As filed with the Securities and Exchange Commission on November 30, 2001
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F/A
(AMENDMENT NUMBER 1)
(Mark One)
[_] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended April 30, 2001
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number: 0-29142
API ELECTRONICS GROUP INC.
(formerly InvestorLinks.com Inc.)
---------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Province of Ontario, Canada
---------------------------------------------------------
(Jurisdiction of incorporation or organization)
505 University Ave., Suite 1400, Toronto, Ontario M5G 1X3
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(Address of principal executive offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
None
Securities registered or to be registered pursuant to Section 12(g) of the Act:
Common Shares, no par value
---------------------------------------------------------
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act:
None
Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period covered by the annual
report:
13,179,020 Common Shares as of April 30, 2001
---------------------------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [_] Inapplicable [_]
Indicate by check mark which financial statement item the registrant has elected
to follow:
Item 17 [X] Item 18[_]
Item 17 of the Form 20-F filed with the Securities and Exchange Commission on
October 31, 2001 is hereby deleted in its entirety and replaced with the
following:
ITEM 17. FINANCIAL STATEMENTS
As noted in Note 1 to the consolidated financial statements of the Company
included with this Part III, Item 17 of the Annual Report, no comparative
figures have been presented because IL Data Canada, Inc., the deemed acquiring
company in a reverse take-over of the Company by IL Data Canada, Inc. effective
June 6, 2000, was a newly incorporated company, having been incorporated on May
10, 2000. Because of the reverse take-over transaction described above, the
Company has only been in operation since May 10, 2000, during and after the
financial year ending April 30, 2001.
In addition, as noted in Note 10(a) to the financial statements of the Company
included with this Part III, Item 17 of the Annual Report, for purposes of
accounting principles generally accepted in the United States ("US GAAP"), since
IL Data Canada, Inc. had no operations, Investorlinks.com LLC, the company that
owned and operated the Investment Web site www.InvestorLinks.com prior to the
June 6, 2000 acquisition transactions, "would be considered the predecessor and
audited information for the previous three years would normally be disclosed
however, the operations of Investorlinks.com LLC have been closed and the
previous information would not be relevant or informative."
Because of the foregoing, financial statements for prior years is not included
in this Annual Report. Selected financial data for prior years is, however,
disclosed in the Company's 2000 Form 20-F Annual Report, available through the
U.S. Securities and Exchange Commission's EDGAR database system.
These financial statements which follow were prepared in accordance with
Canadian Generally Accepted Accounting Principles ("Cdn GAAP") and are expressed
in Canadian dollars. A reconciliation from Cdn GAAP to US GAAP is disclosed in
Note 10 to the financial statements. The financial statements include the
following:
(i) Auditors' Report
(ii) Consolidated Balance Sheet at April 30, 2001
(iii) Consolidated Statements of Operations and Deficit for the year
ended April 30, 2001
(iv) Consolidated Statements of Changes in Cash Flow for the year ended
April 30, 2001
(v) Summary of Significant Accounting Policies
(vi) Notes to Consolidated Financial Statements
Investorlinks.com Inc.
Consolidated Financial Statements
For the period ended April 30, 2001
(expressed in Canadian dollars)
Investorlinks.com Inc.
Consolidated Financial Statements
For the period ended April 30, 2001
(expressed in Canadian dollars)
Contents
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Auditors' Report 2
Consolidated Financial Statement
Balance Sheet 3
Statement of Operations and Deficit 4
Statement of Cash Flows 5
Summary of Significant Accounting Policies 6
Notes to Financial Statements 8
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Auditors' Report
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To the Shareholders of
Investorlinks.com Inc.
We have audited the consolidated balance sheet of Investorlinks.com Inc. as at
April 30, 2001 and the consolidated statement of operations and deficit and cash
flows for the period 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 Canadian generally accepted auditing
standards in Canada and the U.S. 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 financial statements present fairly, in all material
respects, the financial position of the Company as at April 30, 2001 and the
results of its operations and its cash flows for the period ended April 30, 2001
in accordance with Canadian generally accepted accounting principles in Canada.
(signed) BDO Dunwoody LLP
Chartered Accountants
Toronto, Ontario
August 3, 2001
(except Note 11, as to August 30, 2001)
2
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Investorlinks.com Inc.
