UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR
15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the
month of September
2019
Commission
File Number: 000-52145
DIGATRADE FINANCIAL CORP
(Translation
of registrant's name into English)
1500
West Georgia Street, Suite 1300
Vancouver, BC V6G-2Z6
(Address
of principal executive offices)
Indicate
by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
[
X ] Form
20-F [ ] Form 40-F
Indicate
by check mark if the registrant is submitting the Form 6-K in paper
as permitted by Regulation S-T Rule 101(b)(1): [ ]
Indicate
by check mark if the registrant is submitting the Form 6-K in paper
as permitted by Regulation S-T Rule 101(b)(7): [ ]
Indicate
by check mark whether by furnishing the information contained in
this Form, the registrant is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under the
Securities Exchange Act of 1934.
Yes
[ ]
No [ x ]
If
"Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b):
000-52145
SUBMITTED HEREWITH
ANNUAL
INFORMATION FORM AMENDED
DIGATRADE
FINANCIAL CORP.
FORWARD-LOOKING
STATEMENTS
This
report contains certain statements that constitute forward-looking
information relating to Digatrade Financial Corp.
(“Digatrade” or the “Company”). These
forward-looking statements are not descriptive of historical
matters and may refer to management’s expectation or plans.
These statements include but are not limited to statements
concerning our business objectives and plans and future trends in
our industry. Inherent in forward-looking statements are risks and
uncertainties beyond management’s ability to predict or
control including risks that may affect the Company’s
operating or capital plans. Actual results and developments are
likely to differ, and may differ materially, from those expressed
or implied by the forward-looking statements in this discussion and
analysis as well as contained in other components of the annual
report. Such statements are based upon a number of assumptions that
may prove incorrect, including but not limited to, the following
assumptions: that there is no material deterioration in general
business and economic conditions; that there are no unanticipated
fluctuations in interest or exchange rates; that there is no
cancellation or unfavorable variation to its current major
contracts; that if required, Digatrade is able to finance future
acquisitions on reasonable terms; and that Digatrade maintains its
ongoing relations with its business partners. We caution you that
the foregoing list of important factors and assumptions is not
exhaustive. You should also carefully consider matters discussed
under “Risk and Uncertainties” contained elsewhere in
this discussion. Digatrade undertakes no obligation to update
publicly or otherwise revise any forward-looking statements or the
list of factors, whether as a result of new information or future
events or otherwise, except as may be required under applicable
laws.
1.1
This AIF/A Report
is dated September 9, 2019
ITEM 2.
TABLE OF CONTENTS
Item 1 Cover Page
1.1
Date
Item 2 Table of Contents
2.1
Table of Contents
Item 3 Corporate Structure
3.1
Name, Address and Incorporation
3.2
Intercorporate Relationships
Item 4 General Development of the Business
4.1
Three Year History
Item 5 Description of the Business
5.1
General
5.2
Risk Factors
Item 6 Dividends and Distributions
Item 7 Description of Capital Structure
7.1
General Description of Capital Structure
7.2
Constraints
7.3
Ratings
Item 8 Market for Securities
8.1
Trading Price and Volume
8.2
Prior Sales
Item 9 Escrowed Securities and Securities Subject to Contractual
Restriction on Transfer
9.1
Escrowed Securities and Securities Subject to Contractual
Restriction on Transfer
Item 10 Directors and Officers
10.1
Name, Occupation and Security Holding
10.2
Cease Trade Orders, Bankruptcies, Penalties or
Sanctions
10.3
Conflicts of Interest
Item 11 Promoters
Item 12 Legal Proceedings and Regulatory Actions
Item 13 Interest of Management and Others in Material
Transactions
Item 14 Transfer Agents and Registrars
Item 15 Material Contracts
Item 16 Interests of Experts
16.1
Names of Experts
16.2
Interests of Experts
Item 17 Additional Information
17.1
Additional Information
ITEM 3.
CORPORATE STRUCTURE
Digatrade
Financial Corp. (referred to as “Digatrade” or
“the Company”), is a British Columbia corporation,
incorporated on December 28, 2000. The Company is listed as a fully
reporting issuer on the OTC Market Group Inc.’s
“Pink” marketplace, and trades under the symbol
“DIGAF.PK”. The registered and corporate office is at
1500 West Georgia Street, Suite 1300, Vancouver, British Columbia,
Canada, V6C 2Z6. The Company does not have an agent in the United
States.
As of
the date of this report, the Company has four wholly-owned
subsidiaries, Digatrade Limited (a British Columbia corporation),
Digatrade Limited (a Nevada corporation), Digatrade (UK) Limited (a
United Kingdom corporation) and Securter Systems Inc., (a Canadian
Federal Corporation).
Digatrade
Limited (a British Columbia corporation), Digatrade Limited (a
Nevada corporation), and Digatrade (UK) Limited (a United Kingdom
corporation) were incorporated during the year ended December 31,
2015.
Securter
Systems Inc. was incorporated in January 2019.
ITEM 4.
GENERAL DEVELOPMENT OF THE BUSINESS
4.1.
Three Year History
The
Company was incorporated in British Columbia under the name Black
Diamond Holdings Corporation on December 28, 2000. On June 26,
2007, the Company changed its name from Black Diamond Holdings
Corporation to Black Diamond Brands Corporation. On November 21,
2008, the Company changed its name to Rainchief Energy Inc., and on
February 19, 2015, to Bit-X Financial Corporation. On October 27,
2015, the Company changed its name to Digatrade Financial
Corporation.
Digatrade
operates as a financial technology (FinTech) services company. The
Company has been focused on the financial technology industry since
2015. During that time, the Company has pursued several different
areas of business including blockchain development services,
transaction services for crypto-currencies (e.g. Bitcoin) and other
related financial services technologies.
