Item 405 of
Regulation S-K (§229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K
or any amendment to this Form 10-K. o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.
See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer o | Accelerated filer o |
|
Non-accelerated
filer o
(Do
not check if a smaller reporting company)
|
Smaller reporting company x |
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act).
Yes
x
No
o
State
the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity
was
last sold, or the average bid and asked price of such common equity, as of
the
last business day of the registrant’s most recently computed second fiscal
quarter. $556,229
The
number of shares of the issuer’s common stock issued and outstanding as of May
6, 2008 was 53,464,557 shares.
Documents
Incorporated By Reference: None
TABLE
OF CONTENTS
|
Page
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|
PART
I
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||
|
Item
1
|
Business
|
|
|
Item
1A
|
Risk Factors |
|
|
Item
1B
|
Unresolved
Staff Comments
|
|
|
Item
2
|
Properties |
|
|
Item
3
|
Legal
Proceedings
|
|
|
Item
4
|
Submission
of Matters to a Vote of Security Holders
|
|
|
PART
II
|
||
|
Item
5
|
Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
|
|
|
Item
6
|
Selected
Financial Data
|
|
|
Item
7
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operation
|
|
|
Item
7A
|
Quantitative
and Qualitative Disclosures About Market Risk.
|
|
|
Item
8
|
Financial
Statements.
|
|
|
Item
9
|
Changes
in and Disagreements With Accountants on Accounting and Financial
Disclosure
|
|
|
Item
9A(T)
|
Controls
and Procedures
|
|
|
Item
9B
|
Other
Information
|
|
|
PART
III
|
||
|
Item
10
|
Directors,
Executive Officers and Corporate Governance
|
|
|
Item
11
|
Executive
Compensation
|
|
|
Item
12
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
|
|
Item
13
|
Certain
Relationships and Related Transactions, and Director
Independence
|
|
|
Item
14
|
Principal
Accountant Fees and Services
|
|
|
PART
IV
|
||
|
Item
15
|
Exhibits
|
|
|
SIGNATURES
|
PART I
Item
1. Business.
As
used
in this Annual Report on Form 10-K (this “Report”), references to the “Company,”
the “Registrant,” “we,” “our” or “us” refer to DCI USA, Inc., unless the context
otherwise indicates.
Forward-Looking
Statements
This
Report contains forward-looking statements. For this purpose, any statements
contained in this Report that are not statements of historical fact may be
deemed to be forward-looking statements. Forward-looking information includes
statements relating to future actions, prospective products, future performance
or results of current or anticipated products, sales and marketing efforts,
costs and expenses, interest rates, outcome of contingencies, financial
condition, results of operations, liquidity, business strategies, cost savings,
objectives of management, and other matters. You can identify forward-looking
statements by those that are not historical in nature, particularly those
that
use terminology such as “may,” “will,” “should,” “expects,” “anticipates,”
“contemplates,” “estimates,” “believes,” “plans,” “projected,” “predicts,”
“potential,” or “continue” or the negative of these similar terms. The Private
Securities Litigation Reform Act of 1995 provides a “safe harbor” for
forward-looking information to encourage companies to provide prospective
information about themselves without fear of litigation so long as that
information is identified as forward-looking and is accompanied by meaningful
cautionary statements identifying important factors that could cause actual
results to differ materially from those projected in the information.
These
forward-looking statements are not guarantees of future performance and involve
risks, uncertainties and assumptions that we cannot predict. In evaluating
these
forward-looking statements, you should consider various factors, including
the
following: (a) those risks and uncertainties related to general economic
conditions, (b) whether we are able to manage our planned growth efficiently
and
operate profitable operations, (c) whether we are able to generate sufficient
revenues or obtain financing to sustain and grow our operations, (d) whether
we
are able to successfully fulfill our primary requirements for cash, which
are
explained below under “Liquidity and Capital Resources”. We assume no obligation
to update forward-looking statements, except as otherwise required under
the
applicable federal securities laws.