Consolidated Balance Sheet
(expressed in Canadian dollars)
April 30, 2001
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(Comparative Figures Note 1)
Assets
Current
Cash $ 1,085,123
Short term investments 1,170,156
Accounts receivable 34,774
Prepaid expenses 839
---------------
2,290,892
Investments (Note 2) 144,412
Capital assets (Note 3) 130,105
Internet investment site cost (Note 1) 1
---------------
$ 2,565,410
===============================================================================
Liabilities and Shareholders' Equity
Current
Accounts payable $ 489,039
---------------
Shareholders' equity
Contributed surplus 974,308
Share capital (Note 4) 3,639,652
Deficit (2,537,589)
---------------
2,076,371
---------------
$ 2,565,410
===============================================================================
On behalf of the Board:
(signed) Sandra J. Hall, Director
- --------------------------------------
(signed) James C. Cassina, Director
- --------------------------------------
The accompanying summary of significant accounting policies and notes are an
integral part of these financial statements.
3
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Investorlinks.com Inc.
Consolidated Statement of Operations and Deficit
(expressed in Canadian dollars)
For the period May 10, 2000 to April 30, 2001
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(Comparative Figures Note 1)
Revenue
Advertising revenue $ 98,220
Sponsorship newsletter 35,059
--------------
133,279
--------------
Expenses
Accounting 38,000
Administrative salaries and consulting 517,768
Advertising and promotion 32,368
Amortization 36,833
Automobile 23,839
Bad debts 49,803
Business development 555,842
Dues, licence and fees 7,053
Employees benefits 23,585
General and administrative 50,940
Insurance 3,264
Interest 11,908
Internet 80,755
Investor relations 145,968
Marketing 16,072
Occupancy costs 149,941
Other taxes 29,675
Outside services 94,642
Professional fees 216,486
Repairs and maintenance 3,805
Shareholder information and annual meeting 30,469
Telephone 23,156
Transfer agent fees 22,305
Travel 74,065
Write down of internet investment site cost 317,387
Write down of capital assets 61,689
--------------
2,617,618
--------------
Loss before undernoted items (2,484,339)
Interest income 109,803
Foreign exchange gain 99,698
Write down of marketable securities (262,751)
--------------
Net loss for the period and deficit, end of period $ (2,537,589)
===============================================================================
Loss per share (Note 5) $ (0.15)
===============================================================================
The accompanying summary of significant accounting policies and notes are an
integral part of these financial statements.
4
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Investorlinks.com Inc.
Consolidated Statement of Cash Flows
(expressed in Canadian dollars)
For the period May 10, 2000 to April 30, 2001
- -------------------------------------------------------------------------------
(Comparative Figures Note 1)
Cash provided by (used in)
Operating activities
Net loss for the period $ (2,537,589)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Amortization 36,833
Write down of internet investment site cost 317,387
Write down of capital assets 61,689
Business development fees paid by issuance of shares 150,000
Write down of marketable securities 262,751
Changes in non-cash current assets and liabilities
Increase in accounts payable 305,742
Decrease in accounts receivable and prepaid expenses 183,480
------------
(1,219,707)
------------
Investing activities
Proceeds on sale of investments 286,517
Short term investments (423,352)
Purchase of IL Nevada and LLC, net of cash acquired (Note 1) (341,750)
Purchase of capital assets (166,954)
------------
(645,539)
------------
Financing activities
Issuance of common shares, net of issue costs 3,326,533
Treasury stock acquired (376,164)
------------
2,950,369
------------
Increase in cash during the period and cash, end of period $ 1,085,123
===============================================================================
The accompanying summary of significant accounting policies and notes are an
integral part of these financial statements.
5
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Investorlinks.com Inc.
Summary of Significant Accounting Policies
(expressed in Canadian dollars)
April 30, 2001
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Nature of Business Investorlinks.com Inc. (the "Company" or
"Investorlinks") was amalgamated under the
laws of the Province of Ontario. During the
year ended April 30, 2001, the Company
divested itself of its mineral properties
in Canada and Botswana. The Company then
changed its business to owning and
operating the Internet investment site
www.investorlinks.com indirectly through
---------------------
the acquisition of a U.S. subsidiary (see
Note 1). Due to the prevailing market
conditions, the Company subsequently closed
the operations of its U.S. subsidiary and
wrotedown the assets to its estimated net
recoverable amounts. Subsequently, the
Company plans to change its focus (see Note
11).
