<PAGE> 1
DATE FILED: FEBRUARY 18, 1999
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period year ended DECEMBER 31, 1998, or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to ____________________
Commission file number 0-24944
THE TRACKER CORPORATION OF AMERICA
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C>
DELAWARE 86-0767918
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
180 DUNDAS STREET WEST, SUITE 1505, TORONTO, ONTARIO, CANADA M5G 1Z8
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
Registrant's Telephone Number, Including Area Code (416) 593-2604
Indicate by check [CHECKMARK] 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 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 [ ]
Indicate the number of shares outstanding of each of the registrant's classes of
common stock as of the latest practicable date:
<TABLE>
<CAPTION>
Classes of Common Stock Outstanding at February 10, 1999
----------------------- --------------------------------
<S> <C>
$0.001 par value 37,516,623
</TABLE>
<PAGE> 2
THE TRACKER CORPORATION OF AMERICA, INC.
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
Part I. Financial Information 1
Item 1. Financial Statements 2
Consolidated Balance Sheet as of December 31, 1998
and March 31, 1998 3
Consolidated Statement of Operations for the three and nine Months
ended December 31, 1998 and 1997 and for the Period from May 6,
1993 (inception) through December 31, 1998 4
Consolidated Statement of Cash Flows for the three months Ended
December 31, 1998 and 1997 and for the period from May 6, 1993
(inception) through December 31, 1998 5
Notes to Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
Part II. Other Information 10
Item 1. Legal Proceedings 10
Item 3. Defaults Upon Senior Securities 10
Item 6. Exhibits and Reports on Form 8-K 10
</TABLE>
ii
<PAGE> 3
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
<PAGE> 4
THE TRACKER CORPORATION OF AMERICA
(A DEVELOPMENT STAGE COMPANY)
- --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
ASSETS
DECEMBER 31, MARCH 31,
1998 1998
------------ ------------
(UNAUDITED) (AUDITED)
<S> <C> <C>
CURRENT ASSETS
CASH AND CASH EQUIVALENTS $ -- $ --
SHORT-TERM INVESTMENT -- --
ACCOUNTS RECEIVABLE 23,651 --
PREPAID EXPENSES AND DEPOSITS -- --
INVENTORY -- --
DEFERRED CHARGES 114,421 1,187,699
------------ ------------
TOTAL CURRENT ASSETS 138,072 1,187,699
DUE FROM SHAREHOLDERS 14,072 14,072
DEFERRED CHARGES 158,746 275,043
PROPERTY AND EQUIPMENT (NET) -- --
LONG-TERM INVESTMENT -- --
------------ ------------
TOTAL ASSETS $ 310,889 $ 1,476,814
============ ============
LIABILITIES & SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES
ACCOUNTS PAYABLE $ 749,503 $ 440,835
ACCRUED LIABILITIES 603,980 528,399
DEFERRED REVENUE 197,680 1,798,727
DEBENTURE PAYABLE 31,809 31,809
CONVERTIBLE DEBENTURES 475,790 475,790
------------ ------------
TOTAL CURRENT LIABILITIES 2,058,763 3,275,560
DEFERRED REVENUE 264,660 412,846
SHAREHOLDERS' DEFICIT
$1000 6% CONVERTIBLE PREFERRED STOCK, $.001 PAR VALUE, 500,000 SHARES
AUTHORIZED, NIL (NIL - MARCH 31, 1997) SHARES ISSUED AND OUTSTANDING -- --
COMMON STOCK, $.001 PAR VALUE, 30,000,000 SHARES AUTHORIZED,
23,782,128 (22,340,628 - MARCH 31, 1998) SHARES ISSUED AND OUTSTANDING 21,160 19,718
PAID-IN CAPITAL 15,415,481 15,371,641
OTHER CAPITAL (356,002) (356,002)
ACCUMULATED DEFICIT (17,019,319) (17,001,283)
CUMULATIVE TRANSLATION ADJUSTMENT (73,854) (245,666)
------------ ------------
TOTAL SHAREHOLDERS' DEFICIT (2,012,534) (2,211,592)
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT $ 310,889 $ 1,476,814
============ ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
<PAGE> 5
THE TRACKER CORPORATION OF AMERICA
(A DEVELOPMENT STAGE COMPANY)
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
FROM INCEPTION
FOR 3 MONTHS ENDING FOR 9 MONTHS ENDING (MAY 6, 1993)
DECEMBER 31, DECEMBER 31, THROUGH DECEMBER 31,
----------------------------- ----------------------------- --------------------
1998 1997 1998 1997 1998
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenue $ 20,117 $ 12,393 $ 113,630 $ 48,114 $ 420,351
Cost of sales 7,798 2,194 59,222 19,282 159,516
------------ ------------ ------------ ------------ ------------
