SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the fiscal year ended December 31, 1998
Commission File Number 0-5367
D-LANZ DEVELOPMENT GROUP, INC.
(Exact name of registrant as specified in Its charter)
DELAWARE 11-1717709
(State of Incorporation) (I.R.S. Employer Identification Number)
400 Grove St., Glen Rock, NJ 07452
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, with area code: (201) 445-8862
Securities registered pursuant to.Section 12(b) of the Act:
None
Securities registered pursuant to.Section 12(g) of the Act:
Common stock of $.001 par value per share
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 twelve months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B in this form, and no disclosure will be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. X
State Issuer's Revenues for its most recent fiscal year. $-0-
Aggregate market value of the voting stock held by non-affiliates of
registrant: $1,092,000
Number of shares outstanding as of December 31, 1998: 11,700,000
Documents incorporated by reference: Exhibits contained in the
Form 10-KSB for the year ended December 31, 1997.
Part I.
Item 1 DESCRIPTION OF BUSINESS
GENERAL DEVELOPMENT
D-Lanz Development Group, Inc. and (hereinafter referred to as
"Registrant", "D-Lanz", or "Company") commenced business activities as a
partnership in 1947 and was incorporated on December 5, 1952, under the name
Osrow Products Company, Inc. Effective December 1, 1972, Osrow Products Company,
Inc., a New York Corporation, merged into OSR Corporation, a Delaware
corporation. OSR was incorporated on June 28, 1972. OSR was formed solely for
the purpose of having Osrow Product Company's state of incorporation changed
from New York to Delaware and its name changed from Osrow Products Company, Inc.
to OSR Corporation. On May 17, 1988, the Company amended its certificate of
incorporation, changing its name to Resort Connections, Inc. and changing the
total authorized capital stock to 55,000,000 of which 50,000,000 shares are
common stock with a par value of $.001 per share and 5,000,000 shares are
preferred stock with a par value of $.001 per share. On January 30, 1990, the
Company amended its certificate of incorporation to change its name to D-Lanz
Development Group, Inc., and to change the aggregate number of shares of stock
the Company may issue to 100,000,000 shares of which 50,000,000 are common stock
with a par value of $.001 per share and 50,000,000 shares are preferred stock
with a par value of $.001 per share. On May 6, 1988, the company restated the
number of common stock outstanding by reverse splitting the number of shares 1
for 4 from 6,2205,970 to 1,551,394. On September 30, 1997, the Registrant
acquired the assets of Health Technologies International, Inc. ("HTI"), a
private New Jersey corporation, in exchange for 8,448,606 shares of the
Registrant's common stock. HTI was controlled by Roger Fidler, President of the
Registrant.
BUSINESS OF ISSUER
The primary asset acquired from HTI is an exclusive license to manufacture,
market and sell a breast abnormality indicator in Chile and Singapore. This
product, with FDA marketing clearance in place, had been manufactured in the
United States by HumaScan, Inc., which was a NASDAQ listed corporation with
original plans for a December, 1997 launch date. The Registrant and HumaScan are
unrelated. In the United States HumaScan had a marketing arrangement with
Physician Sales and Service, Inc., one of the largest medical product
distributors in the United States, which planned to sell the device under the
trademark "BreastAlert". However, due to a variety of marketing and management
issues, Humascan ceased its business operations in the breast abnormality
indicator device during the 1999 fiscal year. Significant sales of the breast
abnormality indicator device were not achieved in that timeframe.
The Company had entered into a similar marketing arrangement within its
exclusive license territory, with Sandell Corp. S.A. ('Sandell') , disclosed in
the Company's 8K dated September 1, 1998, incorporated herein by reference. The
distribution agreement with Sandell was terminated on November 2, 1999 when the
Company learned that Sandell had ceased its operations. The Company has decided
to seek out another business opportunity and to await further developments in
the efforts of the licensor of BreastCare, Scantech Medical, Inc., to bring the
product to market in South America and Europe. The Company will re-assess the
BreastCare business at a Board of Directors meeting scheduled for March 31,
2000.
In May, 1998, the Company issued 100,000 common shares to Thurcon Capital
Inc. for financial consulting services valued $1,000 or $0.001 per share.
The Company had entered into a contract with Sarit Hirschklorn to provide
computer services on August 13, 1998, with compensation to be paid in the form
of options for 100,000 shares of the Company's common stock. These shares were
registered by the Company on Form S-8 on August 14, 1998. The Company and Ms.
hirschkorn have since cancelled the contract, and the shares registered
thereby are to be cancelled.
On August 14, 1998, the Company issued 200,000 common shares to Joel
Brownstein for consulting services valued at $136,000. On August 25, 1998, the
Company issued 400,000 common shares to Vescom Holdings for consulting services
valued at $4,000. On August 26, 1998, the Company sold 500,000 common shares to
Joel Brownstein for a note of $500,000. On December 1, 1998, the Company
restructured this note by reducing the note and agreeing to cancel 271,500 of
the 500,000 common shares. The new note of $228,500 and accrued interest was
foregiven in exchange for consulting services to be rendered over a three month
period.