Preparation of the financial statements in
conformity with Canadian accepted
accounting principles requires management
to make estimates and assumptions that
affect the reported amount of assets and
liabilities and the reported amounts of
revenues and expenses during the reporting
period. Actual results could differ from
those estimated.
Basis of Consolidation The consolidated financial statements
include the accounts of the Company, and
its wholly-owned subsidiaries IL Data
Canada, Inc. ("IL Canada") and IL Data
Corporation, Inc. ("IL Nevada").
Capital Assets Capital assets are recorded at cost less
accumulated amortization. Amortization is
provided on a declining balance basis as
follows:
Office equipment 20%
Computer equipment 20%
Internet Investment
Site Cost The internet investment site cost is
comprised of the cost of the website upon
the acquisition by IL Canada less
amortization and the write down of the
assets to its estimated net recoverable
amount.
Long Term Investments Long term investments over which the
Company does not exercise significant
influence are recorded at cost less any
write down for impairment that is other
than temporary.
6
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Investorlinks.com Inc.
Summary of Significant Accounting Policies
(expressed in Canadian dollars)
April 30, 2001
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Foreign Currency Translation Balances of the Company denominated in
foreign currencies and the accounts of its
foreign subsidiary (an integrated
operation) are translated to Canadian
dollars as follows:
At the transaction date, each asset,
liability, revenue or expense is
translated into Canadian dollars by the
use of the exchange rate in effect at that
date. At the year end date, monetary
assets and liabilities are translated into
Canadian dollars by using the exchange
rate in effect at that date and the
resulting foreign exchange gains and
losses are included in income in the
current period.
Financial Instruments Unless otherwise noted, it is management's
opinion that the Company is not exposed to
significant interest rate, currency or
credit risks arising from its financial
instruments.
The carrying amounts of the Company's
current financial instruments approximate
fair value because of the short term
maturity of these instruments. The fair
value of the investments is disclosed in
Note 1.
Included in short term investments are
three GICs in the amount of $1,170,156
(includes a GIC of US$ 377,704) with
interest ranging from 3.85% to 4.33%
maturing from June 1, 2001 to July 3,
2001. Also, included in cash is $1,000,000
on deposit with a brokerage firm earning
interest at 6% per annum.
Stock Compensation Plan The Company has three stock-based
compensation plans, which are described in
Note 4. No compensation expense is
recognized for these plans when stock or
stock options are issued to employees. Any
consideration paid by employees on
exercise of stock options or purchase of
stock is credited to share capital. If
stock or stock options are repurchased
from employees, the excess of the
consideration paid over the carrying
amount of the stock or stock option is
charged to retained earnings.
Income Taxes The Company accounts for income taxes
under the asset and liability method.
Under this method, future income tax
assets and liabilities are recognized for
the future tax consequences attributable
to differences between the financial
reporting and tax bases of assets and
liabilities and available loss carry
forwards. A valuation allowance is
established to reduce deferred tax assets
if it is more likely than not that all or
some portions of such deferred tax assets
will not be realized.
7
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Investorlinks.com Inc.
Notes to Consolidated Financial Statements
(expressed in Canadian dollars)
April 30, 2001
- --------------------------------------------------------------------------------
1. Business Acquisitions
(a) IL Canada's acquisition of IL Nevada/ IL Nevada's acquisition of LLC.
On May 10, 2000, IL Canada was incorporated and issued 6,800 common
shares for $10,052 cash.
On June 6, 2000, IL Canada acquired all of the issued shares of IL
Nevada, a Nevada corporation that was incorporated on June 2, 2000 for
$10,052 (US $6,800) cash.
On June 6, 2000, IL Nevada acquired the unincorporated business,
Investorlinks.com LLC ("LLC"), a company whose business focus was
owning and operating the internet investment site www.investorlinks.com
---------------------
from a person who became a director of the Company and the director's
spouse for $443,490 (US $300,000) cash.
The net assets acquired at fair value were as follows:
IL Nevada LLC
============================
Cash $ 10,052 $ 8,131
Current assets - 101,238
Capital assets - 38,436
Current liabilities - (32,134)
============================
Net assets 10,052 115,671
Consideration 10,052 443,490
============================
Excess of consideration given over net assets acquired (1) $ - $ 327,819
============================
(1) The excess of consideration given over the net assets of LLC
acquired is attributed to the cost of the internet investment site.
