FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities and Exchange Act of 1934
For the month of January, 2002
API ELECTRONICS GROUP INC. (Formerly: Investorlinks.com Inc.)
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(Translation of registrant's name into English)
505 University Ave., Suite 1400, Toronto, Ontario M5G 1X3
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(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover form 20-F or Form 40-F:
Form 20-F X Form 40-F
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Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2b under the Securities Exchange Act of 1934:
Yes: No: X
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If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): 82-
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
API ELECTRONICS GROUP INC.
(Formerly Investorlinks.com Inc.)
Date: January 31, 2002 By: /s/ Jason DeZwirek
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Jason DeZwirek, Chairman of the Board,
Executive V.P., Secretary and Director
WeirFouldsLLP
Sanjay M. Joshi BARRISTERS & SOLICITORS
Only of the BC Bar
E-mail sjoshi@weirfoulds.com
Direct Line 416-947-5013
File 08132.00001
VIA SEDAR November 29, 2001
Ontario Securities Commission
Alberta Securities Commission
British Columbia Securities Commission
Dear Sirs/Mesdames:
Re: API Electronics Group Inc. (formerly, InvestorLinks.com Inc.) (the
"Issuer") - Change of year-end under National Policy 51
As counsel to the Issuer, we hereby provide notice that the
Issuer, a reporting issuer in the Provinces of Ontario, Alberta and British
Columbia, wishes to change its financial year-end for the purposes of financial
disclosures and year-end reporting.
Background
The Issuer currently has a year-end of April 30. The last
audited financial statements were filed for the year ended April 30, 2001. The
Issuer has also filed its interim financial statements for the first quarter
ended July 31, 2001.
Effective August 31, 2001, InvestorLinks.com Inc. ("IL") (the
prior name of the Issuer) purchased all of the 197 issued and outstanding common
shares of API Electronics Inc. ("API"), a private corporation incorporated under
the laws of the State of New York, satisfied by the issuance of IL common stock.
Upon completion this transaction constituted a reverse take-over (the "RTO") of
IL by the shareholders of API. Subsequent to the RTO, IL underwent a name change
to its current name and a consolidation, following which there were 10,892,972
Issuer shares issued and outstanding, 59.67% held by former API shareholders and
40.33% held by IL shareholders. A copy of the Issuer's Articles of Amendment
have been filed under separate cover letter.
Year-End
As a result of the RTO, the Issuer wishes to amend its
year-end to coincide with that of its operating subsidiary, API. Therefore,
pursuant to Part 4 of National Policy No. 51 ("NP 51"), the Issuer intends to
change its financial year-end to May 31 (the "New Year-End") from April 30, the
"Last Year-End" for the Issuer. The first New Year-End following this change
will result in a fiscal period of 12 months, commencing June 1, 2001 and ending
May 31, 2002. The audited financial statements for the New Year-End will also
disclose any change in the share capital of the Issuer for the period from May
1, 2001 until May 31, 2001. The Issuer will be seeking approval of the change to
the New Year-End from the Canada Customs and Revenue Agency ("CCRA") after April
30, 2002.
The Exchange Tower, Suite 1600 Telephone 416-365-1110
P.O. Box 480, 130 King Street West Facsimile 416-365-1876
Toronto, Ontario, Canada M5X1J5 Website www.wcirfoulds.com
WeirFouldsLLP
BARRISTERS & SOLICITORS
The directors of the Issuer have provided appropriate
directors' approval to the proposed New Year-End following the RTO to coincide
with the year-end of API, being a recently acquired, wholly owned subsidiary of
the Issuer.
As indicated above, the Issuer's last completed financial year
(the "Previous Financial Year") ended April 30, 2001. As a result of the New
Year-End, the Issuer will have a year-end for the period ended May 31, 2002 (the
"Transition Year"). The Issuer proposes to file financial statements for the
Transition Year as follows:
1 audited financial statements of API for the year ended May 31, 2002 in respect
of the New Year-End with comparative statements of API for the 12 month period
ended May 31, 2001; and
2 interim financial statements as follows:
1. the Issuer had filed its first quarter financial statements for the three
months ended July 31, 2001, prior to the acquisition of API;
2. the Issuer, as a result of the RTO, will file its second quarter interim
financial statements of API for the six months ended November 30, 2001 with
comparatives for the six months ended November 30, 2000. Please note this will
change the deadline for filing second quarter statements from the prior year of
December 31, 2001 to January 31, 2002; and
3. thereafter, the Issuer will file interim financial statements of API for the
nine months ended February 28, 2002 with comparatives to February 28, 2001,
within 60 days after the end of that period.
