U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarter ended June 30, 2000
--------------------------------------------------------------------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
Commission File No. 0-30118
DIRECTION TECHNOLOGIES, INC
--------------------------------------------------------------------------------
(Name of Small Business Issuer in its Charter)
NEVADA 88-0413417
--------------- --------------------
(State or Other Jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
PMB 723, 250 "H" St.,
Blaine, WA 98230
---------------------
(Address of Principle Executive Offices)
Issuer's Telephone Number: (604) 683-6648
Check whether the Issuer (1) filed all reports required to be filed by section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the Company was required to file such reports). And (2) has been
subject to such filing requirements for the past 90 days.
(1) Yes X No (2) Yes X No
---- ---- ---- ----
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(APPLICABLE ONLY TO CORPORATE ISSUERS)
State the number of shares outstanding of each Issuer's classes of common
equity, as of the latest practicable date:
June 30, 2000: Common Stock - 10,231,000
DOCUMENTS INCORPORATED BY REFERENCE
A description of any "Documents Incorporated by Reference" is contained in Item
6 of this report.
Transitional Small Business Issuer Format Yes No X
----- -----
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DIRECTION TECHNOLOGIES, INC.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements:
Balance Sheets as of June 30, 2000 and
December 31, 1999 5
Statements of Operations for the three months ended
June 30, 2000 and June 30, 1999 and the six months ended
June 30, 2000 and June 30, 1999 and from Inception through
June 30, 2000 6
Statements of Cash Flow for the three months ended
June 30, 2000 and June 30, 1999 and the six months ended
June 30, 2000 and June 30, 1999 and from Inception through
June 30, 2000 7
Notes to Financial Statements for the three months ended
June 30, 2000 and June 30, 1999 and the six months ended
June 30, 2000 and June 30, 1999 and from Inception through
June 30, 2000 9
Item 2. Management's Plan of Operations 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Securities Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8 - K 11
Signatures 11
Exhibit 27. Financial Data Schedule 12
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The Financial Statements of the Company required to be filed with this 10-QSB
Quarterly Report were prepared by management and commence on the following page,
together with related Notes. In the opinion of management, these Financial
Statements fairly present the financial condition of the Company, but should be
read in conjunction with the Financial Statements of the Company for the year
ended December 31, 1999 previously filed with the Securities and Exchange
Commission.
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DIRECTION TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
June 30, 2000 and December 31, 1999
(Stated in US Dollars)
Unaudited
---------
ASSETS
------
June 30,2000 Dec 31,1999
------------ -----------
Current
Cash $ 2,620 $ 14
Prepaid Expenses 56,000 -
Inventory 14,463 -
----------- ----------
73,083 14
License Fees 50,000 50,000
----------- ----------
Total Assets $ 123,083 $ 50,014
----------- ----------
LIABILITIES
-----------
Current
Accounts Payable $ 68,730 $ 53,605
Loans Payable 12,385 4,885
----------- ----------
Total Current Liabilities 81,115 58,490
----------- ----------
Total Liabilities 81,115 58,490
----------- ----------
STOCKHOLDERS' EQUITY (DEFICIENCY)
---------------------------------
Share Capital
Authorized:
50,000,000 common shares, $0.001 par value
10,000,000 preferred shares, $0.001 par value
Issued:
10,231,000 common shares 125,500 25,500
Deficit Accumulated During The Development Stage (83,532) (33,976)
----------- ----------
41,968 (8,476)
----------- ----------
$ 123,083 $ 50,014
----------- ----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
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DIRECTION TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF LOSS AND DEFICIT
FOR THE THREE MONTHS AND SIX MONTHS PERIODS ENDED JUNE 30, 2000 AND JUNE 30,
1999 AND FOR THE PERIOD APRIL 30, 1998 (INCEPTION) THROUGH JUNE 30, 2000.
(Stated in US Dollars)
Unaudited
---------
<TABLE>
<CAPTION>
Three Months Three Months Six Months Six Months April 30, 1999
Ended June 30, Ended June 30, Ended June 30, Ended June 30, (Date of
2000 1999 2000 1999 Inception) to
June 30, 2000
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Sales $ - $ - $ - $ - $ -
Gross Profit - - - - -
Operating Expense 47,723 11,653 49,556 28,075 78,532
----------- ----------- ----------- ----------- -----------
Other Items
Excess Value of
Shares Issued
On Investment - - - (2,500) (1,048)
Share of Loss of
Qiblah Tech. Ltd. - - - (728) (3,952
----------- ----------- ----------- ----------- -----------
Net Loss for
the Period (47,723) (11,653) (49,556) (31,303) (83,532)
Deficit Beginning
of Period (35,809) (20,500) (33,976) (850) -
----------- ----------- ----------- ----------- -----------
Deficit End of
Period $ (83,532) $ (32,153) $ (83,532) $ (32,153) $ (83,532)
=========== =========== =========== =========== ===========
Loss Per Share $ (0.00) $ (0.00) $ (0.00) $ (0.00) $ (0.00)
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
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DIRECTION TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS AND SIX MONTHS PERIODS ENDED JUNE 30, 2000 AND JUNE 30,