8
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Investorlinks.com Inc.
Notes to Consolidated Financial Statements
(expressed in Canadian dollars)
April 30, 2001
- --------------------------------------------------------------------------------
1. Business Acquisitions (continued)
(b) The Company's Acquisition of IL Canada
On June 6, 2000, after the above business acquisitions, the Company
acquired all of the issued shares of IL Canada for consideration of
6,800,000 common shares of the Company having a stated value of
$1,700,000. As a result of this transaction, the original shareholders
of IL Canada owned 47% of the issued shares of the Company. The
business combination has been accounted for as a reverse take-over of
the Company by IL Canada. IL Canada is deemed to be the acquirer
because:
(i) the directors of IL Canada became the majority of the Company's
directors;
(ii) the management of IL Canada became the management of the Company;
(iii) the major block of shares is held by the Company's chairman of
the board who held the major block of shares of IL Canada and who,
with his spouse, owned LLC; and
(iv) prior to the business acquisition by the Company of IL Canada
there was no major block of shares of the Company held by any one
person.
Investorlink's assets and liabilities are included in the consolidated
balance sheet at the carrying value. The net assets acquired at fair
value of the Company as at June 6, 2000 are as follows:
Cash $ 93,609
Short term investments 746,804
Marketable securities 696,933
Current assets 117,855
Capital assets 9,553
Current liabilities (151,163)
---------------
Consideration attributed to the stated capital of the shares issued $ 1,513,591
---------------
No comparatives figures have been presented as IL Canada, the deemed
acquiring company, was a newly incorporated company.
(c) Share Repurchase
The Company purchased 4,890,000 common shares back from the
shareholders of IL Canada for US $0.05 per share.
9
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Investorlinks.com Inc.
Notes to Consolidated Financial Statements
(expressed in Canadian dollars)
April 30, 2001
- --------------------------------------------------------------------------------
2. Investments
2001
---------------
91,706 common shares of Oil Springs Energy Corp.
(quoted market value: 2001 - $2,751); at written down amount $ 2,751
4,000,000 common shares of Stroud Resources Ltd., at written down amount
(representing 10% of the outstanding common shares:
quoted market value: 2001 - $140,000), 140,000
30,174 common shares of Maxill Inc., at cost
(quoted market value: 2001 - $3,071) 1,661
---------------
$ 144,412
===============
The quoted market value may not be indicative of the fair value of the
investments since the volume of trading is low. It is not practical to
establish fair value by other means.
- --------------------------------------------------------------------------------
3. Capital Assets
2001
----------------------------------
Accumulated
Cost Amortization
Office equipment $ 107,009 $ 10,701
Computer equipment 38,614 4,817
---------------------------------
$ 145,623 $ 15,518
=================================
Net book value $ 130,105
=============
- --------------------------------------------------------------------------------
4. Share Capital
(a)Authorized
Unlimited non-participating, redeemable, voting preference shares
Unlimited common shares
10
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Investorlinks.com Inc.
Notes to Consolidated Financial Statements
(expressed in Canadian dollars)
April 30, 2001
- --------------------------------------------------------------------------------
4. Share Capital (continued)
(b) Issued common shares
Number of
Shares Consideration
Pre-acquisition common shares for Investorlinks
Balance, April 30, 2000 6,944,576 $ 6,222,102
Exercise of option 300,000 75,000
Exercise of warrants 300,000 105,000
----------------------------
Balance, June 6, 2000 7,544,576 $ 6,402,102
============================
Pre-acquisition common shares for IL Canada
Common shares issued upon incorporation for cash and
the balance June 6, 2000 6,800 $ 10,052
============================
Issued from the date of the "reverse take-over"
Share capital is comprised of the number of issued
and outstanding shares of Investorlinks and the stated
capital of IL Canada 7,544,576 $ 10,052
Shares issued upon the "reverse take-over" (Note 1) 6,800,000 1,513,591
Shares issued upon the exercise of warrants 3,000,000 1,050,000
Shares issued pursuant to private placement for cash (i) 680,000 2,266,481
Shares issued for services and held in escrow (ii) 44,444 150,000
Shares acquired for cancellation by the Company (iii) (4,890,000) (1,350,472)
----------------------------
Balance, April 30, 2001 13,179,020 $ 3,639,652
============================
(i) On August 8, 2000 the Company completed a private placement with
an arm's length third party and issued 680,000 units at US $2.25
for net proceeds of $2,266,481 (US $1,530,000). Each unit consists
of one common share and one common share purchase warrant
exercisable at US $3.00 expiring on August 8, 2002.