Following the May 31, 2002 year-end of the Transition Year,
unaudited comparative interim statements will be filed within 60 days after each
of the three month, six month and nine month periods thereafter.
Kindly contact the undersigned if you require further
information with regard to this matter.
Yours truly,
WeirFoulds LLP
"Sanjay Joshi"
SMJ/ma Per: Sanjay M. Joshi
Only of the BC Bar
c.: API Electronics Group Inc. (via facsimile)
BDO Dunwoody Attn: Bob Babensee (via facsimile)
Wayne T. Egan ::ODMA\PCDOCS\W&F\536500\2
2
API Electronics Group Inc.
Consolidated Interim Financial Statements
Second Quarter
For the period ended November 30, 2001
(Unaudited)
Expressed in US$
API Electronics Group Inc.
Consolidated Interim Balance Sheet
(Expressed in US$)
November 30 May 31
2001 2001
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(Unaudited) (Audited)
Assets
Current
Cash $ 676,436 $ 41,073
Accounts receivable 551,741 340,383
Inventory 1,318,400 1,277,399
Prepaid expenses 73,738 13,174
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2,620,315 1,672,029
Investments 1,848 -
Capital assets 812,117 881,700
Goodwill 5,276 10,552
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$ 3,439,556 $ 2,564,281
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Liabilities and Shareholders' Equity
Current
Bank indebtedness $ 254,350 $ 354,346
Accounts payable 672,497 341,216
Equipment loan payable - current portion 12,000 36,000
Current maturities of capital lease obligations 10,261 10,440
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949,108 742,002
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Bank indebtedness 37,613 43,717
Equipment loan payable 27,000 138,000
Due to shareholders - 43,575
Capital lease obligations - 4,258
Convertible promissory note - 1,265,492
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1,013,721 2,237,044
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Shareholders' equity
Share capital (Note 2) 2,587,916 407,820
Deficit (162,081) (80,583)
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2,425,835 327,237
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$ 3,439,556 $ 2,564,281
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The accompanying summary of significant accounting policies and notes are an
integral part of these financial statements.
1
API Electronics Group Inc.
Consolidated Interim Statement of Operations
and Retained Earnings (Deficit)
(Unaudited)
(Expressed in US$)
Six Months Ended Three Months Ended
November 30 November 30
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2001 2000 2001 2000
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Sales $ 1,639,853 $ 1,320,807 $ 714,837 $ 626,204
Cost of sales 1,194,358 1,021,957 597,871 501,983
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Gross profit 445,495 298,850 116,966 124,221
Expenses
Selling expenses 167,924 105,861 92,051 47,726
General and administrative 369,372 133,682 279,416 69,861
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537,296 239,543 371,467 117,587
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Operating Income (91,801) 59,307 (254,501) 6,634
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Other (Income)
Expenses
Other income (59,128) (819) (2,207) -
Interest expense 18,825 21,812 7,295 10,825
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(40,303) 20,993 5,088 10,825
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Income (loss) before income
taxes (51,498) 38,314 (259,589) (4,191)
Income taxes 30,000 67 30,000 -
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Net income (loss) (81,498) 38,247 (289,589) (4,191)
Retained earnings (deficit),
beginning of period (80,583) (182,684) 127,508 (140,246)
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Deficit, end of period $ (162,081) $ (144,437) $ (162,081) $ (144,437)
============================================================================================================
Earning (loss) per share - basic $ (0.01) $ 0.01 $ (0.03) $ -
============================================================================================================
The accompanying summary of significant accounting policies and notes are an
integral part of these financial statements.
2
API Electronics Group Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(Expressed in US$)
Six Months Ended Three Months Ended
November 30 November 30
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2001 2000 2001 2000
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Cash provided by (used in)
Operating activities
Net income (loss) for the period $ (81,498) $ 38,247 $ (289,589) $ (4,191)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Amortization 75,068 54,128 37,534 27,064
Net change in non-cash working capital
balances (Note 3) (256,527) (95,085) (101,768) (26,844)
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(262,957) (2,710) (353,823) (3,971)
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Investing activities
Capital assets (116,650) (5,555) (105,972) (5,555)
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Financing activities
Cash acquired through reverse take-over,
net of cost of acquisition $ 1,178,375 - 1,178,375 -
Issue of share capital 5,707 - 5,707 -
Bank indebtedness (106,100) - (53,049) -
Capital leases obligations (4,437) (4,242) (2,695) (1,593)
Equipment loan (15,000) - (6,000) -
Due to shareholders (43,575) - (95,574) -
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1,014,970 (4,242) 1,026,764 (1,593)
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Net increase (decrease) in cash 635,363 (12,507) 566,969 (11,119)
Cash, beginning of period 41,073 81,163 109,467 79,775
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Cash, end of period $ 676,436 $ 68,656 $ 676,436 $ 68,656
===========================================================================================================
The accompanying summary of significant accounting policies and notes are an
integral part of these financial statements.
