China Kangtai Cactus Bio-tech (IVNE) Inactive
Filed: 5 Mar 04, 12:00am
(formerly Advance Tech International Ltd.)
REPORT AND FINANCIAL STATEMENTS
March 31, 2003 and 2002
(Stated in US Dollars)
To the StockholdersAdvance
Tech (Asia) Limited
(formerly Advance Tech International Ltd.)
We have audited the accompanying balance sheets of Advance Tech (Asia) Limited (formerly Advance Tech International Ltd.), as of March 31, 2003 and 2002 and the related statements of operations, cash flows and stockholders’ equity for the years ended March 31, 2003 and 2002. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amount and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, these financial statements present fairly, in all material respects, the financial position of Advance Tech (Asia) Limited as of March 31, 2003 and 2002 and the results of its operations and its cash flows for the years ended March 31, 2003 and 2002 in conformity with accounting principles generally accepted in the United States of America.
| Vancouver Canada | Amisano Hanson | ||
| July 18, 2003, except as to Note 9, which is as of | CHARTERED ACCOUNTS and | ||
| November 11, 2003 | CERTIFIED PUBLIC ACCOUNTANT (NEVADA) | ||
750 West Pender Street, Suite 604
Vancouver Canada
Telephone: 604-689-0188
Facsimile: 604-689-9773
(formerly Advance Tech International Ltd.)
BALANCE SHEETS
March 31, 2003 and 2002
(Stated in US Dollars)
ASSETS 2003 Note 2002
Current
Cash $ 74,910 $ 241
Trade receivables 1,034,442 1,223,284
Other receivables 2,949 8,974
Prepayment and other deposits 146,514 321
1,258,815 1,232,820
Capital assets 867,811 3 54,595
$ 2,126,626 $ 1,287,415
LIABILITIES
Current
Trade payables $ - $ 81,144
Other payables 14,033 7 28,595
Due to a director 5,434 4 419,886
Due to a shareholder 84,579 4 -
Provision for taxes 108,678 96,791
Current portion of obligations under capital leases 12,264 5 15,068
224,988 641,484
Obligations under capital leases 12,222 5 24,674
Deferred taxes 133,328 -
370,538 666,158
STOCKHOLDERS' EQUITY
Common stock
Authorized:
50,000 common shares of US$1 each
Issued and fully paid:
122 shares (2002: 111 shares) 122 111
Paid-in capital 535,994 128,331
Foreign exchange adjustment 486 486
Retained earnings 1,219,486 492,329
1,756,088 621,257
$ 2,126,626 $ 1,287,415
Nature of Operations - Note 1
Commitments - Note 6
Subsequent Events - Note 9
SEE ACCOMPANYING NOTES
(formerly Advance Tech International Ltd.)
STATEMENTS OF OPERATIONS
for the years ended March 31, 2003 and 2002
(Stated in US Dollars)
2003 Note 2002
Revenue
Hardware and software sales $ 1,926,772 7 & 8 $ 1,295,368
Cost of sales - Note 3 ( 152,499) ( 233,968)
Gross margin 1,774,273 1,061,400
System integration sales 55,126 159,018
Interest income 44 30
1,829,443 1,220,448
Expenses
Selling and distribution costs 383,595 49,334
Administrative expenses - Note 7 503,839 239,433
Amortization expense 32,913 24,723
Other operating expenses 5,711 2,625
Finance costs 3,036 2,178
929,094 318,293
Income from operations before other item 900,349 902,155
Loss on write-off / disposal of capital assets ( 7,814) ( 9,295)
Income from operations before taxes 892,535 892,860
Current taxes ( 32,050) ( 96,791)
Deferred taxes ( 133,328) -
Net income for the year $ 727,157 $ 796,069
Basic and diluted income per share $ 6,111 $ 7,172
Weighted average number of common shares outstanding 119 111
SEE ACCOMPANYING NOTES
(formerly Advance Tech International Ltd.)
STATEMENTS OF CASH FLOWS
for the years ended March 31, 2003 and 2002
(Stated in US Dollars)
2003 2002
Operating Activities
Net income for the year from operations $ 727,157 $ 796,069
Adjustment from non-cash items:
Amortization 122,653 24,723
Loss on write-off / disposal of capital assets 7,814 9,295
Provision for deferred income taxes 133,328 -
Changes in working capital items:
Trade receivables 188,843 ( 1,140,770)
Other receivables 6,025 ( 8,974)
Prepayment and other deposits ( 146,193) 1,732
Trade payables ( 81,144) 23,244
Other payables ( 14,562) 23,168
Provision for taxes 11,887 96,791
Cash provided by (used in) operating activities 955,808 ( 174,722)
Investing Activities
Acquisition of capital assets ( 941,120) -
Proceeds on disposal of capital assets - 15,384
Cash from (used in) investing activities ( 941,120) 15,384
Financing Activities
Increase (decrease) in due from a director ( 414,452) 180,458
Increase in due from a shareholder 84,579 -
Payment of finance leases ( 17,820) ( 24,568)
Issue of common stock for cash 407,674 -
Cash provided by financing activities 59,981 155,890
Foreign exchange - 167
Net increase (decrease) in cash during the year 74,669 ( 3,281)
Cash, beginning of the year 241 3,522
Cash, end of the year $ 74,910 $ 241
.../Cont'd.
