UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10SB12G
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS
ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
Name of Small Business Issuer in its Charter:
MAINFRAME SECURITY CORP.
State of Other Jurisdiction of Incorporation or Organization:
DELAWARE
I.R.S. Employer Identification No.: 98-0209825
Address of Principal Executive Office:
SUITE ONE, 1155 MELVILLE STREET
VANCOUVER, BC, CANADA
V6E 4C4
Issuer's Telephone Number:
(604)688-5575
Securities to be Registered under Section 12(g) of the Act:
Title of Each Class to be so Registered:
COMMON STOCK
Name of Each Exchange on Which Each Class is to be Registered:
____________________________
Potential persons who are to respond to the collection of information
contained in this form are not required to respond unless the form
displays a currently valid OMB control number.
MAINFRAME SECURITY CORP.
("the Company")
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
--------
PART I
<S> <C> <C>
Item 1. Description of Business.................................................. 1
Item 2. Management's Discussion and Analysis or Plan of Operation................ 3
Item 3. Description of Property.................................................. 3
Item 4. Security Ownership of Certain Beneficial Owners and Management........... 3
Item 5. Directors, Executive Officers, Promoters and Control Persons............. 4
Item 6. Executive Compensation................................................... 5
Item 7. Certain Relationships and Related Transactions........................... 5
Item 8. Description of Securities................................................ 5
PART II
Item 1. Market for Common Equity and Related Stockholder Matters................. 6
Item 3. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure..................................................... 12
Item 4. Recent Sales of Unregistered Securities.................................. 6
Item 5. Indemnification of Directors and Officers................................ 6
Item 5. Financial Statements..................................................... 7
12
PART II
Item 1. Market Price and Dividends on the Registrant's Common Equity and
Other Shareholder Matters.............................................. 12
Item 2. Legal Proceedings........................................................ 12
Item 3. Changes in and Disagreements With Accountants............................ 12
Item 4. Recent Sales of Unregistered Securities.................................. 12
Item 5. Indemnification of Directors and Officers................................ 13
PART F/S
Financial Statements and Exhibits........................................
PART III
Item 1. Index to Exhibits........................................................ 14
Item 2. Description of Exhibits.................................................. 14
</TABLE>
<PAGE>1
ITEM 1. DESCRIPTION OF BUSINESS
GENERAL DEVELOPMENT OF BUSINESS
The Company, incorporated on March 17,1999, is a corporation validly existing
and in good standing under the laws of the State of Delaware. The Company
was incorporated with the intent of engaging in the business of computer
security.
In an Agreement to Acquire Technology dated April 20, 1999, the Company
acquired from Barracuda Security Devices International Inc. ("Barracuda")
the world wide intellectual property and manufacturing and distribution rights
to the "Barracuda computer security card" and other security devices. These
rights include the technology, techniques, patents and related software and
codes. In consideration of the transfer of the technology, the Company issued
five million shares of common stock to Barracuda. (See "Agreement to Acquire
Technology").
This Report contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from
those discussed herein. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed herein including
"Management's Discussion and Analysis or Plan of Operations". The following
summary is qualified in its entirety by detailed information and financial
statements appearing elsewhere in this Report.
NARRATIVE DESCRIPTION OF BUSINESS
The Company's primary activity is the continued operation of Barracuda
Security Devices International Inc. Barracuda will continue with the
manufacturing and marketing of the Barracuda security card, and its
on-going development of other computer and asset security devices.
ORGANIZATION
Barracuda Security Devices International Inc. is a Canadian corporation
federally incorporated on October 8, 1997 and extra-provincially
registered in British Columbia on December 30, 1997. Barracuda's head
office is located at 22545 Kendrick Loop, Maple Ridge, British Columbia.
Barracuda is qualified or licensed under any and all applicable laws,
regulations, ordinances, or orders of public authorities to do business
where the native of business transacted requires it to be qualified or
licensed.
Barracuda purchased the rights to the technology from Colin McLean of
England. Mr. McLean was the owner and developer of the technology.
PRESENT PRODUCT
The patented Barracuda security device is an 8-bit ISA card that is
inserted in a free ISA slot in any computer. It is programmed with
special remote alert software with an access code encrypted and stored
on the card itself. The technology includes the following features:
* Easy to Use, Powerful Software providing remote alert capabilities.
The Barracuda's ultra smart software can manage hundreds of PC's from
one central workstation. Administrators can easily manage full
computer security across large networks. Central administration can
receive an alarm or alert across the Network, via pager or mobile
phone. Software runs under WIN 3.1, WIN 3.11, WIN 95, Win 98 and
WIN NT 4.0.
* Independent Power Supply for protection even when the computer is
turned off.
* Internal Motion Sensor that prevents illegal movements by sounding
an alarm or sending a signal. The Barracuda can detect any computer
movement. If the system is accidentally moved, an intelligent
audible alarm (120dB) provides a one-second warning. If the system
is moved constantly an alarm sounds continuously, and for 120 seconds
after the computer has been set down.
* An International Ambient Light Sensor and Indelible Dye Capsule:
The Barracuda's sensor constantly monitors the ambient light level
inside the computer detecting the slightest variation and activating
the alarm. If the cover of the computer is removed without disarming
the device using a PIN number, the alarm will sound. In conjunction
with the alarm, this sensor will activate an indelible dye capsule
and mark all the components inside the computer. The marking of the
components clearly identifies the components as stolen and hence make
them difficult to resell.
* Reed Switch: A reed switch triggers the alarm, when connected to
the computer case, if it is misaligned (similar to a home alarm
window reed switch). The reed switch is primarily used as a backup.
THE MARKET
The Barracuda Card was introduced to the Marketplace in early 1996
in the United Kingdom. Since then, over 40,000 units have been sold
mostly in Europe and some in North America and Australia. Current
customers include banks, airlines, colleges and universities, Mobil
Oil, Kodak, insurance ompanies, hotels, Shell UK, and many others.
Many North American companies have shown keen interest in the
product since being introduced to it. The Company is now preparing
to launch a major marketing and sales program worldwide. The market
is vast with every company or individual that owns a computer being
a potential customer.
COMPETITION
There are several other computer security devices on the market.
Some techniques include cable tie downs and pad locks and exterior
mounted motion detectors. Some use a marking paint. Some use
software and electronic keys. None are as simple, dependable and
comprehensive as the Barracuda. None have the exploding dye capsule
that covers the CPU and Ram chips in an indelible dry powder which
makes tracking and identifying of the components easier and thus
reates a significant heft deterrent.
<PAGE>2
TECHNOLOGY PROTECTION
The Barracuda Card is patent protected and difficult to replicate
because of its proprietary encoding.
FUTURE OPPORTUNITIES
The Company will continue its development of its security call
scanning system-ACCUI and its Barracuda Security Pad. The
applications and market for both proprietary designs is very large
in the world marketplace.
HISTORICAL FINANCIAL INFORMATION
The Company was recently incorporated and is still in the
development stage. There are no revenues to date. See Audited
Financial Statements attached. Barracuda has had minimal sales
but has spent over $300,000 in market development.
PROJECTED REVENUES
The Company is projecting sales of approximately two million dollars
in the first year following completion of this offering. Depending
in the financial, production and management resources, there is
potential for five million dollars in revenues in year two, with
increased sales in year three.
MANAGEMENT
The Company's management provides a combination of experience in many
facets of business operations including research and development,
administration, sales and marketing, finance, and manufacturing.
Mr. Frank Power, President: Mr. Power, a business management consultant,
has managed and administered several private and public companies for the
past 15 years. Since 1984, he has provided services including strategic
planning, management, administration, design, and construction of major
mining projects both nationally and internationally. He has owned and
operated several consulting companies that have been providing
comprehensive services in the industrial high technology fields as well
as the mining field. His expertise also includes reactivating public
companies, project acquisitions, public and private funding, as well as
developing and taking existing private companies public in Canada and the
United States. See Item 5 also.
Mr. Colin McLean, Sales and Marketing: Mr. McLean has over 15 years
experience in the computer industry. He has successfully held positions
as a sales director and sales office manager for a PC manufacturer and
also for a semi-conductor manufacturer. He has managed a team of over
30 sales people for companies with sales in excess of $100 million.
Mr. McLean had already established a broad customer base for the
Barracuda card in Europe.
Mr. Ed Deneumoustier, Operations: Mr. Deneumoustier owned and managed
his own printing business for over ten years. As President of Barracuda
Security Devices International for the past three years, Mr. Deneumoustier
has gained in-depth knowledge of the computer security industry and of the
Barracuda technology. Mr. Deneumoustier provides the Company with valuable
experience in management, sales and marketing, customer relations and
production.
Mr. Paul Fortescue, Research and Development: Mr. Fortescue is a Microsoft
certified engineer. He is responsible for the engineering, design, and
development of the Barracuda card. He will continue to enhance development
and testing of the card and other security devices.
PRODUCTION
The product is currently being manufactured and assembled in the U.K.
under sub contract. The Company has identified contractors in the United
States and Canada to produce the product at a reduced cost.
LITIGATION-CLAIMS
There are no claims, litigation, actions, suits, investigations or
proceedings pending or, to the knowledge of the Company, threatened
against or affecting the Company or its properties or business, at law
or in equity, or before or by any governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, which if
determined adversely would have a material adverse effect on the business
of financial condition of Power Industries, or the ability of Power
Industries to carry on its business as presently conducted.
INTEREST IN ASSETS
To the best of the knowledge, information and belief of the Company, no
person has any interest in any inventions, patents, copyrights, trademarks,
trade names, trade secrets, proprietary rights or processes or business
lists used in or pertaining to the business of the company.
<PAGE>3
ITEM 2. MANAGEMENTS' DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The Company's plan of operation is to advance the business of Barracuda.
The Company plans to market the product world wide through distributors,
agents, alliances, direct contact and presentations, trade shows, mail
outs, and through the Internet. It will enter into contracts with
established sub contractors to ensure reliable and timely supply of
product. The Company will also continue development of other security
products and services.
ITEM 3. DESCRIPTION OF PROPERTY
The Company rents office space for administration at Suite 1-1155 Melville
Street, Vancouver, British Columbia, V6E 4C4. The Head office for sales
is located in Maple Ridge, British Columbia. The Company does not own any
properties.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following sets forth, as of July 31, 1999, the number and percentage
of shares of the Company's Common Stock with a par value of $0.0001 (its
only class of voting securities), owned beneficially by each Officer and
Director, each person known by the Company to own more than five percent
of the Company's common stock, and all Directors and Officers as a group:
<TABLE>
<CAPTION>
<S> <C> <C>
Name and Address Amount and Nature Percent of
of Beneficial Owner of Beneficial Ownership Class
Frank Power 400,000 4.39%
Lee Meyer 400,000 4.39%
Ed Deneumoustier 500,000 5.49%
Keystone Holdings Ltd. 700,000 7.68%
Barracuda Security
Devices International Inc. 5,000,000 54.85%
All Officers and Directors 800,000 8.78%
as a Group
</TABLE>
The Company is not aware of any arrangements, including a pledge of
securities, which may cause a change in control of the Company.
The Company knows of no arrangements the operation of which may result
in a change of control.
<PAGE>4
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTORS AND CONTROL PERSONS
The Directors and Officers of the Company are:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Name: Age: Position: Served as a Director Since:
Frank Power 56 President/Director March 17, 1999
Lee Meyer 53 Director March 17, 1999
</TABLE>
The position of President has been held by Frank Power since inception
on March 17, 1999. From inception on March 17, 1999 to date Lee Meyer
has served as a Director of the Company.
All directors of the Company will hold offices until the next annual
meeting of stockholders or until their successors have been elected and
qualified. The Officers of the Company who are appointed at the annual
meeting of the Board of Directors, hold office until their successors
are elected and qualified, or until their death, resignation or removal.
The Company presently has no audit, nominating or executive committee
performing substantially similar functions.
The business experience and principal occupations of each Director and
Officer of the Company for at least the past five years are as follows:
Mr. Frank Power: Mr. Power, a business management consultant, has managed
and administered several public companies for the past 15 years. Since
1984, he has provided services including strategic planning, management,
administration, design, and construction of major mining projects both
nationally and internationally. He has owned and operated several
consulting companies that have been providing comprehensive services
in the industrial and high-tech fields as well as the mining field.
His expertise also includes reactivating public companies, project
acquisitions, public and private funding, as well as developing and
taking existing private companies public. He is equally knowledgeable
to provide professional services in the public markets both in Canada
and the United States. Mr. Power has been President and Owner of Pow
Con Management since 1981 and Premier Enterprises Ltd. since 1994,
these companies manage, administrate and finance reporting companies.