In
March 2015, the Company entered into an agreement with Mega Ideas
Holdings Limited, dba ANX (“ANXPRO and ANX
International”), a company incorporated and existing under
the laws of Hong Kong. ANX owns a proprietary trading platform and
provides operational support specializing in blockchain development
services and exchange and transaction services for
crypto-currencies e.g. Bitcoin and other digital assets. However,
effective October 17, 2018, the Company closed its online retail
trading platform, although the Company may continue to evaluate
opportunities and continue with research in digital-asset trading
for prospective institutional customers while continuing to seek
new opportunities within the blockchain and the financial
technology services (non-trading) sector.
On
February 28, 2019 the Company executed
a definitive agreement (the “Securter Agreement”) with
Securter Inc., a private Canadian Corporation
(“Securter”) that is developing a proprietary,
patent-pending credit card payment platform to significantly
increase the security of online credit card payment processing.
Securter technology reduces immense losses by financial
institutions and merchants that arise from fraudulent credit card
use and protects cardholder privacy by eliminating the distribution
of personal information to third parties. With the current
worldwide surge in online commerce expected to continue for years
to come, the problem of credit card security is large and growing.
The Securter Agreement with Securter sets out that Securter’s
technology will be launched and commercialized as a Digatrade
subsidiary.
Pursuant to the
terms of the Securter Agreement, the parties agreed to form a
subsidiary of Digatrade, Securter Systems, Inc. (“Securter
Systems”), and assign all of the assets and intellectual
property of Securter into Securter Systems. Securter Systems has
been created to launch and commercialize the Securter technology
under Digatrade. The consummation of the Securter Agreement is
subject to certain milestone events, including the contribution of
capital by Digatrade to Securter Systems.
ITEM 5.
DESCRIPTION OF THE BUSINESS
Securter Systems is
a newly-formed subsidiary of Digatrade. The name Securter describes
both the technology itself and Securter Systems that is developing
a proprietary payment platform that increases the security of
credit card holder information and enhances the authentication of
online credit card purchases. These enhancements help online
merchants and banks significantly reduce Card-Not-Present
(“CNP”) fraud. CNP Fraud losses are estimated at over
US$6 Billion annually in North America.
Securter Systems
may also reduce the costs associated with PCI DSS compliance, a
payments industry processing protocol. Securter Systems technology,
which is now patent pending, focuses on cardholder identification
for transaction verification.
Following EMV (a
credit card cooperative association) technology migration to reduce
counterfeit fraud at “point of sale” (POS), criminals
are currently able to steal credit card information from personal
computers & open public networks. Securter Systems has
researched and is developing the software and hardware of a next
generation of online user authentication that is based on remote
processing of EMV/smart credit/debit cards. Securter Systems’
payment platform adapts and extends conventional and existing
methods, by going beyond the most reliable EMV technology
(currently intended for physical Point of Sales / POS) to secure
EMV online payments as well.
The
research and development is related to the cyber-security field, in
order to provide robust system architecture without dependence upon
any kind of personal computer vulnerabilities. This is possible
because all operations are performed on two trusted sides –
the bank side and a smart-card secured microprocessor. This
eliminates the need for costly risk management by intermediate
servers (that is the norm today).
Intellectual Property
We rely on Patent (pending), trademark, copyright and trade secret
laws, confidentiality procedures, and contractual provisions to
protect our technology.
Our IP includes "know how", programming code, business plans,
potential customer and partner lists, ideas related to R&D
cycle and other confidential information to protect IP as trade
secrets.
As of November 19, 2015, we had filled provisional patent pending
application that was continued as a PCT patent application that
currently started the examination in the United States and Canada.
Securter Systems Inc. International Patent Application
“Coordinator managed payments” No. PCT/CA2016/051294
intended to cover overall payment/authentication system
architecture and possible implementation of a very secure payment
terminal.
The proposed payment system architecture allows:
*very reliable customer authentication and authorization based on
processing smart cards
* technology implementation in a variety of potential business
directions such as e-commerce/retail, e-gov (Digital ID), IoT
payments/authentication, e-banking (especially for unbanked
population), digital authentication services, blockchain
cryptocurrencies, etc.
US Patent application status:
On May 21st, 2019 we had filled US Revival Patent application and
assignment (including a Petition to revive) with the United States
Patent and Trademark Office. This application was filed as a small
entity (less than 500 employees) and the application number is
16/462,548.
On June 12th, 2019 we have received notice that the application was
revived as of June 11th, 2019.
Canadian Patent application status:
We have received the Notice of National Phase Entry for the
Canadian patent application, indicating that this application was
accorded the filing date of November 7, 2016, and assigned
Application No. 3,040,776.
Provisional Rights: This application has been laid open to public
inspection. In Canada, “reasonable compensation” is
available for infringing activities occurring after the laid open
date and before the patent issue date.
Substantive Examination: A request for substantive
examination, along with the examination fee, must be submitted
within five years of the filing date, or by November 7,
2021.
Vision
Our
belief is that enormous resources are being wasted on fraudulent
Card-Not-Present (CNP) transactions. We aim to bring a convenient,
more affordable and safer solution to cardholders, merchants and
financial institutions. We intend to innovate the payment space by
collaborating with financial institution stakeholders. Our revenue
model is to share in the resulting transaction fees, by being an
integral part of the transaction processing.