On August 26, 1998, the Company sold 400,000 common shares to Wharton
Capital Corp. for $200,000 in consulting fees.
On March 11, 1999, the Company entered into an agreement with James Tilton
whereby Mr. Tilton would be providing the Company with managerial and corporate
policy services in exchange for 400,000 shares of the Company's common stock.
The Company filed a Registration Statement on Form S-8, covering these shares on
March 24, 1999. The Company and Mr. Tilton have since cancelled the contract,
and the shares registered thereby are to be cancelled.
Registrant's principal executive offices are at 400 Grove St., Glen Rock,
NJ 07452. Telephone (201) 445-8862.
Item 2. DESCRIPTION OF PROPERTY
The Company's President provides the Company with limited office space in
his offices at no charge.
Item 3. LEGAL PROCEEDINGS
There are no material pending legal actions involving the Company.
tem 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Registrant submitted no matters to a vote of its security holders during
its fiscal year ended December 31, 1998.
Part II.
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a) The company's Common Stock did not been traded from 1988 to February of
1998. Currently, the Company's Common Stock is traded over the counter on the
Pink Sheets. Since that time it has had a high of $1.25, and a low of $0.001.
(b) As of December 31, 1998, there were approximately 900 holders of
the Company's Common Stock.
(c) No dividends were paid during the fiscal year ending Dec. 31,
1998.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS OR PLAN OF OPERATION
The Company was formed on June 28, 1972, under the laws of the State of Delaware
to engage in any lawful act or activity for which corporations may be organized
under the business corporation law of the State of New York. The Company's
principal assets consist of a purchased License rights to certain patented
technology to manufacture and market for the countries of Chile and Singapore a
temperature sensing device and diagnostic direct reading, digital device to
screen the breast for abnormalities, including cancer.
Development stage activities.
The following discussion relates to the results of our operations to date,
and our financial condition:
For the next 12 months, the Company plans to devote the majority of its
efforts to (i) obtaining financing to build production facilities to manufacture
and market its Licensed device, (ii) enhancing its financing sources for
inventory, and (iii) pursuing and finding a management team to continue the
process of completing its marketing goals and to market limited quantities of
the Licensed devices. The Company anticipates that with the completion of a
private placement offering, the Company will be able to expand its operations.
The Company anticipates that its results of operations may fluctuate for the
foreseeable future due to several factors, including the timing of the
introduction of the Company's products into its target markets; whether and when
new products are successfully developed by the Company, market acceptance of
current or new products, competitive pressures on pricing, changes in the mix of
products sold. Operating results would also be adversely affected by a downturn
in the market for current technology it improved technology is introduced.
Because the Company is continuing to increase its operating expenses for
personnel and other general and administrative expenses, the Company's operating
results would be adversely affected if its sales did not correspondingly
increase. The Company's limited operating history makes accurate prediction of
future operating results difficult or impossible.
The Company has been a development stage enterprise since its inception,
June 28, 1972, to December 31, 1998. During this period, management had devoted
the majority of its efforts to obtaining the License agreement, obtaining
preliminary financing, enhancing its sources for inventory, pursuing and finding
a management team to continue the process of completing its marketing goals,
obtain sufficient working capital through loans and equity through a private
placement offering. These activities were funded by the Company's management and
investments from stockholders and officer loans.
Results of Operations
For the year months ended December 31, 1998 as compared to the year months
ended December 31, 1997
The company has remained inoperative. Sales, costs of goods sold, gross
profit, operating expenses and net profit were $-0- for both the year ended
December 31, 1997 and 1998. The activities of the Company during the year ended
December 31, 1997 and 1998. consisted of preparing and filing corporate income
tax returns and filings for the Securities and Exchange Commission.
The Company's general and administrative costs aggregated approximately $34,502
for the year ended December 31, 1998 as compared to $1,066 for the year ended
December 31, 1997 representing an increase of $33,436. This increase represents
office expenses of $502 and the payment consulting fees of $25,000, rent of
$3,000 and officer's salary of $6,000.
Liquidity And Capital Resources
As of December 31, 1998, the Company's cash balance was $432 and working
capital was $196,074 consisting of cash of $432 and notes receivable from
investors aggregating $223,642.
Net (loss) from operations amounted to $(992,002) for the year ended December
31, 1998 due to increases general and administrative expenditures related to the
payment of consulting fees.
The Company's primary short-term needs are to develop its manufacturing
capabilities, increase inventory levels, begin to support its research and
development programs and begin marketing quantities of Licensed devices and
payment of royalty fees. The Company currently plans to expend approximately
$1.0 million for the expansion and development of its manufacturing facilities
in addition to its marketing and general administrative programs.
The Company expects its capital requirements to increase over the next
several years as it expands its research and development efforts, new product
development, sales and administration infrastructure, manufacturing capabilities
and facilities. The Company's future liquidity and capital funding requirements
will depend on numerous factors, including the extent to which the Company's
products under development are successfully developed and gain market
acceptance, the timing of regulatory actions regarding the Company's potential
products, the costs and timing of expansion of sales, marketing and
manufacturing activities, facilities expansion needs, procurement and
enforcement of patents important to the Company's business, results of clinical
investigations and competition.