3
API Electronics Group Inc.
Summary of Significant Accounting Policies
(Unaudited)
November 30, 2001 and 2000
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Business Acquisition and
Nature of Business API Electronics Group Inc. (the "API" or "Company"),
formerly Investorlinks.Com Inc., and API Electronics
Inc. ("API Electronics"), a private company
incorporated under the laws of the State of New York,
completed the business combination referred to in
Note 1 to the consolidated interim financial
statements. As stated in Note 1, the business
combination has been accounted for as a reverse
take-over of the Company by API Electronics.
The Company's business focus is the manufacture and
supply of high reliability semiconductors and
microelectronics circuits for military, aerospace and
commercial applications.
Principles of The consolidated financial statements include the
Consolidation accounts of the API, the legal parent, together with
its wholly owned subsidiary, API Electronics.
Basis of Presentation These consolidated interim financial statements have
been prepared in accordance with Canadian generally
accepted accounting principles. All amounts are
disclosed in US dollars unless otherwise indicated.
Capital Assets Capital assets are amortized using the straight-line
basis over the following years:
Building - 20 years
Machinery and equipment - ranging from 5 to 10 years
Website - 3 years
Goodwill Goodwill is being amortized over 5 years.
Foreign Currency The accompanying consolidated financial statements
Translation are stated in United States dollars, "the reporting
currency". The transactions of the Company have been
recorded during the period in Canadian dollars. The
translation of Canadian dollars into United States
dollars have been made at the period end exchange
rate for balance sheet items and the average exchange
rate for the period for revenues, expenses, gains and
losses.
4
Accounting Estimates The preparation of financial statements in conformity
with Canadian generally accepted accounting
principles requires management to make estimates and
assumptions that affect the amounts reported in the
financial statements. Actual results could differ
from those estimated.
5
API Electronics Group Inc.
Notes to Interim Consolidated Financial Statements
(Unaudited)
(Expressed in US$)
For the six months ended November 30, 2001 and 2000
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1. Business Acquisition
On August 31, 2001, the Company acquired all of the 197 issued and
outstanding shares of API Electronics for US $2,600,000. The purchase price
was satisfied by the issuer of 6,500,000 units of the Company at US $0.40
per unit. Each unit consists of one common share and 1/2 of one Series A
common share purchase warrants exercisable at US $0.45 per share expiring
February 28, 2003 and 1/2 of one Series B common share purchased warrant
exercisable at US $ 0.75 expiring August 30, 2003. As a result of the
transaction, the original shareholders of API Electronics owned 60% of the
issued shares of the Company. The business acquisition resulted in a change
in business focus and an introduction of new management for the Company.
Accordingly, the acquisition has been accounted for as a reverse take-over
of the Company by API Electronics. Application of reverse take-over
accounting results in the following:
i) API Electronics is deemed to be the acquirer for accounting
purposes and its assets and liabilities are included in the
consolidated balance sheet at their carrying valves. The
comparative figures are those of API Electronics.
ii) The consolidated balance sheet combines the assets and
liabilities of the Company as an acquisition under the purchase
method of accounting for business combinations.
The net capital assets of the Company acquired, at fair value, as at August
31, 2001 are as follows:
Cash and cash equivalents $ 1,213,248
Marketable securities 1,891
Other current assets 122,262
Capital assets 3,559
Current liabilities (397,191)
-----------
Net assets acquired 943,769
Add: Cost of acquisition 34,872
-----------
Consideration attributed to share capital of shares issued $ 908,897
===========
6
API Electronics Group Inc.
Notes to Interim Consolidated Financial Statements
(Unaudited)
(Expressed in US$)
For the six months ended November 30, 2001 and 2000
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2. Share Capital
(a) Authorized
Unlimited special shares
Unlimited common shares
(b) Issued Common Shares
Number of
Shares Consideration
------------------------------
Pre-business combination for API Electronics
Balance at June 1, 2000 and May 31, 2001 100 $ 407,820
Issued upon the capitalization of the promissory note 97 1,265,492
------------------------------
Balance at August 31, 2001 197 $ 1,673,312
==============================
Pre-business combination for the Company
Balance at April 30, 2001 13,179,020 $ 2,985,416
Share consolidation (1) (8,786,048) -
------------------------------
Balance at August 31, 2001 4,392,972 $ 2,985,416
==============================
(1) Pursuant to Articles of Amendment, the Company consolidated
the issued and outstanding common shares on the basis of one
common share for every three issued and outstanding common
share in the capital of the Company.
