital spent minimal funds conducting
its assessment of various businesses. Funds required for administration of Delta
Capital during fiscal years ended December 31, 1998 and subsequent months came
from monies raised from initial investors. On June 1, 1999 Delta Capital entered
into the software development business.
SOFTWARE
On June 1, 1999 Delta Capital acquired the rights to an exclusive worldwide
license to the relBuilder(TM) Enterprise Suite of business intelligent
e-Commerce and e-Business software (the "Software") from 827109 Alberta Ltd.
("AltaCo"), an Alberta, Canada based private company. 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 US$33,785 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 US$33,785 in the
first year, US$135,000 in the second year, and US$200,000 in the third year (the
"Royalty Payments"). The term of the License Agreement is for three years
commencing June 1, 1999 and upon expiration of the term, Delta Capital may renew
the License Agreement for an unlimited term for the sum of one ($1.00) dollar.
AltaCo acquired its rights to the Software from SiCom Solutions Inc., an
Alberta, Canada based private company ("SiCom") on identical terms to the
License Agreement.
SHAREHOLDINGS
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.
<PAGE> 4
4
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
former Director of Delta Capital who resigned on February 15, 2000, owns no
shares of Delta Capital.
RESEARCH AND DEVELOPMENT
To date, Delta Capital has relied primarily on research and development of the
Software previously funded by SiCom. Delta Capital has also advanced monies, as
reflected in the financial statements under general and administrative expenses,
against payment obligations provided for in the License Agreement. As the
licensee of the Software , it will be Delta Capital's responsibility to fund and
direct future development of the Software. Delta Capital has engaged 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. As indicated, Delta Capital will
pay AltaCo fees based on industry standard rates for the services it is
provided.
DELTA CAPITAL'S PRODUCTS
The Software consists of a software engine called the "relBuilder(TM)" which is
the Core Technology for a suite of six enterprise-class applications which
permit companies and organizations to engage in e-Business. These applications
are fully developed and are currently marketed as product release number 1.5.
The Software applications are as follows:
1. ENTERPRISE COMMERCE APPLICATION: Delta Capital's Enterprise e-Commerce
Application provides merchants with the ability to conduct online sales
and merchandizing activities over the Internet. The Enterprise
e-Commerce Application has features which permit merchants to implement
cross-selling, up-selling, comparative shopping and other merchandizing
techniques designed to enhance their business. This technology can
operate on a standalone basis or can enhance other e-Commerce
solutions.
2. BACK OFFICE APPLICATION: The Back Office Application integrates
existing general ledger, accounts receivable and payable, inventory,
warehouse and other related back office functions with the Core
Technology utilizing IBM's new "San Francisco" software architecture.
3. ENTERPRISE DOCUMENT ASSEMBLY APPLICATION: The Document Assembly
Application is a content manager and document assembly tool that
maximizes re-use of corporate information by bringing together data
that is usually scattered across company-wide systems.
4. ENTERPRISE PROJECT MANAGEMENT APPLICATION: The Project Management
Application is equipped to handle cross-project resource analysis,
cross-project roll-ups of complex costing and estimating functions.
This technology integrates with such leading software as Microsoft
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.
<PAGE> 5
5
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 top American and Canadian markets
through its Partner Program over the course of the next 18 months with its first
target markets being Toronto, Calgary, New York, Boston, San Francisco and
Seattle. 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 The Matridigm 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 a fourth 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 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.
DIRECT CLIENTS
In anticipation of Delta Capital fully launching its Partner Program, it has
developed direct relationships with five client/customer companies: Shaw
Communications Inc., a cable company; Fairplay Network, a retail organization;
Chevron Canada Resources, an oil company; G & G Oil & Gas Trading Partners
Network, an oil and gas industry information initiative and Ryder Truck System
through Dunvegan Group Inc. 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(TM) 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(TM) core technology and software suite. These future alliances will
be contract-based agreements
<PAGE> 6
6
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(TM) core technology. Exposure of Delta
Capital's core technology began with Delta Capital's IBM "San Francisco"
technology Fast Start award and participation in the June 1999 Java One
conference. It has continued with Delta Capital's technical team, assisted by
IBM Rochester, Maryland based San Francisco and porting centre teams,
successfully completing certain tests of the relBuilder(TM) software suite. The
tests conducted were those types of tests typically conducted by IBM in
assessing software capabilities. Delta Capital 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(TM) 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(TM) 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(TM) 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 other 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, a former director of Delta
Capital, because management felt that the names would be valuable for future
marketing purposes.
EMPLOYEES
As at December 31, 1999 Delta Capital had two full time employees who were 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 had, as
of December 31, 1999 two part time individuals under contracts pursuant to which
one individual received C$2,500 from June through September and C$3,500 per
month from October through year-end pursuant to a contract which commenced June
15, 1999 and the other individual received C$7,500 a month pursuant to a
contract which commenced July 15, 1999. The C$2,500/$3,500 part time employee
spent 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 C$7,500
individual spent 75% of his time on Delta Capital business and the balance
consulting to non-competitive companies.
