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 September 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
---- ---- ---- ----
<PAGE>
Page 2
(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:
September 30, 2000: Common Stock - 10,233,000
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
----- -----
<PAGE>
Page 3
DIRECTION TECHNOLOGIES, INC.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements:
Balance Sheets as of September 30, 2000 and
December 31, 1999 5
Statements of Operations for the three months ended
September 30, 2000 and September 30, 1999 and the nine months ended
September 30, 2000 and September 30, 1999 and from Inception through
September 30, 2000 6
Statements of Cash Flow for the three months ended
September 30, 2000 and September 30, 1999 and the nine months ended
September 30, 2000 and September 30, 1999 and from Inception through
September 30, 2000 7
Notes to Financial Statements for the three months ended
September 30, 2000 and September 30, 1999 and the nine months ended
September 30, 2000 and September 30, 1999 and from Inception through
September 30, 2000 11
Item 2. Management's Plan of Operations 12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 3. Defaults upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Securities Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8 - K 13
Signatures 13
Exhibit 27. Financial Data Schedule
<PAGE>
Page 4
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.
<PAGE>
Page 5
DIRECTION TECHNOLOGIES INC.
(A Development Stage Company)
BALANCE SHEETS
September 30, 2000 and December 31, 1999
(Stated in US Dollars)
(Unaudited)
---------
ASSETS September 30, December 31,
------
2000 1999
---- ----
Current
Cash $ 310 $ 14
Prepaid expenses 31,000 -
Inventory 24,463 -
Loan receivable 5,000 -
---------- ----------
60,773 14
License fees 75,225 50,000
---------- ----------
$ 135,998 $ 50,014
========== ==========
LIABILITIES
Current
Accounts payable $ 84,228 $ 53,605
Loans payable 8,885 4,885
---------- ----------
93,113 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:
10,320,000 common shares - Note 2 175,635 25,500
Deficit accumulated during the development
stage (132,740) (33,976)
---------- ----------
42,885 (8,476)
---------- ----------
$ 135,998 $ 50,014
========== ==========
The accompanying notes are an integral part of these financial statements
<PAGE>
Page 6
DIRECTION TECHNOLOGIES INC.
(A Development Stage Company)
STATEMENTS OF LOSS AND DEFICIT
for the three and nine month periods ended September 30, 2000 and 1999
and for the period April 30, 1998 (Date of Inception) to September 30, 2000
(Stated in US Dollars)
(Unaudited)
---------
<TABLE>
<CAPTION>
April 30, 1998
Three Three Nine Nine (Date of
months ended months ended months ended months ended Inception) to
September 30, September 30, September 30, September 30, September 30,
2000 1999 2000 1999 2000
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Operating expenses $ 49,208 $ 5,109 $ 98,764 $ 33,184 $ 127,740
----------- ----------- ----------- ----------- -----------
Loss before other items (49,208) (5,109) (98,764) (33,184) (127,740)
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 (49,208) (5,109) (98,764) (36,412) (132,740)
Deficit, beginning of period (83,532) (32,153) (33,976) (850) -
----------- ----------- ----------- ----------- -----------
$ (132,740) $ (37,262) $ (132,740) $ (37,262) $ (132,740)
=========== =========== =========== =========== ===========
Loss per share $ (0.00) $ (0.00) $ (0.01) $ (0.00)
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE>
Page 7
DIRECTION TECHNOLOGIES INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
for the three and nine month periods ended September 30, 2000 and 1999
and for the period April 30, 1998 (Date of Inception) to September 30, 2000
(Stated in US Dollars)
(Unaudited)
---------
<TABLE>
<CAPTION>
April 30, 1998
Three Three Nine Nine (Date of
months ended months ended months ended months ended Inception) to
September 30, September 30, September 30, September 30, September 30,
2000 1999 2000 1999 2000
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Cash Flows from Operating
Activities
Net (loss) $ (49,208) $ (5,109) $ (98,764) $ (33,912) $ (132,740)
Add: items not affecting cash
Share of Qiblah Tech. Ltd.
