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 Exchange Act of 1934
For the month of August, 2001
INVESTORLINKS.COM INC. (Formerly: Opus Minerals Inc.)
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(Translation of registrant's name into English)
Suite 203, 120 Front Street EastToronto, Ontario, M5A 4L9
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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
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.
INVESTORLINKS.COM INC. (formerly Opus
Minerals Inc.)
Date: August 21, 2001 By: /s/ Sandra J. Hall
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Sandra J. Hall, Director and Secretary
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INVESTORLINKS.COM INC.
NOTICE OF SPECIAL MEETING
OF SHAREHOLDERS
TO BE HELD AUGUST 30, 2001
AND
MANAGEMENT INFORMATION CIRCULAR
RELATING TO THE ACQUISITION OF
API ELECTRONICS INC.
JULY 27, 2001
The Canadian Venture Exchange has not in any way passed upon the merits of the
transactions described herein and any representation to the contrary is an
offence.
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TABLE OF CONTENTS
Notice of Special Meeting of Shareholder................. 1
GLOSSARY OF TERMS........................................ 3
SUMMARY.................................................. 4
SOLICITATION OF PROXIES.................................. 7
APPOINTMENT AND REVOCATION
OF PROXIES............................................ 7
VOTING OF SHARES REPRESENTED
BY MANAGEMENT PROXIES................................. 7
ADVICE TO BENEFICIAL HOLDERS
OF COMMON SHARES...................................... 7
VOTING SHARES AND PRINCIPAL
HOLDERS THEREOF....................................... 8
THE ACQUISITION.......................................... 8
Details of the Acquisition............................ 9
ANCILLARY MATTERS TO BE
ACTED UPON AT THE MEETING............................. 10
Share Consolidation................................... 11
Name Change........................................... 11
BACKGROUND TO THE
ACQUISITION........................................... 11
RECOMMENDATION OF THE
DIRECTORS............................................. 12
NAME CHANGE, CONSOLIDATION
and ACQUISITION....................................... 12
DESCRIPTION OF API GROUP................................. 12
Name.................................................. 12
Business Strategy of API Group........................ 12
Management of API Group............................... 13
Pro Forma Capitalization.............................. 15
Description of Share Capital.......................... 16
Fully Diluted Share Capital Table..................... 16
Dividend Policy....................................... 16
Auditors and Registrar and Transfer
Agent.............................................. 16
INVESTORLINKS.COM INC.................................... 17
General............................................... 17
No Relationship to API Insiders....................... 17
Management............................................ 17
STATEMENT OF EXECUTIVE
COMPENSATION.......................................... 17
Summary Compensation Table............................ 18
Long-Term Incentive Plan Awards....................... 18
Stock Options/SAR Grants.............................. 18
Aggregated Option/SAR Exercises
and Financial Year-End
Option/SAR Values.................................. 19
Employment Contracts.................................. 19
Principal Shareholder................................. 20
Price Range and Trading Volume........................ 20
Share Issuances....................................... 20
Legal Proceedings..................................... 20
Material Contracts.................................... 21
Auditors.............................................. 21
RELIANCE BY IL ON API FOR
INFORMATION RELATING TO
API................................................... 21
API ELECTRONICS INC...................................... 21
General............................................... 21
Business of API....................................... 21
Management............................................ 22
Executive Compensation................................ 23
No Relationship to IL Insiders........................ 23
Indebtedness of Directors and
Officers........................................... 23
Shareholders.......................................... 23
Share Issuances....................................... 23
Summary and Analysis of Financial
Operations......................................... 24
Interest of Management and Others in
Material Transactions.............................. 24
Material Contracts.................................... 25
Legal Proceedings..................................... 25
Auditors.............................................. 25
Transfer Agent and Registrar.......................... 25
RISK FACTORS............................................. 25
APPROVAL AND CERTIFICATE OF IL........................... 28
CERTIFICATE OF API....................................... 28
SCHEDULES
Schedule "A" - Resolution Approving Acquisition
of API Electronics Inc.
Schedule "B" - Special Resolution Approving
Share Consolidation
Schedule "C" - Special Resolution Approving
Name Changes to API Electronics Group Inc.
Schedule "D" - Pro Forma Consolidated Balance
Sheet of API Electronics Group Inc.
Schedule "E" - API Electronics Inc. Audited
Financial Statements, May 31, 2001
Schedule "F" - Investorlinks.com Inc. Audited
Financial Statements, April 30, 2000
Schedule "G" - Investorlinks.com Inc. Unaudited
Interim Financial Statements for the period:
July 31, 2000
October 31, 2000
January 31, 2001
INVESTORLINKS.COM INC.
Notice of Special Meeting of Shareholders
NOTICE IS HEREBY GIVEN that a Special Meeting (the "Meeting") of
shareholders of InvestorLinks.com Inc. ("IL") will be held on Thursday, August
30, 2001, at 11:00 a.m. (Toronto time) at the offices of Weir Foulds LLP, Suite
1600, The Exchange Tower, 130 King Street West, Toronto, Ontario M5X 1J5 for the
following purposes:
1. to consider and, if thought appropriate, pass a resolution to approve
the acquisition by IL (the "Acquisition") of all of the issued and
outstanding common shares of API Electronics Inc. ("API") and the
issuance by IL in exchange therefor of 6,500,000 Units at US$0.40 per
Unit, each Unit consisting of one Common Share and 1/2 of one Series A
Common Share Purchase Warrant exercisable at US$0.45 per share for a
period of eighteen months from the date of issue and 1/2 of one Series
B Common Share Purchase Warrant exercisable at US$0.75 for a period of
two years from the date of issue (after giving effect to the
consolidation referred to in paragraph 2(a) below);
2. to consider and, if thought appropriate, to pass, with or without
variation, the following:
(a) a special resolution authorizing a consolidation of IL's
authorized common shares on the basis that every three (3) common
shares will be converted into one (1) common share; and
(b) a special resolution authorizing a change of IL's name to API
Electronics Group Inc., or such other name as may be approved by
the board of directors of the Corporation and applicable
regulatory authorities; and
3. to transact such other business as may properly come before the
Meeting or any adjournment of the Meeting.
