UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2003
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
IVP TECHNOLOGY CORPORATION
(Exact name of small business issuer as specified in its charter)
Nevada 65-6998896
------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
2275 Lakeshore Blvd West, Suite 401, Toronto, Ontario M8V 3Y3 Canada
(Address of principal executive offices)
(416) 255-7578
(Issuer's telephone number)
(Former name, former address and former fiscal year,
if changed since last report)
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section l2, 13 or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court. Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 101,888,522 shares of
common stock, $.001 par value, were outstanding on March 31, 2003
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [x]
PART I - FINANCIAL INFORMATION
ITEM 1. Consolidated Financial Statements
Condensed Consolidated Balance Sheets as of March 31,
2003 (Unaudited) and December 31, 2002
Condensed Consolidated Statement of Operations for the
Three Months Ended March 31, 2003 and 2002 (Unaudited)
Condensed Consolidated Statements of Stockholders'
Deficiency for the Three Months ended March 31, 2003
Condensed Consolidated Statements Of Cash Flows For The
Three Months Ended March 31, 2003 and 2002 (Unaudited)
Notes To Condensed Consolidated Financial Statements As
Of March 31, 2003 (Unaudited)
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II - OTHER INFORMATION
ITEM 1. Legal Matters
ITEM 2. Changes in Securities
ITEM 3. Defaults Upon Senior Securities
ITEM 4. Submission of Matters to a Vote of Security Holders
ITEM 6. Subsequent Events, Exhibits and Reports on Form 8-K
i
IVP TECHNOLOGY CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
AS OF MARCH 31, 2003
IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONTENTS
--------
PAGE 1 CONDENSED CONSOLIDATED BALANCE SHEETS AS OF MARCH 31,
2003 (UNAUDITED) AND DECEMBER 31, 2002
PAGE 2 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE
THREE MONTHS ENDED MARCH 31, 2003 AND 2002 (UNAUDITED)
PAGE 3 CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS'
DEFICIENCY FOR THE THREE MONTHS ENDED MARCH 31, 2003
(UNAUDITED)
PAGES 4 - 5 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE
THREE MONTHS ENDED MARCH 31, 2003 AND 2002 (UNAUDITED)
PAGES 6 - 15 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS
OF MARCH 31, 2003 (UNAUDITED)
IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
------
March 31,
2003 December
CURRENT ASSETS (Unaudited) 31, 2002
------------ ------------
Cash $ 24,882 $ 277,085
Accounts receivable (less allowance for doubtful
accounts of $43,970 as of March 31, 2003 and
December 31, 2002 228,005 166,841
Inventory 78,955 383,738
Prepaid expenses and other current assets 162,653 134,098
------------ ------------
Total Current Assets 494,495 961,762
------------ ------------
FIXED ASSETS
Plant, property and equipment 738,947 701,775
Accumulated depreciation (216,560) (165,543)
------------ ------------
Total Fixed Assets 522,387 536,232
------------ ------------
OTHER ASSETS
License agreement - software, net of accumulated
amortization of $446,008 267,605 356,806
Other assets - 71,816
------------ ------------
Total Other Assets 267,605 428,622
------------ ------------
TOTAL ASSETS $ 1,284,487 $ 1,926,616
- ------------ =========== ============
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
----------------------------------------
CURRENT LIABILITIES
Accounts payable $ 1,609,071 $ 1,839,825
Accrued liabilities 181,760 387,762
Taxes payable 540,681 420,670
Other current liabilities 8,309 72,286
Accrued interest 10,578 14,974
Due to factor 211,249 94,746
Leases payable, current portion 55,504 42,471
Note payable, current portion 1,068,386 184,240
Common stock to be issued 3,602,746 3,617,746
Convertible preferred stock to be issued, short-term 4,779,662 4,779,662
Due to related parties 984,428 1,151,404
------------ -------------
Total Current Liabilities 13,052,374 12,605,786
------------ -------------
LONG-TERM LIABILITIES
Convertible debentures - 150,000
Lease payable, long-term 19,159 5,849
Convertible preferred stock to be issued, long-term 3,584,747 3,584,747
------------ ------------
Total Long-Term Liabilities 3,603,906 3,740,596
------------ ------------
TOTAL LIABILITIES 16,656,280 16,346,382
- ----------------- ------------ ------------
STOCKHOLDERS' DEFICIENCY
Preferred stock, $0.001 par value, 50,000,000 shares
authorized, none issued and outstanding - -
Common stock, $0.001 par value, 150,000,000 shares
authorized, 101,888,522 and 99,449,261 shares issued
and outstanding at March 31, 2003 and December 31,
2002, respectively 101,888 99,449
Additional paid in capital 21,061,225 20,870,864
Accumulated deficit (36,577,898) (35,248,562)
Other comprehensive income - exchange gain 221,554 80,795
Less deferred equity line commitment fees (178,562) (222,312)
------------ ------------
Total Stockholders' Deficiency (15,371,793) (14,419,766)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ 1,284,487 $ 1,926,616
- ---------------------------------------------- ============ ============
See accompanying notes to condensed consolidated financial statements.
1
IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
-----------------------------------------------
(UNAUDITED)
For The For The
Three Three
Months Months
Ended March Ended March
31, 2003 31, 2002
------------- -------------
NET SALES $ 1,236,615 $ -
------------- -------------
COST OF SALES
Product costs 1,039,628 -
Development costs 29,826 16,234
Distribution and other costs including amortization 125,322 512,534
------------- -------------
Total Cost of Sales 1,194,776 528,768
------------- -------------
GROSS PROFIT (LOSS) 41,839 (528,768)
------------- -------------
OPERATING EXPENSES
Salaries and wages 588,782 -
Consulting fees 145,421 19,000
Legal and accounting 106,857 46,097
Management fees - 36,956
General and administrative expenses 355,891 117,180
Financial advisory fees 30,708 -
Research and development 108 -
Amortization and depreciation 44,256 -
------------- -------------
Total Operating Expenses 1,272,023 219,233
------------- -------------
LOSS FROM OPERATIONS (1,230,184) (748,001)
------------- -------------
OTHER INCOME (EXPENSE)
Interest income 5,364 1,628
Interest expense (120,350) (11,927)
Foreign exchange gain 15,834 -
------------- -------------
Total Other Income (Expense) (99,152) (10,299)
------------- -------------
NET LOSS $ (1,329,336) $ (758,300)
- -------- ============= =============
LOSS PER COMMON SHARE - BASIC AND DILUTED $ (0.01) $ (0.02)
============= =============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING - BASIC AND DILUTED 99,777,239 49,055,055
============= =============
See accompanying notes to condensed consolidated financial statements.
2
IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY
FOR THE THREE MONTHS ENDED MARCH 31, 2003
-----------------------------------------
(UNAUDITED)
Additional
Preferred Stock Common Stock Common Stock to be Issued Paid-In Accumulated
Shares Amount Shares Amount Shares Amount Capital Deficit
------ ------ ----------- ---------- ---------- ------------- ------------- ---------------
Balance December 31, 2002 - $ - 99,449,261 $ 99,449 - $ - $20,870,864 $(35,248,562)
Stock issued for services and
settlements - - 283,297 283 - - 42,517 -
Stock issued for cash - - 2,155,964 2,156 - - 147,844 -
Deferred cost recognized - - - - - - - -
Net loss for the period - - - - - - - (1,329,336)
Cumulative translation
adjustment - - - - - - - -
------ ------ -------------- -------- ------- --------- --------------- ----------------
Comprehensive loss - - - - - - - -
------ ------ -------------- -------- ------- --------- --------------- ----------------
- $ - 101,888,522 $101,888 - $ - $21,061,225 (36,577,898)
BALANCE, MARCH 31, 2003 ====== ====== ============== ========= ======= ========= =============== ================
Deferred
Compensation
and Other
Commitment Comprehensive
Fees Income Total
------------- --------------- ---------------
Balance December 31, 2002 $(222,312) $ 80,795 $ (14,419,766)
Stock issued for services
settlements - - 42,800
Stock issued for cash - - 150,000
Deferred cost recognized 43,750 - 43,750
Net loss for the period - - (1,329,336)
Cumulative translation
adjustment - 140,759 140,759
--------- ---------------- -------------
Comprehensive loss - - (1,188,577)
--------- ---------------- -------------
BALANCE, MARCH 31, 2003 $(178,562) $ 221,554 $ (15,371,793)
========== =============== =============
See accompanying notes to condensed consolidated financial statements.
3
IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
(UNAUDITED)
For The Three For The Three
Months Ended Months Ended
March 31, March 31,
2003 2002
------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,329,336) $ (758,300)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation 44,256 -
Amortization of licensing agreements and software
kits 92,982 512,534
Amortization of commitment fees 43,750 -
Impairment of deferred tax asset 71,816 -
Stock issued for services 5,000 232,779
Stock issued for commitment fees and penalties 22,800 -
Changes in operating assets and liabilities, net of effects of acquisitions:
Decrease (increase) in accounts receivable (61,164) -
Decrease in inventory 304,783 -
Decrease (increase) in prepaid expenses and other
current assets (28,555) -
Increase (decrease) in accounts payable (230,754) (828,220)
Increase (decrease) in accrued liabilities (206,002) -
Increase in taxes payable 120,011 -
Increase (decrease) in other current liabilities (63,977) -
Increase (decrease) in accrued interest (4,396) 6,909
----------- -----------
Net Cash Used In Operating Activities (1,218,786) (834,298)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of fixed assets (1,097) -
----------- -----------
Net Cash Used In Investing Activities (1,097) -
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of notes payable (315,000) -
Proceeds from notes payable 1,049,146 856,334
Proceeds from issuance of common stock 150,000 -
Payments on amounts due to related parties (166,976) -
Proceeds from factors 116,503 -
Payment on leases (6,752) -
----------- -----------
Net Cash Provided By Financing Activities 826,921 856,334
----------- -----------
EFFECT OF FOREIGN EXCHANGE RATES 140,759 -
----------- -----------
NET (DECREASE) INCREASE IN CASH FOR THE PERIOD (252,203) 22,036
CASH - BEGINNING OF PERIOD 277,085 232
----------- -----------
CASH - END OF PERIOD $ 24,882 $ 22,268
- -------------------- =========== ===========
See accompanying notes to condensed consolidated financial statements.
4
IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
(UNAUDITED)
For The For The
Three Three
Months Months
Ended Ended
March 31, March 31,
2003 2002
----------- -----------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $ 80,996 $ -
=========== ===========
Cash paid for taxes $ - $ -
=========== ===========
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES:
Equipment purchased under capital leases $ 33,095 $ -
=========== ===========
Common stock issued for payment of accrued consulting $ 15,000 $ -
expenses =========== ===========
See accompanying notes to condensed consolidated financial statements.
5
IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2003
(UNAUDITED)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
- ------ -----------------------------------------------------------
(A) ORGANIZATION
----------------
The consolidated financial statements of IVP Technology Corporation
(formally Mountain Chef, Inc.) and consolidated subsidiaries (the
"Company") include the accounts of the parent, IVP Technology Corporation,
incorporated in the State of Nevada on February 11, 1994, and its
subsidiaries: Ignition Entertainment Ltd. ("Ignition"), a United Kingdom
("UK") company; Springboard Technology Solutions, Inc. ("Springboard"), a
Canadian company; and Erebus Corporation, an inactive company. The Company
was granted an extra-provincial license by the Province of Ontario on June
20, 1995 to carry on business in Ontario, Canada. Prior to 1998, the
Company was involved with various unsuccessful activities relating to the
sale of technology products before becoming inactive by the end of 1997.
The Company began negotiations with a third party in 1998 to become an
exclusive distributor of software and therefore is considered to have
re-entered the development stage on January 1, 1998. Activities from
inception of development stage included raising capital and negotiations
and acquisition of software distribution licenses. On January 1, 2002, the
Company began operations and emerged from the development stage.
