UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB/A
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS
UNDER SECTION 12(B) OR (G) OF THE SECURITIES EXCHANGE ACT OF 1934
MCC Technologies, Inc.
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(Name of Small Business Issuer in its charter)
Nevada 88-045-4570
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
122 Pilling Road,
Gibsons, British Columbia, Canada V0N 1V3
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (604) 922-1972
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None N/A
Securities to be registered under Section 12(g) of the Act:
Common Shares, par value $0.001
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(Title of class)
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INFORMATION REQUIRED IN REGISTRATION STATEMENT
PART I
ITEM 1. DESCRIPTION OF BUSINESS
1.1 Introduction
MCC Technologies, Inc. (the "Company") is a software development company
specializing in interactive voice response software and multimedia automated
information software. The Company's corporate and head offices are located at
122 Pilling Road, Gibsons, British Columbia, Canada V0N 1V0. The telephone
number is (604) 922-1972 and the facsimile number is (604) 886-8824.
The Company's financial statements are stated in United States Dollars (US$) and
are prepared in accordance with United States Generally Accepted Accounting
Principles.
In this Registration Statement, unless otherwise specified, all dollar amounts
are expressed in United States Dollars. Herein, all references to "CDN$" refer
to Canadian Dollars and all references to common shares refer to the common
shares in the capital stock of the Company.
1.2 Business Development of the Company During Last Three Years
The Company was incorporated under the laws of the State of Nevada on February
26, 1998, under the name UCan Inc. On February 28, 2000, the Company changed
its name to MCC Technologies, Inc. Also on February 28, 2000, by resolution of
the shareholders and the Board of Directors, the Company's common shares
underwent a forward split on a 100:1 basis for all shareholders of record,
increasing the then issued and outstanding from 30,000 to 3,000,000 .
On March 27, 2000, the Company filed a Certificate of Amendment of Articles of
Incorporation, increasing its authorized capital stock from 25,000 shares to
100,000,000 shares, effective February 28, 2000.
The Company has not been involved in any bankruptcy, receivership or similar
proceedings, nor has it been a party to any material reclassification, merger,
consolidation or purchase or sale of a significant amount of assets not in the
ordinary course of its business.
1.3 Business of the Company
Prior to February 28, 2000, the Company operated as a development stage company.
On February 28, 2000, the Company began operations (and continues to operate) as
a software company specializing in the development of interactive voice response
("IVR") software and multimedia automated information software, primarily for
the public transit and utilities industries.
Under the terms of a licence and marketing agreement, dated March 1, 2000 (the
"Licence Agreement"), between the Company and Peter Thompson, the Company
acquired a non-exclusive licence to develop, market, sell and support multimedia
automated traveller
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information ("ATIS") software used to provide information to users of fixed
route public transit systems (such as bus, ferry and commuter rail) and of
customer scheduled transit systems (including paratransit operators, taxi cab,
ambulance, transportation shuttle and limousine service providers). The Company
also provides multi-modal information systems in metropolitan areas.
Multi-modal information systems combines the ATIS software applications with
other operational data such as traffic conditions, flow monitoring and real time
parking information, thereby delivering a complete "one-stop-shopping" source of
traveller information.
The Company paid Mr. Thompson a cash payment of $5,000 and has agreed to pay him
a royalty of 15% of the gross annual sales of the Company's ATIS software. Mr.
Thompson agreed to provide the Company with the ATIS software source code and
operations manuals and to actively participate in the further development and
enhancement of the software and the overall operation of the business of the
Company.
The Licence Agreement may be terminated by Mr. Thompson in the event that:
- the Company breaches the Licence Agreement, without curing such breach
within 14 days of receiving written notice of such breach;
- the Company becomes insolvent, ceases to carry on business or fails to use
its best endeavors to carry on business; or
- the Company purchases all of the ownership rights to the ATIS software
from Mr. Thompson.
The Licence Agreement may be terminated by the Company at any time upon 14 days
written notice to Mr. Thompson. A copy of the Licence Agreement is attached as
an exhibit to this Registration Statement.
IVR Software Generally
IVR software is used by businesses and other entities that have a need to
provide information to their customers on a continual basis. By implementing an
IVR software system, businesses and other enterprises can use a standard
telephone network to provide automated voice responses to repetitive and
standard questions from their customers and/or users. IVR software can also be
used in conjunction with customer service representatives, such that routine
questions and requests for information are performed by the automated voice
response of the IVR software system and unusual questions or requests are
handled by live operators or customer service representatives.
Businesses and other enterprises currently implement IVR software in order to:
- increase capacity in handling routine questions and requests for
information;
- decrease operating costs in providing responses to such routine questions
and requests for information by reducing the amount of time required by live
operators or customer service representatives; and
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- improve customer service levels by providing prompt responses to such
routine questions and requests for information.
Industry Description
Interactive voice processing systems are designed to serve the needs of
organizations that require an efficient, cost-effective means of delivering and
communicating information, responding to standard requests or questions and
completing business transactions in a timely manner. Voice processing typically
utilizes a telephone system connected to an external computer which contains
data and information being requested by callers. These systems use specialized
computer hardware and software to store, retrieve and transmit digitized voice
messages and to access information on computer databases. Using speech
recognition software and touchtone or voice commands, along with a combination
of passwords, account numbers and codes, callers can search for or request
information from the computer's database and have information read back in voice
form over the telephone. Voice processing systems have recently evolved and are
now capable of providing information not only through voice messages through the
telephone but also by providing information through the Internet, fax, pagers
and Telecommunications Devices for the Deaf (TDD). Voice processing systems are
widely used for functions such as reporting account balances, confirming
schedule information, reserving appointments for various services, checking
inventory, determining delivery dates for products or otherwise obtaining
standard information, and range from small systems with basic features utilizing
a few phone lines to larger, more complex systems with hundreds of telephone
lines.
In an attempt to capture a segment of the IVR software market, telephone
service/equipment suppliers and computer manufacturers have entered into the
market. Telephone manufacturers have added more intelligent features to their
telephone equipment to automate more complex caller requirements like voice mail
and caller routing. Computer manufacturers have added telephone-based call
handling and switching capabilities to permit remote connectivity and access
between various telephone and computer networks. This convergence of computer
and telephone technology has led to the emergence of standards which are
intended to govern the design and functionality of both computer and telephone
switching hardware.
The market for simple IVR software applications will likely be dominated by
telephone service and equipment suppliers, who will include such simple IVR
systems with their telephone equipment. More complex applications, however,
will likely run on personal computing technology, which will be supplied by
software vendors such as the Company.
The Company's Software
The Company's ATIS software technology is used in both fixed route transit
applications, such as bus, ferry and commuter rail, as well as for customer
scheduled trips offered by service providers including paratransit operators,
taxi cab, ambulance, transportation shuttle and limousine service providers.
The Company also provides multi-modal information systems in metropolitan areas.
Multi-modal information systems combines the ATIS software applications with
other operational data such as traffic conditions, flow monitoring and real time
parking information, thereby delivering a complete "one-stop-shopping" source of
traveller information.
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The Company's fixed route ATIS software permits travellers seeking
transportation information, such as route descriptions, stop locations,
departure times and other information regarding their travel plans to access
this information through the telephone, via the Internet or through other
automated information technologies. The information provided is current and
up-to-the-minute (real time), as the Company's ATIS software is connected
directly to the scheduling database which contains the transportation provider's
operating information.
The Company's ATIS software technology is designed to be compatible with and to
connect to other information technologies via Internet compliant standard
interfaces and open platform design. For example, where the transportation
provider includes global positioning satellite based automated vehicle location
information, a person seeking bus times will be advised when the bus will
actually arrive at a designated stop, rather than when it is scheduled to arrive
at the stop.
For customer scheduled and demand applications, the Company's ATIS software will
permit a customer to schedule a trip, confirm or cancel a scheduled trip or
provide notification of the arrival of the transit vehicle for the scheduled
trip. All of these functions can be performed automatically over the telephone,
Internet and/or fax without the need for human assistance.
The Company's ATIS software technology improves the service delivery of both
fixed route and customer scheduled transportation operators by enabling
operators to offer customer service 24 hours per day, 7 days per week and by
automating most customer inquiries. Superior customer service is delivered to
users at a fraction of the cost of human operators, one of the highest cost
factors to transit operators in delivering customer service. As a result, the
Company estimates that the transit operator will recover the cost of the ATIS
software within six to eight months of installation through savings to the
transportation operator.
The Company has created proprietary communications technology called the
"iEngine" which permits simultaneous public access to transportation information
via whatever medium the user selects. The media choices range from interactive
media such as cellular or fixed-line telephone, the Internet, email or a kiosk
to one-way (passive) media such as fax back, FM radio, TV or automated signage.
The Company is in the process of building proprietary interfaces with the four
major suppliers of scheduling databases in North America: Trapeze Software
Group, GIRO, Multisystems Inc. and Mantech Systems Inc.
The Company intends initially to market its ATIS software to the transit,
paratransit and utilities industries. However, enterprises such as brokerages,
banks, airlines and retailers use similar software platforms to provide
interactive voice responses for applications including stock quotes and trading,
home banking, travel planning and shopping, and are potential target markets for
the Company in the future.
The Company integrates state of the art innovations and advances in information
and computer technology into its ATIS software applications. Its technology is
designed to be "open" with respect to both its architecture, and existing and
anticipated standards. The Company's software applications are compatible with
virtually any DOS, Windows, OS/2 and UNIX operating system based-network, will
run on most personal computers and will connect with most standard- telephone
switches. This adaptability provides optimum flexibility and power to the
customer
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and ensures compatibility with changing hardware requirements. To achieve its
"open" structure, the Company has integrated the following three innovations
into its software products:
Compliance with Telephony Standards such as TAPI and TSAPI
Telephony Applications Programming Interface ("TAPI") is Microsoft's application
for interfacing Windows-based computer applications with telephone systems.
Telephone Services Applications Programming Interface ("TSAPI") is Novell's
application for interfacing telephone systems to Novell networks.
Both TAPI and TSAPI are standards which define the criterion for integrating a
telephone with a personal computer within or outside of a computer network. In
short, the standard describes the interconnectivity of all types of computer and
telephony hardware that could be used in any of the Company's current or future
software applications. The Company monitors all standards development in the
computer telephony sector to keep its software products compliant with such
standards. The Company's products are already compliant with TAPI and TSAPI,
both of which will likely govern future IVR software systems.