Gross profit 12,319 10,199 54,408 28,832 260,836
------------ ------------ ------------ ------------ ------------
Development costs
Operational 43,194 785 153,455 987 1,675,315
Information systems 3,860 378 12,765 475 942,797
Sales and marketing 40,348 917 100,777 1,153 3,537,821
General and administrative 43,554 2,209 179,241 2,776 8,015,472
------------ ------------ ------------ ------------ ------------
Total development costs $ 130,956 $ 4,289 $ 446,238 $ 5,391 $ 14,171,404
Gain (Loss) from continuing operations (118,637) 5,910 (391,830) 23,441 (13,910,568)
Gain (Loss) from discontinued operation (5,985) (585,631) 373,794 (1,041,842) (3,108,751)
------------ ------------ ------------ ------------ ------------
Net Profit (Loss) applicable to common stock $ (124,622) $ (579,721) $ (18,036) $ (1,018,401) $(17,019,319)
============ ============ ============ ============ ============
Profit (Loss) per share of common stock
Loss from continuing operations (0.0050) $ 0.0003 (0.0165) $ 0.0011 $ (1.026)
Gain (Loss) from discontinued operation (0.0003) (0.0273) 0.0157 (0.0492) (0.2294)
------------ ------------ ------------ ------------ ------------
NET LOSS (0.0052) (0.0270) (0.0008) (0.0481) (1.2559)
============ ============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 23,782,128 21,478,470 23,782,128 21,185,780 13,551,625
============ ============ ============ ============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
<PAGE> 6
THE TRACKER CORPORATION OF AMERICA
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FROM INCEPTION
(May 6, 1993) For 9 months ended For 9 months ended
through December 31, December 31, December 31,
1998 1998 1997
------------ ------------ ------------
Cash flows from (used in) operating activities:
<S> <C> <C> <C>
Net loss $(17,019,319) $ (18,036) $ (1,018,401)
Adjustments to reconcile net loss to net cash from
operating activities:
Depreciation $ 380,019 -- 145,698
Loss on sale of long-term investment $ 13,414 -- --
Rent, consulting and marketing services, employee
compensation settled via the issuance of company
shares $ 5,284,144 -- 165,870
Changes in assets and liabilities:
Prepaid expenses and deposits $ (17,273) -- (158,603)
Accounts receivable $ (23,651) (23,651) 50,090
Short-term investment -- -- --
Inventory -- -- (10)
Deferred charges $ (273,166) 1,189,576 2,170,511
Deferred revenue $ 462,341 (1,749,232) (1,905,083)
Accounts payable and accrued liabilities $ 1,082,540 98,661 526,420
------------ ------------ ------------
Net cash used in operating activities (10,110,951) (502,682) (23,508)
------------ ------------ ------------
Cash flows from (used in) investing activities:
Due to Global Tracker 285,588 285,588 --
Acquisition of fixed assets $ 6,028 -- (251,881)
Loan to shareholders $ (370,484) -- (2,344)
Repayment of loans to shareholders $ 356,412 -- --
Note receivable $ (200,317) -- --
Repayment of note receivable $ 200,317 -- --
Long-term investment $ (2,301,372) -- --
Unwind of long-term investment $ 2,287,958 -- --
------------ ------------ ------------
Net cash from (used in) investing activities 264,130 285,588 (254,225)
------------ ------------ ------------
Cash flows from (used in) financing activities:
Issuance of common shares $ 8,997,812 45,282 30,000
Issuance of preferred shares $ 1,050,000 -- --
Issuance of convertible subordinated debentures $ 2,189,529 -- --
Repayment of debentures and convertible subordinated debentures $ (297,401) -- (167,138)
Due to shareholder $ 0 -- 200,625
Repayment to shareholder $ 0 -- --
Share issue costs $ (1,684,735) -- --
------------ ------------ ------------
Net cash from (used in) financing activities 10,255,205 45,282 63,487
------------ ------------ ------------
Effect of exchange rate changes $ (408,384) 171,812 194,026
Increase (decrease) in cash and cash equivalents during (0) (0) (20,220)
the period
Cash and cash equivalents, beginning of period -- -- 105,213
------------ ------------ ------------
Cash and cash equivalents, end of period (0) (0) $ 84,993
============ ============ ============
</TABLE>
Supplemental schedule of noncash financing activities
The Company issued certain shares of its Class B voting common stock for
service and for nominal values.