The Company operates two units rather than two divisions. The enterprise
unit develops, markets, licenses, installs and services data solutions. The
consumer unit develops and publishes interactive software games designed
for mobile phones, other handheld devices, web-sites, personal computers
and video game consoles. The consumer unit also distributes games, hardware
and accessories developed or manufactured by third parties.
(B) BASIS OF PRESENTATION
-------------------------
The condensed consolidated financial statements included herein have been
prepared by the Company without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information
and footnote disclosures normally included in the financial statements
prepared in accordance with accounting principles generally accepted in the
United States of America have been condensed or omitted as allowed by such
rules and regulations. The Company believes that the disclosures are
adequate to make the information presented not misleading. It is suggested
that these condensed consolidated financial statements be read in
conjunction with the December 31, 2002 audited consolidated financial
statements and the accompanying notes thereto included in the Company's
10-KSB. While management believes the procedures followed in preparing
these condensed consolidated financial statements are reasonable, the
accuracy of the amounts are in some respects dependent upon the facts that
will exist, and procedures that will be accomplished by the Company later
in the year.
The management of the Company believes that the accompanying unaudited
condensed consolidated financial statements contain all adjustments
(including normal recurring adjustments) necessary to present fairly the
operations and cash flows for the periods presented. All material
inter-company accounts have been eliminated in consolidation.
6
IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2003
(UNAUDITED)
(C) OPERATIONS OF THE COMPANY
-----------------------------
The accompanying condensed consolidated financial statements have been
prepared in conformity with accounting principles generally accepted in the
United States of America, which contemplates continuation of the Company as
a going concern. The Company has a net loss of $1,329,336, a working
capital deficiency of $12,557,879, a negative cash flow from operations of
$1,218,786 and a stockholders' deficiency of $15,371,793. These matters
raise substantial doubt about the Company's ability to continue as a going
concern. Management's plan is to continue in operation and to continue to
attempt to raise additional debt or equity capital until such time the
Company is able to generate sufficient operating revenue.
In view of these matters, realization of certain of the assets in the
accompanying condensed consolidated financial statements is dependent upon
continued operations of the Company, which in turn is dependent upon the
Company's ability to meet its financial requirements, raise additional
capital, and the success of its future operations. Management believes that
its ability to raise additional capital provides the opportunity for the
Company to continue as a going concern.
(D) RECLASSIFICATIONS
---------------------
Certain reclassifications have been made to the previously reported
statements to conform to the Company's current condensed consolidated
financial statement format.
(E) LOSS PER COMMON SHARE
-------------------------
Basic loss per common share is based on net loss divided by the weighted
average number of common shares outstanding. Common stock equivalents were
not included in the calculation of diluted loss per share as their effect
would be anti-dilutive.
(F) BUSINESS SEGMENTS
---------------------
The Company applies Statement of Financial Accounting Standards No. 131
"Disclosures about Segments of an Enterprise and Related Information".
However, management has determined that it is not practicable to provide
geographic and product segment disclosures for revenues and long-lived
assets because the Company sells its products to a large variety of
locations in the Americas and Europe, and in many instances, these products
are then resold through distributors.
(G) REVENUE RECOGNITION
-----------------------
Risk and Uncertainties
----------------------
A significant portion of all of the Company's net sales are derived from
software publishing and distribution activities, which are subject to
increasing competition, rapid technological change and evolving consumer
preferences, often resulting in the frequent introduction of new products
and short product lifecycles. Accordingly, the Company's profitability and
growth prospects depend upon its ability to continually acquire, develop
7
IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2003
(UNAUDITED)
and market new, commercially successful software products and obtain
adequate financing. If the Company is unable to continue to acquire,
develop and market commercially successful software products, its operating
results and financial condition could be materially adversely affected in
the near future.
Revenue Recognition
-------------------
Publishing revenue is derived from the sale of internally developed
interactive software titles or from the sale of titles licensed from
third-party developers. Publishing revenue amounted to $1,087,906 for the
quarter ended March 31, 2003. The Company had no publishing revenues during
the corresponding quarter of 2002, because it had not yet acquired Ignition
Entertainment Limited, a publishing revenue generating subsidiary.
Distribution revenue is derived from the sale of third-party interactive
software titles, accessories and hardware. Distribution revenue amounted to
$103,051 for the quarter ended March 31, 2003. The Company had no
distribution revenues during the quarter ended March 31, 2002 as it was
still in the development stage.
Revenues from Services and Commercial Software sold under licenses were
$45,658 in the quarter ended March 31, 2003. The Company had no Services or
Commercial Software sales in the corresponding quarter of 2002, because it
had not yet acquired Springboard Technology Solutions, a Serves and
Commercial Software producing subsidiary.
The Company recognizes revenue in accordance with Statement of Position
("SOP") 97-2 "Software Revenue Recognition", as amended by SOP 98-9
"Modification of SOP 97-2 Software Revenue Recognition with respect to
Certain Transactions." SOP 97-2 provides guidance on applying generally
accepted accounting principles in recognizing revenue on software
transactions. SOP 98-9 deals with the determination of vendor specific
objective evidence of fair value in multiple element arrangements, such as
maintenance agreements sold in conjunction with software packages. The
Company's consumer software transactions generally include only one
element, the interactive software game or commercial software under
license. The Company recognizes revenue when the price is fixed and
determinable; there is persuasive evidence of an arrangement, the
fulfillment of its obligations under any such arrangement and determination
that collection is probable. Accordingly, revenue is recognized when title
and all risks of loss are transferred to the customer, which is generally
upon receipt by customer. The Company's payment arrangements with its
customers provide primarily 60 day terms and to a limited extent with
certain customers 30 or 90 day terms. The Company does not have any
multi-element arrangements that would require it to establish VSOE for each
element, nor does the Company have any sales activity that requires the
contract method of accounting.
The Company's distribution arrangements with customers generally do not
give customers the right to return products; however, the Company at its
discretion may accept product returns for stock balancing or defective
products. In addition, the Company sometimes negotiates accommodations to
customers, including price discounts, credits and product returns, when
demand for specific products falls below expectations. The Company's
publishing arrangements generally do not require the Company to accept
product returns and provide price protection. The Company establishes a
8
IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2003
(UNAUDITED)
reserve for future returns and other allowances based primarily on its
return policies, price protection policies and historical return rates. The
Company may not have a reliable basis to estimate returns and price
protection for certain customers or it may be unable to determine that
collection of the receivable is probable. In such circumstances, the
Company defers the revenues at the time of the sale and recognizes them
when collection of the related receivable becomes probable or cash is
received.
Revenue from product sales is recognized when title passes to the customer,
provided that: there are no uncertainties regarding customer acceptance;
persuasive evidence of an arrangement exists; the sales price is fixed or
determinable; and collectability is deemed probable. The Company provides
for estimated product returns at the time of the product shipment, if
necessary. In December 1999, the Securities and Exchange Commission (SEC)
issued Staff Accounting Bulletin (SAB) No. 101, Revenue Recognition in
Financial Statements, which establishes guidance in applying generally
accepted accounting principles to revenue recognition in financial
statements and is effective beginning with the fourth quarter of the year
ended December 31, 2000. The Company has determined that its existing
revenue recognition practices comply with the requirements of SAB 101 for
all periods presented.
(H) RECENT ACCOUNTING PRONOUNCEMENTS
------------------------------------
In November 2002, the EITF reached a consensus on Issue 00-21, addressing
how to account for arrangements that involve the delivery or performance of
multiple products, services, and /or rights to use assets. Revenue
arrangements with multiple deliverables are divided into separate units of
accounting if the deliverables in the arrangement meet the following
criteria: (1) the delivered item has value to the customer on a stand-alone
basis; (2) there is objective and reliable evidence of the fair value of
undelivered items; and (3) delivery of any undelivered items is probable.
Arrangement consideration should be allocated among the separate units of
accounting based on their relative fair values, with the amount allocated
to the delivered item being limited to the amount that is not contingent on
the delivery of additional items or meeting other specified performance
conditions. The final consensus will be applicable to agreements entered
into in fiscal periods beginning after June 15, 2003 with early adoption
permitted. The provisions of this consensus are not expected to have a
significant effect on the Company's financial position or operating
results.
In December 2002, the Financial Accounting Standards Board issued Statement
No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure
- an amendment of FASB Statement No. 123," ("SFAS 148"). SFAS 148 amends
FASB Statement No. 123, "Accounting for Stock Based Compensation" ("SFAS
123") and provides alternative methods for accounting for a change by
registrants to the fair value method of accounting for stock-based
compensation. Additionally, SFAS 148 amends the disclosure requirements of
SFAS 123 to require disclosure in the significant accounting policy
footnote of both annual and interim financial statements of the method of
accounting for stock based-compensation and the related pro forma
disclosures when the intrinsic value method continues to be used. The
statement is effective for fiscal years beginning after December 15, 2002,
and disclosures are effective for the first fiscal quarter beginning after
December 15, 2002. The adoption of this pronouncement will not have a
material effect on the Company's financial position or results of
operations.
9
IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2003
(UNAUDITED)
NOTE 2 ACCOUNTS RECEIVABLE
- ------ -------------------
The components of accounts receivable are as follows:
March 31,
2003 December 31,
(Unaudited) 2002
------------- --------------
Unrestricted trade receivables $ 59,234 $ 61,135
Restricted trade receivables 212,741 149,676
Allowance for doubtful accounts (43,970) (43,970)
------------- --------------
Accounts receivable, net $ 228,005 $ 166,841
============= ==============
Restricted trade receivables are collateral for the Company's secured
borrowing facility that Ignition entered into in April 2002. Unrestricted
trade receivables consists primary of vendor receivables for enterprise
software and information technology services sold by the Company and its
Springboard subsidiary.
NOTE 3 PREPAID EXPENSES AND OTHER CURRENT ASSETS
- ------ -----------------------------------------
Prepaid expenses and other current assets as of March 31, 2003 and December
31, 2002 consist of:
March 31,
2003 December 31,
(Unaudited) 2002
------------- --------------
Prepaid expenses $ 31,755 $ 56,820
VAT receivable 80,707 30,090
GST receivable 21,525 18,002
Miscellaneous receivable, unrelated
parties 27,100 27,341
Other 1,566 1,845
------------- --------------
Total $ 162,653 $ 134,098
============= ==============
10
IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2003
(UNAUDITED)
NOTE 4 FIXED ASSETS
- ------ ------------
As of March 31, 2003 and December 31, 2002, fixed assets consist of:
March 31,
2003 December 31,
(Unaudited) 2002
------------- --------------
Computer equipment $ 324,270 $ 291,505
Office equipment and furniture 19,698 19,698
Computer software 78,972 74,565
Software development kits 45,367 45,367
Automobiles 26,777 26,777
Leasehold improvements 243,863 243,863
------------- --------------
738,947 701,775
Less accumulated depreciation and
amortization (216,560) (165,543)
------------- --------------
$ 522,387 $ 536,232
============= ==============
Depreciation expense for the quarter ended March 31, 2003 and 2002
amounted to $44,256 and $0, respectively.
NOTE 5 NOTES PAYABLE
- ------ -------------
During February 2003, upon the Company's SB-2 Registration becoming
effective, the Company received $970,000 proceeds from the issuance of a $1
million promissory note to an investment banking company (the "Investment
Banker"), net of a 3% cash fee of $30,000, which yields an effective
interest rate of approximately 12% per annum. The promissory note is
non-interest bearing and is to be paid in full within 95 calendar days. The
Company has the discretion to repay the note either with the cash received
from the issuance of stock under the Equity Line of Credit Agreement or
with cash received from operations or other financing sources. If this note
is not fully paid when due, the outstanding principal balance owed will be
payable in full together with interest at the rate of 24% per annum or the
highest rate permitted by law, if lower. See Note 6 below for partial
repayment of this note.