Corporate
Background
We
were
incorporated on June 21, 2000, under the laws of the State of Delaware, as
Gavella Corp. As Gavella Corp., we engaged in two lines of business: owning
and
operating income producing real estate, and making investments in and providing
consulting services to other businesses. On November 9, 2004, Direct Capital
Investments, Ltd. (sometimes referred to herein as “Direct Capital”), purchased
31,500,000 newly-issued shares of our common stock representing approximately
90% of our capital stock outstanding on a fully-diluted basis. Commencing
November 9, 2004 the Company changed its focus and was engaged in lending
to and
investing in a real estate-related opportunity. On November 19, 2004, we
changed
our name to DCI USA, Inc.
On
February 14, 2005, we filed with the Securities and Exchange Commission (the
“SEC”) an election to operate as a regulated business development company
(“BDC”) under the Investment Company Act of 1940 (the “1940 Act”). On December
5, 2005, Direct Capital voted by written consent to authorize the withdrawal
of
our election to be treated as a BDC. On February 22, 2006, we filed with
the SEC
a Notification of Withdrawal of Election to operate as a BDC. We had not
achieved our goals of fully operating as a BDC and decided to cease operations
as a BDC. We decided to become an operating company whose focus is to purchase
or otherwise acquire real property, or other businesses, to be operated directly
by us. In order to accomplish such change in business strategy, we will need
significant additional financing which we may not be able to obtain.
In
2006,
we expanded our business focus to include the field of alternative energy.
On
May 1,
2007 we received notice from the NASD that we had not met the requirements
of
NASD Rule No. 6530 as it pertains to securities listed on the OTCBB due to
omissions in our Annual Report on Form10-KSB for the year ended December
31,
2006. These deficiencies were cured in the Form 10-KSB/A we filed with the
SEC
on May 4, 2007.
On
November 14, 2007, Russull Brothers, Inc., a Delaware corporation formerly
known
as TSSS, Inc., entered into a Purchase Agreement with Jonathan Ilan Ofir,
a
former officer, director and majority shareholder of the Company, and Jonathan
Rigbi, the Company’s Chief Financial Officer to purchase all of the shares of
the Company’s common stock owned by Mr. Ofir and Mr. Rigbi. Pursuant to the
agreement, Russull Brothers paid $2,596,159.80 for the purchase of an aggregate
of 37,087,997 shares of the Company’s common stock. On February 8, 2008, the
Purchase Agreement was amended to reflect that Messrs. Ofir and Rigbi actually
owned and sold 29,602,997 and 6,135,000 shares, respectively of the Company’s
common stock to Russull Brothers, rather than the amount of shares reflected
in
the Purchase Agreement as having been acquired by Russull Brothers. The
amendment also reduced the purchase price from $0.07 to $0.055 per share.
Accordingly, Russull Brothers was refunded an aggregate of $740,569.96 from
Messrs. Ofir and Rigbi representing the actual amount of shares purchased
and
the amended purchase price per share. As such, the total amount paid by Russull
Brothers to acquire the shares of the Company’s common stock pursuant to the
Purchase Agreement was $1,965,589.84. In addition to the shares of the Company’s
common stock acquired by Russull Brothers pursuant to the Purchase Agreement,
Mr. Ofir assigned to Russull Brothers an aggregate principal amount of
$1,066,089.88 plus accrued interest of $19,868 relating to a series of loans
Mr.
Ofir made to the Company.
Pursuant
to the Purchase Agreement, Mr. Ofir resigned as a director and Chairman of
the
Board of Directors of the Company. Following the Purchase Agreement, Russull
Brothers became the majority shareholder of the Company. Ofer Arbib, the
Company’s current President, Chief Executive Officer, director and Chairman, is
the sole officer and director of Russull Brothers.
On
February 27, 2008, Russull Brothers purchased all 3,150,000 shares of the
Company’s common stock owned by Direct Capital Investments, Ltd., for an
aggregate purchase price of $130,000. The transaction was effected pursuant
to a
verbal agreement between Direct Capital Investments, Ltd. and Russull Brothers.
As of April 8, 2008, Russull Brothers owned an aggregate of 40,687,997 shares
representing 76.10% of the Company’s issued and outstanding common stock,
including shares Russull Brothers owned prior to the transactions reported
in
this section.