Network Connectivity
All of the Company's software applications are intranet and internet compatible
and can easily plug into the existing communications capabilities of both
Windows and OS/2 operating systems. Once connected to a Windows or an OS/2
based computer system, the Company's software applications can emulate the
terminal of the transportation provider, thereby providing dynamic, real-time
interactivity with the transportation provider's host database. Through such
terminal emulation, the Company's applications offer the following advantages
over those of its existing competitors:
- transactions between the Company's software and the transportation
provider's host software is in real time with no additional overhead in database
management; and
- no modifications are required to the existing host software as the
Company's software is able to emulate any other workstation on the computer
network.
JAVA Scripting
JAVA is a software language which permits programs to be developed that will run
on virtually any operating system platform including Windows, OS/2 or UNIX.
JAVA software can also operate with software code written in other software
languages such as "C" and "C++". Additionally, JAVA-based applications allow
distributed processes to be run independently over a network, further permitting
the Internet to be used as a medium to connect geographically separated
components of the Company's software applications. Specifically, voice and
telephone-based information can be more readily accessed from information
sources located virtually anywhere in the world.
Upgrades and Support of the Company's IVR Software
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The Company's existing management team supports and services all of its IVR
software products. If an existing customer has a support contract with the
Company, it will receive any upgrades to the IVR software application running on
that operating system as part of that support contract. If there is no support
contract, the customer will continue to receive support for its IVR software but
will be charged on a per hour basis for all repairs and custom upgrades or
enhancements.
Target Markets
The Company's target market for its IVR software is focussed primarily on the
public transit and utilities industries. Public transit and utilities companies
generally purchase and utilize IVR software for two reasons:
- to reduce operating costs involved in providing responses to standard
questions and requests for information; and
- to improve customer service by providing such standard or routine
information in a timely and efficient manner.
IVR software technology automates repetitive and standard questions and requests
for information, which represent the majority of calls to public transit and
utility companies. The versatility of the technology permits full integration
with operators so that routine calls are handled automatically using IVR
software and the more difficult calls are transferred to human operators, who
are usually available during business hours.
Analysis of the Company's Target Market
TRANSIT
The fundamental purpose of transit information lines is to match a customer's
request with respect to a certain public transit route to an available bus,
train, subway or other mode of transportation at or near the requested time and
at the location requested by the customer or user. Most public transit
companies in North America provide service along regular routes with
pre-determined pick up and drop off locations and at scheduled times. The
scheduled times at which a given bus, train, subway or other mode of
transportation travels along a fixed route and arrives at a given stop must be
accessible to people who wish to use public transit. Printed timetables
containing this information are usually available; however, live operators are
also employed by public transit companies to answer questions and requests for
information regarding such scheduled routes and times. The provision of such
schedule information forms an important part of any transit company's
operations. The Company estimates that there are between 750 and 1,000 transit
operators in North America.
Information with respect to the scheduled routes and times of such public
transportation can be provided by a live telephone operator who answers such
questions and requests for information. Maintaining and operating call centers
staffed with live operators is expensive and may be replaced in whole or in part
by automated services using IVR software technology. In this type of market, it
is critical that the IVR software system is capable of connecting to and
extracting information from a database of scheduled times and locations. If the
transit company uses an
<PAGE>
automated scheduling process, the IVR software can be connected directly to the
schedule database from which it can retrieve information and translate it into
an automated voice response for playback over the telephone to the caller. The
Company anticipates that between approximately 60% and 80% of telephone requests
for schedule information can be handled by IVR software, with the remainder
being routed to a live transit operator for personal assistance.
PARATRANSIT
As with public transit companies, paratransit companies match available vehicles
to the travel needs of eligible passengers (most often people who are disabled)
for transport from a specific location to a specific destination within a
mandated service area and at specific times. To be eligible for this type of
service, the person typically has special needs which prevent him/her from using
the regular public transit system.
Paratransit service is significantly more expensive than service on regular
public transit systems due to the costs involved with receiving requests,
dispatching and scheduling service for each individual user. Due to these high
operating costs, the automation capabilities provided by IVR software technology
can provide an opportunity for paratransit companies to reduce such operating
costs.
UTILITY COMPANIES
Utility companies typically supply energy and water to customers in a specific
geographic area. Generally, interaction between a utility and its customers
occurs at the commencement and termination of service, during the billing
process (including the collection of user consumption data), during service
interruption and for other specific promotional purposes. Such interaction
between the utility company and its customers is most often facilitated through
the exchange of mail or by telephone-based communication between the customer
and a live operator.
A utility company typically incurs significant operating costs associated with
the interaction between its customers and its live operators. With the
deregulation of public utilities in the United States, utility companies are
becoming more receptive to adopting technological solutions proven to reduce
these associated operating costs. The Company's IVR software technology can
provide utility companies with an opportunity to reduce costs associated with
customer interaction by connecting a caller directly to the utility company's
information database from which information can be retrieved and translated into
an automated voice response for playback to the caller. Personal assistance
would remain available to a caller in the event that the information required
cannot be retrieved or translated by the IVR software.
The Company is currently targeting small to medium-sized utility companies and
estimates that there are over 1,000 such utility companies in the United States.
Call centers staffed with live operators are not cost effective or efficient for
such small and medium-sized utility companies, as a result of which, the Company
is in a position to offer its IVR software technology as a cost saving
alternative.
Copyrights, Patents, and Trade Secrets
The Company has developed a protection strategy comprised of the following five
elements:
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1. Patents: The Company is in the process of seeking patent protection
under United States and Canadian laws for its unique and proprietary designs and
algorithms used in its ATIS software and for its proprietary approaches to
scripting, trip planning algorithm system design and database interfacing.
2. Product Licensing: All of the Company's products are sold to customers
based on an end-user licence agreement which specifies the application, number
of telephone lines, and the location of the products being used.
3. Copyright/Trademark Protection: The Company is currently seeking
copyright and trademark protection for its ATIS software.
4. Software Encryption: The Company's product will be personalized when the
products are initially set up to identify the site license holder.
5. Hardware "Key": Known as a "dongle switch", this form of protection
includes an Electrical Programmable Read Only Memory (EPROM), used to
automatically identify the application and licensing rights resident only on the
computer of the customer who purchased the licence.
Marketing
The Company's objective is to become a recognized provider of IVR software
applications used within enterprises and across telecommunications networks and
the Internet. To achieve its objective, the Company intends to:
- facilitate the development, adoption and usage of its ATIS software;
- establish the standard for IVR software interfaces;
- leverage its relationships with other companies within the industry to
deliver complete solutions; and
- develop global sales, distribution, service and support capabilities and
related product offerings.
1.5 Competition
The interactive communications industry is highly competitive and the Company
believes that competition will continue to intensify. The Company competes with
a large number of companies which produce IVR products offering one or more of
the three major voice processing applications (each with numerous features)
performed by the Company's products. The Company's competitors include IBM,
InterVoice/Brite, Lucent, Periphonics (Nortel), Aspect and Sytellect, all of
which have emphasized sales of systems with IVR applications. In addition, the
Company competes with dealers and distributors that sell the voice products of
these and other competitors. It is likely that there will be new entrants into
the IVR industry as few major technological barriers to entry exist.
<PAGE>
In the fixed route transportation market, the Company's competitors include very
large communications/technology companies, large automated communications
companies and small private companies. IBM and Lucent are examples of the
first type of competitor. The next level of competitors include Periphonics, a
Nortel Networks company, Syntellect Inc. and Intervoice, Brite Inc. These
companies provide automated communications systems such as telephone banking
systems to the financial, health and large utilities market. The Company's
closest private competitor is Teleride Inc., a subsidiary of TransTec TTI
Systems of Hanover, Germany. Teleride offers a different marketing strategy to
the Company in that it offers a proprietary combined scheduling and
communications system to the customer. This makes Teleride a competitor rather
than an ally of the other scheduler suppliers who currently dominate the transit
markets.
Until very recently, there were no scheduling software vendors in the
paratransit industry. As the value of the opportunities in this segment became
known, the availability of scheduling products developed and there are now three
major North American companies (Trapeze Software Inc., IRD/Teleride and
Multisystems) offering specialized IVR software similar to that offered by the
Company.
Competition for the sale of IVR software products has been based in part on the
application required by the customer. In marketing its IVR software products,
the Company places emphasis on the functions that its ATIS software applications
can perform and the ability to expand these software systems to incorporate
additional applications. The Company believes that its emphasis on openness and
expandability gives it an edge over many of its competitors' products which are
not as easily to customized to a user's specific needs.
Companies are often forced to consider computer systems that integrate voice,
data and customer relationship systems as a means of handling customer load,
increasing efficiency or providing adequate customer service to differentiate
themselves from competition in their own markets. The Company offers solutions
for these companies which are comprised of basic application packages and custom
integration services. A number of competitors offer solutions but from
different technical or market perspectives which are largely dependent on
whether they have an installed base of customers or are new entrants. Some
competitors are long established telephony vendors seeking to add new media
types to their ability to process telephony. These include Lucent, Nortel and
Aspect. Traditional computer telephone integration vendors, such as Genesys
(Alcatel), are seeking to add IVR software capability to their offerings.
Oracle, traditionally a database company, has shown interest in this market
through an acquisition of Versatility, a contact management software company.
Network component companies are also interested in the market, most notably
Cisco, with its acquisitions of Webline (Internet based contact management) and
SummaFour (traditional telephony switches). Start-up companies competing in this
space include Interactive Intelligence, ATIO, Acuity, Cosmocom, eGain, PadNetX,
eShare (Melita), and Apropos. All of these competitors define a dynamic, large
and growing, but very competitive market space.
Marketing and product recognition also play a substantial competitive role in
the IVR industry. Most of the Company's competitors have considerably greater
financial, marketing, and sales resources than the Company. Many of these
competitors have concentrated on one or two voice applications or on specific
vertical markets and may enjoy advantages in selling to customers
<PAGE>
seeking only those applications or to companies in those markets. The Company
believes that the other principal factors affecting competition in the
interactive communications market are product applications and features, quality
and reliability, customer support and service, and price. The Company believes
that it competes favorably with respect to these factors.