Proceeds received from the issuance of this note were used to repay the
convertible debenture and note payable to the Investment Banker. As of
December 31, 2002, total outstanding principal and accrued interest payable
on the convertible debenture and note payable was $155,487 and $15,000,
respectively.
11
IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2003
(UNAUDITED)
NOTE 6 STOCKHOLDERS' DEFICIENCY
- ------ ------------------------
On February 18, 2003, the Company issued 168,889 shares of common stock to
the Investment Banker for payment of penalties for not completing the SB-2
filing by the due date of July 2, 2002 per the terms of the registration
rights agreement entered into in connection with a convertible debenture
transaction with the Investment Banker. These shares were valued at $0.13
per share or an aggregate of $21,956, representing the closing market value
on the date of grant.
On February 18, 2003, the Company issued 114,408 share of common stock to a
consultant for payment of $15,000 of consulting services accrued at
December 31, 2002 as common stock to be issued included in currently
liabilities in the accompanying consolidated balance sheet as of December
31, 2002. These share were valued at $0.13 per share representing the
closing market value on the date of grant.
During March 2003, the Company issued 2,155,964 shares of common stock to
the Investment Banker for cash of $150,000 or $.07 per share, in connection
with the Equity Line of Credit (See Note 7). The cash was applied against
the $1 million promissory note payable to the Investment Banker issued in
February 2003. As of March 31, 2003, the remaining balance of the note
payable to the Investment Banker totaled $850,000.
NOTE 7 AGREEMENTS
- ------ ----------
(A) Investment Banker Equity Line of Credit Agreement
-----------------------------------------------------
In April 2002, the Company entered into an Equity Line of Credit Agreement
with the Investment Banker. Under this agreement, the Company may issue and
sell to the Investment Banker common stock for a total purchase price of up
to $10 million. Subject to certain conditions, the Company will be entitled
to commence drawing down on the Equity Line of Credit when the common stock
to be issued under the Equity Line of Credit is registered with the
Securities and Exchange Commission and the registration statement is
declared effective and will continue for two years thereafter. The purchase
price for the shares will be equal to 92% of the market price, which is
defined as the lowest closing bid price of the common stock during the five
trading days following the notice date. The amount of each advance is
subject to an aggregate monthly maximum advance amount of $425,000 in any
thirty-day period. In no event shall the number of shares issuable to the
Investment Banker, which causes them to own in excess of 9.9% of the then
outstanding shares of the Company's common stock. The Company paid the
Investment Banker a one-time fee equal to $330,000, payable in 3,032,000
shares of common stock. The Investment Banker is entitled to retain 3.0% of
each advance. In addition, the Company entered into a placement agent
agreement with a placement agent firm, a registered broker-dealer. Pursuant
to the placement agent agreement, the Company paid a one-time placement
agent fee of 100,000 shares of common stock, which were valued at $0.20 per
share, or an aggregate of $20,000, on the date of issuance. The Company
agreed to pay an unrelated consultant, a one-time fee of $200,000 for its
work in connection with consulting the company on various financial
matters. Of the fee, $75,000 was paid in cash with the balance paid in
1,040,000 shares of common stock.
The termination date of this agreement is the earliest of: (1) the
Investment Banker makes payment of Advances of $10,000,000, (2) any stop
order or suspension of the effectiveness of the Registration Statement for
12
IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2003
(UNAUDITED)
an aggregate of fifty (50) Trading Days or (3) the Company shall at any
time fail materially to comply with the requirements of the agreement and
such failure is not cured within thirty (30) days after receipt of written
notice from the Investment Banker or (4) the date occurring twenty-four
(24) months after the Effective Date. Pursuant to the terms of the Equity
Line of Credit Agreement, the Company was required to file with the SEC a
registration statement covering the shares to be acquired by the Investment
Banker. The 24-month term commences the effective date of the registration
statement. During February 2003, the Company completed its registration
statement in connection with the Equity Line of Credit Agreement.
To induce the Investment Banker to execute and deliver the Equity Line of
Credit Agreement, the Company agreed to provide certain registration rights
under the Securities Act of 1933, as amended, and the rules and regulations
there under, or any similar successor statute (collectively, the "1933
Act"), and applicable state securities laws. During the commitment period,
the Company shall not, without the prior written consent of the Investment
Banker, issue or sell (i) any Common Stock without consideration or for a
consideration per share less than the Bid price on the date of issuance or
(ii) issue or sell any warrant, option, right, contract, call, or other
security or instrument granting the holder thereof the right to acquire
Common Stock without consideration or for a consideration per share less
than the Bid Price on the date of issuance, provided, however, that the
Investment Banker is given ten (10) days prior written notice and nothing
in this section shall prohibit the issuance of shares of Common Stock
pursuant to existing contracts or commitments, upon exercise of currently
outstanding options or convertible securities, or in connection with any
acquisition.
On each advance date, the Company shall pay to the Investment Banker,
directly from the gross proceeds held in escrow, an amount equal to three
percent (3%) of the amount of each advance as a commitment fee. The Company
has paid the Investment Banker a one-time commitment fee in the amount of
3,032,000 shares of common stock and warrants to purchase 265,000 shares of
common stock of which a warrant to purchase 15,000 shares has an exercise
price of $0.50 per share and a warrant to purchase 250,000 shares has an
exercise price of $0.099 per share. These warrants vest immediately upon
issuance. The value of the one-time commitment fee related to the issuance
of common stock totaled approximately $350,000, which was computed based
upon the market prices of the Company's common stock on the applicable
issuance dates. The warrants issued in connection with the Equity Line of
Credit Agreement for commitment fees were valued on the date of grant using
the Black-Scholes option-pricing model, which computed a value of $6,107.
The commitment fees will be expensed ratably over the life of the Equity
Line of Credit agreement and are included in stockholders' deficiency in
the accompanying consolidated balance sheet as of March 31, 2003 and
December 31, 2002. The Company has recognized commitment fees of
approximately $43,750 and $133,795, which has been included in general and
administrative expenses on the condensed consolidated statement of
operations for the period and year ended March 31, 2003 and December 31,
2002, respectively.
(B) Development and Distribution Agreement
------------------------------------------
On February 10, 2003, the Company signed a development and distribution
agreement with a distribution company for distribution of the Company's
games and other applications for mobile phones and other handheld devices
to the distribution company's mobile operator channels on a worldwide
13
IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2003
(UNAUDITED)
basis. Under the terms of the agreement, which sets forth an initial
publication schedule consisting of 14 products, the Company may also
sublicense and provide games and applications created by other developers
to the distribution company for distribution to their mobile operators.
Under the terms of the agreement, the Company will receive royalty payments
as the developer for each sale of the Company's games and other
applications.
(C) Hospital Service Agreement
------------------------------
On March 11, 2003, the Company entered into a one-year data integration
agreement with a large hospital (the "Customer") in the Toronto area. The
Company will make an interfacing resource available to the Customer for a
fixed number of days per week to provide general interfacing services as
requested by the Customer. This agreement will automatically be renewed for
one-year terms unless terminated by either party in accordance with the
terms set forth in this agreement.
14
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
BUSINESS OVERVIEW
IVP Technology Corporation ("IVP Technology" or the "Company") is an IT
services provider and software developer, licensor, publisher, marketer, and
distributor. Its two operating divisions provide products and services to
certain segments of the consumer software and enterprise IT marketplaces. IVP
Technology is a registered Nevada corporation and has been publicly listed on
the OTCBB for four years. IVP currently has its headquarters in Toronto,
Ontario.
For three years prior to new senior management taking over day to day
control of the Company, following the November 2001 approval by the shareholders
of IVP of the purchase of International Technology Marketing, Inc., IVP was
solely focused on distributing an enterprise software product marketed under the
"PowerAudit" name. Beginning in December 2001, IVP acquired rights to distribute
additional enterprise software products from several other third party vendors.
In May 2002, the Company also acquired 100% of the shares of Ignition
Entertainment Limited, a UK based company engaged in the development, licensing,
publishing, marketing and distribution of platform (X-box, Playstation, GameCube
and GameBoy) video games. In July 2002, IVP acquired 100% of the shares of
Springboard Technology Solutions Inc., a Toronto based consumer and enterprise
software development and IT services company.
ENTERPRISE DIVISION
IVP's enterprise software division primarily operates through its wholly
owned subsidiary, Springboard Technology Solutions Inc., which was acquired on
July 1, 2002 to develop, market, license and install data solutions and other
applications for mid-size companies, large corporations and government agencies.
A number of Springboard's clients are in the health care field thus, in-order to
provide focus to this sector, the company created the d.b.a. registered trade
name of MDI Solutions ("MDI") to identify products and services specifically for
the health care vertical. The MDI Solutions group has developed, and currently
markets, two software products specific to the health care vertical namely "MD
Link" and "MD Eye". IVP's other enterprise data solution offerings use
Vaayu(TM), developed by Springboard Technology, and Classifier(TM), Viper(TM)
and iBos(TM), developed by several third party software companies. In addition
to its enterprise operations Springboard also has an established consumer
software product group which operates under the trade style of SilverBirch
Studios. SilverBirch focuses on developing "handheld" applications most recently
in the form of on-line games for web portals and mobile games for Java enabled
mobile phones or Symbian OS devices. On a world wide basis "SilverBirch Studios"
has been established as a Nevada registered trade name for IVP Technology
Corporation.
ENTERPRISE SOFTWARE PRODUCTS
The enterprise software division currently markets data solutions. These
solutions are made up of separate software products that can operate on a
stand-alone basis or integrate with other enterprise level software. The Company
believes that these products provide enterprises with increased economy,
efficiency and effectiveness when enterprises are faced with the necessity of
obtaining data from the field, wherever that may be, and moving it into
processes that take place in the front and back office environment through to
business decision making levels. The current enterprise software products
represented by the Company are described below.
THIRD PARTY VENDOR PRODUCTS
CLASSIFIER(TM). On December 28, 2001, we entered into a two-year,
non-exclusive licensing agreement to distribute the Classifier(TM) software
program, developed by the Innovation Group, Plc. Subsequently, on September 30,
2002 we renegotiated the agreement with the Innovation Group, Plc to add another
product, i-Bos(TM) (see product description herein), and relinquished the
financial services industry vertical back to the Innovation Group, Plc. In the
course of our contract renegotiation we also obtained the right, on a
non-exclusive basis, to distribute both the Classifier(TM) and the i-Bos(TM)
product in the UK market. Meanwhile we retained the right to sell such software
in the United States, Mexican and Canadian markets. Our distribution agreement
allows us to earn up to a 100% margin on the wholesale price, provided certain
minimum selling prices are met. We anticipate that the distribution agreement
will be renewed on December 31, 2003.
The Classifier(TM) product is a sophisticated business intelligence
solution that provides data analysis benchmarking which can monitor on-going
improvements on business activities, such as specific products, lines of
business and other information of a business operation. The Classifier(TM) was
designed to create and broadcast business intelligence knowledge views direct to
15
decision makers over corporate Intranets and the Internet. The Classifier(TM)
turns a database into a website, enabling more people to access data with a web
browser. The Classifier(TM) incorporates a high-performance and powerful data
analysis server, a web report publishing facility, versatile data transformation
features and the ability to connect and extract data from multiple back office
data sources.
I-BOS(TM). On September 30, 2002, the Company obtained the non-exclusive
right to market the Innovation Group, Plc's i-Bos(TM) product (Innovative
Business Operating System) in North America and the United Kingdom to all
verticals except financial services.
I-Bos(TM) is an application development environment for business analysts.
