EXHIBIT 99.2
Banro Corporation
Consolidated Financial Statements
For the years ended December 31, 2002 and 2001
(Expressed in U.S. dollars)
Banro Corporation
Consolidated Financial Statements
For the years ended
December 31, 2002 and 2001
(Expressed in U.S. dollars)
Contents
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Auditors' Report 2
Consolidated Financial Statements
Balance Sheets 3
Statements of Operations and Deficit 4
Statements of Cash Flows 5
Summary of Significant Accounting Policies 6-8
Notes to Financial Statements 9-18
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Auditors' Report
- --------------------------------------------------------------------------------
To the Shareholders of
Banro Corporation
We have audited the consolidated balance sheet of Banro Corporation as at
December 31, 2002 and the consolidated statements of operations and retained
earnings and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform an audit to obtain reasonable
assurance whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at December 31, 2002
and the results of its operations and cash flows for the year then ended in
accordance with generally accepted accounting principles.
The financial statements for the year ended December 31, 2001 were audited by
other auditors who expressed an opinion without reservation on these statements
in their report dated March 8, 2002.
(Signed )BDO Dunwoody LLP
Chartered Accountants
Toronto, Ontario
February 20, 2003 (Except for Note 10, which is as at May 8, 2003)
2
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Banro Corporation
Consolidated Balance Sheets
(Expressed in U.S. dollars)
December 31 2002 2001
- --------------------------------------------------------------------------------
Assets
Current
Cash $ 1,228,005 $ 14,537
Accounts receivable and other assets 40,571 3,734
Amounts due from related parties (Note 7) 317,108 189,856
---------------------------
1,585,684 208,127
Accounts receivable - 313,099
Note receivable (Note 2) 208,000 200,000
Investment (Note 3) 930,673 437,638
Property, plant and equipment (Note 4) 111,619 171,850
$ 2,835,976 $ 1,330,714
---------------------------
$ 2,835,976 $ 1,330,714
================================================================================
Liabilities and Shareholders' Equity
Current
Accounts payable $ 80,902 $ 381,730
Amount due to related party (Note 7) 4,912 -
---------------------------
85,814 381,730
---------------------------
Shareholders' equity
Share capital (Note 6) 39,173,793 35,996,713
Stock options 29,816 -
Deficit (36,453,447) (35,047,729)
---------------------------
2,750,162 948,984
---------------------------
$ 2,835,976 $ 1,330,714
================================================================================
On behalf of the Board:
(Signed) Arnold T. Kondrat Director
- --------------------------
(Signed) Richard J. Lachcik Director
- ---------------------------
The accompanying summary of significant accounting policies and notes are an
integral part of these financial statements.
3
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Banro Corporation
Consolidated Statements of Operations and Deficit
(Expressed in U.S. dollars)
For the years ended December 31 2002 2001
- --------------------------------------------------------------------------------
Expenses
Professional fees $ 234,588 $ 354,201
Consulting fees 356,458 141,874
Office and sundry 127,515 116,782
Salaries 185,175 67,319
Travel and promotion 262,340 55,491
Shareholder relations 83,115 42,822
Management fees 10,286 12,028
Interest and bank charges 2,532 1,811
Accounting and secretarial fees 818 1,244
Amortization 49,857 64,741
Foreign exchange loss 55,028 3,935
---------------------------
(1,367,712) (862,248)
Interest and miscellaneous income earned 29,461 4,876
---------------------------
Loss from operations (1,338,251) (857,372)
Equity share of loss of BRC Development Corporation (56,821) (63,266)
Loss on disposition of assets (10,646) -
---------------------------
Loss for the year (1,405,718) (920,638)
Deficit, beginning of year (35,047,729) (34,127,091)
---------------------------
Deficit, end of year $(36,453,447) $(35,047,729)
================================================================================
Loss per share (Note 6(e)) $ (0.15) $ (0.15)
================================================================================
The accompanying summary of significant accounting policies and notes are an
integral part of these financial statements.