See Consolidated Statement of Shareholders' Equity (Deficit)
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE> 7
NOTE 1 - BASIS OF PRESENTATION:
The financial statements of The Tracker Corporation of America that accompany
the notes which follow are unaudited except for our balance sheet as of March
31, 1998. They are prepared in accordance with instructions to Form 10-Q and
Rule 10-01 of Regulation S-X and do not include all the information and notes
required by Generally Accepted Accounting Principles for complete financial
statements. We believe we have included all adjustments (consisting of normal
recurring accruals) considered necessary for fair presentation. You should read
these financial statements in conjunction with the financial statements and
accompanying notes from our Annual Report on Form 10-K for the year ended March
31, 1998 filed with the Securities and Exchange Commission.
NOTE 2 - NET (GAIN) LOSS PER SHARE:
We use the weighted average number of shares of common stock outstanding to
compute Tracker's net gain or loss per share during the periods presented. All
earnings per share amounts are presented and, where appropriate, restated to
conform to Financial Accounting Standards Board Statement No. 128, Earnings per
Share. Statement 128 substitutes the determination of basic and diluted earnings
per share for the previously reported primary and fully diluted earnings per
share. Unlike primary earnings per share, the calculation of basic earnings per
share excludes any dilutive effects of options, warrants and convertible
securities. The calculation of diluted earnings per share is similar to the
previously reported fully diluted earnings per share.
NOTE 3 - GOING CONCERN:
We have prepared the financial statements assuming that Tracker will continue as
a going concern. However, the reports of our former independent accountant for
our 1996-97 and 1995-96 fiscal years and the report of our current independent
accountant express doubt concerning our ability to continue as a going concern.
The consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
NOTE 4 - DEFERRED CHARGES:
Deferred charges consist of the following:
<TABLE>
<CAPTION>
December 31, March 31,
1998 1998
---- ----
Current:
<S> <C> <C>
Deferred sales commission (net of cancellation reserve) $ 80,309 $ 776,055
Other 34,112 411,644
---------- ----------
$ 114,421 $1,187,699
---------- ----------
Long term:
Deferred sales' commission (net of cancellation reserve) $ 109,486 $ 183,041
Other 49,260 92,002
---------- ----------
$ 158,746 $ 275,043
</TABLE>
5
<PAGE> 8
NOTE 5 - ACCRUED LIABILITIES:
Accrued liabilities comprise the following:
<TABLE>
<CAPTION>
December 31, March 31,
1998 1998
---- ----
<S> <C> <C>
Directors fees $ 24,432 $ 24,432
Interest expense for convertible debentures 134,366 58,785
Others 445,182 445,182
-------- --------
$603,980 $528,399
======== ========
</TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
CAUTIONARY STATEMENT
This Quarterly Report on Form 10-Q contains forward-looking statements. The
term, "forward-looking statements," is defined in Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. When used in
this Form 10-Q and other filings with the Securities and Exchange Commission, in
our press releases, and in our oral statements, words or phrases such as
"believes," "anticipates," "expects," "intends," "will likely result,"
"estimates," "projects" or similar expressions are intended to denote
forward-looking statements. The possible results that may be suggested by
forward-looking statements are subject to risks and uncertainties that may cause
actual results to differ materially. Some of the factors that might cause such
differences include risks associated with the development of a new technology;
technological obsolescence; dependence on the Tracker(TM) System and the
uncertainty of its market acceptance; history of operating losses and
expectation of future losses; limited sales and marketing experience; heightened
competition; lack of manufacturing capability and dependence on contract
manufacturers and suppliers; dependence on proprietary technology, including the
adequacy of patent and trade secret protection; retention of key personnel and
recruitment of additional qualified skilled personnel; and the failure to raise
additional funds.
