FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month ofMay 2008
CDG Investments Inc.
(Translation of registrant's name into English)
#500, 926 - 5th Ave. S.W.
Calgary, Alberta T2P 0N7
(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 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No X
[If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CDG Investments Inc.
(Registrant)
Date May 23, 2008
“Barbara O’Neill”
Barbara O'Neill, Secretary
Yes No X
[If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-
CDG INVESTMENTS INC.
Unaudited Interim Financial Statements
(Expressed in Canadian dollars)
March 31, 2008
In accordance with national instrument 51-102 released by the Canadian Securities Administrators, the Company discloses that its auditors have not reviewed the unaudited interim balance sheet as at March 31, 2008 nor the unaudited interim statements of net and comprehensive earnings (loss) and deficit and cash flows for the six and three month periods ended March 31, 2008 and March 31, 2007.
CDG Investments Inc.
Interim Balance Sheets
(Expressed in Canadian dollars)
| March 31, | September 30, | |||||
| 2008 | 2007 | |||||
| (Unaudited) | ||||||
| ASSETS | ||||||
| CURRENT | ||||||
| Cash and cash equivalents | $ | 1,945,945 | $ | 1,970,250 | ||
| Deposits | - | 44,500 | ||||
| $ | 1,945,945 | $ | 2,014,750 | |||
| LIABILITIES | ||||||
| CURRENT | ||||||
| Accounts payable and accrued liabilities | $ | 235,832 | $ | 305,453 | ||
| Due to related parties Note 5 | 5,924 | 2,245 | ||||
| 241,756 | 307,698 | |||||
| SHAREHOLDERS’ EQUITY | ||||||
| CAPITAL STOCK | ||||||
| Authorized | ||||||
| Unlimited number of shares without nominal or par value | ||||||
| IssuedNote 4 | 29,544,273 | 29,544,273 | ||||
| CONTRIBUTED SURPLUSNote 4 | 320,194 | 320,194 | ||||
| DEFICIT | (28,160,278 | ) | (28,157,415 | ) | ||
| 1,704,189 | 1,707,052 | |||||
| $ | 1,945,945 | $ | 2,014,750 | |||
See accompanying notes to the financial statements.
Approved by the Board
“Robert Ingram”
“Gregory Smith”
Director
Director
CDG Investments Inc.
Interim Statements of Net and Comprehensive Earnings (Loss) and Deficit
(Expressed in Canadian dollars)
(Unaudited – prepared by management)
| Three months ended March 31 |
| Six months ended March 31 | ||||
| 2008 |
| 2007 |
| 2008 |
| 2007 |
REVENUE |
|
|
|
|
|
|
|
Interest income | $ 18,448 |
| $ 18,023 |
| $ 37,967 |
| $ 34,621 |
|
|
|
|
|
|
|
|
EXPENSES AND OTHER |
|
|
|
|
|
|
|
General and administrative | 21,411 |
| 12,118 |
| 40,830 |
| 47,565 |
NET AND COMPREHENSIVE EARNINGS (LOSS) | (2,963) |
| 5,905 |
| (2,863) |
| (12,944) |
DEFICIT,beginning of period | (28,157,315) |
| (28,171,333) |
| (28,157,415) |
| (28,152,484) |
|
|
|
|
|
|
|
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DEFICIT, end of period | $(28,160,278) |
| $(28,165,428) |
| $(28,160,278) |
| $(28,165,428) |
|
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EARNINGS (LOSS) PER SHARE |
|
|
|
|
|
|
|
Basic | $0.00 |
| $0.00 |
| $0.00 |
| $0.00 |
Diluted | $0.00 |
| $0.00 |
| $0.00 |
| $0.00 |
|
|
|
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|
|
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|
|
|
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WEIGHTED AVERAGE NUMBER |
|
|
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|
|
|
|
OF SHARES OUTSTANDING |
|
|
|
|
|
|
|
Basic | 40,959,855 |
| 40,959,855 |
| 40,959,855 |
| 40,959,855 |
|
|
|
|
|
|
|
|
Diluted | 40,959,855 |
| 40,959,855 |
| 40,959,855 |
| 40,959,855 |
See accompanying notes to the financial statements.
CDG Investments Inc.