4
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Banro Corporation
Consolidated Statements of Cash Flows
(Expressed in U.S. dollars)
For the years ended December 31 2002 2001
- --------------------------------------------------------------------------------
Cash was provided by (used in)
Operating Activities
Loss for the year $ (1,405,718) $ (920,638)
Adjustments to reconcile loss to net cash
provided by operating activities
Equity loss 56,821 63,266
Value of options issued (Note 6(d)) 33,705 -
Loss on disposition of assets 10,646 -
Amortization 49,857 64,741
Interest capitalized (8,000) -
Changes in non-cash working capital balances
Accounts receivable 276,262 (142,003)
Accounts payable (300,828) 291,016
---------------------------
(1,287,255) (643,618)
Investing activities
Acquisition of property, plant and equipment (22,232) (10,348)
Disposition of property, plant and equipment 21,960 -
Investment in BRC Development (549,856) -
---------------------------
(550,128) (10,348)
Financing activities
Due to/from related parties (122,340) (242,186)
Common shares and warrants issued for cash 3,173,191 718,701
---------------------------
3,050,851 476,515
---------------------------
Net increase (decrease) in cash during the year 1,213,468 (177,451)
Cash, beginning of year 14,537 191,988
---------------------------
Cash, end of year $ 1,228,005 $ 14,537
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The accompanying summary of significant accounting policies and notes are an
integral part of these financial statements.
5
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Banro Corporation
Summary of Significant Accounting Policies
(Expressed in U.S. dollars)
December 31, 2002
- --------------------------------------------------------------------------------
Nature of Business Banro Corporation's (the "Company") business focus is in the
exploration and development of mineral properties in the
Democratic Republic of the Congo (the "Congo").
Principles of The consolidated financial statements include the accounts
Consolidation of the Company, its wholly-owned subsidiary in the United
States, Banro American Resources Inc., and its 93% owned
subsidiary, Societe Aurifere du Kivu et du Maniema S.A.R.L.
(Sakima), in the Congo. The Congolese government holds the
remaining 7% ownership interest of Sakima.
Investments Investments in companies subject to significant influence
are accounted for using the equity method. Other long term
investments are accounted for using the cost method.
Property, plant Property plant and equipment is recorded at cost.
and equipment Amortization is recorded as follows:
Office furniture and fixtures 20% declining balance basis
Office equipment Straight line over four
years
Leasehold improvements Straight line over five
years
Aircraft 25% declining balance basis
Foreign Currency These consolidated financial statements are expressed in
Translation United States dollars. For integrated operations, monetary
assets and liabilities are translated at the spot rates of
exchange in effect at the end of the year; non-monetary
items are translated at historical exchange rates in effect
on the dates of the transactions. Revenues and expense
items, except amortization, are translated at average rates
of exchange in effect during the year. Realized exchange
gains and losses and currency translation adjustments are
included in the consolidated statements of operations and
deficit.
For the self-sustaining operation, all assets and
liabilities are translated at spot rates of exchange and
revenue and expense items are translated at historical
exchange rates in effect on the dates of the transactions.
Currency translation adjustments are disclosed as a separate
component of shareholders' equity. There was no cumulative
translation adjustment at year end. Realized exchange gains
and losses are included in the consolidated statements of
operations.
6
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Banro Corporation
Summary of Significant Accounting Policies
(Expressed in U.S. dollars)
December 31, 2002
- --------------------------------------------------------------------------------
Deferred Exploration costs relating to mineral properties and rights
Exploration are deferred and carried as an asset until the results of
Expenditures the projects are known. As the Company currently has no
operational income, any incidental revenues earned in
connection with these properties or related exploration
activities are applied as a reduction to capitalized
exploration costs. If a property is determined to be
non-commercial, non-productive or its value is impaired,
those costs in excess of estimated recoveries are charged to
operations.