<PAGE> 7
7
PROPOSED ACQUISITION OF THE MATRIDIGM CORPORATION
On January 19th, 2000 Delta Capital signed a letter of intent (the "Letter of
Intent") to purchase The Matridigm Corporation ("Matridigm"), a privately held
marketing and communications company based in Calgary, Alberta, Canada. Pursuant
to the Letter of Intent, Delta Capital will acquire 100% of the issued shares of
Matridigm in exchange for 500,000 shares of Delta Capital and $100,000.
Matridigm, which has a well-established client base and has worked extensively
in the high tech sector, will operate as a fully owned subsidiary of Delta
Capital.
Under the Letter of Intent, Cecilia Lanz, President of Matridigm will continue
as President while Michael Steele of Matridigm will be appointed as Vice
President Marketing & Development of Delta Capital. Mr. Steele will also join
Delta Capital's Board of Directors. Ms. Lanz plans to expand Matridigm's
existing client base and also focus it's operations on development of a
high-tech new media center and e-Business specialty house. Mr. Steele will be
responsible for developing Delta Capital's global e-Business partner network and
should management and Delta Capital's board of directors decide to enter the
business, will lead development of Canada's first "Next Generation" Applications
Service Provider business.
Delta Capital and Matridigm are in the process of finalizing a formal Share
Exchange Agreement. The transaction is expected to close on or before March 31,
2000.
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 additional 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 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.
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
<PAGE> 8
8
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 /or will have personnel that are 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.
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 continue to 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.
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.
<PAGE> 9
9
The potential conflicts of Management referred to above are, 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.
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.
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.
<PAGE> 10
10
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 - 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 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 3 - 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 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS
No matters were submitted to a vote by shareholders during the fourth quarter of
the fiscal year ended December 31, 1999.
PART II
ITEM 5 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
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
each quarter between March 1999 and March 2000 are as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
QUARTER ENDED: MARCH 2000 DECEMBER 1999 SEPTEMBER 1999 JUNE 1999 MARCH 1999
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
HIGH 6.00 3.00 3.10 3.00 3.00
- ----------------------------------------------------------------------------------------------------------------
LOW 3.40 2.00 2.00 2.07 2.15
- ----------------------------------------------------------------------------------------------------------------
</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 had 48 registered
shareholders which included Cede & Co. holding 14,100,000 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.
<PAGE> 11
11
DIVIDENDS
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.
STOCK OPTIONS
None of Delta Capital's previously granted stock options have been exercised.
SHARE PURCHASE WARRANTS
To date Delta Capital has not issued any share purchase warrants.
SHARE ISSUANCES FROM INCEPTION (MARCH 4, 1998) TO MARCH 28, 2000
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. T. Davis
Capital Corp. is not related, directly or indirectly to Paul Davis, President of
Delta Capital. 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>
- ----------------------------------------------------------------------------------------------------------------
NAME NUMBER NAME NUMBER
OF SHARES OF SHARES
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
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> 12
12
During March, 2000 Delta Capital completed two private placements issuing in the
aggregate 300,000 shares of restricted common stock at US$2.00 per share. The
shares were exempt from registration under Regulation S as promulgated by the
Securities and Exchange Commission, under the Securities Act of 1933, as amended
and the appropriate restrictive legend was placed on the share certificates
issued.
ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Management discussion and analysis of financial condition and results of
operations for the period ended December 31, 1999.
While Delta Capital is at an early stage, it has successfully achieved its first
objective: the acquisition of Internet technology. The Company is now developing
aggressive plans to take this technology to market in the fourth quarter of
2000.
On June 1, 1999, Delta Capital acquired the exclusive worldwide license to the
relBuilder(TM) Enterprise Suite of intelligent e-Commerce and e-Business
software from 827109 Alberta Ltd. (AltaCo), an Alberta, Canada-based private
company. AltaCo subsequently changed its name to Delta Enterprise Technologies
Canada Inc. (but will be referred to as AltaCo for consistency throughout this
report). 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.
Subsequent to year end Delta Capital, on January 19, 2000, signed a letter of
intent to purchase The Matridigm Corporation, an Alberta, Canada-based private
company with special expertise in high tech marketing and communications. The
closing date was set for January 31, 2000. Subsequent negotiations led the
parties involved to conclude that the closing date for this transaction should
be moved forward to March 31, 2000. Management believes that the March 31, 2000
closing date is realistic and that the transaction will close as scheduled. The
addition of Matridigm, and its experienced staff will permit Delta Capital to
effectively execute its marketing and promotional program.
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:
1. PARTNER PROGRAM: an initiative that involves Delta Capital providing
products and services to established customers ("partners") who in turn
integrate Delta Capital's Software with other software to 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; The Matridigm Corporation, and Imaginet
Communications Group Inc., an Internet services provider. Delta Capital
will focus on establishing this program in Calgary, Toronto, New York,
Boston, San Francisco and Seattle so that sales will commence in the
fourth quarter of 2000.
2. STRATEGIC ALLIANCE PROGRAM: alliances currently exist that involve
Delta Capital having the right to market other company's products or
Delta Capital being able to utilize other companies' software products
within Delta Capital's product and service package. Delta Capital
currently has strategic alliances with BCE Emergis of Montreal and
indirectly through Delta-e with Smart Technologies Inc. of Calgary. The
services/software of BCE Emergis and Smart Technologies Inc. are
embedded in the relBuilder(TM) software and services offered by Delta
Capital and will be passed on to its customers. Delta Capital will
continue seeking out such alliances as an ongoing part of its marketing
activity.