Business
Overview
We
are
presently engaged in two lines of business: (i) the development of clean
energy
technologies; and (ii) the renovation and conversion of buildings to commercial
condominiums.
Gunther
Wind Energy, Ltd.
On
August
1, 2006, we entered into a loan, pledge and option agreement with Gunther
Wind
Energy, Ltd. (“Gunther”) in Israel to invest in the upgrade of an existing wind
farm at Tel Assaniya and in the development of a new site, Nimrod. On June
20,
2007, the Company exercised its option to purchase all the outstanding
shares of Gunther pursuant to and in accordance with the loan, pledge and
option
agreement. The aggregate exercise price of the option was $1.5 million, $110,459
of which was paid in September 2007 and $23,883 of which was paid through
the
cancellation of outstanding loans previously made by the Company to Gunther
(the
Company’s Current Report on Form 8-K filed with the SEC on June 28, 2007
misstated the amount of loan cancellations as $1,468,000).
In
December 2006 Gunther signed an agreement with Nimrod Wind Energy, Ltd
(“Nimrod”) in which Gunther received an irrevocable option to purchase 25% of
Nimrod’s issued and fully paid for share capital. The aggregate purchase price
to be paid by Gunther to the Nimrod upon exercise of such option shall be
an amount equal to $2,750,000. As of December 31, 2007 Gunther did not
exercise its option.
Gunther
owns 25% of the outstanding share capital of ARI, Ltd., an Israeli corporation
formerly known as Green Wind Energy Ltd. (“ARI”) as a result of its acquisition,
on March 5, 2006, of 334 shares of ARI’s preferred stock in consideration of
$3,000,000. As of April 8, 2008, Gunther had paid an aggregate of $2,665,000
of
the purchase price to ARI using funds previously loaned to Gunther by the
Company and the proceeds from a $1.5 million bank loan obtained by Gunther.
The
remaining portion of the $3 million purchase price was paid by Gunther to
ARI on
or about April 28, 2008.
On
September 13, 2006, ARI signed an agreement to purchase a wind farm known
as Tel
Assaniya Windfarm, which is located in Northern Israel. The completion of
the
purchase agreement is expected by December 31, 2007 upon payment of the
outstanding balance. The Tel Assaniya Windfarm is planned to be upgraded
from
the current capacity of 6MW to seven wind turbines with a capacity of 2.3MW
each. Until such upgrade is completed, Gunther will receive a minimum of
a 10%
preferred return on its investment on quarterly installments in anticipation
of
the payment of future dividend. After the upgrade is completed, Gunther will
receive a minimum of a 12.5% preferred return. As of November 14, 2007, Gunther
had appointed one director to ARI and has not yet exercised its right to
appoint
a second director. As of December 31, 2007 Gunther was paid $225,000 advance
on
account of dividend.
The
investment in Gunther is recorded in our financial statements included herein
at
the aggregate purchase price and its results of operations from the date
of
acquisition are reflected in our statement of operations for the periods
ended
December 31, 2007.
On
December 5, 2007, the Company entered into a share acquisition option agreement
with World Group Shipping (“WGS”), a public company in Israel in which Jonathan
Ilan Ofir is a director. Pursuant to this agreement, the Company granted
WGS an
irrevocable option to purchase 100% of the Company’s issued and fully paid for
share capital in Gunther. The aggregate purchase price to be paid by WGS
to the
Company upon exercise of such option shall be an amount equal to
$2,450,000. The option is exercisable by WGS, in its sole and absolute
discretion, for a period ending February 28, 2008. WGS did not exercise its
option prior to this time period, and the option automatically expired.
According to an opinion received by the Company from Israeli counsel, as
a
matter of Israeli law the option was not enforceable when granted.