He served as President and Director of several Vancouver reporting
companies and publicly listed companies since 1986 to present. Since
1992, Mr. Power has served as President of World Organics Inc., listed
on the Vancouver Stock Exchange. From 1996 to 1997, Mr. Power served as
President and Director of Accuimage Diagnostics. He is presently Vice
President of Scientific Technologies, Inc. and former President of
Security Industries, Inc. These companies are listed on the U.S.
stock exchange. Currently he is President of Steelhead Technologies
Corp. and Power Industries, Inc. which have applied for listing on the
OTC Bulletin Board.
Mr. Lee Meyer: Mr. Meyer, since completing his Business Administration
degree from Arizona State University, has held positions including
Managing Director of Omni International; Secretary and Treasurer of Tech
Industries Corp., a specialty equipment rental agency; and Owner and
President of Stretchcoat, a national manufacturer and marketer of
specialty products. Mr. Meyer has also represented major principals
selling products nationally. Since May 1998, he has been a director
of Scientific Technologies, Inc. which is listed on the U.S. stock
exchange. Mr. Meyer is currently Vice President and Director of World
Organics Inc., a VSE listed company. He is also a Director of Steelhead
Technologies Corp. and Power Industries, Inc. which have recently applied
for listing on the OTC Bulletin Board.
No family relationship exists between or among any of the persons named
above.
The Company's Directors are directors of the following companies having
a class of equity securities registered under the Securities Exchange of
1934:
* - Scientific Technologies, Inc.
* - Steelhead Technologies Corp.
* - Power Industries, Inc.
All persons whose activities will be material to the operations of the
Company have been described in this report.
The Company's Directors, Officers, and 10% or greater shareholders are
not presently subject to Section 16(a) of the Exchange Act.
<PAGE>5
ITEM 6. EXECUTIVE COMPENSATION
The following table sets forth information regarding executive
compensation for the Company's Officers and Directors. No executive
officer has received compensation in excess of $100,000.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Names and Fiscal Salary Bonus Other Stock Awards
Principal Year Compensation or Options
Position
Frank Power N/A N/A N/A N/A N/A
Vice President
Lee Meyer N/A N/A N/A N/A N/A
Director
</TABLE>
At the present time no compensation or remuneration is being paid to
any of the Officers or Directors.
There is no annuity, pension or retirement benefits proposed to be
paid to Officers, Directors or Employees of the Company in the event
of retirement at normal retirement date pursuant to any presently
existing plan provided or contributed to by the Company.
No remuneration is proposed to be paid in the future directly or
indirectly by the Company to any Officer or Director under any plan
which is presently existing. The Company, in its discretion, may
adopt one or more of such remuneration programs in the future.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
No Director or Officer of the Company, nominee for election as a
Director, security holder who is known to the Company to own of
record or beneficially more than 5% of any class of the Company's
voting securities, or any relative or spouse of any of the foregoing
persons, or any relative of such spouse, who has the same home as
such person or who is a director or officer of any parent or
subsidiary of the Company, except as outlined here below, has had
any transaction or series of transactions since inception of the
Company, or has any presently proposed transactions to which the
Company was or is to be a party during 1999, in which any of such
persons had or is to have any direct or material interest except:
i) Ed Deneumoustier, a shareholder of more than 5% of the Company's
voting securities is also President, Director, and Shareholder of
Barracuda Securities Devices International, Inc.
ITEM 8. DESCRIPTION OF SECURITIES
The authorized capital stock of the Company consists of 50,000,000 common
shares, $0.0001 par value, of which 9,115,000 are issued and outstanding.
Holders of the Common Stock do not have preemptive rights to purchase
additional shares of Common Stock or other subscription rights. The
Common Stock carries no conversion rights and is not subject to redemption
or to any sinking fund provisions. All shares of Common stock are entitled
to share equally in dividends from sources legally available therefore
when, as and if declared by the Board of Directors and, upon liquidation
or dissolution of the Company, whether voluntary or involuntary, to share
equally in the assets of the Company available for distribution to
stockholders.
All outstanding shares of Common Stock are validly authorized and issued,
fully paid and nonassessable.
The above description concerning the Common stock of the Company does not
purport to be complete. Reference is made to the Company's Certificate of
Incorporation and Bylaws attached.
<PAGE>6
PART II
ITEM 1. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET INFORMATION: The Company will apply to have its common stock
listed on the OTC Bulletin Board, ONYX Trading Corporation of Bellevue,
Washington is the sponsor broker.
HOLDERS: The estimated number of beneficial owners of the Company's
common stock at July 31, 1999 is approximately 21.
DIVIDENDS: Holders of common stock are entitled to receive such
dividends as may be declared by the Company's Board of Directors.
No dividends have been paid with respect to the Company's common
stock and no dividends are anticipated to be paid in the foreseeable
future.
ITEM 2. LEGAL PROCEEDINGS
The Company knows of no material pending legal proceedings to which
the Company is a party to. The Company knows of no legal proceedings,
pending or threatened, or judgments entered against, any Director or
Officer of the Company in his capacity as such.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
Not applicable.
SIGNATURES
In accordance with Section 12 of the Securities Exchange
Act of 1934, the registrant caused this registration statement
to be signed on its behalf by the undersigned, thereunto duly
authorized.
Registrant: Mainframe Security Corp.
Date: ____________, 1999
___________________________________
Frank Power, President and Director
___________________________________
Lee Meyer, Director
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
From inception to July 31, 1999, the Company issued to principal
shareholders 3,500,000 shares of common stock and to seed shareholders
615,000 shares of common stock for the total sum of $62,500 USD. The
proceeds were applied to the costs of the offerings and related documents
and filings, and general administration and operating capital.
All persons, in each of the offerings, were non-US persons as defined
in the Regulations. The offerings were made in reliance on the exemption
from registration contained in Regulation D, Rule 504, and Regulation S.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Pursuant to its Bylaws and the Delaware Corporation Act, the Company shall
indemnify each Director and Officer against expenses, judgment, fines, and
amounts paid in settlement actually and reasonable incurred by him in
connection with any action, suit or proceeding which he may be made a
party by reason of his being or having been made a Director or Officer
of the Company, unless he failed to meet certain standards of conduct.
If a Director is wholly successful, on the merits or otherwise, he shall
be indemnified against reasonable expenses.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "1933" Act) may be permitted to Directors, Officers or
persons controlling the Company pursuant to the foregoing provisions, the
Company had been informed that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the 1933 Act and is therefore unenforceable.
<PAGE>7
PART F/S
FINANCIAL STATEMENTS
Financial Statements Furnished:
i) Audited Report includes the Balance Sheet, Statement of Operation
and Statement of Stockholders' Equity, for the Company for the period
from March 17, 1999 (date of inception) to May 15, 1999 are attached
hereto.
ii) The Unaudited Financial Statements including the Balance Sheet,
Statement of Operations, Statement of Stockholders Equity, and Notes
to the Financial Statement for the Company dated July 31, 1999 are
attached hereto.
iii) The Unaudited Financial Statements including the Balance Sheet,
Statement of Operations, and Notes to Financial Statements for Barracuda
Security Devices Inc. dated August 31, 1998 and July 31, 1999 are
attached hereto.
All such Financial Statements of the Companies present fairly and
accurately in all material respects the financial position of the
Companies as of such dates, and the results of operations and changes
in financial position for the respective periods, indicated; and have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis, except as might be specifically indicated
therein.
- ----------------------------------------------
i)
MAINFRAME SECURITY CORP.
(A Development Stage Company)
Financial Statements
May 15, 1999
Jorgensen Telford Sadovnick, P.L.L.C.
720 Third Avenue, Suite 1910
Seattle, Washington 98104
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of Mainframe Security Corp.
We have audited the accompanying balance sheet of Mainframe Security
Corp., a development stage company, as of May 15, 1999 and the related
statements of loss, changes in stockholders' equity and cash flow for
the period from March 17, 1999 (inception) to May 15, 1999. These
financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, except for the disclosure described in the following
paragraph, the financial statements referred to above present fairly,
in all material respects, the financial position of Mainframe Security
Corp., a development stage company, as of May 15, 1999 and the results
of its operations and its cash flows for the period from March 17, 1999
(inception) to May 15, 1999 in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. There is substantial
doubt about the Company's ability to continue as a going concern as a
result of the development stage the Company is in. Management's plans
in regard to these matters are also described in note 3 to the financial
statements. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
CERTIFIED PUBLIC ACCOUNTANTS
Seattle, Washington
May 26, 1999
<PAGE>8
MAINFRAME SECURITY CORP.
(A Development Stage Company)
Balance Sheet
As of May 15, 1999
<TABLE>
<CAPTION>
<S> <C>
Assets
Current
Cash $17,967
Deposit 8,000
25,967
Technology rights (note 4) 50,000
Total Assets $75,967
Liabilities
Current
Accounts payable and accrued liabilities $17,500
Stockholders' Equity
Common stock, $0.0001 par value;
50,000,000 shares authorized
8,600,000 issued and outstanding (note 5) 860
Additional paid-in capital 82,890
Deficit accumulated during the development stage (25,283)
58,467
Total Liabilities and Stockholders' Equity $75,967
MAINFRAME SECURITY CORP.
(A Development Stage Company)
Statement of Loss
March 17, 1999
(inception) to
May 15, 1999
Revenue $ 0
Expenses
General and administrative $25,283
Net loss for the period $(25,283)
Basic loss per share (note 6) $(0.01)
MAINFRAME SECURITY CORP.
(A Development Stage Company)
Statement of Cash Flow
March 17, 1999
(inception) to
May 15, 1999
Operating Activities
Net loss for the period $(25,283)
Changes in non-cash working capital items:
Increase in deposit (8,000)
Increase in accounts payable and accrued liabilities 17,500
Net cash used in operating activities (15,783)
Financing Activities
Common shares issued for cash 33,750
Increase in cash 17,967
Cash, beginning of period 0
Cash, end of period $17,967
Non-cash Financing and Investing Activities
Common shares issued for technology rights $50,000
</TABLE>
<PAGE>9
MAINFRAME SECURITY CORP.
(A Development Stage Company)
Statement of Changes in Stockholders' Equity
For the period ended May 15, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Deficit
Accumulated Total
Additional During the Share-
Shares Paid-In Development holders'
# Amount Capital Stage Equity
Balance at inception on
March 17, 1999 0 $ 0 $ 0 $ 0 $ 0
Common stock issued for
cash at $0.0025 per share 3,500,000 350 8,400 0 8,750
Common stock issued for
cash at $0.25 per share 100,000 10 24,990 0 25,000
Common stock issued for
technology rights at
$0.01 per share 5,000,000 500 49,500 0 50,000
Net loss for the period
ended May 15, 1999 0 0 0 (25,283) (25,283)
Balance at May 15, 1999 8,600,000 $860 $82,890 $(25,283) $58,467
</TABLE>
ii) The Unaudited Financial Statements including the Balance Sheet,
Statement of Operations, Statement of Stockholders Equity, and Notes
to the Financial Statement for the Company dated July 31, 1999 are
attached hereto.
MAINFRAME SECURITY CORP.
(A Development Stage Company)
Unaudited Balance Sheet
<TABLE>
<CAPTION>
<S> <C>
ASSETS
July 31, 1999
CURRENT ASSETS
Cash $18,255
Prepaid Inventory 8,000
Total Current Assets 26,255
TOTAL ASSETS $26,255
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable 0
Total Current Liabilities 0
Total Liabilities 0
STOCKHOLDERS' EQUITY
Common stock, $0.0001 par value,
50,000,000 shares authorized;
9,115,000 issued and outstanding 912
Capital in excess of par value 61,588
Deficit accumulated during the
development stage (36,245)
Total Stockholders' Equity 26,255
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $26,255
</TABLE>
<PAGE>10
MAINFRAME SECURITY CORP.
(A Development Stage Company)
Unaudited Statement of Operations
<TABLE>
<CAPTION>
<S> <C>
From
Inception on
March 17,
1999 through
July 31, 1999
REVENUE $ 0
EXPENSES
General and administrative 8,756
Organization costs 27,500
Total Expenses 36,256
LOSS FROM OPERATIONS (36,256)
OTHER COMPREHENSIVE INCOME
Foreign currency translation 11
Total Other Comprehensive Income
11
NET LOSS $ (36,245)
BASIC LOSS PER SHARE $ (0.01)
</TABLE>
MAINFRAME SECURITY CORP.
