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
of the Securities Exchange Act of 1934
For: 2004 SECOND QUARTER REPORT FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2004
AND NEWS RELEASES FOR THE MONTH OF MAY, JUNE AND JULY
COMMISSION FILE NUMBER: 000-29614
TRIANT TECHNOLOGIES INC.
(Exact name of Registrant as specified in its charter)
580-1122 Mainland Street
VANCOUVER, BRITISH COLUMBIA
CANADA V6B 5L1
(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
Form 20-F
[ X ]
Form 40-F
[ ]
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 13g3-2(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):
TRIANT TECHNOLOGIES INC.
2004 SECOND QUARTER REPORT
Three months and six months ended June 30, 2004
TRIANT TECHNOLOGIES INC.
2004 SECOND QUARTER REPORT
Three months and six months ended June 30, 2004
CORPORATE PROFILE
Triant Technologies Inc. is a leader in equipment health monitoring, advanced fault detection and sophisticated data analysis technology. Our initial industry focus is the semiconductor industry where we provide innovative APC (Advanced Process Control) software solutions that enable our customers to improve their productivity and lower their manufacturing costs. In addition to our work in the semiconductor industry, we are pursuing significant opportunities for our technology in other industries and vertical markets.
To address the large market opportunity in the semiconductor industry, we have developedModelWare®, a complete equipment health monitoring and advanced fault detection software solution. Leading semiconductor companies are usingModelWare to improve their competitive advantage in manufacturing silicon chips.
Our core technology isUPMTM (Universal Process Modeling), a proprietary advanced mathematical algorithm that can be used to model the behavior of any correlated system or process turning raw data into useful information. UPM, the heart ofModelWare, is key to our strategy of developing new products and services around our core technology for the semiconductor market, as well as other vertical markets.
CONTENTS
Corporate Profile
Management’s Discussion and Analysis
Consolidated Financial Statements
Corporate Directory and Other Information
TRIANT TECHNOLOGIES INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the three months and six months ended June 30, 2004
The following discussion should be read in conjunction with, and is qualified in its entirety by, the Consolidated Financial Statements of the Company for the year ended December 31, 2003 and the unaudited Interim Consolidated Financial Statements for the six months ended June 30, 2004. Those interim financial statements have been prepared in accordance with Canadian generally accepted accounting principles (Canadian GAAP) for interim financial statements as disclosed in Note 1 to those interim financial statements, which in the case of those interim financial statements, conform in all material respects with those in the United States (U.S. GAAP), except as disclosed in Note 8 to those interim financial statements and discussed herein. All figures herein are expressed in Canadian dollars unless otherwise noted.
A.
Operating Results
General
The nature of operations is outlined within Note 1 to the annual Consolidated Financial Statements of the Company. The Company develops, markets, and supports equipment health monitoring, advanced fault detection and sophisticated data analysis technology. The revenue of the Company is derived principally from the sale of software licenses, products and services, including software updates and maintenance services provided pursuant to annual service agreements. The Company currently derives revenue primarily from a limited number of customers in the semiconductor industry. As these customers are geographically dispersed and the Company closely monitors credit granted to each customer, credit risks are considered to be minimal. The Company identifies Canada as the primary economic environment in which it operates and uses the Canadian dollar as its functional currency. A substantial amoun t of the revenue of the Company and receivables are denominated in U.S. dollars. The Company translates revenue and the related receivable at the prevailing exchange rate at the time of the sale. Funds denominated in U.S. dollars are translated into Canadian dollars at the rate in effect on the balance sheet date. Translation gains and losses resulting from variations in exchange rates, upon translation into Canadian dollars, are included in results of operations.
The principal product of the Company, ModelWare, is priced and sold only in U.S. dollars due to the adoption of a common software industry practice of billing worldwide customers in U.S. dollars. This policy of invoicing in U.S. dollars introduces a price risk from exposure to fluctuations in foreign exchange rates. Any increase in the relative value of the U.S. dollar to the Canadian dollar results in increased revenue and net earnings to the Company as the majority of the expenses of the Company are denominated in Canadian dollars. A decrease in the relative value of the U.S. dollar to the Canadian dollar would decrease sales revenue and net earnings of the Company. For example, if the relative value of the U.S. dollar to the Canadian dollar had increased (decreased) by an additional 1.0% for the six months ended June 30, 2004, then revenue would have increased (decreased) by approxima tely 1% or $27,100, costs and expenses would have increased (decreased) by approximately 0.1% or $4,600 and loss from operations and net loss would have decreased (increased) by $22,500. The Company does not hedge foreign currency transactions nor funds held and denominated in U.S. dollars.
The operations of the Company are sensitive to fluctuations in revenue as the base of expenses is relatively fixed over the short-term. The Company has developed and continually seeks to refine its management practices to allow initiation of timely corrective actions if operating results fail to reach pre-determined objectives.
Critical Accounting Policies and Significant Estimates
The significant accounting policies are outlined within Note 2 to the annual Consolidated Financial Statements of the Company for the year ended December 31, 2003, except for the change in accounting policy, as of January 1, 2004 and retroactive to January 1, 2002, in accordance with the recommendations of CICA 3870,Stock-Based Compensation and Other Stock-Based Payments, as outlined within Note 2 to the interim Consolidated Financial Statements of the Company for the three months and six months ended June 30, 2004. Some of those accounting policies require the Company to make estimates and assumptions that affect the amounts reported by the Company. The following items require the most significant judgment and may involve complex estimation:
Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and disclosure of contingent assets and liabilities at the date of the financial statements and for the periods presented. Estimates are used for, but not limited to, accounting for doubtful accounts, determination of the net recoverable value of assets, amortization, income taxes, and contingencies. Actual results may differ from those estimates. Inaccurate estimates or wrong assumptions may have a material effect on the financial condition and results of operations of the Company.
Research and development costs
Research costs are expensed when incurred. Under Canadian GAAP, development costs are capitalized to the extent that recovery of these costs is assured, and are amortized over the life of the related product. No development costs have been capitalized as at June 30, 2004 and December 31, 2003. The assessment of the extent to which development costs should be expensed or capitalized may have a material effect on the financial condition and results of operations of the Company.