On
April
3, 2008, the Company, Gunther and Tobias Jewelry Ltd., an Israeli corporation
(“Tobias”),
executed a share sale agreement, pursuant to which Tobias agreed to purchase
all
of the share capital of Gunther. The transactions contemplated by the agreement
were consummated on April 28, 2008. Pursuant to the agreement, Tobias paid
$777,549 to the Company and, on behalf of the Company, Tobias paid $472,801
to
World Group Capital (58) Ltd., in full satisfaction of the Company’s
pre-existing debt to World Group Capital; however, since the Company’s liability
to World Group Shipping as of April 28, 2008 was $435,584, World Group Shipping
committed to transfer $37,217 to the Company. Tobias also loaned $684,650
to
Gunther, which funds were paid directly to the Company in partial satisfaction
of Gunther’s pre-existing debts to the Company. Tobias also agreed to lend
Gunther $672,000, the remaining outstanding balance of Gunther’s debts to the
Company, on or before April 21, 2009, at which time Gunther is obligated,
pursuant to the Agreement, to repay the entire remaining outstanding balance
of
its debt to the Company. Twenty-five percent of Gunther’s outstanding share
capital will be held in escrow in order to secure repayment of the balance
of
Gunther’s debt to the Company. The remaining seventy-five percent of Gunther’s
share capital was transferred to Tobias on or about April 28, 2008. Pursuant
to
the agreement, Tobias also loaned Gunther $355,000, an amount equal to the
outstanding portion of Gunther’s pre-existing commitment to invest in Green Wind
Energy Ltd., and $30,000, an amount equal to Gunther’s outstanding obligations
to its suppliers.
Purchase
and Strategic Relationship Agreement
In
January 2007, the Company entered into a purchase and strategic relationship
agreement with Senergy, Ltd. (“Senergy”), an Israeli limited liability company
that operates in the areas of solar heating and cooling and solar-based energy
generation. Pursuant to the agreement, the Company, through a subsidiary,
agreed
to lend $500,000 to Senergy and Senergy agreed to issue shares to the Company
representing a 60% equity interest in Senergy. The loan bears interest at
the
rate of 6% and matures on July 28, 2008. As of June 30, 2007, the Company
had
loaned $100,000 of the agreed $500,000 in Senergy. The Company terminated
the
agreement on February 28, 2008. The principals of Senergy have personally
guaranteed repayment of the $100,000 loan made by the Company to Senergy
before
the termination of the agreement.
231
Norman Avenue
The
Company remains involved in the renovation and conversion of certain buildings,
located at 231 Norman Avenue, Brooklyn, New York, to commercial condominiums.
Construction has been completed and a Certificate of Occupancy was obtained
on
January 10, 2008. Approvals needed for the commercial condominium plan offering
have been obtained and 68 commercial condos are currently on the market for
sale. The Company is actively involved in managing the construction, financing,
and sales of the 231 Norman Avenue project. As of the date of filing, 24
contracts to purchase condominium units have been signed and deposits received,
8 units of which were closed and were occupied.
The
Company loaned $1.37 million dollars to 231 Norman Ave, LLC (“Norman LLC”) on
November 28, 2007, in part pursuant to an agreement which provided the Company
the option of acquire 100% of the membership interests in Norman LLC. The
Company exercised this option as of November 2006 and now owns 100% interest
in
Norman LLC. As a result of the Company’s acquisition of Norman LLC, the Company
controls 30% of the membership interests of 231 Norman Avenue Property
Development, LLC (“231 NAPD”).
In
November 2006, the Company purchased an option to acquire an additional 20%
interest in 231 NAPD for $100,000. The option price was required to be paid
by
December 31, 2006. The option, if exercised prior to March 30, 2007, gives
the
Company the right to purchase the 20% interest in exchange for 18 million
shares
of the Company’s common stock and a promissory note in the amount of $1,400,000.
The promissory note would bear interest at the rate of 8% and would mature
in
November 2011. The payment of the option price has been extended to June
30,
2007 and the exercise of the option has been extended to July 31, 2007. The
Company did not exercise the option prior to its expiration on July 31,
2007.
In
March
2005, 231 NAPD consummated a $10 million refinancing and construction loan
with
Washington Mutual with respect to the property at 231 Norman Avenue and received
capital contributions from investors of $1.75 million.
On
September 5, 2007, 231 NAPD entered into a Consolidated Mortgage Extension
and
Security Agreement with North Fork Bank pursuant to which 231 NAPD borrowed
the
principal sum of $2,426,497.29 from said bank and consolidated a previous
loan
of $11,411,002.71, for an aggregate consolidated principal loan amount of
$13,837,500.