(A Development Stage Company)
From Inception on March 17, 1999 through July 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Deficit
Accumulated
Capital in During
Common Stock Excess of Development
Shares Amount Par Value Stage
Balance at inception on 0 $ 0 $ 0 $ 0
March 17, 1999
April 1999, common
$0.0025 per share 3,500,000 350 8,400 0
April 1999, common
stock issued for cash at
$0.25 per share 72,000 7 17,993 0
May 1999, common
stock issued for cash at
$0.25 per share 28,000 3 6,997 0
May 1999, common stock
issued for technology at
predecessor cost of $0.00
(Note 4) 5,000,000 500 (500) 0
July 1999, common
stock issued for cash at
$0.05 per share 500,000 50 24,950 0
July 1999, common
stock issued for cash at
$0.25 per share 15,000 2 3,748 0
Net loss for the period ended
July 31, 1999 0 0 0 (36,245)
Balance, July 31, 1999 9,115,000 $ 912 $ 61,588 $ (36,245)
</TABLE>
MAINFRAME SECURITY CORP.
(A Development Stage Company)
Unaudited Statement of Cash Flows
From
Inception on
March 17,
1999 through
July 31, 1999
<TABLE>
<CAPTION>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (36,245)
Change in operating assets and liabilities:
Increase in accounts payable 0
Increase in prepaid inventory (8,000)
Net Cash (Used) in Operating Activities (44,245)
CASH FLOWS FROM INVESTING ACTIVITIES 0
CASH FLOWS FROM FINANCING ACTIVITIES
Net stock offering proceeds 62,500
Net Cash Provided by Financing Activities 62,500
INCREASE IN CASH AND CASH EQUIVALENTS 18,255
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 0
CASH AND CASH EQUIVALENT AT END OF PERIOD $ 18,255
CASH PAID FOR:
Taxes $ 0
Interest $ 0
</TABLE>
The accompanying notes are an integral part of these financial statements.
iii) The Unaudited Financial Statements including the Balance Sheet,
Statement of Operations, and Notes to Financial Statements for Barracuda
Security Devices Inc. dated August 31, 1998 and July 31, 1999 are
attached hereto.
<PAGE>11
BARRACUDA SECURITY DEVICES INTERNATIONAL INC.
FINANCIAL STATEMENTS
(Unaudited - See Notice to Reader)
SEPTEMBER 30, 1998
BALANCE SHEET
AS AT SEPTEMBER 30, 1998
(Unaudited - See Notice to Reader)
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Current
Accounts receivable $ 29,116
Deposit 10,000
39,116
Capital Assets
Computer 23,284
Office equipment 6,154
Computer software 535
29,973
Less: accumulated amortization (3,282)
26,691
$ 65,807
LIABILITIES
Current
Bank indebtedness $ 156,000
Accounts payable and accrued liabilities 32,800
188,800
Due to Related Party 1
Due to Shareholders 8,432
197,233
SHAREHOLDERS' EQUITY
Share Capital 232,912
Deficit (364,338)
(131,426)
$ 65,807
</TABLE>
<TABLE>
BARRACUDA SECURITY DEVICES INTERNATIONAL INC.
STATEMENT OF OPERATIONS AND DEFICIT
FOR THE YEAR ENDED SEPTEMBER 30, 1998
(Unaudited - See Notice to Reader)
<S> <C>
SALES $ 3,754
EXPENSES
Accounting and legal 18,786
Amortization 3,282
Automotive 6,454
Bank charges 1,293
Cash Short 4,500
Commissions 7,550
Consulting fees 780
Dues and licenses 530
Equipment rental 5,170
Insurance 3,251
Interest 8,288
Management 68,375
Meals and entertainment 5,303
Office and miscellaneous 7,628
Postage and courier 5,467
Printing 4,133
Rent 7,591
Subcontractors 87,445
Telephone, fax and internet 14,679
Trader show and promotion 80,518
Travel 25,757
Utilities 1,238
368,018
OPERATING LOSS (364,264)
OTHER INCOME
Interest income 26
NET LOSS FOR YEAR (364,238)
DIVIDEND PAID (100)
NET LOSS FOR YEAR, BEING DEFICIT, end of year $ (364,338)
</TABLE>
NOTE: The Company was incorporated pursuant to the Company Act of
British Columbia and commenced operations on October 8, 1997.
<PAGE>12
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized.
Registrant: Mainframe Security Corp. Date: July 31, 1999
/s/ Frank Power
- ---------------------
Frank Power,
President and Director
/s/ Lee Meyer
- ---------------------
Lee Meyer, Director
<PAGE>13
PART III
INDEX TO EXHIBITS
Exhibit No. Title of Document
2.0 Agreement to Acquire Technology
3.1 Certificate of Incorporation
3.2 Bylaws of Incorporation
99.1 Disclosure Statement
99.2 Subscription Agreement
AGREEMENT TO ACQUIRE TECHNOLOGY
BETWEEN:
MAINFRAME SECURITY CORP.
(a Delaware Corporation)
Suite 1, 1155 Melville Street
Vancouver, British Columbia
Canada V6E 4C4
AND:
BARRACUDA SECURITY DEVICES INTERNATIONAL INC.
(a British Columbia Corporation)
22545 Kendrick Loop
Maple Ridge, British Columbia
Canada V2X 9W5
WHEREAS, Barracuda Security Devices International Inc.
("Barracuda"), is the holder of all proprietary rights to
certain technology relating to computer security devices
and programs.
WHEREAS, Mainframe Security Corp. ("Mainframe") has the capability
of providing the corporate structure and financing to accomplish
that marketing.
NOW, THEREFORE, in consideration of those premises and the mutual
agreements of the parties, the undersigned hereby agree as follows:
1. Sale of Barracuda Security Devices International Inc.:
Barracuda sells and agrees to convey to Mainframe, subject only to
the contingency set forth in Section 6, 7 and 8 below,
(a) the exclusive rights to the Barracuda technology and all future
modifications, improvements and enhancements thereto, and
(b) the exclusive rights to all trade marks, trade names, copyrights
and other materials relating to that technology. The conveyance of
that technology will occur by execution and delivery by Barracuda to
Mainframe of a mutually agreed on Bill of Sale upon the closing of
this agreement.
2. Transfer of Stock:
In consideration of the transfer of that technology and the
assignment of that contract, Mainframe shall cause to be issued
to Barracuda, five million (5,000,000) shares of common stock of
Mainframe. That stock shall be issued under an exemption from
registration and the certificates evidencing those shares shall
carry an appropriate legend as required by applicable law. As a
condition to the issuance of certificates for those shares, Barracuda
agrees that it shall deliver to Mainframe a letter containing such
representations and acknowledgments as are required to qualify for
such exemption.
3. Private Placement of Shares for Working Capital:
Mainframe agrees that commencing immediately upon listing, it will
undertake one or more private placements or public offerings to
provide working and expansion capital. Any offering of shares will
be made in compliance with Regulations of the US Securities & Exchange
Commission, applicable US State securities laws and the applicable
provisions of the BC Securities Regulations.
4. Limitation of Outstanding Shares:
Mainframe warrants to Barracuda that, at the conclusion of this
exchange of technology for stock under Section 2 above, Mainframe
will have outstanding a total of 8,500,000 shares. There will be
no options, warrants or rights held by any persons for any other
shares. The parties consent to the issuance by Mainframe of a further
1,500,000 shares for the purpose of raising funds through an Offering
Memorandum. This will increase the outstanding shares of Mainframe to
a maximum of 10,000,000 shares. Except for those shares, no other
warrants, options or rights for shares shall be issued without the
approval of the new board of directors to be elected under Section 8(b)
below.
<PAGE>14
5. Limited Right of Rescission:
The parties specifically agree that, notwithstanding the transfer of
the technology under Sections 1 and 2 above, Barracuda shall retain
the right to rescind its obligations under this agreement and the
conveyance of the technology and assignment of contract if Mainframe
should fail to deliver the 5,000,000 shares described in Section 2.
6. Manner of Exercise of Right of Rescission:
To exercise its rights under the foregoing section, Barracuda may,
at any time prior to issuance of the 5,000,000 shares described in
Section 2, notify Mainframe of this fact in writing. Barracuda may
then issue final notice that its transfer of the technology is
rescinded and shall thence forth be void.
Immediately upon receipt of such tender and final notice, Mainframe
shall forthwith cease and desist from any claim to the technology
and deliver to Barracuda all items relating to its ownership.
7. Expiration of Right of Rescission:
Unless exercised earlier, the right for Barracuda to rescind the
transfer of technology under the foregoing Sections 5 and 6 shall
terminate upon the issuance of the 5,000,000 shares described in
Section 2 and 5.
8. Corporate Restructuring:
The parties agree that as soon as immediately convenient, Mainframe
will do the following:
(a) Amendment of Articles: Mainframe will Amend its Articles of
Incorporation; (i) to change its name if deemed necessary, (ii)
provide an indemnification of officers and directors to the extent
allowed by law, and (iii) provide authorized capital of fifty million
(50,000,000) shares of common stock.
(b) Initial Board of Directors: Unless otherwise agreed by the
directors, Mainframe will cause its initial board of directors to
consist of:
Ed Deneumoustier
Frank Power
Lee Meyer
(c) Audit, Corporate Information, Etc.: Mainframe will (i) complete
an audit, if required, confirming no liabilities (ii) make application
with a US Stock Exchange for listing and a symbol, and (iii) appoint a
public stock registrar and transfer agent to maintain its list of
shareholders and all future transfers of its securities.
9. Cooperation:
In addition to the actions and documents specifically discussed herein,
each party hereby agrees to execute, acknowledge and deliver any and
all documents and do any and all other acts which are necessary,
expedient, reasonable or appropriate and are requested by the other
party to more fully carry out the full intents and purposes of this
Agreement.
10. Survival:
All of the representations, warranties and provisions of this Agreement
shall survive its closing and the dissolution of either or both of the
respective parties.
11. Headings:
The headings of the several sections of this Agreement are inserted for
convenience of reference only and are not intended to affect the meaning
or interpretation of this Agreement.
12. Amendments and Modifications:
This Agreement may be modified, amended or cancelled only by a document
signed by each of the parties to this Agreement.
13. Binding Effect:
The various terms and provisions hereof shall inure to the benefit of,
and the same shall be binding upon, the successors and assigns of the
respective parties.
14. Arbitration Clause:
Any dispute involving the enforcement or interpretation of this Agreement
shall be settled by binding arbitration pursuant to the Commercial Rules
of the British Columbia Arbitration Council.
<PAGE>15
15. Facsimile:
This Agreement may also be delivered by telecopier which delivery shall
be deemed to be valid and sufficient.
16. By his signature, or by authorizing the placement of a signature
or mark, on this agreement, each party acknowledges that this agreement
binds and benefits the parties and their respective heirs, executors,
administrators, personal representatives and successors.
This Agreement is Acknowledged and Accepted by the undersigned and is
effective as of the 20th day of April, 1999.
MAINFRAME SECURITY CORP. BARRACUDA SECURITY DEVICES
per: INTERNATIONAL INC.
per:
Frank Power, President Edward Deneumoustier, President
Lee Meyer, Director
CERTIFICATE OF INCORPORATION
OF
Mainframe Security Corp.
I, the undersigned, for the purposes of incorporating and organizing
a corporation under the General Corporation Law of the State of
Delaware, do execute this Certificate of Incorporation and do hereby
certify as follows:
FIRST: The name of the Corporation is Mainframe Security Corp.
SECOND: Its registered office is to be located at Suite 606,
1220 N. Market st., Wilmington, DE 19801, County of New Castle.
The name of the registered agent at such address is Registered Agents,
Ltd.
THIRD: The purpose of the corporation is to engage in any lawful act
or activity for which corporations may be organized under the
Delaware General Corporation Laws.
FOURTH: The amount of total authorized capital stock of the corporation
is fifty million (50,000,000). All such shares are to be with a par
value of $0.0001 and are to be of one class.
FIFTH: The incorporator of the corporation is Sid Garnett, whose
mailing address is Suite 606, 1220 N. Market st., Wilmington, DE 19801.
SIXTH: Unless and except to the extent that the by-laws of the
corporation shall so require, the election of directors of the
corporation need not be by written ballot.
SEVENTH: In furtherance and not in limitation of the powers conferred
by the State of Delaware, the Board of Directors of the corporation is
expressly authorized to make, alter and repeal the by-laws of the
corporation, subject to the power of the stockholders of the
corporation to alter or repael any by-law whether adopted by them or
otherwise.
EIGHTH: A director of the corporation shall not be liable to the
corporation or its stockholders for monetary damage from breach of
fiduciary duty as a director, except to the extent such exemption
from liability or limitation thereof is not permitted under the General
State of Delaware as the same exists or may hereafter be amended. Any
amendment, modification or repeal of the foregoing sentence shall not
adversely affect any right or protection of a director of the
corporation hereunder in respect of any act of omission occurring
prior to the time of such amendment, modification or repeal.