Interim Statements of Cash Flows
(Expressed in Canadian dollars)
(Unaudited – prepared by management)
|
| Three months ended March 31 |
| Six months ended March 31 | ||||
Increase (decrease) in cash and cash equivalents: |
| 2008 |
| 2007 |
| 2008 |
| 2007 |
Operating activities |
|
|
|
|
|
|
|
|
Interest income received |
| $ 18,448 |
| $ 18,023 |
| $ 37,967 |
| $ 34,621 |
Cash operating expenses |
| (45,419) |
| (49,968) |
| (62,272) |
| (88,951) |
|
| (26,971) |
| (31,945) |
| (24,305) |
| (54,330) |
Decrease in cash and cash equivalents |
| (26,971) |
| (31,945) |
| (24,305) |
| (54,330) |
Cash and cash equivalents: |
|
|
|
|
|
|
|
|
Beginning of period |
| 1,972,916 |
| 1,971,067 |
| 1,970,250 |
| 1,993,452 |
End of period |
| $1,945,945 |
| $1,939,122 |
| $1,945,945 |
| $1,939,122 |
Supplementary Information:
Income taxes and interest cash payments
The Company did not expend cash on income taxes or interest during the three and six month periods ended March 31, 2008 and March 31, 2007.
See accompanying notes to the financial statements.
CDG Investments Inc.
Notes to the Interim Financial Statements
(Expressed in Canadian dollars)
(Unaudited – prepared by management)
March 31, 2008
1. Basis of Presentation and Nature and Continuance of Operations
The Company’s business had recently consisted of holding investments in primarily mineral exploration companies. During fiscal 2006 management determined that shareholders of the Company would better realize the fair value of the Company’s assets through their distribution to the shareholders. As a result, during fiscal 2006, the Company distributed substantially all of its investments to shareholders both by way of a dividend in kind and a return of capital. After investment distributions to shareholders and sales in the open market, the Company had disposed of all of its investments by September 30, 2006. During fiscal 2007 and to date, management has been evaluating numerous possible business acquisitions and, subsequent to period-end, entered into a preliminary agreement that, if completed, would result in a business combination with an operating company, (note 7). While the Company h as more than sufficient cash resources to fund its limited operating expenses for the upcoming year, future profitable operations are dependent upon management finding a viable business for the Company.
These interim financial statements, that were not subject to audit or review by the Company’s external accountants, follow the same accounting policies and methods of computation as the audited financial statements for the year ended September 30, 2007 except for the adoption of the accounting policies described in note 2 below. These interim financial statements should be read in conjunction with the audited financial statements for the year ended September 30, 2007 as not all disclosures required by Generally Accepted Accounting Principles for annual financial statements are presented.
2.
Currently adopted and future accounting policies
Currently adopted
Effective October 1, 2007, the Company adopted the following accounting standards on a prospective basis with no restatement of prior period financial statements.
Section 1535, Capital Disclosures, specifies the disclosure of (i) an entity’s objectives, policies and processes for managing capital; (ii) quantitative data about what the entity regards as capital; (iii) whether the entity has complied with any capital requirements; and (iv)if it has not complied, the consequences of such non-compliance.
Sections 3862, Financial Instruments – disclosures, and 3863, Financial Instruments – presentation, replace Handbook Section 3861, Financial Instruments – Disclosure and Presentation, revising and enhancing its disclosure requirements, and carrying forward unchanged its presentation requirements. These new sections place increased emphasis on disclosures about the nature and extent of risks arising from financial instruments and how the entity manages those risks.
Section 1506, Accounting Changes, provides revised standards for changes in accounting policy, estimates or errors. A change in accounting policy must be applied retrospectively, (unless doing so is impracticable or is specified otherwise by a new accounting standard), changes in estimates must be recorded prospectively, and prior period errors must be corrected retrospectively. Voluntary changes in accounting policy are allowed only when they result in financial statements that provide reliable and more relevant information. In addition, these revised standards call for enhanced disclosures about the effects of changes in accounting policies, estimates and errors on the financial statements.
Future
Section 1400, General Standards of Financial Statement Presentation, has been amended effective for the Company’s first quarter ended December 31, 2008, to include requirements to assess and disclose the Company’s ability to continue as a going concern. The adoption of this new section is not expected to materially alter the Company’s disclosure in future periods.
CDG Investments Inc.
Notes to the Interim Financial Statements
(Expressed in Canadian dollars)
(Unaudited – prepared by management)
March 31, 2008
3.