1.6 Risk Factors
Much of the information included in this Registration Statement includes or is
based upon estimates, projections or other "forward-looking statements". Such
forward-looking statements include any projections or estimates made by the
Company and its management in connection with its business operations. While
these forward-looking statements, and any assumptions upon which they are based,
are made in good faith and reflect the Company's current judgment regarding the
direction of its business, actual results will almost always vary, sometimes
materially, from any estimates, predictions, projections, assumptions, or other
future performance suggested herein. The Company undertakes no obligation to
update forward-looking statements to reflect events or circumstances occurring
after the date of such statements.
Such estimates, projections or other "forward-looking statements" involve
various risks and uncertainties as outlined below. The Company cautions the
readers that important factors in some cases have affected and, in the future,
could materially affect actual results and cause actual results to differ
materially from the results expressed in any such estimates, projections or
other "forward-looking statements". In evaluating the Company, its business and
any investment in the Company, readers should carefully consider the following
factors.
History of Losses
The Company has had a history of losses and expects to continue to incur losses,
and may never achieve or maintain profitability. The Company has incurred
losses since it began its operations as an IVR software development company,
including a loss of approximately $2,352 through the year ended March 31, 2000.
As of March 31, 2000, the Company has an accumulated deficit of approximately
$2,152. The Company expects to have net losses and negative cash flow at least
through March 31, 2002, and expects to spend significant amounts of capital to
enhance its products and technologies, develop international sales and
operations, and fund research and development. As a result, the Company will
need to generate significant revenue to break even or achieve profitability.
Even if the Company does achieve profitability, it may not be able to sustain or
increase profitability on a quarterly or annual basis. If the Company does not
achieve and maintain profitability, the market price for its common stock may
decline, perhaps substantially.
Limited Operating History
Due to the Company's limited operating history, there is little information upon
which to base an evaluation of its business and prospects. The Company's
prospects must be considered in light of the risks, uncertainties, expenses and
difficulties frequently encountered by companies in their early stages of
development. Some of these risks and uncertainties relate to the Company's
ability to develop, market, sell and support its IVR software, and to attract,
retain and motivate qualified personnel. The Company cannot be sure that it
will be successful in addressing these
<PAGE>
risks and uncertainties, and its failure to do so could have a materially
adverse effect on its financial condition and continued operations. In
addition, the Company's operating results are dependent to a large degree upon
factors outside the Company's control, including among other things, increased
competition and the acceptance and continued use of IVR technology. There are
no assurances that the Company will be successful in addressing these risks, and
failure to do so may adversely affect the Company's business and financial
condition.
Difficulties Associated With Growth Management
The Company may encounter difficulties in managing its growth, which could
prevent it from executing its business strategy. The Company's ability to
achieve its planned growth is dependent upon a number of factors including, but
not limited to, its ability to hire and retain suitable employees, the adequacy
of the Company's financial resources and the Company's ability to develop,
market, sell and support its IVR software. The Company's anticipated growth
will likely place a significant strain on its resources. To accommodate this
growth, the Company must implement or upgrade a variety of operational and
financial systems, procedures and controls, including the improvement of its
accounting and other internal management systems. There can be no assurance
that the Company will be able to achieve its anticipated goals or that it will
be able to successfully manage its operations. The Company's systems,
procedures and controls may not be adequate to support its future operations.
If the Company fails to improve its operational, financial and management
information systems, or to hire, train, motivate or manage its employees, its
business may be adversely affected. Failure to manage anticipated growth
effectively and efficiently could have a materially adverse effect on the
Company.
Acceptance of IVR Software
IVR software may not achieve widespread acceptance by businesses in general,
public transit and utility companies in particular or telecommunications
carriers, which could limit the Company's ability to expand its business. The
market for IVR software is relatively new and is rapidly evolving. The Company's
ability to generate revenue in the future depends on the acceptance by both its
customers and their end users of its IVR software and IVR technology in general.
The adoption of IVR software could be hindered by the perceived costs of this
new technology, as well as the reluctance of enterprises that have invested
substantial resources in existing call centers to replace their current systems
with this new technology. Accordingly, in order to achieve commercial
acceptance, the Company will have to educate prospective customers, including
large, established telecommunications companies, about the uses and benefits of
IVR software in general and its IVR software in particular. If these efforts
fail, or if IVR software does not achieve commercial acceptance, the Company's
business could be harmed.
The continued and future development of the market for the Company's IVR
software is also dependent upon:
- the widespread deployment of IVR applications by third parties which is
driven by consumer demand for services having an IVR component;
- the demand for new uses and applications of IVR technology;
<PAGE>
- adoption of industry standards for IVR and related technologies; and
- continuing improvements in hardware technology that may reduce the costs
of IVR software solutions.
Technological Changes
The IVR and communications industry within which the Company operates is
characterized by rapid technological change. The development of new technology
by the Company's competitors may render the Company's IVR software technology
obsolete. Competition in the IVR technology industry is based largely upon
technological superiority. Accordingly, the success of the Company will depend
upon its ability to continually enhance its current IVR software products, to
develop and introduce new products that keep pace with technological
developments and to address the changing needs of the marketplace. Although the
Company expects to devote significant resources to research and development
activities, there can be no assurance that these activities will result in the
successful development of new IVR technologies and IVR software products or the
enhancement of existing technologies and products. In addition, there can be no
assurance that the introduction of products, services or technological
developments by others will not have a materially adverse effect on the
Company's operations.
Fluctuation of Quarterly Results
The Company's ability to accurately forecast its quarterly sales is limited, as
a result of which, the Company's quarterly operating results may fluctuate
significantly. The Company expects its results will vary significantly from
quarter to quarter in the future. These quarterly variations may be caused by a
number of factors, including:
- delays in customer orders due to the complex nature of large telephony
systems and the associated implementation projects;
- timing of product deployment and completion of project phases,
particularly for large orders;
- delays in recognition of software license revenue in accordance with
applicable accounting principles;
- the Company's ability to develop, introduce, ship and support new and
enhanced products, such as new versions of its IVR software that respond
to changing technology trends, in a timely manner, as well as its ability
to manage product transitions; and
- the amount and timing of increases in expenses associated with the
Company's growth.
Due to these and other factors, and because the market for IVR software is new
and rapidly evolving, the Company's ability to accurately forecast its quarterly
sales is limited. In addition, in the near future, most of the Company's costs
will be related to personnel, facilities and research and development, which are
relatively fixed in the short term. If the Company does not generate
significant revenue in relation to its expenses, it may be unable to reduce its
expenses quickly enough to avoid lower quarterly operating results. The Company
does not know whether
<PAGE>
its business will grow rapidly enough to absorb the costs of its future
employees and facilities. As a result, its quarterly operating results could
fluctuate and this fluctuation could adversely affect the market price of the
Company's common stock in the future.
In addition, the Company expects to experience seasonality in the sales of its
products. For example, it anticipates that sales may be lower in the first
quarter of each year due to patterns in the capital budgeting and purchasing
cycles of the Company's current and prospective customers. The Company also
expects that sales may decline during summer months, particularly in Asian and
European markets. These seasonal variations in the Company's sales may lead to
fluctuations in its quarterly operating results. Because the Company has
limited operating results, it is difficult to evaluate the degree to which this
seasonality may affect the Company's business.
Effect of Lengthy Sales and Implementation Cycles
The Company's products often have long sales and implementation cycles and, as a
result, its quarterly operating results and its stock price may fluctuate. The
sales cycles for the Company's IVR software products will likely range from
three to eighteen months, depending on the size and complexity of the order and
the services to be provided by the Company.
The purchase of the Company's products requires a significant expenditure by a
potential customer; accordingly, the decision to purchase the Company's products
typically requires significant pre-purchase evaluation. The Company may spend
significant time educating and providing information to prospective customers
regarding the use and benefits of its IVR software products. During this
evaluation period, the Company may expend substantial sales, marketing and
management resources.
After purchase, the expenditure of substantial time and resources to implement
the Company's software and to integrate it with the customer's existing systems
may be required. If the Company is performing significant professional services
in connection with the implementation of its software, it will not recognize
software revenue until after system acceptance or deployment. In cases where
the contract specifies milestones or acceptance criteria, the Company may not
recognize services revenue until these conditions are met. The Company may in
the future experience unexpected delays in recognizing revenue. Consequently,
the length of its sales and implementation cycles and the varying order amounts
for its products make it difficult to predict the quarter in which revenue
recognition may occur and may cause license and services revenue and operating
results to vary significantly from period to period. These factors could cause
the Company's stock price to be volatile or to decline.
Response to Rapid Changes in the IVR Software Market
In the event that the Company fails to respond to rapid changes in the market
for IVR software, the Company may experience a loss of revenues. The IVR
software industry is relatively new and rapidly evolving. The Company's success
will depend substantially upon its ability to enhance its existing products and
to develop and introduce, on a timely and cost-effective basis, new products and
features that meet changing end-user requirements and incorporate technological
advancements. If the Company is unable to develop new products and enhanced
<PAGE>
functions or technologies to adapt to these changes, or if it cannot offset a
decline in revenue from existing products with sales of new products, the
Company's business would likely suffer.
Among other things, commercial acceptance of the Company's products and
technologies will depend on:
- the ability of the Company's products and technologies to meet and adapt
to the needs of its target markets;
- the performance and price of the Company's products as compared to its
competitors' products; and
- the Company's ability to deliver customer service directly and through its
resellers.
Possibility of Software Defects
Any software defects in the Company's products could harm its business and
result in litigation. Complex software products, such as the products offered
by the Company, may contain errors, defects and bugs. With the planned release
of any product, the Company may discover such errors, defects and bugs and, as a
result, its products may take longer than expected to develop. In addition, the
Company may discover that remedies for errors or bugs may not be technologically
feasible. Delivery of products with undetected production defects or
reliability, quality, or compatibility problems could damage the Company's
reputation. Errors, defects or bugs could also cause interruptions, delays or a
cessation of sales to the Company's customers. The Company may be required to
expend significant capital and other resources to remedy these types of
problems. In addition, customers whose businesses are disrupted by these
errors, defects and bugs may bring claims against the Company which, even if
unsuccessful, would likely be time-consuming and could result in costly
litigation and the payment of damages.
