FORM 20-F/A4
(Amendment No. 4)
[X] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
[_] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-31547
CINEMA INTERNET NETWORKS INC.
(Name of Registrant as specified in its charter)
Canada
(state or other jurisdiction of incorporation or organization)
Pier 32, Granville Island, Suite 320
1333 Johnston Street
Vancouver, British Columbia Canada V6H 3R9
(Address of principal executive offices and zip code)
(604) 602-1280
(Issuer's telephone number)
Securities to be registered under Section 12(b) of the Act:
None
Securities to be registered pursuant to Section 12(g) of the Act:
Title of each class
-------------------
Common Shares, no par value per share
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
registration statement: 7,983,207 Common Shares were outstanding as of January
25, 2001.
Indicate by check mark whether the registrant (1) has filed all the reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or 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 __ No X
-
Indicate by check mark which financial statements item the registrant has
elected to follow:
[ITEM 17 [x] ITEM 18[]]
This Amendment No. 4 to Cinema Internet Networks' registration statement on
Form 20-F amends only the following:
. Item 8 of the Form 20-F/A3 and
. The unaudited Financial Statements for the first quarter of Cinema Internet
Networks' fiscal year ending July 31, 2001, filed with the Form 20-F/A3.
Only the amended items set forth above have been filed with the Securities
and Exchange Commission with this Amendment No. 4. For the full text of the
Cinema Internet Networks registration statement on Form 20-F, including all
financial statements and exhibits, please refer to Cinema Internet Networks'
Form 20-F/A3 (Amendment No. 3), filed with the Securities and Exchange
Commission on March 14, 2001.
ITEM 8. SELECTED FINANCIAL DATA
The selected consolidated financial data presented below are expressed
in U.S. dollars for the five-year period ended July 31, 2000, plus the fiscal
quarter ended October 31, 2000. The selected financial data are derived from the
consolidated financial statements of CinemaWorks for the five fiscal years ended
July 31, 2000, 1999, 1998, 1997 and 1996, audited by CinemaWorks' independent
auditors, plus unaudited financial statements from the first fiscal quarter of
the fiscal year ending July 31, 2001. The selected information is qualified in
its entirety by reference to, and should be read in conjunction with, such
consolidated financial statements, related notes and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" included as Item
9 of this Form 20-F. The financial data presented below reflects the
discontinuation and sale of CinemaWorks' prior pay per view services business in
the fiscal year ended July 31, 2000. All amounts below are expressed in U.S.
dollars.
Year Ended July 31,
-------------------
1996 1997 1998(1) 1999 (1) 2000 (1) 2001
---- ---- ---- ---- ---- ----
(fiscal
quarter
ended
October
31, 2000
only) (1)
Income Statement Data
- ---------------------
Revenues $ - $ - $ - $ - $ 222,980 $ 58,165
Gross profit -- -- -- -- 127,968 6,919
Income (loss) from (84,723) (74,691) (82,895) (122,349) (214,093) (132,929)
continuing operations
Income (loss) from (150,818) (75,483) 247,752 (409,257) 99,244 --
discontinued operations
Net income (loss) (235,541) (150,174) 164,857 (531,606) (114,849) (132,929)
Dividend paid -- -- -- -- -- --
Per share amounts
Net income (0.07) (0.05) 0.05 (0.16) (0.02) (0.02)
Income (loss) from (0.03) (0.02) (0.03) (0.04) (0.04) (0.02)
continuing operations
Income (loss) from (0.04) (0.03) 0.08 (0.12) 0.02 --
discontinued operations
Dividend paid -- -- -- -- -- --
Balance Sheet Data
- ------------------
Working capital $(259,176) $(234,082) $ 7,658 $(487,161) $ 388,763 $ 256,771
Total assets 266,234 449,149 390,621 417,885 488,351 326,257
Long term debt -- -- -- -- 57,870 56,408
Capital lease obligation -- -- -- 102,074 -- --
Shareholders' equity 647,317 114,817 279,139 (253,363) 356,182 224,759
____________
(1) CinemaWorks changed its business from the provision of pay per view
services to the installation of Internet infrastructure equipment during
its fiscal year ended July 31, 2000. Revenues exclude revenues generated
from discontinued operations, which totaled $1,064,011 for the fiscal
year ended July 31, 1996, $753,490 for the fiscal year ended July 31,
1997, $612,014 for the fiscal year ended July 31, 1998, $510,198 for the
fiscal year ended July 31, 1999 and $113,068 for the fiscal year ended
July 31, 2000. There were no revenues from discontinued operations in
the first quarter of the fiscal year ended July 31, 2001.