The full texts of the resolutions referred to in paragraphs 1, 2 (a)
and (b) above are set out as Schedules "A", "B" and "C", respectively, to the
Information Circular accompanying this Notice.
The accompanying Information Circular provides additional information
relating to the matters to be dealt with at the Meeting and is incorporated by
reference into and deemed to form part of this Notice.
Holders of common shares of IL are invited to attend the Meeting.
Shareholders of record at the close of business on July 20, 2001, will be
entitled to vote at the Meeting except to the extent that a person has
transferred any common shares of IL after that date and the new holder of such
common shares establishes proper ownership and requests, not later than ten days
before the Meeting, to be included in the list of Shareholders eligible to vote
at the Meeting.
Dated at Toronto, Ontario, this 27th day of July, 2001.
BY ORDER OF THE BOARD
James C. Cassina, President
(signed)
NOTE: Shareholders are requested to date, sign and return the accompanying form
of proxy for use at the Meeting whether or not they are able to attend
personally. To be effective, forms of proxy must be deposited, no later
than forty-eight (48) hours prior to the time of the Meeting, at the
offices of Equity Transfer Services Inc., Richmond Adelaide Centre, 120
Adelaide Street West, Suite 420, Toronto, Ontario, M5H 4C3. Do not send
share certificates with the proxy.
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GLOSSARY OF TERMS
The following is a glossary of terms used in the Notice of Special
Meeting and in the Information Circular, including the Summary:
"Acquisition" means the proposed acquisition by IL of all of the
outstanding API Common Shares;
"API Group" means IL resulting from the Acquisition of API;
"API Group Common Shares" means common shares of IL after the
Acquisition;
"API" means API Electronics Inc., a corporation existing under the laws
of the State of Delaware;
"API Common Shares" means common shares of API;
"CDNX" means the Canadian Venture Exchange;
"Consolidation" means the consolidation of IL's authorized capital of
common shares on the basis of one (1) new common share for every three
(3) common shares;
"Consolidation Resolution" means a special resolution of IL Shareholders
authorizing the Consolidation, the text of which is attached as Schedule
"B" to the Information Circular;
"IL" means InvestorLinks.com Inc., a company incorporated and existing
under the laws of the Province of Ontario;
"IL Common Shares" means common shares of IL;
"IL Shareholder" means a Shareholder of IL;
"Information Circular" means the accompanying management information
circular, together with all Schedules thereto;
"Letter of Intent" means the letter of intent dated June 19, 2001 entered
into by IL and API with respect to the Acquisition;
"Meeting" means the Special Meeting of IL Shareholders to be held on
Thursday, August 30, 2001, at 11:00 a.m. at offices of Weir Foulds LLP,
Suite 1600, The Exchange Tower, 130 King Street West, Toronto, Ontario
M5X 1J5, and all adjournments thereof, for the purposes set forth in the
accompanying Notice of Meeting;
"Name Change Resolution" means a special resolution of IL shareholders
authorizing the name change to "API Electronics Group Inc.", the text of
which is attached as Schedule "C" to the Information Circular;
"OBCA" means the Business Corporations Act (Ontario), as amended; and
"Reorganization" means, collectively, the reorganization of IL effected
by the resolutions set forth in Schedules "A", "B" and "C" if passed and
implemented.
CURRENCY
Unless otherwise specified, in the Information Circular (including the
Schedules attached thereto) all dollar amounts are expressed in Canadian
dollars.
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SUMMARY
The following is a summary of, and is qualified in its entirety by,
the more detailed information and financial statements appearing or referred to
elsewhere in this Information Circular including the Schedules hereto. Certain
capitalized words and terms used in this summary are defined in the Glossary.
THE COMPANIES
InvestorLinks.com Inc.
IL was amalgamated under the laws of the Province of Ontario by
Certificate of Amalgamation issued May 1, 1993. IL's offices are located at 2
Adelaide Street West, Suite 301, Toronto, Ontario M5H 1L6. IL is a reporting
issuer in Ontario, British Columbia, Alberta and is registered as a foreign
reporting issuer with the US Securities and Exchange Commission. IL is a
financial resource and directory portal provider that has assembled financial
content on the Internet. IL offers coverage of the financial markets, technical
analysis tools and an array of financial data for the online searcher of
financial information.
API Electronics Inc.
API is a private corporation incorporated under the laws of the State
of New York by articles of incorporation effective on November 17, 1981. API
changed its place of organization to the State of Delaware on July 25, 2001,
through a migratory merger. API's offices are located at 375 Rabro Drive,
Hauppauge, New York, 11788, N.Y. API is a manufacturer and supplier of high-
reliability semiconductors and microelectronic circuits for military, aerospace,
and commercial applications. Established in 1981, API has maintained its
presence in the semiconductor industry for the past 20 years. API currently
occupies a 15,000-sq-ft manufacturing facility in Hauppauge, New York, which it
owns. All aspects of API's semiconductor manufacturing process are completed on
site at this location.