Simultaneous
with the execution of the agreement, 231 NAPD issued a Restated Promissory
Note
to North Fork Bank in the aggregate principal amount of $13,837,500. Pursuant
to
the Note, principal plus all accrued and unpaid interest thereon shall be
paid
on March 5, 2009. Interest accrues on the principal amount at a daily rate
of
interest equal to 7.25% to be computed on 360-day basis, and is to be paid
on a
monthly basis. Under specified conditions, 231 NAPD may, at its option, extend
the loan for an additional 6 months in which case the rate of interest shall
be
2% above the one year Treasury Index as of the three days prior to the maturity
date. Upon providing 10 days prior written notice, 231 NAPD has the right
to
prepay the North Form Bank loan, in multiples of $25,000 or more, at any
time,
without penalty. The obligations to North Fork Bank are secured by a lien
on the
property owned by 231 NAPD.
In
connection with the consolidation of the loan with North Fork Bank, the Company,
Mr. Ofir, and several other parties executed a guaranty in favor of North
Fork
Bank. In accordance with the guaranty, the guarantors guaranteed full
performance of 231 NAPD’s obligations to North Fork Bank. In the event 231 NAPD
defaults under the terms and provisions of the agreement, upon written demand,
the guarantors, jointly and severally, shall pay to North Fork Bank all amounts
remaining unpaid under the agreement. As added security for the North Fork
Bank
loan, and in accordance with the guaranty, all property of the guarantors
held
by North Fork Bank shall be subject to a lien as security for the liabilities
of
the guarantors. In the event the guarantors fail to make payment to North
Fork
Bank when due, any such payment shall bear interest at the rate of 24% per
annum.
On
November 28, 2007, the Company and Norman LLC entered into a loan agreement
with
WGS. Pursuant to the agreement, WGS agreed to loan $1 million to the Company
and
Norman LLC. The aggregate principal amount, plus interest accruing at a rate
of
1.5% per month, shall be due and payable six months from the closing of the
agreement. As of April 8, 2008, WGS had transferred $399,970 of the $1 million
loan to the Company. While the Company expected the balance of the loan to
be
transferred by December 31, 2007, no such transfer occurred, and no additional
funds are expected.
In
exchange for such loan, on December 12, 2007, Norman LLC gave WGS a promissory
note evidencing the loan, as well as an option to purchase units in the
Company’s 231 Norman Avenue project at a price equal to 20% less than the then
current market price for such units. The promissory note may be repaid, in
whole
or in part, at any time or from time to time upon ten days prior written
notice
to WSG. This option expired on December 5, 2007, as a result of WGS’s failure to
advance the full principal amount of the loan. In addition, and as further
consideration for the loan, the Company has agreed to give WGS an option,
at
WGS’s discretion, to either purchase the 30% membership interests the Company
owns, through Norman LLC, in 231 NAPD for the sum of $2 million, or to purchase
the 100% ownership interest the Company has in Norman LLC, for the sum of
$2
million. Each of these options expires on the later of either six months
from
November 28, 2007, or the date on which the loan and any accrued interest
is
repaid. In connection with the sale of Gunther on April 23, 2008, WGS forfeited
this option without payment from the Company.
On
April
20, 2008 the Company and Russull Brothers, Inc., a Delaware corporation formerly
known as TSSS, Inc. and the holder of approximately 76.10% of our outstanding
common stock as of April 8, 2008, executed a loan agreement. Pursuant to
the
loan agreement the Company’s debt to Russull Brothers, which amounted to
$1,335,761 on December 31, 2007, is payable upon demand and will accrue interest
at an annual rate of 6%. Interest may, at the Company’s option, be paid, no
later than the tenth business day of January, or added to the principal
outstanding amount of the Company’s debt to Russull Brothers.
Governmental
Regulation
We
are
real estate developers due to our 30% ownership in 231 Norman Avenue Property
Development, LLC. 231 NAPD has developed & constructed a building of 68
commercial condominiums in New York City; that means that 231 NAPD works
in
compliance with the City's building codes & regulations, in addition to the
practices of the construction industry. A condominium project requires also
the
New York State Attorney General's office to approve such a plan. Our plan
was
approved & declared.