History
The
initial technology idea was introduced by Securter’s
founders. In 2013 an agreement was signed by them with Mr. Steve
Epstein, now serving as CEO of Securter, to develop a business plan
and to find ways to adapt the technology to the marketplace. Since
2013 Securter‘s founders have achieved Technology Readiness
Level (TRL) 6 - which includes a working prototype tested in the
lab environment. On February 26th 2019 Securter’s founders
approved the Securter Agreement with us. This was reported by SEC
Form 6-K, which filing included a copy of the agreement. The
Securter Agreement called for the formation of a new Digatrade
subsidiary (Securter Systems Inc) to receive and hold all the
Securter founders’ technology related assets and intellectual
property, including existing and future patent rights.
Under
the agreement, Digatrade will fund our new subsidiary up to US$3
Million in operational financing. This will enable the subsidiary
to make its technology market-ready for launch through alliances
with established payment service providers and other FinTech
industry channels.
Previously,
Securter’s founders, through their predecessor company,
Securter Inc., submitted a provisional patent under PCT rules
(Patent Community Treaty), and received letters of intent for
partnership / collaboration with companies specializing in
cyber-security and ASIC design & development, and had been
accepted into the IBM Global Entrepreneur Program.
The Market
Online
shopping is a thriving sector within world commerce. Retail
e-commerce sales worldwide are on-track to nearly double between
2016 and 2020. Internet-savvy buyers are determined to spend time
researching products online and reading online reviews in order to
get the best deal possible. Around 42 percent of U.S. consumers
have searched and purchased products or services online, while 14
percent prefer searching online and buying in store. Retail sales
from worldwide electronic commerce are expected to grow from $2.3
trillion U.S. dollars in 2017 to almost $4.9 trillion in
2021.
Technical and Commercial objectives
Securter will
proceed further with the development of its online payments system
to become fully ready for demonstrations in an operational
environment and field testing by 2020.
Securter Systems
currently has a functional “Alpha” prototype and will
proceed with the development of its online payments system that
will be available for demonstrations in an operational environment
and field testing.
Projected
timetable: Securter Systems will proceed in the 8 months post
Regulation A funding (Phase 1) with the Payment Card Industry Data
Security Standard (PCI DSS) Compliance that applies to companies
that process and transmit cardholder data; Payment Service Provider
(PSP) integration; Mobile Application development; Server Side
(Back End) and Website (Front End) development. By the end of this
phase, Securter will start a real-world pilot with on-line
merchants. We already have interested prospective implementation
partners. This is why we believe that our transaction fee revenue
sharing model is realistic.
In
Phase 2, Securter Systems will make improvements based on Phase 1
tests and demonstrations (developmental testing and evaluation of
whether the Securter platform meets operational requirements) and
testing actual applications of the technology in its final form
under real-life conditions.
Costs of Development
Approximately
$30,000 (US$22,496) in costs have incurred to date paid for by
Digatrade and thousands of working hours in R&D and business
development. The Company anticipates additional research and
development of the Securter technology will cost
US$3,000,000.
The
anticipated technology development costs and key personnel hires in
year-one will be approximately US$1.14m. The Subsidiary team will
consist of one full-time CTO, CINO or VP of R&D, three
full-time company developers, scientific adviser, one full-time
technical support person, web programmer, web designer, 3rd party
software development company and HW development company. Additional
PCI and EMV L2 certifications will be approximately
US$190k.
Securter
Agreement
Structure
On
March 20, 2019, Digatrade incorporated
Securter Systems Inc. as a wholly owned
subsidiary.
On
April 8, 2019, Securter Systems received a transfer of Intellectual
Property, including Patents and Trademarks from Securter Inc.
Subject to the terms and conditions of the Agreement with Securter
Inc., Securter Systems will issue to shareholders 30,000,000 Class
“A” Voting Shares “Shares” and Digatrade
has the option to purchase via subscription up to 12,900,000 Shares
at a price of US$0.23, for a total investment of up to
US$3.0m.
On
June 19, 2019 30,000,000 shares were issued to shareholders of
Securter and 100,000 class “B” supervoting shares (1000
votes each) issued to Digatrade Financial Corp. Digatrade retains
voting control due to its supervoting shares as well as a board
seat (see below) and certain protective provisions in Securter
Systems governing documents.
Board of Directors
As
per terms of the Digatrade and Securter agreement the board of
directors of Securter Systems shall initially be the following
three (3) members:
(a)
One
third (1/3) of the Board must be represented by Digatrade nominees,
which individual shall initially be James D. Romano;
(b)
One
third (1/3) of the Board must be represented by Securter nominees,
which individual shall initially be Steve Epstein; and
(c)
One
third (1/3) of the Board must be represented by an independent
nominee mutually acceptable to both Digatrade and Securter, which
individual shall initially be Andrei Grenader.
Termination
Should
Digatrade fail to purchase Shares in Securter Systems within 120
days from the date of the Agreement and 90 days from the date of
any previous purchase then Digatrade’s right to purchase
Common Stock in Securter Systems shall be terminated. Digatrade
will retain all shares acquired at formation and/or purchased
regardless of termination.
Technology Rights
All
developments, rights to the technology will be the exclusive
property of Securter Systems and it will have sole discretion and
responsibility to deal with developments.
5.2 Risk Factors
Risks Related to the Business
We have a history of operating losses and need additional capital
to implement our business plan.
For the
year ended December 31, 2018, we recorded a net loss of from
operations of $1,122,820 (US$866,822) as compared to a net loss of
$674,520 (US$520,199) for the year ended December 31, 2017. The
financial statements have been prepared using IFRS principles
applicable to a going concern. However, as shown in note 1 to the
consolidated financial statements for the year ended December 31,
2018, our ability to continue operations is uncertain.