(ii) The Company entered into a strategic alliance services agreement,
effective August 2, 2000 with a global financial content firm
("the Firm") to provide business development services. As
consideration for the services to be provided over twenty-nine
months following the effective date, the Company was to release
common shares on the basis of one common share for each US $2.25
of services provided for a total of up to 1,500,000 common shares
for total consideration of US $3,375,000. Subsequent, to the year
end the Firm claimed a breach of the agreement and requested
payment of 144,000 common shares and cash expenses of US$ 26,562
(total cost $525,843). The Firm has given notice of its
termination of the agreement. It is the position of the Company
that it is the Firm that is in breach of the agreement and has so
responded to the Firm. The Company issued 44,444 common shares
with a value of $150,000 and accrued for services based on
invoices to date totalling $405,842.
(iii) The Company purchased 4,890,000 common shares back from the
shareholders of IL Canada for US $0.05 per share for a total of
$376,164. The Company acquired the shares at a discount of
$974,308 from the average paid in capital resulting in contributed
surplus.
11
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Investorlinks.com Inc.
Notes to Consolidated Financial Statements
(expressed in Canadian dollars)
April 30, 2001
- ------------------------------------------------------------------------------------------------------------
4. Share Capital (continued)
(c) Warrants
Warrants outstanding, April 30, 2000 3,340,000
Exercised (3,300,000)
Expired (40,000)
Issued pursuant to private placement 680,000
-----------
Warrants outstanding, April 30, 2001 680,000
===========
As at April 30, 2001 the following warrants are outstanding and
exercisable:
Number of Shares for Exercise Expiry
Outstanding Warrants Price Date
680,000 1 for 1 US $ 3.00 August 8, 2002
(d) Stock Options
Number of Weighted
Options Average
Exercise Price
US$
----------------------------
Options outstanding, April 30, 2000 630,000 0.37
Granted 961,000 2.55
Exercised (300,000) 0.16
Forfeited (920,000) 1.91
----------------------------
Options outstanding, April 30, 2001 371,000 2.60
============================
As at April 30, 2001 the following stock options are outstanding of which
203,000 are exercisable at April 30, 2001:
Number
Issued to Outstanding Exercise Price Expiry Date
Director 30,000 Cdn. $0.30 August 3, 2002
Directors 173,000 US $2.55 June 30, 2005
Employees (1) 24,000 US $2.55 June 30, 2005
Consultant (2) 9,000 US $2.55 June 30, 2005
Advisory Board (3) 135,000 US $2.55 June 30, 2005
(1) The employees common share purchase options vest at a rate of 1/3
per year for three years on June 26, 2001, June 26, 2002 and June
26, 2003.
(2) The consultants common share purchase options vest at a rate of
1/3 per year for three years on June 26, 2001, June 26, 2002 and
June 26, 2003.
(3) The advisory board common share purchase options vest 45,000 on
June 26, 2001 and the 90,000 vest 1/3 per year for three years on
June 26, 2001, June 26, 2002 and June 26, 2003.
Subsequently to April 30, 2001, 278,000 of these options have been
forfeited and expired.
12
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Investorlinks.com Inc.
Notes to Consolidated Financial Statements
(expressed in Canadian dollars)
April 30, 2001
- ------------------------------------------------------------------------------------------------------------
5. Loss Per Share
The loss per share figures have been calculated using the weighted average number of common shares
outstanding during the fiscal period. Exercise of outstanding stock options and warrants would be
anti-dilutive.
- -----------------------------------------------------------------------------------------------------------
6. Supplementary Cash Flow Information
2001
---------------
Cash paid for interest $ 11,908
- -----------------------------------------------------------------------------------------------------------
7. Related Party Transactions
The Company had the following related party transactions:
2001
-------------
(a) Amounts paid to companies whose director
is a director of the Company
Office rent $ 12,500
Accounting and administrative support 38,000
Website hosting and maintenance 1,600
(b) Consulting fees paid pursuant to a consulting agreement with a former
director of the Company for US $10,000 per month to August 31, 2001 30,227
(c) Consulting fees to a director included in accounts payable 25,000
(d) Accounting fees paid to a former director and officer of the Company 8,795
The related party transactions are recorded at the exchange amount.