Revenue recognition
Revenues from software license agreements are recognized upon delivery of software if persuasive evidence of an arrangement exists, collection is probable, the fee is fixed or determinable, and vendor-specific objective evidence exists to allocate the total fee to elements of the arrangement. Vendor-specific objective evidence is typically based on the price charged when an element is sold separately, or, in the case of an element not yet sold separately, the price established by authorized management, if it is probable that the price, once established, will not change before market introduction. Elements included in multiple element arrangements could consist of software products, upgrades, enhancements, or customer support services. If an acceptance period is required, revenues are recognized upon the earlier of customer acceptance or the expiration of the acceptance period. The Company’s agreements with its customers, value-added resellers and distributors do not contain product return rights (except for product defects).
Service revenues are primarily related to training performed on a time-and-materials basis under separate service arrangements related to the use of the Company’s software products. Revenues from services are recognized as services are performed.
Where the Company enters into arrangements which require customization of hardware bundled with software, the Company recognizes revenue upon delivery and acceptance by the customer where the fee is fixed or determinable and collection is reasonably assured. If the fee is not fixed or determinable due to the existence of extended payment terms, revenue is recognized periodically as payments become due, provided all other conditions for revenue recognition are met.
If a transaction includes both license and service elements, license fee revenues are recognized on shipment of the software, provided that services do not include significant customization or modification of the base product, and the payment terms for licenses are not subject to acceptance criteria. In cases where license fee payments are contingent on acceptance of services, the Company defers recognition of revenues from both the license and the service elements until the acceptance criteria are met. Deferred revenue on sales to distributors is recorded net of direct commissions paid.
Revenue related to maintenance agreements for supporting and maintaining the Company’s products is recognized ratably over the term of the agreement, generally one year. Where the Company enters into arrangements for the sale of software licenses and maintenance, the Company accounts for such transactions as multiple element arrangements and allocates the consideration received to each element, based on vendor specific objective evidence of the price charged for elements separately. As a result, revenues recognized from maintenance and license agreements may vary depending on the allocation determined by the Company.
These revenue recognition policies and related estimates may have a material effect on the financial condition and results of operations of the Company.
Warranty
A provision for potential warranty claims is provided for at the time that the sale is recognized, based on warranty terms, and prior experience. While these estimates are determined based on product history, as well as an assessment of the potential for future claims, actual claims may have a material adverse effect on the financial condition and results of operations of the Company.
Stock-based compensation
As of January 1, 2004, the Company changed its accounting policy, retroactive to January 1, 2002, in accordance with the recommendations of CICA 3870,Stock-Based Compensation and Other Stock-Based Payments. This section establishes standards for the recognition, measurement and disclosure of stock-based compensation and other stock-based awards made in exchange for goods and services. As permitted by CICA 3870, the Company has applied this change retroactively for new awards granted on or after January 1, 1995. The Company has adopted the fair value based method of accounting of stock-based compensation awards using the Black-Scholes option pricing model.
Using the fair value method for stock-based compensation, the Company recorded an additional charge to earnings of $115,884 and $145,553 for the three months ended June 30, 2004 and 2003, respectively, for stock options granted to employees and directors. The fair values of options granted during the three months ended June 30, 2004 were determined using an option pricing model assuming no dividends were paid, a weighted average volatility of the Company’s share price of 79% (2003 – 62%), a weighted average expected life of 3 years (2003 – 3 years) and a weighted average annual risk free rate of 3.73% (2003 –3.37%). The option valuation produced by the model is $0.23 per share (2003 – $0.15 per share). The Company has applied the new provisions retroactively with the restatement of prior periods. As a result, a cumulative adjustment to increase open ing deficit, share capital and contributed surplus by $2,364,461, $528,399 and $1,836,062, respectively, has been recorded on January 1, 2003 to reflect the retroactive impact of adopting the new provisions.
Prior to 2003, the Company accounted for stock-based compensation plans under the recognition and measurement provisions of APB Opinion No. 25, Accounting for Stock Issued to Employees and related Interpretation, and the disclosure provisions of SFAS No. 123, Accounting for Stock-Based Compensation. Effective January 1, 2004, the Company adopted the fair value recognition provisions of SFAS No. 123 for stock-based employee compensation. All prior periods presented have been restated to reflect the compensation cost that would have been recognized had the recognition provisions of SFAS No. 123 been applied to all awards granted to employees after January 1, 1995. As described within Notes 2 and 8 to the interim Consolidated Financial Statements of the Company for the three months and six months ended June 30, 2004, the Company has adopted the fair value based approach to stock - -based compensation and other stock-based payments, under the provisions of CICA 3870 and SFAS No. 148, Accounting for Stock-Based Compensation - Transition and Disclosure. The method of adoption applied by the Company is permissible under both Canadian and U.S. GAAP and, as such, no difference will arise. The total unamortized deferred stock-based compensation as at June 30, 2004 is $443,584.
Operating Results
Revenue for the three months ended June 30, 2004 was $1,647,323 compared to $1,438,808 for the second quarter of 2003. During the second quarter, the Company announced that Hynix Semiconductor Inc., one of the world’s leading manufacturers of memory chips, had purchased two additional fab-wide licenses of ModelWare, the Company’s Advanced Process Control (APC) solution for the semiconductor industry: one for its first 300mm fab and one for its R&D fab in Korea. These purchases were the latest in a series of orders for a total of five fab-wide licenses of ModelWare that the Company has received from Hynix over the past 12 months. The Company’s source of revenue is increasingly switching to fab-wide licenses as the Company continues to service existing accounts and to develop significant new accounts, particularly in 300mm fabs. As a result of these efforts, the Co mpany received $2.4million in new orders in the second quarter of 2004 compared to $1.8 million in the second quarter of 2003.
Cost of revenue for the three months ended June 30, 2004 was $396,160 compared to $328,870 for the second quarter of 2003. These costs consist primarily of commissions, salaries and benefits, travel, allocated overhead costs, freight and brokerage and other costs directly associated with revenue. Gross margin and gross margin percentage for the second quarter of 2004 were $1,251,163 and 76%, respectively, compared to $1,109,938 and 77%, respectively, for the second quarter in 2003. The decrease in gross margin percentage for the second quarter of 2004 compared to the second quarter of 2003 was attributable to the combined effect of changes in the distribution channel mix and the product and services mix.
Operating expenses for the three months ended June 30, 2004 were $2,024,053 (including $115,884 for non-cash stock-based compensation expense) compared to $1,894,103 (including $145,553 for non-cash stock-based compensation expense) for the second quarter of 2003. The 7% increase in expenses for the second quarter of 2004 compared to the second quarter of 2003 was attributable to increased research and development expenses and increased selling, general and administrative expenses partially offset by decreased stock-based compensation expense.