NINTH: The corporation reserves the right at any time, and from time
to time, to amend, alter, change or repeal any provision contained in
this Certificate of Incorporation, and other provisions authorized by
the laws of the State of Delaware at the time in force may be added or
inserted, in the manner now or hereafter prescribed by law; and all
rights, preferences and priveleges of whatsoever nature conferred upon
stockholders, directors or any other persons whomsoever by and pursuant
to this Certificate of Incorporationin its present form or as hereafter
amended are granted subject to the rights reserved in this article.
TENTH: The powers of the incorporator are to terminate upon filing
of this Certificate. The name and mailing address of the person(s) who
is to serve as the initial director until the first annual meeting of
stockholders of the corporation, or until a successor(s) is elected and
qualified, is Frank Power, c/o Site 1, 1155 Melville Street,
Vancouver, BC, V6E 4C4, Canada.
The undersigned hereby acknowledges that the foregoing certificate of
incorporation is her act and deed on this seventeenth day of March, 1999.
By: /s/ Sid Garnett
--------------------------
Sid Garnett
INCORPORATOR
State of Delaware
Secretary of state
Division of Corporations
Filed 09:00 AM 03/17/1999
991104094 - 3017897
BYLAWS
OF
MAINFRAME SECURITY CORP.
(a Delaware corporation)
ARTICLE I
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK. Certificates
representing stock in the corporation shall be signed by, or in the
name of, the corporation by the Chairperson or Vice-Chairperson of
the Board of Directors, if any, or by the President or a Vice-President
and by the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary of the corporation. Any or all the signatures on
any such certificate may be facsimile. In case any officer, transfer
agent, or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer,
transfer agent, or registrar before such certificate is issued, it may
be issued by the corporation with the same effect as if such person
were such officer, transfer agent, or registrar at the date of issue.
Whenever the corporation shall be authorized to issue
more than one class of stock or more than one series of any class of
stock, and whenever the corporation shall issue any shares of its stock
as partly paid stock, the certificates representing shares of any such
class or series or of any such partly paid stock shall set forth thereon
the statements prescribed by the General Corporation Law. Any restrictions
on the transfer or registration of transfer of any shares of stock of any
class or series shall be noted conspicuously on the certificate
representing such shares.
The corporation may issue a new certificate of stock or
uncertificated shares in place of any certificate theretofore issued by
it, alleged to have been lost, stolen, or destroyed, and the Board of
Directors may require the owner of the lost, stolen, or destroyed
certificate, or such owner's legal representative, to give the
corporation a bond sufficient to indemnify the corporation against
any claim that may be made against it on account of the alleged loss,
theft, or destruction of any such certificate or the issuance of any
such new certificate or uncertificated shares.
2. UNCERTIFICATED SHARES. Subject to any conditions
imposed by the General Corporation Law, the Board of Directors of the
corporation may provide by resolution or resolutions that some or all
of any or all classes or series of the stock of the corporation shall
be uncertificated shares. Within a reasonable time after the issuance
or transfer of any uncertificated shares, the corporation shall send to
the registered owner thereof any written notice prescribed by the General
Corporation Law.
3. FRACTIONAL SHARE INTERESTS. The corporation may, but
shall not be required to, issue fractions of a share. If the corporation
does not issue fractions of a share, it shall (1) arrange for the
disposition of fractional interests by those entitled thereto, (2) pay
in cash the fair value of fractions of a share as of the time when those
entitled to receive such fractions are determined, or (3) issue scrip or
warrants in registered form (either represented by a certificate or
uncertificated) or bearer form (represented by a certificate) which shall
entitle the holder to receive a full share upon the surrender of such
scrip or warrants aggregating a full share. A certificate for a fractional
share or an uncertificated fractional share shall, but scrip or warrants
shall not unless otherwise provided therein, entitle the holder to exercise
voting rights, to receive dividends thereon, and to participate in any of
the assets of the corporation in the event of liquidation. The Board of
Directors may cause scrip or warrants to be issued subject to the
conditions that they shall become void if not exchanged for certificates
representing the full shares or uncertificated full shares before a
specified date, or subject to the conditions that the shares for which
scrip or warrants are exchangeable may be sold by the corporation and
the proceeds thereof distributed to the holders of scrip or warrants, or
subject to any other conditions which the Board of Directors may impose.
4. STOCK TRANSFERS. Upon compliance with provisions
restricting the transfer or registration of transfer of shares of stock,
if any, transfers or registration of transfers of shares of stock of the
corporation shall be made only on the stock ledger of the corporation by
the registered holder thereof, or by the registered holder's attorney
thereunto authorized by power of attorney duly executed and filed with
the Secretary of the corporation or with a transfer agent or a registrar,
if any, and, in the case of shares represented by certificates, on
surrender of the certificate of certificates for such shares of stock
properly endorsed and the payment of all taxes due thereon.
5. RECORD DATE FOR STOCKHOLDERS. In order that the
corporation may determine the stockholders entitled to notice of or to
vote at any meeting of stockholders or any adjournment thereof, the
Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the date is adopted by
the Board of Directors, and which record date shall not be more than sixty
nor less than ten days before the date of such meeting. If no record date
is fixed by the Board of Directors, the record date for determining
stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding
the day on which the meeting is held. A determination of stockholders of
record entitled to notice of or to vote at a meeting of stockholders shall
apply to any adjournment of the meeting; provided, however, that the
Board of Directors may fix a new record date for the adjourned meeting.
In order that the corporation may determine the stockholders entitled to
consent to corporate action on writing without a meeting, the Board of
Directors may fix a record date, which record date shall not precede the
date upon which the resolution fixing the record date is adopted by the
Board of Directors, and which date shall not be more than ten days after
the date upon which the resolution fixing the record date is adopted by
the Board of Directors. If no record date has been fixed by the Board of
Directors, the record date for determining the stockholders entitled to
consent to corporate action in writing without a meeting, when no prior
action by the Board of Directors is required by the General Corporation
Law, shall be the first date on which a signed written consent setting
forth the action taken or proposed to be taken is delivered to the
corporation by delivery to its registered office in the State of Delaware,
its principal place of business, or an officer or agent of the corporation
having custody of the book in which proceedings of meetings of stockholders
are recorded. Delivery made to the corporation's registered office shall
be by hand or by certified or registered mail, return receipt requested.
If no record date has been fixed by the Board of Directors and prior action
by the Board of Directors is required by the General Corporation Law, the
record date for determining stockholders entitled to consent to corporate
action in writing without a meeting shall be at the close of business on
the day on which the Board of Directors adopts the resolution taking such
prior action. In order that the corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or
allotment of any rights or the stockholders entitled to exercise any
rights in respect of any change, conversion, or exchange of stock, or
for the purpose of any other lawful action, the Board of Directors may
fix a record date, which record date shall not precede the date upon
which the resolution fixing the date is adopted, and which record date
shall not be more than sixty days prior to such action. If no record
date is fixed, the record date for determining stockholders for such
purpose shall be at the close of business on the day on which the Board
of Directors adopts the resolution relating thereto.
6, MEANING OF CERTAIN TERMS. As used herein in respect
of the right to notice of a meeting of stockholders or a waiver thereof
or to participate or vote thereat or to consent or dissent in writing in
lieu of a meeting, as the case may be, the term "share" or "shares" or
"share of stock" or "shares of stock" or "stockholder" or "stockholders"
refers to an outstanding share or shares of stock and to a holder or
holders of record of outstanding shares of stock when the corporation
is authorized to issue only one class of stock, and said reference is
also intended to include any outstanding share or shares of stock and
any holder or holders of record of outstanding shares of stock of any
class upon which or upon whom the certificate of incorporation confers
such rights where there are two or more classes or series of shares of
stock or upon which or upon whom the General Corporation Law confers such
rights notwithstanding that the certificate of incorporation may provide
for more than one class or series of shares of stock, one or more of which
are limited or denied such rights thereunder; provided, however, that no
such right shall vest in the event of an increase or a decrease in the
authorized number of shares of stock of any class or series which is
otherwise denied voting rights under the provisions of the certificate
of incorporation, except as any provisions of law may otherwise require.
7. STOCKHOLDER MEETINGS.
- TIME. The annual meeting shall be held on the date and
the time fixed, from time to time, by the directors, provided, that the
first annual meeting shall be held on a date within thirteen months after
the organization of the corporation, and each successive annual meeting.
A special meeting shall be held on the date and at the time fixed by the
directors.
- PLACE. Annual meetings and special meetings shall be
held at such place, within or without the State of Delaware, as the
directors may, from time to time, fix. Whenever the directors shall fail
to fix such place, the meeting shall be held at the registered office of
the corporation in the State of Delaware.
- CALL. Annual meetings and special meetings may be called
by the directors or by any officer instructed by the directors to call the
meeting.
- NOTICE OR WAIVER OF NOTICE. Written notice of all
meetings shall be given, stating the place, date, and hour of the meeting
and stating the place within the city or other municipality or community
at which the list of stockholders of the corporation may be examined. The
notice of an annual meeting shall state that the meeting is called for an
election of directors and for the transaction of other business which may
properly come before the meeting, and shall (if any other action which could
be taken at a special meeting is to be taken at such annual meeting) state
the purpose or purposes. The notice of a special meeting shall in all
instances state the purpose or purposes for which the meeting is called.
The notice of any meeting shall also include, or be accompanied by, any
additional statements, information, or documents prescribed by the General
Corporation Law. Except as otherwise provided by the General Corporation
Law, a copy of the notice of any meeting shall be given, personally or by
mail, not less than ten days nor more than sixty days before the date of the
meeting, unless the lapse of the prescribed period of time shall have been
waived, and directed to each stockholder at such stockholder's record address
or at such other address which such stockholder may have furnished by request
in writing to the Secretary of the corporation. Notice by mail shall be
deemed to be given when deposited, with postage theron prepaid, in the United
States Mail. If a meeting is adjourned to another time, not more than thirty
days hence, and/or to another place, and if an announcement of the adjourned
time and/or place is made at the meeting, it shall not be necessary to give
notice of the adjourned meeting unless the directors, after adjournment, fix
a new record date for the adjourned meeting. Notice need to be given to any
stockholder who submits a written waiver of notice signed by such stockholder
before or after the time stated therin. Attendance of a stockholder at a
meeting of stockholders shall constitute a waiver of notice of such meeting,
except when the stockholder attends the meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business
to be transacted at, nor the purpose of, any regular or special meeting of the
stockholders need be specified in any written waiver of notice.
- STOCKHOLDER LIST. The officer who has charge of the stock
ledger of the corporation shall prepare and make, at least ten days before
every meeting of stockholders, a complete list of the stockholders arranged
in alphabetical order, and showing the address of each stockholder and the
number of shares registered in the name of each stockholder. Such list shall
be open to the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least ten days
prior to the meeting, either at a place within the city or other municipality
or community where the meeting is to be held, which place shall be specified
in the notice of the meeting, or if not so specified, at the place where the
meeting is to be held. The list shall also be produced and kept at the time
and place of the meeting during the whole time thereof, and may be inspected
by any stockholder who is present. The stock ledger shall be the only
evidence as to who are the stockholders entitled to examine the stock ledger,
the list required by this section or the books of the corporation, or to vote
at any meeting of stockholders.
- CONDUCT OF MEETING. Meetings of the stockholders shall be
presided over by one of the following officers in the order of seniority and
if present and acting - the Chairperson of the Board, if any, the
Vice-Chairperson of the Board, if any, the President, a Vice-President, or,
if none of the foregoing is in office and present and acting, by a
chairperson to be chosen by the stockholders. The Secretary of the
corporation, or in such Secretary's absence, an Assistant Secretary,
shall act as secretary of every meeting, but if neither the Secretary
nor an Assistant Secretary is present the chairperson of the meeting
shall appoint a secretary of the meeting.
- PROXY REPRESENTATION. Every stockholder may authorize
another person or persons to act for such stockholder by proxy in all
matters in which a stockholder is entitled to participate, whether by
waiving notice of any meeting, voting or participating at a meeting, or
expressing consent or dissent without a meeting. Every proxy must be
signed by the stockholder or by such stockholder's attorney-in-fact.
No proxy shall be voted or acted upon after three years from its date
unless such proxy provides for a longer period. A duly executed proxy
shall be irrevocable if it states that it is irrevocable and. if, and
only as long as, it is coupled with an interest sufficient in law to
support an irrevocable regardless or whether the interest with which it
is coupled is an interest in the stock itself or an interest in the
corporation generally.
- INSPECTORS. The directors, in advance of any meeting,
may, but need not, appoint one or more inspectors of election to act at
the meeting or any adjournment thereof. If an inspector or inspectors
are not appointed, the person presiding at the meeting may, but need not,
appoint one or more inspectors. In case any person who may be appointed
as an inspector fails to appear to act, the vacancy may be filled by
appointment made by the directors in advance of the meeting or at the
meeting by the person presiding thereat. Each inspector, if any, before
entering upon the discharge of duties of inspector, shall take and sign
an oath faithfully to execute the dutiesof inspector at such meeting with
strict impartiality and accordingto the best of such inspector's ability.