The Company believes that it must raise additional cash and cash from
operations to satisfy its funding needs for at least the next 12 months.
Thereafter, if cash generated from operations is insufficient to satisfy the
Company's working capital and capital expenditure requirements, the Company may
be required to sell additional equity or debt securities or obtain additional
credit facilities. There can be no assurance that such financing, if required,
will be available on satisfactory terms, if at all.
Income tax: As of December 31, 1998, the Company had a tax loss
carry-forward of $993,477. The Company's ability to utilize its tax credit
carry-forwards in future years will be subject to an annual limitation pursuant
to the "Change in Ownership Rules" under Section 382 of the Internal Revenue
Code of 1986, as amended. However, any annual limitation is not expected to have
a material adverse effect on the Company's ability to utilize its tax credit
carry-forwards.
Year 2000 Readiness
The following disclosure is a Year 2000 ("Y2K") readiness disclosure
statement pursuant to the Year 2000 Readiness and Disclosure Act.
The Company's Year 2000 program is designed to minimize the possibility of
serious Year 2000 interruption. Possible Year 2000 worst case scenarios include
the interruption of significant parts of the Company's business as a result of
internal business system failure or the failure of the business systems of its
suppliers, distributors or customers. The potential effect to the operations of
the present business are minimized currently because the Company's reliance upon
computer systems in the day to day operations is minimal.
However, the Company decided to significantly upgrade its "business
systems" (all computer hardware and software used to run its businesses
including its operations management, administration and financial systems).
Specifications were developed for desired capabilities, including Year 2000
compliance. In 1998 the Company began assessing its Year 2000 exposure and
commenced implementation of a plan to achieve Year 2000 readiness. Based on its
review to date, the Company believes that its products and business software are
Year 2000 compliant.
The Company has also begun to survey major suppliers, distributors, and
customers to determine the status and schedule for their Year 2000 compliance.
To date, no significant issues have been identified, and the survey is expected
to be completed in the third quarter of 1999. Where it believes that a
particular supplier's situation poses unacceptable risks, the Company plans to
identify an alternative source.
The costs of the readiness program for business systems, other
infrastructure areas, and suppliers are a combination of incremental external
spending and use of existing internal resources. In total, the Company expects
to spend less than $1,000 to achieve readiness. This amount is based on the
costs to upgrade the existing business systems to Y2K compliant versions.
Milestones and implementation dates and the costs of the Company's Year
2000 readiness program are subject to change based on new circumstances that may
arise or new information becoming available that may change the underlying
assumptions or requirements.
ITEM 7. FINANCIAL STATEMENTS
The financial statements are attached hereto at page .
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
The Company did not change accountants for the fiscal year ending 1998.
Part III.
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS OF REGISTRANT
Name Age Position
Roger Fidler 46 President, Chief Financial
Officer and Sole Director
Jay Hait 28 Secretary
Roger Fidler. Mr. Fidler has been the sole director, President, Chief
Executive and Financial Officer of the Company since September, 1989. He will
serve until the next annual meeting scheduled for May, or until his successor is
elected and qualified. Mr. Fidler has been engaged in the private practice of
law since 1983. Mr. Fidler has also been President of PPA Technologies, Inc., a
private specialty chemicals company since its inception in 1994. Mr. Fidler has
also been President of Health Technologies International, Inc., a private
medical device company, since 1994.
Jay Hait. Mr. Hait has served as Secretary of the corporation since
November, 1997 and will continue to serve until his successor is elected and
qualified. Mr. Hait has worked as an attorney in Mr. Fidler's law practice since
May of 1997. Prior to that, Mr. Hait had been employed as a computer programmer
at Isis Corporation of Oakland, NJ from 1994. Mr. Hait worked as a help desk and
LAN technician at MDY Advanced Technologies of Fair Lawn, NJ in 1993, and Viacom
of New York, NY in 1992.
ITEM 10. EXECUTIVE COMPENSATION
No compensation was paid to any officer or director of the Company during
the fiscal year ending December 31, 1998.
Item 11. SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of December 31, 1998, of each officer
or director of the Company, by each person or firm who owns more than 5% of the
Company's outstanding shares and by all officers and directors of the Company as
a group.
Number of Percentage
Name Shares of shares
Owned owned
Roger 6,060,000 60.06%
Fidler
400 Grove St.
Glen Rock, NJ 07452
Scantek Medical, Inc. 2,000,000 20.00%
321 Palmer Rd.
Denville, NJ 07834
Officers and
Directors as
a Group 6,060,000 60.06%
___________________________________
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On September 30, 1997, the Registrant acquired the assets of Health
Technologies International, Inc. ("HTI"), a private New Jersey corporation, in
exchange for 8,448,606 shares of the Registrant's common stock. The primary
asset is an exclusive license to manufacture, market and sell a breast
abnormality indicator in Chile and Singapore. HTI was a closely held corporation
controlled by Mr. Fidler, who owned 93% of HTI's common stock. Scantek Medical,
Inc. ('Scanteck') received its 2,000,000 shares pursuant to the terms of the
license agreement.
