-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QW0RcPpS/oLF5rvvrc4TpmnqKfEQoqRqXSmYb2Qc3UT823+ISxnIxli8xK2ZcNPq c685oQ1WoJj1PE7nvrxkSQ== 0001016295-02-000024.txt : 20020425 0001016295-02-000024.hdr.sgml : 20020425 ACCESSION NUMBER: 0001016295-02-000024 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020228 FILED AS OF DATE: 20020425 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DELSECUR CORP CENTRAL INDEX KEY: 0000894498 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 870438451 STATE OF INCORPORATION: NV FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 033-55254-15 FILM NUMBER: 02620780 BUSINESS ADDRESS: STREET 1: 1801 MCGILL COLLEGE, SUITE 1330 STREET 2: STE 107 CITY: MONTREAL STATE: A8 ZIP: H3A2N4 BUSINESS PHONE: 514-282-9000 MAIL ADDRESS: STREET 1: 1800 E SAHARA STREET 2: SUITE 107 CITY: LAS VEGAS STATE: NV ZIP: 89104 FORMER COMPANY: FORMER CONFORMED NAME: GRANDEUR INC DATE OF NAME CHANGE: 19940422 10QSB 1 february10qsb2002.txt FEBRUARY QUARTERLY FILING 2002 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 February 28, 2002 ----------------- [] Transition report under Section 13 or 15(d) of the Exchange Act For the transition period from _________ to ___________ Commission file number 33-55254-15 ----------- delSECUR Corporation (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 February 28, 2002 - ------------------------ ----------------------------------- $.001 PAR VALUE CLASS A 14,809,304 Shares COMMON STOCK 1 PART I FINANCIAL INFORMATION Certain statements contained in this Quarterly Report on Form 10-QSB ("Report"), including, without limitation, statements containing the words "anticipates", "expects, "hopeful" and words of similar import, constitute "forward-looking statements. "Readers should not place undue reliance on these forward-looking statements. delSECUR's actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including risks faced by the Company described in this report, and the other documents delSECUR files with the Securities and Exchange Commission ("SEC"), including its most recent reports on Form 8-K and Form 10-QSB, and amendments thereto." ITEM 1. Financial Statements. The accompanying unaudited financial statements 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 nine months ended February 28, 2002 are not necessarily indicative of the results that can be expected for the year ending May 31, 2002. 2 delSECUR CORPORATION AND SUBSIDIARY (A Development Stage Company) CONSOLIDATED BALANCE SHEETS (expressed in Canadian dollars)
February 28, May 31, 2002 2001 ---------------------- --------------------- ASSETS (Unaudited) (Audited) CURRENT ASSETS Cash $ 0 $ 0 Subscription receivable 98,230 0 Sales taxes receivable 26,466 44,806 Prepaid expenses 36,055 37,239 Receivable-related party 185,000 185,000 ---------------------- --------------------- TOTAL CURRENT ASSETS 345,751 267,045 OTHER ASSETS Property and equipment 126,276 161,539 License from related party 1 1 ---------------------- --------------------- 126,277 161,540 ---------------------- --------------------- $ 472,028 $ 428,585 ====================== ===================== LIABILITIES & DEFICIT CURRENT LIABILITIES Bank overdraft $ 1,898 $ 1,083 Accounts payable 407,542 218,029 Accrued liabilities 181,844 108,073 Payable-related party 184,907 184,907 Payable - officer 1,602,000 1,545,700 Payable - director 245,776 235,000 Loans payable 183,000 190,000 Deposit on shares not yet issued 0 375,000 ---------------------- --------------------- TOTAL CURRENT LIABILITIES 2,806,967 2,857,792 Deferred credit 2,682 3,832 STOCKHOLDERS' DEFICIT Common Stock $.001 par value: Authorized - 100,000,000 shares Issued and outstanding 14,809,304 shares (14,509,304 at May 31, 2001) 21,154 20,698 Additional paid-in capital 7,456,814 6,414,414 Deficit accumulated during the development stage (9,815,589) (8,868,151) ---------------------- --------------------- TOTAL STOCKHOLDERS' DEFICIT (2,337,621) (2,433,039) ---------------------- --------------------- $ 472,028 $ 428,585 ====================== =====================
3 delSECUR CORPORATION AND SUBSIDIARY (A Development Stage Company) CONSOLIDATED STATEMENTS OF OPERATIONS (expressed in Canadian dollars) (Unaudited)
Three Months Ended Nine Months Ended From Date of February 28, February 28, inception to 2002 2001 2002 2001 2/28/02 ---------------- --------------- --------------- --------------- --------------- Net sales $ 0 $ 0 $ 0 $ 0 $ 0 Cost of sales 0 0 0 0 0 ---------------- --------------- --------------- --------------- --------------- GROSS PROFIT 0 0 0 0 0 Other income 0 0 0 0 8,000 Depreciation and amortization 11,754 11,853 35,263 32,261 285,105 Interest expense 5,490 5,850 16,820 17,550 115,146 Research and development 50,489 64,011 133,225 163,530 1,057,202 Loss on settlement of shares 0 0 0 331,396 426,486 General and administrative expenses 266,617 257,858 762,130 1,945,201 7,896,384 ---------------- --------------- --------------- --------------- --------------- 334,350 339,572 947,438 2,489,938 9,780,323 ---------------- --------------- --------------- --------------- --------------- NET LOSS $ (334,350) $ (339,572) $ (947,438) $ (2,489,938) $ (9,772,323) ================ =============== =============== =============== =============== BASIC AND DILUTED (LOSS) PER COMMON SHARE Net income (loss) per weighted average share $ (.02) $ (.02) $ (.06) $ (.17) ================ =============== =============== =============== Weighted average number of common shares used to compute net income (loss) per weighted average share 14,793,919 14,380,493 14,793,919 14,380,493 ================ =============== =============== ===============