Issued from date of reverse take-over
Share capital is comprised of the number of issued
and outstanding shares of the Company and the
stated capital of API Electronics 4,392,972 $ 1,673,312
Shares issued upon the reverse take-over
(Note 1) 6,500,000 908,897
Share issued upon exercise of stock options 10,000 5,707
------------------------------
10,902,972 $ 2,587,916
==============================
7
(c) Warrants
Warrants outstanding, April 30, 2001 226,667
Issued pursuant to advisory services 250,000
Issued pursuant to business acquisition (Note 1)
- Series A 3,250,000
- Series B 3,250,000
-----------
Warrants outstanding, November 30, 2001 6,976,667
===========
8
API Electronics Group Inc.
Notes to Interim Consolidated Financial Statements
(Unaudited)
(Expressed in US$)
For the six months ended November 30, 2001 and 2000
- --------------------------------------------------------------------------------
2. Share Capital - continued
As at November 30, 2001 the following warrants are outstanding and
exercisable:
Number Share for Exercise Expiry
Outstanding Warrants Price Date
-----------------------------------------------------------------------
222,667 1 for 1 $9.00 August 8, 2002
250,000 1 for 1 $0.40 August 31, 2003
3,250,000 1 for 1 $0.45 February 28, 2002
3,250,000 1 for 1 $0.75 August 30, 2003
(d) Stock Options
Weighted
Number of Average
Options Special Price
Options outstanding, April 30, 2001 123,667 $ 7.80
Cancelled (113,667) 8.51
Granted 500,000 0.60
Exercised (10,000) Cdn. 0.90
--------------------------
Options outstanding, November 30, 2001 500,000 $ 0.60
==========================
As at November 30, 2001 the following options are outstanding:
Number Exercise Expiry
Issued to Outstanding Price Date
-----------------------------------------------------------------------
Directors 100,000 0.45 July 31, 2006
Directors 150,000 0.45 August 31, 2006
Directors 100,000 0.75 July 31, 2006
Directors 150,000 0.75 August 31, 2006
9
API Electronics Group Inc.
Notes to Interim Consolidated Financial Statements
(Unaudited)
(Expressed in US$)
For the six months ended November 30, 2001 and 2000
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3. Changes in Non-Cash Working Capital Balances
Non-cash working capital changes are as follows:
Six Months Ended Three Months Ended
November 30 November 30
2001 2000 2001 2000
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Accounts receivable $ (186,152) $ (106,138) $ 75,246 $ (20,138)
Inventory (41,001) (33,074) (54,000) (34,500)
Prepaid expenses 36,535 1,418 28,789 2,688
Accounts payable (65,909) 42,709 (151,803) 25,106
-------------------------------------------------------------------
$ (256,527) $ (95,085) $ (101,768) $ (26,844)
===================================================================
Supplemented cash flow information
Cash paid for interest $ 18,825 $ 21,812 $ 7,295 $ 10,825
Cash paid for taxes - 67 - -
Non- Cash Transaction
Convertible promissory note
converted into common
stock $1,265,492 $ - $ - $ -
Disposal of capital assets in
settlement of equipment
loan $ 120,000 $ - $ - $ -
10
QUARTERLY AND YEAR END REPORT
BC FORM 51-901
[LOGO OMITTED] British Columbia Securities Commission (previously Form 61)
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Freedom of Information and Protection of Privacy Act: The personal information
requested on this form is collected under the authority of and used for the
purpose of administering the Securities Act. Questions about the collection or
use of this information can be directed to the Supervisor, Financial Reporting
(604-899-6729), PO Box 10142, Pacific Centre, 701 West Georgia Street, Vancouver
BC V7Y 1L2. Toll Free in British Columbia 1-800-373-6393
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INSTRUCTIONS
This report must be filed by Exchange Issuers within 60 days of the end of their
first, second and third fiscal quarters and within 140 days of their year end.
"Exchange Issuer" means an issuer whose securities are listed and posted for
trading on the Canadian Venture Exchange and are not listed and posted on any
other exchange or quoted on a trading or quotation system in Canada. Three
schedules must be attached to this report as follows:
SCHEDULE A: FINANCIAL STATEMENTS
Financial statements prepared in accordance with generally accepted accounting
principles are required as follows:
For the first, second and third financial quarters:
Interim financial statements prepared in accordance with section 1751 of the
CICA Handbook, including the following: balance sheet, income statement,
statement of retained earnings, cash flow statement, and notes to the financial
statements.
