Subscription Agreement
Subscription for the Shares shall be made pursuant to a subscription
agreement (the "Subscription Agreement") in the form attached to this
Disclosure Statement. The Subscription Agreement contains, among other
things, customary representations and warranties by the Company,
covenants of the Company reflecting the information set forth herein,
representations by the investors and appropriate conditions to closing.
Underwriter
The Shares are being offered by the Company to the public without
the benefit of an underwriter.
Discounts and Commissions
The sales of the Shares being offered by the Company will be carried
out by the Company. The Company will not pay discount the price of
the Shares or pay a commission to any dealer in connection with the
sale of the Shares.
USE OF PROCEEDS
Use of Proceeds: It is estimated that the Company will use the
maximum funds of $125,000 in the manner set forth below:
Business Development $ 10,000
Inventory 25,000
Marketing and Sales 50,000
General Administration and Operating Capital 15,000
Costs Associated with the Offering, Filings, and
Related Documentation 25,000
$125,000
Any and all additional funds raised under this Offering Memorandum will
be used to expand marketing, for further business development and for
operating capital.
The actual expenditures of the proceeds of the Offering may differ
substantially from the estimated use of proceeds. The actual
expenditures of the proceeds of the Offering will be according to
the expenditures deemed by the Company and its board of directors
to be in the best interests of advancing the business of the Company.
The actual expenditures will also vary from the estimated use of
proceeds if less than all of the Shares are sold.
The Company anticipates that the net proceeds from the Offering will
be sufficient to meet its financial requirements for only a short
period of time. The Company, therefore, will require substantial
additional capital to fund its contemplated business plan in the near
future.
The Company anticipates expenses associated with the Offering,
including legal, accounting and stock transfer agent expenses, will
be approximately $20,000 US. The Company anticipates expenses associated
with the registration of the Shares issued pursuant to the Offering,
including legal and accounting expenses, will be approximately $5,000 US.
DILUTION
"Net tangible book value" is the amount that results from subtracting
the total liabilities and intangible assets of an entity from its total
assets. "Dilution" is the difference between the offering price of a
security such as the Shares, and its net tangible book value per Share
immediately after the Offering, giving effect to the receipt of net
proceeds in the Offering. As of the date of this Disclosure Statement,
the net tangible book value of the Company was $58,000 or approximately
$0.007 per share. Giving effect to the sale by the Company of all
offered Shares at the Offering price, the pro forma net tangible book
value of the Company would be approximately $83,000, or approximately
$0.009 per Share, which would represent an immediate increase in net
tangible book value of approximately $0.002 per Share to present
shareholders and an immediate dilution of approximately $0.041 per
Share, or approximately 0.0001% to new investors.
The following table illustrates the pro forma per Share dilution
assuming the maximum Shares offered are sold.
ASSUMING MAXIMUM
SHARES SOLD
Offering Price (before deduction of Offering expenses) $ 0.25 per share
Net tangible book value before Offering $0.007 per share
Net tangible book value after Offering $0.009 per share
Dilution to new investors $0.041 per share
Dilution as a percentage 0.0001 %
DESCRIPTION OF BUSINESS
CORPORATE BACKGROUND
Corporate Organization
History: The Company is a corporation organized under the laws
of the State of Delaware on March 17, 1999.
History and Current Status: The Company was originally
incorporated for the purpose of high technology development of
computer security devices.
Corporate Facilities: The Company maintains its principal corporate
offices at Xxxxx 0, 0000 Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx,
Xxxxxx, X0X 0X0.
Introduction: In an Agreement to Acquire Technology dated April 20,
1999, the Company acquired from Barracuda Security Devices
International Inc. ("Barracuda"), the world wide intellectual
property, manufacturing, and distribution rights to the "Barracuda"
computer security card and other security devices. These rights
include the technology, techniques, patents and related software
and codes. In consideration of the transfer of these rights, the
Company issued five million shares of common stock to Barracuda.
Barracuda - Corporate Information: Barracuda is a corporation
federally incorporated on October 8, 1997 and extra-provincially
registered in British Columbia on December 30, 1997. The registered
and records offices of Barracuda are located at Dumoulin and Black,
000 Xxxx Xxxxxx, 00xx Xxxxx, Xxxxxxxxx, XX, X0X 0X0. Barracuda's
head office is located at 00000 Xxxxxxxx Xxxx, Xxxxx Xxxxx,
Xxxxxxx Xxxxxxxx, X0X 0X0. Telephone: (000) 000-0000.
Barracuda - General Development and History: Barracuda, of Vancouver,
British Columbia, purchased the rights on March 5, 1999 from Xxxxx
XxXxxx, the sole owner and developer of the technology, in exchange
for 30% of the issued shares of Barracuda.
The patented Barracuda card was developed in the UK by Xx. XxXxxx.