13
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Investorlinks.com Inc.
Notes to Consolidated Financial Statements
(expressed in Canadian dollars)
April 30, 2001
- --------------------------------------------------------------------------------
8. Segmented Information
The Company owns and operates an Internet investment site engaged indirectly
through its subsidiary. The Company does not have reportable operating
segments.
The Company's revenue and capital assets have been identified based on
geographic area as follows:
United States Canada
---------------------------
For the period ended April 30, 2001
Revenue $ 133,279 $ -
Capital assets (1) 122,463 7,642
(1) Subsequent to the year end, substantially all of the capital assets in
the United States were transferred to Canada and the US operations were
closed.
- --------------------------------------------------------------------------------
9. Income Taxes
The difference between income taxes computed at the combined statutory rate
and the income tax provision reflected in the statement of operations is
primarily due to a full valuation allowance against deferred tax assets.
The Company has provided a full valuation allowance against deferred tax
assets at April 30, 2001, due to uncertainties as to the Company's ability
to utilize its net operating losses and other benefits available for tax
purposes amounting to approximately $13,500,000 which would result in a
deferred tax asset of approximately $5,800,000.
The net operating loss carry forwards in the amount of approximately
$6,000,000 are available to be applied against future taxable income. The
right to claim these losses expires $70,000 in 2002, $270,000 in 2003,
$1,710,000 in 2004, $850,000 in 2005, $480,000 in 2006, $1,320,000 in 2007
and $1,300,000 in 2008. The Company also has approximately $7,500,000 in
foreign exploration expenses which are available to be applied against
future income for income tax purposes.
14
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Investorlinks.com Inc.
Notes to Consolidated Financial Statements
(expressed in Canadian dollars)
April 30, 2001
- --------------------------------------------------------------------------------
10. Generally Accepted Accounting Principles In Canada and the United States
The Company's accounting policies do not differ materially from accounting
principles generally accepted in the United States ("US GAAP") except as
follows:
(a) Business Acquisition
For US purposes since IL Canada had no operations LLC would be
considered the predecessor and audited information for the previous
three years would normally be disclosed however, the operations of
LLC have been closed and the previous years information would not be
relevant or informative.
Also, for US purposes (Note 1) the excess of consideration given over
the net assets would not have been recorded as internet investment
site but, rather shown as a distribution to the owners of the
predecessor LLC. Therefore, the only difference at April 30, 2001 is
that for Canadian purposes the internet investment site was written
off to deficit in the amount of $327,819 (Note 1) would have reduced
the share capital for US purposes.
(b) Portfolio Investments
Under accounting principles generally accepted in Canada ("Canadian
GAAP"), gains (losses) in shares of public companies are not
recognized until investments are sold unless there is deemed to be an
impairment in value which is other than temporary. Under US GAAP,
such investments are recorded at market value and the unrealized
gains and losses other than those arising from permanent impairment
are recognized as a separate item in the shareholder's equity section
of the balance sheet.
(c) Stock Options
Under US GAAP (FAS 123), stock options granted to consultants are
recognized as an expense based on their fair value at the date of
grant. Under Canadian GAAP the options are disclosed and no
compensation expense is recorded. The calculation for the
compensation is based on the Black-Scholes option pricing model with
the assumption that no dividends are to be paid on common shares, a
weighted average volatility factor for the Company's share price of
85.0%, a weighted average risk free interest rate of 5.0% and a life
of 2 to 4 years.
The Company follows APB 25 for options granted to employees. For
employees, compensation expense is recognized under the intrinsic
value method. Under this method, compensation cost is the excess, if
any, of the quoted market price at grant date over the exercise
price. Such expense is reflected over the service period; if for
prior services, expensed at date of grant; if for future services,
expensed over vesting period. The exercise price of the stock options
outstanding to employees is equal or exceeds the market value of the
shares at the date granted, therefore, no compensation expense is
recognized for US GAAP purposes.