The periods required to be presented, consistent with CICA Handbook section
1751, are as follows:
o a balance sheet as of the end of the current interim period and a comparative
balance sheet as of the end of the immediately preceding fiscal year;
o a statement of retained earnings cumulatively for the current fiscal
year-to-date, with a comparative statement for the comparable year to-date
period of the immediately preceding fiscal year; and
o income statements and cash flow statements for the current interim period and
cumulatively for the current fiscal year-to-date, with comparative statements
for the comparable interim periods (current and year-to-date) of the
immediately preceding fiscal year.
For the financial year end:
Annual audited financial statements prepared on a comparative basis.
Exchange Issuers with a fiscal year of less than or greater than 12 months
should refer to National Policy No. 51 Changes in the Ending Date of a Financial
Year and in Reporting Status for guidance.
Issuers in the development stage are directed to the guidance provided in CICA
Accounting Guideline AcG-11 Enterprises in the Development Stage that states
"enterprises in the development stage are encouraged to disclose in the income
statement and in the cash flow statement cumulative balances from the inception
of the development stage."
Issuers that have been involved in a reverse take-over should refer to the
guidance found in BCIN #52-701 (previously NIN #91/21) with respect to such
transactions including the requirement or disclosure of supplementary
information regarding the legal parent's prior financial operations.
SCHEDULE B: SUPPLEMENTARY INFORMATION
The supplementary information set out below must be provided when not included
in Schedule A.
1. Analysis of expenses and deferred costs
Provide a breakdown of amounts presented in the financial statements for the
following: deferred or expensed exploration, expensed research, deferred or
expensed development, cost of sales, marketing expenses, general and
administrative expenses, and any other material expenses reported in the
income statement and any other material deferred costs presented in the
balance sheet. The breakdown should separately present, at a minimum, each
component that comprises 20% or more of the total amount for a material
classification presented on the face of the financial statements. All other
components of a material classification may be grouped together under the
heading "miscellaneous" or "other" in the cost breakdown; the total for
"miscellaneous" should not exceed 30% of the total for a material
classification.
Breakdowns are required for the year-to-date period only.
Breakdowns are not required for comparative periods.
Issuers in the development stage are reminded that Section 3(9)(b) of the BC
Securities Commission's Rules requires a schedule or note to the financial
statements containing an analysis of each of exploration, research,
development and administration costs, whether expensed or deferred and if the
issuer is a natural resource issuer, that analysis for each material
property. Because the analysis required by Rule 3(9)(b) must be included in
the financial statements, the information does not have to be repeated in
Schedule B. Consistent with CICA Accounting Guidelines AcG-11, staff
considers an issuer to be in the development stage when it is devoting
substantially all of its efforts to establishing a new business and planned
principal operations have not commenced. Further, in staff's view, the lack
of significant revenues for the past two years normally indicates that an
issuer is in the development stage.
2. Related party transactions
Provide disclosure of all related party transactions as specified in Section
3840 of the CICA Handbook.
3. Summary of securities issued and options granted during the period
Provide the following information for the year-to-date period:
(a) summary of securities issued during the period, including date of issue,
type of security (common shares, convertible debentures, etc.), type of
issue (private placement, public offering, exercise of warrants, etc.)
number, price, total proceeds, type of consideration (cash, property,
etc.) and commission paid, and
(b) summary of options granted during the period, including date, number,
name of optionee for those options granted to insiders, generic
description of other optionees (e.g. "employees",) exercise price and
expiry date.
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FIN 51-901 Rev.2000 / 12 / 19
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4. Summary of securities as at the end of the reporting period
Provide the following information as at the end of the reporting period:
(a) description of authorized share capital including number of shares for
each class, dividend rates on preferred shares and whether or not
cumulative, redemption and conversion provisions,
(b) number and recorded value for shares issued and outstanding,
(c) description of options, warrants and convertible securities outstanding,
including number or amount, exercise or conversion price and expiry date,
and any recorded value, and
(d) number of shares in each class of shares subject to escrow or pooling
agreements.
5. List the names of the directors and officers as at the date this report is
signed and filed.
SCHEDULE C: MANAGEMENT DISCUSSION AND ANALYSIS
1. General Instructions
(a) Management discussion and analysis provides management with the
opportunity to discuss an issuer's business, current financial results,
position and future prospects.
(b) Focus the discussion on material information, including liquidity,
capital resources, known trends, commitments, events, risks or
uncertainties, that is reasonably expected to have a material effect on
the issuer.