26
CinemaWorks' Consolidated Financial Statements have been prepared in accordance
with Canadian GAAP. Except as disclosed in Note 13 of the Consolidated Financial
Statements, the Consolidated Financial Statements conform to all material
respects with U.S. GAAP. The table below reflects the information in the table
above reconciled under U.S. GAAP. The data set forth in the table below for the
fiscal years ended July 31, 2000, 1999, 1998, 1997 and 1996 reflect the
reconciliation to U.S. GAAP as set forth in Note 13 of the Consolidated
Financial Statements for the fiscal year ended July 31, 2000. The data set forth
in the table below for the fiscal quarter ended October 31, 2000 reflect the
reconciliation to U.S. GAAP as set forth in Note 1 of the Consolidated Financial
Statements (unaudited) for the fiscal quarter ended October 31, 2000.
Year Ended July 31,
-------------------
1996 1997 1998 1999 2000 2001 (fiscal
---- ---- ---- ---- ---- ----
quarter ended
October 31,
2000 only)
Income Statement Data
- ---------------------
Revenues $ - $ - $ - $ - $ 222,980 $ 58,165
Gross profit - - - - 127,968 6,919
Income (loss) from continuing operations (235,541) (150,174) 164,857 (535,934) (1,230,297) (132,929)
Income (loss) from discontinued operations - - - - - 281,057
Net income (loss) (235,541) (150,174) 164,857 (535,934) (1,230,297) 148,128
Dividend paid - - - - - -
Per share amounts
Net Income (0.03) (0.03) 0.05 (0.16) (0.22) (0.02)
Net Income from continuing operations (0.03) (0.03) 0.05 (0.16) (0.22) (0.02)
Net Income from discontinued operations - - - - - 0.04
Dividend paid - - - - - -
Balance Sheet Data
- ------------------
Working capital $(259,176) $(234,082) $ 7,658 $(487,161) $ 198,763 $ 256,771
Total assets 266,234 449,149 390,621 417,885 599,444 326,257
Long term debt - - - - 57,870 56,408
Shareholders equity 647,317 114,817 279,139 (253,363) 240,323 224,759
Capital Lease Obligation - - - 102,074 - -
Exchange Rates
CinemaWorks transacts its business in U.S. dollars and Canadian dollars.
Since June 1, 1970, the government of Canada has permitted a floating exchange
rate to determine the value of the Canadian dollar as compared to the U.S.
dollar. On January 15, 2001, the exchange rate for Canadian dollars exchanged
into U.S. dollars was 0.67100, while for the fiscal years ended July 31, 1996,
1997, 1998, 1999 and 2000, plus the first quarter of the fiscal year ending July
31, 2001, the following exchange rates were in effect for Canadian dollars
exchanged into U.S. dollars, expressed in terms of Canadian dollars (based on
the noon buying rates in New York City, for cable transfers in Canadian dollars,
as certified for customs purposes by the Federal Reserve Bank of New York):
Fiscal Year Average High Low Year End
2001 (first
fiscal 0.669570 0.679260 0.653110 0.65484
quarter only)
2000 0.67929 0.69830 0.66010 0.67650
1999 0.66227 0.69170 0.63070 0.66330
1998 0.70132 0.73040 0.66070 0.66310
1997 0.73147 0.75370 0.70970 0.72440
1996 0.73416 0.75320 0.72090 0.72760
27
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant certifies that it meets all of the requirements for
filing on Form 20-F and has duly caused this Fourth Amendment to Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized.
CINEMA INTERNET NETWORKS INC.
Date: 04/09/01 By: /s/ William E. Massey
-------- -------------------------------
William E. Massey, Chief Executive Officer
CINEMA INTERNET NETWORKS INC.
CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. dollars)
(Unaudited - Prepared by Management)
OCTOBER 31, 2000
F-23
CINEMA INTERNET NETWORKS INC.
