ITEM 1. DESCRIPTION OF BUSINESS
General Information
Deltron, Inc. was incorporated in the State of Nevada on
September 14, 2005. We were formed as a land development company
that intends to construct rental housing units in
Costa Rica. In March of 2006, Deltron, Inc. purchased a property in San
Isidro de Heredia, Costa Rica, which we intend to develop. We raised
$74,900 from our recent public offering, and with this money we intend to
finance the construction of two rental units on this property. Deltrons
principal place of business and corporate offices are located at Sabana Oeste,
Restuarante Princessa Marina, 200 Metros Oeste, 100 Norte, Porton Verde, Frente
SBC Computadoras, San Jose, Republic of Costa Rica, telephone number (011)
506-290-4886. The office space is a 3,000 square foot shared-office
building in which Deltron has use of a 150 square foot office. Our fiscal year
end is September 30.
As of September 30, 2007 we had generated no revenues.
We have been issued an opinion by our auditor that raises substantial
doubt about our ability to continue as a going concern based on our current
financial position, please refer to note 1 of our financial statements.
We have a total of 100,000,000 authorized common shares
with a par value of $0.001 per share and 5,545,000 common shares issued and
outstanding as of September 30, 2007.
We completed a form SB-2 Registration Statement under the
Securities Act of 1933 registering 7,500,000 shares (minimum of 3,000,000) of
our common stock in connection with an offering of the 7,500,000 shares at a
price of $0.02 per share. As of September 30, 2007, we had partially completed
the offering and raised a total of $74,900 on the issuance of the 3,745,000
shares. We closed the offering on September 7, 2006.
Business Development
Deltron, Inc. has no revenues and limited operations.
We have sustained losses since inception, September 14, 2005, to September
30, 2007, of $58,765, and rely solely upon the sale of securities and loans from
our corporate officers and directors for funding.
Deltron, Inc. incorporated Deltron Holdings Corporation
S.A. Deltron S.A.) on November 17
th
, 2005 in San Jose, Costa Rica,
a company in which Deltron, Inc. owns 100% of the shares. Deltron
S.A. was used to purchase the property that we currently have available for our
development plans.
Deltron has never declared bankruptcy, been in
receivership, or involved in any kind of legal proceeding. Deltron, its
directors, officers, affiliates and promoters have not and do not intend to
enter into negotiations or discussions with representatives or owners of any
other businesses or companies regarding the possibility of an acquisition or
merger.
Principal Products, Services and Their Markets
Deltron is a land development company
that intends to construct rental housing in Costa
Rica. We will accomplish this goal by developing a total of two (2),
three-bedroom apartments. We will construct the apartments on a property
that we currently own in San Isidro de Heredia, Costa Rica. On completion of the
construction phase, we will offer these apartments for rent to the public via
word of mouth and classified advertising.
The property we purchased, and the apartments that we
intend to construct, will be owned by Deltron S.A., a company incorporated in
San Jose, Costa Rica, on November 17
th
2005, the shares of
which are 100% owned by Deltron, Inc. Upon the closing of our most recent
offering on September 9, 2006,, we had raised a total of $74,900 from the sale
of 3,745,000 common shares, or approximately 50% of the offering. In
accordance with our prospectus dated June 16, 2006, we believed this would
enable us to build 2 apartments and rent them to the public.
However, we were required to suspend the construction of
the two apartments/housing units due to lack of funds, as the cost of
construction has significantly increased since our original estimate in 2005.
This is in large part due to the increase in the price of construction
materials, as well as a major increase in the cost of labor due to the current
construction boom in Costa Rica and the resulting labor shortage.
Presently, our primary focus is to raise sufficient
funding in order that we may construct a minimum of two (2) three-bedroom
apartments with the goal of renting them to middle-income families in order to
generate revenue. Provided that we are able to raise
additional funding, we anticipate that construction will take approximately 5
months. Since we are not sure when or if we are able to raise such funds,
at this time we do not know when we can expect to generate any revenues from
housing rentals, if at all.