1999 AND FOR THE PERIOD APRIL 30, 1998 (INCEPTION) THROUGH JUNE 30, 2000.
(Stated in US Dollars)
Unaudited
---------
<TABLE>
<CAPTION>
Three Months Three Months Six Months Six Months April 30, 1999
Ended June 30, Ended June 30, Ended June 30, Ended June 30, (Date of
2000 1999 2000 1999 Inception) to
June 30, 2000
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS
FROM OPERATING
ACTIVITIES
Net (Loss) $ (47,723) $ (11,553) $ (49,556) $ (28,803) $ (83,532)
Add: Items Not
Affecting Cash
Share Of Qiblah
Tech Ltd. Loss - - - 728 3,952
Excess Value Of
Shares
Issued On Investment - - - - 1,048
----------- ----------- ----------- ----------- -----------
(47,723) (11,653) (49,556) (28,075) (78,532)
----------- ----------- ----------- ----------- -----------
Changes In Non-
Cash
Working Capital
Items
Prepaid Expenses (56,000) - (56,000) 650 (56,000)
Accounts Payable 17,151 9,361 15,125 57,861 68,730
Loans Payable 3,176 - 7,500 - 12,385
Inventory (14,463) - (14,463) - (14,463)
----------- ----------- ----------- ----------- -----------
Net Cash
(Used) From
Operating
Activities (97,859) (2,292) (97,394) 30,436 (67,880)
----------- ----------- ----------- ----------- -----------
Cash Flow
Used For
Investing
Activities
Acquisition Of
License Fees - - - (50,000) (50,000)
----------- ----------- ----------- ----------- -----------
Net Cash
Used For
Investment
Activities - - - (50,000) (50,000)
----------- ----------- ----------- ----------- -----------
</TABLE>
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DIRECTION TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS AND SIX MONTHS PERIODS ENDED JUNE 30, 2000 AND JUNE 30,
1999 AND FOR THE PERIOD APRIL 30, 1998 (INCEPTION) THROUGH JUNE 30, 2000.
(Stated in US Dollars)
Unaudited
---------
<TABLE>
<CAPTION>
Three Months Three Months Six Months Six Months April 30, 1999
Ended June 30, Ended June 30, Ended June 30, Ended June 30, (Date of
2000 1999 2000 1999 Inception) to
June 30, 2000
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS
Financing
Activities
Proceeds From
Issuance
Of Common Shares 100,000 - 100,000 20,500 120,500
----------- ----------- ----------- ----------- -----------
Net Cash
Provided By
Financing
Activities 100,000 - 100,000 20,500 120,500
----------- ----------- ----------- ----------- -----------
Net Increase
(Decrease)
In Cash 2,141 (2,292) 2,606 936 2,620
Cash At
Beginning
Of Period 479 3,228 14 - -
----------- ----------- ----------- ----------- -----------
Cash At End
Of Period $ 2,620 $ 936 $ 2,620 $ 936 $ 2,620
=========== =========== =========== =========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
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DIRECTION TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE PERIOD APRIL 30, 1998 (INCEPTION) THROUGH JUNE 30, 2000.
(Stated in US Dollars)
Unaudited
---------
<TABLE>
<CAPTION>
Deficit
Accumulated
During the
Additional Development
Common Shares Par value Paid-in Capital Stage Total
<S> <C> <C> <C> <C> <C>
Net Loss for the Period - $ - $ - $ (850) $ (850)
---------- ------------- ------------- --------- ---------
Balance, as at
December 31, 1998 - - - (850) (850)
For Cash:
Capital stock issued
pursuant to an offering
memorandum at $0.001 5,000,000 5,000 - - 5,000
Capital Stock issued
Pursuant to an offering
Memorandum at $0.50 31,000 31 15,469 - 15,500
For acquisition of Qiblah
Technologies Ltd. 5,000,000 5,000 - - 5,000
Net Loss for the year - - - (33,126) (33,126)
---------- ------------- ------------- --------- ---------
Balance, as at
December 31, 1999 10,031,000 10,031 15,469 (33,976) (8,476)
For Cash:
Capital stock subscribed
pursuant to a
subscription agreement
At $0.59 200,000 200 99,800 - 100,000
Net Loss for the period - - - (49,556) (49,556)
---------- ------------- ------------- --------- ---------
Balance as at June 30, 2000 10,231,000 $ 10,231 $ 115,269 $ (83,532) $ 41,968
========== ============= ============= ========= =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
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DIRECTION TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2000.