During the 1998 fiscal year, the Company reached an understanding with
Scanteck which will enable the Company to market its devices in South Korea
as well.
Item 13. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES AND REPORTS ON FORM 8-K
(a) All required exhibits are incorporated herein by reference from the
Company's Form 10-KSB filed for the year ending December 31, 1992.
(b) Form S-8 and their associated schedules and reports, submitted on
May 15, 1998, August 25, 1999, and October 14, 1998.
<PAGE>
THOMAS P. MONAHAN
CERTIFIED PUBLIC ACCOUNTANT
208 LEXINGTON AVENUE
PATERSON, NEW JERSEY 07502
(201) 790-8775
Fax (201) 790-8845
To The Board of Directors and Shareholders
of D-Lanz Development Group, Inc.
I have audited the accompanying balance sheet of D-Lanz Development Group,
Inc. (a development stage company) as of December 31, 1997 and the related
statements of operations, cash flows and shareholders' equity for the years
ended December 31, 1996 and 1997. These financial statements are the
responsibility of the Company's management. My responsibility is to express an
opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of D-Lanz Development Group,
Inc. (a development stage company) as of December 31, 1997 and the results of
its operations, shareholders equity and cash flows for the year ended December
31, 1996 and 1997 in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that
D-Lanz Development Group, Inc. (a development stage company) will continue as a
going concern. As more fully described in Note 2, the Company has incurred
operating losses since the date of reorganization and requires additional
capital to continue operations. These conditions raise substantial doubt about
the Company's ability to continue as a going concern. Management's plans as to
these matters are described in Note 2. The financial statements do not include
any adjustments to reflect the possible effects on the recoverability and
classification of assets or the amounts and classifications of liabilities that
may result from the possible inability of D-Lanz Development Group, Inc. (a
development stage company) to continue as a going concern.
/s/ Thomas P. Monahan
Thomas P. Monahan, CPA
March 30, 1999
Paterson, New Jersey
<PAGE>
<TABLE>
<CAPTION>
D-LANZ DEVELOPMENT GROUP, INC.
(A Development Stage Company)
BALANCE SHEET
DECEMBER 31, 1998
Assets
Current assets
<S> <C>
Cash $432
Notes receivable 223,642
224,074
Other assets
License fees 252,500
Total other assets 252,500
Total assets $476,574
Liabilities and Stockholders' Equity
Current liabilities
Accrued liabilities $9,000
Officer loan payable 19,000
Total current liabilities 28,000
Capital stock
Preferred stock-authorized 50,000,000 shares $.001 par value. At
December 31, 1998 the number of shares outstanding was -0-
Common stock-authorized 100,000,000 shares, par value of $.001. At December
31, 1998, there were 11,700,000 shares outstanding.
$11,700
Additional paid in capital 1,430,351
Deficit accumulated during development stage (993,477)
Total stockholders' equity 448,574
Total liabilities and stockholders' equity $476,574
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
D-LANZ DEVELOPMENT GROUP, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the period from
reorganization
For the year For the year (December 31, 1990)
ended December ended December to
31, 1997 31, 1998 December 31,
1998
<S> <C> <C> <C>
Income $-0- $-0- $-0-
Less costs of goods sold -0- -0- -0-
Gross profit -0- -0- -0-
Operations:
General and administrative 1,066 34,502 37,119
Non cash payments for consulting fees 957,500 957,500
Amortization -0- -0- -0-
Total expense 1,066 992,002 994,619
Profit (loss) from operations -0- (992,002) 994,619
Other income
Interest income 1,142 1,142
------
Total other income 1,142 1,142
Net profit or (Loss) $(1,066) $(990,860) $(993,477)
======== ========== ==========
Net income per share $-0- $(0.09) $(0.09)
==== ======= =======
Total number of shares outstanding 3,663,545 10,733,332 10,733,332
========== =========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
D-LANZ DEVELOPMENT GROUP, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the period from
reorganization
For the year For the year (December 31, 1990)
ended December ended December to
31, 1997 31, 1998 December 31,
---- ----
1998
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C>
Net profit (loss) $(1,066) $(990,860) $(993,477)
Depreciation and amortization -0- -0- -0-
Non cash payments consulting fees 957,500 957,500
Bad debt write-off (371,500) (371,500)
Accrued liabilities 9,000 9,000
------ -----
TOTAL CASH FLOWS FROM OPERATING ACTIVITIES (1,066) (395,860) (398,477)
CASH FLOWS FROM FINANCING ACTIVITIES
Officer loan payable 19,000 19,000
Sale of shares of common stock 2,000 600,000 603,551
----- -------- -------
TOTAL CASH FLOWS FROM FINANCING ACTIVITIES 2,000 619,000 622,551
CASH FLOWS FROM INVESTING ACTIVITIES
Notes receivable (223,642) (223,642)
--------- ---------
TOTAL CASH FLOWS FROM INVESTING ACTIVITIES (223,642) (223,642)
NET INCREASE (DECREASE) IN CASH 934 (502) 432
----
CASH BALANCE BEGINNING OF PERIOD -0- 934 -0-
--- --- ---
CASH BALANCE END OF PERIOD $934 $432 $432
===== ==== ====