Do not place undue reliance on forward-looking statements. The forward-looking
statements speak only as of the date made and may not reflect events or
circumstances which occur thereafter. Carefully review and consider the various
disclosures we make in this report and in our other public filings to advise
interested parties of the risks factors and other uncertainties that may affect
our business.
DEVELOPMENT STAGE ACTIVITIES
Tracker has been in the development stage since its formation. Our present line
of business originated in 1994 with the development, marketing, sale and
operation of the "Tracker(TM) System." The Tracker(TM) System is a personal
property marking and monitoring system that utilizes advanced bar code and laser
scanning technology to create an identification device that interfaces with a
computer database and scanning network.
6
<PAGE> 9
From inception through December 31, 1998, we have incurred losses totaling
approximately $17 million, including approximately $1.7 million in operational
costs, $943,000 in research and development expenses, $3.5 million in sales and
marketing expenses and $8 million in general and administrative expenses. Our
development stage activities have consisted primarily of research and product
development, product design, and the creation and implementation of marketing
programs to sell The Tracker(TM) System. We have generated limited revenue and
sustained significant operating losses each year since inception. We expect such
losses to continue for at least the next two years.
Although we continue to believe that The Tracker(TM) System has significant
commercial potential, our present financial circumstances and past experience
require adoption of a more narrowly focused and less costly marketing strategy.
We are in the process of identifying markets we believe will prove most
responsive to our initiatives and developing strategies for optimizing the
limited resources we will have if we obtain additional financing. We are also
evaluating unrelated business opportunities that might benefit Tracker by
reducing our reliance on The Tracker(TM) System as a sole source of revenue and
earnings.
RESULTS OF OPERATIONS
COMPARISON OF THREE AND NINE MONTHS ENDED DECEMBER 31, 1998 AND 1997
Discontinued Operations: During the 1996-97 fiscal year and the first half of
the 1997-98 fiscal year we derived substantial revenue from discontinued
operations. The period-to-period comparisons that appear below adjust
retroactively our results of operations to account for the discontinuance.
Overall Performance: Our total net loss, including the net loss from
discontinued operations, totaled $124,622 and $18,036 during the three and nine
months ended December 31, 1998, as compared to $579,721 and $1,018,401 during
the same periods in 1997. Our net loss from continuing operations totaled
$118,637 and $391,830 during the three and nine months ended December 31, 1998,
as compared to gains of $5,910 and $23,441 during the same periods in 1997. The
1997 gains are largely attributable to the allocation of most 1997 expenses to
discontinued operations.
Revenue: Our revenue for the three months ended December 31,
1998 increased 62% to $20,117 as compared to $12,393 one year ago. The revenue
for the nine months ended December 31, 1998 increased 136% to $113,630 as
compared to $48,114 a year ago. We attribute this revenue increase to the
mid-1998 settlement of our lawsuit with the Securities and Exchange Commission.
This settlement permitted us to redirect our scarce resources from the defense
of the lawsuit to our business.
Cost of Sales: Cost of sales increased 281% or $7,798 for the three-month
period ended December 31, 1998, as compared to $2,194 for the comparable 1997
period. For the nine-month period ended December 31, 1998, cost of sales grew
207% to 59,222 as compared to $19,282 one year ago. Our cost of sales increased
significantly because of the higher production costs Tracker experienced as our
product mix shifted from simple labels to metal tags that require
7
<PAGE> 10
assembly.
Gross Profits: Notwithstanding disproportionate increases in cost of sales,
gross profits increased in both the three-month period and the nine-month period
ended December 31, 1998. For the three-month period, gross profits increased by
20%, to $12,319 as compared to the comparable 1997 period. For the nine-month
period, gross profits increased by 88.7%, to $54,408, as compared to the
comparable 1997 period. We believe gross profits increased because of a renewed
focus on sales following settlement of the FTC suit.