(Stated in US dollars)
----------------------
Unaudited
---------
Note 1 Interim Reporting
-----------------
While the information presented in the accompanying interim six months
financial statements is unaudited, it includes all adjustments which
are, in the opinion of management, necessary to present fairly the
financial position, results of operations and cash flows for the
interim periods presented. All adjustments are of a normal recurring
nature. It is suggested that these interim financial statements be read
in conjunction with the company's December 31, 1999 annual financial
statements.
Note 2 Common Stock
------------
Commitment
Share Purchase Warrants
At June 30, 2000, 200,000 share purchase warrants are outstanding. Each
warrant entitles the holder to purchase one additional share of the
company at $0.50 per share until April 17,2001.
Share Purchase Options
At June 30, 2000, 1,300,000 share purchase options are outstanding.
Each option entitles the holder to purchase one additional share of the
company at $0.75 per share until April 17. 2010.
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DIRECTION TECHNOLOGIES, INC
NOTES TO THE FINANCIAL STATEMENTS FOR THE THREE MONTHS AND SIX MONTHS PERIODS
ENDED JUNE 30, 2000 AND JUNE 30, 1999 AND FOR THE PERIOD APRIL 30, 1998
(INCEPTION) THROUGH JUNE 30, 2000.
1. BASIS OF PRESENTATION
In the opinion of management, the unaudited financial statements reflect all
normally recurring adjustments necessary to fairly present the Company's
financial position and results of operations for the periods indicated. The
accompanying interim financial statements should be read in conjunction with
the financial statements and related notes included in the Company's 10-KSB
for the period ended December 31, 1999, which has been filed with the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in the Company's annual financial statements
have been omitted from the quarterly financial statements based upon
Securities and Exchange Commissions rules and regulations. Net loss per
common and common equivalent share was computed based on the net loss
divided by the weighted average number of common and common equivalent
shares outstanding, unless antidilutive, during the year presented.
2. FINANCING
Common Additional
Shares Paid-in
# Par Value Capital
------- --------- -------
Balance, December 31, 1999 - $ - $ -
Issuance of shares:
- pursuant to offering
memorandum for cash
- at $0.50 per share 31,000 31 15,469
- at $0.001 per share 5,000,000 5,000 -
- pursuant to acquisition
of Qiblah Technologies
Limited 5,000,000 5,000 -
- pursuant to a Reg. S
Investment for cash
- At $0.50 per unit 200,000 200 99,800
---------- --------- ---------
Balance, June 30, 2000 10,231,000 $ 10,231 $ 115,269
========== ========= =========
The capital raised was used to fund operations. The Company anticipates needing
additional capital to fund operations during the upcoming year. The Company
intends to raise capital through a combination of the private placement of its
securities, establishing operating lines of credit, and through the sale of
product.
3. RELATED PARTY TRANSACTIONS
On January 12, 2000, the company acquired the shares of Qiblah International
Industries Ltd. (Qiblah"). Qiblah was a private company controlled by a
significant shareholder of the Company. On January 19, 2000, two directors
of Qiblah became directors of the company. Accounts payable at June 30,
2000 includes $50,000 (1999: $50,000) owing to E.T.C. Industries Ltd., a
company with a common director. Loans payable at June 30, 2000 includes
$2,500 (1999: $Nil) owing to directors of the Company
4. DESCRIPTION OF SECURITIES
The Company has two class of securities authorized; 50,000,000 shares of
$0.001 par value common voting stock and 10,000,000 of $0.001 par value
preferred shares. The holders of the Company's Common Stock are entitled to
one vote per share on each matter submitted to a vote at a meeting of
stockholders. The shares of Common Stock carry cumulative voting rights in
the election of directors. There are no preferred shares issued.
Stockholders of the Company have no pre-emptive rights to acquire additional
shares of Common Stock or other securities. The Common Stock is not subject
to redemption rights and carries no subscription or conversion rights. In
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Page 12
the event of liquidation of the Company, the shares of Common Stock are
entitled to share equally in corporate assets after satisfaction of all
liabilities. All shares of the Common Stock now outstanding are fully paid
and non-assessable.