Research and development expenses for the three months ended June 30, 2004 were $977,168 compared to $910,183 for the second quarter of 2003. The 7% increase in research and development expenses for the second quarter of 2004 compared to the second quarter of 2003 was attributable to increased personnel and related costs. Development work in the second quarter of 2004 continued to be focused on increasing ModelWare functionality; improving availability and reliability; and enhancing usability. The Company expensed costs relating to research and development, as recovery of such costs from future revenue was not assured. Subsequent to the end of the second quarter of 2004, ModelWare version 5.1 was released during the SEMICON West tradeshow. This new release of ModelWare introduces the concept of dynamic models that automatically compensates for maintenance-induced shifts in equipment oper ation. As well, version 5.1 reduces the number of fault detection models required by sharing models among tools and recipes. This simplifies the number and maintenance of fault detection models, thereby significantly reducing the cost of ownership of ModelWare. This new release of ModelWare is even easier to use with additional features that includes multi-lot overlay plots, drill-down reports, and comprehensive alarm reports. Version 5.1 is also easier to manage, integrate, and scale and makes significant use of database and middleware technologies.
Selling, general and administrative expenses for the three months ended June 30, 2004 were $931,001 compared to $838,367 for the second quarter of 2003. The 11% increase in selling, general and administrative expenses in the second quarter of 2004 compared to the second quarter of 2003 was attributable to increased sales and marketing activities during the quarter, as the Company continues to invest in developing the market opportunity for APC (Advanced Process Control) products and services in the semiconductor industry. These activities included the formation of a systems integration group responsible for providing our customers with integration services related to the deployment and application of our APC solutions, as well as the establishment of a wholly owned Korean subsidiary, named Triant Technologies Korea Limited and staffed by local Korean engineers, to better serve our custom ers in this region.
Loss from operations for the three months ended June 30, 2004 was $772,890 (including $115,884 for non-cash stock-based compensation expense) compared to $784,165 (including $145,553 for non-cash stock-based compensation expense) for the second quarter of 2003. The 1% decrease in loss from operations for the second quarter of 2004 compared to the second quarter of 2003 was a result of higher gross margin partially offset by higher research and development expenses and higher selling, general and administrative expenses during the quarter.
Net loss for the three months ended June 30, 2004 was $716,280 (including $115,884 for non-cash stock-based compensation expense) compared to $894,888 (including $145,553 for non-cash stock-based compensation expense) for the second quarter of 2003. The 20% decrease in net loss for the second quarter of 2004 compared to the second quarter of 2003 reflected decreased loss from operations, as well as the effect of a foreign exchange gain of $33,314 in the second quarter of 2004 compared to a foreign exchange loss of $164,075 in the second quarter of 2003 that resulted from changes in the relative value of the Canadian dollar to the U.S. dollar on working capital denominated in U.S. dollars.
Loss per share for the three months ended June 30, 2004 was $0.02 compared to $0.02 for the second quarter of 2003.
Revenue for the six months ended June 30, 2004 was $2,709,512 compared to $2,508,176 for the six months ended June 30, 2003. The Company is well positioned to take advantage of the growth in 300mm fab opportunities, where it is recognized that APC is no longer an option but a necessity and its recently announced win of the 300mm business at Hynix is evidence of this. The Company believes that semiconductor device makers realize that maintaining an active APC program is essential to remaining a leader in semiconductor manufacturing. The Company has continued to focus on opening up new fab-wide accounts and further deployments of ModelWare in existing accounts. As a result of these efforts, the Company received $3.5 million in new orders for the six months ended June 30, 2004 compared to $2.3 million for the six months ended June 30, 2003.
Cost of revenue for the six months ended June 30, 2004 was $580,432 compared to $627,348 for the six months ended June 30, 2003. These costs consist primarily of commissions, salaries and benefits, travel, allocated overhead costs, freight and brokerage and other costs directly associated with revenue. Gross margin and gross margin percentage for the six months ended June 30, 2004 were $2,129,080 and 79%, respectively, compared to $1,880,828 and 75%, respectively, for the six months ended June 30, 2003. The increase in gross margin percentage was attributable to the combined effect of changes in the distribution channel mix and the product and services mix.
Operating expenses for the six months ended June 30, 2004 were $3,854,462 (including $229,443 for non-cash stock-based compensation expense) compared to $3,908,706 (including $289,253 for non-cash stock-based compensation expense) for the six months ended June 30, 2003. The 1% decrease in expenses was attributable to decreased research and development expenses and stock-based compensation expenses partially offset by increased selling, general and administrative expenses.
Research and development expenses for the six months ended June 30, 2004 were $1,748,752 compared to $1,906,339 for the six months ended June 30, 2003. The 8% decrease in research and development expenses was attributable to decreased personnel and related costs and to decreased outsourcing of certain contract software development services during the first three months of the comparative periods. Over the past five years, ModelWare has evolved from a simple tool-side solution to a complete fab-wide solution. The current version of ModelWare is a complex product. It has to operate continuously, be highly reliable and maintainable, simultaneously monitor hundreds of tools and be easy to use. In addition, each customer has a set of performance and feature requirements that may be different from its competitors. Meeting the semiconductor industry’s needs requires significant research an d development, if the Company is to remain a leader.
Selling, general and administrative expenses for the six months ended June 30, 2004 were $1,876,267 compared to $1,713,114 for the six months ended June 30, 2003. The 10% increase in selling, general and administrative expenses was attributable to increased sales and marketing activities.
Loss from operations for the six months ended June 30, 2004 was $1,725,382 (including $229,443 for non-cash stock-based compensation expense) compared to $2,027,878 (including $289,253 for non-cash stock-based compensation expense) for the six months ended June 30, 2003. The 15% decrease in loss from operations was a result of higher gross margin and lower research and development expenses and stock-based compensation expense partially offset by higher selling, general and administrative expenses.
Net loss for the six months ended June 30, 2004 was $1,613,171 (including $229,443 for non-cash stock-based compensation expense) compared to $2,696,471 (including $289,253 for non-cash stock-based compensation expense) for the six months ended June 30, 2003. The 40% decrease in net loss reflected the decreased loss from operations, as well as the effect of a foreign exchange gain of $53,434 during the first six months of 2004 compared to a foreign exchange loss of $757,161 during the fist six months of 2003 that resulted from changes in the relative value of the Canadian dollar to the U.S. dollar on working capital denominated in U.S. dollars.
Loss per share for the six months ended June 30, 2004 was $0.04 compared to $0.07 for the six months ended June 30, 2003. The 43% decrease in loss per share resulted from decreased net loss.