Stock Options The Company has one stock option plan which is described in
Note 6(d). The Company has elected to follow the intrinsic
method of accounting for stock options granted to directors,
officers and employees whereby no compensation expense is
recorded in the financial statements. Any consideration paid
by directors, officers and employees on exercise of stock
options or purchases of shares is credited to share capital.
However, additional disclosure of the effects of accounting
for stock-based compensation to directors, officers and
employees as compensation expense, using the fair value
method, is disclosed as pro-forma information. Compensation
expense on stock options granted to non-employees is
recorded as an expense in the period the options are vested
using the fair value method.
Financial Unless otherwise noted, it is management's opinion that the
Instruments company is not exposed to significant interest, currency or
credit risks arising from these financial instruments. The
fair values of these financial instruments approximate their
carrying values, unless otherwise noted.
7
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Banro Corporation
Summary of Significant Accounting Policies
(Expressed in U.S. dollars)
December 31, 2002
- --------------------------------------------------------------------------------
Income Taxes The asset and liability method is used to determine income
taxes. Pursuant to this method, future tax assets and
liabilities are recognized for future tax consequences
attributable to differences between financial statement
carrying values and tax bases of assets and liabilities.
Future tax assets and liabilities are measured using enacted
tax rates expected to be recovered or settled. The effect on
future tax assets and liabilities of a change in tax rate is
recognized in income in the period that includes the
enactment date. Net future income tax losses are offset by
valuation allowances to the extent that they are not more
likely not to be realized.
Use of Estimates The preparation of consolidated financial statements in
conformity with Canadian generally accepted accounting
principles requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and
liabilities at the date of the consolidated financial
statements and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ
from those estimates.
8
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Banro Corporation
Notes to Consolidated Financial Statements
(Expressed in U.S. dollars)
December 31, 2002
- --------------------------------------------------------------------------------
1. Interest in Sakima
- -- ------------------
On July 31, 1998 the Company discovered that the government of the Congo,
without prior warning or consultation, had issued Presidential decrees to,
among other things, (a) dissolve Sakima and (b) terminate the Company's
mining convention relating to the Company's mineral properties. The Company
disputes the validity of the Congolese government actions and is
vigourously pursuing resolution of the disputes through legal procedures.
On April 19, 2002 the government of the Congo formally signed a settlement
agreement with the Company. The agreement calls for, among other things,
the Company to hold 100% interest in the Twangiza, Kamituga, Lugushwa and
Namoya gold deposits under a revived 30year mining convention. The
government of the Congo retains 100% of the tin assets. Subsequent to the
signing of the settlement agreement the Company filed with the Federal
Court in Washington, DC, a notice of dismissal with respect to its legal
action against the Congolese government.
The Company operates primarily in one operating segment and its assets
located in the Congo, including its interests in gold and other mining
properties, may be subject to sovereign risks, including political and
economic instability, government regulations relating to mining, military
repression, civil disorder, currency fluctuations and inflation, all or any
of which may impede the Company's activities in this country or may result
in the impairment or loss of part or all of the Company's interest in the
properties.
The major components relating to Sakima included in the consolidated
balance sheet are as follows:
2002 2001
------------------------
Current assets $ 34,031 $ 315,838
Current liabilities - (30,970)
------------------------
Net assets $ 34,031 $ 284,868
========================
As at December 31, 2002, the minority interest's share of loss exceeded its
share of net assets by approximately $319,000 (December 31, 2001 -
$316,000).
- --------------------------------------------------------------------------------
2. Note Receivable
- -- ---------------
The note, receivable from a shareholder of the Company, is secured by a
pledge of marketable securities with a market value at December 31, 2002 of
$85,492 and bears interest at 4% per annum. The principal and interest
accrued thereon is due on November 30, 2004.
