SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the quarterly period ended March 31, 1998
o Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from _________ to ___________
Commission file number 33-55254-15
GRANDEUR, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
NEVADA 87-0438451
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
1801 McGill College, Suite 1330,
Montreal, Quebec Canada H3A 2N4
(Address of Principal Executive Offices) (Zip Code)
(Issuer's Telephone Number, Including Area Code) (514) 282-9000
Indicate by a check mark whether the issuer (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 issuer was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. [X] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares of each of the issuer's classes of common
equity, as of the latest practicable date:
Class Outstanding as of March 31, 1998
$.001 PAR VALUE CLASS A 13,848,300 SHARES
COMMON STOCK
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. Financial Statements.
The accompanying unaudited financial statements (pages F-1 through F-4)have been
prepared in accordance with the instructions to Form 10-QSB and, therefore, do
not include all information and footnotes necessary for a complete presentation
of financial position, results of operations cash flows and stockholders' equity
in conformity with generally accepted accounting principles. In the opinion of
management, all adjustments considered necessary for a fair presentation of the
results of operation and financial position have been included and all such
adjustments are of a normal recurring nature. Operating results for the quarter
ended March 31, 1998 are not necessarily indicative of the results that can be
expected for the year ending December 31, 1998.
ITEM 2. Management's Plan of Operation.
Pursuant to an Agreement made and entered into on February 25th 1998 Grandeur
Inc. (the "Company") issued and delivered on February 26, 1998, 12,848,300
shares of its Common Stock bearing a restrictive legend to 3127575 Canada Inc.,
a Canadian Corporation, in exchange for which issuance, it acquired all of the
outstanding shares of 3127575 Canada Inc. Through 3127575 Canada Inc., the
Company has become the exclusive licensee of the del-ID technology for personal
identification by means of electronic scanning of finger characteristics.
3127575 Canada Inc., obtained these exclusive rights by the Exclusive License
Agreement dated November 12, 1997 between it and Pierre de Lanauze, inventor of
the del-ID technology.
The transaction was exempt from the registration requirements of the Securities
Act of 1933 by virtue of Section 4(2) thereof. Also, because the 12,848,300
shares were issued solely to non- U.S. persons, the transaction qualified for
exemption under Rules 901 et seq. of Regulation S.
Following the above transaction the former shareholders of 3127575 Canada Inc.
owned 92.78% of the outstanding shares of the Company.
The del-ID technology permits precise and positive authentication of the
identity of any living individual and is applicable to a wide range of financial
transactions where authentication of the individual is necessary to eliminate
fraud and other improper use of services. The del-ID system collects biological
data from the finger image of the individual and transfers the image to a unique
electronic signature called the "del-gram". The del-gram is not a digitized
bitmap image of the finger, but a synthesized subset of biological data
sufficient to identify the individual.
Patent protection is currently pending for the del-ID system in the United
States and in other major countries.
2
<PAGE>
Commercial applications of the del-ID technology are numerous and include access
to the information highway/internet, identification of employees working from a
home office and requiring access to certain databases or information, health
cards, social insurance cards, drivers' licenses, passport control encryption
and access to confidential files, control of payment by debit or credit payment
systems such as credit cards, smartcards, authentication of oral telephone
ordering, access control to sensitive areas, hotel room access, cellular and
digital telephone controls, automobile entry and protection, census and election
control, door locks, vault locks, residential alarm system controls, timesheet
management, student file management and many others.
The Company expects to encounter substantial competition in the business in
which it proposes to engage. It is likely that the competing entities will have
significantly greater experience, resources, facilities, contacts and managerial
expertise than the Company and will, consequently, be in a better position than
the Company to obtain access to and to engage in the proposed business. The
Company may not be in a position to compete with larger and more experienced
entities. Business opportunities in which the Company may ultimately participate
are likely to be very risky and extremely speculative.
The Company will not manufacture del-ID cards or card readers directly. This
will tend to minimize the capital requirements of the company, its principal
activities being limited to marketing the del-ID system to manufacturers and/or
users internationally. Anticipated sources of revenue are license fees payable
by government agencies and corporate entities for the right to manufacture, use
or sell cards and card readers incorporating the del-ID system, as well as
royalty payments by such entities for each card and reader employed in a del-ID
system.
As of March 31, 1998, the Company's balance sheet showed an accumulated deficit
of $1,072,956, an increase of $138,795 during the first quarter. Operations to
date have been financed principally by loans from senior management and others.
Additional unsecured loan facilities continued to be available and are believed
by management to be sufficient to finance operations over the next several
months, pending the anticipated initial receipt of contract revenues during the
second half of the 1998 fiscal year. No financing involving the issuance of
additional shares is presently contemplated.
The Company had a net loss of $138,795 for the three months ended March 31,
1998.
The Company will continue to seek marketing opportunities for product licensing
with governmental agencies and corporate entities on world-wide basis.
As the Company will be engaged in securing licensing contracts for use of its
existing del-ID technology, no significant expansion of the physical plant,
equipment or number of employees is foreseen for the period of the next twelve
months.
3
<PAGE>
ITEM 6. Exhibits and Report on Form 8-K
The Acquisition Agreement dated February 25, 1998 and the Exclusive License
Agreement dated November 12, 1997 were included as exhibits to a report on Form
8-K filed by the Company on March 10, 1998 which documents and Form 8-K are
incorporated herein by reference.