If we are ultimately successful in raising the funding
and completing the constriction, The final product will be competitive in both
quality and affordability when compared to similar housing offered by our
competitors. However, we intend to distinguish our rental units from the
competition by providing features not found in many Costa Rican rental
properties, such as secured entry, hot water, modern fixtures, internet, cable,
and telephone access.
Deltron will provide ongoing maintenance of the
properties and apartments on a regular basis, and we will make any repairs as
needed, and all tenants will have twenty-four hour telephone access to a
property caretaker in case of emergency.
Competitive Business Conditions and Strategy;
Deltrons Position in the Industry
Deltron intends to establish itself as a competitive
company in an already existing market. Currently, there are many other
corporate and private entities that offer rental housing in Costa Rica.
Most of these rental properties are offered for lease by word of mouth or
classified advertising.
The companys founder and President, Mr. Phillips, a
direct marketing consultant, has lived in Costa Rica for three of the past seven
years, and together with Hilda Rivera,
a
director of the company and Costa Rican land developer, has found that there is
a high demand among the target market for quality rental housing of the kind
that Deltron intends to offer, particularly those that have access to modern
features such as hot water, internet, cablevision, and are located near public
transportation, schools and shopping.
Our strategic approach is to offer middle-class housing
to lower middle-income families. Part of this will be achieved by
constructing apartments with a small frontage area and walkway, as well as a
privately enclosed back yard.
The Company also believes that because the housing will
be new and contain modern features, it will be more desirable to prospective
tenants than many of the options offered by our competitors.
Manicured garden areas, hot water,
cable, internet and telephone access are not common features found many
lower-middle income housing units in Costa Rica, and we contend that this will
help to set us apart from the competition.
Important to our business strategy is to find tenant
families for each of the apartments consisting of two employed adults with good
standing credit histories and previous rental references. We believe that
the kind of rental housing we intend to offer will create high market demand and
enable us to be selective in finding tenants whom are able to pay the rent.
The apartments will be promoted and advertised in the
classified section of local newspapers and by word of mouth. We will also
place a large sign on the front of the property.
To date, we have not entered into any negotiations with
realtors who specialize in matching landlords with tenants, but this will be an
available option to Deltron should we decide that it is a necessary or desired
means of finding tenants.
Sales and Distribution Methods
When and if contracted, we will offer the apartments for
rent via word of mouth and classified newspaper advertisement on terms of
renewable one-year lease agreements. We will also require a one-month
damage deposit from the tenant, which will be refunded at the end of the lease
agreement provided that there is no damage to the apartment other than normal
wear and tear, or because of circumstances beyond the tenants control.
The tenant will be responsible for paying the
electricity, cable, internet, telephone and water bills directly to the
providers.
The rental agreements between Deltron and the tenants
will be written and executed by a Costa Rican attorney.
Sources and Availability of Products
Construction companies and building materials are
plentiful in Costa Rica and the market places for each of these products and
services are highly competitive. The success of Deltrons business
plan relies heavily on finding a general contractor with whom we can negotiate
to construct the apartments on schedule and within budget. Deltron, Inc will
begin looking to hire a construction company to build the apartment units once
we have received sufficient funding. At this time, we have not entered
into any agreements with any construction firm.
Dependence on one or a few major customers
Deltrons business plan is dependent upon finding tenants
who will rent our apartments and make the monthly payments. As such, we
intend to rent each of the apartments to families that consist of at least two
working adults with credit histories and references which we can verify are in
good standing.
Housing is a major need and commitment for a family, and
we do not anticipate much difficulty in collecting the monthly payments from the
tenants.
Patents and Trademarks
There are no aspects of our business plan which require a
patent, trademark, or product license. We have not entered into any vendor
agreements or contracts that give or could give rise to any obligations or
concessions.
Government and Industry Regulation
In Costa Rica, there are numerous government controls in
place with reference to housing construction, all of which revolve around the
specifications of the architectural plans.
In order to proceed with the construction phase of our
business plan, we are required by law to submit the architectural plans for our
project to the municipality for approval before being granted a construction
permit. The plans must be approved by a licensed architect or civil
engineer who is a member of the College of Engineers and Architects of Costa
Rica.