Competition
The
real
estate market in New York City is highly competitive. The Company faces
significant competition in its efforts to acquire properties for development
and
successfully market developed properties. The Company’s current activities are
focused on the development of commercial condominiums, a relatively new and
specialized niche of the New York City real estate market. As a result of
the
relative lack of commercial condominium buildings in the New York metropolitan
area, sale of commercial condominiums developed by the Company requires
significant marketing efforts. Furthermore, many local real estate developers
operate on a wider scale than the Company, developing several sites
simultaneously. As a result, many of the Company’s competitors have significant
administrative and funding capabilities that are not available to the Company.
There can be no assurance that the Company will be able to obtain the funding
and develop the administrative capabilities that will be required in order
to
compete successfully in the New York City real estate market.
Employees
At
this
time we have no full time employees and one part time employee, our chief
financial officer, Jonathan Rigbi. Our other officers and the members of
our
board of directors provide various services, including strategic planning,
negotiating and clerical support, on a voluntary basis.
Item
1A. Risk
Factors.
The
reader should carefully consider each of the risks described below. If any
of
the following risks develop into actual events, our business, financial
condition or results of operations could be materially adversely affected
and
the trading price of the Common Stock could decline significantly.
1. Our
Common Stock May Be Affected By Limited Trading Volume and May Fluctuate
Significantly
Prior
to
this offering, there has been a limited public market for our common stock
and
there can be no assurance that an active trading market for our common stock
will develop. As a result, this could adversely affect our stockholders'
ability
to sell our common stock in short time periods, or possibly at all. Our common
stock has experienced, and is likely to experience in the future, significant
price and volume fluctuations that could adversely affect the market price
of
our common stock without regard to our operating performance. In addition,
we
believe that factors such as quarterly fluctuations in our financial results
and
changes in the overall economy or the condition of the financial markets
could
cause the price of our common stock to fluctuate substantially. Substantial
fluctuations in our stock price could significantly reduce the price of our
stock.
2. Our
Common Stock is quoted on the Pink Sheets Over-the-Counter Quotation System,
Which May Make it More Difficult For Investors to Resell Their Shares Due
to
Suitability Requirements
Our
common stock is currently quoted on the Pink Sheets OTC quotation system,
where
we expect it to remain for the foreseeable future. Broker-dealers often decline
to trade in stocks that are quoted on the Pink Sheets given that the market
for
such securities is often limited, the stocks are more volatile and the risks
to
investors are greater. These factors may reduce the potential market for
our
common stock by reducing the number of potential investors. This may make
it
more difficult to sell our shares to third parties or to otherwise dispose
of
them. This could cause our stock price to decline.
4. Delaware
Law and Certain Provisions of Our Charter May Inhibit a Takeover of Our Company
That Stockholders May Consider Favorable
Provisions
of Delaware law, such as its business combination statute, may have the effect
of delaying, deferring or preventing a change in control of our company.
As a
result, these provisions could limit the price some investors might be willing
to pay in the future for shares of our common stock.
5. Our
Largest Stockholder Has the Ability to Exercise Significant Influence over
Matters Submitted for Stockholder Approval and His Interests May Differ From
Other Stockholders
Russull
Brother, Inc. (formerly known as TSSS, Inc.), whose sole officer and director
is
Ofer Arbib, our President, Chief Executive Officer, Director and Chairman
beneficially owns 40,687,997 shares of our common stock representing
approximately 76.10% of our outstanding common stock as of April 8, 2008.
Through Russull Brothers, Mr. Arbib, therefore, has the ability to appoint
our
Board of Directors. Accordingly, Mr. Arbib may have significant influence
in
determining the outcome of any corporate transaction or other matter submitted
to our Board for approval, including issuing common and preferred stock,
and
appointing officers, which could have a material impact on mergers,
acquisitions, consolidations and the sale of all or substantially all of
our
assets, and also the power to prevent or cause a change in control. The
interests of Mr. Arbib may differ from the interests of the other
stockholders.