Items addressed in the report on Form 8-K were:
Item 1: Change in Control of Registrant
Item 2: Acquisition or Disposition of Assets
Item 6: Resignation of Directors
Item 7: Financial Statements and Exhibits
Item 9: Sale of Equity Securities Pursuant to Regulation S.
4
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized
Grandeur, Inc.
Date: May 20, 1998 By: /s/ Pierre de Lanauze
----------------------
Pierre de Lanauze, President,
Chairman of the Board and Director
5
<PAGE>
SMITH & COMPANY
A PROFESSIONAL CORPORATION OF
CERTIFIED PUBLIC ACCOUNTANTS
MEMBERS OF: 10 WEST 100 SOUTH, SUITE 700
AMERICAN INSTITUTE OF SALT LAKE CITY, UTAH 84101
CERTIFIED PUBLIC ACCOUNTANTS TELEPHONE: (801) 575-8297
UTAH ASSOCIATION OF FACSIMILE: (801) 575-8306
CERTIFIED PUBLIC ACCOUNTANTS E-MAIL: [email protected]
- --------------------------------------------------------------------------------
INDEPENDENT AUDITOR'S REPORT
The Board of Directors and Shareholders
Grandeur, Inc.
The accompanying consolidated balance sheet of Grandeur, Inc. and subsidiary as
of March 31, 1998, and the related statements of operations, and cash flows for
the three months ended March 31, 1998 and 1997 were not audited by us and,
accordingly, we do not express an opinion on them.
/s/ Smith & Company
CERTIFIED PUBLIC ACCOUNTANTS
Salt Lake City, Utah
May 21, 1998
F - 1
<PAGE>
GRANDEUR INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
March 31,
1998
----------------------
ASSETS
CURRENT ASSETS
<S> <C>
Accounts receivable $ 87,068
Prepaid expenses 13,400
Receivable-related party 98,854
----------------------
TOTAL CURRENT ASSETS 199,322
OTHER ASSETS
Property and equipment 132,917
License from related party 1,000,000
----------------------
1,132,917
----------------------
$ 1,332,239
======================
LIABILITIES & DEFICIT
CURRENT LIABILITIES
Cash overdraft $ 2,292
Accounts payable and accrued liabilities 88,838
Loans* 1,401,065
Payable-related parties 912,568
----------------------
TOTAL CURRENT LIABILITIES 2,404,763
STOCKHOLDERS' DEFICIT
Common Stock $.001 par value:
Authorized - 100,000,000 shares
Issued and outstanding
13,848,300 shares 13,848
Additional paid-in capital (11,776)
Deficit accumulated during the
development stage (1,074,596)
----------------------
TOTAL STOCKHOLDERS' DEFICIT (1,072,524)
----------------------
$ 1,332,239
======================
</TABLE>
* May be converted to equity.
F - 2
<PAGE>
GRANDEUR INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1997
------------------ ------------------
<S> <C> <C>
Net sales $ 0 $ 0
Cost of sales 0 0
------------------ ------------------
GROSS PROFIT 0 0
Depreciation and amortization 13,078 0
Interest expense 2,098 0
Research and development 11,187 0
General and administrative expenses 112,432 0
------------------ ------------------
NET LOSS $ (138,795) $ 0
================== ==================
Net income (loss) per weighted
average share $ (.03) $ .00
================== ==================
Weighted average number of common
shares used to compute net income
(loss) per weighted average share 5,282,767 1,000,000
================== ==================
Cash paid for interest $ 2,098 $ 0
================== ==================
</TABLE>
F - 3
<PAGE>
GRANDEUR INC. AND SUBSIDIARY
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1998 1997
--------------- ---------------
OPERATING ACTIVITIES
<S> <C> <C>
Net (loss) $ (138,795) $ 0
Adjustments to reconcile net (loss) to cash used
by operating activities:
Depreciation 13,078 0
Changes in assets and liabilities (234,273) 0
--------------- ---------------
NET CASH USED
BY OPERATING ACTIVITIES (359,990) 0
INVESTING ACTIVITIES
Organization costs 0 0
--------------- ---------------
NET CASH PROVIDED (USED)
BY INVESTING ACTIVITIES 0 0
FINANCING ACTIVITIES
Loan proceeds 365,947 0
Loan repayments (7,043) 0
Overdraft of subsidiary (1,206) 0
--------------- ---------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 357,698 0
--------------- ---------------
DECREASE IN CASH
AND CASH EQUIVALENTS (2,292) 0
Cash and cash equivalents at beginning of year 0 0
--------------- ---------------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ (2,292) $ 0
=============== ===============
</TABLE>
F - 4
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from Grandeur Inc. March 31, 1998 financial statements and is
qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0000894498
<NAME> Grandeur Inc.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 185,922
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 199,322
<PP&E> 190,038
<DEPRECIATION> (57,121)
<TOTAL-ASSETS> 1,332,239
<CURRENT-LIABILITIES> 2,404,763
<BONDS> 0
0
0
<COMMON> 13,848
<OTHER-SE> (1,086,372)
<TOTAL-LIABILITY-AND-EQUITY> 1,332,239
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 136,697
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,098
<INCOME-PRETAX> (138,795)
<INCOME-TAX> 0
<INCOME-CONTINUING> (138,795)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (138,795)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