A complete set of plans includes a design plan, site
plan, distribution plan, elevation and transversal and longitude perspectives,
roof design and drainage, design of footings and support beams, structural
plans, electrical design, mechanical and sanitary system design, as well as a
plan that details the constructions interior finish.
We have hired the services of Tropical Design Group S.A.,
an architectural firm, who has completed the design and aforementioned plans for
two rental units to be built on the site owned by Deltron. Eventually,
those plans will need to be presented to the City of San Isidro de Heredia for
approval and issuance of the building permits once we are ready to enter into
the construction phase of our business plan.
Research and Development Activities and
Costs
Deltron has spent no time in the last two fiscal years on
specialized research and development activities, and has no plans to undertake
any research or development in the future.
Compliance with Environmental Laws
The property which we intend to build the two apartment
units has been zoned for residential housing, and there are no special
environmental laws for building apartments on a property in Costa Rica which is
zoned for residential housing.
Subcontractors
At this time we are not in any
negotiations to hire the services of any subcontractor(s).
In the future, when we are ready
to commence with the construction phase of our business plan, we will hire a
construction firm who will be directly responsible for the hiring and
supervision of any required subcontractors.
Employees and Employment
Agreements
At present, we have no full-time
employees. Our one officer and two directors are part-time employees and each
will devote up to approximately 20 hours per week of their time to our
operation. Our officers and directors do not have employment agreements with us.
We presently do not have pension, health, annuity, insurance, stock options,
profit sharing or similar benefit plans; however, we may adopt plans in the
future. There are presently no personal benefits available to our officers and
directors. Our officers and directors will handle our administrative duties.
Because our officers and directors are inexperienced with construction, they
will hire a qualified person for the, development of the property who will also
supervise the hiring of the labour for the construction.
Risks associated with DELTRON, INC.
We are a start-up company with a lack of operating
history and profitability. Deltron has incurred losses since inception and
we expect those losses to continue in the future. As a result, we may have
to suspend or cease operations.
We were incorporated on September 14
th
,
2005,
and we have not started our proposed
business operations or realized any revenues. We have no operating history
upon which an evaluation of our future success or failure can be made. As
a result, it is possible that we may not generate revenues in the future.
We have incurred a net loss of $58,765 since inception to September 30,
2007, and in order to generate revenue we are dependent on:
·
Our ability to finance and construct
our rental units
·
Our ability to find tenants who will
rent the apartments in order to generate revenues
Based upon current plans, we expect to incur operating
losses in future periods. This will happen because the maximum possible
revenues we can generate from the business will not be sufficient enough to
cover the expenses associated with operating the company. As such, we may
not be able to generate enough future revenues to cover our expenses, which
could cause us to suspend or cease operations.
Because Deltron is a small company, and does not
have much capital, if we are unable to raise additional funds to meet our needs
we may have to scale back operations which could result in a loss of your
investment.
Because we are a small company with limited financial
resources, we are limited in our ability to successfully implement our business
plan, and we may not be able to build and rent as many apartments as we would
like. In that case, we would have to raise more capital in order for the
business to be successful.
If we cannot build and rent enough apartments, then we
would be unable to generate the revenues required in order to maintain our
business and this could result in a loss of your investment.
Because Mr. Phillips has other outside business
activities, he will only be able to dedicate a limited amount of his time to
Deltrons operations. This could result in periodic interruptions or
suspensions of the business plan.
Because our Company president
has other outside business interests, he will
only be able to devote a limited amount of his time to our operations.
Deltron operations may occur at times which are inconvenient to Mr.
Phillips, which could result in the development of our plan being periodically
interrupted or suspended.
Because Deltrons Operations and Assets are
concentrated in Costa Rica and not in the United States, we are subject to the
risks associated with currency fluctuations.
Deltron will be subject to fluctuations in the exchange
rates between the U.S. dollar and the Costa Rican Colone. The funds being
raised for this prospectus are in U.S. dollars and will be placed in a U.S.
dollar account. However, any fluctuation in currency value between the U.S.
dollar and Costa Rican Colone could cause an increase in overall expenses that
would exceed the achievable revenues. If that were the case, Deltron
would have to cease or suspend operations.