SEE ACCOMPANYING NOTES
ADVANCE TECH (ASIA) LIMITED Continued (formerly Advance Tech International Ltd.) |
STATEMENTS OF CASH FLOWS
for the years ended March 31, 2003 and 2002
(Stated in US Dollars)
2003 2002
Supplemental disclosure of cash flow information:
Cash paid for:
Interest $ 3,036 $ 2,178
Income taxes $ 20,162 $ -
Supplemental disclosure of non-cash investing and financing
activities:
Capital assets purchased on lease $ 2,564 $ 51,490
SEE ACCOMPANYING NOTES
(formerly Advance Tech International Ltd.)
STATEMENT OF STOCKHOLDERS’ EQUITY
for the years ended March 31, 2003 and 2002
(Stated in US Dollars)
Foreign Retained
Common Shares Paid-in Exchange Earnings
Shares Amount Capital Adjustment (Deficit) Totals
Balance, March 31, 2001 111 $ 111 $ 128,331 $ - $ ( 303,740) $ ( 175,298)
Net income for the year - - - - 796,069 796,069
Foreign currency translation - - - 486 - 486
Balance, March 31, 2002 111 111 128,331 486 492,329 621,257
Issuance of common shares for cash 11 11 407,663 - - 407,674
Net income for the year - - - - 727,157 727,157
Balance, March 31, 2003 122 $ 122 $ 535,994 $ 486 $ 1,219,486 $ 1,756,088
SEE ACCOMPANYING NOTES
(formerly Advance Tech International Ltd.)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 2003 and 2002
(Stated in US Dollars)
Note 1Nature of Operations
| The Company was incorporated in the British Virgin Islands on March 1, 2000 as a private limited company and is engaged in providing real-time transaction solutions, customized solutions and professional information technology (“IT”) consultancy services in Hong Kong and the Peoples Republic of China. |
| By directors’ resolution dated May 16, 2002, the Company changed its name from Advance Tech International Ltd. to Advance Tech (Asia) Limited. |
Note 2Summary of Significant Accounting Policies
| The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates, which have been made using careful judgment. Actual results may vary from these estimates. |
| The financial statements have, in management’s opinion, been properly prepared within reasonable limits of materiality and within the framework of the significant accounting policies summarized below: |
Cash and Cash Equivalents
| The Company considers all cash and other highly liquid investments with initial maturities of three months or less to be cash equivalents. |
Basic Earnings Per Share
| The Company reports basic earnings per share in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 128, “Earnings per Share”. Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding for the period less shares subject to repurchase. |
Revenue Recognition
| Revenue is recognized when it is probable that the economic benefits will flow to the Company and when the revenue can be measured reliably, on the following basis: |
| (i) | revenue from system service and maintenance income is recognized when the relevant services are rendered; and |
| (ii) | interest income is recognized on an accrual basis. |
Advanced Tech (Asia) Limited(formerly
Advance Tech International Ltd.)Notes
to the Financial Statements
March 31, 2003 and 2002
(Stated in US Dollars) – Page 2
Note 2 Summary Of Significant Accounting Policies - (cont'd)Capital Assets
| Capital assets are stated at cost less accumulated amortization. Cost represents the purchase price of the asset and other costs incurred to bring the asset into its existing use. |
| Amortization is provided on straight-line basis over their estimated useful lives. The principal annual rates are as follows: |
Computer equipment and software 20 - 30%
Office equipment, furniture and fixtures 25%
Leasehold improvements 25%
Impairment of Long-lived Assets
| The Company reports the impairment of long-lived assets and certain identifiable intangibles in accordance with SFAS No. 144, “Accounting for the Impairment of Long-lived Assets”. Certain long-lived assets held by the Company are reviewed for impairment whenever assets or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Accordingly, an impairment loss is recognized in the period it is determined. |
Foreign Currency Translation
| The functional currency of the Company is Hong Kong dollars, which has been translated into US dollars, the reporting currency, in accordance with SFAS No. 52 “Foreign Currency Translation”. Assets and liabilities are translated at the exchange rate at the balance sheet date and revenue and expenses are translated at the exchange rate at the date those elements are recognized. Any translation adjustments resulting are not included in determining net income but are included in foreign exchange adjustment, a component of shareholders’ equity. |
Income Taxes
| The Company uses the asset and liability method of accounting for income taxes pursuant to SFAS No. 109 “Accounting for Income Taxes”. Under the asset and liability method of SFAS 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and loss carryforwards and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. |