Development Costs: Development costs fall into four categories: Operational,
Information systems, sales and marketing, and general and administrative.
Operational includes the costs to operate The Tracker(TM) System call center and
recovery service, and compensation costs for operations and security personnel.
Information systems includes compensation costs for MIS personnel. Sales and
marketing includes compensation costs for sales and marketing personnel, trade
show attendance and software development. General and administrative includes
executive and secretarial compensation and rent.
Prior to the discontinuance of the credit card registration service, we
allocated development costs between our business segments on a percentage basis
based upon revenue. Because discontinued operations generated a
disproportionate amount of revenue, we attributed to it most of our development
costs. Since the discontinuance, we have shifted the allocation of development
costs solely to the Tracker(TM) System product line. Because of this change in
methodology, total development costs appear to have increased by 3050% for the
three months ended December 31, 1998, to $130,956, compared to the comparable
1997 period, and by 8277% for the nine months ended December 31, 1998, to
$446,238, as compared to $5,391 one year ago.
LIQUIDITY AND CAPITAL RESOURCES
Our operations since inception have been funded by net proceeds from the sale of
Common and Preferred Stock, notes and debentures totaling approximately
$10,255,205, net of discontinued operations. During the nine months ended
December 31, 1998, our net cash used in operations was $502,682 as compared to
$23,508 for the comparable 1997 period. The substantial increase in cash used in
operations during the 1998 period reflects the reduction in cash flows
previously generated by discontinued operations without a commensurate increase
in cash flows from sales of The Tracker(TM) System. Cash used in operations was
devoted primarily to funding the development of identification and recovery
systems and software, labels, packaging, marketing and advertising.
At December 31, 1998, we had total current assets of $138,072 as compared to
$1,187,699 at March 31, 1998. Current assets consisted of accounts receivable in
the amount of $23,651 as compared to Nil at March 31, 1998, and current deferred
charges in the amount of $114,421 as compared to $1,187,699 at March 31, 1998.
The substantial decrease in current assets at December 31, 1998 as compared to
March 31, 1998 results from the disposition of assets in the intervening period
as a result of the bankruptcy of our wholly-owned subsidiary, Tracker Canada.
8
<PAGE> 11
At December 31, 1998, we had amount due from stockholders of $14,072, the same
as at March 31, 1998, and long-term deferred charges totaling $158,746 as
compared to $275,043 at March 31, 1998. The amount due from stockholders
primarily reflects expenses advanced to our Chief Executive Officer who, to
enable Tracker to conserve cash, has not drawn a salary since Fall 1997. The
reduction in long-term deferred charges reflects the reduced deferred
commission expense resulting from discontinued operations.
At December 31, 1998, we had liabilities of $2,058,763 as compared to $3,275,560
at March 31, 1998. We experienced an approximately $1.6 million reduction in
liabilities through the recognition of deferred revenue from discontinued
operations. Other liabilities increased approximately $400,000 in the
intervening period. Such liabilities consist of: accounts payable in the amount
of $749,503 at December 31, 1998 as compared to $440,835 at March 31, 1998;
accrued liabilities in the amount of $603,980 as compared to $528,399 at March
31, 1998; deferred revenues in the amount of $197,680 as compared to $1,798,727
at March 31, 1998; debentures in the amount of $31,809 as compared to the same
as at March 31, 1998; and convertible subordinated debentures in the amount of
$475,790 as compared to the same at March 31, 1998. We had long-term deferred
revenues in the amount of $264,660 at December 31, 1998 as compared to $412,846
at March 31, 1998.
As of December 31, 1998 and March 31, 1998, respectively, our accumulated
deficits totaled $17,019,319 and $17,001,283. To date, we have financed our
research and development activities and operations primarily through sales
generated by discontinued operations, private placements of debt and equity
securities, the sale of equity securities pursuant to Regulation S, and loans.
CAPITAL REQUIREMENTS
We are currently focusing on commercializing our personal property
identification and recovery system through various distribution channels. The
acquisition of equipment, establishment of distribution channels and the
execution of a comprehensive marketing campaign are crucial to our success. We
believe the system has a selling cycle of up to 24 months and, as a result,
additional capital will be required before our revenue stream grows to support
these activities. We cannot assure that the necessary equity or debt funding
to support this effort will be available when needed, in sufficient amounts,
on acceptable terms, or at all. If we do not receive sufficient funding on
acceptable terms, this could prevent or delay the marketing, sale and operation
of our services and will have a material adverse effect on our business,
operating results and financial condition.