SPECIAL MEETING
Date, Time and Place of Meeting
The Meeting will be held on Thursday, August 30, 2001, at 11:00 a.m.
(Toronto time) the offices of Weir Foulds LLP, Suite 1600, The Exchange Tower,
130 King Street West, Toronto, Ontario M5X 1J5
Record Date for Voting
The record date for voting at the Meeting is the close of business on
July 20, 2001.
Purpose of the Meeting
The purpose of the Meeting is to consider and, if thought appropriate,
to pass a number of resolutions relating to the acquisition by IL of API and a
concurrent reorganization of IL.
THE ACQUISITION
The Acquisition, if completed, will result in the acquisition by IL of
all of the issued and outstanding API Common Shares. If completed, the
Acquisition will also constitute a reverse take-over of IL by the shareholders
of API.
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Details of the Acquisition
IL is proposing to purchase all of the 197 outstanding API Common
Shares for a purchase price of US$2,600,000 (approximately CDN$3,900,000). The
said purchase price will be satisfied by the issuance by IL to the API
shareholders of 6,500,000 post-Consolidation IL 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 per share for a period of eighteen months from
the date of issue and 1/2 of one Series B Common Share Purchase Warrant
exercisable at US$0.75 for a period of two years from the date of issue. At the
Meeting, the IL Shareholders will be asked to consider and, if thought
appropriate, to pass a resolution approving the Acquisition. Upon the completion
of the Reorganization and Acquisition, there will be approximately 10,893,007 IL
Common Shares outstanding, 59.67% of which will be held by former API
shareholders and 40.33% of which will be held by the current IL Shareholders.
The board of directors of IL following the Acquisition will initially be
composed of 5 directors, being Thomas W. Mills, Jason DeZwirek and Phillip
DeZwirek, nominees of API, and James C. Cassina and Sandra J. Hall, nominees of
IL.
Background to and Reasons for the Acquisition
The purpose of the transaction is to allow IL to acquire a company, API, which
will result in IL owning part of an additional operating business. Since 1991
API has maintained an above average growth rate through developing new
innovations for discontinued technologies and acquiring companies that supply
niche products. API has met the most pressing needs of leading electronics
manufacturers and electronic systems designers - the need for relatively small
runs of high-quality parts with closely defined functional capabilities. API's
operations and facilities are designed specifically to fill this role. It is the
intention of management to utilize API to build IL assets and revenues and
maximize shareholder value.
Conditions to the Completion of the Acquisition
The closing of the Acquisition will be subject to certain conditions,
including the following:
(a) all of the outstanding API Common Shares shall have been properly
tendered for transfer to IL;
(b) any and all regulatory approvals or consents, and any and all third
party consents or waivers required to complete the Acquisition, shall
have been obtained on terms satisfactory to IL;
(c) IL Shareholders shall have approved, by the requisite majority of the
shares entitled to vote thereon, the matters to be voted on at the
Meeting;
(d) IL shall have implemented the Consolidation and the Name Change;
(e) all of the outstanding stock options and warrants of IL shall have
been cancelled, other than 30,000 options held by a director and
680,000 warrants issued in conjunction with a financing and (k)
herein;
(f) at closing, IL shall have no material liabilities not previously
disclosed;
(g) no material adverse change in the business, legal or financial
condition, results of operations or business prospects of IL or API
shall have occurred from that shown in the unaudited financial
statements as at and for the period ended May 31, 2001 for IL and
audited financial statements as at and for the year ended May 31, 2001
for API except to the extent contemplated in the Letter of Intent; and
(h) completion to the satisfaction of each of IL and API of their
respective due diligence investigations of the other party;
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(i) execution of the Agreement and Plan of Merger between IL, API and the
shareholders of API.
(j) At the time of closing IL shall have $1.8 million in cash or cash
equivalents or written approval from API for any expenditures reducing
the amount.
(k) the grant of 50,000 post consolidated common share purchase options to
acquire 50,000 Common Shares exercisable at US$0.45 and the grant of
50,000 post consolidated common share purchase options to acquire
50,000 Common Shares at US $0.75 for a period of five (5) years from
the date of issue, to each API Group director.
OTHER MATTERS TO BE VOTED UPON
If the Acquisition is approved, there are a number of ancillary
matters to be acted upon at the Meeting which are necessary to complete the
Acquisition. Specifically, IL Shareholders will be asked to consider and, if
thought appropriate:
. pass a special resolution authorizing the Consolidation; and
. pass a special resolution authorizing the Name Change in conjunction
with the Consolidation.
SIGNIFICANT SHAREHOLDERS
As of the date of this Information Circular and to the knowledge of
the directors and officers of IL, no persons or companies, beneficially own
directly or indirectly, more than ten percent (10%) of the issued and
outstanding Common Shares of IL. As a result, there are no significant
shareholders to indicate any intention in respect of the matters to be
considered at the Meeting.
NAME CHANGE
If the Acquisition is approved at the Meeting and the other conditions
to the completion of the Acquisition are fulfilled or waived, it is anticipated
that the Acquisition will close shortly after the Meeting. IL will, subject to
requisite shareholder approval, change its name to "API Electronics Group Inc."
or such other name as may be approved by the board of directors of IL and
applicable regulatory authorities.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
OF API GROUP AS AT MAY 31, 2001
The unaudited pro forma consolidated balance sheet attached to this
Information Circular as Schedule "D" has been prepared by management from the
unaudited balance sheet as at May 31, 2001 of IL and the audited balance sheet
as at May 31, 2001 of API stated in US dollars and converted to Canadian dollars
at the Bank of Canada nominal rate as of May 31, 2001. All information has been
stated in Canadian dollars unless otherwise noted. In the opinion of the
management of IL and API, the pro forma consolidated balance sheet includes all
adjustments necessary for fair presentation in accordance with Canadian
generally accepted accounting principals. The pro forma consolidated balance
sheet may not be indicative of the financial position that actually would have
occurred if the events reflected therein had been in effect on the dates
indicated nor of the financial position which may be obtained in the future.