We
continue to incur operating losses and have a consolidated deficit
of $6,298,938 (US$5,725,781) as at December 31, 2018. Operations
for the year ended December 31, 2018 have been funded primarily
from the issuance of share capital, debt financing and the
continued support of creditors. Historically, we have met working
capital needs primarily by selling equity to Canadian residents,
raising debt finance and from loans (including loans from relatives
of principal shareholders).
We
estimate that we will require at least US$3,000,000 to further fund
the development of a proprietary, patent-pending credit card
payment platform to significantly increase the security of online
credit card payment processing, reducing financial losses being
experienced by financial institutions and merchants from fraudulent
credit card use, while also better protecting cardholder privacy. A
full implementation of our business plan will be delayed until the
necessary capital is raised.
We cannot predict when or if we will produce revenues.
We have
not generated any revenue to date from operations. In order for us
to continue with our plans and open our business, we must raise
capital. The timing of the completion of the milestones needed to
commence operations and generate revenues is contingent on the
success of this raise. There can be no assurance that we will
generate revenues or that revenues will be sufficient to maintain
our business.
Our entry into the development of a secure mobile application for
card not present “CNP” transaction business may not be
successful and there are risks attendant on these
activities.
The
Financial Technology “FinTech” business is extremely
competitive. There are many companies, large and small entering the
market with the capital to develop and create new innovative
applications resulting in a highly competitive and fast-moving
environment. Even with capital and technical expertise, industry,
political and compliance risks are significant. Regulatory
compliance and the overall ecosystem for secure online payments is
extremely complex and not yet fully defined by governments and
financial institutions worldwide. We may not be able to finance our
business plan and marketing plan, there is no assurance that our
entry into this business will be successful.
Cybersecurity risks associated with the FinTech industry are
becoming increasingly challenging and we may be unable to meet
future regulatory requirements related to data protection and
privacy.
Cybersecurity
is becoming increasingly challenging with the growth in the number
of hackers and financial stalkers seeking opportunities to disrupt
operations and/or extort funds from persons or companies whose
cybersecurity measures were unable to prevent malicious data
harvesting and misuse. We cannot guarantee that all such attempts
shall be defeated, nor that our intellectual property shall remain
beyond the reach of parties seeking proprietary insights. Data
protection and privacy is never absolute, regardless of method(s)
used. Independent of any 3rd party malicious intent referred to
above, there is a risk that despite best efforts our data
protection and privacy shall not meet a future regulatory
definition of a reasonable standard, if it is imposed or
“expected” retroactively. Information at risk may or
may not be financial in nature and may or may not be our own
information. We do not have sufficient resources to evaluate all
possible outcomes, or all possible measures that we could take now,
or could have taken in the past, to attain an even higher level of
diligence and care than we are taking presently.
Regulatory compliance in the FinTech sector is
evolving.
We are
unable to guarantee that we will be able to proceed with all
desired plans if the regulatory environment changes in a manner
that undermines existing business plans. Such regulations have an
impact in every country in which we will be deriving revenue from
licensing or by any other commercial mechanism.
We may be unable to meet growth Open Source technology trends which
could have a detrimental impact on our business.
Open
source software compliance and vulnerability management has become
an area of risk due to the expanding scope of this realm of
software. We cannot ensure that we will at all times fully
understand the state-of-the-art standing of every aspect of our own
development goals until such time that a sufficient expenditure of
time, money and effort has been made to understand all open source
material and trends, and their relevance to our own
interests.
Customers may not adapt to our new technology which may affect our
ability to generate revenues in the future.
Culture
risk emerges when our organization interfaces with financial
institutions as our customers. We do not know in advance whether
all our customers will be willing to make changes, if necessary, to
accommodate protocols that arise from the adoption of our
technology, or incompatibility that may arise from the nature of
our software development methods, including our approach to FinTech
problem solving.
Reliance on systems governance on third party transactions may risk
compliance issues.
Governance
for intelligent automation is of increasing importance in business
activity that is characterized by a large number of
small-dollar-value transactions. Our revenue model requires sharing
of transaction fees for commerce that, in aggregate, may represent
millions or even hundreds of millions of consumer transactions. We
may therefore need to rely upon systems-governance more than
individual situational oversight where third party transactions are
concerned. This may mean that non-compliance of some type may come
to light too late to remedy in the immediate tense and may
therefore only be correctable with systemic adjustment for the
future.
FinTech is an emerging industry that may be subject to changes in
accounting standards in the future the adoption of which may
require time for our business to adjust.
New
accounting standards in the category of FinTech sector businesses
may be introduced over time and have a bearing on our planning,
execution and reporting in respect of issues that have hitherto
been satisfactory and understood, but may require a period of
transition to grasp implications at the strategic level and
communicate same to shareholders effectively.
Use of
data and analytics in our internal audit may become more complex as
metadata becomes increasingly important to our analyses. It is not
known whether the effect upon our internal practices of new
analytics will remain permissible from the perspective of
third-party audits occurring after-the-fact.
Our use of Cloud computing, data storage and/or cloud collaboration
may not conform to future operational “best
practices.
Transitioning
to and operating “in the cloud” is a matter whose risks
and rewards are subject to conflicting strategies even amongst
companies who otherwise are considered to have best practices,
operationally. It is not knowable in advance whether our own
policies regarding the use of cloud computing, cloud data storage
or cloud collaboration in our use of information, our sharing of
information and our design of proprietary information assets will
conform to a future interpretation of “best practices”,
after cloud eco-system techniques and their implications are better
understood.
We rely on third party service providers which we may not be able
to control. This subjects us to risks for failure of performance in
development of our business plan.