CONSOLIDATED BALANCE SHEETS
(Expressed in U.S. dollars)
(Unaudited - Prepared by Management)
============================================================================================================================
October 31, October 31, July 31,
2000 1999 2000
- ----------------------------------------------------------------------------------------------------------------------------
ASSETS
Current
Cash $ 29,782 $ 4,714 $ 114,785
Accounts receivable 80,043 47,187 156,179
Receivable on disposal of assets 190,000 - 190,000
Prepaid expenses 2,036 2,717 2,098
------------ ------------ ------------
301,861 54,618 463,062
Capital assets 24,396 307,638 25,289
Intangible assets - 11,436 -
------------ ------------ ------------
$ 326,257 $ 373,692 $ 488,351
============================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities $ 40,115 $ 598,893 $ 69,399
Current portion of long-term debt 4,975 - 4,900
Current portion of obligation under capital lease - 22,659 -
------------ ------------ ------------
45,090 621,552 74,299
Long-term debt 56,408 - 57,870
Obligation under capital lease - 102,074 -
------------ ------------ ------------
101,498 723,626 132,169
------------ ------------ ------------
Shareholders' equity
Capital stock 4,519,800 3,628,702 4,518,294
Deficit (4,295,041) (4,142,861) (4,162,112)
Cumulative translation adjustment - 164,225 -
------------ ------------ ------------
224,759 (349,934) 356,182
------------ ------------ ------------
$ 326,257 $ 373,692 $ 488,351
============================================================================================================================
On behalf of the Board:
/s/ "William Massey" Director /s/ "Al Murphy" Director
- -------------------------- -------------------------
The accompanying note is an integral part of these consolidated financial
statements.
F-24
CINEMA INTERNET NETWORKS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
(Expressed in U.S. dollars)
(Unaudited - Prepared by Management)
THREE MONTH PERIOD ENDED OCTOBER 31
==============================================================================================================
2000 1999
- --------------------------------------------------------------------------------------------------------------
REVENUES $ 58,165 $ -
DIRECT COSTS (51,246) -
------------- -------------
GROSS PROFIT 6,919 -
------------- -------------
GENERAL AND ADMINISTRATIVE EXPENSES
Amortization 1,884 -
Foreign exchange loss 1,183 -
Interest on long-term debt 468 -
Listing fees and transfer agent 6,069 4,140
Management fees 15,000 5,000
Marketing 8,409 -
Office services and miscellaneous 5,540 3,151
Professional fees 10,135 1,565
Rent 6,053 6,531
Telephone and communications 3,282 983
Travel and promotion 17,150 5,348
Wages, benefits and consulting fees 64,675 17,719
------------- -------------
(139,848) (44,437)
------------- -------------
Loss from continuing operations (132,929) (44,437)
Loss from discontinued operations - (51,161)
------------- -------------
Loss for the period (132,929) (95,598)
Deficit, beginning of period (4,162,112) (4,047,263)
------------- -------------
Deficit, end of period $ (4,295,041) $ (4,142,861)
==============================================================================================================
Loss per share from continuing operations $ (0.02) $ (0.01)
Loss per share from discontinued operations - (0.02)
------------- -------------
Loss per share $ (0.02) $ (0.03)
==============================================================================================================
Weighted average number of shares outstanding 7,961,707 3,288,667
==============================================================================================================
The accompanying note is an integral part of these consolidated financial
statements.
F-25
CINEMA INTERNET NETWORKS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in U.S. dollars)
(Unaudited - Prepared by Management)
THREE MONTH PERIOD ENDED OCTOBER 31
============================================================================================================================
2000 1999
- ----------------------------------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES
Loss from continuing operations $ (132,929) $ (44,437)
Item not affecting cash
Amortization 1,884 -
Changes in non-cash working capital items
(Increase) decrease in accounts receivable 76,136 24,343
(Increase) decrease in prepaid expenses 62 -
Increase (decrease) in accounts payable and accrued liabilities (29,284) 52,378
------------- -------------
Net cash provided by (used in) continuing operating activities (84,131) 32,284
------------- -------------
INVESTING ACTIVITIES
Purchase of capital assets (991) -
------------- -------------
Net cash used in investing activities (991) -
------------- -------------
FINANCING ACTIVITIES
Issuance of capital stock 1,506 -
Long-term debt (1,387) -
Translation adjustment - (973)
------------- -------------
Net cash provided by (used in) financing activities 119 (973)
------------- -------------
Net cash provided by (used in) discontinued operations - (34,363)
------------- -------------
Change in cash position during the period (85,003) (3,052)
Cash position, beginning of period 114,785 7,766
------------- -------------
Cash position, end of period $ 29,782 $ 4,714
============================================================================================================================
The accompanying note is an integral part of these consolidated financial
statements.