4 delSECUR CORPORATION AND SUBSIDIARY (A Development Stage Company) CONSOLIDATED STATEMENTS OF CASH FLOWS (expressed in Canadian dollars) (Unaudited)
Nine Months Ended From Date of February 28, inception to 2002 2001 2/28/2002 --------------- --------------- ------------------ OPERATING ACTIVITIES Net (loss) $ (947,438) $ (2,489,938) $ (9,772,323) Adjustments to reconcile net (loss) to cash provided (used) by operating activities: Depreciation 35,263 32,261 285,106 Amortization of deferred credit (1,150) (1,150) (4,984) Free rent 0 0 7,666 Stock issued for services 0 2,072,671 3,969,292 Loss on settlement of shares 0 331,606 0 Related party advances 0 0 310,402 Foreign exchange fluctuation 56,300 38,300 188,700 Changes in assets and liabilities: Subscription receivable (98,230) 0 (98,230) Sales tax receivable 18,340 (1,658) (26,466) Prepaid expenses 1,184 (10,347) (36,055) Receivable - related party 0 (4,040) (495,402) Accounts payable 189,513 9,978 407,542 Accrued liabilities 73,771 (15,429) 181,844 Payable - related party 0 (250) 184,907 Payable - director 10,776 (268,053) 245,776 --------------- --------------- ------------------ NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (661,671) (306,049) (4,652,225) INVESTING ACTIVITIES Purchase of property & equipment 0 (56,675) (411,382) --------------- --------------- ------------------ NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES 0 (56,675) (411,382) FINANCING ACTIVITIES Loan 0 0 601,850 Repayment of loan (7,000) 0 (418,850) Loan from director 0 0 2,085,250 Increase in Bank overdraft 815 0 1,898 Stock sold 456 0 1,165 Contribution by director (100,000) 0 1,649,894 Deposit on shares (375,000) 375,000 0 Increase in paid-in capital 1,142,400 0 1,142,400 --------------- --------------- ------------------ NET CASH PROVIDED BY FINANCING ACTIVITIES 661,671 375,000 5,063,607 --------------- --------------- ------------------ INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 0 12,276 0 Cash and cash equivalents at beginning of year 0 8,755 0 --------------- --------------- ------------------ CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 0 $ 21,031 $ 0 =============== =============== ================== NON-CASH FINANCING & INVESTING ACTIVITIES Repayment of a loan to a shareholder $ 0 $ 0 $ (2,085,250) Acquisition of license 0 0 (1,413,299) Cash paid for interest $ 14,510 $ 17,550 $ 112,836
During the nine months ended February 28, 2002, the Company issued 300,000 shares of common stock for $1,142,400, of which $98,230 is receivable at February 28, 2002. During the nine months ended February 28, 2001, the Company issued 216,671 shares of common stock for services of $2,072,553 and to settle liabilities of $331,606. 5 ITEM 2. Management's Plan of Operation. Pursuant to an Agreement made and entered into on February 25th 1998 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. (now delSECUR 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 delSECUR Inc. owned 92.5% of the outstanding shares of the Company. The del-ID(Registered) 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(Registered) 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. Commercial applications of the del-ID(Registered) 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. Patent protection was pending for the del-ID system in the United States. Since June 26, 2001, The United States Patent application has been allowed for issuance by the U.S. Department of Commerce Patent and Trademark Office. We improved the technology from a proof of concept to totally functional devices that we called "the first generation". Those del-ID(Registered) devices will be implemented for dedicated applications with leading corporations. The secondary done in parallel covers the implementation of a study in a controlled laboratory environment. During the last two years, an amount of $446,521 was spent for Research & Development, $184,569 for the year ending May 31, 2000 and $261,952 for the year ending May 31, 2001. Research and development expenses were $133,225 and $163,530 for the nine months ended February 28, 2002 and 2001 respectively. Moreover, culminating several months of discussions with various agencies and senior levels of the United States Government, the Company is involved with National Security Agency who has signed a Confidential Agreement. The signing of the agreement will permit delSECUR Inc. to disclose its core del-ID(Registered) technology to NSA for testing and evaluation as a national and international 6 means of protection against computer hacking. They have to make recommendations to the US Federal Government. The signing of this Confidentiality Agreement confirmed the uniqueness and innovative aspects of the del-ID(Registered) technology, as mentioned on the Press Release issued on April 5th, 2000. The next step will be the implementation of the totally functional del-ID technology within their laboratory as agreed with their representatives. 