FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
Quarterly Report Under Section 13 or 15 (d)
Of the Securities Exchange Act of 1934
For Quarter Ended July 31, 1999
Commission File Number 0-011228
Digital Commerce International, Inc.
(Exact name of registrant as specified in its charter)
DELAWARE 02-0337028
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
404 815 HORNBY STREET
VANCOUVER BC V6Z2E6
(Address of principal executive offices)
Registrant's telephone number
including area code (604) 899-0411
4505 Wasatch Blvd, Salt Lake City UT 84121
Former Address, if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the
registrant was required to file such reports)
Yes X No
and (2) has been subject to such filing requirements for the past 90 days.
Yes X No
13,167,500
(Number of shares of common
stock the registrant had
outstanding as of September 14, 1999)
PART 1
ITEM 1 - FINANCIAL STATEMENTS
The condensed financial statements included herein have been prepared by
the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although the Company believes that the
disclosures are adequate to make the information presented not misleading.
In the opinion of the Company, all adjustments, consisting of only normal
recurring adjustments, necessary to present fairly the financial position of
the Company as of July 31, 1999 and the results of its operations and changes
in its financial position from November 1, 1998 through July 31, 1999 have
been made. The results of its operations for such interim period is not
necessarily indicative of the results to be expected for the entire year.
Digital Commerce International, Inc.
( A Development Stage Company)
Balance Sheets
ASSETS
July 31, October 31,
1999 1998
CURRENT ASSETS (unaudited)
Cash $ 1,177,000 $ -
TOTAL CURRENT ASSETS $ 1,177,000 $ -
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable and Accrued Expenses $ 8,919 $ 8,919
Total Current Liabilities 8,919 8,919
STOCKHOLDERS' EQUITY
Class A Preferred stock, $.001 value,
500,000 shares issued and outstanding (Note 3) 500 -
Class B Preferred stock, $.001 value,
0 shares issued and outstanding (Note 3) - -
Class C Preferred stock, $.001 value,
0 shares issued and outstanding (Note 3) - -
Common Stock 30,000,000 shares
authorized at $.001 par value;
12,917,000 and 21,080,755 shares issued
and outstanding (Note 2) 12,917 21,080
Capital in Excess of Par Value 11,326,797 10,142,134
Deficit Accumulated During
Development Stage (10,172,133) (10,172,133)
Total Stockholders' Equity 1,168,081 (8,919)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,177,000 $ -
Digital Commerce International, Inc.
(A Development Stage Company)
Statements of Operations
(unaudited)
For the Three For the Three For the Nine For the Nine
Months Ended Months Ended Months Ended Months Ended
July 31, July 31, July 31, July 31,
1999 1998 1999 1998
REVENUE $ - $ - $ - $ -
EXPENSES
General &
Administrative - 8,54 - 28,545
Total Expenses - 8,545 - 28,545
NET INCOME
(LOSS)
Before Taxes - (8,545) - (28,545)
Provision
(credit) for
Taxes - - - -
INCOME
(LOSS) $ - $ (8,545) $ - $ (28,545)
Loss Per
Common Share $ - $ - $ - $ -
Average Outstanding
Shares 15,452,371 16,436,311 19,204,199 16,436,311
Digital Commerce International, Inc.
(A Development Stage Company)
Statements of Cash Flows
(unaudited)
For the Nine For the Nine
Months Ended Months Ended
July 31, July 31,
1999 1998
CASH FLOWS FROM
OPERATING ACTIVITIES
Net Income (Loss) $ - $ (28,545)
Changes in Assets and
Liabilities - 1,058
Stock for Services - 20,000
- (9,603)
CASH FLOWS FROM
FINANCING ACTIVITIES
Proceeds from sale of stock - 9,000
- 9,000
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS - (603)
CASH AND CASH EQUIVALENTS
AT THE BEGINNING OF PERIOD - 603
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ - $ -
SUPPLEMENTAL INFORMATION:
Issuance of stock to
pay shareholder debt and/or services
Common stock at par value $ - $ 20,000
Additional paid in capital $ - $ -
Cash Paid for:
Taxes $ - $ -
Interest $ - $ -
Digital Commerce International, Inc.
(A Development Stage Company)
Notes to the Financial Statements
June 30, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
OPERATIONS OF THE COMPANY
Digital Commerce International, Inc. (the "Company") was organized
in the state of Delaware in July 1982 as Systems Assurance Corporation but has
been inactive since 1991. In June 1999, the Company acquired a wholly owned
subsidiary, Digital Commerce, Inc. and changed its name to Digital Commerce
International, Inc.
The Company now intends to enter the business of processing
e-commerce transactions through the internet.
INCOME TAXES
The Company adopted Statement of Financial Accounting Standards No.
109 "Accounting for Income Taxes" in the fiscal year ended October 31, 1996
and has applied the provisions of the statement to the current fiscal year
which resulted in no significant adjustment.