Our current cash projections indicate that its short-term annual funding
requirements will be approximately $2 million for the next twelve months. We
anticipate that future cash sales and equity or debt financing will cover
long-term cash needs, but this might not occur. We are currently seeking
additional equity/debt financing to finance our immediate working capital needs
and supplement future cash flows. No assurance can be given that the necessary
funding will be available to us when needed, in sufficient amounts, on
acceptable terms, or at all. Any failure to receive sufficient funding when
needed, in sufficient amounts, and on acceptable terms would affect our ability
to continue as a going concern.
9
<PAGE> 12
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We, along with Symbol Technologies, Inc. ("Symbol"), are defendants in a
lawsuit filed by Datastrip (IOM) Limited ("Datastrip") in the United States
District Court for the District of Delaware. Datastrip alleges that Tracker is
infringing on Datastrip's U.S. Patent No. 4,782,221, relating to certain
data-encoding technology allegedly developed by Datastrip and that Symbol is
inducing infringement of the patent. The complaint seeks injunctive relief
against both Tracker and Symbol, and unspecified damages against Symbol. We
believe, based on advice of Symbol's counsel, that neither Tracker nor Symbol
are liable to Datastrip and that the claim is frivolous and without merit with
regard to both facts and law. Symbol is vigorously defending itself and us
against Datastrip's claim. Discovery has been completed, including dicovery of
expert witnesses. Based on the results of discovery, Symbol's counsel, on
February 18, 1999, filed four motions with the district court seeking summary
judgment. Symbol, however, has not agreed to indemnify us from any losses that
may result from this claim.
We are not a party to any other material litigation and are not aware of any
pending or threatened litigation that would have a material adverse effect upon
our business, operating results or financial condition.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
As of December 31, 1998, we are in default to our subordinated
convertible debenture holders in the principal amount of $475,790 plus accrued
interest.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Number Description
- ------ -----------
10
<PAGE> 13
2.1++++ Reorganization Agreement Among Ultra Capital Corp. (the
predecessor of the Registrant), Jeff W. Holmes, R. Kirk Blosch
and the Tracker Corporation dated May 26, 1994, as amended by
Amendment Number One dated June 16, 1994, Amendment Number Two
dated June 24, 1994, and Amendment Number Three dated June 30,
1994, Extension of Closing dated June 23, 1994, and July 11,
1994 letter agreement.
2.2++++ Agreement and Plan of Merger dated July 1, 1994 between Ultra
Capital Corp. (the predecessor of the Registrant) and the
Registrant.
3.1++++ Certificate of Incorporation, as corrected by Certificate of
Correction of Certificate of Incorporation dated March 27,
1995, and as amended by Certificate of Amendment to the
Certificate of Incorporation dated November 1, 1995, and
Certificate of Designation of Rights, Preferences and
Privileges of $1,000.00 6% Cumulative Convertible Preferred
Stock of the Registrant dated April 19, 1996.
3.2++++ Bylaws
4.1++++ Specimen Common Stock Certificate
9.1++++ Agreement dated December 21, 1993 among 1046523 Ontario
Limited, Gregg C. Johnson and Bruce Lewis
9.2++++ Right of First Refusal, Co-Sale and Voting Agreement dated
March 14, 1994 between The Tracker Corporation, Stalia
Holdings B.V., I. Bruce Lewis, MJG Management Accounting
Services Ltd., Spire Consulting Group, Inc., 1046523 Ontario
Limited, Mark J. Gertzbein, Gregg C. Johnson and Jonathan B.
Lewis, as confirmed by letter dated June 22, 1994 and
Agreement dated July 1994
10.1++++ 1994 Stock Incentive Plan of the Registrant, as amended by
Amendment No. 1 to the 1994 Stock Incentive Plan
10.2++++ Discretionary Cash Bonus Arrangement of the Registrant
10.3++++ Form of Indemnification Agreement entered into between the
Registrant each of its Directors
10.4++++ Employment Agreement dated June 30, 1994 between the
Registrant and I. Bruce Lewis, as amended by Amendment to
Employment Agreement dated July 12, 1995
10.5++++ Employment Agreement dated June 30, 1994 between the
Registrant and Mark J. Gertzbein, as amended by Amendment to
Employment Agreement dated July 12, 1995
15
<PAGE> 14
10.6++ Marketing Agreement between the Registrant and The L.L.