We will
at all times in the pursuit of our goals rely on at least some
expertise that is external to our company. Despite best efforts to
vet the competency of service providers, it will not be possible to
fully appreciate the quality of their contribution until
after-the-fact, which may in some instances require second
attempts, corrections or new directions. We shall always seek to
mitigate our risk and liability arising from any failures of
performance that may arise; however, it is not possible to quantify
this in financial terms or predict it in operational terms. The
risk in our development work is inherently high and does not
diminish over time as we will continually focus on customer
problems that require new solutions yet to be created.
The loss of key personnel or the inability of replacements to
quickly and successfully perform in their new roles could adversely
affect our business.
We
depend on the leadership and experience of our key executive and
chairman, Brad Moynes. Mr. Moynes functions as our chairman and
executive officer, and as such, we are heavily dependent upon him
to conduct our operations. In 2018, the Company added two
additional directors which now brings the board to four directors.
We do not have key man insurance. If Mr. Moynes resigns or dies,
there could be a substantial negative impact upon our operations.
If that should occur, until we find other qualified candidates to
become officers and/or directors to conduct our operations, we may
have to suspend our operations or cease operating entirely. In that
event, it is possible you could lose your entire
investment.
Risks Relating to Intellectual Property
If we are unable to protect our intellectual property rights,
including those related to Securter technology, our competitive
position could be harmed or we could be required to incur
significant expenses to enforce our rights.
Our
ability to compete effectively is dependent in part upon our
ability to protect our proprietary technology. We rely on patents,
trademarks, trade secret laws, confidentiality procedures and
licensing arrangements to protect our intellectual property rights.
There can be no assurance these protections will be available in
all cases or will be adequate to prevent our competitors from
copying, reverse engineering or otherwise obtaining and using our
technology, proprietary rights or products. For example, the laws
of certain countries in which our products may be licensed may not
protect our proprietary rights to the same extent as the laws of
Canada or the United States. In addition, third parties may seek to
challenge, invalidate or circumvent our intellectual property, or
applications for same. There can be no assurance that our
competitors will not independently develop technologies that are
substantially equivalent or superior to our technology or design
around our proprietary rights. In each case, our ability to compete
could be significantly impaired. To prevent substantial
unauthorized use of our intellectual property rights, it may be
necessary to prosecute actions for infringement and/or
misappropriation of our proprietary rights against third parties.
Any such action could result in significant costs and diversion of
our resources and management’s attention, and there can be no
assurance we will be successful in such action. Furthermore, many
of our current and potential competitors have the ability to
dedicate substantially greater resources to enforce their
intellectual property rights than we do. Accordingly, despite our
efforts, we may not be able to prevent third parties from
infringing upon or misappropriating our intellectual
property.
Claims by others that we infringe their intellectual property
rights could harm our business.
Our
industry is characterized by vigorous protection and pursuit of
intellectual property rights, which has resulted in protracted and
expensive litigation for many companies. Third parties may in the
future assert claims of infringement of intellectual property
rights against us or against our customers for which we may be
liable. As the number of service providers and competitors in our
market increases and overlaps occur, infringement claims may
increase.
Intellectual
property claims against us, and any resulting lawsuits, may result
in our incurring significant expenses and could subject us to
significant liability for damages and invalidate what we currently
believe are our proprietary rights. Our involvement in any patent
dispute or other intellectual property dispute or action to protect
trade secrets and know-how could have a material adverse effect on
our business. Adverse determinations in any litigation could
subject us to significant liabilities to third parties, require us
to seek licenses from third parties and prevent us from developing
and selling our products. Any of these situations could have a
material adverse effect on our business.
These
claims, regardless of their merits or outcome, would likely be time
consuming and expensive to resolve and could divert
management’s time and attention.
We are generally obligated to indemnify our end-customers for
certain expenses and liabilities resulting from intellectual
property infringement claims regarding our software products, which
could force us to incur substantial costs.
We have
agreed, and expect to continue to agree, to indemnify our
end-customers for certain intellectual property infringement claims
regarding our software products. As a result, in the case of
infringement claims against these end-customers, we could be
required to indemnify them for losses resulting from such claims or
to refund amounts they have paid to us. Our end-customers in the
future may seek indemnification from us in connection with
infringement claims brought against them. We will evaluate each
such request on a case-by-case basis and we may not succeed in
refuting all such claims. If an end-customer elects to invest
resources in enforcing a claim for indemnification against us, we
could incur significant costs disputing it. If we do not succeed in
disputing it, we could face substantial liability.
Risks Related to Our Stock
The market price of our shares may fluctuate
significantly.
The
market price and liquidity of the market for shares may be
significantly affected by numerous factors, some of which are
beyond our control and may not be directly related to our operating
performance. Some of the factors that could negatively affect the
market price of our shares include:
●
our actual or
projected operating results, financial condition, cash flows and
liquidity, or changes in business strategy or
prospects;
●
equity issuances by
us, or share resales by our stockholders, or the perception that
such issuances or resales may occur;
●
loss of a major
funding source;
●
actual or
anticipated accounting problems;
●
changes in market
valuations of similar companies;
●
adverse market
reaction to any indebtedness we incur in the future;
●
speculation in the
press or investment community;
●
price and volume
fluctuations in the overall stock market from time to
time;
●
general market and
economic conditions, and trends including inflationary concerns,
the current state of the credit and capital markets;
●
significant
volatility in the market price and trading volume of securities of
companies in our sector, which are not necessarily related to the
operating performance of these companies;
●
changes in law,
regulatory policies or tax guidelines, or interpretations
thereof;
●
operating
performance of companies comparable to us; and
●
short-selling
pressure with respect to shares of our shares
generally.