In order to conform Canadian GAAP to U.S. GAAP, net loss would be increased by $302,165 and $Nil for each of the six months ended June 30, 2004 and 2003, respectively, for severance expense recognized as a liability and expensed under Canadian GAAP in the fourth quarter of fiscal 2003 and under U.S. GAAP in the first quarter of fiscal 2004, as described within Note 8 to the interim Consolidated Financial Statements of the Company for the six months ended June 30, 2004. As a result of these adjustments, loss from operations under U.S. GAAP would have been $2,027,547 and $2,027,878 for each of the six months ended June 30, 2004 and 2003, respectively, and net loss under U.S. GAAP would have been $1,915,336 and $2,696,471 for each of the six months ended June 30, 2004 and 2003, respectively, and basic and diluted loss per share under U.S. GAAP would have been $0.04 and $0.07 for each of the six months ended June 30, 2004 and 2003, respectively.
Recent U.S. GAAP Accounting Pronouncements include the following:
In November 2002, the FASB issued Interpretation No. 45,Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (“FIN 45”). FIN 45 requires a company, at the time it issues a guarantee, to recognize an initial liability for the fair value of obligations assumed under the guarantee and elaborates on existing disclosure requirements related to guarantees and warranties. The initial recognition requirements of FIN 45 are effective for guarantees issued or modified after December 31, 2002. The adoption of this Statement does not have a material impact on the Company’s financial statements.
In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities. SFAS No. 149 amends and clarifies the accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS No. 133. In particular, SFAS No. 149 (1) clarifies under what circumstances a contract with an initial net investment meets the characteristic of a derivative as discussed in SFAS No. 133, (2) clarifies when a derivative contains a financing component, (3) amends the definition of an underlying derivative to conform it to the language used in FASB Interpretation No. 45, Guarantor Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, and (4) amends certain other existing pronouncements. SF AS No. 149 is generally effective for contracts entered into or modified after June 30, 2003. The adoption of this Statement does not have a material impact on the Company’s financial statements.
In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. SFAS No. 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). Many of those instruments were previously classified as equity. Some of the provisions of this statement are consistent with the current definition of liabilities in FASB Concepts Statement No. 6, Elements of Financial Statements. This statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The adoption of this Statement does not have a material impact on the Company’s financial statements.
In December 2003, the FASB issued Interpretation No. 46-Revised (“FIN 46-R”), Consolidation of Variable Interest Entities, an interpretation of ARB 51 (revised December 2003), which replaces FIN 46. FIN 46-R incorporates certain modifications of FIN 46 adopted by the FASB subsequent to the issuance of FIN 46, including modifications to the scope of FIN 46. For all non-special purpose entities (“SPE”) created prior to February 1, 2003, public entities will be required to adopt FIN 46-R at the end of the first interim or annual reporting period ending after March 15, 2004. For all entities (regardless of whether the entity is an SPE) that were created subsequent to January 31, 2003, public entities are already required to apply the provisions of FIN 46, and should continue doing so unless they elect to adopt the provisions of FIN 46-R early as of the f irst interim or annual reporting period ending after December 15, 2003. If they do not elect to adopt FIN 46-R early, public entities would be required to apply FIN 46-R to those post-January 31, 2003 entities as of the end of the first interim or annual reporting period ending after March 15, 2004.
B.
Liquidity and Capital Resources
At June 30, 2004, cash, cash equivalents and short-term investments were $5,849,793 compared to $7,354,044 at December 31, 2003; working capital was $6,784,925 compared to $8,192,230 at December 31, 2003; assets were $8,815,383 compared to $11,319,517 at December 31, 2003; and shareholders’ equity was $7,363,156 compared to $8,745,194 at December 31, 2003.
At June 30, 2004, 5.5% of cash, cash equivalents and short-term investments were denominated in U.S. dollars compared to 2.2% as at December 31, 2003 and 100% of trade accounts receivable were denominated in U.S. dollars compared to 100% as at December 31, 2003 (since the Company invoices its products primarily in U.S. dollars). Any increase (decrease) in the relative value of the U.S. dollar to the Canadian dollar would increase (decrease) cash, cash equivalents and short-term investments and would impact the net earnings of the Company. For example, if the relative value of the U.S. dollar to the Canadian dollar had increased (decreased) by an additional 1.0% for the six months ended June 30, 2004, then cash, cash equivalents and short-term investments would have increased (decreased) and net loss would have decreased (increased) by approximately $3,200 and accounts receivable would ha ve increased (decreased) and net loss would have decreased (increased) by approximately $21,000. Included in accounts receivable at June 30, 2004 is U.S.$515,000 relating to extended payment terms as a sales incentive for a major customer. The Company does not hedge funds denominated in U.S. dollars.
During the three months ended June 30, 2004, the Company had a net outflow of cash and cash equivalents of $884,797 compared to a net inflow of $244,339 for the second quarter of 2003.During the second quarter of 2004, cash and cash equivalents were used in operating activities (outflow of $810,053) and used in investing activities for property, plant and equipment (outflow of $74,744). During the second quarter of 2003, cash and cash equivalents were used in operating activities (outflow of $1,515,614) and used in investing activities for property, plant and equipment (outflow of $32,707).
During the six months ended June 30, 2004, the Company had a net outflow of cash and cash equivalents of $1,504,251 compared to a net outflow of $1,982,131 for the six months ended June 30, 2003. During the six months ended June 30, 2004, cash and cash equivalents were used in operating activities (outflow of $1,394,032), provided by financing activities (inflow of $1,690) and used in investing activities for property, plant and equipment (outflow of $111,909). During the six months ended June 30, 2003, cash and cash equivalents were used in operating activities (outflow of $3,673,637) and used in investing activities for property, plant and equipment (outflow of $101,154).
The Company believes that its existing cash resources are sufficient to fund expected capital requirements and operating losses for the next 12 months. The Company intends to use its existing cash resources to fund research and development of existing and new technologies; to fund new business development programs, including sales and marketing of existing and new products; and for general corporate purposes, including possible future acquisitions and investments. While management anticipates continued growth in revenue from its products and services, there is no assurance that the Company will earn sufficient revenue to maintain future operations and fund the growth of the Company. Consequently, the Company may raise additional funds through financings in the future in order to take advantage of any growth opportunities, which may require a more rapid expansion, or acquisitions of compl ementary businesses or technologies, the formation of new alliances, the development of new products, and other responses to competitive pressures. There can be no assurance that additional financing will be available, if at all, on terms favourable to the Company. If such funds are unavailable or are not available on acceptable terms, the Company may be unable to maintain its future operations, take advantage of opportunities, develop new products, or otherwise respond to competitive pressures.