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
D-LANZ DEVELOPMENT GROUP, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
Additional Deficit accumulated
Date Preferred Preferred Common Common paid during development
Stock Stock Stock Stock in capital stage Total
----- ----- ----- ----- ----------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
12-31-1991 -0- $-0- 1,551,394 $1,551 $(1,551) $-0-
=== ==== ========= ====== ======== ====
12-31-1992 -0- $-0- 1,551,394 $1,551 $(1,551) $-0-
=== ==== ========= ====== ======== ====
12-31-1993 -0- $-0- 1,551,394 $1,551 $(1,551) $-0-
=== ==== ========= ====== ======== ====
12-31-1994 -0- $-0- 1,551,394 $1,551 $(1,551) $-0-
=== ==== ========= ====== ======== ====
12-31-1995 -0- $-0- 1,551,394 $1,551 $(1,551) $-0-
=== ==== ========= ====== ======== ====
12-31-1996 -0- $-0- 1,551,394 $1,551 $(1,551) $-0-
Sale of shares 2,000,000 2,000 2,000
Issuance of 6,448,606 6,449 246,051 252,500
shares for
acquisition of
license rights
Net loss (1,066) (1,066)
------ ------------- ------- -------
12-31-1997 -0- $-0- 10,000,000 10,000 246,051 (2,617) 253,434
Issuance of 900,000 900 449,100 450,000
shares for
consulting fees
Issuance of 200,000 200 135,800 136,000
shares for
consulting fees
Sale of shares 600,000 600 599,400 600,000
Net loss (990,860) (990,860)
------ -------------
Balance -0- $-0- 11,700,000 $11,700 $1,430,351 $(993,477) $448,574
=== ==== ========== ======== =========== ========== ========
12-31-1998
</TABLE>
See accompanying notes to financial statements.
<PAGE>
D-LANZ DEVELOPMENT GROUP, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
F-9
Note 1 - Organization of Company and Issuance of Common Stock
----------------------------------------------------
a. Creation of the Company
D-Lanz Development Group, Inc. (the "Company") was formed on June 28,
1972 under the laws of the State of Delaware under the name OSR Corporation. On
May 17, 1988, the Company amended its certificate of incorporation changing its
name to Resort Connections, Inc. and changing the total shares authorized to
issue to 55,000,000 of which 50,000,000 shares are shares of common stock, $.001
par value per share and 5,000,000 shares of preferred stock, $.001 par value per
share. On January 30, 1990, the Company amended its certificate of incorporation
to change its name to D-Lanz Development Group, Inc. and change the aggregate
number of shares of stock the Company may issue to 100,000,000 shares of which
50,000,000 are shares of common stock, $.001 par value per share and 50,000,000
shares preferred stock, $.001 par value per share.
b. Description of the Company
The Company has purchased the License rights to certain patented
technology to manufacture and market for the countries of Chile and Singapore a
temperature sensing device and diagnostic direct reading, digital device to
screen the breast for abnormalities, including cancer.
Note 2-Summary of Significant Accounting Policies
a. Basis of Financial Statement Presentation
The accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The Company has been dormant
since December 31, 1990. On September 30, 1997, the Company acquired the License
rights to certain patents. The Company has not generated any income and has been
dependent upon management to pay the expenses to maintain the Company's
existence and pay the costs of acquiring the License rights. These factors
indicate that the Company's continuation as a going concern is dependent upon
its ability to obtain adequate financing.
The financial statements presented at December 31, 1998 consist of the
balance sheet of the Company as at December 31, 1998, and the related statements
of operations, retained earnings and cash flows for the year ended December 31,
1997 and 1998.
b. Cash and cash equivalents
The Company treats temporary investments with a maturity of less than
three months as cash.
c. Significant Concentration of Credit Risk
At December 31, 1998 and September 30, 1999, the Company has concentrated
its credit risk by maintaining deposits in several banks. The maximum loss that
could have resulted from this risk totaled $-0- and $-0- which represents the
excess of the deposit liabilities reported by the banks over the amounts that
would have been covered by the federal insurance.
d. Earnings per share
Basic earnings per share are calculated on the basis of the weighted
average number of common shares outstanding for each period.
Year ended Year ended
December 31, December 31,
1997 1998
- ---------------------------------
Weighted number common
shares outstanding 3,663,545 10,733,332
============================
e. Revenue recognition
Revenue is recognized when products are shipped or services are rendered
f. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect 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.
Note 3 - Acquisition of License Rights
On September 30, 1997, the Company issued 6,448,606 shares of common
stock to purchase from Health Technologies International, Inc. ("Health Tech")
the rights to manufacture and market certain patented technologies. The License
has been valued at the historic cash purchase price of $252,500 paid by Health
Tech for the manufacturing and marketing rights.