Knickerbocker Company, Inc. dated March 15, 1995
10.7++++ Lease dated October 18, 1993 between The Dundas/Edward Centre
Inc. and The Tracker Corporation
10.8++++ Corporate Relations Agreement dated February 24, 1994 between
Corporate Relations Group, Inc. and The Tracker Corporation,
as amended by letter agreement dated January 16, 1995 and by
Amendment to Corporate Relations and Marketing Agreement dated
June 22, 1995
10.9++++ Consulting arrangement with Gregg C. Johnson effective August
12, 1995
10.10++++ Right of First Refusal, Co-Sale and Voting Agreement dated
March 14, 1994 between The Tracker Corporation, Stalia
Holdings B.V., I. Bruce Lewis, MJG Management Accounting
Services Ltd., Spire Consulting Group, Inc., 1046523 Ontario
Limited, Mark J. Gertzbein, Gregg C. Johnson and Jonathan B.
Lewis, as confirmed by letter dated June 22, 1994 and
Agreement dated July 1994 (contained in Exhibit 9.2)
10.11++++ Stock Option Agreement dated March 14, 1994 between The
Tracker Corporation and Stalia Holdings B.V., as confirmed by
letter dated June 22, 1994
10.12++++ Letter from DHL International Express Ltd to The Tracker
Corporation dated March 8, 1994
10.13++++ Agreement dated September 1994 between The Tracker Corporation
and Purolator Courier Ltd.
10.14++++ National Account Agreement dated September 15, 1994 between
Mail Boxes Etc. USA, Inc. and the Registrant, as amended by
Amendment to National Account Agreement dated September 14,
1994
10.15++++ Letter agreement dated March 15, 1995 between The Tracker
Corporation and Black Photo Corporation, as amended by
facsimile amendment dated March 4, 1995
10.16++++ Letter agreement dated September 14, 1995 between The Tracker
Corporation and Amerasia International Holdings Limited
10.17++++ Letter Agreement dated August 31, 1995 between The Tracker
Corporation and Tokai Boeki Co. Ltd.
10.18++++ Letter agreement dated October 5, 1993 between The Tracker
Corporation and Symbol Technologies, Inc., as amended by
letter from The Tracker Corporation to Symbol Technologies
Canada, Inc. dated November 23, 1995, and letter from
16
<PAGE> 15
Symbol Technologies Canada, Inc. to The Tracker Corporation
dated November 27, 1995
10.19++++ Assignment World-Wide dated May 12, 1994 from I. Bruce Lewis
to the Tracker Corporation
10.20++++ Exchange Agency and Trust Agreement dated July 12, 1994 among
Ultra Capital Corp. (the predecessor of the Registrant), The
Tracker Corporation and Montreal Trust Company of Canada
10.21++++ Guarantee Agreement dated July 12, 1994 between Ultra Capital
Corp. (the predecessor of the Registrant) and The Tracker
Corporation
10.22++++ 1995 Stock Wage and Fee Payment Agreement
10.23++++ Agreement dated August 10, 1995 between The L.L. Knickerbocker
Company, Inc. and the Registrant
10.24+++ Share Purchase Agreement dated July 29, 1994 among The Tracker
Corporation, Page-Direct Ltd., Marc Bombenon, Marc Bombenon
Enterprises Ltd. and 614593 Alberta Ltd.
10.25++++ General Release dated June 15, 1995 among The Tracker
Corporation, 614593 Alberta Ltd., 1069232 Ontario Inc.,
Gowling, Strathy & Henderson, Page-Direct Ltd., Marc Bombenon
Enterprises Ltd.
and Mark Bombenon.
10.26+++++ Agreement Between The International Association of Chiefs of
Police and The Tracker Corporation dated February 13, 1996
10.27+++++ Letter agreement dated January 26, 1996 between The Tracker
Corporation and Consumers Distributing Inc.
