Sungold International (SGIHF) 6-K Current report (foreign)

SUNGOLD INTERNATIONAL HOLDINGS CORP.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SECOND QUARTER ENDED FEBRUARY 28, 2007

(A Development Stage Company)
(Presented in Canadian Dollars)

(Unaudited – Prepared by Management)

NOTICE TO READER

In accordance with Canadian Securities Administrators National Instrument 51-102, Sungold International Holdings Corp. discloses that these unaudited financial statements for the second financial quarter ended February 28, 2007, have not been reviewed by our auditors, Mintz & Partners LLP.

Toronto, ON

April 30, 2007

SUNGOLD INTERNATIONAL HOLDINGS CORP.

CONSOLIDATED BALANCE SHEET

FEBRUARY 28, 2007

(A Development Stage Company)
(Presented in Canadian Dollars)

(Unaudited – Prepared by Management)

	(Unaudited)		(Audited)
	February 28		August 31
	2007		2006
	$		$
ASSETS
CURRENT ASSETS
Cash	444		-
Sundry receivables	8,203		17,853
Prepaid expenses and deposits	640		640
	9,287		18,493
PRE-DEVELOPMENT COSTS (Note 4)	279,680		270,288
EQUIPMENT (Note 5)	441,966		483,776
MARKETING RIGHTS (Note 6)	25,740		-
	756,673		772,557
LIABILITIES
CURRENT LIABILITIES
Bank indebtedness	-		2,919
Accounts payable and accrued liabilities	622,675		639,532
Loans payable (Note 9d)	7,500		7,500
Current obligation under capital leases (Note 8)	6,623		6,128
	636,798		656,079
LONG TERM LIABILITIES
Obligation under capital leases (Note 8)	3,078		6,518
	639,876		662,597
SHAREHOLDERS’ EQUITY
SHARE CAPITAL (Note 7)	22,531,154		22,045,688
CONTRIBUTED SURPLUS	344,265		254,587
DEFICIT	(22,758,622	)	(22,190,315	)
	116,797		109,960
	756,673		772,557

APPROVED BY THE DIRECTORS:
“Art Cowie”	Director
“Donald Harris”	Director

(See accompanying notes to consolidated financial statements)

SUNGOLD INTERNATIONAL HOLDINGS CORP.

CONSOLIDATED STATEMENT OF LOSS AND DEFICIT

FOR THE SECOND QUARTER ENDED FEBRUARY 28, 2007

(A Development Stage Company)
(Presented in Canadian Dollars)

(Unaudited – Prepared by Management)

	April 7, 1986		Second Quarter Ended		Year-to-Date
	(inception) to
	February 28		February 28	February 28	February 28	February 28
	2007		2007	2006	2007	2006
	$		$	$	$	$
					��
REVENUE
Gain on disposition of marketable securities	838,947		-	-	-	-
EXPENSES
Impairment write-down of pre-development costs	6,460,304		-	-	-	-
Advertising and promotion	3,399,260		4,190	22,414	6,809	46,170
Professional and consulting fees	3,661,502		102,724	254,881	122,455	324,100
Management fees and salaries	2,467,301		61,529	147,917	138,701	193,167
Investor relations	1,413,172		47,111	32,858	57,296	93,355
Travel and conference	1,160,521		9,826	24,067	13,629	28,146
Office and miscellaneous	886,592		10,252	8,924	13,676	19,579
Internet services	828,311		518	6,210	1,670	12,287
Amortization	981,148		25,927	34,182	51,285	68,201
Office rent and services	642,031		20,060	3,099	30,770	15,992
Transfer agent and filing fees	416,109		14,131	8,917	16,414	13,653
Insurance	263,953		-	-	-	167
Financing fees	237,433		5,000	-	10,000	-
Stock based compensation	344,265		35,593	-	89,678	-
Finder fees	154,031		-	-	-	-
Interest and bank charges	135,905		2,204	2,355	4,499	3,172
Settlement agreement	71,178		-	-	-	-
Interest on capital leases	33,291		418	858	894	1,646
Fees and commissions	30,741		1,000	-	1,000	-
Loss on disposition of equipment	15,464		-	-	606	-
Foreign exchange loss (gain)	(4,943	)	4,473	793	8,925	801
	23,597,569		344,956	547,475	568,307	820,436
LOSS	22,758,622		344,956	547,475	568,307	820,436
DEFICIT– BEGINNING	-		22,413,666	20,891,342	22,190,315	20,618,381
DEFICIT – ENDING	22,758,622		22,758,622	21,438,817	22,758,622	21,438,817
Weighted average number of shares			129,410,908	123,762,832	128,187,111	122,095,485
Loss per share			0.0027	0.0044	0.0044	0.0067