The inspectors, if any, shall determine the numbers of shares of stock
outstanding and the voting power of each, the shares of stocks represented
at the meeting, the existence of a quorum, the validity and effect of
proxies, and shall receive votes, ballots, or consents, hear and determine
all challenges and questions arising in connection with the right to vote,
count and tabulate all votes, ballots, or consents, determine the result,
and do such acts as are proper to conduct the election or vote with
fairness to all stockholders. On request of the person presiding at
the meeting, the inspector or inspectors, if any, shall make a report
in writing of any challenge, question, or matter determined by such
inspector or inspectors and execute a certificate of any fact found by
such inspector or inspectors. Except as may otherwise be required by
subsection (e) of Section 231 of the General Corporation Law, the
provisions of that Section shall not apply to the corporation.
- QUORUM. The holders of a majority of the outstanding
shares of stock shall constitute a quorum at a meetign of stockholders
for the transaction of any business. The stockholders present may adjourn
the meeting despite the absence of a quorum.
- VOTING. Each share of stock shall entitle the holder
thereof to one vote. Directors shall be elected by a plurality of the
votes of the shares present in person or represented by proxy at the
meeting and entitled to vote on the elections of directors. Any other
action shall be authorized by a majority of the votes cast except where
the General Corporation Law prescribes a different persentage of votes
and/or a different exercise of voting power, and except as may be otherwise
prescribed by the provisions of the certificate of incorporation and these
Bylaws. In the election of directors, and for any other action, voting need
not be by ballot.
- --------------------------------------------------------------------------------
8. STOCKHOLDER ACTIONS WITHOUT MEETINGS. Except as any
provision of the General Corporation Law may otherwise require, any action
required by the General Corporation Law to be taken at any annual or special
meeting of stockholders, or any action which may be taken at any annual or
special meeting of stockholders, may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting forth
the action so taken, shall be signed by the holders of outstanding stock
having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled
to vote thereon were present and voted. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing.
Action taken pursuant to this paragraph shall be subject to the provisions
of Section 228 of the General Corporation Law.
ARTICLE II
DIRECTORS
1. FUNCTIONS AND DEFINITION. The business and affairs
of the corporation shall be managed by or under the direction of the
Board of Directors of the corporation. The Board of Directors shall
have the authority to fix the compensation of the members thereof.
The use of the phrase "whole board" herein refers to the total number
of directors which the corporation would have if there were no vacancies.
2. QUALIFICATIONS AND NUMBER. A director need not be a
stockholder, a citizen of the United States, or a resident of the State
of Delaware. The initial Board of Directors shall consist of persons.
Thereafter the number of directors constituting the whole board shall be
at least one. Subject to the foregoing limitation and except for the
first Board of Directors, such number may be fixed from time to time by
action of the stockholders or of the directors, or, if the number is not
fixed, the number shall be . The number of directors may be
increased or decreased by action of the stockholders or of the directors.
3. ELECTION AND TERM. The first Board of Directors,
unless the members thereof shall have been named in the certificate of
incorporation, shall be elected by the incorporator or incorporators
and shall hold office until the first annual meeting of stockholders and
until their successors are elected and qualified or until their earlier
resignation or removal. Any director may resign at any time upon written
notice to the corporation. Thereafter, directors who are elected at an
annual meeting of stockholders, and directors who are elected in the
interim to fill vacancies and newlu created directorships, shall hold
office until the next annual meeting of stockholders and until their
successors are elected and qualified or until their earlier resignation
or removal. Except as the General corporation Law may otherwise require,
in theinterim between annual meetings of stockholders or of special
meetings of stockholders calledfor the election of directors and/or for
the removal of one or more directors and for the filling of any vacancy
in that connection, newly created directorship and any vacancies in the
Board of Directors, including unfilled vacancies from the removal of
directors for cause or without cause, may be filled by the vote of a
majority of the remaining directors then in office, although less than
a quorum, or by the sole remaining director.
4. MEETINGS.
- TIME. Meetings shall be held at such time as the
Board shall fix, except that the first meeting of a newly elected
Board shall be held as soon after its election as the directors may
conveniently assemble.
- PLACE. Meetings shall be held at such place within
or without the State of Delaware as shall be fixed by the Board.
- CALL. No call shall be required for regular meetings
for which the time and place have been fixed. Special meetings may be
a called by or at the direction of the Chairperson of the Board, if any,
the Vice-Chairperson of the Board, if any, of the President, or of a
majority of the directors in office.
- NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice
shall be required for regular meetings for which the time and place
have been fixed. Written, oral, or any other mode of notice of the
time and place shall be given for special meetings in sufficient time
for the convenient assembly of the directors thereat. Notice need not
be given to any director or to any member of a committee of directors
who submits a written waiver of notice signed by such director or member
before or after the time stated therein. Attendance of any such person
at a meeting shall constitute a waiver of notice of such meeeting, except
when such person attends a meeting for the express purpose of objecting,
at the beginning of the meeting, to the transactionof any businessbecause
the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of
directors need be specified in any written waiver of notice.
- QUORUM AND ACTION. A majority of the whole board
shall constitute a quorum except when a vacancy or vacancies prevents
such majority, whereupon a majority of the directors in office shall
constitute a quorum, provided, that such majority shall constitute at
least one-third of the whole Board. A majority of the directors
present, whether or not a quorum is present, may adjourn a meeting to
another time and place. Except as herein otherwise provided, and except
as otherwise provided by the General Corporation Law, the vote of the
majority of the directors present at a meeting at which a quorum is
present shall be the act of the board. The quorum and voting provisions
herein stated shall not be construed as conflicting with any provisions
of the General Corporation Law and these Bylaws which govern a meeting of
directors held to fill vacancies and newly created directorships in the
Board or action of disinterested directors.
Any member or members of the Board of Directors or of
any committee designated by the board, may participate in a meetingof
the Board, or any such committee, as the case may be, by means of
conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other.
- CHAIRPERSON OF THE MEETING. The Chairperson of the
Board, if any and if present and acting, shall preside at all meetings.
Otherwise, the Vice-Chairperson of the Board, if any and if present and
acting, or the President, if present and acting, or any other director
chosen by the Board, shall preside.
5. REMOVAL OF DIRECTORS. Except as may otherwise be
provided by the General Corporation Law, any director of the entire
Board of Directors may be removed, with or without cause, by the holders
of a majority of the shares then entitled to vote at an election of
directors.
6. COMMITTEES. The Board of Directors may designate
one or more committees, each committee to consist of one or more of
the directors of the corporation. The Board may designate one or more
directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee. In the
absence or disqualification of any member of any such committee or
committees , the member or members thereof present at any meeting and
not disqualified from voting, whether or not such member or members
constitute a quorum, may unanimously appoint another member of the
Board of Directors to act at the meeting in the place of any such
absent or disqualified member. Any such committee, to the extent
provided in the resolution of the Board, shall have and may exercise
all the powers and authority of the Board of Directors in the
management of the business and affairs of the corporation with the
exception of any power or authority the delegation of which is
prohibited by Section 141 of the general Corporation Law, and may
authorize the seal of the corporation to be affixed to all papers
which may require it.
7. WRITTEN ACTION. Any action required or permitted
to be taken at any meeting of the Board of Directors or any committee
thereof may be taken without a meeting if all members of the Board or
committee, as the case may be, consent thereto in writing, and the
writing or writings are filed with the minutes of proceedings of the
Board or committee.
ARTICLE III
OFFICERS
The officers of the corporation shall consist of a
President, a Secretary, a Treasurer, and, if deemed necessary,
expedient, or desirable by the Board of Directors, a Chairperson
of the Board, a Vice-Chairperson of the Board, an Executive
Vice-President, one or more other Vice-Presidents, one or moe
Assistant Secretaries, one or more Assistant Treasurers, and such
other officers with such titles as the resolution of the Board od
Directors choosing them shall designate. Except as may otherwise be
provided in the resolution of the Board od Directors choosing such
officer, no officer other than the Chairperson or Vice-Chairperson
of the Board, if any, need be a director. Any number of offices may
be held by the same person, as the directors may determine.
Unless otherwise provided in the resolution choosing
such officer, each officer shall be chosen for a term which shall
continue until the meeting of the Board of Directors following the
next annual meeting of stockholders and until such officer's successor
shall have been chosen and qualified.
All officers ot the corporation shall have such
authority and performsuch duties in the management and operation
of the corporation as shall be prescribed in the resolutions of
the Board of Directors designating and choosing such officers and
prescribing their authority and duties, and shall have such additional
authority and duties as are incident to their office except to the
extent that such resolutions may be inconsistent therewith. The
Secretary or an Assistant Secretary of the corporation shall record
all of the proceedings of all meetings and actions in writing of
stockholders, directors, and committees of directors, and shall exercise
such additional authority and perform such additional duties as the
Board shall assign to such Secretary or Assistant Secretary. Any
officer may be removed, with or without cause, by the Board of Directors.
Any vacancy in any office may be filled by the Board of Directors.
ARTICLE IV
CORPORATE SEAL
The corporate seal shall be in such form as the Board
of Directors shall prescribe.
ARTICLE V
FISCAL YEAR
The fiscal year of the corporation shall be fixed, and
shall be subject to change, by the Board of Directors.
ARTICLE VI
CONTROL OVER BYLAWS
Subject to the provisions of the certificate of
incorporation and the provisions of the General Corporation Law, the
power to amend, alter, or repeal these Bylaws and to adopt new Bylaws
may be exercised by the Board of Directors or by the stockholders.
I HEREBY CERTIFY that the foregoing is a full, true,
and correct copy of the Bylaws of Mainframe Security Corp., a delaware
corporation, as in effect on the date hereof.
Dated: March 19th, 1999
___________________________________________
Frank Power, President, Director, Secretary
DISCLOSURE STATEMENT
MAINFRAME SECURITY CORP.
Suite 1, 1155 Melville Street, Vancouver,
British Columbia, Canada V6E 4C4
Tel. (604) 688-5575 Fax. (604)688-5579
Email: [email protected]
DATE OF DISCLOSURE STATEMENT: July 23, 1999
TYPE OF SECURITIES OFFERED: Shares of Common Stock
of the Company
NUMBER OF SECURITIES OFFERED: Up to 500,000 Shares of
Common Stock (the "Shares")
Offering Price
Underwriter Discount and Commissions
Proceeds to Company
Per Share
$0.25
Nil
$0.25
Total
(If all shares sold)
$125,000
Nil
$125,000
The securities offered are offered on a best efforts basis.
The Shares are offered by the Company without the benefit of an
underwriter. Sales of Common Stock will commence on the date of
this Disclosure Statement and will terminate on October 23, 1999.
There is no minimum number of Shares to be sold.
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT"), AND ARE PROPOSED TO BE ISSUED
IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE ACT PROVIDED BY REGULATION S PROMULGATED UNDER THE ACT.
UPON ANY SALE, SUCH SECURITIES MAY NOT BE REOFFERED FOR SALE OR
RESOLD OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF REGULATION S, PURSUANT TO AN EFFECTIVE REGISTRATION
UNDER THE ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM
REGISTRATION UNDER THE ACT. HEDGING TRANSACTIONS INVOLVING THE
SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT.
INVESTMENT IN THE COMMON STOCK OFFERED BY THE COMPANY INVOLVES A
HIGH DEGREE OF RISK. IN MAKING AN INVESTMENT DECISION INVESTORS
MUST RELY ON THEIR OWN EXAMINATION OF THE ISSUER AND THE TERMS OF
THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. PROSPECTIVE
INVESTORS SHOULD RETAIN THEIR OWN PROFESSIONAL ADVISORS TO REVIEW
AND EVALUATE THE FINANCIAL, ECONOMIC, TAX AND OTHER CONSEQUENCES
OF THIS INVESTMENT. INVESTORS SHOULD NOT INVEST ANY FUNDS IN THIS
OFFERING UNLESS THEY CAN AFFORD TO LOSE THEIR INVESTMENT IN ITS
ENTIRETY.
THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION HAS NOT
PASSED UPON THE MERITS OF THIS OFFERING OR GIVEN ITS APPROVAL
TO ANY SECURITIES OFFERED OR TO THE TERMS OF THE OFFERING. THE
UNITED STATES SECURITIES COMMISSION HAS NOT PASSED UPON THE
ACCURACY OR COMPLETENESS OF THIS DISCLOSURE STATEMENT. THE UNITED
STATES SECURITIES AND EXCHANGE COMMISSION HAS NOT MADE AN
INDEPENDANT DETERMINATION THAT THE SECURITIES OFFERED HEREUNDER
ARE EXEMPT FROM REGISTRATION.