6. Our
Investments May Not Generate Sufficient Income to Cover Our
Operations
Our
only
substantial asset is our 30% interest in 231 Norman Avenue Property Development,
LLC. Although we anticipate receiving net proceeds from this and our other
endeavors sufficient to satisfy our obligations, there is no assurance as
to
when or whether these proceeds will be received. Even if we receive proceeds
sufficient to satisfy our obligations, upon the sale or the liquidation of
Norman Property LLC we will have no ongoing business operations. We intend
to
use the net proceeds derived from our current holdings and such additional
funds
as we may raise through the issuance of debt or equity securities to acquire
real estate or other businesses. There can be no assurance that we will be
successful in our efforts to acquire any real estate or operating businesses
or,
if acquired, that any such business or project will prove to be
profitable.
7. The
Sale or Availability for Future Sale of Substantial Amounts of our common
shares
could Adversely Affect our Stock Price
As
of
April 8, 2008, there were 53,464,557shares of our Common Stock outstanding.
We
are authorized to issue up to a total of 100,000,000 shares of Common Stock
and
1,000,000 shares of blank check preferred stock. Additional issuances, including
the rights and preferences of the preferred shares, do not require stockholder
approval. The sale or availability for sale of substantial amounts of our
Common
Stock, in the public market could adversely affect the market price of our
Common Stock.
8. We
may, in the future, issue additional common shares, which would reduce
investors’ percent of ownership and may dilute our share
value.
Our
Articles of Incorporation authorize the issuance of 500,000,000 shares of
common
stock and 5,000,000 shares of preferred stock. The future issuance of common
stock may result in substantial dilution in the percentage of our common
stock
held by our then existing shareholders. We may value any common stock issued
in
the future on an arbitrary basis. The issuance of common stock for future
services or acquisitions or other corporate actions may have the effect of
diluting the value of the shares held by our investors, and might have an
adverse effect on any trading market for our common stock.
9. Our
common shares are subject to the "Penny Stock" Rules of the SEC and the trading
market in our securities is limited, which makes transactions in our stock
cumbersome and may reduce the value of an investment in our
stock.
The
SEC
has adopted Rule 15g-9 which establishes the definition of a "penny stock,"
for
the purposes relevant to us, as any equity security that has a market price
of
less than $5.00 per share or with an exercise price of less than $5.00 per
share, subject to certain exceptions. For any transaction involving a penny
stock, unless exempt, the rules require:
• that
a
broker or dealer approve a person's account for transactions in penny stocks;
and
• the
broker or dealer receive from the investor a written agreement to the
transaction, setting forth the identity and
quantity of the penny stock to be purchased.
In
order
to approve a person's account for transactions in penny stocks, the broker
or
dealer must:
•
obtain
financial information and investment experience objectives of the person;
and
•
make
a
reasonable determination that the transactions in penny stocks are suitable
for
that person and the person has
sufficient knowledge and experience in financial matters to be capable of
evaluating the risks of transactions in
penny
stocks.
The
broker or dealer must also deliver, prior to any transaction in a penny stock,
a
disclosure schedule prescribed by the SEC relating to the penny stock market,
which, in highlight form:
•
sets
forth the basis on which the broker or dealer made the suitability
determination; and
•
that
the
broker or dealer received a signed, written agreement from the investor prior
to
the transaction.
Generally,
brokers may be less willing to execute transactions in securities subject
to the
"penny stock" rules. This may make it more difficult for investors to dispose
of
our Common shares and cause a decline in the market value of our
stock.
Disclosure
also has to be made about the risks of investing in penny stocks in both
public
offerings and in secondary trading and about the commissions payable to both
the
broker-dealer and the registered representative, current quotations for the
securities and the rights and remedies available to an investor in cases
of
fraud in penny stock transactions. Finally, monthly statements have to be
sent
disclosing recent price information for the penny stock held in the account
and
information on the limited market in penny stocks.
10. There
is no current active trading market for our securities and if an active trading
market does not develop, purchasers of our securities may have difficulty
selling their shares.