F-26
CINEMA INTERNET NETWORKS INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Expressed in U.S. dollars)
(Unaudited - Prepared by Management)
=============================================================================================================================
Cumulative
Number Translation
of Shares Amount Deficit Adjustment Total
- -----------------------------------------------------------------------------------------------------------------------------
Balance, July 31, 1999 3,288,667 $ 3,628,702 $ (4,047,263) $ 165,198 $ (253,363)
Translation adjustment - - - (973) (973)
Loss for the period - - (95,598) - (95,598)
----------- ------------ ------------ ------------ -----------
Balance October 31, 1999 3,288,667 3,628,702 (4,142,861) 164,225 (349,934)
Shares issued for cash
Private placement 950,000 379,256 - - 379,256
Exercise of warrants 40,250 20,406 - - 20,406
Exercise of options 170,000 28,955 - - 28,955
Agent's fee 95,000 - - - -
Settlement of accounts payable 3,416,290 460,975 - - 460,975
Translation adjustment - - - (164,225) (164,225)
Loss for the period - - (19,251) - (19,251)
----------- ------------ ------------ ------------ -----------
Balance, July 31, 2000 7,960,207 4,518,294 (4,162,112) - 356,182
Shares issued for cash
Exercise of warrants 3,000 1,506 - - 1,506
Loss for the period - - (132,929) - (132,929)
----------- ------------ ------------ ------------ -----------
Balance, October 31, 2000 7,963,207 $ 4,519,800 $ (4,295,041) $ - $ 224,759
=============================================================================================================================
The accompanying note is an integral part of these consolidated financial
statements.
F-27
CINEMA INTERNET NETWORKS INC.
NOTE TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. dollars)
(Unaudited - Prepared by Management)
OCTOBER 31, 2000
================================================================================
1. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES
These consolidated financial statements have been prepared in
accordance with generally accepted accounting principles ("GAAP") in
Canada. Except as set out below, these consolidated financial
statements also comply, in all material respects, with accounting
principles generally accepted in the United States and the rules and
regulations of the Securities and Exchange Commission.
Stock based compensation
SFAS No. 123, "Accounting for Stock Based Compensation", requires
expanded disclosure of stock-based compensation arrangements with
consultants and requires the recognition of compensation expense
related to stock compensation based on the fair value of the equity
instrument granted or repriced. Canadian GAAP does not require the
reporting of any stock based compensation expense in the Company's
financial statements.
Under Canadian Venture Exchange policy, options can be repriced only if
at least six months have elapsed since the later of the date of
commencement of the option term, the date the Company's shares
commenced trading or the date the option exercise price was last
amended, and if regulatory approval is received.
In calculating compensation expense under United States GAAP the
Company utilizes the Black-Scholes model to estimate the fair value of
options granted or repriced. No options were granted or repriced during
the three month periods ended October 31, 2000 and 1999.
The following is a summary of the status of stock options outstanding
at October 31, 2000:
=======================================================================================================
Outstanding Options Exercisable Options
------------------- -------------------
Weighted
Average Weighted Weighted
Remaining Average Average
Contractual Exercise Exercise
Range of Exercise Prices Number Life (Years) Price Number Price
-------------------------------------------------------------------------------------------------------
$ 0.25 20,000 0.08 $ 0.25 20,000 $ 0.25
0.88 753,723 1.50 0.88 753,723 0.88
=======================================================================================================
Income taxes
Under United States GAAP, income taxes are provided in accordance with
SFAS No. 109, "Accounting for Income Taxes". A deferred tax asset or
liability is recorded for all temporary differences between financial
and tax reporting and net operating loss carryforwards. Deferred tax
expenses (benefit) results from the net change during the year of
deferred tax assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion or
all of the deferred tax assets will not be realized. Deferred tax
assets and liabilities are adjusted for the effects of changes in tax
laws and rates on the date of enactment.
For the three month periods ended October 31, 2000 and 1999, no
deferred tax assets or liabilities would have resulted from the
implementation of SFAS No. 109.
F-28
CINEMA INTERNET NETWORKS INC.
NOTE TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. dollars)
(Unaudited - Prepared by Management)
OCTOBER 31, 2000
================================================================================
1. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES (cont'd...)
Foreign currency translation
The Company's policy on foreign currency translation is in compliance with
SFAS No. 52, "Foreign Currency Translation".