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
such an affiliation with IBM, but as of mid March 2000 has not
established a formal relationship. Delta Capital has entered into
discussions with IBM to establish co-marketing and co-development
opportunities within IBM's
<PAGE> 13
13
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 continues to work directly with five
organizations that are either using early versions of Delta Capital's
Software and/or are working with Delta to further develop Delta's
Software/service package:
o Ryder Truck System, a national truck rental company through
The Dunvegen Group Inc;
o Shaw Communications Inc., a cable and communications company;
o Fairplay Network, a retail organization;
o Chevron Canada Resources, an oil company;
o G & G Oil and Gas Trading Partners Network, an oil and gas
industry information initiative.
The direct sale of software and service package is designed to develop
examples of Delta Capital's technology at work. These examples will be
used is proof of performance in Delta Capital's sales and promotional
activities. Delta Capital does not anticipate that it will explore many
more direct relationships once its Partner Program is fully in place.
A) Plan of Operation:
a) Delta Capital anticipates modest revenues in fiscal 2000 and
projects continuing losses from operations as it introduces its
relBuilder(TM) software and services offering to the marketplace.
Delta Capital plans to raise additional funds during the current
fiscal year in the amount of approximately US$2.5 million through
equity financing, participation in industry software/hardware
support programs and debt financing to fund 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 most
of Fiscal 2000 establishing its distribution and sales channels,
negotiating its partnership arrangements and working to gain
strategic partners to utilize Delta Capital's core technology
relBuilder(TM) software.
c) Delta Capital is undertaking market research and developing
various branding, sales and promotional strategies to gauge
marketplace acceptance of its software and services. Delta Capital
will not directly undertake any product development in the coming
12 months. However, The Company anticipates that AltaCo will
continue development of the relBuilder(TM)software suite under
direction from Delta Capital. Accordingly Delta Capital has an
arrangement with AltaCo to purchase services at fair market rates
to ensure continued development of the Software and provision of
support services and has advanced funds against its royalty
obligations to ensure the timely production of "commercial ready"
products.
d) Delta Capital management anticipates that it will hire a
significant number of employees in the coming year, including
personnel with specialized technology, financial experience and
specific industry sales experience to bolster its abilities to
enter the market place effectively.
e) Although Delta Capital has not experienced any Y2K problems to
date and management does not anticipate Y2K problems. Delta
Capital will continue to reduce any possible future risk of Y2K
problems 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, 1999.
<PAGE> 14
14
b) General and Administrative Expense
Expenses to fiscal year ended December 31, 1999 were $652,472
compared with $39,281 from March 4, 1998 through December 31,
1998. General and administrative expense was $154,682, the
majority of which was in the form of advances to AltaCo
against its royalty licensing agreement. The major expense item
for the period was license agreement amortization of $486,111, as
detailed in the financial statements which form part of this
report.
c) Net Loss from Operations
Net loss from operations in fiscal 1999 was $652,472. 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 initiatives. Management does not
believe that any material revenues will result from this activity
until the fourth quarter of 2000 as per its "Business Plan
2000-2003".
ITEM 7 - FINANCIAL STATEMENTS
DELTA CAPITAL TECHNOLOGIES, INC.
CONSOLIDATED FINANCIAL STATEMENTS FOR DECEMBER 31, 1999
Table of Contents
Page No.
--------
Independent Auditor's Report ........................................... F-1
Financial Statements:
Consolidated Balance Sheet..................................... F-2
Consolidated Statement of Operations........................... F-3
Consolidated Statement of Changes in Stockholders' Equity...... F-4
Consolidated Statement of Cash Flows........................... F-5
Notes to Consolidated Financial Statements..................... F-6
<PAGE> 15
PETERSON SULLIVAN P.L.L.C.
Suite 2300 - 601 Union Street, Seattle, Washington 98101
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders
Delta Capital Technologies, Inc.
We have audited the accompanying balance sheet of Delta Capital Technologies,
Inc. (a development stage company) as of December 31, 1999, and the related
statements of operations, changes in stockholders' equity, and cash flows for
the year then ended. 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 audit. The financial statements of Delta
Capital Technologies, Inc. as of December 31, 1998, were audited by other
auditors whose report dated September 10, 1999, expressed an unqualified opinion
on those statements.
We conducted our audit 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 from material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the 1999 financial statements referred to above present fairly,
in all material respects, the financial position of Delta Capital Technologies,
Inc. (a development stage company) as of December 31, 1999, and the results of
its operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles.
PETERSON SULLIVAN, P.L.L.C.