10.28+++++ The Tracker Corp./Tracker Referral Network, Int'l Marketing
Agreement dated April 8, 1996 between The Tracker Corporation
and Tracker Referral Network, Int'l
10.29+++++ Letter agreement dated March 7, 1996 between The Tracker
Corporation and Samsonite Canada Inc.
10.30+++++ Letter agreement dated March 22, 1996 between The Tracker
Corporation and Sony of Canada Ltd.
10.31+++++ Lead Generation/Corporate Relations Agreement dated November
20, 1995 between The Tracker Corporation and Corporate
Relations Group, Inc., as amended by Amendment to the
Marketing Agreement between the Registrant and Corporate
Relations Group, Inc. dated December 5, 1995
17
<PAGE> 16
10.32+++++ Independent Contractor Agreement between The Tracker
Corporation and Datatrack Inc. dated January 12, 1996
10.33+++++ Services Agreement and Registration Rights Agreement and
Options Agreement dated July 10, 1996 between the Registrant
and Merchant Partners, L.P.
10.34++++++ Exclusive Agent License Agreement dated April 4, 1997 between
The Tracker Corporation of America and Executive Trading Ltd.
10.35++++++ Agreement dated May 15, 1997 between The Tracker Corporation
and Liberty Health.
10.36++++++ Agreement dated May 22, 1997 between The Tracker Corporation
of America and Schwinn Cycling & Fitness Inc.
10.37++++++ Modification Agreement dated May 27, 1997 between The Tracker
Corporation of America, Saturn Investments, Inc., The Tracker
Corporation, I. Bruce Lewis, Mark J. Gertzbein, and Jonathan
B. Lewis.
10.38+++++++ Agreement dated July 1, 1998 between The Global Tracker
Corporation and Warrantech Additive, Inc.
10.39+++++++ License Agreement dated as of July 30, 1998 between The Global
Tracker Corporation and The Tracker Corporation of America,
Inc.
10.40+++++++ Employment Agreement dated September 24, 1996 between I. Bruce
Lewis and The Tracker Corporation of America, Inc.
21.1++++ List of subsidiaries of the Registrant
23+++++++ Consent of Independent Accountants
27.1+++++++ Financial Data Schedule, Fiscal Year Ended March 31, 1998
27.2+++++++ Financial Data Schedule, Fiscal Year Ended March 31, 1997 -
Restated
27.3++++++++ Financial Data Schedule, Fiscal Quarter Ended September 30,
1998
27.4+++++++++ Financial Data Schedule, Fiscal Quarter Ended June 30, 1998
99.1++++++++ Cautionary Statement
+ Incorporated by reference from the Registrant's Current Report on Form
8-K dated July 12, 1994.
++ Incorporated by reference from the Registrant's Current Report on Form
8-KA dated February 28, 1995 (filed March 15, 1995).
18
<PAGE> 17
+++ Incorporated by reference from the Registrant's Current Report on Form
8-K dated July 29, 1994 (filed August 12, 1994).
++++ Incorporated by reference from the Registrant's Registration Statement
on Form S-1 (No. 33-99686).
+++++ Incorporated by reference from the Registrant's Current Report on Form
10-K dated March 31, 1996 (filed July 15, 1996)
++++++ Incorporated by reference from the Registrant's Current Report on Form
10-K dated March 31, 1997 (filed July 3, 1997)
+++++++ Incorporated by reference from the Registrant's Annual Report on Form
10-K dated March 31, 1998 (filed November 4, 1998)
++++++++ Incorporated by reference from the Registrant's Quarterly Report on
Form 10-Q dated November 23, 1998.
+++++++++Incorporated by reference from the Registrant's Quarterly Report on
Form 10-Q dated November 23, 1998.
(b) REPORTS ON FORM 8-K
No reports were filed on on Form 8-K during the three months ended
December 31, 1998.
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 hereunto duly authorized.
Date: February 18, 1999 THE TRACKER CORPORATION
OF AMERICA, a Delaware
corporation
By: /s/ Bruce I. Lewis
Bruce I. Lewis
Chairman of the Board,
Chief Executive Officer
(Principal Executive Officer)
19
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