In previous years, the functional currency of the Company's Canadian hotel
pay-per-view operations was the Canadian dollar. Using the current rate
method, translation adjustments resulting from translating the Canadian
operation's financial statements into the reporting currency, the U.S.
dollar, were disclosed and accumulated in a separate component of equity.
During the year ended July 31, 2000, the Company disposed of both its U.S.
and Canadian hotel pay-per-view operations. As such, the Company has
included the amount accumulated in the translation adjustment component of
equity as part of the gain on disposal of discontinued operations.
Also during the year ended July 31, 2000, the Company began operations of
its new business. Although the business is run out of its Canadian office,
the currency of the primary economic environment in which the Company
operates is the U.S. dollar. Therefore the U.S. dollar is the Company's
functional currency and also remains it's reporting currency. Gains and
losses on foreign currency transactions are included in determining net
income (loss) for the period.
Comprehensive income
SFAS No. 130, "Reporting Comprehensive Income", addresses standards for the
reporting and display of comprehensive income and its components.
Comprehensive income includes net income and other comprehensive income.
Other comprehensive income represents revenues, expenses, gains and losses
that are excluded from net income under generally accepted accounting
principles.
For the three month periods ended October 31, 2000 and 1999, there were no
other items of comprehensive income of a material nature.
Disposal of discontinued operations
The treatment of the disposal of discontinued operations is different under
Canadian and United States GAAP. Under Canadian GAAP, the gain on the sale
of the Company's hotel pay-per-view business was recorded during the year
ended July 31, 2000 despite the sale not closing until August 3, 2000. The
reasons for this were as follows:
a) The date of the letter agreement was only three days after the year
end. The terms of the agreement had been settled by July 31, 2000.
b) Shareholder approval had not been received. However, management
approved the plan, had received no shareholder complaints in response
to the announcement of its plan, and had never encountered significant
opposition at any meeting of shareholders.
F-29
CINEMA INTERNET NETWORKS INC.
NOTE TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. dollars)
(Unaudited - Prepared by Management)
OCTOBER 31, 2000
================================================================================
1. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES (cont'd...)
Disposal of discontinued operations (cont'd...)
c) Chequemate actually assumed responsibility for operating the hotel pay-
per-view business in March, 2000. Since that time all revenues from and
expenses incurred in operating the business have been Chequemate's.
Under United States GAAP however, a gain must not be recognized before the
disposal date. As well, the measurement date, as defined in APB 30, was not
met during fiscal 2000 because shareholder approval for management's plan
was not received by July 31, 2000. Therefore, the gain recorded in the 2000
fiscal year was reversed for United States reporting purposes and was
recognized in the current period.
Consolidated financial statement balances under United States GAAP
The impact of the above differences between Canadian and United States GAAP
on the consolidated balance sheets is as follows:
===================================================================================================================
2000 1999
-------------------------------------------------------------------------------------------------------------------
Consolidated balance sheets
Total assets, United States GAAP $ 326,257 $ 373,692
==============================
Total liabilities, United States GAAP $ 101,498 $ 723,626
-------------- ------------
Capital stock, Canadian GAAP 4,519,800 3,628,702
Cumulative compensation expense on stock options 838,719 4,328
-------------- ------------
Capital stock, United States GAAP 5,358,519 3,633,030
Cumulative translation adjustment - 164,225
Deficit, United States GAAP (5,133,760) (4,147,189)
-------------- ------------
Shareholders' equity, United States GAAP 224,759 (349,934)
-------------- ------------
Shareholders' equity and liabilities, United States GAAP $ 326,257 $ 373,692
===================================================================================================================
F-30
CINEMA INTERNET NETWORKS INC.
NOTE TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. dollars)
(Unaudited - Prepared by Management)
OCTOBER 31, 2000
================================================================================
1. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES (cont'd...)
Consolidated financial statement balances under United States GAAP
(cont'd...)