March 10, 2000
Seattle, Washington
F-1
<PAGE> 16
DELTA CAPITAL TECHNOLOGIES
(A Development Stage Company)
BALANCE SHEET
December 31, 1999
<TABLE>
<S> <C>
ASSETS
Current Assets
Cash $ 351
Accounts receivable - affiliate 82,041
-----------
Total current assets 82,392
Other Assets
Investment 2,013,889
Marketing license 27,216
Other 488
-----------
2,041,593
-----------
$ 2,123,985
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 40,912
Notes payable 214,619
-----------
Total current liabilities 255,531
Shareholders' Equity
Common stock, $.001 par value, 25,000,000 shares
authorized; 13,800,000 issued and outstanding 13,800
Additional paid-in capital 2,546,407
Deficit accumulated during the development stage (691,753)
-----------
1,868,454
-----------
$ 2,123,985
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE> 17
DELTA CAPITAL TECHNOLOGIES, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
For the Year Ended December 31, 1999, and the Period
From March 4, 1998 (Inception) to December 31, 1998
<TABLE>
<CAPTION>
Total
Accumulated
During the
Development
Stage
March 4, (March 4,
1998 to 1998 to
December 31, December 31,
1999 1998 1999)
------------ ------------ -------------
<S> <C> <C> <C>
Revenue $ - $ - $ -
Expenses
General and administrative (154,682) (39,281) (193,963)
License agreement amortization (6,569) (6,569)
Investment amortization (486,111) (486,111)
Interest expense (5,110) (5,110)
------------ ------------ -------------
Net loss $ (652,472) $ (39,281) $ (691,753)
============ ============ =============
Basic and diluted loss per share $ (0.06) $ (0.01) $ (0.08)
============ ============ =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 18
DELTA CAPITAL TECHNOLOGIES, INC.
(A Development Stage Company)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the Year Ended December 31, 1999, and the Period From March 4, 1998
(Inception) to December 31, 1998
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional During the
----------------------- Paid-in Development
Shares Amount Capital Stage Total
---------- ---------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Balance, March 4, 1998 - $ - $ - $ - $ -
Issuance of common stock for services (March 1998) 800,000 800 (593) 207
Issuance of common stock for cash (June 1998) 8,000,000 8,000 52,000 60,000
Net loss for the period (39,281) (39,281)
---------- ---------- ----------- ------------ ------------
Balance, December 31, 1998 8,800,000 8,800 51,407 (39,281) 20,926
Issuance of common stock (September 1999) 5,300,000 5,300 2,496,692 2,501,992
Cancellation of common stock (December 1999) (300,000) (300) (1,692) (1,992)
Net loss for the year (652,472) (652,472)
---------- ---------- ----------- ------------ ------------
Balance, December 31, 1999 13,800,000 $ 13,800 $ 2,546,407 $ (691,753) $ 1,868,454
========== ========== =========== ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 19
DELTA CAPITAL TECHNOLOGIES, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
For the Year Ended December 31, 1999, and the Period
From March 4, 1998 (Inception) to December 31, 1998
<TABLE>
<CAPTION>
Total
Accumulated
During the
Development
Stage
March 4, (March 4,
1998 to 1998 to
December 31, December 31,
1999 1998 1999)
----------- ------------ ------------
<S> <C> <C> <C>
Cash Flows From Operating Activities
Net loss $ (652,472) $ (39,281) $ (691,753)
Adjustments to reconcile net loss to net
cash used in operating activities
Issuance of common stock for expenses 207 207
Amortization 492,756 492,756
Increase in accounts payable 40,912 40,912
Increase in accounts receivable (82,041) (82,041)
----------- ---------- -----------
Net cash used in operating activities (200,845) (39,074) (239,919)
Cash Flows From Investing Activities
Purchase of marketing license (33,785) (33,785)
Purchase of office equipment (564) (564)
----------- ---------- -----------
Net cash used in investing activities (34,349) (34,349)
Cash Flows From Financing Activities
Proceeds from loans 214,619 214,619
Proceeds from issuance of common stock 60,000 60,000
----------- ---------- -----------
Net cash provided by financing activities 214,619 60,000 274,619
----------- ---------- -----------
Net increase (decrease) in cash (20,575) 20,926 351
Cash, beginning of period 20,926
----------- ---------- -----------
Cash, end of period $ 351 $ 20,926 $ 351
=========== ========== ===========
</TABLE>
No cash payments for interest or income taxes have been made.
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 20
NOTES TO THE FINANCIAL STATEMENTS
Note 1. The Company and Summary of Significant Accounting Policies
Delta Capital Technologies, Inc. ("the Company") was incorporated on March 4,
1998, in Delaware. The Company is currently in the development stage. The
purpose of the Company is to market computer software in the United States and
Canada. No revenues have yet been earned from this activity.
In June 1999, the Company acquired approximately 36% of the outstanding shares
of common stock of another company in exchange for 5,000,000 shares of its own
common stock. The actual exchange of shares occurred in September 1999. The
other company owns the right to software which is to be marketed by the Company
under a three-year marketing license agreement. The software is to be used by
various businesses to assist in the development of internet businesses and
technology. The market for such software is extremely competitive.
The acquisition of the shares in the other company was a nonmonetary transaction
which was valued at $2,500,000 based on management's estimate of the trading
value of the Company's shares. This investment is being amortized over its
estimated useful life of three years which is in accordance with the nature of
the transaction. Management believes no impairment of this asset has occurred.
The Company entered into the marketing license agreement in June 1999 for cash
of $33,785. The license cost is being amortized over the three-year life of the
agreement. Under this agreement, the Company is to pay a royalty of 15% of net
sales of the software. Minimum royalty payments of $33,785, $135,000 and
$200,000 are required under the agreement for the first, second and third year,
respectively, of the agreement. The agreement may be renewed beyond the initial
three-year term for a nominal amount. The royalty amounts will be expensed as
incurred.