(c) For an issuer with active ongoing operations the discussion should be
substantive (e.g. generally two to four pages in length); for an issuer
with limited operations the discussion may not be as extensive (e.g. one
page).
(d) The discussion must be factual, balanced and non-promotional.
(e) Where the discussion relates to a mineral project, as defined in National
Instrument 43-101 "Standards of Disclosure for Mineral Projects," the
disclosure must comply with NI 43-101.
2. Description of Business
Provide a brief description of the issuer's business. Where an issuer is
inactive and has no business, disclose these facts together with a
description of any plans to reactivate and the business the issuer intends to
pursue.
3. Discussion of Operations and Financial Condition
Provide a meaningful discussion and analysis of the issuer's operations for
the current year-to-date period presented in the financial statements.
Discuss the issuer's financial condition as at the date of the most recent
balance sheet presented in the financial statements.
The following is a list of items that should be addressed in management's
discussion and analysis of the issuer's operations and financial condition.
This is not intended to be an exhaustive list of the relevant items.
(a) expenditures included in the analysis of expenses and deferred costs
required under Securities Rule 3(9)(b) and Schedule B;
(b) acquisition or abandonment of resource properties material to the issuer
including material terms of any acquisition or disposition;
(c) acquisition or disposition of other material capital assets including
material terms of the acquisition, or disposition;
(d) material write-off or write-down of assets;
(e) transactions with related parties, disclosed in Schedule B or the notes
to the financial statements;
(f) material contracts or commitments;
(g) material variances between the issuer's financial results and information
previously disclosed by the issuer, (for example if the issuer does not
achieve revenue and profit estimates previous released, discuss this fact
and the reasons for the variance);
(h) material terms of any existing third party investor relations
arrangements or contracts including:
i. the name of the person;
ii. the amount paid during the reporting period; and
iii. the services provided during the reporting period;
(i) legal proceedings;
(j) contingent liabilities;
(k) default under debt or other contractual obligations;
(l) a breach of corporate, securities or other laws, or of an issuer's
listing agreement with the Canadian Venture Exchange including the nature
of the breach, potential ramifications and what is being done to remedy
it;
(m) regulatory approval requirements for a significant transaction including
whether the issuer has obtained the required approval or has applied for
the approval;
(n) management changes; or
(o) special resolutions passed by shareholders.
4. Subsequent Events
Discuss any significant events and transactions that occurred during the time
from the date of the financial statements up to the date that this report is
certified by the issuer.
5. Financings, Principal Purposes and Milestones
(a) In a tabular format, compare any previously disclosed principal purposes
from a financing to actual expenditures made during the reporting period.
(b) Explain any material variances and the impact, if any, on the issuer's
ability to achieve previously disclosed objectives and milestones.
6. Liquidity and Solvency
Discuss the issuer's working capital position and its ability to meet its
ongoing obligations as they become due.
How to File Under National Instrument 13-101 - System for Electronic Document
Analysis and Retrieval (SEDAR)
BC Form 51-901 Quarterly and Year End Reports are filed under Category of
Filing: Continuous Disclosure and Filing Type: Interim Financial Statements or
Annual Financial Statements. Schedule A (Financial Statements) is filed under
Document Type: Interim Financial Statements or Annual Financial Statements.
Schedule B (Supplementary Information) and Schedule C (management Discussion)
are filed under Document Type: BC Form 51-901 (previously Document Type Form
61(BC)).
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FIN 51-901 Rev.2000 / 12 / 19
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Meeting the Form Requirements
BC Form 510-901 consists of three parts: Instructions to schedules A, B and C,
issuer details and a certificate. To comply with National instrument 132-101 it
is not necessary to reproduce the instructions that are set out in BC Form
51-901. A cover page to the schedules titled BC Form 51-901 that includes the
issuer details and certificate is all that is required to meet the BC Form
51-901 requirements. The form of the certificate should be amended so as to
refer to one or two of the three schedules required to complete the report.
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FIN 51-901 Rev.2000 / 12 / 19
QUARTERLY AND YEAR END REPORT
BC FORM 51-901
[LOGO OMITTED] British Columbia Securities Commission (previously Form 61)
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Freedom of Information and Protection of Privacy Act: The personal information
requested on this form is collected under the authority of and used for the
purpose of administering the Securities Act. Questions about the collection or
use of this information can be directed to the Supervisor, Financial Reporting
(604-899-6729), PO Box 10142, Pacific Centre, 701 West Georgia Street, Vancouver
BC V7Y 1L2. Toll Free in British Columbia 1-800-373-5393
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- ----------------------------------------------------------------------------------- -------------------- ------------------------
ISSUER DETAILS DATE OF REPORT
NAME OF ISSUER FOR QUARTER ENDED YY MM DD
API ELECTRONICS GROUP INC. 2001/11/30 2002 01 28
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ISSUER ADDRESS
505 UNIVERSITY AVENUE, SUITE 1400
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CITY PROVINCE POSTAL CODE ISSUER FAX NO. ISSUER TELEPHONE NO.