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 (Registered) 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 following the issuance of first application results from our technology showcases. delSECUR Corporation announced July 1st 1999 the creation of a new wholly owned subsidiary, delSECUR USA Inc., incorporated in Delaware and with its principal offices located at 555, 11th Street NW, 6th Floor, Lincoln Square, Washington D.C. 20004. This subsidiary has been created specifically to manage all delSECUR operations in the United States. The decision to locate the offices in Washington D.C. was made following the recent expressions of interest in the del-ID (Registered) technology by several U.S. Government agencies. This subsidiary has no employees and does not have any operations. The corporation's Canadian subsidiary has currently 5 employees who are officers of the Company. The Agreement dated February 25, 1998 and the Exclusive License Agreement dated November 12, 1997 were attached as Exhibits A and B to the Company's electronic filing of Form 8-K on March 10, 1998. In December 2000, the Company adopted the delSECUR Corporation Stock Option Plan for the granting of stock options to directors, officers, employees and consultants of the Company. The Company has reserved 1,400,000 shares of common stock for issuance under the Plan, in order to enable certain key employees, officers, directors and consultants of the Corporation to participate in the growth of the Corporation and thereby provide effective incentives for such individuals. The Plan shall be managed by the Board of Directors. In accordance with the terms of the Plan, the beneficiaries may be granted options to purchase ordinary shares at a price determined by the Board of Directors. The price may not be below the market price in accordance with the regulations established by the regulatory bodies having jurisdiction over the securities of the Corporation. The total amount of common shares of the Corporation that may be subscribed under the Plan is 1,400,000 shares. 7 The financing of current operations will be provided in part by the Balance to be received of USD $65,000 of the Private placements in the initial amount of USD $750,000. We are hopeful to close the transaction before the end of April 2002. If needed, the controlling shareholder, Mr. Pierre de Lanauze, will provide the appropriate funding to meet the company's operations. This funding arise from the sales of shares from his personal portfolio. Mr. de Lanauze holds 6,975,797 ordinary shares carrying shares certificate number 2010. The total number of shares issued and outstanding of delSECUR CORPORATION is 14,809,304. Management is of the opinion that the Company's del-ID technology, while as yet untested in the marketplace, represents a viable business opportunity in a number of different fields of government and business activity. Given the well publicized worldwide requirement for ID authentication systems and the paucity of suitable alternatives available, it is the intention of management to proceed by way of co-ventures, joint ventures, sublicense agreements and similar arrangements with major entities, including governments at all levels, that can benefit from implementing the technology in their existing operations. The Company has no present intention to manufacture del-ID products; instead, products will be manufactured by licensed outside suppliers/users. The last twelve months have been dedicated to finalizing the technology del-ID(registered) advancing from a concept version all the way to pre-commercialization edition devices. We actually have a functional reader to create the abstract image from a living finger with the enrolment software and diagnostics both operational. We have also developed an application for a smart card. We are now in the process to implement technologies showcases with banks, government and industries. We have already letter of intent to this effect. We have gained much intelligence and credibility when the patent has been allowed to Mr. De Lanauze on the del-ID(registered) technology by the U.S. Patent Office. delSECUR can confirm to hold the exclusive, world-wide license of a unique technology of which the intellectual property is official recognized. For a potential licensee this is a factor in their decision to commit to commercialization and legally with delSECUR. There is a momentum to replace personal identification number (PIN) and passwords by a more secure technology. We are in relation with potential users and their interest in the del-ID(registered) technology make the management team confident to generate incomes in the actual fiscal year. As of February 28, 2002, the Company's balance sheet showed an accumulated deficit of $9,815,589, an increase of $947,438 during the nine months. Operations to date have been financed principally by loans from senior management and others and sales of common stock. Additional unsecured loan facilities continue 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 current fiscal year. The Company had a net loss of $947,438 for the nine months ended February 28, 2002 compared with a loss of $2,489,938 for the same period for the prior year. The main decrease from 2001 was reducing promotion expenses by about $1.17 million. The Company will continue to seek marketing opportunities for product licensing with governmental agencies and corporate entities on a world-wide basis. 8 As the Company will be engaged in securing licensing contracts for use of its existing del- ID(R) technology, no significant expansion of the physical plant, equipment or number of employees is foreseen for the period of the next twelve months. 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. delSECUR Corporation Date: April 25, 2002 By:/s/ Pierre de Lanauze ------------------ --------------------------------- Pierre de Lanauze, President, Chairman of the Board and Director 9 -----END PRIVACY-ENHANCED MESSAGE-----