(d) Contributed Surplus
Under US GAAP, the consideration paid for the repurchase of shares
(Note 4(b)(iii)) would have reduced share capital and no amounts
recorded as contributed surplus.
15
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Investorlinks.com Inc.
Notes to Consolidated Financial Statements
(expressed in Canadian dollars)
April 30, 2001
- --------------------------------------------------------------------------------------------------------
10. Generally Accepted Accounting Principles in Canada and the United States (continued)
(d) The impact of the foregoing on the financial statements is as follows:
2001
-------------
Total assets Canadian GAAP $ 2,565,410
Unrealized gain on investments 1,410
Internet investment site (1)
-------------
Total assets US GAAP $ 2,566,819
=============
Total liabilities Canadian and US GAAP $ 489,039
=============
Shareholders' equity Canadian GAAP $ 2,076,371
Writedown of internet investment site 317,387
Amortization on internet investment site 10,431
Distribution of capital (327,819)
Unrealized gain on investments US GAAP 1,410
-------------
Total shareholders' equity US GAAP $ 2,077,780
=============
2001
-------------
Net loss per Canadian GAAP $ (2,537,589)
Internet investment site 327,818
Consulting expense (136,500)
-------------
Net loss US GAAP (2,346,271)
Unrealized gain on investments 1,410
-------------
Comprehensive net loss US GAAP $ (2,344,861)
=============
Loss per share US GAAP $ (0.14)
=============
Weighted average number of shares outstanding 17,338,092
=============
Pro-forma loss per share (1) $ (0.41)
=============
(1) The pro-forma loss per share takes into consideration the
consolidation of shares as disclosed in the subsequent event (Note
11(a)).
16
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Investorlinks.com Inc.
Notes to Consolidated Financial Statements
(expressed in Canadian dollars)
April 30, 2001
- --------------------------------------------------------------------------------
11. Subsequent Events
(a) Business Acquisition
On August 30, 2001, the shareholders approved the acquisition of all of
the issued and outstanding common shares of API Electronics, Inc.
("API") by the issuance of 6,500,000 post-consolidation units at US
$0.40 per unit. Each unit consists of one common share and 1/2 of one
Series A common share purchase warrant exercisable at US $0.45 for a
period of eighteen months from date of issue and 1/2 of one Series B
common share purchase warrant exercisable at US $0.75 for a period of 2
years from date of issue.
(b) Name Change and Share Consolidation
The shareholders approved the name change to API Electronics Group Inc.
and the consolidation of the authorized common shares on the basis that
every three (3) pre-consolidation common shares will be converted into
one (1) post-consolidation common share.
(c) Advisory Services
On June 26, 2001, the Company entered into an advisory agreement with
respect to the acquisition. Upon completion of the acquisition, the
Company agreed to issue broker warrants to the investment advisor to
acquire up to 250,000 units each such broker warrant exercisable at US$
0.40 to acquire one unit for a period of 24 months from date of issue.
(d) Stock Options and Warrants
(i) On August 1, 2001, the Company granted to two directors 150,000
pre-consolidation common share purchase options to acquire 150,000
common shares exercisable at US $0.15 and the grant of 150,000
pre-consolidation common share purchase options to acquire 150,000
common shares at US $0.25 expiring July 31, 2006.
(ii) Upon the acquisition, all stock options and warrants outstanding
at year end have been terminated other than 30,000 pre-
consolidation director options referred to in Note 4(d), the
300,000 pre-consolidation options referred to in Note 11 (d)(i)
and 680,000 pre-consolidation warrants referred to in Note 4(c).
(iii) The Company is obligated to grant to each of the new three API
directors 50,000 post-consolidation common share purchase options
to acquire 50,000 common shares exercisable at US $0.45 and the
grant of 50,000 post-consolidation common share purchase options
to acquire 50,000 common shares exercisable at US $0.75 for a
period of five years from the date of issue.
17
Pursuant to the requirements of Section 12 of the Securities Act of 1934, the
Registrant certifies that it meets all of the requirements for filing on Form
20-F and has duly caused this Annual Report on Form 20-F, Amendment Number 1, to
be signed on its behalf by the undersigned, thereunto authorized.
Dated at Hauppauge, New York, United States of America, this 30/th/ day of
November 2001.
API ELECTRONICS GROUP INC.
By: /s/ Thomas W. Mills
------------------------
Thomas W. Mills, President