Advanced Tech (Asia) Limited(formerly
Advance Tech International Ltd.)Notes
to the Financial Statements
March 31, 2003 and 2002
(Stated in US Dollars) – Page 3
Note 2 Summary Of Significant Accounting Policies - (cont'd)Leases
| Leases are classfied as either capital or operating leases. A lease that transfers substantially all of the benefits and risks incidental to the ownership of property is classified as a capital lease. All other leases are accounted for as operating leases wherein rental payments are expensed as incurred. At the inception of a capital lease, an asset and an obligation are recorded at an amount equal to the lesser of the present value of the minimum lease payments and the property’s fair value at the beginning of such lease. Assets are recorded under capital leases, are amortized on a straight-line basis over the estimated useful lives of the respective assets on commencement of use of the related assets. |
Note 3Capital Assets
---------------- -----2003------ ---------------- ------2002------
---------------- ---------------- ---------------- ----------------
Accumulated
Cost Amortization Net Net
Computer equipment and
software $ 905,354 $ 92,254 $ 813,100 $ -
Office equipment, furniture
and fixtures - purchased 40,972 20,981 19,991 10,738
- leased 2,564 641 1,923 -
Leasehold improvements 16,269 4,068 12,201 7,814
Motor vehicles (leased) 51,490 30,894 20,596 35,043
$ 1,016,649 $ 148,838 $ 867,811 $ 54,595
| As at March 31, 2003, the net carrying amount of capital assets held by the Company under capital leases amounted to $22,519 (2002: $35,043). For the year ended March 31, 2003, the amortization expense related to the leased assets was $16,088 (2002: $15,447). |
| Included in cost of sales is $89,740 (2002: $Nil) amortization of computer equipment and software. |
Note 4Due to a Director and a Shareholder
| Amounts due to a director and a shareholder are unsecured, interest-free and have no fixed terms of repayment. |
Advanced Tech (Asia) Limited(formerly
Advance Tech International Ltd.)Notes
to the Financial Statements
March 31, 2003 and 2002
(Stated in US Dollars) – Page 4
Note 5Obligations Under Capital Leases
The following are future minimum lease commitments under capital leases for office and equipment.
2003 2002
2003 $ - $ 18,933
2004 14,787 14,147
2005 7,446 7,446
2006 7,446 7,446
2007 1,241 1,241
Total minimum lease payments 30,920 49,213
Less: amounts representing interest 6,434 9,471
24,486 39,742
Less: current portion 12,264 15,068
Long-term portion $ 12,222 $ 24,674
Note 6Lease Commitments
| The Company has entered into an office lease expiring June 16, 2004. The minimum annual lease payments are as follows: |
2004 $ 33,351
2005 6,064
$ 39,415
Note 7Related Party Transactions
| As at March 31, 2003, included in other payables is $2,564 (2002: $Nil) of fees owing to a director. |
| During the year ended March 31, 2003, the Company had sales of $2,179 (2002: $174,631) to the holding company of the Company, which a director of the Company has a beneficial interest in. Management is of the opinion that the sales transactions were conducted in the ordinary course of business. |
Advanced Tech (Asia) Limited(formerly
Advance Tech International Ltd.)Notes
to the Financial Statements
March 31, 2003 and 2002
(Stated in US Dollars) – Page 5
Note 7Related Party Transactions – (cont’d)
| During the years ended March 31, 2003 and 2002, the Company was charged the following by directors of the Company: |
2003 2002
Administration Expenses
Consulting fees $ 698 $ -
Directors fees 14,102 -
Management fees 100,622 93,059
$ 114,724 $ 93,059
| These charges were measured by the exchange amount which is the amount agreed upon by the transacting parties. |
Note 8Economic Dependence
| During the year ended March 31, 2003, three customers accounted for 95% of the Company’s sales with totals of 20%, 25% and 50% respectively. |
| During the year ended March 31, 2002, two customers accounted for 81% of the Company’s sales with totals of 12% and 69% respectively. |
Note 9Subsequent Events
| i) | On November 11, 2003, Investnet, Inc. (“Investnet”), a public company listed for trading on the Over-the-Counter Bulletin Board, entered into an acquisition agreement with the Company whereby Investnet will issue 22,312,500 of its common shares at $0.001 per share in exchange for all the issued and outstanding shares of the Company. This transaction will be accounted for as a reverse acquisition, with the Company being treated as the accounting acquirer. |
| ii) | Subsequent to March 31, 2003, the Company settled $128,217 (HK$11,000,000) in liabilities due to a director of the Company incurred subsequent to March 31, 2003 by the issuance of 500 common shares. |