The impact of the above differences between Canadian and United States GAAP
on the consolidated statements of operations and deficit and cash flows is
as follows:
=====================================================================================================================
2000 1999
---------------------------------------------------------------------------------------------------------------------
Consolidated statements of operations and deficit
Loss for the period as reported $ (132,929) $ (95,598)
Gain on disposal of discontinued operations 281,057 -
-------------- --------------
Income (loss) for the period, in accordance with United States
GAAP 148,128 (95,598)
Deficit in accordance with United States GAAP,
beginning of period (5,281,888) (4,051,591)
-------------- --------------
Deficit in accordance with United States GAAP,
end of period $ (5,133,760) $ (4,147,189)
Consolidated statements of cash flows
Cash flows provided by (used in) operating activities, Canadian GAAP $ (84,131) $ 32,284
Gain on disposal of discontinued operations (281,057) -
Item not affecting cash 281,057 -
-------------- --------------
Cash flows provided by (used in) operating activities, United States GAAP (84,131) 32,284
-------------- --------------
Cash flows provided by (used in) financing activities, United States GAAP 119 (973)
-------------- --------------
Cash flows used in investing activities, United States GAAP (991) -
-------------- --------------
Cash flows provided by (used in) discontinued operations, United States GAAP - (34,363)
-------------- --------------
Change in cash during the period (85,003) (3,052)
Cash, beginning of period 114,785 7,766
-------------- --------------
Cash, end of period $ 29,782 $ 4,714
=====================================================================================================================
F-31
CINEMA INTERNET NETWORKS INC.
NOTE TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. dollars)
(Unaudited - Prepared by Management)
OCTOBER 31, 2000
================================================================================
1. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES (cont'd...)
The impact of the above differences between Canadian and United States GAAP
on the consolidated statements of stockholders' equity, as reported, is as
follows:
==========================================================================================================================
Share Capital Cumulative
-------------------------
Number Translation
of Shares Amount Deficit Adjustment Total
--------------------------------------------------------------------------------------------------------------------------
Stockholders' equity as reported
October 31, 1999 3,288,667 $ 3,628,702 $ (4,142,861) $ 164,225 $ (349,934)
Cumulative compensation expense
on stock options - 4,328 (4,328) - -
--------- ------------- ------------- ------------- -------------
Stockholders' equity in accordance
with United States generally
accepted accounting principles at
October 31, 1999 3,288,667 $ 3,633,030 $ (4,147,189) $ 164,225 $ (349,934)
============================================================================
Stockholders' equity as reported
October 31, 2000 7,963,207 $ 4,519,800 $ (4,295,041) $ - $ 224,759
Cumulative compensation expense
on stock options - 838,719 (838,719) - -
--------- ------------- ------------- ------------- -------------
Stockholders' equity in accordance
with United States generally
accepted accounting principles at
October 31, 2000 7,963,207 $ 5,358,519 $ (5,133,760) $ - $ 224,759
==========================================================================================================================
Earnings per share (EPS)
SFAS No. 128, "Earnings Per Share", requires dual presentation of basic and
diluted earnings per share by entities with complex capital structures.
Basic earnings per share includes no dilution and is computed by dividing
income available to common stockholders by the weighted average number of
shares outstanding for the period. Diluted earnings per share takes into
consideration common shares outstanding (computed under basic earnings per
share) and potentially dilutive common shares.
F-32
CINEMA INTERNET NETWORKS INC.
NOTE TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. dollars)
(Unaudited - Prepared by Management)
OCTOBER 31, 2000
================================================================================
1. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES (cont'd...)
Earnings per share (EPS) (cont'd...)
Under Canadian GAAP, shares held in escrow are included in calculating the
weighted average number of shares outstanding for computing basic earnings
per share. Under United States GAAP, shares held in escrow are excluded
from this calculation.
The following loss per share information results under United States
GAAP:
======================================================================================================================
2000 1999
----------------------------------------------------------------------------------------------------------------------
Loss from continuing operations $ (132,929) $ (44,437)
Loss from discontinued operations -- (51,161)
Gain (loss) on disposal of discontinued operations 281,057 -
------------- -------------
Income (loss) for the period under United States GAAP 148,128 (95,598)
======================================================================================================================
Weighted average number of shares outstanding
under United States GAAP 7,961,707 3,288,667
======================================================================================================================
Loss per share from continuing operations $ (0.016) $ (0.014)
Earnings (loss) per share from discontinued operations 0.035 (0.016)
------------- -------------
Basic earnings (loss) per share $ 0.019 $ (0.03)
======================================================================================================================
For the three month period ended October 31, 1999, diluted EPS has not been
disclosed as the effect of the exercise of the Company's outstanding
options and warrants would be anti-dilutive.
2. SUBSEQUENT EVENT
Subsequent to October 31, 2000, the Company received a CDN $100,000 loan
from a director. The loan bears interest at 1% per month and is due
thirteen months from the date of receipt.
F-33