TORONTO ON M5G 1X3 416-593-4658 416-593-6543
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CONTACT NAME CONTACT POSITION CONTACT TELEPHONE NO.
JASON DEZWIREK CHAIRMAN 416-593-6543
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CONTACT EMAIL ADDRESS WEB SITE ADDRESS
jason@kaboose.com www.api-electronics.com
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CERTIFICATE
The three schedules required to complete this Report are attached and the
disclosure contained therein has been approved by the Board of Directors. A copy
of this Report will be provided to any shareholder who requests it.
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DIRECTOR'S SIGNATURE PRINT FULL NAME DATE SIGNED
YY MM DD
"JASON DEZWIREK" JASON DEZWIREK
2002 01 28
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DIRECTOR'S SIGNATURE PRINT FULL NAME DATE SIGNED
YY MM DD
"PHILIP DEZWIREK" PHILIP DEZWIREK
2002 01 28
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FIN 51-901 Rev.2000 / 12 / 19
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SCHEDULE "A"
FINANCIAL INFORMATION
See attached unaudited consolidated financial statements of API Electronics
Group Inc. (the "Company") for the three-month period ended November 30, 2001.
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FIN 51-901 Rev.2000 / 12 / 19
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Schedule "B"
API ELECTRONICS GROUP INC.
INCOME STATEMENT
SUPPLEMENTAL INFORMATION
6 months ended 6 months ended 3 months ended 3 months ended
November 30, 2001 November 30, 2000 November 30, 2001 November 30, 2000
-----------------------------------------------------------------------------------
Selling Expenses
Auto Expenses $12,750 $11,102 $6,033 $4,586
Advertising $14,535 $442 $13,285 $442
Entertainment and travel $34,791 $30,189 $19,735 $12,993
Miscellaneous $2,540 $2,688 $1,437 $763
Officer Salary $0 $8,000 $0 $0
Payroll Sales $96,145 $49,000 $47,995 $26,900
Payroll Taxes $7,163 $4,440 $3,566 $2,042
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$167,924 $105,861 $92,051 $47,726
===================================================================================
General and Administrative
Business Development and investor $154,002 $0 $154,002 $0
relations
Consulting $14,486 $11,250 $10,055 $5,750
Depreciation and amortization $15,014 $10,826 $7,507 $5,412
Insurance Life $1,944 $1,717 $1,110 $1,000
Miscellaneous and Bank $4,166 $131 $599 $128
Office Supplies and Expenses $15,091 $13,411 $9,248 $7,313
Office Salaries $36,036 $30,390 $20,241 $15,795
Officer Salary $45,500 $41,500 $22,750 $22,750
Payroll Taxes $5,971 $5,600 $3,091 $2,943
Professional Services $29,423 $4,003 $23,618 $1,120
Pension Expense 401K $21,770 $6,699 $8,615 $3,565
Shareholder information $470 $0 $470 $0
Telephone $15,311 $8,155 $7,922 $4,085
Transfer agent fees $7,652 $0 $7,652 $0
Website maintenance expense $2,536 $0 $2,536 $0
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$369,372 $133,682 $279,416 $69,861
===================================================================================
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FIN 51-901 Rev.2000 / 12 / 19
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API ELECTRONICS GROUP INC.
SUPPLEMENTAL INFORMATION REGARDING THE
LEGAL PARENT'S PRIOR FINANCIAL OPERATIONS
Consolidated Statement Of Operations and Deficit
for the Period from May 1, 2001 to August 31, 2001
--------------------------------------------------
(expressed in US$)
Advertising revenue $9,903
Interest income $15,614
Gain/Loss on foreign exchange ($146)
----------------------
Total Revenue $25,371
----------------------
Accounting and administrative support $5,215
Amortization $239
Bad debts $25,233
Bank charges $214
Business development $5,215
Consulting fees $40,000
Depreciation $2,206
Employee benefit program $97
Internet $13,573
Legal, audit and professional $108,443
Office and general $22,983
Other taxes $11
Outside services $2,775
Payroll taxes ($359)
Postage and freight $5,395
Public relations ($5,162)
Rent $2,945
Salaries $14,090
Share certificate cost $2,078
Shareholder information $12,557
Stock exchange fees $433
Transfer agent fees and expenses $5,753
Corporation tax expense $2,704
Loss on writedown of investments $92,238
Miscellaneous revenue ($5,625)
Gain/loss on sale of assets $78,991
----------------------
Total expenses $432,243
----------------------
Net Income (loss) for the period ($406,872)
Deficit - beginning of period ($1,641,922)
----------------------
Deficit - end of period ($2,048,794)
======================
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FIN 51-901 Rev.2000 / 12 / 19
SCHEDULE "C"
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
A) Business Description
The Company's business focus is the manufacture and supply of high-reliability
semiconductors and microelectronics circuits for military, aerospace and
commercial applications.