At June 30, 2004, the aggregate minimum future payments under operating leases for the years ending December 31, 2004 to 2007 are $166,464, $233,346, $162,216, and $40,554, respectively.
Summary
The Company continues to invest in developing the market opportunity for APC (Advanced Process Control) products and services in the semiconductor industry.
The Company believes the demand for APC products and services will continue to increase on a year-over-year basis as customers realize their benefits. According to the Semiconductor Industry Association, 2004 is expected to be another year of strong double-digit growth for the semiconductor industry and has projected stronger-than-expected growth of 28.6% for the year, with a projected compound annual growth rate of 10.4% for the period 2004 through 2007. The Company is optimistic that this will have a positive effect on its business. For 40 years the semiconductor industry has sustained a remarkable growth due to a variety of design and manufacturing improvements that have resulted in the proliferation of electronics. Because of these improvements, the industry has managed a 30% per year cost reduction per chip function and has managed to grow at a compound annual rate of 17% per year d uring this past period. However, the industry is facing some tough challenges, which include: increasingly complex factories due to the rapid changes in semiconductor technologies, business requirements and market conditions; the efficiency of the equipment used to manufacture chips is not keeping up with industry-specific targets, which has a significant impact on capital and operating costs; and with respect to the conversion to 300mm factories, the semiconductor industry must quickly ramp 300mm production to high volumes and it must achieve its efficiency targets. APC can help the semiconductor industry meet these and other challenges it currently faces. APC is the Company’s business.
The Company’s sales prospects for 2004 remain very healthy, particularly in Japan and Korea, from where more than half of its 2004 revenue is expected to come. As stated by the Company earlier in the year, a significant portion of its 2004 revenue is targeted from 300mm fabs, and the timing of this revenue may be dependent on when these 300mm fabs are brought on-line. APC solutions are characterized by lengthy sales cycles, due in part to the strategic importance of these solutions especially in 300mm fabs where APC has become a necessity. APC provides our customers with a strategic manufacturing advantage and they carefully compare competing products and companies before making a final decision. Lengthy sales cycles, coupled with the fact that the industry is characterized by a relatively small number of semiconductor manufacturers, means that our quarter-to-quarter revenue can be lumpy. The Company anticipates that its revenue in 2004 will be stronger in the second half of the year.
The Company’s strategy is to focus on the semiconductor industry and develop a sustainable and profitable business in this industry segment by focusing on equipment health monitoring and advanced fault detection, and by introducing new products and services into the semiconductor market to broaden our opportunities.
TRIANT TECHNOLOGIES INC.
CONSOLIDATED BALANCE SHEETS
(Expressed in Canadian Dollars)
(Unaudited)
June 30, 2004 | December 31, 2003 |
(Note 2) | ||
Assets | ||
Current | ||
Cash and cash equivalents | $ 5,489,793 | $ 7,354,044 |
Accounts receivable, net | ||
Trade (net of allowance for doubtful accounts: | ||
June 30, 2004 and December 31, 2003 – nil) | 2,088,346 | 3,002,297 |
Other | 49,843 | 7,814 |
Prepaid expenses and deposits | 79,630 | 144,878 |
Inventory (Note 3) | 169,540 | 257,520 |
Total current assets | 8,237,152 | 10,766,553 |
Property, plant and equipment, net | 578,231 | 552,964 |
Total assets | $ 8,815,383 | $ 11,319,517 |
Liabilities | ||
Current | ||
Accounts payable | $ 127,862 | $ 873,824 |
Accrued liabilities | 684,467 | 1,235,999 |
Deferred revenue | 639,898 | 464,500 |
Total current liabilities | 1,452,227 | 2,574,323 |
Commitments (Note 6) | ||
Shareholders’ equity | ||
Capital stock (Note 4) | ||
Preferred shares | ||
Authorized: 100,000,000 without par value | ||
Issued and outstanding: June 30, 2004 and December 31, 2003 – Nil | ||
Common shares | ||
Authorized: 100,000,000 without par value | ||
Issued and outstanding: June 30, 2004 – 41,407,875 and December 31, 2003 – 41,402,675 | 36,739,395 | 36,736,997 |
Contributed surplus | 2,662,889 | 2,434,174 |
Deficit | (32,039,128) | (30,425,957) |
Total shareholders’ equity | 7,363,156 | 8,745,194 |
Total liabilities and shareholders’ equity | $ 8,815,383 | $ 11,319,517 |
Approved by the Board of Directors:
(Signed) Robert Heath____________
(Signed) David L. Baird________
Robert Heath, Director
David L. Baird, Director
See accompanying Notes to the Consolidated Financial Statements.
TRIANT TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in Canadian Dollars)
(Unaudited)
Three months ended June 30, | Six months ended June 30, | |||
2004 | 2003 | 2004 | 2003 |
(Note 2) | (Note 2) | |||
Revenue | ||||
Licenses and products | $ 1,406,372 | $ 1,368,972 | $ 2,117,086 | $ 2,218,759 |
Services and maintenance | 240,951 | 69,836 | 592,426 | 289,417 |
1,647,323 | 1,438,808 | 2,709,512 | 2,508,176 | |
Cost of revenue | 396,160 | 328,870 | 580,432 | 627,348 |
Gross margin | 1,251,163 | 1,109,938 | 2,129,080 | 1,880,828 |
Operating expenses | ||||
Research and development | 977,168 | 910,183 | 1,748,752 | 1,906,339 |
Selling, general and administrative | 931,001 | 838,367 | 1,876,267 | 1,713,114 |
Stock-based compensation (Note 2) | 115,884 | 145,553 | 229,443 | 289,253 |
2,024,053 | 1,894,103 | 3,854,462 | 3,908,706 |
Loss from operations | (772,890) | (784,165) | (1,725,382) | (2,027,878) |
Interest and other income | 23,296 | 53,352 | 58,777 | 88,568 |
Foreign exchange gain (loss) | 33,314 | (164,075) | 53,434 | (757,161) |
Net loss for the period | $ (716,280) | $ (894,888) | $ (1,613,171) | $ (2,696,471) |
Loss per common share | $ (0.02) | $ (0.02) | $ (0.04) | $ (0.07) |
Weighted average number of common shares outstanding | 41,407,875 | 41,402,675 | 41,406,925 | 41,402,675 |
See accompanying Notes to the Consolidated Financial Statements.