It is process and rule centric and allows analysts to build complete business
applications for specific vertical markets without any programming knowledge in
a language that is understood by that business sector. i-Bos(TM) is currently
used primarily in financial services arenas, however it can be used in any
process driven organization such as government, health care or any other
organization where it is important that certain steps be taken prior to other
operations being performed
VIPER(TM). On February 20, 2002, the Company entered into an agreement
with Smart Focus Limited, to resell its Viper(TM) suite of products which
consists of Viper Analyze(TM) and Viper Visualize(TM), Viper Data Mining(TM),
Viper CRM(TM), Viper Campaign Planner(TM) and Viper Smart Campaigner(TM).
Pursuant to the license, IVP Technology will be entitled to a 15% commission on
sales of Viper(TM) through customer opportunities created by IVP Technology.
Smart Focus Limited will make sales representatives available to assist in sales
presentations.
The Company believes that Viper(TM) is a powerful, fast and easy-to-use
analysis and visualization application designed for corporate marketing
departments and those decision makers concerned with gross data from voluminous
rows of customer information. Viper(TM) harnesses customer and transactional
data from any touch-point or channel across any organization to create, build
and maintain customer insight and customer intelligence. Viper(TM) is designed
to empower enterprises to better understand, predict, manage and influence
customer behavior.
INTERNALLY DEVELOPED PRODUCTS
VAAYU(TM). Vaayu(TM) is a platform-independent software product that
mobile-enables existing Enterprise Applications within an organization, allowing
staff and field workers to remotely access internal data and systems through a
variety of handheld and wireless devices, including Palm OS devices, RIM
devices, handheld computers and other mobile devices.
MD LINK. During the last fiscal year the Company has also developed in for
its medical data integration business a software product that connects
independent data systems within a healthcare organization, enabling connectivity
and information sharing with stand-alone or legacy applications through industry
protocols such as HL7 and XML.
MD EYE. MD Eye is a software product that monitors the runtime status of
systems and interfaces within an interfacing environment, keeping watch over
critical elements such as disk space usage, processor utilization, network
connectivity, queue sizes and other IT system critical elements. This product is
used in many of MDI Solutions services contracts to assist in monitoring systems
and to automatically call for human intervention.
ENTERPRISE SERVICES
The primary services provided by the Enterprise Division, solely performed
under the Springboard Technology Solutions subsidiary, are performed by staff
that are on call or operate under contract as outsourced IT personnel in both
the health care market and in the network solutions market. Network solutions
staff work under the Springboard Technology banner and are typically specialists
in working with data networks, typically in high value professional office
environments. Specialists in particular medical data structures are employed
under the MDI Solutions banner for the health care market.
CONSUMER DIVISION
The Consumer Division operates through both Ignition Entertainment Limited
in the UK, through IVP Technology d.b.a. as Ignition USA for platform games and
d.b.a. SilverBirch Studios in North America, Asia and Europe for mobile and
on-line games. On May 28, 2002, the Company acquired Ignition Entertainment
Limited, a company organized in late 2001 under the laws of England and Wales,
specializing in the design, development, licensing, publishing and distribution
of personal computer and game console software and accessories. Ignition has
been solely concerned with developing for the personal computer and video games
platforms market. The Company has development license agreements with
16
Microsoft(TM), Nintendo(TM) and Sony(TM) to support its development activities.
The three major platform manufacturers will not accept game products created for
mass distribution under their respective brand names unless they are built using
development kits obtained from the platform manufacturers. These agreements
permit IVP Technology to develop software for these platforms with a
non-exclusive, non-transferable license to use these platforms to develop games
for platform use. The development of high quality platform video games is an
expensive and time consuming process entailing long lead times and has
substantial risk associated with picking the correct genres of games, correct
timing for releases and is subject to retail acceptance in the market.
Games are published pursuant to a written agreement with the manufacturers
of the various game platforms for specific geographic territories.
The products currently being distributed are a combination of products
purchased or subsequently developed by the Company as a result of the Ignition
Entertainment Limited acquisition. Several more large scale games are nearing
the end of their development cycle. Currently, Ignition Entertainment Limited
has the following software titles in distribution in Europe and North America
for the Nintendo Gameboy Advance(TM) platform and will shortly be releasing five
of these same titles for the Sony Playstation(TM) platform:
WORLD TENNIS STARS DEMON DRIVER MONSTER BASS FISHING
STRIKE FORCE HYDRA ANIMAL SNAP INTERNATIONAL KARATE PLUS
PINBALL TYCOON STADIUM GAMES SUPER DROP ZONE
During the first quarter of 2003 IVP Technology signed a development and
distribution agreement with Tira Wireless Inc. (www.tirawireless.com), for
non-exclusive distribution of IVP's games and other applications for mobile
phones and other handheld devices through to Tira's Mobile Operator/Carrier
channels on a world wide basis. Tira distributes games and applications through
AT&T Wireless, Nokia, Mobilkom Austria, End2End, Telecom1, Vodaphone, Vizzavi
Portugal, Jamba and O2 which span the globe in terms of service to mobile
subscribers. In addition to using Tira Wireless as a distributor and publisher,
IVP has also executed a software distribution agreement with Handango, Inc.
which firm distributes a wide range of mobile applications through its on-line
web store. Handango is the leading publisher and platform for mobile software.
Handango markets more than 25,000 applications from more than 8,000 Handango
Software Partners through an extensive global distribution network of online,
retail, and enterprise channels reaching more than five million mobile users
each month. Handango provides its partners with worldwide distribution,
marketing support, on-time payment processing, e-commerce services, product
launch assistance and business development expertise.
IVP's initial publication and release schedule for Java(TM) games consists
of 14 entertainment products which have been created specifically for mobile
phone platforms. IVP's mobile games have been created by SilverBirch Studios, an
internal development group within Springboard Technology Solutions. In addition
to developing mobile applications the SilverBirch group is currently completing
work on a mobile phone game website "vortal" for a school age demographic
segment to be initiated and marketed under the trade name "Recessgames.com".
In the first quarter Ignition Entertainment Limited executed several
exclusive GBA distribution agreements with COKeM in North America, Virgin in
Spain, Gamesworld in the Benelux, and SG Diffusion in France. Ignition's GBA
titles are also being sold through UK retail giant Sainsbury's as well as EB and
Prism in the UK.
ENTERPRISE DIVISION
The enterprise division has made steady progress with particular emphasis
on the MDI Solutions group under the Springboard Technology Solutions Inc.
subsidiary. In February 2003 the group received its first order for the MD Link
product as an HL7 integration solution from Guelph General Hospital for current
and future system interfaces within their facility. The installation of the MD
Link product was completed in the second quarter of 2003 hence no revenue from
this sale has been included in company financial results for the first quarter.
In addition MDI Solutions has executed multiple contracts with four of the
Toronto area's largest hospitals. These contracts are for a combination of time,
17
material and retained consulting services and have an initial term ranging from
six to twelve months with four automatically renewing for additional periods.
The key health centers which are serviced by MDI under these contracts are
Mount Sinai, a 462 bed hospital and critical care facility, located in downtown
Toronto; St. Joseph's Health Centre, a 350 bed community service facility
located in West Toronto; York Central Hospital, a 430 bed community hospital
located in Toronto's North West region; and The Rouge Valley Health System, a
two site 411 bed hospital health center, located in Toronto's Eastern region.
The four health centers are amongst the ten largest hospitals in the Toronto
area. Springboard Technology has hired additional staff to service the
anticipated growth in service contracts and is investing in marketing and sales
personnel to obtain greater penetration in both the US and Canadian health care
markets.
The anticipated growth of the MDI Solutions Group and the enterprise
division is expected to provide a rising level of recurring revenue to IVP. We
anticipate that there will be continuing growth in the enterprise division in
the future.
ACQUISITIONS AND REORGANIZATIONS
IVP Technology maintains and active interest in acquisitions and the
reorganization of its component parts to better service clients of both its
consumer and enterprise divisions. Investment in its existing operations
augmented by growth through acquisitions is a key goal of company management as
is the effective use of capital to drive acceptable returns on investment. IVP
management will be recommending to its shareholders at the forthcoming Annual
General Meeting that the number of authorized common shares be increased to
provide sufficient room in its share structure to complete acquisitions using
shares as well as to provide room for equity and debt capital raising. It is
management's belief that acquisitions and reorganizations ought to be undertaken
when such activities are accretive i.e. the cost of share dilution is offset by
earnings in the future.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2003 COMPARED WITH THE THREE MONTHS ENDED
MARCH 31, 2002
REVENUES. During the three months ended March 31, 2003, we generated
$1,236,615 in revenue in comparison to revenue of nil in the corresponding
period ended March 31, 2002. From a revenue source perspective in the first
quarter of fiscal year 2003, $1,088,000 of revenue was generated by Ignition
Entertainment Limited from the sale of video game entertainment products,
$103,051 was generated by IVP at the parent company level also from the sale of
consumer software and games and $45,659 resulted from the sale of data solution
products and services through Springboard. IVP Technology acquired Ignition on
May 28, 2002 and acquired Springboard on July 1, 2002. Accordingly, IVP
Technology had no revenue from either source in the comparable period in 2002.
We expect that the percentage of revenue produced by Springboard will rise from
this level as our medical data integration business increases in future
quarters.
COST OF SALES. Cost of sales was $1,194,776 for the three months ended
March 31, 2003 versus $528,768 in the three months ended March 31. 2002. The
principal cost of sales items in the first quarter 2003 consisted of video
entertainment product costs. IVP's d.b.a Ignition USA spent $10,305 on
publisher's fees, Springboard $128,552 on labor and $2,436 on third party
software purchases, while Ignition spent $898,335 on components of video game
sales. In addition, the company recorded amortization of prepaid licences of
$92,982 related to IVP's Classifier(TM) and I-Bos(TM) distribution and license
agreement while distribution costs for Ignition products were $31,676 and
Ignition product development costs of $29,826 were incurred and allocated
towards the cost of product sold during the quarter. In the three month period
ended March 31, 2002 the Company recognized cost of sales of $528,768 related to
the amortization of the PowerAudit and Classifier distribution agreements. The
result of the cost of sales components elaborated above led to a positive gross
margin of $41,839 in the period ended March 31, 2003 versus a negative gross
margin of $528,768 in the three months ended March 31, 2002.
OPERATING EXPENSES. Total operating expenses for the three months ended
March 31, 2003 were $1,272,023 versus $219,233 in the three months ended March
31, 2002.
The largest components of first quarter fiscal year 2003 operating
expenses were related to salaries and wages and other general and administration
expenses. IVP's Chicago office accounted for $41,922 of salary expense,
Springboard $36,478 and the operation in the UK $510,381. Salaries and wages
include costs of all group insurance and various government programs. The
company has a high wage cost base in its UK operation in relation to salaries in
the US and Canadian operations. The Company has been implementing cost saving
18
tactics in the UK operation in an effort to bring down costs. In the period
ended March 31, 2002 the company expensed $nil in salary and wages. General and
Administrative expenses reflect a similar cost differential between the various
operations with the UK operation accounting for $161,991 of G&A expenses;
Springboard $23,446, the Ignition USA sales operation in Chicago $12,014, and
the head office of IVP accounting for $155,899 of which the two largest items
were a write-off of commitment fees of $52,339 and a write-off of future income
tax asset of $76,938 - the remaining items consisted of general overhead items
such as investor relations fees and travel and lodging. In the three months
ended March 31 2002, $117,180 was expensed to General and Administrative
expenses.
Consulting fees for the three months ending March 31, 2003 were $145,421
which was a large increase over the three months ended March 31, 2002 due to the
following: fees for Brian MacDonald and Peter Hamilton at the IVP parent company
level of $31,780, fees for Geno Villella and Kevin Birch at the Springboard
level of $15,891 and fees at the Ignition Entertainment level for management
contracts of $96,747. In the three months ended March 31, 2002 only payments to
the original management group of IVP was included in consulting fees for a total
of $19,000.