Financial Instruments
The following summarizes the carrying values of the financial instrument categories:
Category | Carrying value | |
| March 31, 2008 | September 30,2007 |
Held for trading (Cash and Cash Equivalents) | $ 1,945,945 | $ 1,970,250 |
Other financial liabilities (Accounts payable and accrued liabilities and due to related parties) | $ 241,756 | $ 307,698 |
Other financial liabilities are carried at amortized cost which approximates fair value and cost due to the short-term nature of the instruments. Held for trading investments are carried at fair value which approximates cost due to their short-term nature.
Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, currency, or credit risks arising from these financial instruments.
Cash and cash equivalents include cash and highly liquid Canadian dollar denominated investments in bankers’ acceptances, with terms to maturity of 90 days or less when acquired. The counter-parties are financial institutions. At March 31, 2008, these instruments were yielding a weighted average interest rate of 3.45% per annum.
4.
Capital Stock and Contributed Surplus
a) Issued
| Number of Shares |
| Capital Stock Amount |
| Contributed Surplus Amount |
September 30, 2007 and March 31, 2008 | 40,959,855 |
| $ 29,544,273 |
| $ 320,194 |
b)
Stock option transactions and stock options outstanding
The Company has an option plan, in which up to 10% of the issued and outstanding common shares are reserved for issuance. Under the plan, the options that have been granted expire at the earlier of five years from the grant date, the date at which the directors determine, or 60 days from the date from which the optionee ceases to be a director, officer, employee or consultant. Options are granted at the fair value of the shares around the grant date or greater amount determined by the directors.
At September 30, 2007 stock options were outstanding that could be exercised to acquire 100,000 common shares at $0.33 per share. These options expired without exercise on February 27, 2008. No options were granted during the six months ended March 31, 2008 and there were no options outstanding on March 31, 2008.
5. Related Party Transactions
During the six months ended March 31, 2008 companies, related by virtue of certain common officers and directors, charged $6,000, (2007 - $8,000), for the Company’s share of miscellaneous office expenses and allocated administrative salaries. The related party payables reflect the unpaid portion of the aforementioned transactions and directors’ fees payable at March 31, 2008 and September 30, 2007 respectively.
These related party transactions were in the normal course of business and were recorded at the exchange amount, being the amount established and agreed to by the two parties.
CDG Investments Inc.
Notes to the Interim Financial Statements
(Expressed in Canadian dollars)
(Unaudited – prepared by management)
March 31, 2008
6. Capital
The Company’s objective when managing capital is to continue as a going concern so that it can provide value to shareholders by acquiring and undertaking a business with the ultimate goal of providing income from operations. The Company has traditionally financed its undertakings with share issuances occasionally supplemented by convertible debentures. The Company manages its capital structure in a manner that provides sufficient funding for operational activities. The Company invests all capital that is surplus to its immediate operational needs in short-term, liquid and highly-rated financial instruments such as Bankers’ Acceptances.
The Company is currently not subject to externally imposed capital requirements.
7. Subsequent Event
Subsequent to period-end, the Company entered into a non-binding letter of intent for the combination of the Company with an Alberta-based private software company, Preo Software Inc., (Preo). The combination is subject to completion of satisfactory due diligence and receipt of applicable regulatory and shareholder approvals, if required. It is expected that the Company and Preo will complete either an amalgamation or a share exchange whereby the Company would acquire all of the outstanding shares of Preo in exchange for shares of the Company. It is anticipated that the transaction will proceed by way of a plan of arrangement.
CDG INVESTMENTS INC.
MANAGEMENT DISCUSSION AND ANALYSIS
FOR THE SIX MONTHS ENDED MARCH 31, 2008
The information included in this document should be read in conjunction with the unaudited financial statements for the six months ended March 31, 2008 and related notes thereto. The financial information in this Management Discussion and Analysis, (MD&A), is derived from the Company’s financial statements prepared in accordance with Canadian Generally Accepted Accounting Principles. The effective date of this MD&A is May 22, 2008. All dollar amounts are in Canadian Dollars unless otherwise stated.
1)
Principal Business of the Company
In recent years, the Company’s business had consisted of holding investments in primarily mineral exploration companies. Management determined that shareholders of the Company would better realize the fair value of the Company’s assets through their distribution to the shareholders. As a result, during fiscal 2006, the Company distributed substantially all of its investments to shareholders both by way of a dividend in kind and a return of capital. After investment distributions to shareholders and sales in the open market, the Company had disposed of all of its investments by September 30, 2006. During fiscal 2007 and the early part of fiscal 2008, management had been evaluating numerous possible business acquisitions with which the Company can move forward. On April 25, 2008, the Company announced that it has entered into a non-binding letter of intent for the combination of the Company with Preo Software Inc., (Preo), an Alberta-based private software company. This business reorganization is contingent upon the completion of satisfactory due diligence and the receipt of applicable regulatory and shareholder approvals, if required. While the Company has more than sufficient cash resources to fund its limited operating expenses for the upcoming year, future profitable operations are dependent upon the profitability of the acquired business.