It was brought to market there in January, 1996. Over 40,000 units
have been sold in Europe since then. The Company is now preparing
to launch the market in North America and worldwide. BARRACUDA has
spent over $200,000 USD in the past two years developing the large
potential world market.
Technology: The Barracuda is an 8-bit ISA card that is inserted in a
free ISA slot in any computer. It is programmed with special remote
alert software with an access code encrypted and stored on the card
itself. The technology includes the following features:
* Easy to Use, Powerful Software providing remote alert capabilities.
The Barracuda's ultra smart software can manage hundreds of PC's from
one central workstation. Administrators can easily manage full
computer security across large networks. Central administration
can receive an alarm or alert across the Network, via pager or mobile
phone. Software runs under WIN 3.1, WIN 3.11, WIN 95, WIN 98 and
WIN NT 4.0.
* Independent Power Supply for protection even when the computer is
turned off.
* Internal Motion Sensor that prevents illegal movements by sounding
an alarm or sending a signal. The Barracuda can detect any computer
movement. If the system is accidentally moved, an intelligent audible
alarm (120dB) provides a one-second warning. If the system is moved
constantly an alarm sounds continuously, and for 120 seconds after
the computer has been set down.
* An Internal Ambient Light Sensor and Indelible Dye Capsule: The
Barracuda's sensor constantly monitors the ambient light level inside
the computer detecting the slightest variation and activating the alarm.
If the cover of the computer is removed without disarming the device
using a PIN number, the alarm will sound. In conjunction with the alarm,
this sensor will activate an indelible dye capsule and xxxx all the
components inside the computer. The marking of the components clearly
identifies the components as stolen and hence make them difficult to
resell.
* Xxxx Switch: A xxxx switch triggers the alarm, when connected to
the computer case, if it is misaligned (similar to a home alarm window
xxxx switch). The xxxx switch is primarily used as a backup.
The Market: The Barracuda Card was introduced to the marketplace in
early 1996 in the United Kingdom. Since then, over 40,000 units have
been sold mostly in Europe and some in North America and Australia.
Current customers include banks, airlines, colleges and universities,
Mobil Oil, Kodak, insurance companies, hotels, Shell UK, and many others.
Many North American companies have shown keen interest in the product
since being introduced to it. The Company is now preparing to launch a
major marketing and sales program worldwide. The market is vast with
every company or individual that owns a computer being a potential
customer.
Competition: There are several other computer security devices on the
market. Some techniques include cable tie downs and pad locks and
exterior mounted motion detectors. Some use a marking paint. Some
use software and electronic keys. None are as simple, dependable and
comprehensive as the Barracuda. None have the exploding dye capsule
that covers the CPU and Ram chips in an indelible dry powder which
makes tracking and identifying of the components easier and thus
creates a significant theft deterrent.
Technology Protection: The Barracuda Card is patent protected and
difficult to replicate because of its proprietary encoding.
Future Opportunities: The Company will continue its development of
its security call scanning system -
ACCUI TM and its Barracuda Security Pad. The applications and market
for both proprietary designs is very large in the world marketplace.
Historical Financial Information: The Company was recently
incorporated and is still in the development stage. There are no
revenues to date. See Audited Financial Statements attached.
Projected Revenues: The Company is projecting sales of approximately
two million dollars in the first year following completion of this
offering. Depending on the financial, production and management
resources, there is potential for five million dollars in revenues
in year two, with increased sales in year three.
Management: The Company's management is comprised of a small team of
individuals experienced in all facets of business operations including
product research and development, administration, sales and marketing,
finance, and manufacturing.
Plant, Equipment and Operations: The product is currently being
manufactured and assembled in the U.K. under sub contract. The
Company has identified contractors in Canada and the U.S. to produce
the product at a reduced cost.
INTELLECTUAL PROPERTY AND OTHER PROPRIETARY RIGHTS
The Company has acquired the intellectual property rights and the
exclusive world wide manufacturing and marketing rights to the
"Barracuda" security card and other security devices. These rights
include the technology, patents, techniques and related software
codes.
EMPLOYEES
At this stage there are no employees.
DESCRIPTION OF PROPERTY
The primary business activities of the Company and Barracuda are
carried on at leased premises located at Xxxxx 0, 0000 Xxxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0. The premises are comprised of 800
square feet and is leased for a term of one years expiring on December
31, 1999. The Company does not lease or own any other property.
DIRECTORS, OFFICERS AND SIGNIFICANT EMPLOYEES
The following information sets forth the names of the officers and
directors of the Company, their present positions with the Company,
and their biographical information.
Each director will serve until the next annual meeting of
shareholders, and thereafter if reelected.