(See accompanying notes to consolidated financial statements)

SUNGOLD INTERNATIONAL HOLDINGS CORP.

CONSOLIDATED STATEMENT OF CASH FLOW

FOR THE SECOND QUARTER ENDED FEBRUARY 28, 2007

(A Development Stage Company)
(Presented in Canadian Dollars)

(Unaudited – Prepared by Management)

		April 7, 1986
		(inception) to		Second Quarter Ended				Year-to-Date
		February 28		February 28		February 28		February 28		February 28
		2007		2007		2006		2007		2006
		$		$		$		$		$
Loss		(22,758,622	)	(344,956	)	(547,475	)	(568,307	)	(820,436	)
Items not involving cash:
Write-down of pre-development costs		6,460,304		-		-		-		-
Amortization		981,148		25,927		34,183		51,285		68,201
Stock-based compensation		344,265		35,593		-		89,678		-
Issuance of private placement units or
common shares for services		714,928		71,926		241,229		78,106		294,617
Gain on disposition of marketable securities		(838,947	)	-		-		-		-
Loss on disposition of equipment		15,464		-		-		606		-
		(15,081,460	)	(211,510	)	(272,063	)	(348,632	)	(457,618	)
Cash provided by changes in non-cash
working capital items:
Sundry receivables		(8,203	)	14,089		(10,947	)	9,650		(8,963	)
Prepaid expenses and deposits		(640	)	-		(17,232	)	-		97
Accounts payable and accrued liabilities		622,675		(62,631	)	(44,745	)	(16,857	)	12,963
		(14,467,628	)	(260,052	)	(344,987	)	(355,839	)	(453,521	)
INVESTING ACTIVITIES
Pre-development costs		(5,330,605	)	(6,193	)	(6,542	)	(9,392	)	(7,115	)
Proceeds of disposition of equipment		39,236		-		-		1,208		-
Acquisition of equipment		(1,406,520	)	(10,789	)	(2,188	)	(11,289	)	(2,402	)
Acquisition of marketing rights		(25,740	)	(25,740	)	-		(25,740	)	-
		(6,723,629	)	(42,722	)	(8,730	)	(45,213	)	(9,517	)
FINANCING ACTIVITIES
Loans payable		2,583,228		-		-		-		(12,500	)
Repayment of obligation under capital leases		(73,102	)	(1,501	)	(1,671	)	(2,945	)	(3,413	)
Issuance of shares		16,955,828		297,682		365,628		407,360		478,832
Proceeds of disposition of marketable securities		1,725,747		-		-		-		-
		21,191,701		296,181		363,957		404,415		462,919
(DECREASE) INCREASE IN CASH		444		(6,593	)	10,240		3,363		(119	)
CASH – beginning		-		7,037		517		(2,919	)	10,876
CASH – ending		444		444		10,757		444		10,757
Notes to statement of cash flow:
1)	Cash consists of balances with banks
2)	Interest and income taxes paid:
	Interest paid	169,196		2,622		3,213		5,393		4,818
	Income taxes paid	-		-		-		-		-

(See accompanying notes to consolidated financial statements

SUNGOLD INTERNATIONAL HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SECOND QUARTER ENDED FEBRUARY 28, 2007

(A Development Stage Company)
(Presented in Canadian Dollars)

(Unaudited – Prepared by Management)