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SOLICITATION OF PROXIES
The information contained in this Information Circular is furnished in
connection with the solicitation of proxies to be used at the Special Meeting of
shareholders of InvestorLinks.com Inc. to be held on Thursday, August 30, 2001,
at 11:00 a.m. (Toronto time) at the offices of Weir Foulds LLP, Suite 1600, The
Exchange Tower, 130 King Street West, Toronto, Ontario M5X 1J5, and all
adjournments of the Meeting, for the purposes set forth in the accompanying
Notice of Meeting. It is expected that the solicitation will be made primarily
by mail or courier but proxies may also be solicited personally by the
employees, officers and directors of IL. The solicitation of proxies by this
Information Circular is being made by and on behalf of the management of IL. The
cost of the solicitation will be borne by IL.
APPOINTMENT AND REVOCATION OF PROXIES
The persons named in the enclosed form of proxy accompanying this
Information Circular are directors and officers of IL. An IL Shareholder has the
right to appoint a person other than the persons specified in such form of proxy
which person need not be a shareholder of IL to attend and act for the IL
Shareholder and on the IL Shareholder's behalf at the Meeting. Such right may
be exercised by striking out the names of the persons specified in the form of
proxy, inserting the name of the person to be appointed in the blank space
provided in the form of proxy, signing the form of proxy and returning it in the
reply envelope in the manner set forth in the Notice of Meeting.
A IL Shareholder who has given a proxy may revoke it by an instrument
in writing, including another properly completed form of proxy, executed by the
shareholder or the shareholder's attorney authorized in writing, and deposited
at the registered office of IL at any time up to and including the last business
day preceding the date of the Meeting, or any adjournment of the Meeting, or
with the chairman of the Meeting on the day of the Meeting or any adjournment of
the Meeting or in any other manner permitted by law.
VOTING OF SHARES REPRESENTED BY MANAGEMENT PROXIES
The persons named in the enclosed form of proxy will vote the shares
in respect of which they are appointed proxy on any ballot that may be called
for in accordance with the instructions on the proxy. In the absence of such
instructions, such shares will be voted in favour of each of the resolutions
referred to in the proxy.
The form of proxy accompanying this Information Circular confers
discretionary authority upon the persons named in the proxy with respect to
amendments to or variations of matters identified in the Notice of Meeting and
with respect to other matters, if any, which may properly come before the
Meeting. At the date of this Information Circular, the management of IL knows of
no such amendments, variations or other matters to come before the Meeting.
However, if any other matters which are not known to management should properly
come before the Meeting, the proxy will be voted on such matters in accordance
with the best judgment of the named proxy.
ADVICE TO BENEFICIAL HOLDERS OF COMMON SHARES
The information set forth in this section is of significant importance to many
IL Shareholders, as a substantial number of shareholders do not hold IL Common
Shares in their own names. IL Shareholders who do not hold their IL Common
Shares in their own names (referred to herein as "Beneficial Shareholders")
should note that only proxies deposited by shareholders whose names appear on
the records of IL as the registered holders of IL Common Shares can be
recognized and acted upon at the Meeting. If IL Common Shares are listed in an
account statement provided to a shareholder by a broker, then, in almost all
cases, those shares will not be registered in the shareholder's name on the
records of IL. Such shares will more likely be registered under the name of the
shareholder's broker or an agent of that broker. In Canada, the vast majority
7
of such shares are registered under the name of CDS & Co. (the registration name
for The Canadian Depositary for Securities, which acts as nominee for many
Canadian brokerage firms). IL Common Shares held by brokers or their agents or
nominees can only be voted (for or against resolutions) upon the instructions of
the Beneficial Shareholder. Without specific instructions, a broker and its
agents and nominees are prohibited from voting shares for the broker's clients.
Therefore, Beneficial Shareholders should ensure that instructions respecting
the voting of their IL Common Shares are communicated to the appropriate person.
Applicable regulatory rules require intermediaries/brokers to seek voting
instructions from Beneficial Shareholders in advance of shareholders' meetings.
Every intermediary/broker has its own mailing procedures and provides its own
return instructions to clients, which should be carefully followed by Beneficial
Shareholders in order to ensure that their IL Common Shares are voted at the
Meeting. Often, the form of proxy supplied to a Beneficial Shareholder by its
broker (or the agent of the broker) is identical to the form of proxy provided
to registered shareholders. However, its purpose is limited to instructing the
registered shareholder (the broker or agent of the broker) how to vote on behalf
of the Beneficial Shareholder. The majority of brokers now delegate
responsibility for obtaining instructions from clients to Independent Investor
Communications Corporation ("IICC"). IICC typically applies a special sticker
to the proxy forms, mails those forms to the Beneficial Shareholders and asks
Beneficial Shareholders to return the proxy forms to IICC. IICC then tabulates
the results of all instructions received and provides appropriate instructions
respecting the voting of shares to be represented at the meeting. A IL
Beneficial Shareholder receiving a proxy with an IICC sticker on it cannot use
that proxy to vote IL Common Shares directly at the Meeting - the proxy must be
returned to IICC well in advance of the Meeting in order to have the IL Common
Shares voted.