Health Tech entered into an agreement on August 15, 1996 with Scantek, a
Delaware corporation located in Mountain Lakes, New Jersey for the licensing of
certain patented technology to manufacture and market for the countries of Chile
and Singapore. The patented technology consists of a temperature sensing device
and diagnostic direct reading, digital device to screen the breast for
abnormalities, including cancer.
As a result of the acquisition, the Company has been granted an
indivisible, exclusive right and license within the territories of Chile and
Singapore to assemble, use and sell the devices for a period ending with the
expiration of the applicable patents in these countries.
If the Company fails to achieve for a period of 12 consecutive months the
minimum net sales of the devices with respect to each country, Scantek may upon
30 days written notice and at its option either terminate this agreement or
delete the country from the Company's territories. Minimum net sales as defined
is based upon market penetration. The size of the market in each of the three
countries will be computed using official government census information from
each country. The market is defined as the lesser of two pairs of the device for
each women between the ages of 25 and 70 or such usage as may be recommended by
the relevant medical association or government agency in each country in the
Territory. The percentage of market penetration by year is as follows: Year
Percentage of
Market Penetration
1998 0%
1999 1%
2000 3%
2001 4%
2002 and after 5%
This schedule is based upon the scheduled delivery of an operational
assembly line, part of which will be installed in Scantek's facility, part of
which will be install in the Company's facility. The above referenced years were
adjusted to appropriate calendar years so as not to prejudice the Company's 365
day time period in which to achieve the graduated market penetration.
As of September 30, 1997, Health Tech has paid to Scantek a nonrefundable
License Fees aggregating $252,500.
The Company is required to pay a royalty equal to 15% of Net Sales of
Licensed Devices in the Territories during each contract year during the term of
the agreement. The royalty paid, will in no instance be less than $1.00 per unit
or a guaranteed minimum royalty payable as follows:
The first minimum royalty payment of $80,000 is not due until December
31, 1998; $200,000 for the year 1999; $300,000 for the year 2000 and $400,000
for each year thereafter.
Royalties are due and payable each quarter either for the actual amount
due or 25% of the minimum royalty payable for the year.
In the event that at any time during the term of this agreement, the
consumer price index in effect for the national government of the country of the
territory be increased by 10% over the index base as of the date of the
agreement. Then the minimum royalty payable and the minimum net sales for the
year will be increased by 10%.
The Company sold to Scantek 2,000,000 shares of common stock,
representing 20% of the total issued and outstanding common shares of the
Company as of the date of the agreement for the aggregate sum of $2,000 or $.001
per share. Under no circumstances will Scantek's common stock position be
diluted to less than 15% of the issued and outstanding common stock of the
Company. In the event Scantek will receive, at nominal cost, warrants to
purchase sufficient shares of common stock to maintain its 20% ownership, such
warrants will allow the purchase of shares at $2.25 per share for five years
from the date of the agreement.
The Company is required to arrange to purchase a turnkey manufacturing
line. Upon completion of the line, that portion of the line that manufactures
Sensors for the licensed devices will be installed at the same location as
Scantek's own manufacturing facility. Scantek will operate that portion of the
line and to the extent of the lines manufacturing capacity, deliver the
Company's requirements for Sensors to the Company's plant location F.O.B. for
cost plus 25%. Scantek will maintain a purchase money security interest in the
sensors delivered pursuant to this agreement.
During each contract year, the Company is required to spend 5% of net
sales during the immediately preceding year on advertising and promotion.
Upon termination of this agreement, the Company agrees that neither the
Company's officers, directors, principals nor its shareholders will during a
period of 5 years from the date of termination manufacture Sensors or purchase
Sensors manufactured by any entity other than Scantek for use in the licensed
devices or any competing device or directly or indirectly manage, operation or
control of or be connected as an officer, director, shareholder, partner,
consultant, owner, employee, agent, lender, donor, vendor, or otherwise, or have
any financial interest in or aid assist anyone else in the conduct of any
competing entity which offers similar devices for sale.
The Company is required to maintain product liability insurance with a
limit of not less than $1,000,000.
Note 4 - Related Party transactions
a. Issuance of Common Shares
On September 30, 1997, the Company issued 6,448,606 shares of common
stock to Health Tech in consideration for the purchase of certain patents valued
at $252,500.
Mr. Roger Fidler is President of both the Company and of Health Tech
On September 30, 1997, the Company sold 2,000,000 shares of common stock
to Scantek Medical, Inc. ("Scantek") pursuant to Regulation D for $2,000.
b. Lease Commitment
The Company occupies office space on a month to month basis for $250 per
month from Roger Fidler, President at 400 Grove Street, Glenn Rock, New Jersey.
c. Officer Salaries
Roger Fidler, President is to receive a minimal salary of $500 per month
until such time as the Company enters into profitable operations.