Dependence on a Limited Number of Customers
The Company anticipates that it will depend on a limited number of customer
orders for a substantial portion of its revenue during any given period. Loss
of, or delays in, a key order could substantially reduce the Company's revenue
in any given period and harm its business. Generally, customers who make large
purchases are not expected to make subsequent equally large purchases in the
short term. As a result, if the Company does not acquire a major customer, if a
contract is delayed, cancelled or deferred, or if an anticipated sale is not
made, the Company's ability to generate revenue could be adversely affected.
International Operations
Sales to customers outside the United States and Canada may account for a
significant portion of the Company's revenues in the future, which would expose
the Company to risks inherent in international operations. The Company would be
subject to a variety of risks associated with conducting business
internationally, any of which could have a materially adverse effect on the
Company's business. These risks include:
- difficulties and costs of staffing and managing foreign operations;
<PAGE>
- difficulties in establishing and maintaining an effective international
reseller network;
- the burden of complying with a wide variety of foreign laws, particularly
with respect to intellectual property and license requirements;
- political and economic instability outside the United States;
- import or export licensing and product certification requirements;
- tariffs, duties, price controls or other restrictions on foreign
currencies or trade barriers imposed by foreign countries;
- potential adverse tax consequences, including higher marginal rates;
- unfavorable fluctuations in currency exchange rates; and
- limited ability to enforce agreements, intellectual property rights and
other rights in some foreign countries.
In order to increase the Company's international sales, it must develop
localized versions of its products. If the Company is unable to do so, it may
be unable to increase its revenue and execute its business strategy.
The Company intends to expand its international sales, which will require the
investment of significant resources to create and refine different language
models for each particular language or dialect. These language models are
required to create versions of the Company's products that allow end users to
speak the local language or dialect and be understood and authenticated. If the
Company fails to develop localized versions of its products, its ability to
address international market opportunities and to develop its international
business will be limited.
Industry Standards
If the standards employed by the Company are not adopted as the standards for
IVR software, businesses might not use the Company's IVR software for delivery
of applications and services. The market for IVR software is new and emerging
and industry standards have not yet been firmly established. The Company may
not be competitive unless its products support changing industry standards. The
emergence of industry standards, whether through adoption by official standards
committees or widespread usage, could require costly and time consuming redesign
of the Company's products. If these standards become widespread and the
Company's products do not support them, its customers and potential customers
may not purchase its products. Multiple standards in the marketplace could also
make it difficult for the Company to insure that its products will support all
applicable standards, which could in turn result in decreased sales of the
Company's products.
Protection of Proprietary Technology
Any inability to adequately protect the Company's proprietary technology could
harm its ability to compete. Its future success and ability to compete depends
in part upon its proprietary
<PAGE>
technology and its trademarks, which the Company attempts to protect with a
combination of patent, copyright, trademark and trade secret laws, as well as
with its confidentiality procedures and contractual provisions. These legal
protections afford only limited protection and may be time-consuming and
expensive to obtain and/or maintain. Further, despite the Company's efforts, it
may be unable to prevent third parties from infringing upon or misappropriating
its intellectual property. Although the Company intends to file U.S. and
Canadian patent applications, it does not currently have any issued patents.
There is no guarantee that patents will be issued with respect to its current or
future patent applications. Any patents that are issued could be invalidated,
circumvented or challenged. If challenged, the Company's patents might not be
upheld or their claims could be narrowed. The Company's intellectual property
may not be adequate to provide a competitive advantage or to prevent competitors
from entering the markets for the Company's products. Additionally, the
Company's competitors could independently develop non-infringing technologies
that are competitive with, equivalent to, and/or superior to the Company's
technology. Monitoring infringement and/or misappropriation of intellectual
property can be difficult, and there is no guarantee that the company would
detect any infringement or misappropriation of its proprietary rights. Even if
the Company did detect infringement or misappropriation of its proprietary
rights, litigation to enforce these rights could cause the Company to divert
financial and other resources away from its business operations. Further, the
Company licenses its products internationally, and the laws of some foreign
countries do not protect the Company's proprietary rights to the same extent as
do the laws of the United States and Canada.
Infringement by the Company on Other Intellectual Property
The Company's products may inadvertently infringe upon the intellectual property
rights of others, and resulting claims against the Company could be costly and
require that the Company enter into disadvantageous license or royalty
arrangements. The software industry is characterized by the existence of a
large number of patents and frequent litigation based on allegations of patent
infringement and the violation of intellectual property rights. Although the
Company attempts to avoid infringing known proprietary rights of third parties,
it may be subject to legal proceedings and claims for alleged infringement by of
third-party proprietary rights, such as patents, trade secrets, trademarks or
copyrights, from time to time in the ordinary course of business. Any claims
relating to the infringement of third-party proprietary rights, even if not
successful or meritorious, could result in costly litigation, divert resources
and management's attention or require that the Company enter into royalty or
license agreements which are not advantageous to it. In addition, parties
making these claims may be able to obtain injunctions, which could prevent the
Company from selling its products.
1.7 Governmental Regulation
To the best of its knowledge, the Company is not currently subject to direct
federal, state or local regulation in the United States, other than regulations
applicable to businesses generally.
1.8 Key Employees
As at September 30, 2000, the Company's key personnel included Lael Todesco
(President) and Peter Thompson (Secretary/Treasurer). Ms. Todesco and Mr.
Thompson are currently the
<PAGE>
Company's only employees. The loss of either Ms. Todesco's or Mr. Thompson's
services, or the services of any future employees, for any reason may have a
materially adverse effect on the prospects of the Company. There can be no
assurance that the Company would be able to find a suitable replacement in the
event that the services of Ms. Todesco or Mr. Thompson, or of future key
employees, are lost. Furthermore, the Company does not presently maintain "key
man" life insurance on the lives of its key personnel. The Company relies upon
the continued service and performance of a relatively small number of key senior
management personnel, and the Company's future success depends on its retention
of these key employees, whose knowledge of the Company's business and technical
expertise would be difficult to replace. At this time, neither of the Company's
key senior management personnel are bound by employment agreements, and as a
result, either of these employees could leave with little or no prior notice.
If the Company loses any of its key senior management personnel, its business
may be adversely affected.
If the Company is unable to hire and retain technical, sales and marketing and
operational personnel, its business could be materially adversely affected. The
Company intends to hire a significant number of additional personnel, including
software engineers, sales and marketing personnel and operational personnel in
the future. Competition for these individuals is intense, and the Company may
not be able to attract, assimilate, or retain additional highly qualified
personnel in the future. The failure to attract, integrate, motivate and retain
these employees could harm the Company's business.
1.9 "Penny Stock" Rules
The Company's common shares are subject to rules promulgated by the SEC relating
to "penny stocks", which apply to companies whose shares are not traded on a
national stock exchange or on the NASDAQ system, trade at less than $5.00 per
share, or who do not meet certain other financial requirements specified by the
SEC. These rules require brokers who sell "penny stocks" to persons other than
established customers and "accredited investors" to complete certain
documentation, make suitability inquiries of investors, and provide investors
with certain information concerning the risks of trading in the such penny
stocks. These rules may discourage or restrict the ability of brokers to sell
the Company's common shares and may affect the secondary market for the
Company's common shares. These rules could also hamper the Company's ability to
raise funds in the primary market for the Company's common shares.
1.10 Need for Additional Financing
Based on its current operating plan, the Company anticipates that it will
require funds in the amount of approximately $1,000,000 prior to September 30,
2001 in order to finance the research and development of its ATIS software as
well as to finance an advertising and marketing campaign.
The Company's ability to continue in business in the future depends upon its
continued ability to obtain financing. There can be no assurance that any such
financing would be available upon terms and conditions acceptable to the
Company, if at all. The inability to obtain additional financing in a
sufficient amount when needed and upon acceptable terms and conditions could
have a materially adverse effect upon the Company. Although the Company
believes that it can
<PAGE>
raise financing sufficient to meet its immediate needs, it will require funds to
finance its exploration and development activities in the future. There can be
no assurance that such funds will be available or available on terms
satisfactory to the Company. If additional funds are raised by issuing equity
securities, further dilution to existing or future stockholders is likely to
result. If adequate funds are not available on acceptable terms when needed,
the Company may be required to delay, scale-back or eliminate its development.
Inadequate funding also could impair the Company's ability to compete in the
marketplace and could result in its dissolution.
1.11 Volatility of Stock Price
The Company's common shares are not currently publicly traded. In the future,
the trading price of the Company's common shares may be subject to wide
fluctuations. Trading prices of the common shares may fluctuate in response to
a number of factors, many of which will be beyond the Company's control. In
addition, the stock market in general, and the market for software technology
companies in particular, has experienced extreme price and volume fluctuations
that have often been unrelated or disproportionate to the operating performance
of such companies. Market and industry factors may adversely affect the market
price of the common shares, regardless of the Company's operating performance.
In the past, following periods of volatility in the market price of a company's
securities, securities class-action litigation has often been instituted. Such
litigation, if instituted, could result in substantial costs and a diversion of
management's attention and resources.
1.12 Reports to Security Holders
Under Nevada state law, the Company is not required to deliver an annual report
to its shareholders but does intend to voluntarily send an annual report
including its audited financial statements.
1.13 Securities and Exchange Commission's Public Reference
Any member of the public may read and copy any materials filed by the Company
with the Securities and Exchange Commission (the "SEC") at the SEC's Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. Information
on the operation of the Public Reference Room may be obtained by calling the SEC
at 1-800-SEC-0330. The SEC maintains an Internet web site (http://www.sec.gov)
that contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC.
ITEM 2. PLAN OF OPERATION
2.1 Cash Requirements
Over the twelve month period ending September 30, 2001, the Company intends to
raise up to $1,000,000 through private placements of its equity securities
and/or debt financing. The Company intends to use those funds as follows:
- to continue the research and development of the Company's IVR software
($350,000);
<PAGE>
- to begin a marketing/advertising campaign for the Company' s IVR software
($250,000);
- to hire sales personnel to market/sell the Company's IVR software
($150,000);
- to cover legal/patent application costs ($50,000);
- to cover general and administrative expenses ($100,000); and
- to cover other miscellaneous general corporate costs ($100,000).
2.2 Product Research and Development
The Company acquired its existing technology through a licence agreement with
Peter Thomson, which was sold to the Company for the sum of $5,000, and which
comprises the amount of money expended by the Company on research and
development with respect to IVR technology to date. The Company anticipates
that it will expend approximately $350,000 on further research and development
through September 30, 2001.