TABLE OF CONTENTS
SUMMARY 3
RISK FACTORS 4
PLAN OF DISTRIBUTION 7
USE OF PROCEEDS 9
DILUTION 9
DESCRIPTION OF BUSINESS 10
DESCRIPTION OF PROPERTY 12
DIRECTORS, OFFICERS AND SIGNIFICANT EMPLOYEES 12
REMUNERATION OF DIRECTORS AND OFFICERS 13
SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN SECURTY OWNERS 13
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN
TRANSACTIONS 14
SECURITIES BEING OFFERED 14
FINANCIAL STATEMENTS 15 +
Exhibit 'A'
SUBSCRIPTION AGREEMENT
Exhibit 'B'
SUMMARY
The following summary is qualified in its entirety by the more
detailed information and financial statements appearing elsewhere
in this Disclosure Statement and the exhibits hereto. Prospective
investors are urged to read this Disclosure Statement in its
entirety.
The Company
Mainframe Security Corp. is a Delaware corporation incorporated
on March 17, 1999.
The Offering
Securities Being Offered: Up to 500,000 shares of Common
Stock of the Company at a price of $0.25 US per share;
See "DESCRIPTION OF SHARES."
Purchase Price: $0.25 US per share. See "TERMS OF THE
OFFERING."
Regulation S: The Shares are being offered pursuant
to Regulation S of the United States Securities Act of 1933 to
persons who are not "U.S. Persons". See "PLAN OF DISTRIBUTION".
Registration Rights: The Company has agreed to register
the Shares with the United States Securities and Exchange Commission
in order to qualify the resale of the Shares in the United States.
The Company will file the required registration statement within a
reasonable time of acceptance of the Subscription. See "PLAN OF
DISTRIBUTION".
Securities Issued: As of the date of this Document, there
are 9,100,000 shares of Common Stock issued and outstanding. Upon
the completion of this offering, there will be 9,600,000 shares of
Common Stock issued and outstanding if the offered Shares are fully
sold. See "SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITY
OWNERS" and "TERMS OF THE OFFERING."
Use of Proceeds: The proceeds to the Company
from the sale of the Shares will be approximately $125,000
assuming all Shares are sold. See "USE OF PROCEEDS."
Dilution: Investors in this offering will experience
substantial dilution. Dilution represents the difference between
the offering price and the net tangible book value per share after
the offering. Additional dilution may result from future offerings
or from the exercise of future options pursuant to any stock option
plan or warrants that may be established by the Company. See
"DILUTION".
Risk Factors: The securities offered hereby involve a high
degree of risk and should not be purchased by anyone who cannot
afford the loss of their entire investment. Prospective investors
should carefully review and consider the factors set forth in the
following section of this Document entitled "RISK FACTORS", as well
as the other information set-forth herein, before subscribing for
any of the Shares offered hereby.
RISK FACTORS
An investment in the Shares offered herein is highly speculative
and subject to a high degree of risk. Only those persons who can
bear the risk of the entire loss of their investment should
participate. Any investor should carefully consider the risks
described below and the other information in this Disclosure
Statement and any other filings the Company may make with the
United States Securities and Exchange Commission (the "SEC") in
the future before investing in the Company's common stock. The
risks described below are not the only ones affecting the Company.
Additional risks that the Company is not aware of or that the Company
currently believes are immaterial may become important factors that
affect its business. If any of the following risks occur, or if others
occur, the Company's business, operating results and financial
condition could be seriously harmed. The trading price of its common
stock could decline due to any of these risks, and any investor may
lose all or part of his or her investment.
An investment in the Common Stock involves many substantial risk
factors, including those associated generally with a new venture
and a high technology undertaking which does not have a developed
marketing structure into a tested market. Although management
itself feels that there is substantial demand for its product at
its proposed price, that assumption is yet to be tested in full
operation. The Company itself has a limited operating history.
Risk Factors Related to the Company's Business
Status of Venture: The Company, formed in 1999, has had no significant
operations or business assets, and is yet in its early, development
stage. In April, 1999 it acquired technology from Barracuda Security
Devices International Inc. ("Barracuda") as described in "DESCRIPTION
OF BUSINESS".
No Operating History: The Company has been in actual operation under
its current management for a relatively short time. It faces all of
the risks inherent in a new business and those risks specifically
inherent in the development and operation of a new business. The
likelihood of the Company's success must be considered in light of
the problems, expense, difficulties and delays frequently encountered
in connection with a new business, including, but not limited to,
uncertainty as to the ability to develop a market for a new product
in a new area. The Company is not expected to generate any significant
revenues until it completes a further offering of its securities. The
purchase of the securities offered hereby must be regarded as the placing
of funds at risk in a new or "start-up" venture with all of the unforeseen
costs, expenses, problems and difficulties to which such ventures are
subject.
Management Risks Inherent in High-Technology Businesses: New
ventures, particularly those involved in high technology, have
substantial inherent risks. These risks are in three general
areas: technical, mechanical and human. Notwithstanding any
pre-production planning, any new products can incur unexpected
problems in full-scale production, all of which cannot always be
foreseen or accurately predicted. Designs can become unworkable,
for unpredicted reasons. Quality control and component sourcing
failures are to be expected from time to time. Any operation,
including the one contemplated here, is substantially dependent
upon the capabilities and performance of both management and sales
personnel. Mistakes in judgement or performance can be costly and,
in instances, disabling. Therefore, management skill, experience,
character and reliability are of premium importance.
Production Risks in High-Technology Ventures: The high-technology
product line requires the Company to deal with suppliers and
subcontractors supplying highly specialized parts, operating highly
sophisticated and narrow tolerance equipment and performing highly
technical calculations and tasks. Components must be custom designed
and manufactured, which is not only complicated and expensive, but
can require a number of months to accomplish. Slight mistakes in
either the design or manufacturing can result in unsatisfactory
parts which may not be correctable. Since this operation uses the
talents of various professions mistakes from very slight oversights
or miscommunications can occur, resulting not only in costly delays
and lost orders but in disagreements regarding liability and, in any
event, extended delays in production.
Conflicts of Interest in Economic and Cost Data: The only
production cost studies and market analysis which are relied
upon in this Confidential Private Placement Offering Memorandum
were prepared and performed by personnel of the Company. Those
persons will derive substantial personal benefits from the
start-up of the Company, part of which income will result whether
or not the Company ever achieves sufficient income to reach
economic equilibrium enabling it to make dividend distributions
to shareholders.
Nature of Market Appeal: Although Management believes that the
product will have sustained market demand over an extended period
into the future, It is possible that current indications of
commercial demand are limited to current market conditions only.
It is possible that demand may be directed to other similar or
competing products, because of technical developments or
preferences or simply because of overwhelming commercial
promotion, within a short period of time, thereby limiting the
commercial viability of the product either prior to or shortly
after the Company reaches an initial level of economic
profitability. Unexpected negative publicity, even if not relating
directly to the Company or its own products and even if unwarranted,
can devastate a market. Such unusual fortuities can never be
predicted.
Risk Factors Relating to Market Protection
Market Competition: The computer security business is dominated
by a number of competitors, large and small, who are established
in the market place, have experienced and talented management, are
well financed and have well recognized trade names related to their
product lines. Although the Company believes its product lines have
certain distinctive characteristics which will allow it to penetrate
the existing market and acquire a sufficient market share in its
special niche to be profitable, there is no assurance that existing
companies will not aggressively compete by introducing new products
substantially similar to the Company's and at a price below that at
which the Company can compete. Should this occur, the Company may
not be able to survive for a sufficient time to reach viability.
Inherently Limited Nature of Patent Protection: It is conceivable that
new similar products are now being or will be produced and distributed
by one or more other entities. As some security from competition
within the market place, the Company is relying on the protection
which it hopes to realize under the patent laws. See "DESCRIPTION
OF BUSINESS". It is even conceivable that certain patent copyright
claims superior to the Company's currently unfiled are either pending
or planned, either within the U.S. or other foreign countries, which
could significantly impact the Company's rights to the use of all, or
important aspects, of the Barracuda technology. It is further
conceptually possible that similar devices could be designed which,
although not identical and therefore not infringing upon the Company's
proprietary right, could function adequately to be distributed into the
same market. Moreover, it is even possible that an unpatented or
uncopyrighted but prior existing device or design may exist which simply
has never been made public and therefore not known to Management or the
industry in general. Such a device could be introduced into the market
without infringing upon the Company's current rights. If any such
competing non-infringing devices are produced and distributed, the
Company's profit potential could be seriously limited.
Patent Protection is Not Self-Enforcing: The Company plans to file
copyright claims within the United States and countries where major
markets exist. However, even apart from a superior right to the
Company's claim to exclusive design and concept rights, if one or
more competitors should yet produce and distribute a product
apparently within the protection of one or more of those claims,
the cost of enforcing the Company's claim could fall on the Company
itself. The costs can be substantial and ultimately could be beyond
the financial resources of the Company. Even if it is not, the
legal costs required in protecting that claim could seriously
debilitate the Company's other operations. This is an inherent
problem in relying upon patent claims for market protection.
Thus, even though the patent may be valid, investors should be
aware that it is not self-enforcing.
Cautions on Copyright Protection: If any of those copyright claims
are challenged in a future lawsuit by one or more competitors, it
is possible, although not probable, that a court could yet find one
or more of those claims invalid, or at least too broad. The courts,
and not the granting agencies are generally the final arbiters on
such matters. If challenged, the court through its own interpretation
of the laws and facts may either determine the patent to be completely
invalid or the claim to be considerably narrower than defined in the
patent documents issued by the patent offices.
Dependence Upon Key Personnel: At least in the near term, the Company
is dependent upon its executive officers and certain key employees and
consultants, the loss of any one of whom could have a material adverse
effect on the Company. The Company has not obtained key man life
insurance on the lives of any of its key personnel. At the present
time, the Company has not entered into consulting and employment
agreements with each of its key employees. Alternatively, the primary
means of maintaining their relationship with the Company's pursuit is
their substantial equity interest. The continued success of the Company
will also be dependent upon its ability to attract and retain highly
qualified personnel in the sales area. There can be no assurance that
the Company will be able to recruit and retain such personnel.
Risks Related to the Management Structure of the Company
Limitation on Liability of Management: Management will have no
liability to the Company for any mistakes or errors of judgement
or for any act or omission believed to be within the scope of
authority conferred by the Company's articles unless such acts
or omissions were performed or omitted fraudulently or in bad
faith, constituted gross negligence or were a violation of directors
or officer's fiduciary obligations to the Company. The Company has
agreed to indemnify the officers and directors against all loss or
damage even if caused by an officer's or director's simple negligence
unless such loss or damage was caused by that officer's or director's
fraud, bad faith, gross negligence or breach of fiduciary obligation.
Risks Inherent in Business Investment
No Assurance of Profitability of Operation: Notwithstanding the
business plan and projections made by the Company, there can be
no assurance that the Company will be able to operate the commercial
operation successfully and in fact, may ultimately fail. Even if the
commercial operation itself is successful, there is no assurance that
any specific level of profitability will be achieved by Management.
Application of Revenues: Although earnings sufficient to allow the
possible payment of stock dividends may in the future develop, there
is no assurance that earnings sufficient to pay such dividends will
ever be achieved. Even if achieved there is no assurance that such
funds will not be applied by Management to other purposes. For instance,
Management could apply those funds to payment of other debt which either
now exists or may be incurred in the future, capital expansion or
improvements, the creation of reserves, the payment of compensation
or any other of a variety of business purposes. The decision of what
portion of earnings is to be distributed in payment of dividends and
what portion is to be retained for any of those other purposes is
inherently within the discretion of Management.
Dilutionary Possibilities: A Board of Directors has the inherent
right under applicable law, for whatever value the Board deems
adequate, to the limit of shares authorized by the Articles, to
issue additional shares, and all Common Stock shareholders,
regardless of when the stock is issued, thereafter generally rank
equally in all aspects of that class of stock, regardless of when
issued. A majority of shareholders can vote to amend the Articles
of Incorporation to authorize the issuance of preferred shares.
The Board of Directors likewise has the inherent right, limited
only by applicable law, previsions of the Articles of Incorporation
and existing resolutions, to expand the number of shares in a series,
create new series and to establish preferences and all other terms
and conditions in regard to such newly created series. Those terms
and conditions may include preferences on an equal or prior rank to
existing series and to all Common Stock. Those shares may be issued
on such terms and for such consideration as the Board then deems
reasonable and such stock shall then rank equally in all aspects of
the series and on the preferences and conditions so provided,
regardless of when issued. Any of those actions can not only dilute
the Common Shareholders but the relative position of the holders of
any series of any preferred class. Current shareholders have no
rights to prohibit such issuances nor inherent "preemptive" rights
to purchase any such stock when offered.