Although a Beneficial Shareholder may not be recognized directly at the Meeting
for the purposes of voting IL Common Shares registered in the name of his broker
(or an agent of the broker), a Beneficial Shareholder may attend at the Meeting
as proxyholder for the registered shareholder and vote the IL Common Shares in
that capacity. Beneficial Shareholders who wish to attend the Meeting and
indirectly vote their IL Common Shares as proxyholder for the registered
shareholder, should enter their own names in the blank space on the Instrument
of Proxy provided to them and return the same to their broker (or the broker's
agent) in accordance with the instructions provided by such broker (or agent),
well in advance of the Meeting.
VOTING SHARES AND PRINCIPAL HOLDERS THEREOF
The authorized share capital of IL is an unlimited number of common shares
without par value. As of the date of this Information Circular, there are
13,179,020 IL Common Shares outstanding. Each holder of record of a IL Common
Share at the close of business on July 20, 2001, the record date established for
notice of the Meeting, will, unless otherwise specified in this Information
Circular, be entitled to one vote for each IL Common Share held by such holder
on all matters coming before the Meeting, except to the extent that such holder
has transferred any such shares after the record date and the transferee of such
shares establishes ownership of such shares and makes a written demand, not
later than ten days before the Meeting, to be included in the list of IL
Shareholders entitled to vote at the Meeting, in which case the transferee will
be entitled to vote such shares at the Meeting.
To the knowledge of the directors and officers of IL, no person beneficially
owns, directly or indirectly, or exercises control or direction over, more than
10% of the issued and outstanding IL Common Shares
THE ACQUISITION
IL and API have entered into a letter of intent dated June 19, 2001 (the "Letter
of Intent") with respect to the proposed acquisition by IL of all of the
outstanding API Common Shares. The Letter of Intent contemplates the preparation
and execution of a definitive share exchange agreement in respect of the
Acquisition among IL, API and the shareholders of API, which will contain, among
other things, the basic terms and conditions noted below and the
representations, warranties and indemnities of each of the parties thereto to
the others customary
8
for transactions of a similar nature. That agreement was made effective July 27,
2001 incorporating the terms from the Letter of Intent (the "Agreement").The
principal purpose of the Meeting is to consider and, if thought appropriate, to
pass a resolution approving the Acquisition. The Acquisition, if completed, will
constitute a reverse take-over of IL by the shareholders of API.
IL has also entered into an agreement made June 26, 2001 with an investment
advisor (the "Advisory Agreement") with respect to the Acquisition. Under the
terms of the Advisory Agreement, upon completion of the Acquisition, IL has
agreed to issue warrants to the investment advisor to acquire up to 250,000
Units, each such warrant exercisable at US$0.40 to acquire one (1) Unit for a
period of twenty four months from the date of issue.
Details of the Acquisition
IL is proposing to purchase all of the outstanding API Common Shares (which
total 197 at closing of the Acquisition) for consideration of 6,500,000 post-
consolidation IL Units at US$0.40 per Unit to the API shareholders. Each Unit
consists of one Common Share and 1/2 of one Series A Common Share Purchase
Warrant exercisable at US$0.45 per share for a period of eighteen months from
the date of issue and 1/2 of one Series B Common Share Purchase Warrant
exercisable at US$0.75 for a period of two years from the date of issue. The
Agreement provides that the board of directors of IL following the Acquisition
will be constituted to initially consist of five directors; two nominees of IL
and three nominees of API (see the table under "Description of API Group -
Management of API Group" which sets out the names of and certain other
information relating to these nominees).
At the Meeting, the IL Shareholders will be asked to consider and, if thought
appropriate, to pass a resolution approving the Acquisition. A copy of the
proposed resolution is attached to this Information Circular as Schedule "A".
To be effective, this resolution must be passed by at least a majority of the
votes cast at the Meeting in respect thereof, other than votes attaching to any
securities beneficially owned by shareholders of API, any related parties of
such shareholders and any related parties of API. The persons named in the
enclosed form of proxy intend to vote at the Meeting in favour of this
resolution.
The closing of the Acquisition will be subject to certain conditions, including
the following:
(a) all, but not less than all, of the outstanding API Common Shares shall
have been properly tendered for transfer to IL;
(b) any and all regulatory approvals or consents and any and all third
party consents or waivers required to complete the Acquisition, shall
have been obtained on terms satisfactory to IL;
(c) the IL Shareholders shall have approved, by the requisite majority of
the shares entitled to vote thereon, the matters to be voted on at the
Meeting;
(d) IL shall have implemented the Consolidation and the Name Change;
(e) all of the outstanding stock options and warrants of IL shall have
been cancelled, other than 30,000 options held by a director and
680,000 warrants issued in conjunction with a financing and (k)
herein;
(f) at closing, IL shall have no material liabilities not previously
disclosed;
(g) no material adverse change in the business, legal or financial
condition, results of operations or business prospects of IL as at and
for the period ended May 31, 2001 for IL and audited financial
statements as at and for the year ended May 31, 2001 for API, except
to the extent contemplated in the Letter of Intent; and
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(h) completion to the satisfaction of each of IL and API of their
respective due diligence investigations of the other party;
(i) execution of the Agreement and Plan of Merger between IL, API and the
shareholders of API.
(j) at the time of closing IL shall have $1.8 million in cash or cash
equivalents or written approval from API for any expenditures reducing
the amount.