Research and Development Activities
The Company is committed to investing in product research and development, and
intends to undertake future activities, using revenue generated exclusively from
sales or from contract research, and development undertaken on behalf of a
certain customer. The Company intends to spend approximately 20% of its revenue
on research and development activities, in order to ensure that the Company
remains competitive and that investments in the Company remain protected, among
other things.
Over the two years ending September 30, 2002, the Company proposes to enhance
its current products as follows:
- Improved Ergonomics: Ergonomic and other improvements will be undertaken
systematically as the Company gathers information from customers and from the
market place generally. In the future, focus group product evaluation and
on-going customer satisfaction studies will be undertaken to identify areas
requiring improvement.
- Graphical Interface: All user interfaces will be redesigned for easier
use and will have a look similar to "Windows" applications.
- Functionality: A new generation of commercial voice recognition products
is now available for testing purposes. Over the next six months, the Company
intends to acquire and test what it deems the most promising new products, and
to integrate those that perform well into the Company's product line.
- Multi-media: The transit industry in particular has shown a renewed
interest in multi-media based information technology. A multi-media based
solution provides information stored on the same server to a number of different
media simultaneously, including video kiosks, telephone and computer. Although
the Company will continue to focus on voice-based applications, it will identify
opportunities for entering this specialized market.
<PAGE>
In the event that gaps in the Company's existing products are identified, the
above-noted proposals will be modified as necessary.
2.4 Purchase of Significant Equipment
The Company does not intend to purchase any significant equipment through
September 30, 2001.
2.5 Employees
Over the twelve months ending September 30, 2001, the Company anticipates an
increase in the number of employees it retains, as it intends to hire one
qualified accountant, one person to perform clerical and administrative tasks,
two software engineers and two sales and marketing personnel.
ITEM 3. DESCRIPTION OF PROPERTY
The Company's executive and head offices are located at 122 Pilling Road,
Gibsons, British Columbia. The offices are extremely small in size and are
provided to the Company on a rent free basis by the Company's former President,
Brian Hall.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
4.1 Beneficial Ownership
As used in this section, the term "beneficial ownership" with respect to a
security is defined by Regulation 228.403 under the Securities Exchange Act of
1934, as amended, as consisting of: (1) any person who, directly or indirectly,
through any contract, arrangement, understanding, relationship or otherwise has
or shares voting power (which includes the power to vote, or to direct the
voting of such security) or investment power (which includes the power to
dispose, or to direct the disposition of, such security); and (2) any person
who, directly or indirectly, creates or uses a trust, proxy, power of attorney,
pooling arrangement or any other contract, arrangement or device with the
purpose or effect of divesting such person of beneficial ownership of a security
or preventing the vesting of such beneficial ownership.
Each person has sole voting and investment power with respect to the common
shares, except as otherwise indicated. Beneficial ownership consists of a
direct interest in the common shares, except as otherwise indicated.
As of September 30, 2000, 3,000,000 common shares, par value $0.001
were issued and outstanding. The Company is authorized to issue 100,000,000
common shares, par value $0.001.
As of September 30, 2000, no person known to the Company was the beneficial
owner of more than five percent (5%) of the outstanding common shares of the
Company except the following:
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS OF
TITLE OF CLASS BENEFICIAL OWNER AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP PERCENTAGE OF CLASS(1)
<S> <C> <C> <C>
Brian Hall
122 Pilling Road
Common Shares . . . . . Gibsons, BC, Canada V0N 1V0 280,000 9.3%
---------------------------- ----------------------------------------- ----------------------
Peter Thompson
1103 Point Road
Common Shares . . . . . Gibsons, BC, Canada V0N 1V0 250,000 8.3%
----------------------- ---------------------------- ----------------------------------------- ----------------------
Steve Trotter
2835 Windflower Place
Common Shares . . . . . Coquitlam, BC, Canada 250,000 8.3%
----------------------- ---------------------------- ----------------------------------------- ----------------------
<FN>
(1) Based on 3,000,000 shares outstanding as of September 30, 2000.
</TABLE>
The following table lists, as of September 30, 2000, the number of common shares
beneficially owned, and the percentage of the Company's common shares so owned,
by the directors and officers of the Company.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENTAGE
TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS(1)
==================== ================================ ==================== ===========
<S> <C> <C> <C>
Lael Todesco
793 Premier Street
Common Shares. . . . North Vancouver, BC, Canada 120,000 4.0%
-------------------------------- -------------------- -----------
Peter Thompson
1103 Point Road
Common Shares . . . Gibsons, BC, Canada V0N 1V0 250,000 8.3%
-------------------------------- -------------------- -----------
Common Shares. . . . Directors and Officer as a group 370,000 12.3%
==================== ================================ ==================== ===========
<FN>
(1) Based on 3,000,000 shares outstanding as of September 30, 2000 and as to
a specific person, shares issuable pursuant to the conversion or exercise, as the case
may be, of currently exercisable or convertible debentures, share purchase warrants and
stock options.
</TABLE>
4.2 Changes in Control
The Company is unaware of any contract or other arrangement the operation of
which may at a subsequent date result in a change of control of the Company.
<PAGE>
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following table and text sets forth the names and ages of the Company's
directors, executive officers and significant employees as of September 30,
2000. The present directors will serve until the next Annual General Meeting of
shareholders and until their successors are elected and qualified, or until
their earlier death, retirement, resignation or removal. Also provided is a
brief description of the business experience of the directors, executive
officers and significant employees during the past five years and an indication
of directorships held by the directors in other companies subject to the
reporting requirements of the Securities Exchange Act of 1934.
5.1 Directors, executive officers and other significant employees:
<TABLE>
<CAPTION>
POSITION HELD WITH THE DATE FIRST ELECTED
NAME COMPANY AGE OR APPOINTED
<S> <C> <C> <C>
Lael Todesco . President and Director 38 February 28, 2000
-------------------------------- ------------------ -----------------
Peter Thompson Secretary/Treasurer and Director 52 February 26, 1998
-------------- -------------------------------- ------------------ -----------------
</TABLE>
<PAGE>
Lael Todesco
In addition to her duties as the President of the Company, Ms. Todesco acts as
executive in charge of operations of Consolidated Envirowaste Industries Ltd., a
publicly traded Canadian company whose common shares trade on the Canadian
Venture Exchange. She is also currently a director of Consolidated Envirowaste
Industries Ltd. Ms. Todesco has developed and implemented multi-media
strategies for several publicly traded companies. She has gained expertise in
the areas of strategic management, leadership and corporate strategy
development, and has diversified the Company's focus in the communications and
hi-tech IVR technology sectors.
Peter Thompson
In addition to his responsibilities with the Company, Mr. Thompson is also a
director of the British Columbia Institute of Technology, a position he has held
since 1989. Between March, 1982 and June, 1989, he was employed as the
Vice-President, Corporate and Industry Relations at the British Columbia
Discovery Foundation, a British Columbia government institution dedicated to
advancing British Columbia's technology industry. Mr. Thompson obtained a
Bachelor of Commerce specializing in marketing from the University of British
Columbia.
There are no arrangements or understandings between any of the Company's
directors or executive officers, pursuant to which either was selected to be a
director or executive officer, nor are there any family relationships among any
of the Company's directors and officers.
<PAGE>
The Company's directors, executive officers and control persons have not been
involved in any of the following events during the past five years:
1. any bankruptcy petition filed by or against any business of which such
person was a general partner or executive officer either at the time of the
bankruptcy or within two years prior to that time;
2. any conviction in a criminal proceeding or being subject to a pending
criminal proceeding (excluding traffic violations and other minor offenses);
3. being subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise limiting
his involvement in any type of business, securities or banking activities; or
4. being found by a court of competent jurisdiction (in a civil action), the
Commission or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law, and the judgment has not been
reversed, suspended, or vacated.
ITEM 6. EXECUTIVE COMPENSATION
The Company's chief executive officer did not receive any cash or other
compensation during the year ended March 31, 2000.
There were no grants of stock options or stock appreciation rights made during
the fiscal year ended March 31, 2000 to the Company's executive officers and
directors. There were no stock options outstanding as at March 31, 2000. To
date, the Company has not granted stock options to any of its employees,
consultants, directors or executive officers.
The Company has no formal plan for compensating its directors for their service
in their capacity as directors although such directors are expected to receive
in the future stock options to purchase common shares as awarded by the Board of
Directors or (as to future stock options) a Compensation Committee which may be
established. Directors are entitled to reimbursement for reasonable travel and
other out-of-pocket expenses incurred in connection with attendance at meetings
of the Board of Directors. The Board of Directors may award special
remuneration to any director undertaking any special services on behalf of the
Company other than services ordinarily required of a director. No director
received and/or accrued any compensation for their services as a director,
including committee participation and/or special assignments.
There are no management agreements with the Company's directors or executive
officers.
The Company has no plans or arrangements in respect of remuneration received or
that may be received by the executive officers of the Company to compensate such
officers in the event of termination of employment (as a result of resignation,
retirement, change of control) or a change of responsibilities following a
change of control, where the value of such compensation exceeds $60,000 per
executive officer.
<PAGE>
There are no arrangements or plans in which the Company provides pension,
retirement or similar benefits for directors or executive officers. The Company
has no material bonus or profit sharing plans pursuant to which cash or non-cash
compensation is or may be paid to the Company's directors or executive officers,
except that stock options may be granted at the discretion of the Board of
Directors or a committee thereof.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
With the exception of the Licence Agreement, there have been no transactions, or
proposed transactions, which have materially affected or will materially affect
the Company in which any director, executive officer or beneficial holder of
more than 10% of the outstanding common stock, or any of their respective
relatives, spouses, associates or affiliates, has had or will have any direct or
material indirect interest.
Pursuant to the Licence Agreement, the Company acquired a non-exclusive licence
to develop, market, sell and support IVR software from Peter Thompson, a
director and the Secretary/Treasurer of the Company. The Company paid Mr.
Thompson $5,000 cash and agreed to pay him a royalty of 15% of the gross annual
sales of the Company's IVR software. See Item 1.3 Business of the Company for
further details.
ITEM 8. DESCRIPTION OF SECURITIES
All of the authorized shares of common stock of the Company are of the same
class and, once issued, rank equally as to dividends, voting powers, and
participation in assets. Holders of common shares are entitled to one vote for
each share held of record on all matters to be acted upon by the shareholders.