Stock-Based Compensation
The Company accounts for stock-based compensation using Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees." Accordingly,
compensation cost for stock options granted to employees is measured as the
excess, if any, of the quoted market price of the Company's stock at the date of
the grant over the amount an employee is required to pay for the stock.
The Company granted options to an officer in August 1998 to acquire 200,000
shares of common stock at $.0075 each. The options expire March 21, 2000. No
compensation expense was recorded at the grant date. The pro forma amounts
required to be calculated by Statement of Financial Accounting Standards No. 123
are not material to these financial statements. Also, these options have not
been included in the computation of earnings per share because they are
antidilutive.
F-6
<PAGE> 21
Note 1. (Continued)
Taxes on Income
The Company accounts for income taxes under an asset and liability approach that
requires the recognition of deferred tax assets and liabilities for expected
future tax consequences of events that have been recognized in the Company's
financial statements or tax returns. In estimating future tax consequences, the
Company generally considers all expected future events other than enactments of
changes in the tax laws or rates.
Earnings Per Share
Basic earnings per share is computed by dividing income available to common
shareholders by the weighted average number of common shares outstanding in the
period. Diluted earnings per share takes into consideration common shares
outstanding (computed under basic earnings per share) and potentially dilutive
common shares. The weighted average number of shares was 10,449,314 and
6,450,165 for the year ended December 31, 1999 and for the period March 4, 1998
through December 31, 1998, respectively. The weighted average number of shares
was 8,632,330 for the period from March 4, 1998 to December 31, 1999.
Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Segment Reporting
No revenue has been generated as a result of operations. Therefore, management
has not defined any segments for the Company.
Comprehensive Income
There are no reconciling items between the net loss presented in the Statements
of Operations and comprehensive loss as defined by Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income."
New Accounting Standards
New accounting standards issued through the date of the independent auditors'
report do not have an effect on these financial statements.
F-7
<PAGE> 22
Note 2. Income Taxes
The reconciliation of income tax computed at the federal statutory rate to
income tax expense is as follows:
<TABLE>
<CAPTION>
December 31
-------------------------
1999 1998
---------- --------
<S> <C> <C>
Tax at statutory rate $ (222,000) $ (7,500)
Permanent difference, amortization of investment 165,250 -
Change in valuation allowance for deferred tax asset 56,750 7,500
---------- --------
Income tax expense $ - $ -
========== ========
</TABLE>
The Company's deferred tax asset is as follows:
<TABLE>
<CAPTION>
December 31
-------------------------
1999 1998
---------- --------
<S> <C> <C>
Net operating loss carryforwards $ 55,000 $ 7,500
Acquired marketing license 9,250 -
---------- --------
Deferred tax asset 64,250 7,500
Less valuation allowance (64,250) (7,500)
---------- --------
Net deferred tax asset $ - $ -
========== ========
</TABLE>
The Company's net operating loss carryforwards will expire $161,000 in 2019 and
$39,000 in 2018.
Note 3. Notes Payable
The Company had two unsecured notes payable at December 31, 1999, and none at
December 31, 1998. The notes are in the principal amount of $194,619 due July
31, 2000 and $20,000 due June 30, 2000 and bear interest at 12% and 6%,
respectively. The fair value of these notes is equal to their carrying value
because of their short durations.
Note 4. Subsequent Event
In March 2000, the Company sold 200,000 shares of its common stock to a third
party for a total of $400,000 cash.
F-8
<PAGE> 23
15
ITEM 8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 9 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
NAME AGE POSITION
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Paul Davis 48 President, CEO and Director since June 4, 1999
- ----------------------------------------------------------------------------------------------
Michael E. Horsey (1) 58 Chairman of the Board and Director since February 4, 2000
- ----------------------------------------------------------------------------------------------
Kevin Wong 26 Director since June 4, 1999
- ----------------------------------------------------------------------------------------------
Rajesh Taneja (2) 29 former Director (June 4, 1999 to February 15,2000)
- ----------------------------------------------------------------------------------------------
Judith Miller 59 Corporate Secretary and Director since April 28, 1998
- ----------------------------------------------------------------------------------------------
</TABLE>
(1) Appointed as Chairman of the Board and Director on February 4, 2000
(2) Resigned as Director on February 15, 2000
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.
MICHAEL E. HORSEY, Chairman of the Board and Director of Delta Capital, is the
principal of Stadium Partners Services Inc. which assists sports and
entertainment owners and operators in the development and operation of
facilities. Mr. Horsey is also the former President of Northwest Arena
Corporation, the developer of the $175 million General Motors Place in
Vancouver, British Columbia. He is a former Deputy Minister of Tourism for the
Province of British Columbia and an Executive Vice-President of a major Canadian
advertising agency. Mr. Horsey has had a long-standing interest in technology,
having served as a director for Net Nanny, the Vancouver-based Internet
screening filter Software Company and he has been involved in several high tech
ventures.
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.
RAJESH TANEJA, former Director of Delta Capital between June 4, 1999 and
February 15, 2000, 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.