Risks Relating To The Nature Of The Offering
Arbitrary Offering Price: The offering price of the Common Stock
was arbitrarily determined by the Management and is not based on
any specific recognized criteria of value or other practices.
Quite specifically, it should be recognized that it is impossible
to determine at what price if anything, those shares would sell.
See "Terms of Offering", and "Conflicts of Interest".
Dilution of Proceeds from Common Stock: The Common Stock offered
hereunder is being sold at US$0.25 per share. Subscribers under
this offering will suffer an immediate dilution of their rights
and contribution, as compared to the current shareholders of the
Company. See "Terms of Offering" and "Financial Statements".
While Management feels that the value of its technology and the
business plan discussed herein justifies the subscription price,
there is no assurance that this venture will succeed, thereby
confirming that projection of disproportionate value.
GENERAL CAUTION: For all of the aforesaid reasons, and others set
forth herein, the very nature of the Company, its management
structure and the securities being offered here each involve a
notable risk. Any person considering an investment in the securities
offered hereby should be aware of these and other risk factors as set
forth in this Disclosure Statement. No person should invest in these
securities if that person anticipates a need for immediate return on
his investment. These securities should only be purchased by persons
who can afford to absorb a total loss of their investment and, at the
very least, have no need for immediate return on that investment.
PLAN OF DISTRIBUTION
Securities Offered
The Offering consists of the offering of up to 500,000 shares
of Common Stock of the Company, par value $0.0001 per share
(each a "Share") at a price of $0.25 US per Share (the "Offering").
Sales of Common Stock to the public will commence on the date of
this Disclosure Statement and will terminate on October 23, 1999,
unless extended by the board of directors of the Company. There
is no minimum number of Shares to be sold.
Capital Structure: The Company is authorized to issue a total of
50,000,000 shares of Common Stock of a par value of $0.0001 per
share. At the present time, the Company has issued and outstanding
a total of 9,100,000 shares of that Common Stock. If this Offering
is fully subscribed, a maximum of 500,000 further shares will be
issued in return for those subscriptions. This will bring the total
shares outstanding, at the closing of this Offering to 9,600,000
shares.
Regulation S
The Offering is being made pursuant to Regulation S of the United
States Securities Act of 1933 (the "Act"). The Offering is made
to persons who are not "U.S. Persons" as defined by Regulation S
of the Act. A "U.S. Person" is defined by Regulation S of the Act
to be any person who is;
a. any natural person resident in the United States;
b. any partnership or corporation organized or
incorporated under the laws of the United States;
c. any estate of which any executor or administrator
is a U.S. person;
d. any trust of which any trustee is a U.S. person;
e. any agency or branch of a foreign entity located
in the United States;
f. any non-discretionary account or similar account
(other than an estate or trust) held by a dealer or other
fiduciary organized, incorporate, or (if an individual) resident
in the United States; and
g. any partnership or corporation if:
(1) organized or incorporated under the laws of any
foreign jurisdiction; and
(2) formed by a U.S. person principally for the purpose
of investing in securities not registered under the Act, unless
it is organized or incorporated, and owned, by accredited investors
[as defined in Section 230.501(a) of the Act] who are not natural
persons, estates or trusts.
By execution of the Subscription Agreement, each subscriber for
shares (a "Subscriber") will represent to the Company that the
Subscriber is not a U.S. Person and will agree with the Company
as follows as a condition of the Company selling Shares to any
Subscriber:
(A) The Subscriber will resell the Shares only in
accordance with the provisions of Regulation S of the Act
pursuant to registration under the Act, or pursuant to an
available exemption from registration pursuant to the Act;
(B) The Subscriber will not engage in hedging transactions
with regard to the Shares unless in compliance with the Act;
(C) The Subscriber will acknowledge and agree that all
certificates representing the Shares will be endorsed with the
following legend in accordance with Regulation S of the Act:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT"), AND
HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT PROVIDED BY REGULATION S PROMULGATED UNDER
THE ACT. SUCH SECURITIES MAY NOT BE REOFFERED FOR SALE OR RESOLD OR
OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF
REGULATION S, PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE ACT,
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE
ACT. HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE
CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT"
(D) The Company will refuse to register any transfer of the Shares
not made in accordance with the provisions of Regulation S of the Act,
pursuant to registration under the Act, or pursuant to an available
exemption from registration.
(E) The securities acquired by each respective subscriber hereunder
will be released for trading on a quarterly basis commencing 10 days
from the date of issue of the Company's trading symbol.
Registration Rights
The Company will prepare and file a registration statement with the
United States Securities and Exchange Commission (the "SEC") pursuant
to the Act on a Form SB-1, or other appropriate registration statement,
as required to qualify the Shares purchased by each Subscriber for
resale in the United States (the "Registration Statement"). The Company
will undertake to file the Form SB-1 with the SEC within a reasonable
time following the completion of the Offering of the Shares. The Company
will use its best efforts to ensure effectiveness of the Registration
Statement within a reasonable period of time following filing of the
Registration Statement.
Local Securities Laws
The Offering and any subscription for Shares is subject to compliance
with the securities laws and other applicable laws of the jurisdiction
in which any Subscriber for the Offering is resident. Each Subscriber
will deliver to the Company all other documentation, agreements,
representations and requisite government forms required by the lawyers
for the Company, in addition to the Subscription Agreement, as required
to comply with all securities laws and other applicable laws of the
jurisdiction of the Subscriber. The Company will not grant any
registration or other qualification rights to any Subscriber, other
than the agreement of the Company to register the Shares with the SEC
as discussed above.
Best Efforts Basis
The Shares are being offered by the Company on a "best efforts". There
is no minimum number of Shares to be sold pursuant to this Offering.
The Company may immediately use proceeds obtained from this Offering.
All proceeds received by the Company from subscribers for the Shares
offered hereby will be available to the Company immediately.
Subscription Agreement
Subscription for the Shares shall be made pursuant to a subscription
agreement (the "Subscription Agreement") in the form attached to this
Disclosure Statement. The Subscription Agreement contains, among other
things, customary representations and warranties by the Company,
covenants of the Company reflecting the information set forth herein,
representations by the investors and appropriate conditions to closing.
Underwriter
The Shares are being offered by the Company to the public without
the benefit of an underwriter.
Discounts and Commissions
The sales of the Shares being offered by the Company will be carried
out by the Company. The Company will not pay discount the price of
the Shares or pay a commission to any dealer in connection with the
sale of the Shares.
USE OF PROCEEDS
Use of Proceeds: It is estimated that the Company will use the
maximum funds of $125,000 in the manner set forth below:
<TABLE>
<CAPTION>
<S> <C>
Business Development $ 10,000
Inventory 25,000
Marketing and Sales 50,000
General Administration and Operating Capital 15,000
Costs Associated with the Offering, Filings, and
Related Documentation 25,000
$125,000
</TABLE>
Any and all additional funds raised under this Offering Memorandum will
be used to expand marketing, for further business development and for
operating capital.
The actual expenditures of the proceeds of the Offering may differ
substantially from the estimated use of proceeds. The actual
expenditures of the proceeds of the Offering will be according to
the expenditures deemed by the Company and its board of directors
to be in the best interests of advancing the business of the Company.
The actual expenditures will also vary from the estimated use of
proceeds if less than all of the Shares are sold.
The Company anticipates that the net proceeds from the Offering will
be sufficient to meet its financial requirements for only a short
period of time. The Company, therefore, will require substantial
additional capital to fund its contemplated business plan in the near
future.
The Company anticipates expenses associated with the Offering,
including legal, accounting and stock transfer agent expenses, will
be approximately $20,000 US. The Company anticipates expenses associated
with the registration of the Shares issued pursuant to the Offering,
including legal and accounting expenses, will be approximately $5,000 US.
DILUTION
"Net tangible book value" is the amount that results from subtracting
the total liabilities and intangible assets of an entity from its total
assets. "Dilution" is the difference between the offering price of a
security such as the Shares, and its net tangible book value per Share
immediately after the Offering, giving effect to the receipt of net
proceeds in the Offering. As of the date of this Disclosure Statement,
the net tangible book value of the Company was $58,000 or approximately
$0.007 per share. Giving effect to the sale by the Company of all
offered Shares at the Offering price, the pro forma net tangible book
value of the Company would be approximately $83,000, or approximately
$0.009 per Share, which would represent an immediate increase in net
tangible book value of approximately $0.002 per Share to present
shareholders and an immediate dilution of approximately $0.041 per
Share, or approximately 0.0001% to new investors.
The following table illustrates the pro forma per Share dilution
assuming the maximum Shares offered are sold.
ASSUMING MAXIMUM
SHARES SOLD
<TABLE>
<CAPTION>
<S> <C>
Offering Price (before deduction of Offering expenses) $ 0.25 per share
Net tangible book value before Offering $0.007 per share
Net tangible book value after Offering $0.009 per share
Dilution to new investors $0.041 per share
Dilution as a percentage 0.0001 %
</TABLE>
DESCRIPTION OF BUSINESS
CORPORATE BACKGROUND
Corporate Organization
History: The Company is a corporation organized under the laws
of the State of Delaware on March 17, 1999.
History and Current Status: The Company was originally
incorporated for the purpose of high technology development of
computer security devices.
Corporate Facilities: The Company maintains its principal corporate
offices at Suite 1, 1155 Melville Street, Vancouver, British Columbia,
Canada, V6E 4C4.
Introduction: In an Agreement to Acquire Technology dated April 20,
1999, the Company acquired from Barracuda Security Devices
International Inc. ("Barracuda"), the world wide intellectual
property, manufacturing, and distribution rights to the "Barracuda"
computer security card and other security devices. These rights
include the technology, techniques, patents and related software
and codes. In consideration of the transfer of these rights, the
Company issued five million shares of common stock to Barracuda.
Barracuda - Corporate Information: Barracuda is a corporation
federally incorporated on October 8, 1997 and extra-provincially
registered in British Columbia on December 30, 1997. The registered
and records offices of Barracuda are located at Dumoulin and Black,
595 Howe Street, 10th Floor, Vancouver, BC, V6C 2T5. Barracuda's
head office is located at 22545 Kendrick Loop, Maple Ridge,
British Columbia, V2X 9W5. Telephone: (604) 463-1986.
Barracuda - General Development and History: Barracuda, of Vancouver,
British Columbia, purchased the rights on March 5, 1999 from Colin
McLean, the sole owner and developer of the technology, in exchange
for 30% of the issued shares of Barracuda.
The patented Barracuda card was developed in the UK by Mr. McLean.
It was brought to market there in January, 1996. Over 40,000 units
have been sold in Europe since then. The Company is now preparing
to launch the market in North America and worldwide. BARRACUDA has
spent over $200,000 USD in the past two years developing the large
potential world market.
Technology: The Barracuda is an 8-bit ISA card that is inserted in a
free ISA slot in any computer. It is programmed with special remote
alert software with an access code encrypted and stored on the card
itself. The technology includes the following features:
* Easy to Use, Powerful Software providing remote alert capabilities.
The Barracuda's ultra smart software can manage hundreds of PC's from
one central workstation. Administrators can easily manage full
computer security across large networks. Central administration
can receive an alarm or alert across the Network, via pager or mobile
phone. Software runs under WIN 3.1, WIN 3.11, WIN 95, WIN 98 and
WIN NT 4.0.
* Independent Power Supply for protection even when the computer is
turned off.
* Internal Motion Sensor that prevents illegal movements by sounding
an alarm or sending a signal. The Barracuda can detect any computer
movement. If the system is accidentally moved, an intelligent audible
alarm (120dB) provides a one-second warning. If the system is moved
constantly an alarm sounds continuously, and for 120 seconds after
the computer has been set down.
* An Internal Ambient Light Sensor and Indelible Dye Capsule: The
Barracuda's sensor constantly monitors the ambient light level inside
the computer detecting the slightest variation and activating the alarm.
If the cover of the computer is removed without disarming the device
using a PIN number, the alarm will sound. In conjunction with the alarm,
this sensor will activate an indelible dye capsule and mark all the
components inside the computer. The marking of the components clearly
identifies the components as stolen and hence make them difficult to
resell.
* Reed Switch: A reed switch triggers the alarm, when connected to
the computer case, if it is misaligned (similar to a home alarm window
reed switch). The reed switch is primarily used as a backup.
The Market: The Barracuda Card was introduced to the marketplace in
early 1996 in the United Kingdom. Since then, over 40,000 units have
been sold mostly in Europe and some in North America and Australia.