Holders of common shares are entitled to receive such dividends as may be
declared from time to time by the Board of Directors, in its discretion, out of
funds legally available therefore.
Upon liquidation, dissolution or winding up of the Company, holders of common
shares are entitled to receive pro rata the assets of Company, if any, remaining
after payments of all debts and liabilities. No common shares have been issued
subject to call or assessment. There are no pre-emptive or conversion rights
and no provisions for redemption or purchase for cancellation, surrender, or
sinking or purchase funds.
The Company's articles and by-laws do not contain any provisions that would
delay, defer or prevent a change in control of the Company.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
There is no public trading market for the Company's common shares in the United
States or elsewhere.
The Company's common shares are issued in registered form. Interwest Transfer
Co. Inc., Suite 100, 1981 East 4800 South, Salt Lake City, Utah 84117
(Telephone: (801) 272-9294;
<PAGE>
Facsimile: (801) 277-3147) is the registrar and transfer agent for the Company's
common shares.
On September 30, 2000, the shareholders' list for the Company's common shares
showed 37 registered shareholders and 3,000,000 shares outstanding. The
Company has researched indirect holdings registered to the various depository
institutions and stock brokerage firms, and estimates that there no additional
beneficial shareholders beyond the 37 registered shareholders as of September
30, 2000.
There are no outstanding options or warrants to purchase, or securities
convertible into, common shares of the Company. All of the Company's issued and
outstanding shares could be sold pursuant to Rule 144 of the Securities Act of
1933.
The Company has not declared any dividends since incorporation and does not
anticipate that it will do so in the foreseeable future. Although there are no
restrictions that limit the ability to pay dividends on the Company's common
shares, the intention of the Company is to retain future earnings for use in its
operations and the expansion of its business.
ITEM 2. LEGAL PROCEEDINGS
The Company knows of no material, active or pending legal proceedings against
it, nor is the Company involved as a plaintiff in any material proceeding or
pending litigation. There are no proceedings in which any director, officer of
affiliate of the Company, or any registered or beneficial shareholder is an
adverse party or has a material interest adverse to the Company.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
In the past three years, the Company has sold the following common shares
without registering such common shares under the Securities Act of 1933:
On March 3, 1998, the Company issued a total of 30,000 common shares
at a price of $0.25 per common share, for total cash consideration of
$7,500 to the following people, relying on sections 4(2) and 3(b) of
the Securities Act of 1933, as amended. The price per share was established
arbitrarily by the Company's Board of Directors. The transaction was private
in nature and the Company had reasonable grounds to believe that the investors
were capable of evaluating the merits and risk of their investment and acquired
the shares for investment purposes. Each of the following people was a close
friend or business associate of the directors of the Company, and had access to
all of the Company's records and documents. In addition, each person had an
opportunity to ask questions and receive answers from the Company's management.
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
COMMON SHARES NAME CONSIDERATION
<C> <S> <C>
1,200 Lael Todesco. . . $ 300
------------------- --------------
2,800 Brian Hall. . . . $ 700
------------------- --------------
2,500 Peter Thompson. . $ 625
------------------- --------------
1,200 Neil Abbey. . . . $ 300
------------------- --------------
400 Anne Abbey. . . . $ 100
------------------- --------------
400 Cynthia Abbey . . $ 100
------------------- --------------
400 Melvin Abbey. . . $ 100
------------------- --------------
400 Constance Fischer $ 100
------------------- --------------
600 Kerry Frankham. . $ 150
------------------- --------------
600 Kevin Frankham. . $ 150
------------------- --------------
600 Peter Frankham. . $ 150
------------------- --------------
600 Mary Hall . . . . $ 150
------------------- --------------
400 Clinton Hussey. . $ 100
------------------- --------------
600 Pamela Jakes. . . $ 150
------------------- --------------
600 Jerry Jakes . . . $ 150
------------------- --------------
400 Phillip Kukkonen. $ 100
------------------- --------------
600 Norman Paterson . $ 150
------------------- --------------
600 Charles Paterson. $ 150
------------------- --------------
600 Barbara Paterson. $ 150
------------------- --------------
400 Susan Santage . . $ 100
------------------- --------------
400 Tyler Todesco . . $ 100
------------------- --------------
400 Helen Thompson. . $ 100
------------------- --------------
<PAGE>
1200 Barry Williams. . $ 300
------------------- --------------
400 Caroline Williams $ 100
------------------- --------------
1200 Joanne Yan. . . . $ 300
------------------- --------------
400 Li Ying Yan . . . $ 100
------------------- --------------
1200 Ian Stuart. . . . $ 300
------------------- --------------
1200 Jamie Goodheart . $ 300
------------------- --------------
400 Jim Goodheart . . $ 100
------------------- --------------
400 Marilyn Goodheart $ 100
------------------- --------------
1200 Riz Alikhan . . . $ 300
------------------- --------------
400 Jeff Trotter. . . $ 100
------------------- --------------
400 Ryan Trotter. . . $ 100
------------------- --------------
1200 Mike Armstrong. . $ 300
------------------- --------------
600 Tim Folkman . . . $ 150
------------------- --------------
2,500 Steve Trotter . . $ 625
------------------- --------------
600 Derrick Walker. . $ 150
------------- ------------------- --------------
</TABLE>
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Articles provide that no director or officer shall be personally
liable to the Company or any of its stockholders for damages for breach of
fiduciary duty as a director or officer involving any act or omission of any
such director or officer provided however that the foregoing provision shall not
eliminate or limit the liability of a director or officer (i) for acts or
omission which involve intentional misconduct, fraud or a knowing violation of
the law, or (ii) the payment of dividends in violation of section 78.300 of the
Nevada Revised Statutes.
The Company's Bylaws provide that, subject to the provisions of the general
corporation law of the State of Nevada, any person who was or is a party or is
threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative, because he
or a person whom he legally represents is or was a director or officer of the
Company, or is or was serving at the request of the Company or for its benefit
as a director or
<PAGE>
officer of another corporation, or as its representative in a partnership, joint
venture, trust or other enterprise, will be indemnified and held harmless to the
fullest extent legally permissible under the general corporation law of the
State of Nevada from time to time against all expenses, liability and loss
(including attorneys' fees, judgments, fines and amounts paid in settlement)
reasonably incurred or suffered by him in connection with his acting in any such
positions. The expenses of officers and directors incurred in defending a civil
or criminal action, suit or proceeding must be paid by the Company as such costs
are incurred and in advance of the final disposition of the action, suit or
proceeding upon receipt of an undertaking by or on behalf of the director or
officer to repay the amount if it is ultimately determined by a court of
competent jurisdiction that such director and/or officer is not entitled to be
indemnified by the Company. Such right of indemnification shall be a contract
right which may be enforced in any manner desired by such person. Such right of
indemnification shall not be exclusive of any other right which such directors,
officers or representatives may have or hereafter acquire and, without limiting
the generality of such statement, they shall be entitled to their respective
rights of indemnification under any bylaw, agreement, vote of stockholders,
provision of law or otherwise, as well as their rights under the bylaws.
12.1 Indemnification under the Nevada Revised Statutes
The general corporation law of State of Nevada provides that:
1. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
except an action by or in the right of the corporation, by reason of the fact
that he is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses, including attorneys' fees, judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with the action, suit or proceeding if he acted in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent, does not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and that, with respect to any criminal action or
proceeding, he had reasonable cause to believe that his conduct was unlawful.
2. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favour
by reason of the fact that he is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses, including amounts paid in
settlement and attorneys' fees actually and reasonably incurred by him in
connection with the defense or settlement of the action or suit if he acted in
good faith
<PAGE>
and in a manner which he reasonably believed to be in or not opposed to the best
interests of the corporation. Indemnification may not be made for any claim,
issue or matter as to which such a person has been adjudged by a court of
competent jurisdiction, after exhaustion of all appeals therefrom, to be liable
to the corporation or for amounts paid in settlement to the corporation, unless
and only to the extent that the court in which the action or suit was brought or
other court of competent jurisdiction determines upon application that in view
of all the circumstances of the case, the person is fairly and reasonably
entitled to indemnity for such expenses as the court deems proper.
3. To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections 1 and 2, or in defense of
any claim, issue or matter therein, the corporation shall indemnify him against
expenses, including attorneys' fees, actually and reasonably incurred by him in
connection with the defense.
Any discretionary indemnification under the above provisions unless ordered by a
court or advanced pursuant to section 2 above, may be made by the corporation
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances. The determination must be made:
(a) by the stockholders;
(b) by the board of directors by majority vote of a quorum consisting of
directors who were not parties to the action, suit or proceeding;
(c) if a majority vote of a quorum consisting of directors who were not
parties to the action, suit or proceeding so orders, by independent legal
counsel in a written opinion; or
(d) if a quorum consisting of directors who were not parties to the action,
suit or proceeding cannot be obtained, by independent legal counsel in a written
opinion.
The articles of incorporation, the bylaws or an agreement made by the
corporation may provide that the expenses of officers and directors incurred in
defending a civil or criminal action, suit or proceeding must be paid by the
corporation as they are incurred and in advance of the final disposition of the
action, suit or proceeding, upon receipt of an undertaking by or on behalf of
the director or officer to repay the amount if it is ultimately determined by a
court of competent jurisdiction that he is not entitled to be indemnified by the
corporation. The provisions of this subsection do not affect any rights to
advancement of expenses to which corporate personnel other than directors or
officers may be entitled under any contract or otherwise by law.
The indemnification and advancement of expenses authorized in or ordered by a
court pursuant to the general corporation law of the State of Nevada:
(a) Does not exclude any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under the articles of
incorporation or any bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, for either an action in his official capacity or an
action in another
<PAGE>
capacity while holding his office, except that indemnification, unless ordered
by a court or for the advancement of expenses, may not be made to or on behalf
of any director or officer if a final adjudication establishes that his acts or
omissions involved intentional misconduct, fraud or a knowing violation of the
law and was material to the cause of action.
(b) Continues for a person who has ceased to be a director, officer,
employee or agent and inures to the benefit of the heirs, executors and
administrators of such a person.
PART FINANCIAL STATEMENTS
The Company's financial statements are stated in United States Dollars (US$) and
are prepared in accordance with United States Generally Accepted Accounting
Principles.