If our officers and directors resign or die without
having found replacements, our operations will be suspended or cease altogether.
Should that occur, you could lose your investment.
We have 1
officer and
2
directors and we are entirely dependent
upon them in order to conduct our operations. If they should resign or
die, there will be no one to run Deltron. The Company has no key-man
insurance. If such an event were to take place and we were unable to find
other persons to run us, our operations would be suspended or cease entirely,
and this would result in the loss of your investment.
Our business plan requires us to hire an
independent contractor to build the apartments. If we hire a contractor
who fails to build the apartments on schedule, within budget, or within the
government building code, we may have to cease operations and you could lose
your investment.
Because no one on our management team is trained in
construction, we will have to hire a general contractor to build the apartments.
Unlike the United States, there is very little regulation governing
construction companies or general contractors in Costa Rica, and no
qualifications are required in order to own or operate a construction business.
So, it is vital that we hire an experienced construction company with a
proven track record.
Also, Costa Rica is a country where construction problems
are rampant. The industry is notorious for its inability to complete projects on
schedule, budget, or in compliance with the required government building codes.
Furthermore, it can take many years in Costa Rica to
resolve any dispute in the courts. So, should we desire to sue the
construction company because they did not meet their contractual agreements
and/or obligations, we may have to cease operations and you could lose your
investment.
Our shares are defined as penny stock, the rules
imposed on the sale of the shares may affect your ability to resell any shares,
if at all.
Our shares are defined as a penny stock under the
Securities and Exchange Act of 1934, and rules of the Commission. The
Exchange Act and such penny stock rules generally impose additional sales
practice and disclosure requirements on broker-dealers who sell our securities
to persons other than certain accredited investors who are, generally,
institutions with assets in excess of $5,000,000 or individuals with net worth
in excess of $1,000,000 or annual income exceeding $200,000, or $300,000 jointly
with spouse, or in transactions not recommended by the broker-dealer. For
transactions covered by the penny stock rules, a broker-dealer must make a
suitability determination for each purchaser and receive the purchaser's written
agreement prior to the sale. In addition, the broker-dealer must make
certain mandated disclosures in penny stock transactions, including the actual
sale or purchase price and actual bid and offer quotations, the compensation to
be received by the broker-dealer and certain associated persons, and deliver
certain disclosures required by the Commission. Consequently, the penny
stock rules may affect the ability of broker-dealers to make a market in or
trade our common stock and may also affect your ability to resell any shares you
may purchase in the public markets.
We will incur ongoing costs and expenses for SEC
reporting and compliance, without revenue we may not be able to remain in
compliance, making it difficult for investors to sell their shares, if at
all.
Our common stock is quoted on the OTC Electronic Bulletin
Board, under the symbol DTRO. To be eligible for quotation on the OTCBB,
issuers must remain current in their filings with the SEC. Market Makers are not
permitted to begin quotation of a security whose issuer does not meet this
filing requirement. Securities already quoted on the OTCBB that become
delinquent in their required filings will be removed following a 30 or 60 day
grace period if they do not make their required filing during that time.
In order for us to remain in compliance we will require future revenues to
cover the cost of these filings, which could comprise a substantial portion of
our available cash resources. If we are unable to generate sufficient
revenues to remain in compliance it may be difficult for you to resell any
shares you may purchase, if at all.
Reports to Security Holders
The Company is not required to
provide annual reports to security holders.
We are subject to the reporting
requirements of the Securities and Exchange Commission (SEC) and will file
reports including, but not limited to, Annual Reports of Form 10-KSB, Quarterly
Reports on Form 10-QSB, Current Reports on Form 8-K, and Proxy Statements on
Schedule 14.
The public may read and copy any
materials we file with the SEC at the SECs Public Reference Room at 100 F
Street N.E., Washington, D.C. 20549. The public may obtain information on
the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
The SEC maintains an Internet site that contains reports, proxy and
information statements, and other information regarding issuers that file
electronically with the SEC and the address of that site is www.sec.gov.