2)
Operating Results
Six months ended March 31, 2008 compared to the six months ended March 31, 2007
| Six months ended March 31, 2008 | Six months ended March 31, 2007 |
|
Interest income | $ 37,967 | $ 34,621 | a |
General and administrative expenses | (40,830) | (47,565) | b |
Net and comprehensive loss | $ (2,863) | $ (12,944) |
|
a.
Interest Income
Cash balances have remained very close from comparative period to comparative period, therefore interest income has not varied greatly.
b. General and Administrative expenses
Overall general and administrative expenses for the six months ended March 31, 2008 decreased by $7,000 from the comparative period. The sharp decrease in activity levels from period to period has lead to a decrease in administrative support costs.
Three months ended March 31, 2008 compared to the three months ended March 31, 2007
| Three months ended March 31, 2008 | Three months ended March 31, 2007 |
|
Interest income | $ 18,448 | $ 18,023 | a |
General and administrative expenses | (21,411) | (12,118) | b |
Net and comprehensive earnings (loss) | $ (2,963) | $ 5,905 |
|
CDG INVESTMENTS INC.
MANAGEMENT DISCUSSION AND ANALYSIS
FOR THE SIX MONTHS ENDED MARCH 31, 2008
2) Operating Results(continued)
Three months ended March 31, 2008 compared to three months ended March 31, 2007
a.
Interest income varied little from period to period due to the fact that cash balances and interest rates did not change significantly.
b.
General and administrative expenses increased $9,000 from the comparative period primarily due to the fact that costs associated with the preparation of the U.S. 20 F filing document and certain reporting to shareholder costs were incurred in the second quarter of fiscal 2008 and the first quarter of 2007.
3)
Selected Annual Financial Information
The following selected financial data has been extracted from the audited financial statements, prepared in accordance with Canadian Generally Accepted Accounting Principles, for the fiscal years indicated and should be read in conjunction with those audited financial statements.
For the years ended or as at September 30, | 2007 | 2006 | 2005 |
Financial Results |
|
|
|
Gain on disposal of investments | $ - | $ 438,310 | $ 2,583,434 |
Interest income | $ 86,118 | $ 103,848 | $ 30,690 |
Net and Comprehensive Earnings (Loss) | $ (4,931) | $ 9,229,978 | $ 3,693,390 |
Basic earnings (loss) per share | $ 0.00 | $ 0.23 | $ 0.11 |
Diluted earnings (loss) per share | $ 0.00 | $ 0.23 | $ 0.10 |
Financial Position |
|
|
|
Working capital | $ 1,707,052 | $ 1,711,983 | $ 3,497,909 |
Total assets | $ 2,014,750 | $ 2,038,126 | $ 7,219,896 |
Capital Stock | $ 29,544,273 | $ 29,544,273 | $ 43,119,885 |
Warrants | $ - | $ - | $ 240,000 |
Contributed Surplus | $ 320,194 | $ 320,194 | $ 236,594 |
Deficit | $ (28,157,415) | $ (28,152,484) | $ (36,688,906) |
The sale of investments throughout 2005 and 2006, as well as the investment and cash distributions to shareholders in fiscal 2006, contributed to the fluctuations in earnings, assets and working capital among the years. For the entire 2007 fiscal year, there were no remaining investments and activities consisted only of holding cash resources in short-term interest-bearing instruments and incurring reduced general and administrative expenses while management reviewed possible business acquisitions and reorganizations.
4)
Selected Quarterly Financial Information
The following selected financial data has been extracted from the unaudited interim financial statements, prepared in accordance with Canadian Generally Accepted Accounting Principles, for the fiscal periods indicated and should be read in conjunction with those unaudited financial statements.