Legal and accounting expenses were $106,857 in the three months ended
March 31, 2003 versus $46,097 in the period ended March 31, 2002. The increase
between the periods was primarily due to additional audit fees related to
increased operations and legal fees related to the completion of the Company's
SB-2 Registration Statement in February 2003. Legal fees of $48,492 and
accounting fees of $45,233 were paid at the IVP level during the first three
months of the year, while Springboard incurred $1,584 in legal fees and Ignition
Entertainment incurred $10,978 in legal and accounting fees. In the period ended
March 31, 2002 the $46,097 in fees were primarily related to clean up of the
company's financial statements and other legal expenses.
Financial advisory fees were $30,708 in the period March 31, 2003 versus
$nil in the period ended March 31, 2002. The charges were directly related to
the costs of retaining Danson Partners to assist in bringing the company up to
SEC standards in accounting and finance, the contract with Danson Partners
expired at the end of February 2003.
Amortization and depreciation in the first three months ended March 31,
2002 was $44,256 versus nil in the period ended March 31, 2002. Amortization in
the first quarter of 2003 consisted primarily of fixed asset depreciation.
OTHER INCOME/EXPENSES
Interest income from cash on deposit was $5,364 in the quarter ended March
31, 2003 versus $1,628 in the quarter ended March 31, 2002.
Interest expense was much higher in the period ended March 31, 2003 at
$120,350 than in the comparative period ended March 31, 2002 which was $11,927.
In the first quarter the parent company incurred financing charges of $60,000
related to the Cornell Capital Equity Line of Credit made up of $30,000 from the
3% funding fee for cash advances from Cornell and $30,000 which represented an
interest penalty due to Cornell as a result of not successfully getting the SB 2
approved within 90 days of contract execution in May 2002.. As well the Company
incurred $7,558 of bank interest, $2,070 in accrued interest on the Berra note
and $41,998 in finance charges for its Ignition subsidiary. The company recorded
a foreign exchange gain of $15,834 for the three months ended March 31, 2003 as
a result of the decline of the US dollar in relation to both the UK Pound and
the Canadian Dollar. There was no corresponding gain or loss in the comparative
fiscal period as the company was not carrying on operations in other countries
during the period.
NET LOSS. As a result of the items specified above, the Company incurred a
net loss of $1,329,336 or 0.01 cent per share versus a loss of $758,300 or 0.02
cents per share in the first quarter of 2002.
LIQUIDITY AND CAPITAL RESOURCES
Prior to December 31, 2001 the Company financed its operations through a
combination of convertible securities and the private placement of shares. In
the fiscal year ended December 31, 2002 the Company entered into several
financing arrangements. These included an equity line of credit with Cornell
Capital Partners LP for $10,000,000 and factoring and letter of credit
facilities with DcD Group to assist in providing working capital for Ignition
Entertainment Limited. Our primary need for cash is to fund our ongoing
operations, chiefly Ignition Entertainment Limited, and to defray the cost of
remaining a public company until such time that the sale of our products and
services generates sufficient net revenue to fund operations and grow the
Company.
19
As March 31, 2003, our need for cash included satisfying $4,669,966 of
current liabilities which consisted of accounts payable of $1,609,071, $181,760
of accrued liabilities, taxes payable of $540,681, and other current liabilities
of $8,309, accrued interest of $10,578, amounts payable to DcD factors of
$211,249 the current portion of leases payable of 55,504, amounts payable to
related parties of $984,428 and notes payable of $1,068,386. Excluded from these
figures is debt of $8,382,408 which is payable by the issuance of stock to the
former shareholders of Ignition Entertainment Limited and to DCD group for
financing provided to Ignition Entertainment. These shares will be placed in
escrow following acceptance of a resolution of the shareholders to increase the
number of authorized shares of the company. In addition, the Company entered
into a promissory note in the first quarter of 2003 for $221,824, which
evidences the cash portion owed to a software licensor. The note will be repaid
in nine equal installments of $25,203, commencing on June 1, 2003. The Company
has long-term debt of $3,603,906, of which $3,584,747 will be satisfied by the
issuance of stock also to the former shareholders of Ignition Entertainment
Limited. The balance consists of the long term portion of leases payable of
$19,159.
Our independent accountants have issued a going concern opinion on our
financial statements that raise substantial doubt about our ability to continue
as a going concern. Our ability to continue as a going concern is dependent on
our ability to raise additional bank or non-bank term and operating credit,
convertible debt, equity capital or access capital under the equity line and
implement our business plan to market and sell our various enterprise software
and services and our various consumer software titles through our wholly owned
subsidiaries. Ignition Entertainment Limited has secured a 1,000,000 British
pound revolving credit facility with UK based Revelate Limited for the purpose
of allowing Ignition Entertainment Limited to purchase goods and services from
third party vendors. Under the terms of the revolving credit facility, Ignition
Entertainment Limited may contract for the importation of software products and
services to the extent of 60% of the projected resale price of items purchased
as a result of the credit facility. The credit facility may be accessed by
demonstrating firm orders for goods to be delivered and sold. The Company has
not borrowed any funds under the revolving credit facility. Ignition
Entertainment Limited also has arranged a loan secured by its accounts
receivable and other tangible and intangible assets with DcD Factors, Plc. Under
the terms of the secured loan, Ignition Entertainment Limited will be able
borrow up to 75% of its eligible accounts receivable. As of March 31, 2003
Ignition Entertainment Limited had $211,249 outstanding with DcD Factors, Plc.
At March 31, 2003 the Company had cash on hand of $24,882. In addition, as at
the fiscal year end, certain shareholders have also supported the Company to the
extent of $984,428 and while there is no legal commitment for them to do so the
company believes that certain shareholders will continue to support the Company
in a similar manner. These advances are shown in long term liabilities and they
have no fixed terms for repayment.
During February 2003, upon the Company's SB-2 Registration becoming
effective, the Company received $970,000 proceeds from the issuance of a $1
million promissory note to the Investment Banker, net of a 3% cash fee of
$30,000, which yields an effective interest rate of approximately 12% per annum.
The promissory note is non-interest bearing and is to be paid in full within 95
calendar days. The Company has the discretion to repay the note either through
cash received from the issuance of stock under the Equity Line of Credit
Agreement or by cash from other sources. In connection with the note, the
Company has agreed to escrow 10 requests for advances under the Equity Line of
Credit Agreement in the amount not less than $100,000. The request will be held
in escrow by an independent law firm, who will release such requests to the
Investment Banker every 7 calendar days commencing on March 3, 2003 unless
otherwise agreed between the Company and Cornell Capital. If this note is not
fully paid when due, the outstanding principal balance owed will be payable in
full together with interest at the rate of 24% per annum or the highest rate
permitted by law, if lower. See below for partial repayment of this note.
In April 2002, IVP Technology entered into an Equity Line of Credit
Agreement with Cornell Capital Partners, L.P. Under this agreement, IVP
Technology may issue and sell to Cornell Capital Partners common stock for a
total purchase price of up to $10 million. Subject to certain conditions, IVP
Technology will be entitled to commence drawing down on the Equity Line of
Credit when the common stock to be issued under the Equity Line of Credit. On
February 14, 2003 a Registration Statement on Form SB-2 that was filed by the
Company was declared effective by the SEC. Under the terms of the Equity Line of
Credit the Company may provide notice to Cornell and Cornell will purchase from
the company shares equal to 92% of the market price, which is defined as the
lowest closing bid price of the common stock during the five trading days
following the notice date. The amount of each advance is subject to an aggregate
maximum advance amount of $425,000 in any thirty-day period. Cornell Capital is
entitled to retain 3.0% of each advance. In April 2002, IVP Technology paid
Cornell a one-time fee equal to $330,000, paid in the form of 3,032,000 shares
of common stock. In addition, IVP Technology entered into a placement agent
agreement with Westrock Advisors, Inc., a registered broker-dealer. Pursuant to
the placement agent agreement, IVP Technology paid a one-time placement agent
fee of 100,000 shares of common stock, which were valued at $0.20 per share, or
an aggregate of $20,000, on the date of issuance. IVP Technology agreed to pay
Danson Partners, LLC, a consultant, a one-time fee of $200,000 for its work in
connection with consulting the Company on various financial matters. Of the fee,
$75,000 was paid in cash with the balance paid in 1,040,000 shares of common
stock. To the end of March 2003, the Company has received under the Equity Line
of Credit $150,000 in exchange for 2,155,964 shares of common stock. Except for
the Equity
20
Line of Credit, the Company has no commitments for equity capital although the
company continues to explore other funding alternatives in an effort to broaden
its capital sources.
The Company anticipates that its cash needs over the next 12 months will
consist of general working capital needs of $5,000,000, which would include the
satisfaction of current liabilities of $3,099,055. As of March 31, 2003 the
company had a working capital deficiency of $12,557,879. The Company anticipates
that its cash needs over the next 12 months will come primarily from a
combination of operating credit lines, term loans, which may or may not be
secured by assets, or contain conversion features which may lead to additional
shares being issued, or the sale of equity under the Equity Line of Credit. Draw
downs on the Equity Line of Credit may cause the share price to decline in value
unless buyers are present to take up the supply of new shares entering the
market.
If the company is unable to obtain additional funding through our Equity
Line of Credit facility or from other sources of debt and equity capital, then
the failure to obtain this funding will have a material adverse effect on our
business and this may force us to re-organize, reduce our investment in, or
otherwise divest of one or more of our operations, or to reduce the cost of all
operations to a lower level of expenditure which may have the effect of reducing
our expected revenues and potentially net income in 2003 and 2004.
CAPITAL RESOURCES
Pursuant to the Equity Line of Credit, the Company may periodically sell
shares of common stock to Cornell Capital to raise capital to fund its working
capital needs. The periodic sale of shares is known as an advance. The Company
may request an advance every 5 trading days. A closing will be held 7 trading
days after such written notice at which time the Company will deliver shares of
common stock and Cornell Capital Partners, L.P. will pay the advance amount,
less the 3% retention. The Company may request advances under the Equity Line of
Credit once the underlying shares are registered with the Securities and
Exchange Commission. Thereafter, the company may continue to request advances
until Cornell Capital has advanced $10.0 million or two years after the
effective date of the registration statement, whichever occurs first. The amount
of each advance is subject to an aggregate maximum advance amount of $425,000 in
any thirty-day period. The amount available under the Equity Line of Credit is
not dependent on the price or volume of our common stock.
The Company registered 30,000,000 shares of common stock in connection
with the Equity Line of Credit and upon conversion of the debentures. The
Company cannot predict the actual number of shares of common stock that will be
issued pursuant to the Equity Line of Credit, in part, because the purchase
price of the shares will fluctuate based on prevailing market conditions and the
company has not determined the total amount of advances the Company intends to
draw. Nonetheless, if the Company issued all 30,000,000 shares of common stock
at a recent price of $0.04 per share (which assumes that no shares would need to
be issued upon conversion of debentures), then the Company would receive
$1,200,000 under the Equity Line of Credit (after deducting a 3% retention
payable to Cornell). This is $8,800,000 less than is available under the Equity
Line of Credit. The Company's stock price would have to rise substantially for
us to have access to the full amount available under the Equity Line of Credit.
These shares would represent 20% of our outstanding common stock upon issuance.