(k) the grant of 50,000 post consolidated common share purchase options to
acquire 50,000 Common Shares exercisable at US$0.45 and the grant of
50,000 post consolidated common share purchase options to acquire
50,000 Common Shares at US $0.75 for a period of five (5) years from
the date of issue, to each API Group director.
IL's Common Shares are currently listed for trading in the United States on the
National Association of Securities Dealers, Over The Counter Bulletin Board
under the symbol "IVLKF".
CDNX, a market where the IL Common Shares are listed for trading in Canada, has
a policy which requires that "reverse take-over" transactions such as the
Acquisition require pre-approval, including a review of the Information Circular
prior to mailing to the shareholders of IL. Due to business and time issues in
completing the transaction, management of IL has determined that there is not
sufficient time to comply with the CDNX policy, but that it is in the best
interests of IL to seek approval from its shareholders for the Acquisition. As a
result, there is no assurance that a public market for IL common shares will
continue on CDNX following the Acquisition.
The board of directors of IL has approved the Acquisition and the Reorganization
subject to all regulatory and shareholder approvals. See "Background to the
Acquisition" and "Recommendation of the Directors". If the Acquisition is
approved, there are a number of ancillary matters to be acted upon at the
Meeting which are necessary to give effect to, and to accommodate, the
Acquisition. These ancillary matters are discussed below at "Ancillary Matters
To Be Acted Upon at the Meeting".
Upon the completion of the Reorganization and Acquisition, there will be
approximately 10,893,007 IL Common Shares outstanding (subject to the rounding
of fractional shares pursuant to the Consolidation), 59.67% of which will be
held by former API shareholders and 40.33% of which will be held by the current
IL Shareholders. After giving effect to the Reorganization and Acquisition, no
person or company will beneficially own, or exercise control or direction over,
more than 10% of the outstanding IL Common Shares except for Mr. Phillip
DeZwirek and Mr. Jason DeZwirek, who each will hold 1,409,439 IL Common Shares
indirectly, representing approximately 12.94% of the outstanding IL Common
Shares. Each of them holds 50% of Icarus Investments Corp., which holds 50.01%
of Can-Med Technology, Inc. (doing business as Green Diamond Corp.). Can-Med
Technology Inc. holds 85 API Common Shares, which will be exchanged for
2,818,878 Units of API Group. Phillip also controls Technapower Industries
Corporation, that will hold 164,975 IL Common Shares, for an additional 1.5 % of
the IL Common Shares following the Acquisition. Mr. Jason DeZwirek is Mr.
Phillip DeZwirek's son.
ANCILLARY MATTERS TO BE ACTED UPON AT THE MEETING
If the Acquisition is approved, there are a number of ancillary matters to be
acted upon at the Meeting which are necessary to complete the Acquisition.
Specifically, IL Shareholders will be asked to consider and, if thought
appropriate:
. pass a special resolution authorizing the Consolidation; and
10
. pass a special resolution authorizing the Name Change.
The board of directors of IL will only act upon the above resolutions, if
passed, if the board of directors of IL is of the view that the Acquisition will
be completed successfully. Each of the foregoing resolutions is discussed in
further detail below.
Share Consolidation
In connection with the Acquisition, IL Shareholders will also be asked at the
Meeting to approve the consolidation of the authorized IL Common Shares on the
basis that every three (3) IL Common Shares will be converted into one (1) IL
Common Share immediately prior to the Acquisition. The Consolidation is being
undertaken to rationalize the capital structure of IL to facilitate the
Acquisition. To be effective, the Consolidation Resolution, the text of which is
attached to this Information Circular as Schedule "B", must be passed by at
least two-thirds of the votes cast in respect of the resolution at the Meeting.
The persons named in the enclosed form of proxy intend to vote at the Meeting in
favour of this resolution.
No fractional shares will be issued as a result of the Consolidation. Any
fraction of a share will be disregarded and a IL Shareholder will only be
entitled to receive a whole number of shares. The administrative cost of
processing and mailing payment for fractional shares would far exceed the
amounts which could possibly be required to be paid. The Consolidation will not
alter any of the existing rights and obligations of IL. To the extent that any
right or obligation as related to the IL Common Shares is outstanding, such
right or obligation will be adjusted to reflect the Consolidation.
The Consolidation Resolution provides that the directors of IL may determine not
to implement the Consolidation at any time prior to filing the Articles of
Amendment, without further action on the part of IL Shareholders.
Name Change
IL Shareholders will be asked at the Meeting to pass the Name Change Resolution
authorizing IL to change its name to "API Electronics Group Inc.". To be
effective, this resolution, the text of which is attached to this Information
Circular as Schedule "C", must be passed by at least two-thirds of the votes
cast in respect of the resolution at the Meeting. The persons named in the
enclosed form of proxy intend to vote at the Meeting in favour of this
resolution.
The Name Change Resolution provides that the directors of IL may determine not
to implement the Name Change at any time prior to the issuance of articles of
amendment implementing the Name Change, without further action on the part of
the IL Shareholders.
BACKGROUND TO THE ACQUISITION
The transaction is to allow IL to acquire a company, API, which will result in
IL owning an additional operating business. In continuous operation for the past
20 years, API has maintained since 1991 an above average growth rate through
developing innovative solutions for discontinued technologies and acquiring
companies that supply niche products. API has dealt with a number of electronics
manufacturers and electronic systems designers and has met their need for
relatively small runs of high-quality parts with closely defined functional
capabilities. API's operations and facilities are designed specifically to fill
this role. It is the intention of management to utilize API to build IL assets
and revenues and maximize shareholder value.