9
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Banro Corporation
Notes to Consolidated Financial Statements
(Expressed in U.S. dollars)
December 31, 2002
- --------------------------------------------------------------------------------
3. Investment
- -- ----------
The Company owns 3,500,000 common shares, representing 43.75% equity
interest, in BRC Development Corporation (BRC) with a quoted market value
of approximately $333,000 (2001 -2,000,000 common shares representing a 31%
equity interest with a quoted market value of $314,000). On November 29,
2002 the Company acquired, by way of private placement 1,500,000 common
shares of BRC at a price of Cdn. $0.20 per share.
BRC is a corporation formed under the laws of the Province of Ontario whose
principal business is the acquisition and exploration of mineral properties
in Canada.
The Company's investment in BRC is summarized as follows: 2002 2001
2002 2001
------------------------
Equity investment, beginning of year $ 367,024 $ 430,290
Acquisition of 1,500,000 common shares 192,765 -
Equity share of loss (56,821) (63,266)
------------------------
Equity investment, end of year 502,968 367,024
Amount due from BRC (see Note 10) 427,705 70,614
------------------------
$ 930,673 $ 437,638
========================
The amount due from BRC is unsecured, non-interest bearing and is due on
demand.
BRC's summarized audited balance sheet and income statement for the year
ended December 31, 2002 and 2001, converted to US$ at the year end rate of
exchange, is as follows: 2002 2001
2002 2001
-------------------------
Assets
Current assets $ 596,069 $ 91,386
Investment 791,905 784,285
Mineral properties 240,455 260,750
Property, plant and equipment 76,109 103,643
-------------------------
1,704,538 1,240,064
-------------------------
Liabilities 577,582 138,065
-------------------------
Net equity $1,126,956 $1,101,999
=========================
Income Statement
Revenue $ 10 $ 91
Expenses (150,667) (199,974)
Write-off of mineral claims (25,263) -
-------------------------
Net loss $ (175,920) $ (199,883)
=========================
10
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Banro Corporation
Notes to Consolidated Financial Statements
(Expressed in U.S. dollars)
December 31, 2002
- --------------------------------------------------------------------------------
4. Property, Plant and Equipment
- -- -----------------------------
Accumulated Net Book
2002 Cost Amortization Value
Office furniture and fixtures $ 18,254 $ 10,775 $ 7,479
Office equipment 103,019 57,039 45,980
Leasehold improvements 105,746 47,586 58,160
-------------------------------------
$ 227,019 $ 115,400 $ 111,619
=====================================
Accumulated Net Book
2001 Cost Amortization Value
Office furniture and fixtures $ 33,721 $ 25,913 $ 7,808
Office equipment 119,969 72,334 47,635
Leasehold improvements 105,746 26,437 79,309
Aircraft 120,000 82,902 37,098
-------------------------------------
$ 379,436 $ 207,586 $ 171,850
=====================================
- --------------------------------------------------------------------------------
5. Deferred Exploration Expenditures and Mineral Rights
- -- ----------------------------------------------------
Cumulative
from
Inception in
April 1994
Deferred Exploration
Exploration cost $ 16,158,080
Amortization 30,581
-------------
Net expenditure 16,188,931
Effect of exchange rate changes 2,511
-------------
Write-off 16,191,442
(16,191,442)
-------------
Balance, end of year $ -
=============
Mineral Rights
Mineral rights $ 9,681,194
Write-off (9,681,194)
-------------
Balance, end of year $ -
=============
Because of the events referred to in Note 1, the mineral rights and deferred
exploration expenditures were written off in 2000. For the years ended December
31, 2002 and 2001, the Company has not capitalized any costs related to the
Congo mineral properties.