Name of Director Age
Xx. Xxxxx Power 56
Xx. Xxx Xxxxx 53
Name of Officer Office
Xx. Xxxxx Power President
As a Delaware corporation, the final responsibility for the
management of the affairs of the Company rests with the Board
of Directors. That Board currently consists of two directors.
Those directors are elected at the annual meeting of the
shareholders and serve for an annual term or until they resign
or are replaced. Those directors meet or otherwise consult with
one another on a regular basis to review the affairs of the Company
and to adopt or confirm any resolutions which are necessary to grant
contractual and other authority to the administrative officers.
The directors may, and probably will, designate an executive
committee to which they will grant limited authority to make certain
ministerial decisions on behalf of the board between meetings of the
full board. The affairs of the Company are administered by its
executive officers. Those officers are designated by the Board of
Directors to whom those officers are responsible. The executive
officers are generally elected by the directors on an annual basis
and serve throughout that term or until such earlier time as they
resign or are replaced. The directors may, and in the case of this
Company will designate themselves as senior executive officers of
the Company. The Company's day to day actions will occur through the
actions of those executive officers acting on behalf of the Company.
Throughout this Offering Memorandum the term "Management" shall be
interpreted as the current directors end officers of the Company
designated in the following section.
The following sets forth information as to the principal occupation
and business experience for at least the past five years of each of
those directors and officers.
Xx. Xxxxx Power: Mr. Power, a business management consultant, has
managed and administered several public companies for the past 15
years. Since 1984, he has provided services including strategic
planning, management, administration, design, and construction of
major mining projects both nationally and internationally. He has
owned and operated several consulting companies that have been
providing comprehensive services in the industrial and high-technology
fields as well as the mining field. His expertise also includes
reactivating public companies, project acquisitions, public and
private funding, as well as developing and taking existing private
companies public. He is equally knowledgeable to provide professional
services in the public markets both in Canada and the United States.
Mr. Power has been President and Owner of Pow Con Management since 1981
and Premier Enterprises Ltd. since 1994, these companies manage,
administrate and finance reporting companies. He served as President
and Director of several Vancouver reporting companies and publicly
listed companies since 1986 to present. Since 1992, Mr. Power has
served as President of World Organics Inc., listed on the Vancouver
Stock Exchange. From 1996 to 1997, Mr. Power served as President and
Director of Accuimage Diagnostics. He is presently Vice-President of
Scientific Technologies, Inc. and former President of Security
Industries, Inc. These companies are listed on the U.S. stock exchange.
Xx. Xxx Xxxxx: Xx. Xxxxx, since completing his Business Administration
degree from Arizona State University, has held positions including
Managing Director of Omni International; Vice-President and Director
of World Organics, Inc., a reporting company; Secretary and Treasurer
of Tec Industries Corp., a specialty equipment rental agency; and owner
and President of Stretchcoat, a national manufacturer and marketer of
specialty products. Xx. Xxxxx has also represented major principals
selling products nationally.
Management Compensation: Until funded, the Company expects to pay no
salaries or consulting fees to any of its directors, officers or
employees.
REMUNERATION OF DIRECTORS AND OFFICERS
The following table sets forth certain information as to the Company's
two highest paid officers and directors for the period from the
commencement of the Company business to July 23, 1999. No other
compensation was paid or will be paid to any such officer or directors
other than the cash compensation set forth below.
Summary Compensation Table
Name of Individual or Identity of Group
Capacities in Which Remuneration was Received
Aggregate Remuneration
Xx. Xxxxx Power
Director and President
$0.00
Xx. Xxx Xxxxx
Director
$0.00
Officers and Directors of the Company as a Group
Directors and Officers
$0.00
The compensation paid to directors and officers to July 23, 1999
is believed by the Company to be below market compensation rates
for the services provided by the directors and officers, having
regard to the experience and qualifications of the directors and
officers. The Company anticipates compensation being increased to
market rates upon the Company achieving sufficient revenues and/or
financings to pay such increased compensation.
SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN SECURITY OWNERS
The following table sets forth, as of July 23, 1999, the beneficial
ownership of the Company's Common Stock by each officer and director
of the Company, by each person known by the Company to beneficially
own more than 10% of the Company's Common Stock outstanding and by
the officers and directors of the Company as a group. Except as
otherwise indicated, all shares are owned directly.
Title of Class
Name and Address
Of Beneficial Owner
Number of Shares
Of Common Stock
Percentage of
Common Stock (1)
Common Stock
Barracuda Security Devices International Inc.
5,086,000
55.89%
Common Stock
All Officers and Directors as a Group (2 persons)
800,000
8.79%
(1) Based on 9,100,000 shares of common Stock of the
company issued and outstanding on July 23,1999.
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN
TRANSACTIONS
There are no material contracts entered into by the Company preceding
the date hereof which are still in effect, except as follows:
Agreement to Acquire Technology, dated April 20, 1999 between the
Company and Barracuda Security Devices International Inc. as set forth
in "Business Plan" and "Certain Transactions".