Statement of Financial Accounting Standards No. 109 "Accounting for
Income Taxes" requires an asset and liability approach for financial
accounting and reporting for income tax purposes. This statement recognizes
(a) the amount of taxes payable or refundable for the current year and (b)
deferred tax liabilities and assets for future tax consequences of events
that have been recognized in the financial statements or tax returns.
Deferred income taxes result from temporary differences in the
recognition of accounting transactions for tax and financial reporting
purposes. There were no temporary differences at October 31, 1998 and earlier
years, accordingly, no deferred tax liabilities have been recognized for all
years.
The Company had cumulative net operating loss carryforwards of
approximately $30,000 at October 31, 1998. No effect has been shown in the
financial statements for the net operating loss carryforwards as the
likelihood of future tax benefit from such net operating loss carryforwards is
uncertain. The net operating losses begin to expire in the year 2016.
NET INCOME (LOSS) PER SHARE
Net income (loss) per share of Common Stock is computed by dividing
net income by the weighted average number of shares of Common Stock and Common
Stock Equivalents, if dilutive, outstanding during the year.
Digital Commerce International, Inc. and Subsidiary
(a Development Stage Company)
Notes to the Consolidated Financial Statements
June 30, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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 amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
For the purposes of the statement of cash flows, the Company
considers all highly liquid debt instruments with original maturity of three
months or less to be cash equivalents.
INCOME PER SHARE
The computation of income per share of common stock is based on the
weighted average number of shares outstanding during the period.
NOTE 2 - STOCKHOLDERS' EQUITY
On June 15, 1999, the Company acquired Digital Commerce, Inc.
(Digital) a corporation created on November 17, 1998 in the nation of Nevis.
Digital Commerce now has a presence in Vancouver, British Columbia and was
organized for the purpose of engaging in the business of handling the
financial execution of e-commerce transactions through the Internet.
5,000,000 shares of common stock were issued for the acquisition of Digital,
which at the time of the acquisition had no assets or liabilities and had no
operating history. The value of the stock was placed at $0 since there was no
value to the company (Digital) acquired.
The Company has since engaged in raising equity funding through
private placements to qualified individuals and businesses. The Company
raised $620,000 up to June 30, 1999 and another $807,500 up to September
14, 1999.
At the time of the acquisition of Digital, a director/officer
canceled 14,340,755 shares of stock.
Digital Commerce International, Inc. and Subsidiary
(a Development Stage Company)
Notes to the Consolidated Financial Statements
June 30, 1999
NOTE 3 - PREFERRED STOCK
At the time of the acquisition of Digital Commerce, Inc., the
Company issued 500,000 shares (250,000 each)of Class A Preferred Stock to two
of the officers and directors of Digital as incentive for future operations.
The terms of the preferred stock issuance were determined by the board of
directors at the time of the issuance to the two officers are as follows:
-the preferred stock has voting rights equal to 10 common shares.
-the preferred stock is non transferable.
-the preferred stock is convertible into 10 common shares for each
preferred share only upon the following conditions:
-the acquisition of control of the Company by a party not affiliated with
current management, or
-a cumulative credit card transaction volume which exceeds $2 billion.
The shares were valued at $0 at the time of issuance based on the
contingencies listed above.
Class B and Class C preferred shares are authorized, but at this time,
none have been issued and none of the rights, privileges, or other
characteristics of the stock have been determined.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Liquidity and Capital Resources. The Registrant had approximately
$(1,168,081) as operating capital at July 31, 1999, compared to $(8,919) for
the same period last year. The Registrant has raised $1,177,000 through
private placements with accredited and sophisticated investors.
Results of Operation. Due to the lack of operations during the quarter
ended July 31, 1999, the registrant had a net loss of $0, compared to a net
loss of $0 for the same period last year. The registrant had net loss of $0
for the nine months ended July 31, 1999 compared to $0 for the same period
last year.
Plan of Operations. On June 16, 1999, the Company announced that it had
acquired all of the outstanding stock of Digital Commerce, Inc., a Nevis
Company created for the purpose of handling the financial execution of
e-commerce transactions through the internet. The Company has begun raising
capital by issuing a private placement and raising $1,177,000 up to July 31,
1999. The Company intends to raise a total of $10,000,000 in a second private
placement.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings. None
Item 2. Changes in Securities. None
Item 3. Defaults Upon Senior Securities. None
Item 4. Submission of Matters to a Vote of Security Holders. None
Item 5. Other Information. None
Item 6. Exhibits and Reports on Form 8-K. None
(a) on June 7, 1999 a change in control of the Company was reported
along with the reported acquisition of a wholly owned subsidiary, Digital
Commerce, Inc. On September 15, 1999 the 8K was filed showing the financial
statements of the consolidated group as of June 30, 1999. At the time of
acquisition, the subsidiary had no assets or liabilities.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned authorized officer.
Dated September 15, 1999
Digital Commerce International, Inc.
/s/ Michael Kang
President and CEO
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