TRIANT TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Expressed in Canadian Dollars)
(Unaudited)
Common Shares | |||||
Shares | Amount | Contributed Surplus | Deficit | Total |
(Note 2) | |||||
Balance at December 31, 2002 | 41,402,675 | $ 36,208,578 | $ - | $ (27,038,200) | $ 9,170,378 |
Cumulative effect of change in accounting policy (Note 2) | - | 528,399 | 1,836,062 | - | 2,364,461 |
Stock-based compensation (Note 2) | - | - | 598,112 | - | 598,112 |
Net loss for the year | - | - | - | (3,387,757) | (3,387,757) |
Balance at December 31, 2003 | 41,402,675 | 36,736,977 | 2,434,174 | (30,425,957) | 8,745,194 |
Issued for cash | |||||
Share Incentive Plan, options | 5,200 | 2,418 | (728) | - | 1,690 |
Stock-based compensation (Note 2) | - | - | 229,443 | - | 229,443 |
Net loss for the period | - | - | - | (1,613,171) | (1,613,171) |
Balance at June 30, 2004 | 41,407,875 | $ 36,739,395 | $ 2,662,889 | $ (32,039,128) | $ 7,363,156 |
See accompanying Notes to the Consolidated Financial Statements.
TRIANT TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in Canadian Dollars)
(Unaudited)
Three months ended June 30, | Six months ended June 30, | |||
2004 | 2003 | 2004 | 2003 |
(Note 2) | (Note 2) | |||
Operating activities | ||||
Net loss for the period | $ (716,280) | $ (894,888) | $ (1,613,171) | $ (2,696,471) |
Items not affecting cash | ||||
Accrued interest on short-term investments | - | (157) | - | (7,195) |
Amortization | 46,084 | 41,512 | 86,462 | 80,630 |
Foreign exchange loss on short-term investments | - | - | - | 133,512 |
Stock-based compensation (Note 2) | 115,884 | 145,553 | 229,443 | 289,253 |
Changes in operating assets and liabilities (Note 5) | (255,741) | (807,634) | (96,946) | (1,473,366) |
Net cash used in operating activities | (810,053) | (1,515,614) | (1,394,032) | (3,673,637) |
Financing activity | ||||
Common shares issued for cash, net of issue costs | - | - | 1,690 | - |
Net cash provided by financing activity | - | - | 1,690 | - |
Investing activity | ||||
Proceeds from disposition of short-term investments | - | 1,792,660 | - | 1,792,660 |
Acquisition of property, plant and equipment | (74,744) | (32,707) | (111,909) | (101,154) |
Net cash (used in) provided by investing activities | (74,744) | 1,759,953 | (111,909) | 1,691,506 |
Net cash (outflow) inflow | (884,797) | 244,339 | (1,504,251) | (1,982,131) |
Cash and cash equivalents, beginning of period | 6,734,590 | 8,296,592 | 7,354,044 | 10,523,062 |
Cash and cash equivalents, end of period | $ 5,849,793 | $ 8,540,931 | $ 5,849,793 | $ 8,540,931 |
Cash and cash equivalents are comprised of: | ||||
Cash | $ 3,638,490 | $ 8,486,987 | $ 3,638,490 | $ 8,486,987 |
Cash equivalents | 2,211,303 | 53,944 | 2,211,303 | 53,944 |
$ 5,849,793 | $ 8,540,931 | $ 5,849,793 | $ 8,540,931 |
See accompanying Notes to the Consolidated Financial Statements.
TRIANT TECHNOLOGIES INC.
Notes to the Interim Financial Statements
June 30, 2004
(Expressed in Canadian Dollars)
(Unaudited)
1.
BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements include all information and footnote disclosures required under Canadian generally accepted accounting principles for interim financial statements. In the opinion of management, all adjustments (consisting primarily of normal recurring adjustments) considered necessary for a fair presentation of the consolidated financial position, results of operations and cash flows as at June 30, 2004, and for all periods presented, have been included.
The unaudited consolidated balance sheets, statements of operations and shareholders’ equity and statements of cash flows have been prepared in accordance with Canadian generally accepted accounting principles for interim financial statements. These financial statements follow the same accounting policies and methods of applications as the most recent annual consolidated financial statements dated December 31, 2003, except as described in Note 2. These financial statements should be read in conjunction with the annual consolidated financial statements and notes thereto for the fiscal year ended December 31, 2003.
2.
CHANGE IN ACCOUNTING POLICY
As of January 1, 2004, the Company changed its accounting policy, retroactive to January 1, 2002, in accordance with recommendations of CICA 3870,Stock-based Compensation and Other Stock-based Payments. This section establishes standards for the recognition, measurement and disclosure of stock-based compensation and other stock-based awards made in exchange for goods and services. As permitted by CICA 3870, the Company has applied this change retroactively for new awards granted on or after January 1, 1995. The Company has adopted the fair value based method of accounting of stock-based compensation awards using the Black-Scholes option pricing model.
Using the fair value method for stock-based compensation, the Company recorded an additional charge to earnings of $115,884 and $145,553 for the three months ended June 30, 2004 and 2003, respectively, for stock options granted to employees and directors. The fair values of options granted during the three months ended June 30, 2004 were determined using an option pricing model assuming no dividends were paid, a weighted average volatility of the Company’s share price of 79% (2003 - 62%), a weighted average expected life of 3 years (2003 - 3 years) and a weighted average annual risk free rate of 3.73% (2003 – 3.37%). The option valuation produced by the model is $0.23 per share (2003 - $0.15 per share).
The Company has applied the new provisions retroactively with the restatement of prior periods. As a result, a cumulative adjustment to opening deficit, share capital and contributed surplus has been recorded on January 1, 2003 to reflect the retroactive impact of adopting the new provisions as follows:
Increase as at January 1, 2003 |
Share capital | $ 528,399 |
Contributed surplus | 1,836,062 |
Deficit | (2,364,461) |
3.
INVENTORY
As at June 30, 2004, finished goods inventory of $63,000 (December 31, 2003 - $123,000) is valued at the lower of cost and estimated net realizable value, and work-in-progress inventory of $106,540 (December 31, 2003 - $134,520) is valued on a percentage of completion basis based on cost.
4.
CAPITAL STOCK
As at June 30, 2004, there were 4,581,000 options issued and outstanding at exercise prices ranging from $0.26 to $2.15 with remaining contractual lives ranging from 0.5 to 5 years.
As at July 13, 2004, there were 41,407,875 common shares issued and outstanding and 4,581,000 options issued and outstanding at exercise prices ranging from $0.26 to $2.15 with remaining contractual lives ranging from 0.5 to 5 years.