During Delta Capital's fiscal year ended December 31, 1999 Paul Davis, Judith
Miller, Rajesh Taneja, Kevin Wong and 827109 Alberta Ltd. failed to file initial
Form 3's and annual Form 5 statements required by Section 16(a) and 23(a) of the
Exchange Act. None of those parties have traded in securities of Delta Capital
since the date they were obligated to file and accordingly those parties are not
delinquent in filing Form 4's.
ITEM 10 - EXECUTIVE COMPENSATION
The following table sets forth certain compensation paid or accrued by the
Company to Mr. Paul Davis, Delta Capital's current President during the fiscal
years ended December 31, 1998 and 1999.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG TERM COMPENSATION
----------------------------------------------------------------------
AWARDS PAYOUTS
- -------------------------------------------------------------------------------------------------------------------
NAME AND YEAR SALARY BONUS OTHER SECURITIES RESTRICTED LTIP ALL OTHER
PRINCIPAL ENDING ANNUAL UNDER SHARES OR PAYOUTS COMPENSATION
POSITION COMPENSATION OPTIONS RESTRICTED
GRANTED SHARE UNITS
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Paul Davis 1998 Nil Nil Nil Nil Nil Nil Nil
President 1999 Nil Nil Nil Nil Nil Nil Nil
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
Note: There were no compensation payments to Chief Executive Officer for
preceding 3 yrs.
Rajesh Taneja, former director and Judith Miller, Corporate Secretary received
C$15,000 and C$17,500, respectively, during 1999. No other Executive
Officers of Delta Capital received any reportable salary or bonus during 1999.
OPTION GRANTS IN LAST FISCAL YEAR
No options were granted in fiscal 1999.
<PAGE> 24
16
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. By consent resolution dated March 16, 2000, the stock option expiry date
was extended again to March 31, 2001. 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.
COMPENSATION OF DIRECTORS
None of the Directors receive Director's fees.
EMPLOYMENT CONTRACTS
Delta Capital does not have written employment contracts with any of its
personnel.
ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 28, 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>
- ------------------------------------------------------------------------------------------------------------
NAME, MUNICIPALITY OF RESIDENCE AND OFFICE HELD COMMON SHARES PERCENTAGE OF
BENEFICIALLY OWNED COMMON SHARES
DIRECTLY OR INDIRECTLY
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Michael E. Horsey(1) Nil Nil
502 - 1230 Hamilton Street, Vancouver, BC V6B 2S8
Chairman of the Board and Director
- ------------------------------------------------------------------------------------------------------------
Paul Davis(2) 5,000,000 36.23%
8 Stratton Place SW, Calgary, Alberta T3H 1T6
President and Director
- ------------------------------------------------------------------------------------------------------------
Kevin Wong(3) 803,571 5.82%
341 - 33rd Avenue NE, Calgary, Alberta T2E 2H9
Director
- ------------------------------------------------------------------------------------------------------------
Rajesh Taneja(4) Nil Nil
#104, 10668 - 138th Street, Surrey, BC V3T 4K5
former Director (June 4, 1999 to February 15, 2000)
- ------------------------------------------------------------------------------------------------------------
Judith Miller 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) Appointed as Chairman of the Board and Director effective February 4,
2000
(2) 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.
(3) 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.
(4) Resigned as Director on February 15, 2000
<PAGE> 25
17
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 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.
STOCK OPTION PLAN
Delta Capital does not have a stock option plan, however, the Company did enter
into a verbal Stock Option Agreement with Judith Miller, a Director and officer
of 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. By consent resolution dated March 16, 2000, the stock
option expiration date was again extended to March 31, 2001. To date Ms.
Miller's stock options have not been exercised.
PENSION PLANS
Delta Capital does not have a defined benefit pension plan that provides annual
benefits to any Executive Officers.
ITEM 12 - 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.
Michael E. Horsey, Chairman of the Board and Director, does not hold any shares.
Paul Davis, President and Director of Delta Capital and President and Director
of AltaCo, holds 6,750,000 shares of AltaCo and 3,140,857 shares of SiCom. Mr.
Davis receives $6,000.00 per month as an employee of AltaCo.
Kevin Wong, Director of Delta Capital and is Director and Vice-President
Technology of AltaCo. Mr. Wong owns 2,250,000 shares of AltaCo and 440,000
shares of SiCom and he receives C$4,000 per month as an employee of the AltaCo.
Rajesh Taneja, former Director of Delta Capital received 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, 2001. 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.
<PAGE> 26
18
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 former Director of Delta
Capital received 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 and Kevin Wong holds 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 C$3,000. Mr.
Taneja is a former Director and employee of Delta Capital.
(d) Verbal Lease Agreement:
Pursuant to a verbal agreement between Delta Capital and AltaCo,
Delta Capital utilizes, without charge, premises leased by
AltaCo in Calgary, Alberta.
(e) Stock Option Agreement:
Judith Miller, a Director and officer of Delta Capital, entered
into 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. By consent resolution dated March
16, 2000 the stock option expiration date was extended again to
March 31, 2001.
ITEM 13 - EXHIBITS AND REPORTS ON FORM 8-K
No reports were filed on Form 8-K during the fourth quarter of the period
covered by this Form 10KSB.