Six Months Ended November 30, 2001 Compared to the Six Months Ended November 30,
2000
Sales revenue during the six months ended November 30, 2001 of $1,639,853 an
increase of 24.2% over the $1,320,807 revenue for the six months ended November
30, 2000. Operating Gross Margins improved from 22.6% in 2000 to 27.2% in 2001.
The increased revenue is attributed to favourable market conditions for its
semiconductors and microelectronics circuits in the military industry.
Selling expenses increased from $105,861 during the six month period ended
November 30, 2000 to $167,924 for the six month period ending November 30, 2001.
This is primarily attributable to the addition of one sales person, increasing
the sales payroll from $49,000 for the 2000 six month period to $96,145 for the
2001 six month period As a percentage of sales, the 2001 six month period
selling expenses were 10.2% and this was reasonably in line with the 8.0% in the
2000 six month period.
General and administrative expenses increased 176% from the six month period
ending November 30, 2000 amount of $133,682 to the $369,372 amount incurred for
the six month period ended November 30, 2001. The increase is attributed
primarily to the following:
Expense Description 6 months 6 months
November 30, 2001 November 30, 2000
Business development and investor relations $154,002 $0
- - significant expenditures were made in the areas of business plan development and
investor relations to create market awareness and provide support for future
financing.
Professional fees $29,423 $4,003
- - additional expenditures were incurred for professional services related to
expanded public company accounting and disclosure
Pension expense
- - $21,770 $6,699
Transfer agent fees $7,652 $0
- - these are new fees for the company effective August 31, 2001 as a result of
their new status as a reporting issuer on that date
Other income increased from $819 for the six month period ending November 30,
2000 to $59,128 in the six month period ending November 30, 2001. The increase
was attributed to rental income and an insurance claim.
The net loss for the six month period ending November 30, 2001 was ($81,498)
($0.01 loss per share) as compared to net income in the amount of $38,247 ($0.01
earnings/share) for the six month period ending November 30, 2000.
B) Liquidity and Capital Resources
The Company had cash resources in the amount of $676,436 as at November 30, 2001
compared to $41,073 as at its year end date of May 31, 2001. The increase was
attributed to cash acquired in connection with its business acquisition as
detailed in Note 1 of the November 30, 2001 six month financial statements
Working capital increased from $930,027 as at May 31, 2001 to $1,671,207 as at
November 30, 2001. An comparison of the major components is presented below:
November 30, 2001 May 31, 2001 Increase(Decrease)
Accounts Receivable $551,741 $340,383 $211,358
Inventory $1,318,400 $1,277,399 $41,001
Prepaid Expenses $73,738 $13,174 $60,564
Bank Indebtedness $254,350 $354,346 ($99,996)
Accounts Payable $672,497 $341,216 $331,281
Increases in accounts receivable and inventory for November 30, 2001 compared to
May 31, 2001 can be attributed to more investment required to support increased
sales levels. The increase in accounts payable can be attributed to additional
purchases to support increase production and sales volume. Also included in
accounts payable at November 30, 2001 and not May 31, 2001 are liabilities
assumed and not settled in connection with the Company's business acquisition as
described in note 1 of the six month interim financial statements ending
November 30, 2001.
Equipment loans payable decreased from $138,000 as at May 31, 2001 to $27,000 as
at November 30, 2001 as a result of the Company disposing of the related capital
assets in settlement of the equipment loan.
In July, 2001 the convertible promissory note in the amount of $1,265,492 was
converted to common shares of the Company.
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FIN 51-901 Rev.2000 / 12 / 19
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Overall, as at November 30, 2001, the Company is in a positive working capital
position that is expected to be sufficient to meet is obligations as they come
due.
C) Financings
For the six month period ending November 30, 2001, there were no financings
D) Subsequent Events
No significant events occurred after the period ended November 30, 2001.
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FIN 51-901 Rev.2000 / 12 / 19