As
noted above, market factors unrelated to our performance could also
negatively impact the market price of our shares. One of the
factors that investors may consider in deciding whether to buy or
sell our shares is our distribution rate as a percentage of our
share price relative to market interest rates. If market interest
rates increase, prospective investors may demand a higher
distribution rate or seek alternative investments paying higher
dividends or interest. As a result, interest rate fluctuations and
conditions in the capital markets can affect the market value of
our shares. For instance, if interest rates rise, it is likely that
the market price of our shares will decrease as market rates on
interest-bearing securities increase.
If we have to raise capital by selling securities in the future,
your rights and the value of your investment in the Company could
be reduced.
If we
issue debt securities, the lenders would have a claim to our assets
that would be superior to the stockholder rights. Interest on the
debt would increase costs and negatively impact operating results.
If we issue more common stock or any preferred stock, your
percentage ownership will decrease and your stock may experience
additional dilution, and the holders of preferred stock (called
preference securities in Canada) may have rights, preferences and
privileges which are superior to (more favorable) the rights of
holders of the common stock. It is likely the Company will sell
securities in the future. The terms of such future transactions
presently are not determinable.
If the market for our common stock is illiquid in the future, you
could encounter difficulty if you try to sell your
stock.
Our
stock trades on the OTC "Pink" Marketplace but it is not actively
traded. If there is no active trading market, you may not be able
to resell your shares at any price, if at all. It is possible that
the trading market in the future will continue to be "thin" or
"illiquid," which could result in increased price volatility.
Prices may be influenced by investors' perceptions of us and
general economic conditions, as well as the market for energy
generally. Until our financial performance indicates substantial
success in executing our business plan, it is unlikely that there
will be coverage by stock market analysts will be extended. Without
such coverage, institutional investors are not likely to buy the
stock. Until such time, if ever, as such coverage by analysts and
wider market interest develops, the market may have a limited
capacity to absorb significant amounts of trading. As the stock is
a “penny stock,” there are additional constraints on
the development of an active trading market – see the next
risk factor.
The penny stock rule operates to limit the range of customers to
whom broker-dealers may sell our stock in the market.
In
general, "penny stock" (as defined in the SEC’s rule 3a51-1
under the Securities Exchange Act of 1934) includes securities of
companies which are not listed on the principal stock exchanges, or
the Nasdaq National Market or the Nasdaq Capital Market, and which
have a bid price in the market of less than US$5.00; and companies
with net tangible assets of less than $2 million ($5 million if the
issuer has been in continuous operation for less than three years),
or which has recorded revenues of less than $6 million in the last
three years.
As a
"penny stock" our stock therefore is subject to the SEC’s
rule 15g-9, which imposes additional sales practice requirements on
broker-dealers which sell such securities to persons other than
established customers and "accredited investors" (generally,
individuals with net worth in excess of US$1 million or annual
incomes exceeding US$200,000, or US$300,000 together with their
spouses, or individuals who are the officers or directors of the
issuer of the securities). For transactions covered by rule 15g-9,
a broker-dealer must make a special suitability determination for
the purchaser and have received the purchaser's written consent to
the transaction prior to sale. This rule may adversely affect the
ability of broker-dealers to sell our stock, and therefore may
adversely affect our stockholders' ability to sell the stock in the
public market.
If you are a United States investor, your legal recourse could be
limited.
The
Company is incorporated under the laws of British Columbia. Most of
the assets now are located in Canada. Our directors and officers
and the audit firm are residents of Canada. As a result, if any of
our shareholders were to bring a lawsuit in the United States
against the officers, directors or experts in the United States, it
may be difficult to effect service of legal process on those people
who reside in Canada, based on civil liability under the Securities
Act of 1933 or the Securities Exchange Act of 1934. In addition, we
have been advised that a judgment of a United States court based
solely upon civil liability under these laws would probably be
enforceable in Canada, but only if the U.S. court in which the
judgment were obtained had a basis for jurisdiction in the matter.
We also have been advised that there is substantial doubt whether
an action could be brought successfully in Canada in the first
instance on the basis of liability predicated solely upon the
United States' securities laws.
ITEM 6.
DIVIDENDS AND DISTRIBUTIONS
Not
Applicable
ITEM 7.
DESCRIPTION OF CAPITAL STRUCTURE
7.1
General Description
of Capital Structure
Unlimited number of
common shares, participating, voting (voting right of 1 vote per
share), with no par value.
1,100,000 Class
“B” common shares, non-participating, voting (voting
right of 1,000 votes per share), with no par value.
Not
Applicable
Not
Applicable
ITEM 8.
MARKET FOR SECURITIES
8.1
Trading Price and
Volume
The
Company's common shares are traded on the “OTC.PK”
under the symbol DIGAF; the shares are not listed on any exchange
or traded on any other medium. Trading commenced in the first
quarter 2004 on the Pink Sheets and the Company then became a
reporting issuer and was listed for trading on the OTC.BB during
the second quarter of 2007.
The
following table sets forth the high and low closing prices on the
OTC Markets and the OTC.BB for the periods indicated, adjusted
for the consolidations of the Company’s stock on March 22,
2010, April 3, 2013 and June 8, 2016.
|
|
|
|
|
By
Month in 2018
|
|
|
|
|
January
2018
|
$0.520
|
$0.205
|
12,852,900
|
|
February
2018
|
$0.259
|
$0.135
|
14,525,100
|
|
March
2018
|
$0.152
|
$0.104
|
5,449,400
|
|
April
2018
|
$0.156
|
$0.108
|
9,542,000
|
|
May
2018
|
$0.125
|
$0.080
|
4,832,500
|
|
June
2018
|
$0.086
|
$0.030
|
14,646,200
|
|
July
2018
|
$0.059
|
$0.031
|
33,216,100
|
|
August
2018
|
$0.039
|
$0.024
|
24,363,100
|
|
September
2018
|
$0.026
|
$0.009
|
34,252,000
|
|
October
2018
|
$0.014
|
$0.003
|
249,952,600
|
|
November
2018
|
$0.021
|
$0.007
|
300,749,800
|
|
December
2018
|
$0.007
|
$0.004
|
68,029,000
|
On
December 31, 2018, the closing price was US$0.005 per
share.