During the quarter the Company determined that it is to the advantage and in
the best interest of the Company to grant Options to consultants, vendors,
customers, and others to afford additional incentive to increase their
efforts in providing significant services to the Company.
The terms and conditions of the options granted were for the optionee to
purchase a number of shares of the authorized $0.001 par value Common Stock
of the Company, at the purchase price of $0.75 per share for a period of 5
years.
The following options were granted: Rolf Papsdorf 200,000
Dieter Schindelhauer 200,000
Ken Liebscher 200,000
Dharcarium Ltda. 200,000
Sundance Capital Group 200,000
Bruce Haglund 200,000
Maurice Jacquesson 100,000
There is no provision in the Company's Articles of Incorporation, as
amended, or Bylaws that would delay, defer, or prevent a change in control
of the Company.
Item 2. Management's Plan of Operations
The Company is in its initial stages of development with no revenues or income
and is subject to all the risks inherent in the creation of a new business.
Since the Company's principal activities to date have been limited to
organizational activities, prospect development, and acquisition of interests,
it has no record of any revenue-producing operations. Consequently, there is no
operating history upon which to base an assumption that the Company will be able
to achieve its business plans.
During the quarter the Company has entered into negotiations to acquire two high
tech security industry companies based in Colorado. The companies have combined
gross revenues of $18,000,000. They are engaged in the hardware and software
aspects of providing electronic security and fire protection systems to large
public and industrial complexes worldwide. These acquisitions will add another
dimension to Direction's growing family of proprietary electronic products and
manufacturing facilities.
During the quarter the Company entered into an employment contract with Rolf
Papsdorf to provide services as General Manager of the Company. The contract is
for a period of one year and calls for compensation of $60,000 per year. The
Company also entered into a consulting agreement with Sundance Capital Group to
provide investment banking, international merchant banking, general business
consulting, including strategic business planning services and acquisition
analysis to the Company. The contract is for one year and the compensation is
$60,000.
PRINCIPAL PRODUCT.
One of the specific reasons the Company was founded is for the purpose of
entering into a world-wide license agreement with E.T.C. Industries Ltd. of
Vancouver, British Columbia, Canada to license certain technology, and obtain
advice in facilitating the production of electric vehicles using certain
technology developed by the licensor.
The other specific reason for formation of the Company is to purchase certain
assets of Qiblah International Industries Ltd. a British Columbia corporation,
of Vancouver, British Columbia, Canada (a non-operational holding company).
Qiblah International Industries Ltd. owns 50% of Qiblah Technologies Ltd. a duly
registered non-reporting, non-listed South African public corporation.This firm
has developed a state-of-the art electronic device called the Qiblah Locator, a
battery-operated hand-held device that indicates the direction of the Muslim
religious center Mecca from any location in the world. The Qiblah Locator is
designed to be of assistance to the more than 1.5 billion adherents of the
Muslim faith in the performance of their religious observations.
LIQUIDITY.
During the next 12 months, the Company will need significant working capital to
fund its marketing efforts and to manufacture product. The Company intends to
obtain working capital from the sale of product and through private investments
made by third parties. During the quarter, the Company approved the issuance
and sale of 200,000 shares at a price of US $0.50 per share and the issuance and
sale of 200,000 warrants at an exercise price of US $0.50 per share exercisable
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Page 13
at any time until the expiration of the Warrants on April 17, 2001. This
Agreement was executed by the parties in reliance upon the exemption from the
registration requirements under the Securities Act of 1933, as amended ("1933
Act"), afforded by Regulation S ("Regulation S") as promulgated by the
Securities and Exchange Commission ("SEC") under the Act.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None;
Item 2. Changes in Securities and Use of Proceeds.
During the second quarter of 2000, the Company issued 200,000
restricted shares of common stock to The Excalibur Group A.G. in reliance upon
the exemption from the registration requirements under the Securities Act of
1933, as amended ("1933 Act"), afforded by Regulation S ("Regulation S") as
promulgated by the Securities and Exchange Commission ("SEC") under the Act.
The funds received are designated for working capital.
Item 3. Defaults Upon Senior Securities.
None;
Item 4. Submission of Matters to a Vote of Security Holders.
None;
Item 5. Other Information.
On March 3, 2000 the Company was cleared by the NASD for trading on
the OTC Bulletin Board. The symbol is DRCG.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
None
(b) Reports on Form 8-K.
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
DIRECTION TECHNOLOGIES, INC
Date: 8/11/00 By: /s/ Rolf Papsdorf
President and Director
Date: 8/11/00 By: /s/ Dieter Schindelhauer
Secretary/Treasurer and Director
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