Note 1	BASIS OF PRESENTATION
	The accompanying unaudited interim financial statements have been prepared in accordance with Canadian generally accepted accounting principles for interim financial information and, accordingly, certain information and note disclosure normally included in financial statements prepared in accordance with Canadian generally accepted accounting principles has been condensed, or omitted. In the opinion of management, these financial statements include all adjustments necessary for the fair presentation of the results of the interim periods presented. These financial statements have been prepared using the same accounting policies as used in the annual financial statements and should be read in conjunction with the audited financial statements of the Company for the year ended August 31, 2006. The results of operations for any interim period are not necessarily indicative of the results of operations of any other interim period or full fiscal year.
Note 2	GOING CONCERN AND NATURE OF OPERATIONS
	The principal activity is developing and promoting a proprietary pari-mutuel wagering virtual horseracing product, internet payment system and other internet related products. To date, the Company has not earned significant revenues and is considered to be in a development stage.
	The recoverability of the amounts shown for pre-development costs is primarily dependent on the ability of the Company to put its pre-development projects into economically viable products in the future. The Company plans to meet anticipated financing needs in connection with its obligations by the exercise of stock options, share purchase warrants, and through private placements, public offerings or joint-venture participation by others.
	These consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered recurring losses from operations that raise substantial doubt about its ability to continue as a going concern. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Note 3	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
	Basis of Consolidation
	These consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Horsepower Broadcasting Network (HBN) International Ltd., SafeSpending Inc., and Racing Unified Network (R.U.N.) Inc. All inter-company transactions and balances have been eliminated.
Note 4	PRE-DEVELOPMENT COSTS
	a)	SafeSpending™ project
		In May 2001, a subsidiary of the Company, SafeSpending Inc., acquired all the rights to an internet payment system technology which is a spending system that can be used to make anonymous purchases online from merchants and individuals. The agreement provides SafeSpending Inc. with all copyrights, trademarks, source codes and intellectual property and the Company has patents pending in 105 countries for the SafeSpending™ anonymous payment system.

…/ 2

SUNGOLD INTERNATIONAL HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SECOND QUARTER ENDED FEBRUARY 28, 2007

(A Development Stage Company)
(Presented in Canadian Dollars)

(Unaudited – Prepared by Management)

PAGE 2

Note 4	PRE-DEVELOPMENT COSTS (continued)
	a)	SafeSpending™ project (continued)

 

	August 31		Impairment	February 28
	2006	Additions	Write off	2007
	$	$	$	$
Acquisition cost	62,300	-	-	62,300
Legal and consulting fees	83,191	851	-	84,042
	145,491	851	-	146,342

 

b)

Horsepower® project

Horsepower® World Pool Virtual Horse Racing System is a proprietary, pari-mutual wagering product operated by Horsepower Broadcasting Network (HBN) International Ltd., a subsidiary of the Company. The product is being offered to Licensed facilities and Authorized Racetrack Affiliates. Development of this project is largely complete but there are no operating installations as of the date of this statement.

	August 31		Impairment	February 28
	2006	Additions	Write off	2007
	$	$	$	$
Legal and consulting fees	124,797	8,541	-	133,338
	August 31		Impairment	February 28
	2006	Additions	Write off	2007
	$	$	$	$
Total Pre-development costs	270,288	9,392	-	279,680

Note 5 EQUIPMENT

		February 28		August 31
		2007		2006
	Cost	Less	Net Book	Net Book
		Accumulated	Value	Value
		Amortization
	$	$	$	$
Software – Horsepower®	1,033,216	644,539	388,677	431,864
Computer hardware	314,755	281,871	32,884	39,238
Leased computer equipment	20,975	10,367	10,608	12,480
Office equipment	10,399	602	9,797	194
	1,379,345	937,379	441,966	483,776

Note 6	MARKETING RIGHTS
	The Company acquired by agreement the exclusive marketing rights for Canada to a proprietary internet place-based sports information and advertising network at a cost of $25,740, calculated at the market price of the treasury shares issued for the purchase.

