NOTICE
Attached are the unaudited interim financial statements of Nettron.com, Inc. (the “Corporation”) for the period ended June 30, 2004. The Corporation’s auditor has not reviewed the attached financial statements.
NETTRON.COM, INC.
“signed”
Douglas E. Ford
Director
August 20, 2004
1
Nettron.Com Inc.
Consolidated Interim Balance Sheet
(Expressed in Canadian Dollars)
(Unaudited — Prepared by Management)
| | | | | | | | | | | | | |
| | | | | | | June 30 | | March 31 |
| | | | | | | 2004 | | 2004 |
ASSETS
| | | | | | | | |
Current
| | | | | | | | |
Cash and Equivalents
| | $ | 3,088 | | | $ | — | |
Accounts receivable
| | | 2,795 | | | | 2,059 | |
| | | | | | | | | | | | | |
| | | | | | | | 5,883 | | | | 2,059 | |
Capital assets
| | | - | | | | - | |
| | | - | | | | - | |
| | | | | | | $ | 5,883 | | | $ | 2,059 | |
| | | | | | | | | | | | | |
Liabilities and Shareholders Deficiency
| | | | | | | | |
Liabilities
| | | | | | | | |
Current
| | | | | | | | |
Accounts payable and accrued liabilities
| | $ | 207,844 | | | $ | 194,315 | |
Shareholders deficiency
| | | | | | | | |
Share capital
| | | 2,999,420 | | | | 2,999,420 | |
Deficit
| | | (3,201,381 | ) | | | (3,191,676 | ) |
| | | | | | | | | | | | | |
| | | | | | | | (201,961 | ) | | | (192,256 | ) |
| | | | | | | $ | 5,883 | | | $ | 2,059 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
On behalf of the board:
| | | | | | | | |
“Douglas E Ford “ Director
| | “Edward D Ford “ Director
|
| |
|
2
Nettron.Com Inc.
Consolidated Interim Statements of Operations and Deficit
(Expressed in Canadian Dollars)
(Unaudited — Prepared by Management)
| | | | | | | | | |
| | | Three months ended June 30 |
| | | 2004 | | 2003 |
| Expenses | | | | | | | | |
| Amortization | | | — | | | | 1,500 | |
| Bank charges and interest | | | 41 | | | | 8 | |
| Filing and transfer agent | | | 3,301 | | | | 1,689 | |
| Management fees (Note 3) | | | 1,500 | | | | 1,500 | |
| Office and miscellaneous | | | — | | | | — | |
| Professional Fees | | | 5,435 | | | | — | |
| Rent | | | 1,500 | | | | 1,500 | |
| Telephone and utilities | | | — | | | | — | |
| Travel | | | — | | | | — | |
| Wages benefits and contract labour | | | — | | | | — | |
| Website servicing | | | — | | | | — | |
| | | | | | | | | |
| Total Expenses | | | 11,777 | | | | 6,197 | |
| | | | | | | | | |
| Loss from operations | | | (11,777 | ) | | | (6,197 | ) |
| | | | | | | | | |
| Other Income (expense) | | | | | | | | |
| Interest Income | | | — | | | | — | |
| Foreign exchange gain (loss) | | | 2,072 | | | | — | |
| | | | | | | | | |
| Loss from continued operations | | | (9,705 | ) | | | (6,197 | ) |
| | | | | | | | | |
| Net loss for the period | | | (9,705 | ) | | | (6,197 | ) |
| Deficit, beginning of period | | | (3,191,676 | ) | | | 3,168,029 | |
| Deficit, end of period | | | (3,201,381 | ) | | | 3,174,226 | |
| | | | | | | | | |
| Loss per share-basic and diluted | | | | | | | | |
| From continued operations | | $ | (0.001 | ) | | $ | (0.001 | ) |
| Weighted average shares outstanding | | | 6,715,374 | | | | 6,715,374 | |
| | | | | | | | | |
Nettron.Com Inc.
Consolidated Interim Statements of Cash Flows
(Expressed in Canadian Dollars)
(Unaudited — Prepared by Management)
| | | | | | | | | |
| | | Three months ended June 30 |
| | | 2004 | | 2003 |
| Cash provided by (used in) | | | | | | | | |
| Operating activities | | | | | | | | |
| Loss from continued operations | | | (9,705 | ) | | | (6,197 | ) |
| Items not involving cash | | | | | | | | |
| Amortization of capital assets | | | — | | | | 1,500 | |
| Write-down of capital assets | | | — | | | | — | |
| Changes in non-cash | | | | | | | | |
| working capital items | | | 12,793 | | | | 4,694 | |
| Cash from continued Operations | | | 3,088 | | | | (3 | ) |
| Cash from operations | | | 3,088 | | | | (3 | ) |
| | | | | | | | | |
| Investing activities | | | | | | | | |
| Purchase of capital assets | | | — | | | | — | |
| | | | | | | | | |
| Increase (decrease) in cash during period | | | 3,088 | | | | 3,088 | |
| Cash, beginning of period | | | — | | | | 7,786 | |
| | | | | | | | | |
| Cash, end of period | | | 3,088 | | | | 7,783 | |
| | | | | | | | | |
3
Nettron.Com, Inc.
Notes to the Consolidated Financial Statements
(Expressed in Canadian Dollars)
(Unaudited — Prepared by Management)
June 30, 2004
1. Nature of Business and Ability to Continue as a Going Concern
The Company was incorporated under the Alberta Business Corporations Act on January 19, 1996 and was in the business of marketing its interactive dating service “Cupid’s Web”. With the sale of Bikestar and Arizona Outback, in January 2001, the Company’s principal business is now located in Canada.
These consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. Upon the sale of Bikestar and Arizona Outback in fiscal 2001, the Company returned to the development stage as the remaining business has not yet generated revenue and planned principal operations have not yet commenced. As at June 30, 2004, due to difficulties encountered in raising financing, the Company has discontinued its activity in the interactive dating service business and has accumulated losses totalling $3,201,381 and had a working capital deficiency of $201,961. The continuation of the Company is dependent upon the financial support of shareholders as well as obtaining long-term financing. The Company has been exploring business opportunities that might allow the Company to restart commercial operations. Management is currently seeking new sources of equity financing. While the Company is expending its best efforts to achieve the above plans, there is no assurance that any such activity will generate funds that will be available for operations.
These conditions raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments that might arise from this uncertainty.
2. Share Capital
Authorized:
Unlimited number of common shares without par value
Unlimited number of preferred shares without par value
Issued:
Common shares
| | | | | | | | | |
| | | Number of |
| | | Shares | | Amount |
| Balance, March 31, 2003 | | | 6,435,374 | | | $ | 2,999,420 | |
| Issued during the year | | | — | | | | — | |
| | | | | | | | | |
| Balance, March 31, 2004 | | | 6,435,374 | | | $ | 2,999,420 | |
| Issued during the period | | | — | | | | — | |
| | | | | | | | | |
| Balance, June 30, 2004 | | | 6,435,374 | | | $ | 2,999,420 | |
| | | | | | | | | |
4
Nettron.Com, Inc.
Notes to the Consolidated Financial Statements
(Expressed in Canadian Dollars)
(Unaudited — Prepared by Management)
June 30, 2004
2. Share Capital (cont)
(a) No common shares were issued during the year ended March 31, 2004 nor in the 3-months ended June 30, 2004. However, pursuant to a private placement of common shares at US $0.05 per share announced August 16, 2002. The Company has received US $11,200 and has reserved for issuance 224,000 common shares to fulfill those subscriptions. Regulatory approval has not yet been received.
(b) Stock options
Pursuant to the Company’s 1996 Incentive Stock Option Plan (“The Plan”), a total of 10% of the Company’s common shares are reserved for the granting of stock options. The Plan provides that the terms of the options and the option price shall be fixed by the Directors and subject to the price restrictions and other requirements imposed by the TSX Venture Exchange. The Plan also provides that no option shall be granted to any person except on recommendations of the Directors of the Company. Stock options granted under the Plan may not be for a period longer than five years.
Stock option transactions during the three-month period ended June 30, 2004 were as follows:
| | | | | | | | | |
| | | Number of
| | Weighted Average
|
| | | Options
| | Exercise Price
|
| | | | | | | | | |
| Number of options outstanding March 31, 2004 | | | 612,500 | | | $ | 0.70 | |
| Granted | | | — | | | | — | |
| Exercised | | | — | | | | — | |
| | | | | | | | | |
| Number of options outstanding June 30, 2004 | | | 612,500 | | | | 0.70 | |
All outstanding stock options at June 30, 2004 are exercisable on a 1:1 basis and are summarized as follows:
| | | | | | | | | |
| Expiry Date | | Exercise Price | | Stock Options |
| September 10, 2004 | | $ | 0.44 | | | | 512,500 | |
| | | | | | | | | |
| March 27, 2005 | | $ | 2.00 | | | | 100,000 | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | 612,500 | |
| | | | | | | | | |
5
Nettron.Com, Inc.
Notes to the Consolidated Financial Statements
(Expressed in Canadian Dollars)
June 30, 2004
3. Related Party Transactions
Related party transactions not disclosed elsewhere in these consolidated financial statements are as follows:
Included in accounts payable and accrued liabilities is $140,638 (2004 — $106,039; 2003 — $93,619) due to directors and companies controlled by directors.
(b) During the three-year period ended March 31, 2004, the Company paid fees to directors and companies controlled by directors for the following services:
| | | | | | | | | | | | | |
| | | 2004 | | 2003 | | 2002 |
| Consulting | | $ | — | | | $ | — | | | $ | 5,000 | |
| Management fees | | | 6,000 | | | | 4,500 | | | | 36,000 | |
| Rent | | | 6,000 | | | | 4,500 | | | | 3,179 | |
| Office and miscellaneous | | | — | | | | 394 | | | | 2,564 | |
These transactions have been recorded at the exchange amount being the consideration established and agreed to by the related parties.
During the three-month periods ended June 30, 2004 and 2003, the Company paid or accrued fees to directors and companies controlled by directors for the following services:
| | | | | | | | | |
| | | 2004 | | 2003 |
| Management fees | | | 1,500 | | | | 1,500 | |
| Rent | | | 1,500 | | | | 1,500 | |
4. Segmented Information
With the disposal of Arizona Outback and Bikestar on January 1, 2001, and the discontinuation of the Internet marketing service “Cupid’s Web” on March 24, 2004, the Company now is not operating. The company’s principal offices are located in British Columbia, Canada.
5. Direct Costs
There are no direct costs to disclose
6
Nettron.Com, Inc.
Notes to the Consolidated Financial Statements
(Expressed in Canadian Dollars)
(Unaudited — Prepared by Management)
June 30 , 2004
6. List of Directors and Officers
As at June 30, 2004, the directors and officers of Nettron.Com, Inc. are as follows:
M. Glen Kertz — President
Edward D. Ford – Director
Douglas E. Ford – Secretary & Director & Acting President
Gary E. Read – Director
Larry F. Robb – Director
Malcolm E. Rogers, Jr. – Director
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