6-K 1 dk6k-0631.txt FOR THREE MONTHS ENDED JUNE 30, 2001 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 6-K REPORT OF FOREIGN ISSUER Pursuant to Rule 13a-16 or 15-d 16 of The Securities Exchange Act of 1934 FOR THE PERIOD ENDED: June 30, 2001 COMMISSION FILE NUMBER: 0-30314 DEALCHECK.COM INC. ------------------------------------------------------------------------------- (Exact name of Registrant as specified in its charter) ONTARIO, CANADA ------------------------------------------------------------------------------- (Jurisdiction of Incorporation) 65 Queen Street West, Suite 1905, Ontario, Canada M5H 2M5 ------------------------------------------------------------------------------- (Address of principal executive Offices) (416) 860 0211 ------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant files or will file annual report Under cover Form 20F or 40F: Form 20F [X] Form 40F [ ] Indicate by check mark whether the registrant by furnishing the information Contained in the Form is also thereby furnishing the information to Commission to Rule 12g3-2(h) under the Securities Act of 1934: Yes [ ] No [X] The number of shares outstanding of the Registrant's common stock as of June 30, 2001 is 4,619,916 1 DEALCHECK.COM INC. Dealcheck.com Inc. has elected to provide quarterly financial and other Information generally comparable to that required to be provided by United States Issuers on Form 10-Q. This report relates to the period of three months ended June 30, 2001. TABLE OF CONTENTS Page No. -------- PART 1 - FINANCIAL INFORMATION ------------------------------ Item 1. Financial Statements 3-7 Consolidated Balance Sheets - June 30, 2001 and 3 2000 (unaudited) and March 31, 2001 (audited) Consolidated Statements of operations and Deficit 4 (unaudited) for the three months ended June 30, 2001 and 2000 Consolidated Statements of Changes in Financial 5 Position (unaudited) for the three months ended June 30, 2001 and 2000 Notes to Financial Statements 6-7 Item 2 Management discussion and Analysis of Financial 7-12 Condition and Results of Operations PART 11- OTHER INFORMATION -------------------------- Item 1 Legal Proceedings 12 Item 2 Changes in Securities 12 Item 3 Default Upon Senior Securities 12 Item 4 Submission of matters to a vote of Security 12 Item 5 Other Information 12 Signature 2
Dealcheck.com Inc. Consolidated Balance Sheet (Canadian Dollars) June 30, 2001 and 2000 ------------------------------------------------------------------------------------------------- June 30 March 31 June 30 June 30 March 31 June 30 2001 2001 2000 (Unaudited) (audited) (Unaudited) ------------------------------------------------------------------------------------------------- Assets ------ Current Cash $ 15,727 $ 40,737 $ 335,239 Short-term Investments 38,068 38,068 618,876 Advances to directors, non-interest bearing 65,337 73,311 89993 Amounts receivable and prepaid expenses 453,809 523,303 491,380 ------------------------------------------------------------------------------------------------- 572,941 675,419 1,535,488 Long-term investments 58,290 58,290 803,761 Product development costs 141,849 134,521 13,000 Capital assets 34,252 40,414 58,595 ------------------------------------------------------------------------------------------------- $ 807,332 $ 908,644 $ 2,410,844 ------------------------------------------------------------------------------------------------- Liabilities ------------- Current Accounts payable and accrued liabilities $ 38,057 $ 64,803 $ 47,862 Other Advances, non-interest- Bearing 83,480 84,320 222,739 ---------------------------------------------------------------------------------------------- 121,537 149,123 270,601 ---------------------------------------------------------------------------------------------- Shareholders' Equity -------------------- Capital stock 19,814,829 19,814,829 19,660,724 Deficit (19,129,034) (19,055,308) (17,520,481) ---------------------------------------------------------------------------------------------- 685,795 759,521 2,140,243 ---------------------------------------------------------------------------------------------- $ 807,332 $ 908,644 $ 2,410,844 ==============================================================================================
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Dealcheck.com Inc. Consolidated Statements of Operations and Deficit (Canadian Dollars) For the Three months ended June 30, 2001 and 2000 (Unaudited) ============================================================================================== 2000 2001 ---------------------------------------------------------------------------------------------- Income ------ Operational Services $ 30,000 - Interest 13 3,220 Net exchange gain 3,139 32,441 Net gain on investments - 11,631 ---------------------------------------------------------------------------------------------- 33,152 47,292 ---------------------------------------------------------------------------------------------- Expenses -------- Travel, promotion and consulting 49,171 162,486 Professional fees 19,559 18,000 Projects development costs 300 12,000 Bank charges and interest 470 462 Rent 10,954 7,578 Telephone, Internet and courier 3,966 3,210 Transfer agents fees 2,446 1,017 Shareholders information 449 12,038 Amortization 9,187 6,060 Office and general 10,376 6,818 ---------------------------------------------------------------------------------------------- 106,878 229,669 ---------------------------------------------------------------------------------------------- Net loss for period (73,726) (182,377) Deficit at beginning of period (19,055,308) (17,338,104) ---------------------------------------------------------------------------------------------- Deficit at end of period $ (19,129,034) $ (17,520,481) ---------------------------------------------------------------------------------------------- Net loss per share $ (0.02) $ (0.04) ==============================================================================================