11
RECOMMENDATION OF THE DIRECTORS
===============================================================================
THE DIRECTORS OF IL HAVE CONCLUDED THAT THE ACQUISITION AND THE REORGANIZATION
ARE IN THE BEST INTERESTS OF THE IL SHAREHOLDERS AND RECOMMEND THAT IL
SHAREHOLDERS VOTE FOR THE ADOPTION OF THE RESOLUTIONS WITH RESPECT TO THE
ACQUISITION AND ALL ASPECTS OF THE REORGANIZATION.
================================================================================
NAME CHANGE, CONSOLIDATION AND ACQUISITION
Prior to the completion of the Acquisition, IL Common Shares will have been
consolidated on a three (3) for one (1) basis, and IL will have changed its name
to "API Electronics Group Inc.".
DESCRIPTION OF API GROUP
If the Acquisition and other ancillary matters referred to above are approved by
IL Shareholders and the Acquisition is completed on the terms currently
contemplated, the following represents a description of API Group.
Name
The name of IL will be changed to "API Electronics Group Inc." pursuant to the
Acquisition (see "Acquisition and Name Change").
Business Strategy of API Group
API manufactures niche specialty products that major semiconductor manufacturers
no longer produce or do not plan on producing in the future. In support of API's
goals and objectives, API has focused on maximizing the potential of the various
products for which it has become the sole source supplier. Through the
implementation of engineering process controls and total quality management
principles, API has achieved manufacturing efficiencies and effectiveness via
specialization and concentration on these niche products. This strategy has
enabled the gradual increase in prices, thereby enhancing margins in these sole
source offerings.
The main thrust of API's strategy has been to increase its market penetration
via the acquisition of the following competitors' product lines:
1. Ampower - Power Transistors
2. Unitrode - Power and Darlington Transistors
3. Solid Power Corp. - Homotaxial Power Transistors
4. MSI Electronics - Varactor Tuning, Abrupt, and Hyperabrupt Diodes
5. ASI Microsystems - Custom Hybrid Circuits
6. REL Labs - Standard Hybrid Amplifiers, Oscillators, and Networks
API has obtained the original designs of these companies to manufacture brand
new spare parts for aircraft, military, medical, and commercial systems that
were built over the past three decades and are still providing essential
services.
Additionally, API will further invest in engineering and R&D to become more
active in High Current/High Voltage devices and introduce a line of specialty
power rectifiers. Offering foundry capabilities to other organizations needing
manufacturing facilities will also serve to achieve the goal of increased market
12
penetration. API will look to maximize its current Qualified Product List (QPL)
offerings and concentrate on achieving QPL status on other products. Also, the
purchase of standard materials in volume will capitalize on discounted price
points and support improved margins.
Seeking to better communicate its capabilities to the industry as a whole --
including customers, sales reps, and distributors -- API has instituted a cost-
effective sales & marketing program. Updated catalogs, brochures, line cards,
and product lists are augmented by its website describing API and its
capabilities.
API will also look to improve its product sales in overseas markets through an
increased emphasis on the part of its domestic direct sales force and improved
communication with overseas sales representatives and distributors.
Management of API Group
The following table sets forth the name, municipality of residence, position(s)
to be held with API Group and principal occupations during the past five years
of each of the proposed directors and officers of API Group. The following table
also sets forth the number of API Group Common Shares to be owned beneficially,
directly or indirectly, or over which control or direction will be exercised by
each such individual immediately following the Amalgamation.
Name, Municipality
of Residence and Position(s) Principal Occupations During Number of API Group
to be Held with API Group the Past Five Years Shares to be Held/(2)/
Thomas W. Mills President and Chief Operating Officer of API Electronics 328,250
Kings Park, N.Y. Inc. since 1981.
President and Director
Phillip DeZwirek Chairman, CEO and Director of CECO Environmental 1,574,414/(a)/
Toronto, Ontario Corp. since August 1979; Director of Kirk & Blum and
Chairman and Director kbd/Technic since 1999; President of Can-Med
Technology, Inc. d/b/a Green Diamond Corp. since 1990.
Jason DeZwirek Vice President and Director of CECO Environmental 1,409,439/(b)/
Toronto, Ontario Corp. since February, 1994 and Secretary of CECO since
Secretary-Treasurer February 20, 1998. Since October 1999 a Founder and
the President of kaboose.com Inc.
James C. Cassina President and CEO of Energy Power Systems Limited 4,333
Toronto, Ontario since July 1998 and Director since September 1996.
Director President of Core Financial Enterprises Inc.
Sandra J. Hall Comptroller of IL from September 1996 to June 2000. 6,916
Director Director of IL since April 2000 and Secretary IL since
Ajax, Ontario June 8, 2000. Secretary, Director and Vice President of
Corporate Affairs of Energy Power Systems Limited.
__________________________________
Notes:
- ------
(a) Mr. Phillip DeZwirek holds 50% of Icarus Investments Corp., which in turn
holds 50.01% of Can-Med Technology, Inc. Can-Med Technology Inc. holds 85
API Common Shares. Mr. Phillip DeZwirek will hold indirectly approximately
1,409,439 Common Shares of IL representing approximately 12.94% of the
outstanding IL Common Shares. Phillip also controls Technapower Industries
Corporation, that will hold 164,975 IL Common Shares, for an additional
1.5% of the IL Common Shares following the Acquisition.