The financial statements are attached hereto and found immediately following the
text of this Registration Statement. The Independent Auditor's Report of
Weinberg & Company, P.A. for the audited financial statements for the years
ended March 31, 2000 and March 31, 1999 is included herein immediately preceding
the audited financial statements.
Audited Financial Statements by Weinberg & Company, P.A.:
Independent Auditor's Report, dated September 15, 2000.
Balance Sheets at March 31, 2000 and 1999.
Statement of Changes in Stockholders' Equity for the period from Inception
(February 26, 1998) to March 31, 2000.
Statements of Operations for the years ended March 31, 2000 and 1999, and
for the period from Inception (February 26, 1998) to March 31, 2000.
Statements of Cash Flows for the years ended March 31, 2000 and 1999, and
for the period from Inception (February 26, 1998) to March 31, 2000.
Notes to the Financial Statements.
Unaudited Interim Financial Statements and Financial Statement Schedules:
Balance Sheet at June 30, 2000
Statements of Operations and Accumulated Deficit for the Three Months ended
June 30, 2000
Statement of Cash Flows for the Three Months ended June 30, 2000
Statement of Changes in Stockholders' Equity for the Three Months ended
June 30, 2000
Notes to Interim Financial Statements
<PAGE>
PART III
ITEM 1. INDEX TO EXHIBITS
Financial Statements Filed as Part of the Registration Statement
See "Part Financial Statements".
Exhibits Required by Item 601 of Regulation S-B
Exhibit Description
Number
(2) Charter and By-laws:
2.1 Articles of Incorporation effective February 26, 1998.
2.2 By-Laws effective February 26, 1998.
2.3 Corporate Charter, dated March 6, 1998.
2.4 Certificate of Reinstatement, dated February 28, 2000.
2.5 Certificate of Amendment of Articles of Incorporation, filed
March 27, 2000.
(6) Material Contracts
6.1 License Agreement between Peter Thomson and MCC Technologies,
Inc., dated March 1, 2000
<PAGE>
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.
MCC TECHNOLOGIES, INC.
By: /s/ Lael Todesco
Lael Todesco, President/Director
November 19, 2000
By: /s/ Peter Thompson
Peter Thompson, Secretary/Treasurer/Director
November 20, 2000
<PAGE>
MCC TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
AS OF MARCH 31, 2000 AND 1999
<PAGE>
MCC TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
PAGE 1 INDEPENDENT AUDITORS' REPORT
PAGE 2 BALANCE SHEETS AS OF MARCH 31, 2000 AND 1999
PAGE 3 STATEMENTS OF OPERATIONS FOR THE YEARS ENDED MARCH 31, 2000 AND
1999 AND FOR THE PERIOD FROM FEBRUARY 26, 1998 (INCEPTION) TO
MARCH 31, 2000
PAGE 4 STATEMENT OF CHANGES OF STOCKHOLDERS' EQUITY FROM FEBRUARY 26,
1998 (INCEPTION) TO MARCH 31, 2000
PAGE 5 STATEMENTS OF CASH FLOW FOR THE YEARS ENDED MARCH 31, 2000 AND
1999 AND FOR THE PERIOD FROM FEBRUARY 26, 1998 (INCEPTION) TO
MARCH 31, 2000
PAGE 6-9 NOTES TO FINANCIAL STATEMENTS
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
-------------------------------
To the Board of Directors of:
MCC Technologies, Inc.
(a development stage company)
We have audited the accompanying balance sheets of MCC Technologies, Inc. (a
development stage company) as of March 31, 2000 and 1999 and the related
statements of operations, changes in stockholders' equity and cash flows for the
years then ended and for the period from February 26, 1998 (inception) to March
31, 2000. 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. These standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of MCC Technologies, Inc. as of
March 31, 2000 and 1999 and the results of its operations and its cash flows for
the years then ended and for the period from February 26, 1998 (inception) to
March 31, 2000 in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 6 to the
financial statements, the Company's recurring losses from operations, and lack
of revenue raise substantial doubt about its ability to continue as a going
concern. Management's Plan in regards to these matters is also described in
Note 6. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
WEINBERG & COMPANY, P.A.
Boca Raton, FL
September 15, 2000
<PAGE>
MCC TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
AS OF MARCH 31, 2000 AND 1999
<TABLE>
<CAPTION>
2000 1999
-------- -------
<S> <C> <C>
ASSETS
------------------------------------------------------------------------------------------------------
CURRENT ASSETS
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,730 $7,500
Total Current Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,730 7,500
-------- -------
OTHER ASSETS
License agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000 -
Total Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000 -
-------- -------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $11,730 $7,500
------------------------------------------------------------------------------------------------------ ======== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------------------------------------------------------------------------
CURRENT LIABILITIES
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 750 $ 200
Due to stockholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,832 -
Total Current Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,582 200
-------- -------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,582 200
-------- -------
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value, 100,000,000 shares authorized, 3,000,000 shares issued and outstanding 3,000 3,000
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500 4,500
Accumulated deficit during development stage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,352) (200)
Total Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,148 7,300
-------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $11,730 $7,500
------------------------------------------------------------------------------------------------------ ======== =======
</TABLE>
See accompanying notes to financial statements.
<PAGE>
MCC TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Period From
For the Year For the Year February 26, 1998
Ended Ended (Inception) to
March 31, 2000 March 31, 1999 March 31, 2000
--------------------- ---------------- -------------------
<S> <C> <C> <C>
REVENUES . . . . . . . . . . . . . . . $ - $ - $ -
--------------------- ---------------- -------------------
OPERATING EXPENSES
Filing fees. . . . . . . . . . . . . . 632 100 832
Professional fees. . . . . . . . . . . 1,520 - 1,520
Total Operating Expenses . . . . . . . 2,152 100 2,352
--------------------- ---------------- -------------------
NET LOSS . . . . . . . . . . . . . . . $ (2,152) $ (100) $ (2,352)
-------------------------------------- ===================== ================ ===================
Net loss per share - basic and diluted $ - $ - $ -
===================== ================ ===================
Weighted average number of shares
outstanding - basic and diluted. . . 3,000,000 3,000,000 3,000,000
===================== ================ ===================
</TABLE>
See accompanying notes to financial statements.
<PAGE>
MCC TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY
FROM FEBRUARY 28, 1998 (INCEPTION) TO MARCH 31, 2000
<TABLE>
<CAPTION>
ADDITIONAL
PAID-IN ACCUMULATED
COMMON STOCK CAPITAL DEFICIT TOTAL
SHARES AMOUNT
<S> <C> <C> <C> <C> <C>
Stock issued for cash . 3,000,000 $ 3,000 $ 4,500 $ - 7,500
Net loss, 1998. . . . . - - - (100) (100)
------------ ------------ -------- -------- --------
Balance, March 31, 1998 3,000,000 3,000 4,500 (100) 7,400
Net loss, 1999. . . . . - - - (100) (100)
------------ ------------ -------- -------- --------
Balance, March 31, 1999 3,000,000 3,000 4,500 (200) 7,300
Net loss, 2000. . . . . - - - (2,152) (2,152)
------------ ------------ -------- -------- --------
BALANCE, MARCH 31, 2000 3,000,000 $ 3,000 $ 4,500 $(2,352) $ 5,148
----------------------- ============ ============ ======== ======== ========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
MCC TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the period from
February 26, 1998
For the year ended For the year ended (inception) to
March 31, 2000 March 31, 1999 March 31, 2000
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Loss . . . . . . . . . . . . . . . . . . $ (2,152) $ (100) $ (2,352)
Changes in Operating Assets and Liabilities:
Increase in accounts payable . . . . . . . . 550 100 750
--------------------- -------------------- ----------------
Net Cash Used In Operating Activities. . . . (1,602) - (1,602)
--------------------- -------------------- ----------------
CASH FLOWS FROM INVESTING
ACTIVITIES . . . . . . . . . . . . . . . . - - -
--------------------- -------------------- ----------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Common stock . . . . . . . . . . . . . . . . - - 7,500
Due to stockholder . . . . . . . . . . . . . 832 - 832
--------------------- -------------------- ----------------
Net Cash Provided By Financing Activities. . 832 - 8,332
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS . . . . . . . . . . . . . (770) - 6,730
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD . . . . . . . . . . . 7,500 7,500 -
--------------------- -------------------- ----------------
CASH AND CASH EQUIVALENTS - END OF
--------------------------------------------
PERIOD . . . . . . . . . . . . . . . . . . $ 6,730 $ 7,500 $ 6,730
-------------------------------------------- ===================== ==================== ================
NON CASH INVESTING AND FINANCING
ACTIVITIES:
The Company entered into a license
agreement with a stockholder for a one time
fee payable subsequent to March 31, 2000 . . $ 5,000 $ - $ 5,000
===================== ==================== ================
</TABLE>
See accompanying notes to financial statements.
<PAGE>
MCC TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF MARCH 31, 2000
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
(A)ORGANIZATION
MCC Technologies, Inc., formerly named UCAN, Inc., ("the Company") was
incorporated in the state of Nevada on February 26, 1998, and is in the
development stage. The Company specializes in software used in interactive
voice response (IVR) systems, targeted at public transit, public paratransit and
public utilities.
Activities during the development stage included raising capital, implementing
its business plan and developing its technology.
(B) USE OF ESTIMATES
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
revenues and expenses during the reported period. Actual results could differ
from those estimates.
(C) CASH AND CASH EQUIVALENTS
For purposes of the cash flow statements, the Company considers all highly
liquid investments with original maturities of three months or less at the time
of purchase to be cash equivalents.
(D) SOFTWARE LICENSE AGREEMENT
The Software License Agreement is stated at cost and will be amortized over an
estimated economic useful life of three years. As of March 31, 2000, the
software has not been placed in service and no amortization expense has been
recorded.
(E) FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures about Fair
Value of Financial Instruments", requires disclosures of information about the
<PAGE>
MCC TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF MARCH 31, 20O00
fair value of certain financial instruments for which it is practicable to
estimate the value. For purposes of this disclosure, the fair value of a
financial instrument is the amount at which the instrument could be exchanged in
a current transaction between willing parties other than in a forced sale or
liquidation. The carrying amounts of the Company's accounts payable and
stockholder loans payable approximates fair value due to the relatively short
period to maturity for these instruments.