11
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Banro Corporation
Notes to Consolidated Financial Statements
(Expressed in U.S. dollars)
December 31, 2002
- --------------------------------------------------------------------------------
6. Share Capital
- -- -------------
(a) Authorized Share Capital
Unlimited number of common shares
Unlimited number of preference shares, issuable in series
(b) Issued Share Capital - Common Shares
2002 2001
------------------------- -------------------------
Number of Number of
Shares Amount Shares Amount
Balance,
beginning of year 7,472,844 $ 35,996,713 15,671,181 $ 35,278,012
Share consolidation - - (10,448,337) -
Exercise of stock options 38,750 22,710 - -
Exercise of warrants 425,000 125,502 (33,721) -
Issued during the year 1,950,000 3,028,868 2,250,000 718,701
------------------------- -------------------------
Balance, end of year 9,886,594 $ 39,173,793 7,439,123 $ 35,996,713
========================= =========================
(i) In January 2001 the Company consolidated its shares on a one for three
basis.
(ii) In March 2001 the Company completed a private placement of 1,200,000
common shares at a price of Cdn. $0.50 per share for cash proceeds of
Cdn. $600,000 (US $390,092) of which 600,000 common shares were
purchased by a director of the Company.
(iii)On October 15, 2001, the Company completed an arm's-length private
placement of 300,000 units of the Company at a price of Cdn. $0.35 per
unit for cash proceeds of Cdn. $105,000 (US $66,964). Each unit
consists of one common share of the Company and one non-transferable
warrant. Each warrant entitles the holder thereof to purchase one
common share of the Company at a price of Cdn. $0.40 until October 15,
2003.
12
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Banro Corporation
Notes to Consolidated Financial Statements
(Expressed in U.S. dollars)
December 31, 2002
- --------------------------------------------------------------------------------
6. Share Capital - (Continued)
- -- ---------------------------
(iv) On November 20, 2001, the Company completed a non-brokered arm's
length private placement of 350,000 common shares of the Company at a
price of Cdn. $0.50 per share for cash proceeds of Cdn. $175,000 (US
$109,718).
(v) On December 13, 2001, the Company completed an arm's length private
placement of 400,000 units of the Company at a price of Cdn. $0.60 per
unit for cash proceeds of Cdn. $240,000 (US $151,927). Each unit
consists of one common share of the Company and one non-transferable
warrant. Each such warrant entitles the holder thereof to purchase one
common share of the Company at a price of Cdn. $0.70 until December
13, 2003. All 400,000 units were purchased by a director of the
Company.
(vi) On January 24, 2002, the Company issued by way of private placement
350,000 units of the Company at a price of Cdn. $0.70 per unit for
cash proceeds of Cdn. $245,000 (US $152,886). Each unit consists of
one common share of the Company and one non-transferable warrant. Each
such warrant entitles the holder thereof to purchase one common share
of the Company at a price of Cdn. $0.80 for a period of two years.
(vii)On March 25, 2002, the Company completed a non-brokered arm's length
private placement of 500,000 common shares of the Company at a price
of Cdn. $1.30 per share for cash proceeds of Cdn. $650,000 (US
$408,703).
(viii) On April 22, 2002, the Company completed a non-brokered arm's length
private placement of 100,000 units of the Company at a price of Cdn.
$1.50 per unit for cash proceeds of Cdn. $150,000 (US $94,067). Each
unit consists of one common share of the Company and one
non-transferable warrant. Each such warrant entitles the holder
thereof to purchase one common share of the Company at a price of Cdn.
$1.80 for a period of two years.
(ix) On May 21, 2002, the Company completed a non-brokered arm's length
private placement of 1,000,000 common shares of the Company at a price
of Cdn. $3.65 per share for cash proceeds of Cdn. $3,650,000 (US
$2,373,212).
13
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Banro Corporation
Notes to Consolidated Financial Statements
(Expressed in U.S. dollars)
December 31, 2002
- --------------------------------------------------------------------------------
6. Share Capital - (Continued)
- -- ---------------------------
(c) Warrants
The following is a summary of the continuity of warrants for the years
ended December 31, 2002 and 2001.