On
October 10, 2018, the Company passed a resolution authorizing the
creation of 100,000 Class “B” common shares with the
following characteristics: non-participating, no par value, and
with the voting right of 1,000 votes per share. On the same day,
the Company issued 100,000 Class “B” common shares at
$0.001 per share for total proceeds of $100 to a shareholder who is
also a Director and Officer of the Company.
On
January 2, 2019, the Company passed a resolution to increase the
authorized number of Class “B” common shares from
100,000 to 1,100,000. On the same day, the Company issued 1,000,000
Class “B” common shares at $0.0001 per share for total
proceeds of $100 to a shareholder who is also a Director and
Officer of the Company and who is the holder of the 100,000 Class B
Common Shares issued on October 10, 2018.
ITEM 9.
Escrowed Securities and Securities Subject to Contractual
Restriction on Transfer
|
Designation
of class
|
Number
of securities held in escrow or that are subject to a contractual
restriction on transfer
|
Percentage
of class
|
|
Common
Shares
|
1,500
|
0.00%*
|
* Based
on 302,251,877 shares of common stock and 1,100,000 shares of Class
B common stock issued and outstanding as at June 30,
2019:
On
September 19, 2014, the Company entered into an escrow agreement
with a creditor. The Company agreed to pay the creditor $2,500 upon
signing of the agreement and to issue 1,500 shares to be held in
escrow. The Company was obligated to pay the creditor a further
$7,334 (US$6,687) forty five days after the Company’s stock
becomes DWAC-eligible. On December 22, 2016, the Company paid
$5,374 (US$4,000) and the creditor agreed to release these shares
from escrow.
As of
December 31, 2018 and June 30, 2019, the 1,500 shares were held in
trust by the corporate lawyer and have not been returned to the
Company’s Treasury.
ITEM
10. DIRECTORS, OFFICERS AND PROMOTERS
10.1
Name, Address,
Occupation and Security Holdings
|
Name, Municipality of Residence
|
Position and Period with the Company
|
Principal Occupation During Last 5 Years
|
Number and Percentage of Common Shares Owned or
Controlled
|
|
Bradley
Moynes
Vancouver,
BC
Canada
|
Chairman,
Director
Chief
Executive Officer Interim Chief Financial Officer
Since
December 2000
|
CEO,
Digatrade Financial Corp.
|
22,504,000
Common Shares (7.45%*)
1,100,000
Class B Common Shares (100%*)
|
|
Tyrone
Docherty
|
Director
Since
July 2016
|
CEO,
Deer Horn Capital
|
250,000
(0.0001%)
|
|
Timothy
Delaney
|
Director
Since
November 2018
|
Business
Advisor
|
-
|
* Based
on 302,251,877 shares of common stock and 1,100,000 shares of Class
B common stock issued and outstanding as at June 30,
2019:
** On
May 21, 2019 Mr. James Romano resigned as a director of the Company
and accepted the appointment of Chairman of Securter Systems
Inc.
10.2
Corporate Cease
Trade Orders or Bankruptcies
As
of the date hereof, and within the ten years before the date
hereof, no director or officer of the Company is, or has been, a
director or executive officer of any issuer that, while that person
was acting in that capacity:
(a)
was
the subject of a cease trade or similar order or an order that
denied the issuer access to any exemption under securities
legislation, for a period of more than 30 consecutive
days;
(b)
was
subject to an event that resulted, after the director or executive
officer ceased to be a director or executive officer, in the issuer
being the subject of a cease trade or similar order or an order
that denied the issuer access to any exemption under securities
legislation, for a period of more than 30 consecutive days;
and
(c)
or
within a year of that person ceasing to act in that capacity,
became bankrupt, made a proposal under any legislation relating to
bankruptcy or insolvency or was subject to or instituted any
proceedings, arrangement or compromise with creditors or had a
receiver, receiver manager or trustee appointed to hold its
assets
10.3
Conflicts of
Interest
Directors and
officers of the Company may also serve as directors and/or officers
of other companies and may be presented from time to time with
situations or opportunities which give rise to apparent conflicts
of interest which cannot be resolved by arm’s length
negotiations, but only through exercise by the directors and
officers of such judgment as is consistent with their fiduciary
duties to the Company which arise under the CBCA and corporate law,
especially insofar as taking advantage, directly or indirectly, of
information or opportunities acquired in their capacities as
directors or officers of the Company. All conflicts of interest
will be resolved in accordance with the British Columbia Business
Corporations Act (BCBCA) and other applicable law. Any transactions
with directors and officers will be on terms consistent with
industry standards and sound business practice in accordance with
the fiduciary duties of those persons to the Company and may be
submitted to the shareholders for their approval to the extent
required by the BCBCA or applicable Exchange Policies. To the best
of their knowledge, the management of the Company is not aware of
the existence of any conflicts of interest between any of their
directors and officers as of the date of this AIF, other than as
disclosed herein
ITEM
11. PROMOTERS
Not
Applicable
ITEM
12. LEGAL PROCEEDINGS AND REGULATORY ACTIONS
The
Company is not aware of:
(a)
any legal
proceedings to which it is a party, or by which any of its property
is subject, which would be material to it and are not aware of any
such proceedings being contemplated,
(b)
any penalties or
sanctions imposed by a court relating to securities legislation, or
other penalties or sanctions imposed by a court or regulatory body
against it that would likely be considered important to a
reasonable investor making an investment decision and
(c)
any settlement
agreements that we have entered into before a court relating to
securities legislation or with a securities regulatory
authority.