EXHIBIT DESCRIPTION
2.1* Articles of Incorporation dated March 4, 1998 together with Amended
Articles of Incorporation dated April 23, 1998
2.2* By-Laws of Delta Capital dated April 23, 1998
6.1* License Agreement between Delta Capital and 827109 Alberta Ltd.
dated June 1, 1999
6.2* License Agreement between SiCom Solutions Inc. and 827109 Alberta
Ltd. dated June 1, 1999
<PAGE> 27
19
6.3* 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
6.4* 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
6.5* Share Exchange Agreement between Delta Capital and 827109 Alberta
Ltd. dated June 1, 1999
6.6* Stock Option Agreement between Delta Capital and Judith Miller,
Corporate Secretary and Director of Delta Capital dated September
15, 1999
6.7** Letter from Delta Capital to Judith Miller dated January 7, 2000
6.8** Non-Distribution Agreement between Delta Capital and Rajesh Taneja
dated July 28, 1999
6.9*** Letter from Rajesh Taneja dated December 3, 1999 regarding
acquisition of corporate names by Delta Capital
6.10**** Letter of Intent between Delta Capital and The Matridigm Corporation
dated January 19, 2000
6.11**** Amended to the Letter of Intent between Delta Capital and The
Matridigm Corporation dated January 30, 2000
23**** Consent letter from Peter Sullivan P.L.L.C.
27**** Financial Data Schedule
* Filed as an exhibit with Delta Capital's Form 10SB filed with the SEC on
January 5, 2000
** Filed as an exhibit with Delta Capital's Form 10SB filed with the SEC on
January 11, 2000
*** Filed as an exhibit with Delta Capital's Form 10SB filed with the SEC on
January 14, 2000
**** Filed herewith
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
causes this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
DELTA CAPITAL TECHNOLOGIES, INC.
Per:
/s/ Paul Davis
----------------------------------
Paul Davis
President and Director
Dated: March 28, 2000
In accordance with the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant and in the
capacities indicated.
Signatures:
/s/ Paul Davis
-------------------------------------
Paul Davis
President and Director
<PAGE> 28
20
/s/ Michael E. Horsey
-------------------------------------
Michael E. Horsey
Chairman of the Board and Director
/s/ Judith Miller
-------------------------------------
Judith Miller
Secretary and Director
Dated: March 28, 2000
INDEX TO EXHIBITS
EXHIBIT DESCRIPTION
2.1* Articles of Incorporation dated March 4, 1998 together with Amended
Articles of Incorporation dated April 23, 1998
2.2* By-Laws of Delta Capital dated April 23, 1998
6.1* License Agreement between Delta Capital and 827109 Alberta Ltd.
dated June 1, 1999
6.2* License Agreement between SiCom Solutions Inc. and 827109 Alberta
Ltd. dated June 1, 1999
6.3* 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
6.4* 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
6.5* Share Exchange Agreement between Delta Capital and 827109 Alberta
Ltd. dated June 1, 1999
6.6* Stock Option Agreement between Delta Capital and Judith Miller,
Corporate Secretary and Director of Delta Capital dated September
15, 1999
6.7** Letter from Delta Capital to Judith Miller dated January 7, 2000
6.8** Non-Distribution Agreement between Delta Capital and Rajesh Taneja
dated July 28, 1999
6.9*** Letter from Rajesh Taneja dated December 3, 1999 regarding
acquisition of corporate names by Delta Capital
6.10**** Letter of Intent between Delta Capital and The Matridigm
Corporation dated January 19, 2000
6.11**** Amended to the Letter of Intent between Delta Capital and The
Matridigm Corporation dated January 30, 2000
23**** Consent of Peterson Sullivan P.L.L.C. dated March 27, 2000
27**** Financial Data Schedule
* Filed as an exhibit with Delta Capital's Form 10SB filed with the SEC on
January 5, 2000
** Filed as an exhibit with Delta Capital's Form 10SB filed with the SEC on
January 11, 2000
*** Filed as an exhibit with Delta Capital's Form 10SB filed with the SEC on
January 14, 2000
**** Filed herewith
<PAGE> 1
21
EXHIBIT 6.10
This letter of Intent is made the 19th day of January 2000, between
Delta Capital Technologies Inc.
Suite B-201
1331 Homer Street
Vancouver, BC V6B 5M5
Canada (herein after "Delta")
and
Matridigm Corporation
Suite 804
16th Ave SW
Calgary, AB T2R 0S9
Canada (herein after "Matridigm")
and shall outline the basic terms of an agreement to be executed at a later
date.