5.
CHANGES IN OPERATING ASSETS AND LIABILITIES
The effect on cash flows from changes in operating assets and liabilities is as follows:
Three months ended June 30, | Six months ended June 30, | |||
2004 | 2003 | 2004 | 2003 |
Accounts receivable | ||||
Trade | $ (539,681) | $ (944,815) | $ 913,951 | $ (320,902) |
Other | (35,986) | 21,744 | (42,029) | (11,319) |
Prepaid expenses and deposits | 26,038 | 22,484 | 65,248 | 23,042 |
Inventory | 78,523 | 15,600 | 87,980 | (165,000) |
Accounts payable | (89,371) | (76,232) | (745,962) | (31,959) |
Accrued liabilities | 201,157 | 61,903 | (551,532) | (384,804) |
Deferred revenue | 103,579 | 91,682 | 175,398 | (582,424) |
$ (255,741) | $ (807,634) | $ (96,946) | $ (1,473,366) |
6.
COMMITMENTS
At June 30, 2004, aggregate minimum future payments under operating leases for the years ended December 31 are as follows:
2004 | $ 166,464 |
2005 | 233,346 |
2006 | 162,216 |
2007 | 40,554 |
7.
SEGMENTED AND OTHER INFORMATION
(a)
The Company operates in one segment for developing, marketing and supporting equipment health monitoring, advanced fault detection and sophisticated data analysis technology. Since the Company operates in one segment, all financial segment information can be found in the consolidated financial statements.
Information related to geographic areas is as follows:
Three months ended June 30, | Six months ended June 30, | |||
2004 | 2003 | 2004 | 2003 |
Revenue | ||||
Asia | $ 1,451,647 | $ 739,948 | $ 2,412,258 | $ 1,791,620 |
Europe | 62,940 | 638,253 | 88,294 | 638,476 |
United States | 132,736 | 60,607 | 208,960 | 78,080 |
$ 1,647,323 | $ 1,438,808 | $ 2,709,512 | $ 2,508,176 |
The Company attributes revenue among geographical areas based on the location of its customers. Long-lived assets consist of property, plant and equipment, substantially all of which are located in Canada.
(b)
Concentration of credit risk and economic dependence
The Company currently derives revenue primarily from customers in the semiconductor industry. These customers are geographically dispersed and the Company closely monitors credit granted to each customer. Therefore, credit risks are considered to be minimal. Revenue during the three-month and six-month periods ended June 30, 2004 includes $1,472,225 (89%) (2003 - $1,322,332 (92%)) from sales to three (2003 - three) customers and $2,449,105 (90%) (2003 - $2,337,382 (93%)) from sales to three (2003 - three) customers, respectively. As at June 30, 2004, accounts receivable includes $2,036,197 (95%) (December 31, 2003 - $2,977,111 (99%)) from four (December 31, 2003 - five) customers. The Company invests its excess cash principally in money market funds and investment grade securities. The Compa ny has established guidelines relative to diversification and maturities that maintain safety and liquidity.
8.
UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
These consolidated financial statements have been prepared in accordance with Canadian GAAP which, in the case of these financial statements, conforms in all material respects with U.S. GAAP except as follows:
Consolidated Balance Sheets
June 30, 2004 | December 31, 2003 |
(Note 2) | ||
Total shareholders’ equity under Canadian GAAP | $ 7,363,156 | $ 8,745,194 |
Severance expense (a) | - | 302,165 |
Total shareholders’ equity under U.S. GAAP | $ 7,363,156 | $ 9,047,359 |
Consolidated Statements of Operations
Three months ended June 30, | Six months ended June 30, | |||
2004 | 2003 | 2004 | 2003 |
(Note 2) | (Note 2) | |||
Net loss under Canadian GAAP | $ (716,280) | $ (894,888) | $ (1,613,171) | $ (2,696,471) |
Severance expense (a) | - | - | (302,165) | - |
Net loss under U.S. GAAP | $ (716,280) | $ (894,888) | $ (1,915,336) | $ (2,696,471) |
Basic and diluted loss per share under Canadian GAAP | $ (0.02) | $ (0.02) | $ (0.04) | $ (0.07) |
Basic and diluted loss per share under U.S. GAAP | $ (0.02) | $ (0.02) | $ (0.05) | $ (0.07) |
(a)
Under U.S. GAAP, the liability for a cost associated with an exit or disposal activity should be recognized at its fair value when the liability is incurred in accordance with SFAS No. 145, Accounting for Costs Associated with Exit or Disposal of Activities. Under Canadian GAAP, these costs should be recognized as a liability and expense when the event that obligates the Company occurs. In the fourth quarter of fiscal 2003, the Company’s management decided to restructure its operations to reduce operating expenses. The Company reduced its overall head count and provided affected employees with severance packages. This decision was not communicated to the affected employees until after December 31, 2003. These severance costs were fully paid during the first quart er of 2004.
(b)
Prior to 2003, the Company accounted for stock-based compensation plans under the recognition and measurement provisions of APB Opinion No. 25,Accounting for Stock Issued to Employees and related Interpretation, and the disclosure provisions of SFAS No. 123,Accounting for Stock-Based Compensation. Effective January 1, 2004, the Company adopted the fair value recognition provisions of SFAS No. 123 for stock-based employee compensation. All prior periods presented have been restated to reflect the compensation cost that would have been recognized had the recognition provisions of SFAS No. 123 been applied to all awards granted to employees after January 1, 1995.
As described in Note 2, the Company has adopted the fair value based approach to stock-based compensation and other stock-based payments, under the provisions of CICA 3870 and SFAS No. 148,Accounting for Stock-Based Compensation - Transition and Disclosure. The method of adoption applied by the Company is permissible under both Canadian and U.S. GAAP and, as such, no difference will arise. The total unamortized deferred stock-based compensation as at June 30, 2004 is $443,584.
(c)
Under U.S. GAAP, costs incurred in the development of products are expensed as incurred until the product is established as technologically feasible in accordance with SFAS No. 86,Accounting for theCosts of Computer Software to be Sold, Leased, or Otherwise Marketed. Under Canadian GAAP, these costs may be capitalized to the extent that they meet specified criteria for recoverability. For all periods presented, there is no difference relating to the treatment of product development costs under Canadian and U.S. GAAP.