…/ 3

SUNGOLD INTERNATIONAL HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SECOND QUARTER ENDED FEBRUARY 28, 2007

(A Development Stage Company)
(Presented in Canadian Dollars)

(Unaudited – Prepared by Management)

PAGE 3

Note 7 SHARE CAPITAL

 

	(Unaudited)	(Audited)
	February 28	August 31
	2007	2006
	$	$
Authorized:
Unlimited common shares without par value
100,000,000 Class “A” preference shares	-	-
without par value
100,000,000 Class “B” preference shares	-	-
without par value
Issued and outstanding:
132,996,962 common
(August 31, 2006 – 126,375,535 common)	22,531,154	22,045,688

a) Shares issued during the period:

	Second quarter ended		Year-to-Date
	February 28, 2007		February 28, 2007
	#	$	#	$
For cash	4,095,766	297,682	5,695,766	407,360
Non-cash transactions:
- for services provided	879,882	71,926	925,661	78,106
	4,975,648	369,608	6,621,427	485,466

b)	Stock options and stock based compensation:
	The Company has a fixed stock option plan on the issuance of options of up to 10% of the Company’s issued share capital. The following are incentive share purchase options outstanding:

Date of Grant	Price	Balance Aug 31, 2006	Granted	Exercised / Expired / Cancelled	Balance Feb 28, 2007	Expiration date
Aug 10, 2001	US$0.12	300,000	-	-	300,000	Aug 10, 2007
Dec 20, 2001	US$0.09	100,000	-	-	100,000	Dec 20, 2006
Jan 4, 2002	US$0.08	36,000	-	-	36,000	Jan 4, 2007
Oct 11, 2002	US$0.15	200,000	-	-	200,000	Oct 11, 2007
Jan 15, 2003	US$0.11	136,000	-	-	136,000	Jan 15, 2008
May 27, 2003	US$0.05	64,000	-	-	64,000	May 27, 2008
Apr 14, 2005	US$0.12	1,000,000	-	-	1,000,000	Mar 31, 2007
May 27, 2005	US$0.12	750,000	-	-	750,000	Mar 31, 2007
Jun 1, 2005	US$0.12	1,000,000	-	-	1,000,000	Mar 31, 2007
Jun 6, 2005	US$0.12	500,000	-	-	500,000	Mar 31, 2007
Jul 1, 2005	US$0.12	500,000	-	-	500,000	Mar 31, 2007
Jul 20, 2005	US$0.12	500,000	-	-	500,000	Mar 31, 2007
Jan 16, 2006	US$0.65	500,000	-	-	500,000	Mar 31, 2007
Mar 1, 2006	US$0.50	200,000	-	-	200,000	Feb 28, 2008
Mar 10, 2006	US$0.15	250,000	-	-	250,000	Mar 31, 2007
Mar 10, 2006	US$0.15	495,000	-	-	495,000	Mar 31, 2008
Sep 1, 2006	US$0.50	-	200,000	-	200,000	Jul 31, 2008
Sep 5, 2006	US$0.20	-	2,800,000	-	2,800,000	Sep 30, 2008
Oct 31, 2006	US$0.50	-	100,000	-	100,000	Oct 31, 2009
Feb 14, 2007	US$0.75	-	175,000	-	175,000	Feb 28, 2009
Feb 14, 2007	US$0.30	-	500,000	-	500,000	Feb 28, 2009
		6,531,000	3,775,000	-	10,306,000

…/ 4

SUNGOLD INTERNATIONAL HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SECOND QUARTER ENDED FEBRUARY 28, 2007

(A Development Stage Company)
(Presented in Canadian Dollars)

(Unaudited – Prepared by Management)

PAGE 4

Note 7 SHARE CAPITAL (continued)

 

b)	Stock options and stock based compensation (continued):
	In 2001, the Canadian Institute of Chartered Accountants issued Section 3870 for Stock-based Compensations, which requires the use of fair value based method for fiscal years beginning on or after January 1, 2002, and applied to awards granted on or after the date of adoption. The Company adopted the recommendations prospectively for the fiscal year starting September 1, 2002.
	Under this fair value based method, the value of a stock-based compensation plan is the sum of two component parts: its intrinsic value and its time value. The intrinsic value reflects the extent to which it is “in the money” at any date, and the time value is the value of the potential increases to the plan holder at any given time. The estimated time value is added to the intrinsic value to determine the fair value of the plan at any time.
	Since September 1, 2002, the Company granted 5,100,000 share purchase options as follows:

Date of Grant	Price	Granted #	Exercised Expired or Cancelled #	Exercisable #	Expiration date
Oct 11, 2002	US$0.15	200,000	-	200,000	Oct 11, 2007
Oct 16, 2002	US$0.15	300,000	300.000	-	Cancelled 2006
Jan 23, 2003	US$0.11	136,000	-	136,000	Jan 15, 2008
May 27, 2003	US$0.05	64,000	-	64,000	May 27, 2008
May 28,2003	US$0.05	150,000	150,000	-	Exercised 2006
Total granted:		850,000	450,000	400,000
Outstanding Aug 31, 2003:		850,000	450,000	400,000
Options granted in fiscal 2004:		-	-	-
Outstanding Aug 31, 2004:		850,000	450,000	400,000
Options granted in fiscal 2005:
Apr 14, 2005	US$0.12	1,000,000	-	1,000,000	Mar 31, 2007
May 27, 2005	US$0.12	750,000	-	750,000	Mar 31, 2007
Jun 1, 2005	US$0.12	500,000	-	500,000	Mar 31, 2007
Jun 1, 2005	US$0.12	500,000	-	500,000	Mar 31, 2007
Jun 6, 2005	US$0.12	500,000	-	500,000	Mar 31, 2007
Jul 1, 2005	US$0.12	500,000	-	500,000	Mar 31, 2007
Jul 20, 2005	US$0.12	500,000	-	500,000	Mar 31, 2007
Total granted:		4,250,000		4,250,000
Outstanding Aug 31, 2005:		5,100,000	450,000	4,650,000
Options granted in fiscal 2006:
Jan 16, 2006	US$0.65	500,000	-	500,000	Mar 31, 2007
Mar 1, 2006	US$0.50	200,000	-	200,000	Feb 28, 2008
Mar 10, 2006	US$0.15	250,000	-	250,000	Mar 31, 2007
Mar 10, 2006	US$0.15	495,000	-	495,000	Mar 31, 2008
Total granted:		1,445,000		1,445,000

…/ 5

SUNGOLD INTERNATIONAL HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SECOND QUARTER ENDED FEBRUARY 28, 2007

(A Development Stage Company)
(Presented in Canadian Dollars)

(Unaudited – Prepared by Management)

PAGE 5

Note 7	SHARE CAPITAL (continued)
	b)	Stock options and stock based compensation (continued):

Outstanding Aug 31, 2006:		6,545,000	450,000	6,095,000
Options granted in fiscal 2007:
Sep 1, 2006	US$0.50	200,000	-	200,000	Jul 31, 2008
Sep 5, 2006	US$0.20	2,800,000	-	2,800,000	Sep 30, 2008
Oct 31, 2006	US$0.50	100,000	-	100,000	Oct 31, 2009
Feb 14, 2007	US$0.75	175,000		175,000	Feb 28, 2009
Feb 14, 2007	US$0.30	500,000		500,000	Feb 28, 2009
Total granted:		3,775,000	-	3,775,000
Outstanding Feb 28, 2007:		10,320,000	450,000	9,870,000

The fair value of each option granted is estimated on the date of the grant using the Black-Sholes option pricing model with the following assumptions:

Risk-free interest rate	2.82% to 3.00%
Dividend yield	0
Estimated hold period prior to exercise (years)	2 to 3 year
Volatility in the price of the Company’s common shares	120% to 150%

Between January 1, 2002 and August 31, 2002, the Company granted 946,764 share purchase options to directors at US$0.08 per share until Jan 4, 2007, 136,000 share purchase options to a director at US$0.08 per share until Jan 15, 2007, 400,000 share purchase options to a director at US$0.0725 per share until Jan 24, 2007, 136,000 share purchase options to a director at US$0.23 per share until March 26, 2007 and 272,000 share purchase options to a director at US$0.20 per share until May 17, 2007.

