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 November 30, 1998
[ ] 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 November 30, 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-3)
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' deficit 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 six months ended November 30, 1998 are not necessarily
indicative of the results that can be expected for the year ending May 31, 1999.
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. The International Preliminary Examination Report was issued in
accordance with the Patent Cooperation Treaty application (PCT) that included 82
countries. The Examiner has recognized and acknowledged the inventive step, the
novelty and the industrial applicability by accepting all of the 11 claims
represented by the technology.
<PAGE>
In April 1998, 3127575 Canada Inc. signed an agreement with the "Centre
de Recherche en Informatique de Montreal (CRIM)" for a scientific evaluation of
the technology. The evaluation holds two topics. The primary one covers
theoretical and accurate applications. The secondary covers the implementation
of a study in a controlled laboratory environment. Here are the following
details of the laboratory :
- - The basic analysis of the technology ( technical specifications).
- - Practical applications in simulated commercial environment such as
banking, telephony, e-commerce etc.
The primary topic analysis has been done by the CRIM in collaboration
with a major American University. The positive results have been published and
shall be available soon on the delSecur web site at delsecur.com.
The secondary topic is presently in the making and will be done in
collaboration with majors firms who are well recognized in their fields of
activity. These majors firms will sponsor part of the implementation costs of
the laboratory studies. For the time frame and more details about this section,
we refer the reader to the delSecur web site.
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
informations, health cards, social insurance cards, drivers' licenses, passport
control encryptions 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. Therefore it is to our advantage to associate ourselves to
such major firms by gaining credibility and recognition. This enables us to use
their know how, their resources and networking.
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. We anticipate the first commercial revenue in
twelve months from the present.
As of November 30, 1998, the Company's balance sheet showed an
accumulated deficit of $2,551,260, an increase of $664,416 during the six
months. Operations to date have been financed principally by loans from senior
management and others. Additional unsecured loan facilities continue to be
available and are believed by management to be
<PAGE>
sufficient to finance operations over the next several months, pending the
anticipated initial receipt of contract revenues during the second half of the
1999 fiscal year. No financing involving the issuance of additional shares is
presently contemplated.
The Company had a net loss of $382,365 for the three months ended
November 30, 1998 and a $664,416 loss for the six months then ended.
The Company will continue to seek marketing opportunities for product
licensing with governmental agencies and corporate entities on a 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.
PART II
OTHER INFORMATION
ITEM 6. Exhibits and Report on Form 8-K
An 8-K was filed on September 9, 1998 which disclosed that the Company
appointed new auditors.
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: 13 January 1999 By:
Pierre de Lanauze, President,
Chairman of the Board and Director
<PAGE>
GRANDEUR INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
(expressed in Canadian dollars)
(Unaudited)
<TABLE>
<CAPTION>
November 30,
1998
----------------------
ASSETS
CURRENT ASSETS
<S> <C>
Cash $ 0
Sales taxes receivable 125,797
Prepaid expenses 25,656
Receivable-related party (non-interest bearing) 131,862
Receivable - officer (non-interest bearing) 380,850
----------------------
TOTAL CURRENT ASSETS 664,165
OTHER ASSETS
Property and equipment 201,280
License from related party 1
----------------------
201,281
----------------------
$ 865,446
======================
LIABILITIES & DEFICIT
CURRENT LIABILITIES
Bank overdraft $ 18,202
Accounts payable 360,537
Accrued liabilities 83,267
Payable-related party (non-interest bearing) 208,425
Payable - officer 1,413,300
Loan payable 268,623
----------------------
TOTAL CURRENT LIABILITIES 2,352,354
STOCKHOLDERS' DEFICIT
Common Stock $.001 par value:
Authorized - 100,000,000 shares
Issued and outstanding 13,848,300
shares 19,715
Additional paid-in capital 1,044,637
Deficit accumulated during the
development stage (2,551,260)
----------------------
TOTAL STOCKHOLDERS' DEFICIT (1,486,908)
----------------------
$ 865,446
======================
</TABLE>
F - 1
<PAGE>
GRANDEUR INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(expressed in Canadian dollars)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
November 30, November 30,
1998 1997 1998 1997
------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
Net sales $ 0 $ 0 $ 0 $ 0
Cost of sales 0 0 0 0
------------- ------------- ------------- --------------
GROSS PROFIT 0 0 0 0
Depreciation and amortization 13,861 0 27,565 0
Interest expense 5,000 0 8,000 0
Research and development 182,735 0 228,297 0
General and administrative expenses 180,769 0 400,554 0
------------- ------------- ------------- --------------
382,365 0 664,416 0
------------- ------------- ------------- --------------
NET LOSS $ (382,365) $ 0 $ (664,416) $ 0
============= ============= ============= ==============
Net income (loss) per weighted
average share $ (.03) $ .00 $ (.05)
============= ============= =============
Weighted average number of common
shares used to compute net income
(loss) per weighted average share 13,848,300 1,000,000 13,848,300 1,000,000
============= ============= ============= ==============
</TABLE>
F - 2
<PAGE>
GRANDEUR INC. AND SUBSIDIARY
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(expressed in Canadian dollars)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended November 30,
1998 1997
--------------- ---------------
OPERATING ACTIVITIES
<S> <C> <C>
Net (loss) $ (664,416) $ 0
Adjustments to reconcile net (loss) to cash used
by operating activities:
Depreciation 27,565 0
Changes in assets and liabilities:
Sales tax receivable 6,856 0
Prepaid expenses (18,836) 0
Officer loan 6,257 0
Accounts payable 265,919 0
Accrued liabilities (14,933) 0
Payable - related party 62,218 0
--------------- ---------------
NET CASH USED
BY OPERATING ACTIVITIES (329,370) 0
INVESTING ACTIVITIES
Receivable - related party 5,787 0
Purchase of property & equipment (50,351) 0
--------------- ---------------
NET CASH USED
BY INVESTING ACTIVITIES (44,564) 0
FINANCING ACTIVITIES
Loan 143,500 0
Loan repayment (140,000) 0
Increase in bank overdraft 18,202 0
Increase in paid-in capital 349,035 0
--------------- ---------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 370,737 0
--------------- ---------------
DECREASE IN CASH
AND CASH EQUIVALENTS (3,197) 0
Cash and cash equivalents at beginning of year 3,197 0
--------------- ---------------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 0 $ 0
=============== ===============
Cash paid for interest $ 6,500 $ 0
=============== ===============
</TABLE>
F - 3
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Grandeur Inc. November 30, 1998 consolidated financial statements and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000894498
<NAME> Grandeur Inc.
<CURRENCY> Canadian dollars
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1999
<PERIOD-END> NOV-30-1998
<EXCHANGE-RATE> .65210
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 638,509
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 664,165
<PP&E> 318,791
<DEPRECIATION> (117,511)
<TOTAL-ASSETS> 865,446
<CURRENT-LIABILITIES> 2,352,354
<BONDS> 0
0
0
<COMMON> 19,715
<OTHER-SE> (1,506,623)
<TOTAL-LIABILITY-AND-EQUITY> 865,446
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 664,416
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,000
<INCOME-PRETAX> (664,416)
<INCOME-TAX> 0
<INCOME-CONTINUING> (664,416)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (664,416)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> (.05)
</TABLE>