Accordingly, the Company would need to register additional shares of common
stock in order to fully utilize the $10 million available under the Equity Line
of Credit at the current price of $0.04 per share. In addition, the Company
would be required to obtain the approval of our shareholders to increase the
number of authorized shares of common stock. Pursuant to our Articles of
Incorporation, the Company is authorized to issue up to 150,000,000 shares of
common stock. At a recent price of $0.04 per share, the Company would be
required to issue 250,000,000 shares of common stock in order to fully utilize
the $10.0 million available. The Company would be required to obtain a vote of
at least a majority of the outstanding shares in order to increase our
authorized shares of common stock for this purpose. Our inability to obtain such
approval would prohibit us from increasing our authorized shares of common stock
and from issuing any additional shares under the Equity Line of Credit or to
otherwise raise capital from the sale of capital stock.
In April 2002, IVP Technology raised $150,000 of gross proceeds from the
issuance of convertible debentures. These debentures accrue interest at a rate
of 5% per year and mature two years from the issuance date. The debentures are
convertible at the holder's option any time up to maturity at a conversion price
equal to the lower of (i) 120% of the closing bid price of the common stock as
of the closing date (ii) 80% of the average closing bid price of the common
stock for the 4 lowest trading days of the 5 trading days immediately preceding
the conversion date. At maturity, IVP Technology has the option to either pay
the holder the outstanding principal balance and accrued interest or to convert
the debentures into shares of common stock at a conversion price equal to the
lower of (i) 120% of the closing bid price of the common stock as of the closing
date or (ii) 80% of the average closing bid price of the common stock for the 4
lowest trading days of the 5 trading days immediately preceding the conversion
date. IVP Technology has the right to redeem the debentures upon 30 days notice
for 120% of the amount redeemed. Upon such redemption, IVP Technology will issue
21
the investor a warrant to purchase 10,000 shares of common stock at an exercise
price of $0.50 per share for every $100,000 of debentures that are redeemed. As
is further disclosed in the Company's financial statements the Company redeemed
this convertible debenture and accrued interest in February 2003.
On January 31, 2002, the Company entered into an interim financing
agreement for 600,000 British pounds, (U.S.$856,334) on an unsecured basis with
the European based venture capital and merchant banking firm DcD Holdings
Limited. The loan bears an interest rate equal to the HSBC Bank base rate, minus
5% if that figure is positive, and interest is payable monthly. The loan was due
on April 30, 2002. On May 1, 2002, the Company converted the loan, plus accrued
interest into 4,000,000 shares of our common stock.
CONSOLIDATED STATEMENT OF CASH FLOWS
Cash on the balance sheet of IVP Technology Corporation decreased from
$277,085 in December 2002 to $24,882 on March 31, 2003. While there was a net
loss from operations of $1,329,336 in the three months ended March 31, 2003,
there were net non-cash expense adjustments of $280,604. In the period ended
March 31, 2002 the non-cash adjustments were $745,313 consisting of amortization
of a portion of the Classifier license agreement and stock issued for services.
NET CASH USED IN OPERATING ACTIVITIES
Net cash used in operating activities was $1,218,786 for the three months
ended March 31, 2003 and $834,298 for the three months ended March 31, 2002. The
use of cash in operating activities was principally the result of net losses
during both reporting periods although in 2002 cash was primarily used to
maintain a public listing and to service the Classifier and Orchestral
PowerAudit distribution agreements while in 2003 the Company was carrying on an
active business. The company did not have active operations during the quarter
ended March 31, 2002. In the three months ended March 31, 2003 cash used in
operating activities consisted of a number of changes in operating items such as
accounts receivable, inventory and other operating items as reflected in the
statement of cash flows.
NET CASH USED IN INVESTING ACTIVITIES
Net cash used in investing activities was $1,097 related to an increase in
fixed assets in the quarter ended March 31, 2003.
NET CASH PROVIDED BY FINANCING ACTIVITIES
During the three months ended March 31,2003 the Company raised cash of
$1,315,649 from investing activities and repaid a note payable, the convertible
debenture from Cornell Capital and made a reduction on certain items payable to
employees or shareholders together with lease payments of $6,752 to yield a net
826,921 in cash from financing activities. In the same period in 2002 the
Company completed one transaction which consisted of borrowing $856,334 from DCD
group which was subsequently converted to shares in May 2002.
CRITICAL ACCOUNTING POLICIES
The consolidated financial statements of IVP Technology Corporation
(formally Mountain Chef, Inc.) and consolidated subsidiaries (the "Company")
include the accounts of the parent, IVP Technology Corporation, incorporated in
the State of Nevada on February 11, 1994, and its subsidiaries: Ignition
Entertainment Ltd. ("Ignition"), a United Kingdom ("UK") company; Springboard
Technology Solutions, Inc. ("Springboard"), a Canadian company; and Erebus
Corporation, an inactive company. The Company was granted an extra-provincial
license by the Province of Ontario on June 20, 1995 to carry on business in
Ontario, Canada. Prior to 1998, the Company was involved with various
unsuccessful activities relating to the sale of technology products before
becoming inactive by the end of 1997. The Company began negotiations with a
third party in 1998 to become an exclusive distributor of software and therefore
is considered to have re-entered the development stage on January 1, 1998.
Activities from inception of development stage included raising capital and
negotiations and acquisition of software distribution licenses. On January 1,
2002, the Company began operations and emerged from the development stage.
The Company operates two divisions, enterprise and consumer. The
enterprise division develops, markets, licenses, installs and services data
solutions. The consumer division develops and publishes interactive software
games designed for mobile phones, other handheld devices, web-sites, personal
computers and video game consoles. The consumer division also distributes games,
hardware and accessories developed or manufactured by third parties.
22
REVENUE RECOGNITION
RISK AND UNCERTAINTIES
A significant portion of all of the Company's net sales are derived from
software publishing and distribution activities, which are subject to increasing
competition, rapid technological change and evolving consumer preferences, often
resulting in the frequent introduction of new products and short product
lifecycles. Accordingly, the Company's profitability and growth prospects depend
upon its ability to continually acquire, develop and market new, commercially
successful software products and obtain adequate financing. If the Company is
unable to continue to acquire, develop and market commercially successful
software products, its operating results and financial condition could be
materially adversely affected in the near future.
REVENUE RECOGNITION
Publishing revenue is derived from the sale of internally developed
interactive software titles or from the sale of titles licensed from third-party
developers. Publishing revenue amounted to $1,087,906 for the quarter ended
March 31, 2003. The Company had no publishing revenues during the corresponding
quarter of 2002, because it had not yet acquired Ignition Entertainment Limited,
a publishing revenue generating subsidiary.
Distribution revenue is derived from the sale of third-party interactive
software titles, accessories and hardware. Distribution revenue amounted to
$103,051 for the quarter ended March 31, 2003. The Company had no distribution
revenues during the quarter ended March 31, 2002 as it was still in the
development stage.
Revenues from Services and Commercial Software sold under licenses were
$45,658 in the quarter ended March 31, 2003. The Company had no Services or
Commercial Software sales in the corresponding quarter of 2002, because it had
not yet acquired Springboard Technology Solutions, a Serves and Commercial
Software producing subsidiary.
The Company recognizes revenue in accordance with Statement of Position
("SOP") 97-2 "Software Revenue Recognition", as amended by SOP 98-9
"Modification of SOP 97-2 Software Revenue Recognition with respect to Certain
Transactions." SOP 97-2 provides guidance on applying generally accepted
accounting principles in recognizing revenue on software transactions. SOP 98-9
deals with the determination of vendor specific objective evidence of fair value
in multiple element arrangements, such as maintenance agreements sold in
conjunction with software packages. The Company's consumer software transactions
generally include only one element, the interactive software game or commercial
software under license. The Company recognizes revenue when the price is fixed
and determinable; there is persuasive evidence of an arrangement, the
fulfillment of its obligations under any such arrangement and determination that
collection is probable. Accordingly, revenue is recognized when title and all
risks of loss are transferred to the customer, which is generally upon receipt
by customer. The Company's payment arrangements with its customers provide
primarily 60 day terms and to a limited extent with certain customers 30 or 90
day terms. The Company does not have any multi-element arrangements that would
require it to establish VSOE for each element, nor does the Company have any
sales activity that requires the contract method of accounting.
The Company's distribution arrangements with customers generally do not
give customers the right to return products; however, the Company at its
discretion may accept product returns for stock balancing or defective products.
In addition, the Company sometimes negotiates accommodations to customers,
including price discounts, credits and product returns, when demand for specific
products falls below expectations. The Company's publishing arrangements
generally do not require the Company to accept product returns and provide price
protection. The Company establishes a reserve for future returns and other
allowances based primarily on its return policies, price protection policies and
historical return rates. The Company may not have a reliable basis to estimate
returns and price protection for certain customers or it may be unable to
determine that collection of the receivable is probable. In such circumstances,
the Company defers the revenues at the time of the sale and recognizes them when
collection of the related receivable becomes probable or cash is received.
Revenue from product sales is recognized when title passes to the
customer, provided that: there are no uncertainties regarding customer
acceptance; persuasive evidence of an arrangement exists; the sales price is
fixed or determinable; and collectability is deemed probable. The Company
provides for estimated product returns at the time of the product shipment, if
necessary. In December 1999, the Securities and Exchange Commission (SEC) issued
Staff Accounting Bulletin (SAB) No. 101, Revenue Recognition in Financial
Statements, which establishes guidance in applying generally accepted accounting
principles to revenue recognition in financial statements and is effective
beginning with the fourth quarter of the year ended December 31, 2000. The
Company has determined that its existing revenue recognition practices comply
with the requirements of SAB 101 for all periods presented.
23
RECENT ACCOUNTING PRONOUNCEMENTS
In November 2002, the EITF reached a consensus on Issue 00-21, addressing
how to account for arrangements that involve the delivery or performance of
multiple products, services, and /or rights to use assets. Revenue arrangements
with multiple deliverables are divided into separate units of accounting if the
deliverables in the arrangement meet the following criteria: (1) the delivered
item has value to the customer on a stand-alone basis; (2) there is objective
and reliable evidence of the fair value of undelivered items; and (3) delivery
of any undelivered items is probable. Arrangement consideration should be
allocated among the separate units of accounting based on their relative fair
values, with the amount allocated to the delivered item being limited to the
amount that is not contingent on the delivery of additional items or meeting
other specified performance conditions. The final consensus will be applicable
to agreements entered into in fiscal periods beginning after June 15, 2003 with
early adoption permitted. The provisions of this consensus are not expected to
have a significant effect on the Company's financial position or operating
results.
In December 2002, the Financial Accounting Standards Board issued
Statement No. 148, "Accounting for Stock-Based Compensation-Transition and
Disclosure - an amendment of FASB Statement No. 123," ("SFAS 148"). SFAS 148
amends FASB Statement No. 123, "Accounting for Stock Based Compensation" ("SFAS
123") and provides alternative methods for accounting for a change by
registrants to the fair value method of accounting for stock-based compensation.
Additionally, SFAS 148 amends the disclosure requirements of SFAS 123 to require
disclosure in the significant accounting policy footnote of both annual and
interim financial statements of the method of accounting for stock
based-compensation and the related pro forma disclosures when the intrinsic
value method continues to be used. The statement is effective for fiscal years
beginning after December 15, 2002, and disclosures are effective for the first
fiscal quarter beginning after December 15, 2002. The adoption of this
pronouncement will not have a material effect on the Company's financial
position or results of operations.
24
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES
RECENT SALES OF UNREGISTERED SECURITIES
During February 2003, upon the Company's SB-2 Registration becoming
effective, the Company received $970,000 proceeds from the issuance of a $1
million promissory note to an investment banking company (the "Investment
Banker"), net of a 3% cash fee of $30,000, which yields an effective interest
rate of approximately 12% per annum. The promissory note is non-interest bearing
and is to be paid in full within 95 calendar days. The Company has the
discretion to repay the note either with the cash received from the issuance of
stock under the Equity Line of Credit Agreement or with cash received from
operations or other financing sources. If this note is not fully paid when due,
the outstanding principal balance owed will be payable in full together with
interest at the rate of 24% per annum or the highest rate permitted by law, if
lower. See Note 6 below for partial repayment of this note.