Three months ended: | March 31, 2008 | Dec. 31 2007 | Sept. 30 2007 | June 30 2007 | Mar. 31 2007 | Dec. 31 2006 | Sept. 30 2006 | June 30 2006 |
Interest income | $18,448 | $19,519 | $ 22,709 | $ 28,788 | $ 18,023 | $ 16,598 | $ 20,563 | $ 29,136 |
Change in unrealized appreciation of investments | - | - | - | - | - | - | (22,311) | (11,303,805) |
Gain on disposal of investments | - | - | - | - | - | - | 22,335 | 303,240 |
Earnings (loss) before Other Income (Loss) | (2,963) | 100 | (9,279) | 17,292 | 5,905 | (18,849) | (54,025) | (11,137,660) |
Realized change in fair value of investment | - | - | - | - | - | - | - | 8,720,106 |
Other | - | - | - | - | - | - | - | 530,800 |
Net and comprehensive Earnings (Loss) | (2,963) | 100 | (9,279) | 17,292 | 5,905 | (18,849) | (54,025) | (1,886,754) |
Basic Earnings (Loss) per share | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $ 0.00 | $ 0.00 | $ (0.07) |
Diluted Earnings (Loss) per share | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $ 0.00 | $ 0.00 | $ (0.07) |
The sale of the Company’s remaining interest in Waddy Lake Resources Inc. and the sale of a royalty interest are reflected in “other” above for the quarter ended June 30, 2006.
CDG INVESTMENTS INC.
MANAGEMENT DISCUSSION AND ANALYSIS
FOR THE SIX MONTHS ENDED MARCH 31, 2008
4) Selected Quarterly Financial Information(continued)
During the year ended September 30, 2006, the Company had significant investment sales. As a result there were significant gains on disposal of investments during the fiscal 2006 quarters. Further, the Company became eligible to use fair value accounting for its investments during fiscal 2006. This resulted in a significant change in unrealized gain/loss and a significant realized change in the fair value of an investment in the quarter ended June 30, 2006.
During the year ended September 30, 2007 and during the three month periods ended December 31, 2007 and March 31, 2008 respectively, the Company no longer held investments. Activities during this period were limited to holding cash in short-term bank-secured investments and incurring limited general and administrative expenses while management and directors investigated possible business opportunities. Investors should review the management discussion and analysis for the periods above for further details all of which can be accessed at www.sedar.com.
5)
Liquidity and Capital Resources
The Company’s working capital position at March 31, 2008 was $1,704,000, (September 30, 2007 - $1,707,000).
During the six months ended March 31, 2008 cash operating expenses exceeded interest income received by $24,000, (2007 – $54,000). Cash generated by interest income and expended on general and administrative expenses constituted the only change in cash and cash equivalents for the six and three month periods ended March 31, 2008 and March 31, 2007 respectively.
6)
Related Party Transactions
The following non-arm’s length transactions, (amounts rounded to nearest $1,000), occurred during the six months ended March 31, 2008:
Companies, related by virtue of certain common officers and directors, charged $6,000, (2007 - $8,000), for the Company’s share of miscellaneous office expenses and allocated administrative salaries. The related party payables at March 31, 2008 reflect the unpaid portion of the aforementioned transactions in addition to directors’ fees payable on that date.
The purpose of related company office and administrative salary charges is to realize certain economies associated with sharing office expenses and administrative services. Related party transactions were in the normal course of operations and were measured at the “exchange amount,” which is the amount of consideration established and agreed to by the related parties.
7)
Contractual Obligations
As the Company terminated its office sub-lease during fiscal 2006, it had no contractual obligations at March 31, 2008.
8)
Capital Stock and Contributed Surplus
a)
Authorized and Issued
The Company is authorized to issue an unlimited number of shares without nominal or par value. There have been no changes to issued capital stock and no changes to contributed surplus during the three and six months ended March 31, 2008 and no changes during the period from April 1, 2008 to May 22, 2008.
b) Stock options
The Company has an option plan, in which up to 10% of the issued and outstanding common shares are reserved for issuance. Under the plan, the options that have been granted expire at the earlier of five years from the grant date, the date at which the directors determine, or 60 days from the date from which the optionee ceases to be a director, officer, employee or consultant. Options are granted at the fair value of the shares around the grant date or a greater amount determined by the Directors.
CDG INVESTMENTS INC.
MANAGEMENT DISCUSSION AND ANALYSIS
FOR THE SIX MONTHS ENDED MARCH 31, 2008
8) Capital Stock and Contributed Surplus(continued)
b) Stock options
No stock options were granted, exercised or cancelled during the six months ended March 31, 2008 and during the period from April 1, 2008 to May 22, 2008. During the three months ended March 31, 2008 options to acquire 100,000 common shares at $0.33 per share expired without exercise and consequently there were no options outstanding at March 31, 2008.