Note 5 - Capital Stock
a. Common Stock
On January 30, 1990, the Company amended its certificate of incorporation
to change its name to D-Lanz Development Group, Inc. and change the aggregate
number of shares of stock the Company may issue to 100,000,000 shares of which
50,000,000 are shares of common stock, $.001 par value per share and 50,000,000
shares preferred stock, $.001 par value per share.
c. Issuance of Capital Stock
In May, 1998, the Company filed an Registration Statement on Form S-8,
issuing an aggregate of 300,000 shares of common stock as follows: 150,000
shares of common stock to Sound Capital and 150,000 to Thurcon Capital, Inc. The
Company issued an aggregate of 100,000 shares of common stock pursuant to the
agreement for financial consulting services valued at $1,000 or $.001 per share.
On August 14, 1998, the Company issued 200,000 shares of common stock to
Joel Brownstein in consideration for consulting services valued at $136,000 or
$0.68 per share.
On August 25, 1998, the Company issued 400,000 shares of common stock to
Vescom Holdings, Inc. in consideration for consulting services valued at $4,000
or $.01 per share.
On August 26, 1998, the Company sold 600,000 shares of common stock at
$1.00 per share in consideration for notes receivable aggregating $600,000 as
follows: 500,000 shares to Joel Brownstein for $500,000; 100,000 shares to Sarit
Hirschkorn (wife of Jay Hait, Esq., Secretary to the Company).
Subsequent to the date of the financial statements, Sarit Hirschkorn
returned the 100,000 shares of common stock for cancellation in consideration
for cancellation of the Note Receivable for $100,000.
On December 1, 1998, the Company restructured its note receivable with
Joel Brownstein ("JB") in consideration for the sale of 500,000 shares of common
stock as follows: A new note for $228,500 with interest at 6% due by March 31,
1999 was entered into and an agreement to return 271,500 shares of common stock
as soon as practical for cancellation.
On February 1, 1999, the Company entered into a consulting agreement with
JB for financial consulting services to be rendered to the Company over a three
month period in consideration for forgiveness of the $228,500 note receivable
and accrued interest to February 1, 1999 aggregating $230,785.
Subsequent to the date of the balance sheet, JB returned for cancellation
271,500 shares of common stock.
On August 26, 1998, the Company issued 200,000 shares of common stock to
Vescom Holdings, Inc. pursuant to an agreement for sale for an aggregate of
$200,000 or $1.00 per share.
As of December 31, 1998, these shares were held in escrow by the Company
pending immediate delivery as required by a purchase option agreement. These
shares have not been reflected in the number of shares of common stock
outstanding as of December 31, 1998.
On August 26, 1998, the Company sold 400,000 shares of common stock to
Wharton Capital Corp., ("Wharton") for an aggregate consideration of $200,000 in
consulting fees or $0.40 per share.
b. Preferred Stock
The Company is authorized to issue 5,000,000 shares of preferred stock,
$.001 par value per share. The board of directors of the Company is granted the
power to determine by resolution from time to time the power, preferences,
rights, qualifications, restrictions or limitations of the preferred stock.
At December 31, 1997, the number of preferred shares outstanding was -0-.
Note 6 - Income Taxes
The Company provides for the tax effects of transactions reported in the
financial statements. The provision if any, consists of taxes currently due plus
deferred taxes related primarily to differences between the basis of assets and
liabilities for financial and income tax reporting. The deferred tax assets and
liabilities, if any represent the future tax return consequences of those
differences, which will either be taxable or deductible when the assets and
liabilities are recovered or settled. As of December 31, 1997, the Company had
no material current tax liability, deferred tax assets, or liabilities to impact
on the Company's financial position because the deferred tax asset related to
the Company's net operating loss carry forward and was fully offset by a
valuation allowance.
At December 31, 1997, the Company has net operating loss carry forwards
for income tax purposes of $993,477. These carry forward losses are available to
offset future taxable income, if any, and expire in the year 2010. The Company's
utilization of this carry forward against future taxable income may become
subject to an annual limitation due to a cumulative change in ownership of the
Company of more than 50 percent.
The components of the net deferred tax asset as of December 31, 1998 are as
follows:
Deferred tax asset:
Net operating loss carry forward $ 337,782
Valuation allowance $( 337,782)
Net deferred tax asset $ -0-
The Company recognized no income tax benefit for the loss generated for
the SFAS No. 109 requires that a valuation allowance be provided if it is more
likely year ended December 31, 1998.
SFAS No. 109 requires that a valuation allowance be provided if it is
more likely than not that some portion or all of a deferred tax asset will not
be realized. The Company's ability to realize benefit of its deferred tax asset
will depend on the generation of future taxable income. Because the Company has
yet to recognize significant revenue from the sale of its products, the Company
believes that a full valuation allowance should be provided
Note 7 - Commitments and Contingencies
Liabilities, Commitments and Contingencies
At December 31, 1997 the Company has no liabilities or contingencies.
a. Financial Consulting Agreements
In May, 1998, the Company filed an Registration Statement on Form S-8,
issuing an aggregate of 300,000 shares of common stock as follows: 150,000
shares of common stock to Sound Capital and 150,000 to Thurcon Capital, Inc.