Our
common stock was eligible to be traded on the Over-The-Counter Bulletin Board,
under the ticker symbol DCIU, from September 2002. There has been no active
trading in the Company’s securities and an active trading market in our
securities may not develop or, if developed, may not be sustained. If for
any
reason an active public trading market for our shares does not develop,
purchasers of the shares may have difficulty selling their common stock should
they desire to do so.
11. Because
we do not intend to pay any cash dividends on our common stock, our stockholders
will not be able to receive a return on their shares unless they sell
them.
We
intend
to retain any future earnings to finance the development and expansion of
our
business. We do not anticipate paying any cash dividends on our common stock
in
the foreseeable future. Unless we pay dividends, our stockholders will not
be
able to receive a return on their shares unless they sell them.
12. We
may issue shares of preferred stock in the future that may adversely impact
your
rights as holders of our common stock.
Our
Certificate of Incorporation authorizes us to issue up to 1,000,000 shares
of
“blank check” preferred stock. Accordingly, our board of directors will have the
authority to fix and determine the relative rights and preferences of preferred
shares, as well as the authority to issue such shares, without further
stockholder approval. As a result, our board of directors could authorize
the
issuance of a series of preferred stock that would grant to holders preferred
rights to our assets upon liquidation, the right to receive dividends before
dividends are declared to holders of our common stock, and the right to the
redemption of such preferred shares, together with a premium, prior to the
redemption of the common stock. To the extent that we do issue such additional
shares of preferred stock, your rights as holders of common stock could be
impaired thereby, including, without limitation, dilution of your ownership
interests in us. In addition, shares of preferred stock could be issued with
terms calculated to delay or prevent a change in control or make removal
of
management more difficult, which may not be in your interest as holders of
common stock
Item
1B.Unresolved Staff Comments.
Not
applicable.
Item
2. Properties.
We
currently maintain our corporate offices at 231 Norman Avenue, Brooklyn,
New
York 11222. We do not have a lease for this property and do not pay rent
for
this space as we have a 30% interest in the property at this address. We
believe
that this space will be sufficient until we start generating revenues and
need
to hire employees.
Item
3. Legal
Proceedings.
There
are
no pending legal proceedings to which the Company is a party or in which
any
director, officer or affiliate of the Company, or any owner of record or
beneficially of more than 5% of any class of voting securities of the Company,
is a party adverse to the Company or has a material interest adverse to the
Company. The Company’s property is not the subject of any pending legal
proceedings.
Item
4. Submission
of Matters to a Vote of Security Holders.
During
the period ending December 31, 2007, there has not been any matter which
was
submitted to a vote of the Company’s shareholders through the solicitation of
proxies or otherwise.
PART
II
Item
5. Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities.
Market
Information
Our
common stock was eligible to be traded on the Over-The-Counter Bulletin Board,
under the ticker symbol DCIU, from September 2002. The table below sets forth
the range of quarterly high and low sale information for shares of our common
stock. These quotations reflect inter-dealer prices, without retail markup,
markdown or commission, and may not represent actual transactions.
|
|
||
|
2007
Quarter Ended
|
High
Price
|
Low
Price
|
|
12/31/2007
|
$0.05
|
$0.03
|
|
9/30/2007
|
0.07
|
0.05
|
|
6/30/2007
|
0.08
|
0.06
|
|
3/31/2007
|
0.09
|
0.03
|
|
|
||
|
2006
Quarter Ended
|
High
Price
|
Low
Price
|
|
12/31/2006
|
$0.04
|
$0.04
|
|
9/30/2006
|
0.02
|
0.01
|
|
6/30/2006
|
0.05
|
0.05
|
|
3/31/2006
|
0.05
|
0.05
|
Holders
As
of
April 8, 2008, there were 53,464,557 common shares issued and outstanding,
which
were held by 129 stockholders of record.
Dividends
We
have
never declared or paid any cash dividends on our common stock nor do we
anticipate paying any in the foreseeable future. Furthermore, we expect to
retain any future earnings to finance our operations and expansion. The payment
of cash dividends in the future will be at the discretion of our Board of
Directors and will depend upon our earnings levels, capital requirements,
any
restrictive loan covenants and other factors the Board considers relevant.
Equity
Compensation Plans
We
do not
have any equity compensation plans.