ITEM
13. INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL
TRANSACTIONS
Other
than as disclosed in this AIF or in the financial statements of the
Company for the financial year ended December 31, 2018 none of the
directors or executive officers of the Company, nor any person or
company that beneficially owns, or controls or directs, directly or
indirectly, more than 10% of any class or series of the
Company’s outstanding voting securities, nor any associate or
affiliate of the foregoing persons, has or has had any material
interest, direct or indirect, in any transaction within the three
years prior to the date of this AIF that has materially affected or
is reasonably expected to materially affect the Company or its
subsidiaries.
ITEM
14. TRANSFER AGENT AND REGISTRAR
The
transfer agent and registrar of the Company is Action Stock
Transfer Corp. 2469 E. Fort Union Blvd., Suite 214, Salt Lake City,
UT 84121
ITEM
15. MATERIAL CONTRACTS
On
February 28, 2019, the Company entered into an agreement with
Securter Inc., in terms of which a newly formed corporation,
Securter Systems Inc. (“SSI”) would acquire all the
assets and liabilities of Securter Inc. Upon incorporation, SSI
issued 25,937,594 Class A common shares to the shareholders of
Securter Inc. and 100,000 Class B common shares to the Company.
Each Class B common share is non-participating and carries 1,000
votes. The Company shall have the right to purchase up to 30.3%
Class A common shares of SSI at a price of US$0.23 for a total
purchase consideration of up to US$3,000,000, to fund the further
development and commercialization of the Securter
technology.
ITEM
16. INTEREST OF EXPERTS
The
financial statements of the Company for the fiscal year ended
December 31, 2018 have been audited by WDM Chartered Professional
Accountants, the auditors of the Company, located at 420-1501 West
Broadway Vancouver British Columbia V6J 4Z6, who are independent in
accordance with the Rules of Professional Conduct established by
the Institute of Chartered Accountants of British
Columbia.
16.2
Interests of
Experts
Not
Applicable
Item
17. ADDITIONAL INFORMATION
Additional
information relating to the Company, including the Audited Annual
Financial Statements and Management Discussion and Analysis for the
year ended December 31, 2018, may be found under its profile on
SEDAR at www.sedar.com..
ABOUT DIGATRADE
DIGATRADE is a Financial Technology “fintech” services
company. Digatrade is developing various payment industry process
improvements that are proprietary. They represent a next generation
platform for security and convenience in a variety of modalities,
including online credit card payment system, globally, through its
new subsidiary; Securter Systems, Inc. Digatrade is targeting
numerous fintech service licensing vehicles, also including
blockchain derived applications. Digatrade Financial Corp. is
located in Vancouver, British Columbia, and publicly listed on the
OTC.PK under the trading symbol DIGAF. DIGAF is a reporting
issuer in the Province of British Columbia, Canada with the British
Columbia Securities Commission "BCSC" and in the United States with
the Securities Exchange Commission "SEC".
ABOUT SECURTER
Securter Systems, Inc. is a subsidiary of Digatrade Financial Corp.
that is developing proprietary, patent-pending credit card payment
platform innovations to increase the security of online credit card
payment processing, globally. Securter technology reduces immense
losses by financial institutions and merchants that arise from
fraudulent credit card use. Securter technology also protects
cardholder privacy by eliminating the need to distribute credit
card details to multiple commercial 3rd
parties, where such information is
ordinarily stored, becoming vulnerable to theft or manipulation.
Securter technology can and will be integrated into complementary
payment methods and fintech protocols, including cryptocurrency and
other blockchain derivatives to come for independent platforms.
Securter has internal R&D capability and management as well as
external fintech business relationships to support
Digatrade’s overall business mission.
CORPORATE CONTACT INFORMATION:
Digatrade
Financial Corp
1500
West Georgia Street, 1300
Vancouver,
BC V6G 2Z6 Canada
Tel:
+1(604) 200-0071
Fax:
+1(604) 200-0072
Forward-Looking Information
This press release contains certain “forward-looking
information”. All statements, other than statements of
historical fact, that address activities, events or development
that the Company believes, expects or anticipates will or may occur
in the future constitute forward-looking information. This
forward-looking information reflects the current expectations or
beliefs of the company based on information currently available to
the Company. Forward-looking information is subject to a number of
significant risks and uncertainties and other factors that may
cause the actual results of the Company to differ materially from
those discussed in the forward-looking information, and even if
such actual results are realized or substantially realized, there
can be no assurance that they will have the expected consequences
to, or effects on the Company. Factors that could cause actual
results or events to differ materially from current expectations
include, but are not limited to, the possibility of unanticipated
costs and expenses. Any forward-looking information speaks only as
of the date on which it is made and, except as may be required by
applicable securities laws, the company disclaims any intent or
obligation to update any forward-looking information whether as a
result of new information, future events or results or otherwise.
Although the Company believes that the assumptions inherent in the
forward-looking information are reasonable, forward-looking
information is not a guarantee of future performance and
accordingly undue reliance should not be put on such information
due to the inherent uncertainty therein.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
|
|
Digatrade
Financial Corp (Registrant)
|
|
|
|
|
|
|
|
Date:
September 12, 2019
|
By:
|
/s/ Brad J.
Moynes
|
|
|
|
|
Brad J.
Moynes
|
|
|
|
|
Title: CEO
|
|
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