Terms:
1. Delta is a public company trading on the OTC Electronic Bulletin Board
and its focus is the e-Business industry;
2. The parties agree that a formal agreement clarifying the terms of this
letter of intent will be drafted and that the parties shall complete
the agreement prior to January 31, 2000;
3. Delta shall acquire all the shares from the shareholders of Matridigm;
4. Delta shall issue 500,000 shares ("the Delta shares") in exchange for
all the shares of Matridigm;
5. Delta shall pay to Matridigm $100,000 cash within 30 days of closing;
6. Delta shall appoint Michael Steele of Matridigm to its Board of
Directors;
7. Delta shall put in place not later than April 1, 2000 a Stock Option
Plan whereby the Company is authorized to issue annually up to five per
cent (5%) of the total number of common shares issued and outstanding
as of December 31, of the proceeding year. These options shall be
available to directors, employees and consultants as scheduled in the
completed agreement;
8. Delta shall enter into employment contracts with its key employees, to
include key Delta and Matridigm employees prior to the close of this
transaction;
9. Delta currently plans to maintain Matridigm as a wholly subsidiary but
it reserves the right to amalgamate at a future date;
10. Matridigm has provided Delta with financial and other documentation for
Delta's due diligence;
11. It is understood by the parties that prior to Delta completing the
agreement, it shall require Board of Directors approval.
The parties agree to these general terms and further agree to negotiate in good
faith a mutually satisfactory final contract using this document as its basis.
/S/ Paul F. Davis
- --------------------------------------
Paul F. Davis
Delta Capital Technologies Inc.
/S/ Mike Steele /S/ Cecilia Lanz
- -------------------------------------- --------------------------------------
Mike Steele Cecilia Lanz
Matridigm Corporation
<PAGE> 1
22
EXHIBIT 6.11
This letter of Intent is made the 30th day of January 2000, between
Delta Capital Technologies Inc.
Suite B-201
1331 Homer Street
Vancouver, BC V6B 5M5
Canada (herein after "Delta")
and
Matridigm Corporation
Suite 804
16th Ave SW
Calgary, AB T2R 0S9
Canada (herein after "Matridigm")
and shall outline the basic terms of an agreement to be executed at a later
date.
Terms:
1. Delta is a public company trading on the OTC Electronic Bulletin Board
and its focus is the e-Business industry;
2. The parties agree that a formal agreement clarifying the terms of this
letter of intent will be drafted and that the parties shall complete
the agreement prior to March 31, 2000;
3. Delta shall acquire all the shares from the shareholders of Matridigm;
4. Delta shall issue 500,000 shares ("the Delta shares") in exchange for
all the shares of Matridigm;
5. Delta shall pay to Matridigm $100,000 cash within 30 days of closing;
6. Delta shall appoint Michael Steele of Matridigm to its Board of
Directors;
7. Delta shall put in place not later than April 1, 2000 a Stock Option
Plan whereby the Company is authorized to issue annually up to five per
cent (5%) of the total number of common shares issued and outstanding
as of December 31, of the proceeding year. These options shall be
available to directors, employees and consultants as scheduled in the
completed agreement;
8. Delta shall enter into employment contracts with its key employees, to
include key Delta and Matridigm employees prior to the close of this
transaction;
9. Delta currently plans to maintain Matridigm as a wholly subsidiary but
it reserves the right to amalgamate at a future date;
10. Matridigm has provided Delta with financial and other documentation for
Delta's due diligence;
11. It is understood by the parties that prior to Delta completing the
agreement, it shall require Board of Directors approval.
The parties agree to these general terms and further agree to negotiate in good
faith a mutually satisfactory final contract using this document as its basis.
/S/ Paul F. Davis
- ------------------------------------
Paul F. Davis
Delta Capital Technologies Inc.
/S/ Mike Steele
- ------------------------------------
Mike Steele
Matridigm Corporation
<PAGE> 1
23
PETERSON SULLIVAN P.L.L.C.
601 UNION STREET SUITE 2300 SEATTLE WA 98101 (206)382-7777 FAX 382-7700
CERTIFIED PUBLIC ACCOUNTANTS
EXHIBIT 23
Independent Auditors' Consent
We hereby consent to the use of our auditors' report dated March 10, 2000, on
the Delta Capital Technologies, Inc. financial statements as of December 31,
1999, and for the year then ended, included in the Delta Capital Technologies,
Inc. Form 10-KSB for the year ended December 31, 1999.
PETERSON SULLIVAN P.L.L.C.
March 28, 2000
Seattle, Washington
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the audited
balance sheets of the Company at December 31, 1999 and December 31, 1998 and the
statement of operations, stockholders' equity, and cash flow for the period
January 1 to December 31, 1999 and the period from March 4, 1998 (date of
inception) to December 31, 1998.
</LEGEND>
<CIK> 0001066764
<NAME> DELTA CAPITAL TECHNOLOGIES, INC.
<CURRENCY> U.S. DOLLARS
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1999
<PERIOD-START> JAN-01-1998 JAN-01-1999
<PERIOD-END> DEC-31-1998 DEC-31-1999
<EXCHANGE-RATE> 1 1
<CASH> 20,926 351
<SECURITIES> 0 2,013,889
<RECEIVABLES> 0 82,041
<ALLOWANCES> 0 488
<INVENTORY> 0 0
<CURRENT-ASSETS> 20,926 82,392
<PP&E> 0 27,216
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 20,926 2,123,985
<CURRENT-LIABILITIES> 0 255,531
<BONDS> 0 0
0 0
0 0
<COMMON> 8,800,000 13,800,000
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 20,926 2,123,985
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> (39,281) (652,472)
<LOSS-PROVISION> (39,281) (691,753)
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 0 0
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (39,281) (652,472)
<EPS-BASIC> 0 (0.06)
<EPS-DILUTED> 0 (0.07)
</TABLE>