Number of
warrants
Balance, January 1, 2001 125,000
Issued during 2001 700,000
-----------
Balance, December 31, 2001 825,000
Exercised during 2002 (425,000)
Issued during 2002 (Note 6(b)(vi)(viii)) 450,000
-----------
Balance, December 31, 2002 850,000
===========
The following table summarizes information about warrants outstanding
at December 31, 2002:
Warrants Outstanding and Exercisable
------------------------------------------
Exercise
Number Price Expiry
Date of Grant Outstanding Cdn. $ Date
12/13/01 400,000 $ 0.70 12/13/03
01/24/02 350,000 0.80 01/24/04
04/22/02 100,000 1.80 04/22/04
--------------------------
850,000 $ 0.87
==========================
(d) Stock Options
In January 2001, the Company's 1995 and 1996 Stock Option Plans were
terminated and a new 2001 Stock Option Plan was established. Under the
2001 Stock Option Plan, options vest 25% immediately at grant date and
25% on each of the three consecutive six-month periods subsequent to
the issuance. As at December 31, 2002 the Company had 744,250 stock
options outstanding to acquire common shares at a weighted-average
price of Cdn. $0.82 per share, expiring at various dates between
January 2004 and January 2007.
14
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Banro Corporation
Notes to Consolidated Financial Statements
(Expressed in U.S. dollars)
December 31, 2002
- --------------------------------------------------------------------------------
6. Share Capital - (Continued)
- -- ---------------------------
(d) Stock Options - (Continued)
The following table summarizes information about stock options
outstanding and exercisable at December 31, 2001:
Options Outstanding and Exercisable
---------------------------------------------------
Number Options Options Number Options
Outstand- Granted Exercised Outstand- Exercis- Exercise
Date of ing at During Expired or ing at able at Price Expiry
Grant 1/1/02 the Year Forfeited 12/32/02 12/31/02 Cdn. $ Date
01/31/01 465,000 - 68,750 396,250 396,250 $ 0.60 01/31/04
01/31/01 40,000 - 10,000 30,000 30,000 1.00 01/31/04
10/12/01 40,000 - - 40,000 30,000 0.60 10/12/04
01/08/02 - 233,000 10,000 223,000 106,500 0.80 01/08/07
04/03/02 - 25,000 - 25,000 12,500 1.70 04/03/04
04/26/02 - 30,000 - 30,000 15,000 3.30 04/26/04
--------------------------------------------------------
545,000 288,000 88,750 744,250 590,250
========================================================
The weighted average grant-date fair value of 178,000 stock options
granted to employees, directors and officers during 2002 was $58,822.
No compensation cost was recognized in the income statement for these
stock options. Had the fair value of these options been expensed, the
loss for the year would be $1,464,540 and the loss per share would be
$0.16.
During 2002 the Company issued a total of 110,000 stock options to
consultants and other service providers, of which 10,000 were
exercised on January 26, 2002 and 45,000 were exercisable as at
December 31, 2002. The weighted average grant-date fair value of these
vested stock options was $33,705. This amount was recognized in the
income statement as an expense and was credited accordingly to
contributed surplus in the balance sheet.
The Black-Scholes option-pricing model was used to estimate values of
all stock options granted during the year based on the following
weighted average information:
(i) risk-free interest rate: 2.54%
(ii) expected volatility: 124%
(iii) expected life: 4.38 years
(iv) expected dividends: $Nil
(e) Loss per Share
Loss per share was calculated on the basis of the weighted average
number of common shares outstanding for the year ended December 31,
2002, amounting to 9,183,681 (2001 - 6,327,091) common shares.
Fully diluted earnings per share has not been presented since the
exercise of the options and warrants would be anti-dilutive.