9)
Directors and Officers
Robert Ingram, Chief Executive Officer/ President and Director Calvin Fairburn, Director
Gregory Smith, Chief Financial Officer and Director Kerry Brown, Director
Barbara O’Neill, Corporate Secretary
10)
Management Remuneration
Ms. O’Neill is the corporate secretary of the Company, but was employed by a corporation that was related by virtue of certain officers and directors. This related corporation billed the Company $2,200 for the time that Ms. O’Neill devoted to CDG business during the six months ended March 31, 2008.
Directors are remunerated in cash for attendance at meetings of the board of directors, ($500 for each meeting attended in person; $300 for each meeting attended by telephone). Further they receive stock options in recognition of their service. No stock options were granted during the six months ended March 31, 2008. During the six months ended March 31, 2008 Messrs. Fairburn and Smith each received $800 and Messrs. Brown and Ingram each received $600 for meetings attended.
11)
New Accounting Policies
Currently adopted
Effective October 1, 2007, the Company adopted the following accounting standards related to financial instruments and capital disclosure. These accounting policy changes were adopted on a prospective basis with no restatement of prior period financial statements.
Section 1535, Capital Disclosures, specifies the disclosure of (i) an entity’s objectives, policies and processes for managing capital; (ii) quantitative data about what the entity regards as capital; (iii) whether the entity has complied with any capital requirements; and (iv)if it has not complied, the consequences of such non-compliance.
Sections 3862, Financial Instruments – disclosures, and 3863, Financial Instruments – presentation, replace Handbook Section 3861, Financial Instruments – Disclosure and Presentation, revising and enhancing its disclosure requirements, and carrying forward unchanged its presentation requirements. These new sections place increased emphasis on disclosures about the nature and extent of risks arising from financial instruments and how the entity manages those risks.
Section 1506, Accounting Changes, provides revised standards for changes in accounting policy, estimates or errors. A change in accounting policy must be applied retrospectively, (unless doing so is impracticable or is specified otherwise by a new accounting standard), changes in estimates must be recorded prospectively, and prior period errors must be corrected retrospectively. Voluntary changes in accounting policy are allowed only when they result in financial statements that provide reliable and more relevant information. In addition, these revised standards call for enhanced disclosures about the effects of changes in accounting policies, estimates and errors on the financial statements.
CDG INVESTMENTS INC.
MANAGEMENT DISCUSSION AND ANALYSIS
FOR THE SIX MONTHS ENDED MARCH 31, 2008
11) New Accounting Policies
Future
Section 1400, General Standards of Financial Statement Presentation, has been amended effective for the Company’s first quarter ended December 31, 2008, to include requirements to assess and disclose the Company’s ability to continue as a going concern. The adoption of this new section is not expected to materially alter the Company’s disclosure in future periods.
12)
Off-Balance Sheet Transactions
The Company has no “Off-Balance Sheet Transactions” to report.
13)
Outlook
The Company has entered into a non-binding letter of intent for the combination of the Company with Preo Software Inc., (Preo), an Alberta-based private software company. The combination is subject to completion of satisfactory due diligence and receipt of applicable regulatory and shareholder approvals, if required. It is expected that the Company and Preo will complete either an amalgamation or a share exchange whereby the Company would acquire all of the outstanding shares of Preo in exchange for shares of the Company. It is anticipated that the transaction will proceed by way of a plan of arrangement.
Preo is a Canadian-based private print knowledge management system provider that serves customers in a wide variety of industries, domestically and internationally. Preo’s primary proprietary software adapts itself to an organization’s printing behavior, through a unique patent-pending adaptive rules engine that modifies the messaging delivered to end-users at the desktop based on individual behavior.
14)
Risk Factors
The Company has disposed of significantly all of its investment assets. The Company’s long-term viability is dependent upon acquiring a profitable business. There is a risk that the transaction discussed in 13)Outlook will not be completed, or that the business reorganization will be completed, but the new business will not prove to be profitable over the long-term.
15)
Cautionary Statements
Statements and/or financial forecasts that are unaudited and not historical are to be regarded as forward-looking statements that are subject to risks and uncertainties that can cause actual results to differ materially from those anticipated. Such risks and uncertainties include risks related to the Company’s business including, but not limited to: general market and economic conditions, limited operating history, continued industry and public acceptance, regulatory compliance, potential liability claims, additional capital requirements and uncertainty of obtaining additional financing and dependence on key personnel.
16) Other
Additional information relating to the Company may be found on SEDAR at www.sedar.com.