Approved on behalf of the Board Terence Robinson Director -------------------- Kam Shah Director -------------------- 4
Dealcheck.com Inc. Consolidated Statements of Cash Flows (Canadian Dollars) For the Three months Ended June, 2001 and 2000 (Unaudited) ---------------------------------------------------------------------------------------------- 2000 2001 ---------------------------------------------------------------------------------------------- Operating Activities -------------------- Net loss $ (73,726) $ (182,377) Amortization 9,187 6,060 Write-off of investment - Net gain on investments - (11,631) Amounts receivable and prepaid expenses 69,494 (400,356) Accounts Payable and Accrued Liabilities (26,746) (7,313) ------------------------------------------------------------------------------------------- (21,791) (580,991) ------------------------------------------------------------------------------------------- Investing Activities -------------------- Purchase of Capital Assets (353) (17,850) Refund of Subscription Advance - 489,173 Investments 68,956 Product Development Costs (10,000) (3,000) ------------------------------------------------------------------------------------------- (10,353) 537,279 ------------------------------------------------------------------------------------------- Financing activities -------------------- Net Advances (850) 52,976 Net Advances to Directors 7,974 (89,993) ------------------------------------------------------------------------------------------- 7,134 (47,017) ------------------------------------------------------------------------------------------- Increase (decrease) in cash during period (25,010) (90,729) Cash at beginning of period 40,737 425,968 ------------------------------------------------------------------------------------------- Cash at end of period $ 15,727 $ 335,239 ===========================================================================================
5 Dealcheck.com Inc. Notes to Consolidated Financial Statements For the Three Months Ended June 30, 2001 and 2000 ------------------------------------------------------------------------------- 1. BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in Canada for interim information and with the instructions to Form 10Q and Rule 10-1 of the United States Securities Act of 1933 or Regulation S-X. Accordingly, they do not include all the information and Footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all material adjustments consisting of normal recurring accruals and certain adjustments to reserves and allowances considered necessary for a fair presentation have been included. Operating results for the three months ended June 30, 2001 are not necessarily Indicative of the results that may be expected for the year ending March 31, 2002. 2. CANADIAN AND UNITED STATES ACCOUNTING PRINCIPLES The costs of developing the commercial web sites and technical projects re allowed to be deferred under the Canadian Generally Accepted Accounting Principles. However, the commercial web sites and technical Projects are allowed to be deferred under the Canadian Generally Accepted Accounting Principles. However, these costs should be expensed under US GAAP. Accordingly, under the US GAAP, net loss for period would be $215,575 (2000 - $ 195,377). Total assets would be $697,583 (2000 - $2,397,844) and deficit would be $19,270,883 (2000 - $17,533,481). Investments ----------- Investments in marketable equity securities that are classified as short -term investments under Canadian GAAP, are grouped into trading and available-for-sale -for-sale categories and accounted for at fair value under the US GAAP. Unrealised holding gains or losses on trading securities are included in the income. Unrealised holding gains and losses on available-for-sale securities are included in shareholders' equity. Investments in equity securities that are classified as long term investments under the Canadian GAAP, are accounted for at fair value under the US GAAP. Unrealised holding gains and losses are included in shareholders' equity. No significant adjustment would be required in the net loss for year, total assets and deficit under the US GAAP. Stock-Based Compensation ------------------------ The Company accounts for common stock purchase options and warrants granted to non-employees pursuant to Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (FAS No.123) and Emerging Issues Task Force ("EITF") No. 96-18, "Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services." These standards require that the fair value of equity instruments, including options and warrants, be recognized in the financial statements. FAS No. 123 permits a company to account for employee stock options under the method specified by the previous standard, Accounting Principles Board Opinion No. 25 ("APB No.25"), "Accounting for Stock Issued to Employees." Under APB No.25, if the exercise price of fixed employee stock options equals or exceeds the market 6 Dealcheck.com Inc. Note to Consolidated Financial Statements - Continued For the Three months ended June 30, 2000 and 1999 (Unaudited) price of the underlying stock on the date of grant, no compensation expense is ecorded. For such options, FAS No.123 requires disclosure of, among other things, the fair value of options granted, the assumptions used in determining the fair value and the pro-forma effect on earnings as if measurement provisions of FAS No. 123 had been applied. The Company will apply the measurement principles of APB No.25, supplemented by the required FAS No.123 disclosures, for any stock options it grants to employees in the future. Recent Accounting Developments --------------------_--------- In June 1998, SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" was issued and, as amended by SFAS No. 137, was adopted by the Company on July 1, 2000. This statement requires that an entity recognize all derivatives as either assets or liabilities and measure those instruments at fair value. The accounting for changes in fair value of a derivative instrument depends on its intended use and the resulting designation. The adoption of this statement does not impact the Company's historical financial statements, as the Company currently does not use derivative instruments. 