On February 18, 2003, the Company issued 168,889 shares of common stock to
the Investment Banker for payment of penalties for not completing the SB-2
filing by the due date of July 2, 2002 per the terms of the registration rights
agreement executed in connection with the convertible debentures Agreement.
These shares were valued at $0.13 per share or an aggregate of $21,956,
representing the closing market value on the date of issue.
On February 18, 2003, the Company issued 114,408 shares of common stock to
a consultant for payment of $15,000 of consulting services accrued at December
31, 2002 as common stock. These shares were valued at $0.13 per share
representing the closing market value on the date of grant.
On September 30, 2002, the former shareholders of ITM earned 20,000,000
contingent shares having a value of $3,800,000. These shares are to be released
out of escrow.
On July 1, 2002, IVP Technology acquired all the outstanding shares of
Springboard Technology Solutions, Inc. for consideration of 2,000 common shares
on the basis of a one for one exchange. The shares were valued at $260
corresponding to the date that the Company's Board of Directors approved the
transaction.
On June 28, 2002, IVP Technology issued 2,410,916 shares of common stock
to Rainbow Investments pursuant to the terms of our March 17, 2000 debt
conversion agreement.
On June 28, 2002, IVP Technology issued 23,370 shares of common stock to
Danson Partners, LLC having a value of $5,000 for consulting services rendered.
On May 28, 2002, IVP Technology acquired Ignition Entertainment Limited.
IVP Technology is obligated to issue 15,000,000 shares of common stock and
3,500,000 shares of preferred stock as payment to Ignition Entertainment Limited
over a period of two years from the date of the acquisition. Additionally, the
management team of Ignition Entertainment Limited may earn up to 1,500,000
shares of preferred stock if certain revenue and net income goals are met at
specific time periods. These shares will be held in escrow and disbursed by the
escrow agent according to the escrow agreement.
25
In May 2002, IVP Technology entered into an agreement with Vanessa Land
for marketing and advisory services connected with product marketing in the
European Economic Community and North America. In relation with this agreement,
IVP Technology issued 5,000,000 shares of common stock to Ms. Land. These shares
were registered on a Form S-8 filed on May 3, 2002. These shares were valued at
$.05 per share, or an aggregate of $250,000, on the date of issuance.
On May 1, 2002, IVP Technology agreed to issue 4,000,000 shares of common
stock having a value of $760,000 in full settlement of its obligation to DcD
Holdings Limited. IVP Technology issued these shares on or about August 6, 2002.
In April 2002, IVP Technology raised $150,000 of gross proceeds from the
issuance of convertible debentures. These debentures accrued interest at a rate
of 5% per year and were to mature two years from the issuance date. The
convertible debentures and all accrued interest were paid in February, 2003.
On April 26, 2002, IVP Technology issued 62,027 shares of common stock to
Danson Partners, LLC having a value of $5,000 for consulting services rendered.
On or about March 25, 2002, IVP Technology issued 100,000 shares of common
stock to Barry Gross that was earned pursuant to a consulting contract signed in
2000. These shares were valued at $0.09 per share, or an aggregate of $9,000, on
the date of issuance.
On or about March 25, 2002, IVP Technology issued 14,000,000 shares of
common stock to Brian MacDonald to be held in escrow pending achievement of the
performance clauses related to the September 17, 2001 agreement with
International Technology Marketing.
On or about March 25, 2002, IVP Technology issued 14,000,000 shares of
common stock to Peter Hamilton to be held in escrow pending achievement of the
performance clauses related to the September 17, 2001 agreement with
International Technology Marketing.
26
On or about March 25, 2002, IVP Technology issued 14,000,000 shares of
common stock to Kevin Birch to be held in escrow pending achievement of the
performance clauses related to the September 17, 2001 agreement with
International Technology Marketing.
On or about March 25, 2002, IVP Technology issued 4,000,000 shares of
common stock to Geno Villella to be held in escrow pending achievement of the
performance clauses related to the September 17, 2001 agreement with
International Technology Marketing.
On or about March 25, 2002, IVP Technology issued 4,000,000 shares of
common stock to Sherry Bullock to be held in escrow pending achievement of the
performance clauses related to the September 17, 2001 agreement with
International Technology Marketing. Subsequently, Ms. Bullock left employment
with IVP Technology and has accepted a partial payment of 800,000 shares and the
remainder of her performance based shares will be reallocated to the remaining
members of International Technology Marketing.
On or about March 25, 2002, IVP Technology issued 500,000 shares of common
stock to John Maxwell in lieu of compensation for services performed in 2001 as
President of IVP Technology. These shares were valued at $0.05 per share, or an
aggregate of $25,000, on the date of issuance.
On or about March 25, 2002, IVP Technology issued 500,000 shares of common
stock to John Trainor in lieu of compensation for services performed in 2001 as
Secretary of IVP Technology. These shares were valued at $0.05 per share, or an
aggregate of $25,000, on the date of issuance.
On or about March 25, 2002, IVP Technology issued 2,375,600 shares of
common stock valued at $.05 per share to Thomas Chown for the conversion of
$118,780 of debts owed by the corporation for services performed in 2001.
On or about March 25, 2002, IVP Technology issued 1,000,000 shares of
common stock to Buford Industries as conversion of a fee of $50,000 earned for
introducing IVP Technology to International Technology Marketing. These shares
were valued at $0.05 per share, or an aggregate of $50,000, on the date of
issuance.
On or about March 25, 2002, IVP Technology issued 50,000 shares of common
stock to Ruffa and Ruffa, P.A. for payment of interest on outstanding legal
bills for the year 2001 - 2002. These shares were valued at $0.10 per share, or
an aggregate of $5,000, on the date of issuance.
On or about March 25, 2002, IVP Technology issued 1,000,000 shares of
common stock to J. Stephen Smith to be held in escrow for services as a board
member for the period from 2001 to 2003 to be accrued at the rate of 500,000 per
year.
On or about March 25, 2002, IVP Technology issued 1,000,000 shares of
common stock to Michael Sidrow to be held in escrow for services as a board
member for the period from 2001 to 2003 to be accrued at the rate of 500,000 per
year. In June 2002, these shares were rescinded as a result of Mr. Sidrow's
resignation from the board of directors.
On or about March 25, 2002, IVP Technology issued 1,000,000 shares of
common stock to Robert King to be held in escrow for services as a board member
for the period from 2001 to 2003 to be accrued at the rate of 500,000 per year.
In June 2002, these shares were rescinded as a result of Mr. King's resignation
from the board of directors.
With respect to the sale of unregistered securities referenced above, all
transactions were exempt from registration pursuant to Section 4(2) of the
Securities Act of 1933 (the "1933 Act"), and Regulation D promulgated under the
1933 Act. In each instance, the purchaser had access to sufficient information
regarding IVP Technology so as to make an informed investment decision. More
specifically, IVP Technology had a reasonable basis to believe that each
purchaser was an "accredited investor" as defined in Regulation D of the 1933
Act and otherwise had the requisite sophistication to make an investment in IVP
Technology's securities.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
27
OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Exhibit No. Description Location
- ----------- ----------- --------
2.1 Agreement and Plan of Incorporated by reference to
Reorganization dated March 21, Exhibit 4.1 to IVP Technology's
2000 between IVP Technology Form 8-K12G3 filed on April 19,
Corporation and Erebus Corporation 2000
3.1 Certificate of Amendment of Incorporated by reference to
Articles of Incorporation Exhibit 3.1 to IVP Technology's
Form 10-KSB filed on April 15, 2002
3.2 Bylaws Incorporated by reference to
Exhibit 3.2 to IVP Technology's
Amendment No. 2 to the Form SB-2
filed on November 14, 2002
4.4 Description of Securities Incorporated by reference to
Exhibit 4.4 to IVP Technology's
Form S-8 filed on July 23, 2001
10.4 Second Amending Agreement to Incorporated by reference to
Software Distribution Agreement Exhibit 10.4 to IVP Technology's
dated as of May 31, 2000 between Form 10-QSB filed on September 24,
the Registrant and Orchestral 2000
Corporation
10.5 Service Bureau Arrangement Incorporated by reference to
Agreement dated September 28, 2000 Exhibit 10.5 to IVP Technology's
between the Registrant and Form 10-QSB filed on November 14,
E-RESPONSES.COM 2000
10.6 Stock Purchase Agreement dated Incorporated by reference to
September 17, 2001 among the Exhibit 10.6 to IVP Technology's
Registrant, International Form 10-KSB filed on April 15, 2002
Technology Marketing, Inc., Brian
MacDonald, Peter Hamilton, Kevin
Birch, Sherry Bullock, and Geno
Villella
10.7 Agreement dated May 15, 2000 Incorporated by reference to
between the Registrant and Rainbow Exhibit 10.7 to IVP Technology's
Investments International Limited Form 10-KSB filed on April 15, 2002
10.8 Employment Agreement dated August Incorporated by reference to
30, 2001 between International Exhibit 10.8 to IVP Technology's
Technology Marketing, Inc. and Form 10-KSB filed on April 15, 2002
Brian J. MacDonald
10.9 Agreement dated February 12, 2002 Incorporated by reference to
between the Registrant and Exhibit 10.9 to IVP Technology's
SmartFOCUS Limited Form 10-KSB filed on April 15, 2002
10.10 Warrant Agreement dated May 15, Incorporated by reference to
2000 between the Registrant and Exhibit 10.10 to IVP Technology's
Rainbow Investments International Form 10-KSB filed on April 15, 2002
Limited
28
Exhibit No. Description Location
- ----------- ----------- --------
10.11 Convertible Promissory Note dated Incorporated by reference to
May 2000 between the Registrant Exhibit 10.11 to IVP Technology's
and Rainbow Investments Form 10-KSB filed on April 15, 2002
International Limited
10.12 Software Distribution Agreement Incorporated by reference to
dated December 28, 2001 between Exhibit 10.12 to IVP Technology's
the Registrant and TIG Acquisition Form 10-KSB filed on April 15, 2002
Corporation
10.13 Loan Agreement dated January 16, Incorporated by reference to
2002 between the Registrant and Exhibit 10.13 to IVP Technology's
DCD Holdings Limited Form 10-KSB filed on April 15, 2002
10.14 Agreement for the Provision of Incorporated by reference to
Marketing Services dated May 3, Exhibit 10.1 to IVP Technology's
2002 between the Registrant and Form S-8 filed with the SEC on May
Vanessa Land 3, 2002
10.15 Reserved
10.16 Employment Agreement dated August Incorporated by reference to
30, 2001 between International Exhibit 10.16 to IVP Technology's
Technology Marketing, Inc. and Form 10-KSB filed on April 15, 2002
Geno Villella
10.17 Employment Agreement dated August Incorporated by reference to
30, 2001 between International Exhibit 10.17 to IVP Technology's
Technology Marketing, Inc. and Form 10-KSB filed on April 15, 2002
Kevin Birch
10.18 Employment Agreement dated August Incorporated by reference to
30, 2001 between International Exhibit 10.18 to IVP Technology's
Technology Marketing, Inc. and Form 10-KSB filed on April 15, 2002
Peter J. Hamilton
10.19 Employment Agreement dated August Incorporated by reference to
30, 2001 between International Exhibit 10.19 to IVP Technology's
Technology Marketing, Inc. and Form 10-KSB filed on April 15, 2002
Sherry Bullock
10.20 Loan and Security Agreement dated Incorporated by reference to
July 30, 2001 among the Exhibit 10.20 to IVP Technology's
Registrant, Clarino Investments Form 10-KSB filed on April 15, 2002
International Ltd., and Berra
Holdings Ltd.