Copies of the foregoing contracts and any reports referred to in this
Offering Memorandum may be inspected at the head office of the Company
at Xxxxx 0, 0000 Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0,
during normal business hours while the Offering contemplated hereunder
is in progress to and including the closing date.
Except as set forth below, none of the following persons has any direct
or indirect material interest in any transaction to which the Company
is a party since the incorporation of the Company in March, 1999 or in
any proposed transaction to which the Company is proposed to be a party:
(A) any director or officer of the Company;
(B) any proposed nominee for election as a director of the
Company;
(C) any person who beneficially owns, directly or indirectly,
shares carrying more than 10% of the voting rights attached to the
Company's Common Stock; or
(D) any relative or spouse of any of the foregoing persons,
or any relative of such spouse, who has the same house as such person
or who is a director or officer of any parent or subsidiary of the
Company.
SECURITIES BEING OFFERED
The securities being offered are the shares of the Company's common
stock, par value $0.0001 per share. Under the Company's Articles of
Incorporation, the total number of shares of all classes of stock that
the Company shall have authority to issue is 50,000,000 shares of common
stock, par value $0.0001 per share (the "Common Stock"). As of July 23,
1999, a total of 9,100,000 shares of Common Stock are issued and
outstanding. All issued and outstanding shares of the Common Stock are
fully paid and non-assessable.
Common Stock
Holders of Common Stock have the right to cast one vote for each share
held of record on all matters submitted to a vote of holders of Common
Stock, including the election of directors. Holders of Common Stock do
not have cumulative voting rights in the election of directors. Holders
of a majority of the voting power of the capital stock Issued and
outstanding and entitled to vote, represented in person or by proxy, are
necessary to constitute a quorum at any meeting of the Company's
stockholders and the vote by the holders of a majority of such outstanding
shares is required to effect certain fundamental corporate changes such as
liquidation, merger or amendment of the Company's Articles of Incorporation.
Holders of Common Stock are entitled to receive dividends pro rata
based on the number of shares held, when, as and if declared by the
Board of Directors, from funds legally available therefor. In the
event of the liquidation, dissolution or winding up of the affairs
of the Company, all assets and funds of the Company remaining after
the payment of all debts and other liabilities shall be distributed,
pro rata, among the holders of the Common Stock.
Holders of Common Stock are not entitled to pre-emptive or subscription
or conversion rights, and there are no redemption or sinking fund
provisions applicable to the Common Stock. All outstanding shares of
Common Stock are fully paid and non-assessable.
Transfer Agent
Pacific Stock Transfer Co. of Las Vegas, Nevada is the transfer
agent for the Shares.
Share Purchase Warrants
There are no warrants authorized or issued.
Options
There are no options authorized or issued.
Convertible Securities
There are no convertible securities authorized or issued.
LITIGATION
The Company is not party to any legal proceedings. Management of
the Company is not aware of any threatened legal proceedings which,
if successful against the Company, would have a materially adverse
effect on the Company.
FINANCIAL STATEMENTS
The Company's audited financial statements for period from inception
to May 15, 1999, together with the auditor's report, are appended to
this Offering Memorandum. The financial statements are non-consolidated
statements for the Company. INVESTORS ARE URGED TO CAREFULLY REVIEW
SUCH FINANCIAL STATEMENTS AND THE FOOTNOTES TO THOSE FINANCIAL
STATEMENTS.
Certain Financial Matters: These financial statements reflect the
position of the Company on May 15, 1999, which is prior to the funding
under this Offering. Therefore, such statements reflect substantially
no assets other than cash but do demonstrate that the Company likewise
has few liabilities. Accordingly, the book value of Common Shares
outstanding at the date of these statements is at this time, negligible.
The statements further reflect no income, other than deposits.
The Company's earnings per share are negative.
Management's Discussion of Financial Statements: The Balance Sheet
and financial statements are audited and are prepared in accordance
with generally accepted accounting principles of the United States.
Specifically, those figures do not, and are not intended to, reflect
the current net fair market value of the Company's assets. That
value can only be estimated, based upon the potential sales and
prospective net income which will be generated from the Company's
present and future technology. Because of the various matters which
inherently must occur in the future, the outcome cannot be precisely
determined and is therefore necessarily a matter of opinion.
Management believes that technology, combined with management's ability
to successfully commercialize the applications through its developed
products, to be substantial. It is that opinion, and not the current
financial statement, upon which the price of the Common Stock is being
offered under this Offering.
ADDITIONAL ATTACHMENTS
The following additional attachments are attached to this Disclosure
Statement:
Exhibit Description
"A'' Subscription Agreement
"B" Financial Statements