1. RELATED PARTY TRANSACTIONS Transactions with related parties are incurred in the normal course of business and are measured at the exchange amount. Related party transactions and balances have been listed below, unless they have been disclosed elsewhere in the financial statements. - consulting service fee income of $30,000 (2000 - nil) were earned from a corporation which has common management. - Included in Travel, promotion and consulting expense is $30,000 (2000 - $44,406) to a corporation which has common management. - Rent and telephone expense are net of recoveries of $28,140 (2000 - $21,414) from corporations which share common management and directors. - Included in professional and consulting fees are $27,600 (2000 - $63,000) paid to directors of the Company. - Business expenses of $13,420 (2000 - $30,016) were reimbursed to directors of the corporation. - Consulting fees include amounts to a shareholder corporation of $ nil (2000 - $44,406). Expenses relating to the shared premises and consultants were recharged to the affiliated entities at cost. Balances as at year end are included in "Amounts Receivable and prepaid expenses" 1. COMPARATIVE FIGURES Certain of the comparative figures have been reclassified to comply with the current period's presentation. 7 ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following discussion and analysis should be read in conjunction with the consolidated (unaudited) financial statements of the Company, which have been prepared in accordance with generally accepted accounting principles ("GAAP") in Canada. A summary of material adjustments to conform to U.S. GAAP is set out in Note 2 to the consolidated (unaudited) financial statements. Results of Operations ---------------------
Three Months Ended June 30 2001 2000 ------'000 Canadian Dollars------ Income 33 47 Expenses 107 230 --------------------------------- Net Loss for Period 74 183 Deficit at End of Period 19,129 17,520
Income consisted of operational services charge of $30,000 and exchange gain of $3,139 . Operational services were provided to an affiliate on an arms length basis Under a consulting contract. There was no such income in the prior period. The main income in the prior period was an exchange gain of $32,441 arising from significant fluctuations in US dollar versus Canadian dollar rates and relatively heavy volume of transactions in these currencies. The major components of expenses are as follows: Travel, Promotion and Consulting --------------------------------
Three Months Ended June 30 2001 2000 ------'000 Canadian Dollars------ Travel, Meals and Entertainment 9571 27,877 Consulting 39,600 134,467 Promotion - 142 --------------------------------- 49,171 162,486 --------------------------------- % of Operating expenses 46% 71%
8 During the first quarter ended June 30, 2001, the management focused its attention entirely on monitoring its existing investments and projects and hence did not actively seek any new investments. This resulted in reduced travel and entertainment costs for the quarter. Consulting costs include a fee of $30,000 ( 2000: $44,406) charged by an affiliate for providing investor relations services. Previous period's costs included a consulting fee of $44,406 charged by a shareholder corporation for providing funding and public relations services. This contract was terminated in September 2000 and was not renewed. Other consulting fees in the quarter ended June 30, 2000 related mainly to fees paid for general IT, management and corporate services. During the quarter ended June 30, 2001, such fees were limited to $9,600 only due to scale down in the activities. Professional fees ----------------- Professional fees in the first quarter of fiscal 2002 were $19,559 compared to $18,000 in the first quarter of fiscal 2001. These costs relate to fees paid for financial record keeping and statutory compliances. Other operating costs --------------------- Other operating costs in the first quarter of fiscal 2002 were 37,848, which compares closely with the costs of $37,183 in the first quarter of fiscal 2001. These costs include rent, telephone, Internet, transfer agents fees and other general and administration costs and reflects the management's continued attention to keeping these costs to minimum. Liquidity and Capital Requirements ---------------------------------- Cash and working capital ------------------------ Cash on hand at June 30, 2001 was $15,727 compared to $335,239 at June 30, 2000. Net working capital at June 30, 2001 was approx. $0.5 million compared to $1.3 million at June 30, 2000. Significant improvement in the liquidity of the Company at June 30, 2000 was the result of a successful private placement of approx. $3.3 million in the fiscal 2000. Since then, however the funds were invested in various businesses and projects as per the stated objectives of the Company. Unfortunately, significant decline in business in the IT sector during the fiscal 2001 affected the Company's investments. Many of these investments were disposed off at significant losses or had to be written off at the end of the fiscal 2001. This trend affected both the cash and net liquidity of the company at June 30, 2001. Trade payables at June 30, 2001 were $38,057 compared to $ 47,862 at June 30, 2000. The net cash spent on operations during three months ended June 30, 2001 was $21,791 compared to $580,991 during the three months ended June 30, 2000. Increased spending in the quarter ended June 30, 2000 was mainly related to increased travel and promotion costs to