15
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Banro Corporation
Notes to Consolidated Financial Statements
(Expressed in U.S. dollars)
December 31, 2002
- --------------------------------------------------------------------------------
7. Related Party Transactions
- -- --------------------------
Amounts due from Related Parties
The amounts primarily represent advances of $215,725 (2001 -$26,983) due
from a company whose director and shareholder is a director of the Company
and from BRC and it's investee company and advances of $101,393 (2001
-$139,281) to employees of the Company. All amounts due from related
parties are unsecured, non-interest bearing and repayable upon demand.
Amounts due to Related Parties
At December 31, 2002 an amount of $4,912 was due to a director and officer
of the Company. This amount is unsecured, non-interest bearing and payable
upon demand.
Management, Directors, General and Accounting Fees
Management fees of $10,286 (2001 - $12,000) were paid to an officer of the
Company.
The Company's share of general expenses amounting to $53,986 ( 2001
-$54,912) were paid or payable to a corporation that is wholly owned by a
director of the Company.
Accounting fees of $814 (2001 - $1,244) were paid to an officer of the
Company.
Legal fees of $98,442 (2001 -$56,679) were paid to a law firm whose two
partners are also directors of the Company.
These transactions are in the normal course of operations and are measured
at the exchange value.
16
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Banro Corporation
Notes to Consolidated Financial Statements
(Expressed in U.S. dollars)
December 31, 2002
- --------------------------------------------------------------------------------
8. Income Taxes
- -- ------------
The Company's income tax provision (recovery) for the year ended December
31, 2002 has been calculated as follows:
2002 2001
----------------------------
Net loss for the year $ (1,405,718) $ (920,638)
----------------------------
Combined federal and provincial tax rates 38.62% 41.74%
Income tax recovery at Canadian federal
and provincial statutory rates (542,888) (384,292)
Effect of income tax rates of other
jurisdictions compared to Canadian rates - (3,741)
Losses of subsidiaries not taken for tax 10,295 -
Non-deductible amounts expensed 43,487 75,165
Losses expired 123,438 -
Change in tax rate 307,381 -
Change in valuation allowance 58,287 312,868
----------------------------
Net future income tax asset recorded $ - $ -
============================
The Company's future income tax assets and liabilities at December 31, 2002
are summarized as follows:
Property plant and equipment $ 20,169 $ 14,461
Non-capital losses carried forward 2,314,795 2,262,216
----------------------------
Net future tax asset before valuation allowance 2,334,964 2,276,677
Valuation allowance (2,334,964) (2,276,677)
----------------------------
Net future tax asset $ - $ -
============================
As at December 31, 2002, the Company has available tax losses for Canadian
income tax purposes that may be carried forward to reduce taxable income
derived in future years. A summary of these losses is provided below. These
losses will expire as follows:
2003 $ 1,039,268
2004 456,133
2005 1,071,946
2006 536,939
2007 1,307,224
2008 696,048
2009 1,213,566
-----------
$ 6,321,124
===========
17
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Banro Corporation
Notes to Consolidated Financial Statements
(Expressed in U.S. dollars)
December 31, 2002
- --------------------------------------------------------------------------------
8. Income Taxes - (Continued)
- -- --------------------------
A valuation allowance has been recorded to offset the potential benefits of
these carry-forward non-capital losses and deductible temporary differences
in these consolidated financial statements as the realization thereof is
not considered more likely than not. In addition the Company had capital
losses of $23,387,988 (2001 -$23,274,168) which could be used to offset
capital gains in future tax periods.
- --------------------------------------------------------------------------------
9. Lease Commitments
- -- -----------------
The Company's future minimum lease commitments for office premises as at
December 31, 2002 for the following three years are as follows:
2003 $ 108,328
2004 108,328
2005 72,219
This cost is shared equally with two related companies.
- --------------------------------------------------------------------------------
10. Subsequent Events
- --- -----------------
On May 8, 2003 BRC Development Corporation repaid the amount due to the
Company in full.
- --------------------------------------------------------------------------------
11. Comparative Figures
- --- -------------------
Certain of the prior year's amounts have been reclassified to conform to
the current year's presentation.
18