The Company issued an aggregate of 100,000 shares of common stock
pursuant to the agreement for financial consulting services valued at $1,000 or
$.001 per share.
b. Agreement with Joel Brownstein
In August, 1998, the Company filed an Registration Statement on Form S-8,
registering options to sell 200,000 shares of common stock at $.001 per share
for an aggregate of $2,000 to Joel Brownstein ("JB") in consideration for a
financial consulting agreement for a period of 6 months. On August 5, 1998, The
Company issued the shares of common stock. The transaction was valued at valued
at $136,000 or $0.68 per share.
d. Agreement with Wharton Capital Corp.
On August 13, 1998, the Company entered into a financial consulting
agreement with Wharton Capital Group, Inc. ("Wharton") for a term of one year
and may be canceled upon 30 days notice by either party. As consideration, the
Company issued 125,000 shares of common stock valued in the aggregate at $50,000
or $.40 per share and receive a aggregate cash payment of $100,000 to be paid in
3 installments as follows: $25,000 upon execution of the agreement, $25,000 due
within 1 week latter and the third installment due within 30 days.
The 125,000 shares of common stock were issued at a value of $125,000 and
the first installment of $25,000 was paid directly by Mr. Roger Fidler.
e. Agreement with Vescom Holdings, Inc.
On August 25, 1998, the Company entered into a financial and management
consulting agreement with Vescom Holdings, Inc. for a period of one year. In
consideration for this agreement, the Company agreed to as follows: issue
400,000 shares of common stock valued at $4,000 or $.01 per share; to grant
options to purchase 200,000 shares of common stock at $1.00 per share and
required the payment of an aggregate of $100,000. The payment of $100,000 was to
be paid in installments as follows: $25,000 upon execution of the contract;
$25,000; $25,000 a week latter and the balance within 30 days provided the
Company is satisfy with Vescom's performance.
As of December 31, 1998, the 400,000 shares of common stock were
delivered and the initial payment of $25,000 was made.
As of December 31, 1998, the contract was canceled for unsatisfactory
performance.
As of December 31, 1998, 200,000 shares were being held in escrow by the
Company pending immediate delivery as required by a purchase option agreement.
These shares have not been reflected in the number of shares of common stock
outstanding as of December 31, 1998.
Subsequent to the date of the financial statements, these shares were to
be canceled by the Company for non-execution of the agreement for optioned
shares at $1.00 per share.
f. Agreement with Sarit Hirschkorn
On August 23, 1998, the Company entered into computer consulting
agreement with Sarit Hirschkorn ("Hirschkorn") to create a customer and sales
tracking database. In consideration for these services, Hirschkorn was granted
an option to purchase 100,000 shares of common stock at $1.00 per share. In
August, 1998, the Company issued 100,000 shares of common stock in consideration
for a note receivable for $100,000 plus accrued interest at 6%.
Subsequent to the date of the financial statements, the agreement was
terminated along with the note receivable for $100,000 plus accrued interest and
the stock was returned to the Company for cancellation.
As of December 31, 1998, the Company has set up a 100% reserve against
this note.
Note 8. Supplemental Cash Flow Information
The following is supplemental cash flow information for the year ended
December 31, 1997.
Issuance of 6,448,606 shares for acquisition of
License rights $(252,500)
Common stock 252,500
---------------
Total $ -0-
======
Note 9 - Development Stage Company
The Company is considered to be a development stage company with little
operating history. The Company is dependent upon the resources of the Company's
management and its ability to raise or borrow additional funds to continue to
exist. The Company has purchased the License rights to manufacture and market
certain patented technologies from Scantek and will require additional funds to
complete the process of building manufacturing facilities and implement the
Company's marketing program.
Note 10 - Subsequent Events
a. Agreement with THE TAXIN NETWORK
On February 19, 1999, the Company filed an Registration Statement on Form
S-8, issuing 200,000 shares of common stock to THE TAXIN NETWORK ("TTN") as
financial consultant for an aggregate consideration of $40,000 or $.20 per share
for a term of four months.
The agreement calls for members of the Company to make appearances on
various broadcast stations around the country, optional mailings to a list of
listeners of "The Financial Hours with Ed Taxin"; printing of press releases to
be published on the Internet under the by line Ed Taxin; inclusion of the
Company at various speaking engagements and financial seminars ;and other
appearance opportunities.
b. Agreement with Jim D. Tilton
On March 24, 1999, the Company filed an Registration Statement on Form
S-8, issuing 400,000 shares of common stock to Jim D. Tilton ("Tilton") of
Louisville, Kentucky as financial consultant. The agreement entitles Tilton to
option to purchase 400,000 shares of common stock at $0.01 per share. These
shares to be issued will be registered on Form S-8 soon after execution of the
agreement.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
DATE: January 11, 2000 By: s/Roger L. Fidler
ROGER L. FIDLER
President & Chief Financial
and Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and dates indicated.
DATE: January 11, 2000 By: s/Roger L. Fidler
ROGER L. FIDLER
President
Director
<TABLE> <S> <C>
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<LEGEND>
This schedule contains summary financial information extracted from
financial statements for the year ended ecember 31, 1998 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000075053
<NAME> D-lanz Development Group, Inc.
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<FISCAL-YEAR-END> DEC-31-1998
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<TOTAL-LIABILITY-AND-EQUITY> 476,574
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