Current customers include banks, airlines, colleges and universities,
Mobil Oil, Kodak, insurance companies, hotels, Shell UK, and many others.
Many North American companies have shown keen interest in the product
since being introduced to it. The Company is now preparing to launch a
major marketing and sales program worldwide. The market is vast with
every company or individual that owns a computer being a potential
customer.
Competition: There are several other computer security devices on the
market. Some techniques include cable tie downs and pad locks and
exterior mounted motion detectors. Some use a marking paint. Some
use software and electronic keys. None are as simple, dependable and
comprehensive as the Barracuda. None have the exploding dye capsule
that covers the CPU and Ram chips in an indelible dry powder which
makes tracking and identifying of the components easier and thus
creates a significant theft deterrent.
Technology Protection: The Barracuda Card is patent protected and
difficult to replicate because of its proprietary encoding.
Future Opportunities: The Company will continue its development of
its security call scanning system -
ACCUI TM and its Barracuda Security Pad. The applications and market
for both proprietary designs is very large in the world marketplace.
Historical Financial Information: The Company was recently
incorporated and is still in the development stage. There are no
revenues to date. See Audited Financial Statements attached.
Projected Revenues: The Company is projecting sales of approximately
two million dollars in the first year following completion of this
offering. Depending on the financial, production and management
resources, there is potential for five million dollars in revenues
in year two, with increased sales in year three.
Management: The Company's management is comprised of a small team of
individuals experienced in all facets of business operations including
product research and development, administration, sales and marketing,
finance, and manufacturing.
Plant, Equipment and Operations: The product is currently being
manufactured and assembled in the U.K. under sub contract. The
Company has identified contractors in Canada and the U.S. to produce
the product at a reduced cost.
INTELLECTUAL PROPERTY AND OTHER PROPRIETARY RIGHTS
The Company has acquired the intellectual property rights and the
exclusive world wide manufacturing and marketing rights to the
"Barracuda" security card and other security devices. These rights
include the technology, patents, techniques and related software
codes.
EMPLOYEES
At this stage there are no employees.
DESCRIPTION OF PROPERTY
The primary business activities of the Company and Barracuda are
carried on at leased premises located at Suite 1, 1155 Melville Street,
Vancouver, British Columbia V6E 4C4. The premises are comprised of 800
square feet and is leased for a term of one years expiring on December
31, 1999. The Company does not lease or own any other property.
DIRECTORS, OFFICERS AND SIGNIFICANT EMPLOYEES
The following information sets forth the names of the officers and
directors of the Company, their present positions with the Company,
and their biographical information.
Each director will serve until the next annual meeting of
shareholders, and thereafter if reelected.
Name of Director Age
Mr. Frank Power 56
Mr. Lee Meyer 53
Name of Officer Office
Mr. Frank Power President
As a Delaware corporation, the final responsibility for the
management of the affairs of the Company rests with the Board
of Directors. That Board currently consists of two directors.
Those directors are elected at the annual meeting of the
shareholders and serve for an annual term or until they resign
or are replaced. Those directors meet or otherwise consult with
one another on a regular basis to review the affairs of the Company
and to adopt or confirm any resolutions which are necessary to grant
contractual and other authority to the administrative officers.
The directors may, and probably will, designate an executive
committee to which they will grant limited authority to make certain
ministerial decisions on behalf of the board between meetings of the
full board. The affairs of the Company are administered by its
executive officers. Those officers are designated by the Board of
Directors to whom those officers are responsible. The executive
officers are generally elected by the directors on an annual basis
and serve throughout that term or until such earlier time as they
resign or are replaced. The directors may, and in the case of this
Company will designate themselves as senior executive officers of
the Company. The Company's day to day actions will occur through the
actions of those executive officers acting on behalf of the Company.
Throughout this Offering Memorandum the term "Management" shall be
interpreted as the current directors end officers of the Company
designated in the following section.
The following sets forth information as to the principal occupation
and business experience for at least the past five years of each of
those directors and officers.
Mr. Frank Power: Mr. Power, a business management consultant, has
managed and administered several public companies for the past 15
years. Since 1984, he has provided services including strategic
planning, management, administration, design, and construction of
major mining projects both nationally and internationally. He has
owned and operated several consulting companies that have been
providing comprehensive services in the industrial and high-technology
fields as well as the mining field. His expertise also includes
reactivating public companies, project acquisitions, public and
private funding, as well as developing and taking existing private
companies public. He is equally knowledgeable to provide professional
services in the public markets both in Canada and the United States.
Mr. Power has been President and Owner of Pow Con Management since 1981
and Premier Enterprises Ltd. since 1994, these companies manage,
administrate and finance reporting companies. He served as President
and Director of several Vancouver reporting companies and publicly
listed companies since 1986 to present. Since 1992, Mr. Power has
served as President of World Organics Inc., listed on the Vancouver
Stock Exchange. From 1996 to 1997, Mr. Power served as President and
Director of Accuimage Diagnostics. He is presently Vice-President of
Scientific Technologies, Inc. and former President of Security
Industries, Inc. These companies are listed on the U.S. stock exchange.
Mr. Lee Meyer: Mr. Meyer, since completing his Business Administration
degree from Arizona State University, has held positions including
Managing Director of Omni International; Vice-President and Director
of World Organics, Inc., a reporting company; Secretary and Treasurer
of Tec Industries Corp., a specialty equipment rental agency; and owner
and President of Stretchcoat, a national manufacturer and marketer of
specialty products. Mr. Meyer has also represented major principals
selling products nationally.
Management Compensation: Until funded, the Company expects to pay no
salaries or consulting fees to any of its directors, officers or
employees.
REMUNERATION OF DIRECTORS AND OFFICERS
The following table sets forth certain information as to the Company's
two highest paid officers and directors for the period from the
commencement of the Company business to July 23, 1999. No other
compensation was paid or will be paid to any such officer or directors
other than the cash compensation set forth below.
Summary Compensation Table
Name of Individual or Identity of Group
Capacities in Which Remuneration was Received
Aggregate Remuneration
Mr. Frank Power
Director and President
$0.00
Mr. Lee Meyer
Director
$0.00
Officers and Directors of the Company as a Group
Directors and Officers
$0.00
The compensation paid to directors and officers to July 23, 1999
is believed by the Company to be below market compensation rates
for the services provided by the directors and officers, having
regard to the experience and qualifications of the directors and
officers. The Company anticipates compensation being increased to
market rates upon the Company achieving sufficient revenues and/or
financings to pay such increased compensation.
SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN SECURITY OWNERS
The following table sets forth, as of July 23, 1999, the beneficial
ownership of the Company's Common Stock by each officer and director
of the Company, by each person known by the Company to beneficially
own more than 10% of the Company's Common Stock outstanding and by
the officers and directors of the Company as a group. Except as
otherwise indicated, all shares are owned directly.
Title of Class
Name and Address
Of Beneficial Owner
Number of Shares
Of Common Stock
Percentage of
Common Stock (1)
Common Stock
Barracuda Security Devices International Inc.
5,086,000
55.89%
Common Stock
All Officers and Directors as a Group (2 persons)
800,000
8.79%
(1) Based on 9,100,000 shares of common Stock of the
company issued and outstanding on July 23,1999.
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN
TRANSACTIONS
There are no material contracts entered into by the Company preceding
the date hereof which are still in effect, except as follows:
Agreement to Acquire Technology, dated April 20, 1999 between the
Company and Barracuda Security Devices International Inc. as set forth
in "Business Plan" and "Certain Transactions".
Copies of the foregoing contracts and any reports referred to in this
Offering Memorandum may be inspected at the head office of the Company
at Suite 1, 1155 Melville Street, Vancouver, British Columbia, V6E 4C4,
during normal business hours while the Offering contemplated hereunder
is in progress to and including the closing date.
Except as set forth below, none of the following persons has any direct
or indirect material interest in any transaction to which the Company
is a party since the incorporation of the Company in March, 1999 or in
any proposed transaction to which the Company is proposed to be a party:
(A) any director or officer of the Company;
(B) any proposed nominee for election as a director of the
Company;
(C) any person who beneficially owns, directly or indirectly,
shares carrying more than 10% of the voting rights attached to the
Company's Common Stock; or
(D) any relative or spouse of any of the foregoing persons,
or any relative of such spouse, who has the same house as such person
or who is a director or officer of any parent or subsidiary of the
Company.
SECURITIES BEING OFFERED
The securities being offered are the shares of the Company's common
stock, par value $0.0001 per share. Under the Company's Articles of
Incorporation, the total number of shares of all classes of stock that
the Company shall have authority to issue is 50,000,000 shares of common
stock, par value $0.0001 per share (the "Common Stock"). As of July 23,
1999, a total of 9,100,000 shares of Common Stock are issued and
outstanding. All issued and outstanding shares of the Common Stock are
fully paid and non-assessable.
Common Stock
Holders of Common Stock have the right to cast one vote for each share
held of record on all matters submitted to a vote of holders of Common
Stock, including the election of directors. Holders of Common Stock do
not have cumulative voting rights in the election of directors. Holders
of a majority of the voting power of the capital stock Issued and
outstanding and entitled to vote, represented in person or by proxy, are
necessary to constitute a quorum at any meeting of the Company's
stockholders and the vote by the holders of a majority of such outstanding
shares is required to effect certain fundamental corporate changes such as
liquidation, merger or amendment of the Company's Articles of Incorporation.
Holders of Common Stock are entitled to receive dividends pro rata
based on the number of shares held, when, as and if declared by the
Board of Directors, from funds legally available therefor. In the
event of the liquidation, dissolution or winding up of the affairs
of the Company, all assets and funds of the Company remaining after
the payment of all debts and other liabilities shall be distributed,
pro rata, among the holders of the Common Stock.
Holders of Common Stock are not entitled to pre-emptive or subscription
or conversion rights, and there are no redemption or sinking fund
provisions applicable to the Common Stock. All outstanding shares of
Common Stock are fully paid and non-assessable.
Transfer Agent
Pacific Stock Transfer Co. of Las Vegas, Nevada is the transfer
agent for the Shares.
Share Purchase Warrants
There are no warrants authorized or issued.
Options
There are no options authorized or issued.
Convertible Securities
There are no convertible securities authorized or issued.
LITIGATION
The Company is not party to any legal proceedings. Management of
the Company is not aware of any threatened legal proceedings which,
if successful against the Company, would have a materially adverse
effect on the Company.
FINANCIAL STATEMENTS
The Company's audited financial statements for period from inception
to May 15, 1999, together with the auditor's report, are appended to
this Offering Memorandum. The financial statements are non-consolidated
statements for the Company. INVESTORS ARE URGED TO CAREFULLY REVIEW
SUCH FINANCIAL STATEMENTS AND THE FOOTNOTES TO THOSE FINANCIAL
STATEMENTS.
Certain Financial Matters: These financial statements reflect the
position of the Company on May 15, 1999, which is prior to the funding
under this Offering. Therefore, such statements reflect substantially
no assets other than cash but do demonstrate that the Company likewise
has few liabilities. Accordingly, the book value of Common Shares
outstanding at the date of these statements is at this time, negligible.
The statements further reflect no income, other than deposits.
The Company's earnings per share are negative.
Management's Discussion of Financial Statements: The Balance Sheet
and financial statements are audited and are prepared in accordance
with generally accepted accounting principles of the United States.
Specifically, those figures do not, and are not intended to, reflect
the current net fair market value of the Company's assets. That
value can only be estimated, based upon the potential sales and
prospective net income which will be generated from the Company's
present and future technology. Because of the various matters which
inherently must occur in the future, the outcome cannot be precisely
determined and is therefore necessarily a matter of opinion.
Management believes that technology, combined with management's ability
to successfully commercialize the applications through its developed
products, to be substantial. It is that opinion, and not the current
financial statement, upon which the price of the Common Stock is being
offered under this Offering.
ADDITIONAL ATTACHMENTS
The following additional attachments are attached to this Disclosure
Statement:
Exhibit Description
"A'' Subscription Agreement
"B" Financial Statements
<TABLE> <S> <C>
<ARTICLE>5
<LEGEND>
This Schedule contains summary financial information extracted from the Audited
Financial Statements for March 17, 1999 (inception) to May 15, 1999.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-30-1999
<PERIOD-START> MAR-17-1999
<PERIOD-END> MAY-15-1998
<CASH> 17,967
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 25,967
<PP&E> 50,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 75,967
<CURRENT-LIABILITIES> 17,500
<BONDS> 0
0
0
<COMMON> 860
<OTHER-SE> 58,467
<TOTAL-LIABILITY-AND-EQUITY> 75,967
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (25,283)
<INCOME-TAX> 0
<INCOME-CONTINUING> (25,283)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (25,283)
<EPS-BASIC> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