Had compensation cost of the stock based employee compensation been recorded, based upon the fair value of share options, additional compensation expense for the year ended August 31, 2002 would have been $111,430. The pro forma loss per share, assuming this additional compensation expense would have been ($0.0584) . The Pro forma results may be materially different than actual results realized.

The Black-Sholes valuation model was developed for use in estimating the fair value of traded options which are fully transferable and highly traded. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company’s stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its director stock options.

Outstanding share purchase options which were issued prior to January 1, 2002, have neither been charged to income nor included in the calculation of the pro forma loss, in accordance with Section 3870 of the CICA Handbook, which is to take effect prospectively.

…/ 6

SUNGOLD INTERNATIONAL HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SECOND QUARTER ENDED FEBRUARY 28, 2007

(A Development Stage Company)
(Presented in Canadian Dollars)

(Unaudited – Prepared by Management)

PAGE 6

Note 7	SHARE CAPITAL (continued)
	c)	Share purchase warrants:

Date of Grant	Price	Balance Aug 31, 2006	Granted	Exercised	Expired / Cancelled	Balance Feb 28, 2007	Expiration date
May 2, 2005	US$0.15	250,000	-	-	-	250,000	May 31, 2007
May 31, 2005	US$0.05	300,000	-	-	-	300,000	May 31, 2007
May 31, 2005	US$0.05	300,000	-	-	-	300,000	May 31, 2007
May 31, 2005	US$0.05	793,260	-	-	-	793,260	May 31, 2007
May 31, 2005	US$0.15	152,500	-	-	-	152,500	May 31, 2007
Jun 17, 2005	US$0.15	52,250	-	-	-	52,250	Jun 30, 2007
Jun 22, 2005	US$0.15	147,500	-	-	-	147,500	Jun 30, 2007
Jul 27, 2005	US$0.15	50,650	-	-	-	50,650	Jul 31, 2007
Jul 30, 2005	US$0.15	51,000	-	-	-	51,000	Jul 31, 2007
Aug 5, 2005	US$0.15	51,000	-	-	-	51,000	Jul 31, 2007
Oct 3, 2005	US$0.15	35,750	-	-	-	35,750	Sep 30, 2007
Oct 3, 2005	US$0.15	35,750	-	-	-	35,750	Sep 30, 2007
Oct 3, 2005	US$0.15	53,750	-	-	-	53,750	Oct 31, 2007
Nov 15, 2005	US$0.15	30,150	-	-	-	30,150	Nov 30, 2007
Nov 29, 2005	US$0.15	53,500	-	-	-	53,500	Nov 30, 2007
Dec 2, 2005	US$0.15	608,333	-	-	-	608,333	Nov 30, 2007
Dec 8, 2005	US$0.15	25,000	-	-	-	25,000	Dec 31, 2007
Dec 20, 2005	US$0.35	11,400	-	-	-	11,400	Dec 31, 2007
Dec 29, 2005	US$0.50	195,750	-	-	-	195,750	Dec 31, 2007
Jan 2, 2006	US$0.45	110,000	-	-	-	110,000	Dec 31, 2007
Jan 3, 2006	US$0.50	7,250	-	-	-	7,250	Jan 31, 2008
Jan 4, 2006	US$0.42	50,000	-	-	-	50,000	Dec 31, 2007
Jan 12, 2006	US$0.60	14,750	-	-	-	14,750	Jan 31, 2008
Jan 31, 2006	US$0.55	8,000	-	-	-	8,000	May 31, 2008
Apr 25, 2006	US$0.30	29,300	-	-	-	29,300	Apr 30, 2007
May 10, 2006	US$0.30	32,250	-	-	-	32,250	May 31, 2008
May 31, 2006	US$0.26	35,000	-	-	-	35,000	May 31, 2008
Jul 7, 2006	US$0.25	21,000	-	-	-	21,000	Jul 31, 2008
Aug 11, 2006	US$0.18	50,000	-	-	-	50,000	Aug 15, 2008
Aug 18, 2006	US$0.20	62,500	-	-	-	62,500	Aug 31, 2008
Sep 17, 2006	US$0.15	-	75,000	-	-	75,000	Sep 30, 2008
Sep 14, 2006	US$0.20	-	62,500	-	-	62,500	Sep 30, 2008
Sep 14, 2006	US$0.20	-	62,500	-	-	62,500	Sep 15, 2008
Oct 19, 2006	US$0.10	-	400,000	-	-	400,000	Oct 31, 2008
Nov 20, 2006	US$0.10	-	150,000	-	-	150,000	Nov 30, 2008
Nov 30, 2006	US$0.11	-	250,000	-	-	250,000	Nov 30, 2008
Dec 28, 2006	US$0.11	-	934,091	-	-	934,091	Dec 31, 2008
Dec 15, 2006	US$0.10	-	400,000	-	-	400,000	Dec 31, 2008
Jan 22, 2007	US$0.14	-	285,715	-	-	285,715	Jan 23, 2009
Feb 27, 2007	US$0.11	-	650,000	-	-	650,000	Feb 28, 2009
Feb 27, 2007	US$0.16	-	412,500	-	-	412,500	Feb 28, 2009
Feb 27, 2007	US$0.13	-	538,460	-	-	538,460	Feb 28, 2009
		3,617,593	4,220,766	-	-	7,838,359