(F) INCOME TAXES
The Company accounts for income taxes under the Financial Accounting Standards
Board Statement of Financial Accounting Standards No. 109 "Accounting for Income
Taxes" ("Statement 109"). Under Statement 109, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. Under Statement 109, the effect on deferred tax assets
and liabilities of a change in tax rates is recognized in income in the period
that includes the enactment date. There was no current or deferred income tax
expense (benefit) for the years ended March 31, 2000 and 1999 because the
Company's operations were not material during these years.
(G) LOSS PER SHARE
Basic and diluted net loss per common share is computed based upon the weighted
average common shares outstanding as defined by Financial Accounting Standards
No. 128, "Earnings Per Share". There were no common stock equivalents at March
31, 2000 and 1999.
(H) BUSINESS SEGMENTS
The Company applies Statement of Financial Accounting Standards No. 131
"Disclosures about Segments of an Enterprise and Related Information". The
Company operates in one segment and therefore segment information is not
presented.
<PAGE>
MCC TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF MARCH 31, 2000
NOTE 2 LICENSE AGREEMENT
On March 1, 2000 the Company entered into a software licensing agreement with A
shareholder whereby it was granted the non exclusive right to market within
Continental North America, IVR computer software. The licensor will receive 15%
of gross annual sales of the product, which is the technology and intellectual
property necessary to promote, market, sell and supply the computer software.
The agreement may be terminated by the Company at any time after a 14 day notice
period. The agreement may be terminated by the licensor under certain
conditions as stated in the license agreement. (See note 5)
NOTE 3 DUE TO STOCKHOLDER
A stockholder has paid expenses on behalf of the Company. These amounts are due
on demand. (See note 5)
NOTE 4 EQUITY
During 1998 the Company issued 3,000,000 common shares for cash of $7,500.
On February 28, 2000 the Company approved a forward split of 100 for 1 of the
issued and outstanding shares. At the same time the Articles of Incorporation
were amended to increase the authorized capital stock to 100,000,000 shares with
a par value of $.001. These financial statements give retroactive affect to the
stock split from date of inception.
NOTE 5 RELATED PARTIES
The Company has a license agreement with a stockholder whereby royalties are
paid based on product sales. The Company will pay the stockholder a one time
license fee of $5,000 subsequent to March 31, 2000. A stockholder has paid $832
in expenses on behalf of the Company during the year ended March 31, 2000.
These amounts are included in the due to stockholder balance at March 31, 2000.
NOTE 6 GOING CONCERN
As reflected in the accompanying financial statements, the Company's recurring
losses, and lack of revenue raise substantial doubt about its ability to
continue as a
<PAGE>
going concern. The Company has not generated any revenues as of the date of the
accompanying audit report. The ability of the Company to continue as a going
concern is dependent on the Company's ability to raise additional capital and
implement its business plan. The financial statements do not include any
adjustments that might be necessary if the Company is unable to continue as a
going concern.
Management believes that actions presently being taken to obtain additional
funding and implement its strategic plans provide the opportunity for the
Company to continue as a going concern.
<PAGE>
DISCLOSURE
TO: THE SHAREHOLDERS OF
MCC TECHNOLOGIES, INC. (the "Company")
It is the opinion of the management of the Company that the interim financial
statements for the period ended June 30, 2000 and June 30, 1999 include all
adjustments necessary in order to ensure that the financial statements are not
misleading.
Gibsons, British Columbia
September 27, 2000
/s/ Lael Todesco
Director of the Company
<PAGE>
<TABLE>
<CAPTION>
MCC TECHNOLOGIES, Inc.
(A Development Stage Company)
INTERIM BALANCE SHEET
(Unaudited)
June 30, 2000
(Expressed in U.S. dollars)
June 30 March 31
2000 2000
<S> <C> <C>
ASSETS
Current
Cash in bank or on hand . . . . . . . . . . . . . $ 4,065 $ 6,730
Other
Licence agreement . . . . . . . . . . . . . . . . 5,000 5,000
TOTAL ASSETS. . . . . . . . . . . . . . . . . . . $ 9,065 $ 11,730
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable. . . . . . . . . . . . . . . . . $ 750 $ 750
Shareholder loan, without interest or stated
terms of repayment . . . . . . . . . . . . . . . 23,964 5,832
24,714 6,582
Stockholders' Equity
Common stock
100,000,000 Common shares authorized with
$.001 par value
3,000,000 Shares issued and outstanding . . . . 3,000 3,000
Additional paid in capital. . . . . . . . . . . . 4,500 4,500
7,500 7,500
Deficit accumulated during the development stage. (21,529) (732)
(14,029) 6,768
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY. . . . $ 10,685 $ 13,350
</TABLE>
The accompanying notes are in integral part of the financial statements.
<PAGE>
<TABLE>
<CAPTION>
MCC TECHNOLOGIES, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
For the Period From Inception (February 26, 1998 to June 30, 2000)
(Expressed in U.S. dollars)
Additional
Paid-in Accumulated
Common Stock Capital Deficit
Shares Amount
<S> <C> <C> <C> <C>
Balance, February 26, 1998
(Date of inception) . . . . . . . . . . . . . . . . . . . . . . . - $ - $ - $ -
Issuance of stock at $.0025
per share for cash. . . . . . . . . . . . . . . . . . . . . . . . 3,000,000 3,000 4,500 -
Net loss for the year. . . . . . . . . . . . . . . . . . . . . . . - - - -
Balance, March 31, 1998. . . . . . . . . . . . . . . . . . . . . . 3,000,000 3,000 4,500 -
Net loss for the year. . . . . . . . . . . . . . . . . . . . . . . - - - (100)
Balance, March 31, 1999. . . . . . . . . . . . . . . . . . . . . . 3,000,000 3,000 4,500 (100)
Net loss for the year. . . . . . . . . . . . . . . . . . . . . . . - - - (632)
Balance, March 31, 2000. . . . . . . . . . . . . . . . . . . . . . 3,000,000 3,000 4,500 (732)
Net loss for the quarter . . . . . . . . . . . . . . . . . . . . . - - - (20,797)
Balance, June 30, 2000 . . . . . . . . . . . . . . . . . . . . . . 3,000,000 $ 3,000 $ 4,500 $(21,529)
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<TABLE>
<CAPTION>
MCC TECHNOLOGIES, INC.
(A Development Stage Company)
INTERIM STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
(Unaudited)
For the Period From Inception (February 26, 1998 to June 30, 2000)
and For the Period Ended June 30, 2000 and the Years Ended March 31, 1999 and 2000
(Expressed in U.S. dollars)
3 Months 3 Months Accumulated
Ended Ended Feb 26, 1998
June 30 June 30 To
2000 1999 June 30, 2000
<S> <C> <C> <C>
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ - $ - $ -
Expenses
Filing fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500 632 1,232
Software development. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,132
Professional fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,165 2,165
Net Loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,797 632 3,397
Accumulated Deficit,
Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 832 200 -
Accumulated Deficit
End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 21,629 $ 832 $ 3,397
Net Loss Per Common Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.0007 $ 0.0000 $ 0.0001
Weighted Average Number of
Common Shares Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000,000 30,000,000 30,000,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<TABLE>
<CAPTION>
MCC TECHNOLOGIES, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
(Unaudited)
For the Period From Inception (February 26, 1998 To June 30, 2000)
and For the Period Ended June 30, 2000 and the Years Ended March 31, 1999 and 2000
(Expressed in U.S. dollars)
3 Months 3 Months Accumulated
Ended Ended Ended Feb 26, 1998
June 30 March 31 March 31 To
2000 2000 June 30, 2000
<S> <C> <C> <C>
Cash Flows to Operating Activities
Net loss for the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (20,797) $ (632) $ (3,397)
Non-cash working capital items. . . . . . . . . . . . . . . . . . . . . . . . . . . 18,132 24,714
(2,665) (632) 21,317
Cash Flows from Investing Activities
Licence agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - (5,000)
Cash Flows from Financing Activities
Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - 7,120
Net Change In Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,665) (632) 23,437
Cash, Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,878 7,500 -
Cash, End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,213 $ 6,878 $ 23,437
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
MCC TECHNOLOGIES INC.
(A Development Stage Company)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
(Unaudited)
June 30, 2000
1. Development Stage Company
MCC Technologies, Inc. herein "the Company" was incorporated on February 26,
1998 pursuant to the laws of the State of Nevada.
The Company is a development stage company specializing in software development
in interactive voice response (IVR) technology, targeted at public transit,
public paratransit and public utilities.
In a development stage company, management devotes most of its activities to
establishing a new business. Planned principal activities have not yet produced
significant revenue. The ability of the Company to emerge from the development
stage with respect to its planned principal business activity is dependent upon
its successful efforts to raise additional equity financing and to develop and
market its technology.
2. Summary of Significant Accounting Policies
(a) Year end
The Company's fiscal year end is March 31.
(b) Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amount of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amount of revenues and expenditures during the period. Actual
results may differ from those estimates.
(c) Financial instruments
The Company's financial instruments consist of cash which approximates carrying
value.
(d) Foreign Exchange
All of the Company's transactions have been in U.S. currency. The Company's
anticipated market is the US. Therefore, the Company's exposure to foreign
currency exchange risks is currently considered minimal.
(e) Income Taxes
Since the Company is in its development stage and has no income, no income tax
expense is reported on the financial statements.
<PAGE>
MCC TECHNOLOGIES INC.
(A Development Stage Company)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
(Unaudited)
June 30, 2000
3. Common Stock Transactions
The Company was incorporated with authorized capital of 25,000 shares of common
stock, no par value. On March 3, 1998 the Company issued 30,000 shares for
cash.
On February 28, 2000 the Company approved a forward split of 100 for 1 of the
issued and outstanding shares. At the same time the Articles of Incorporation
were amended to increase the authorized capital stock to 100,000,000 shares with
a par value of $.001. These financial statements give retroactive affect to the
stock split from date of inception.
4. Licence Agreement and related party transaction
On March 1, 2000 the Company entered into a software licencing agreement with a
shareholder whereby it was granted the non exclusive right to market within
Continental North America, IVR computer software. The Licensor will receive 15%
of gross annual sales of the product, which is the technology and intellectual
property necessary to promote, market, sell and supply the computer software.
The agreement may be terminated by the Company at any time after a 14 day notice
period. The agreement may be terminated by the Licensor under certain
conditions as stated in the licence agreement.