(d)
Under Canadian GAAP, the Company includes in income, gains and losses resulting from the translation of the accounts of its foreign subsidiary. Under U.S. GAAP, where an entity’s functional currency is a foreign currency, the translation adjustment resulting from the process of translating the entity’s financial statements into the reporting currency is reported separately as a component of equity. For all periods presented, there is no material difference relating to the translation of the foreign subsidiary’s financial statements under Canadian and U.S. GAAP.
Under Canadian GAAP, the Company includes gains and losses from its foreign currency transactions in the determination of income. Under U.S. GAAP, a change in exchange rates between the functional currency and the currency in which the transaction is denominated results in a transaction gain or loss that is included in income, unless the transactions are designated as effective hedges against foreign currency investments or commitments. For all periods presented, there is no difference relating to foreign currency transactions under Canadian and U.S. GAAP.
(e)
Under U.S. GAAP, SFAS No. 109,Accounting for Income Taxes, the Company would calculate its future income taxes using only enacted tax rates. This differs from Canadian GAAP which uses substantively enacted tax rates. Since any change in the carrying value of the Company’s future income tax assets would be offset by a 100% valuation allowance, there would be no effect on the Company’s financial position or results of operations.
(f)
Under U.S. GAAP, SFAS No. 115,Accounting for Certain Investments in Debt and Equity Securities, the Company would have classified its short-term securities as held-to- maturity. Investments classified as held-to-maturity securities are stated at amortized cost with corresponding premiums or discounts amortized against interest income over the life of the investment. For all periods presented, there is no effect on the Company’s financial position or results of operations.
(g)
Recent accounting pronouncements
In November 2002, the FASB issued Interpretation No. 45,Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (“FIN 45”). FIN 45 requires a company, at the time it issues a guarantee, to recognize an initial liability for the fair value of obligations assumed under the guarantee and elaborates on existing disclosure requirements related to guarantees and warranties. The initial recognition requirements of FIN 45 are effective for guarantees issued or modified after December 31, 2002. The adoption of this Statement did not have a material impact on the Company’s financial statements.
In April 2003, the FASB issued SFAS No. 149,Amendment of Statement 133 on Derivative Instruments and Hedging Activities. SFAS No. 149 amends and clarifies the accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS No. 133. In particular, SFAS No. 149 (1) clarifies under what circumstances a contract with an initial net investment meets the characteristic of a derivative as discussed in SFAS No. 133, (2) clarifies when a derivative contains a financing component, (3) amends the definition of an underlying derivative to conform it to the language used in FASB Interpretation No. 45, Guarantor Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, and (4) amends certain other existing pronouncements. SFAS No. 149 is generally effective for contracts entered into or modified after June 30, 2003. The adoption of this Statement did not have a material impact on the Company’s financial statements.
In May 2003, the FASB issued SFAS No. 150,Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. SFAS No. 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). Many of those instruments were previously classified as equity. Some of the provisions of this statement are consistent with the current definition of liabilities in FASB Concepts Statement No. 6, Elements of Financial Statements. This statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The adoption of this Statement did not have a material impact on the Company’s financial statements.
In December 2003, the FASB issued Interpretation No. 46-Revised (“FIN 46-R”),Consolidation of Variable Interest Entities, an interpretation of ARB 51 (revised December 2003), which replaces FIN 46. FIN 46-R incorporates certain modifications of FIN 46 adopted by the FASB subsequent to the issuance of FIN 46, including modifications to the scope of FIN 46. For all non-special purpose entities (“SPE”) created prior to February 1, 2003, public entities will be required to adopt FIN 46-R at the end of the first interim or annual reporting period ending after March 15, 2004. For all entities (regardless of whether the entity is an SPE) that were created subsequent to January 31, 2003, public entities are already required to apply the provisions of FIN 46, and should continue doing so un less they elect to adopt the provisions of FIN 46-R early as of the first interim or annual reporting period ending after December 15, 2003. If they do not elect to adopt FIN 46-R early, public entities would be required to apply FIN 46-R to those post-January 31, 2003 entities as of the end of the first interim or annual reporting period ending after March 15, 2004.
TRIANT TECHNOLOGIES INC.
Corporate Directory
Other Information
June 30, 2004
BOARD OF DIRECTORS David Baird(1)(2) Richard Deininger(1) Brian Harrison(1)(2) CHAIRMAN OF THE BOARD Robert Heath CHIEF EXECUTIVE OFFICER Paul O’Sullivan PRESIDENT AND CHIEF OPERATING OFFICER Brian Piccioni(1)(2) (1) MEMBER OF AUDIT COMMITTEE (2) MEMBER OF CORPORATE GOVERNANCE COMMITTEE | All dollar amounts in this Interim Report are in Canadian dollars and in accordance with Canadian generally accepted accounting principles unless stated otherwise. This Interim Report contains forward-looking statements that are subject to various risks and uncertainties. The Company’s actual results could differ materially from those anticipated in such forward-looking statements as a result of numerous factors that may be beyond the Company’s control. Forward-looking statements are based on the expectations and opinions of the Company’s management on the date the statements are made. TRADEMARKS Triant and ModelWare are registered trademarks of Triant Technologies Inc. UPM and C-RAS are trademarks of Triant Technologies Inc. |
OFFICERS Brian Harrison(3) CHAIRMAN OF THE BOARD Robert Heath CHIEF EXECUTIVE OFFICER Paul O’Sullivan PRESIDENT AND CHIEF OPERATING OFFICER Mark Stephens CHIEF FINANCIAL OFFICER AND CORPORATE SECRETARY Francis St-Pierre VICE PRESIDENT, WORLDWIDE SALES & MARKETING Don Gayton VICE PRESIDENT, ENGINEERING (3) NON-EXECUTIVE OFFICER | |
AUDITORS Deloitte & Touche LLP Vancouver, Canada | |
BANKERS Bank of Montreal Vancouver, Canada | |
SOLICITORS Koffman Kalef Vancouver, Canada | REGISTERED AND RECORDS OFFICE 19th Floor, 885 West Georgia Street Vancouver, British Columbia, Canada V6C 3H4 |
REGISTRAR AND TRANSFER AGENT Computershare Investor Services Inc. Vancouver, Canada | SHARE LISTINGS Toronto Stock Exchange (TSX), Symbol: TNT OTC Bulletin Board (OTCBB), Symbol: TNTTF |
SIGNATURE
The registrant hereby certifies that it meets all of the requirements for filing on Form 6-K and that it has duly caused and authorized the undersigned to sign this Interim Report on its behalf.
TRIANT TECHNOLOGIES INC.
By: (signed)
MARK A. STEPHENS
Chief Financial Officer and Corporate Secretary
Date: July 29, 2004