pursue investment and business opportunities, web site projects development costs and increase in funds advanced. Investments ----------- The Company made no new investments during the three months ended June 30, 2001. Most of the investments made during the fiscal 2000 and 2001 were either liquidated or written off at March 31, 2001. Full details of the investments by category are given in the management discussion and analysis accompanying the audited financial statements at March 31, 2001, which are included in the annual report, F-20 filed on August 23, 2001. The management believes that the investment value at June 30, 2001 is not less than the carrying value. Significant changes since March 31, 2001 are explained below: Advances -------- As at June 30, 2001, the Company advanced a total sum of about $211,000 to First Empire Entertainment.com Inc. under a convertible loan agreement, which provides options to the Company to convert these advances into equity. Accordingly, on August 1, 2001, the board of the Company decided to exercise its conversion option and received 2 million common shares of First Empire in full settlement of the amounts owed. First Empire Entertainment.com Inc. (First Empire) is a Canadian public company whose main business is entertainment. The Company's first project is the 9 development and production of "The Count of Monte Cristo", a live theatrical musical production, adapted from the novel of the same name. First Empire acquired the rights to the adaptation from a Toronto based writer and lyricist. First Empire initiated two previews, one in Toronto and the other in New York. It will be seeking additional funds to commence a workshop leading to a full -blown road shows. Internet projects ----------------- Biochex.com ----------- During the fiscal 2001, the Company acquired full equity ownership of 1388755 Ontario Inc., which is an Ontario incorporated private company. 1388755 Ontario Inc.'s objective is to innovate and develop cost-effective, secure and portable Internet appliances, with wireless connection to the Web, using the latest technologies for wireless connectivity such as Bluetooth (short range, low power radio technology), 802.11HR and Wi-Fi. 1388755 Ontario's first project, named "Biochex", is the development of an Internet enabled medical data logging device, that is both wireless and portable. Mr. Jose Laraya, an electronic engineering graduate of Tokyo University, who has developed other innovative technologies, leads the development work. Mr. Laraya developed the world's first APL computer using an 8-bit microprocessor, the first IBM compatible LCD laptop computer employing voice recognition, encryption systems based on digital speed compressors and many others. The company spent additional $10,000 on consulting fee during the first quarter ended June 30, 2001 bringing the total investment to 4123,151 AT June 30, 2001. 1388755 Ontario Inc. continues to work on the development of Biochex and anticipates a fully functional and secured web site by October 2001. Capital Expenditure ------------------- The Company spent $353 on capital assets; mainly comprising office equipment, during the three months ended June 30, 2001 compared to $17,850 during the three months ended June 30, 2000. Trend Information ----------------- The management focus during the fiscal 2002 will be on marketing its IRCheck.com web site and completing the "Biochex" prototype and then exploring strategic partners and investors for initiating commercial application of the "Biochex" products. The Company is also seeking acquisition and merger possibilities as well as other new potential financial partners. Forward Looking Statements -------------------------- The foregoing Management's Discussion and Analysis contains "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended, and as contemplated under the Private Securities Litigation Reform Act of 1995, including statements regarding, among other items, the Company's business strategies, continued growth in the Company's markets, projections, and anticipated trends in the Company's business and the industry in which it operates. The words "believe," "expect," "anticipate," "intends," "forecast, " "project," and similar expressions identify forward-looking statements. These forward-looking statements are based largely on the Company's expectations and are subject to a number of risks and uncertainties, certain of which are beyond the Company's control. The Company cautions that these statements are further qualified by important factors that could cause actual results to differ materially from those in the forward looking statements, including, among others, the following: reduced or lack of increase in demand for the Company's products, competitive pricing pressures, changes in the market price of ingredients used in the Company's products and the level of 10 expenses incurred in the Company's operations. In light of these risks and uncertainties, there can be no assurance that the forward-looking information contained herein will in fact transpire or prove to be accurate. The Company disclaims any intent or obligation to update "forward looking statements". PART 11 OTHER INFORMATION ---------------------------- Item 1 Legal Proceedings --------------------------- There are no material legal proceedings in progress or to the knowledge of the Company, pending or threatened to which the Company is a party or to which any of its properties is subject. Item 2 Changes in Securities -------------------------------- None Item 3 Defaults Upon Senior Securities ----------------------------------------- None Item 4 Submission of Matters to a Vote of Securities Holders --------------------------------------------------------------- None Item 5 Other Information --------------------------- None 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 Terence E. Robinson ------------------- Chairman and CEO Dealcheck.com Inc. 11