10.21 Consulting and Advisory Extension Incorporated by reference to the
Agreement dated February 14, 2001 Exhibit to IVP Technology's Form
between the Registrant and Barry 10-QSB filed on May 21, 2001
Gross D/B/A Gross Capital
Associates
10.22 Letter Agreement dated June 28, Incorporated by reference to
2001, between the Registrant and Exhibit 4.1 to IVP Technology's
Andris Gravitis Form S-8 filed on July 23, 2001
10.23 Letter Agreement dated June 28, Incorporated by reference to
2001, between the Registrant and Exhibit 4.2 to IVP Technology's
Thomas Chown. Form S-8 filed on July 23, 2001
10.24 Letter Agreement dated May 30, Incorporated by reference to
2001, between the Registrant and Exhibit 4.3 to IVP Technology's
Ruffa & Ruffa, P.C. for Form S-8 filed on July 23, 2001
Modification of Retainer Agreement
10.25 Consulting Agreement dated Incorporated by reference to
September 1, 2000 between the Exhibit 13.1 to IVP Technology's
Registrant and Barry Gross d/b/a Form 10-KSB filed on July 5, 2001
Gross Capital Associates
29
Exhibit No. Description Location
- ----------- ----------- --------
10.26 Consulting and Advisory Agreement Incorporated by reference to
dated September 25, 2000 between Exhibit 13.2 to IVP Technology's
the Registrant and Koplan Form 10-KSB filed on July 5, 2001
Consulting Corporation
10.27 Warrant Agreement dated April 3, Incorporated by reference to
2002 between the Registrant and Exhibit 10.27 to IVP Technology's
Cornell Capital Partners LP Form 10-KSB filed on April 15, 2002
10.28 Equity Line of Credit Agreement Incorporated by reference to
dated April 3, 2002 between the Exhibit 10.28 to IVP Technology's
Registrant and Cornell Capital Form 10-KSB filed on April 15, 2002
Partners LP
10.29 Registration Rights Agreement Incorporated by reference to
dated April 3, 2002 between the Exhibit 10.29 to IVP Technology's
Registrant and Cornell Capital Form 10-KSB filed on April 15, 2002
Partners, LP
10.30 Escrow Agreement dated April 3, Incorporated by reference to
2002 among the Registrant, Cornell Exhibit 10.30 to IVP Technology's
Capital Partners, LP, Butler Form 10-KSB filed on April 15, 2002
Gonzalez, and First Union
National Bank
10.31 Securities Purchase Agreement Incorporated by reference to
dated April 3, 2002 among the Exhibit 10.31 to IVP Technology's
Registrant and the Buyers Form 10-KSB filed on April 15, 2002
10.32 Escrow Agreement dated April 3, Incorporated by reference to
2002 among the Registrant, the Exhibit 10.32 to IVP Technology's
Buyers, and First Union National Form 10-KSB filed on April 15, 2002
Bank
10.33 Debenture Agreement Dated April 3, Incorporated by reference to
2002 between the Registrant and Exhibit 10.33 to IVP Technology's
Cornell Capital Partners LP Form 10-KSB filed on April 15, 2002
10.34 Investor Registration Rights Incorporated by reference to
Agreement dated April 3, 2002 Exhibit 10.34 to IVP Technology's
between the Registrant and the Form 10-KSB filed on April 15, 2002
Investors
10.35 Placement Agent Agreement dated Incorporated by reference to
April 3, 2002 among the Exhibit 10.35 to IVP Technology's
Registrant, Westrock Advisors, Form 10-KSB filed on April 15, 2002
Inc. and Cornell Capital Partners
LP
10.36 Letter Agreement dated February Incorporated by reference to
20, 2002 between the Registrant Exhibit 10.36 to IVP Technology's
and Buford Industries Inc. Form 10-KSB filed on April 15, 2002
10.37 Letter Confirmation Agreement Incorporated by reference to
dated July 21, 2001 between the Exhibit 10.37 to IVP Technology's
Registrant and Buford Industries Form 10-KSB filed on April 15, 2002
Inc.
10.38 Consulting Agreement dated March Incorporated by reference to
1, 2002 between the Registrant and Exhibit 10.38 to IVP Technology's
Danson Partners LLC Form 10-KSB filed on April 15, 2002
10.39 Term Sheet between the Registrant Incorporated by reference to
and Cornell Capital Partners, LP Exhibit 10.39 to IVP Technology's
Increasing the Commitment under Form SB-2 filed on May 15, 2002
the Equity Line of Credit to $10
million
30
Exhibit No. Description Location
- ----------- ----------- --------
10.40 Consulting Agreement dated Incorporated by reference to
February 12, 2002 between the Exhibit 10.40 to IVP Technology's
Registrant and Danson Partners LLC Form SB-2 filed on May 15, 2002
10.41 Escrow Agreement dated as of May Incorporated by reference to
15, 2002 among the Registrant, Exhibit 10.41 to IVP Technology's
Brian MacDonald, Peter Hamilton, Form SB-2 filed on May 15, 2002
Kevin Birch, Sherry Bullock, and
Gino Villella
10.42 Termination letter dated June 13, Incorporated by reference to
2002 between the Registrant and Exhibit 10.42 to IVP Technology's
Orchestral Corporation Form 10-QSB filed on August 19,
2002
10.43 Acquisition Agreement dated as of Incorporated by reference to
May 28, 2002 regarding the Exhibit 10.43 to IVP Technology's
purchase of Ignition Entertainment Form 10-QSB filed on August 19,
2002
10.44 Consulting Agreement dated as of Incorporated by reference to
June 1, 2002 Ignition Exhibit 10.44 to IVP Technology's
Entertainment Limited and Form 10-QSB filed on August 19,
Montpelier Limited 2002
10.45 Amendment to Equity Line of Credit Incorporated by reference to
Agreement dated May 2002 between Exhibit 10.45 to IVP Technology's
IVP Technology and Cornell Capital Amendment No. 2 to the Form SB-2
Partners. filed on November 14, 2002
10.46 Letter of Credit Facility dated as Incorporated by reference to
of April 10, 2002 between Revelate Exhibit 10.46 to IVP Technology's
Limited and Ignition Entertainment Amendment No. 2 to the Form SB-2
Limited filed on November 14, 2002
10.47 Debenture dated as of June 14, Incorporated by reference to
2002 between Revelate Limited and Exhibit 10.47 to IVP Technology's
Ignition Entertainment Limited Amendment No. 2 to the Form SB-2
filed on November 14, 2002
10.48 Standard Conditions for Purchase Incorporated by reference to
of Debts dated May 23, 2002 Exhibit 10.48 to IVP Technology's
between DCD Factors PLC and Amendment No. 2 to the Form SB-2
Ignition Entertainment Limited filed on November 14, 2002
10.49 All Assets Debenture dated as of Incorporated by reference to
May 23, 2002 between DCD Factors Exhibit 10.49 to IVP Technology's
PLC and Ignition Entertainment Amendment No. 2 to the Form SB-2
Limited filed on November 14, 2002
10.50 Memorandum of Agreement dated as Incorporated by reference to
of July 1, 2002 between Exhibit 10.50 to IVP Technology's
Springboard Technology Solutions Amendment No. 2 to the Form SB-2
Inc. and IVP Technology filed on November 14, 2002
10.51 Heads of Agreement dated as of Incorporated by reference to
December 28, 2001 and amended on Exhibit 10.51 to IVP Technology's
September 30, 2002 between TiG Amendment No. 2 to the Form SB-2
Acquisition Corporation and IVP filed on November 14, 2002
Technology
10.52 MDI Solutions Services Agreement Incorporated by reference to
(Interface Development Retainer Exhibit 10.1 to IVP Technology's
Services) between Medical Data Form 8-K filed with the SEC on
Integration Solutions group and April 1, 2003
Mount Sinai Hospital entered into
March 11, 2003 (Contract No.
MDI02008)
31
Exhibit No. Description Location
- ----------- ----------- --------
10.53 MDI Solutions Services Agreement Incorporated by reference to
(Interface Development Retainer Exhibit 10.2 to IVP Technology's
Services) between Medical Data Form 8-K filed with the SEC on
Integration Solutions group and April 1, 2003
Mount Sinai Hospital entered into
March 11, 2003 (Contract No.
MDI02009)
10.54 MDI Solutions Services Agreement Incorporated by reference to
(Interface Development Retainer Exhibit 10.3 to IVP Technology's
Services) between Medical Data Form 8-K filed with the SEC on
Integration Solutions group and April 1, 2003
Rouge Valley Health System entered
into September 12, 2002 (Contract
No. MDI02003)
10.55 MDI Solutions Services Agreement Incorporated by reference to
(Interface Development Retainer Exhibit 10.4 to IVP Technology's
Services) between Medical Data Form 8-K filed with the SEC on
Integration Solutions group and April 1, 2003
Rouge Valley Health System entered
into September 12, 2002 (Contract
No. MDI02004)
10.56 MDI Solutions Services Agreement Incorporated by reference to
(Interface Development Retainer Exhibit 10.5 to IVP Technology's
Services) between Medical Data Form 8-K filed with the SEC on
Integration Solutions group and April 1, 2003
York Central Hospital entered into
September 13, 2002 (Contract No.
MDI02006)
10.57 MDI Solutions Services Agreement Incorporated by reference to
(Interface Development Retainer Exhibit 10.6 to IVP Technology's
Services) between Medical Data Form 8-K filed with the SEC on
Integration Solutions group and April 1, 2003
York Central Hospital entered into
September 13, 2002 (Contract No.
MDI02007)
10.58 MDI Solutions Services Agreement Incorporated by reference to
(Interface Development Retainer Exhibit 10.7 to IVP Technology's
Services) between Medical Data Form 8-K filed with the SEC on
Integration Solutions group and April 1, 2003
St. Joseph's Medical Centre
entered into March 18, 2003
(Contract No. MDI03001)
10.59 MDI Solutions Services Agreement Incorporated by reference to
(Interface Development Retainer Exhibit 10.8 to IVP Technology's
Services) between Medical Data Form 8-K filed with the SEC on
Integration Solutions group and April 1, 2003
St. Joseph's Medical Centre
entered into March 18, 2003
(Contract No. MDI03002-Expires
March 31, 2004)
10.60 MDI Solutions Services Agreement Incorporated by reference to
(Interface Development Retainer Exhibit 10.9 to IVP Technology's
Services) between Medical Data Form 8-K filed with the SEC on
Integration Solutions group and April 1, 2003
St. Joseph's Medical Centre
entered into March 18, 2003
(Contract No. MDI03002-Expires
June 11, 2004)
32
(b) Reports on Form 8-K.
None
33
SIGNATURES
Pursuant to the requirements of Section 13(a) or 15(d) 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.
Registrant:
IVP TECHNOLOGY CORPORATION
/s/ Brian MacDonald May 23, 2003
- ----------------------------------------
By: Brian MacDonald
President, Chief Executive Officer
and Acting Chief Financial Officer
34
OFFICER'S CERTIFICATE
PURSUANT TO SECTION 302
CERTIFICATION
I, Brian MacDonald, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of IVP Technology
Corporation;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report is
being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing date
of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for
the registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 23, 2003 By: /s/ Brian MacDonald
------------------------------
Brian MacDonald
President, Chief Executive Officer and
Acting Chief Financial Officer
35
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of IVP Technology Corporation (the
"Company") on Form 10-QSB for the period ended March 31, 2003 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), the
undersigned, in the capacities and on the dates indicated below, hereby
certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that to his knowledge:
1. The Report fully complies with the requirements of Section 13(a)
or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operation of the
Company.
Date: May 23, 2003 By: /s/ Brian MacDonald
------------------------------
Brian MacDonald
President, Chief Executive Officer and
Acting Chief Financial Officer
36