…/ 7

SUNGOLD INTERNATIONAL HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SECOND QUARTER ENDED FEBRUARY 28, 2007

(A Development Stage Company)
(Presented in Canadian Dollars)

(Unaudited – Prepared by Management)

PAGE 7

Note 8 CAPITAL LEASES The Company has a lease agreement for computers accounted for as capital leases. Current payments are $640 monthly, expiring July 2008. The following is a schedule of future lease payments.

	February 28		August 31
	2007		2006
	$		$
Total minimum lease payments	10,878		14,717
Less amount representing interest	(1,177	)	(2,071	)
Balance of obligations	9,701		12,646
Less current portion	(6,623	)	(6,128	)
Non-current portion	3,078		6,518

Future annual principal payments required to retire the lease obligations are as follows:

2007	3,183
2008	6,518
	9,701

Note 9 RELATED PARTY TRANSACTIONS

a)	During the quarter, salaries and consulting fees of $73,842 (2006 - $108,256) were paid to directors and officers of the Company and subsidiaries of the Company. The fees are in the normal course of business and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.
b)	During the quarter, the Company paid $1,570 to an officer for rent of office space provided (2006 – $4,710).
c)	During the quarter, consulting fees of $NIL (2006 - $157,024) were paid by share capital awarded, valued at closing price before the date of settlement, to directors and officers of the Company and subsidiaries of the Company. The fees are in the normal course of business and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.
d)	The loans payable of $7,500 is an unsecured advance from a shareholder and has no specified interest rate or repayment terms (2006 - $NIL).

Note 10 COMMITMENTS The Company was paying month to month rent for office space in Toronto at the rate of $1,570 per month, until December 31, 2006, after which the Company signed a five year lease, beginning January 1, 2007, and ending December 31, 2011, for the same office space. In addition, the Company signed a lease for additional office space, beginning September 1, 2006 for five years and four months, ending December 31, 2011. Minimum annual lease payments for the next six years are as follows:

2007	-- $ 80,241
2008	-- $102,431
2009	-- $107,666
2010	-- $112,901
2011	-- $118,136
2012	-- $ 39,960

…/ 8

SUNGOLD INTERNATIONAL HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SECOND QUARTER ENDED FEBRUARY 28, 2007

(A Development Stage Company)
(Presented in Canadian Dollars)

(Unaudited – Prepared by Management)

PAGE 8

Note 11 SUBSEQUENT EVENTS Subsequent to February 28, 2007, the Company received $101,919 from the issuance of 1,319,231 private placement shares, for an average price of $0.077 per share. Subsequent to February 28, 2007, the Company issued 1,000,000 shares for services in lieu of payments of $129,646 for an average share price of $0.13 per share.