(loss) - - - 728 3,952
Excess value of shares
issued on investment - - - 2,500 1,048
----------- ----------- ----------- ----------- -----------
(49,208) (5,109) (98,764) (30,684) (127,740)
Change in non-cash items
Prepaid expenses 25,000 (500) (31,000) 150 (31,000)
Accounts payable 15,498 706 30,623 58,567 84,228
Loans payable (3,500) 4,885 4,000 4,885 8,885
Inventory (10,000) - (24,463) - (24,463)
Loan receivable (5,000) - (5,000) - (5,000)
----------- ----------- ----------- ----------- -----------
Net cash (used by) from
operating activities (27,210) (18) (124,604) 32,918 (95,090)
----------- ----------- ----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE>
Page 8
DIRECTION TECHNOLOGIES INC. Continued
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
for the three and nine month periods ended September 30, 2000 and 1999
and for the period April 30, 1998 (Date of Inception) to September 30, 2000
(Stated in US Dollars)
(Unaudited)
---------
<TABLE>
<CAPTION>
April 30, 1998
Three Three Nine Nine (Date of
months ended months ended months ended months ended Inception) to
September 30, September 30, September 30, September 30, September 30,
2000 1999 2000 1999 2000
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Cash flow from investing
activities
Investment in Qiblah Tech Ltd. - - - (5,000) -
Acquisition of license fees (18,600) - (18,600) (50,000) (68,600)
----------- ----------- ----------- ----------- -----------
Net cash (used) by investing
activities (18,600) - (18,600) (55,000) (68,600)
----------- ----------- ----------- ----------- -----------
Cash flows from financing
activities
Proceeds from issuance of
common shares 43,500 - 143,500 23,000 164,000
----------- ----------- ----------- ----------- -----------
Net cash provided by
financing activities 43,500 - 143,500 23,000 164,000
----------- ----------- ----------- ----------- -----------
Net increase (decrease) in cash (2,310) (18) 296 918 310
Cash, beginning of period 2,620 936 14 - -
----------- ----------- ----------- ----------- -----------
Cash, end of period $ 310 $ 918 $ 310 $ 918 $ 310
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE>
Page 9
DIRECTION TECHNOLOGIES INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
for the period April 30, 1998 (Date of Inception) to September 30, 2000
(Stated in US Dollars)
(Unaudited)
---------
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional During the
Common Paid-in Development
Shares Par Value 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 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 - $0.50 200,000 200 99,800 - 100,000
Pursuant to the exercise
of warrants at - $0.50 87,000 87 43,413 - 43,500
Shares issued as partial
payment of license fee
at - $3.31 2,000 2 6,623 - 6,625
Net loss for the period - - - (98,764) (98,764)
---------- ----------- ----------- ----------- -----------
Balance, as at September
30, 2000 10,320,000 $ 10,320 $ 165,305 $ (132,740) $ 42,885
========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE>
Page 10
DIRECTION TECHNOLOGIES INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
September 30, 2000
(Stated in US Dollars)
(Unaudited)
---------
Note 1 Interim Reporting
-----------------
While the information presented in the accompanying interim nine 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 normal recurring nature. It is suggested
that these financial statements be read in conjunction with the company's
December 31, 1999 annual financial statements.
Note 2 Common Stock
------------
Commitments
Share Purchase Warrants
At September 30, 2000, 113,000 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 Option
At September 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 above until April 17, 2010.
<PAGE>
Page 11
DIRECTION TECHNOLOGIES, INC
NOTES TO THE FINANCIAL STATEMENTS FOR THE THREE MONTHS AND NINE MONTHS PERIODS
ENDED SEPTEMBER 30, 2000 AND SEPTEMBER 30, 1999 AND FOR THE PERIOD APRIL 30,
1998 (INCEPTION) THROUGH SEPTEMBER 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
- pursuant to set up of company
in UAE 2,000 2 6,623
- At $3 5/16 per share
---------- ------- ----------
Balance, September 30, 2000 10,233,000 $ 10,233 $ 121,892
========== ======= ==========
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 September 30,
2000 includes $50,000 (1999: $50,000) owing to E.T.C. Industries Ltd., a
company with a common director. Loans payable at September 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
<PAGE>
Page 12
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
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. The Company has incentive options outstanding. 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 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 second quarter the Company entered into negotiations to acquire two
high tech security industry companies based in Colorado. They are engaged in
the hardware and software aspects of providing electronic security and fire
protection systems to large public and industrial complexes worldwide. At
September 30, 2000 financing had not been accomplished and the negotiations were
extended to October 15, 2000.
During the quarter the Company entered into an agreement with Eurolink Emirites,
a company representing the Royal Family of the United Arab Emirites, to form a
marketing alliance in the UAE . A company designated as Qiblah Emirites will
exclusively market, import and export the Qiblah Locator in the Mid-East.
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.
<PAGE>
Page 13
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
of 2,000 shares at a price of US $3.3125 per share as part of the cost of
establishing a marketing presence in Dubai UAE. 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 third quarter of 2000, the Company issued 2,000 restricted
shares of common stock to Eurolink Emirites 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.
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: 11/06/00 By: /s/ Rolf Papsdorf
President and Director
Date: 11/06/00 By: /s/ Dieter Schindelhauer
Secretary/Treasurer and Director
<PAGE>