13
(b) Mr. Jason DeZwirek holds 50% of Icarus Investments Corp., which in turn
holds 50.01% of Can-Med Technology, Inc. Can-Med Technology Inc. holds 85
API Common Shares. Mr. Jason DeZwirek will hold indirectly approximately
1,409,439 Common Shares of IL representing approximately 12.94% of the
outstanding IL Common Shares.
The following sets out additional biographical information for each of the above
individuals:
Thomas W. Mills is President and Chief Operating Officer of API Electronics,
Inc. He has worked within the electronics industry since 1967 and has
specialized in semiconductors since 1969. His management career has spanned
Production Control, Production/Manufacturing, Quality Control/Assurance,
Program/Project Operation, and Vice President of Operations. Mr. Mills, who has
been with API since 1981, holds an Economics degree and has taken courses in
Industrial Engineering.
Phillip DeZwirek became a director, Chairman of the Board and the Chief
Executive Officer of CECO Environmental Corp. in August 1979. Mr. DeZwirek also
served as Chief Financial Officer until January 26, 2000. Mr. DeZwirek's
principal occupations during the past five years have been as Chairman of the
Board and Vice President of CECO Filters (since 1985); Treasurer and Assistant
Secretary of CECO Group (since December 10, 1999); a director of Kirk & Blum and
kbd/Technic (since 1999); and President of Can-Med Technology, Inc. d/b/a Green
Diamond Corp. ("Can-Med") (since 1990). Mr. DeZwirek has also been involved in
private investment activities for the past five years.
Jason DeZwirek has been Vice President and a Director of CECO Environmental
Corp. since February, 1994 and the Secretary of CECO since February 20, 1998, He
also serves as Vice President of Can-Med Technology, Inc. d/b/a Green Diamond
Corp. Mr. DeZwirek's principal occupation since October 1999 has been as Founder
and President of kaboose.com Inc., a company engaged in the development of
interactive educational content. Mr. DeZwirek has also been involved in private
investment activities for the past five years.
Sandra J. Hall has acted as Comptroller of IL since September 1996. Ms. Hall has
been a director of Energy Power Systems Limited since December 1997 and
Secretary from July 1998. Ms. Hall has extensive experience in corporate
financial administration and regulatory and investor communications for public
companies. Ms. Hall has provided financial administrative and executive services
to several publicly traded companies independently since September 1996. Prior
to that, Ms. Hall worked 15 years at a major corporate services company where
they managed the public, investor and regulatory filing requirements of over 100
companies.
James Cassina is the President and a Director of IL. Mr. Cassina is also the
President, Chief Executive Officer and a member of the board of directors of
Energy Power Systems Limited since 1996. Mr. Cassina has extensive experience
managing public companies.
During the past five years, the above individuals have served the following
public companies for the periods and in the capacities noted below:
Name Public Company Capacity Period
- ---- -------------- -------- ------
Phillip DeZwirek CECO Environmental Corp. Chairman, CEO August 1979 to present
CFO August 1979 to January 2000
Digital Fusion Multimedia Corp. Director January, 1995 to June, 1998
Chairman
Jason DeZwirek CECO Environmental Corp. Director February 1994 to present
Secretary February 1998 to present
14
Name Public Company Capacity Period
- ---- -------------- -------- ------
Digital Fusion Multimedia Corp. President January, 1995 to June, 1998
James C. Cassina Investorlinks.com Inc. Director December 1996 to April 2000
President , Director April 2001 to present
Energy Power Systems Limited President, C.E.O. July 1998 to present
Director September 1996 to present
Oil Springs Energy Corp. President August 1984 to October, 1999
Director August 1984 to present
Eugenic Corp. President, Director November 1996 to October 2000
Bonanza Blue Corp. President, Director October 2000 to Present
Sandra J. Hall Investorlinks.com Inc. Director April 2000 to Present
Secretary June 2000 to Present
Energy Power Systems Limited Director December 1997 to present
Secretary July 1998 to present
VP Corporate Affairs October 1999 to present
Rally Energy Corp. President May 2000 to May 2001
Director December 1997 to June 2001
Eugenic Corp. President, Director October 2000 to present
______________________________
Pro Forma Capitalization
For accounting purposes, the business combination resulting from the Acquisition
will be treated as a reverse take-over of IL by API. The following table sets
forth the capitalization of IL as at May 31, 2001, and the pro forma
consolidated capitalization of API Group as at May 31, 2001 converted to
Canadian dollars at the Bank of Canada nominal rate after giving effect to the
Acquisition and adjustments. Shareholders should also refer to the pro forma
consolidated financial statements of IL and the financial statements of API
attached to this Information Circular as Schedule "D" and Schedule "E",
respectively.
May 31, 2001 after
IL API giving effect to
May 31, 2001 May 31, 2001 the Acquisition
------------ ------------ ---------------
(unaudited) (audited) (unaudited)
Loans payable - 398,063 398,063
Convertible promissory note - 1,956,071 -
Due to stockholder - 67,354 67,354
Common shares/(1)/ 4,613,960 630,367 4,671,466
Translation adjustment 43,958 - -
Deficit (2,572,890) (124,557) (174,557)
---------- ---------- ----------
TOTAL CAPITALIZATION $2,085,028 $2,927,298 $4,962,326
---------- ---------- ----------
______________________________
(1) The authorized share capital of IL prior to giving effect to the
Acquisition and Reorganization is unlimited common shares and unlimited
special shares. The authorized share capital of API Group after giving
effect to the Acquisition and the Continuance will be an unlimited number
of common shares and an unlimited number of special shares (see
"Description of API Group - Description of Share Capital").
15
Description of Share Capital
The authorized share capital of API Group will consist of unlimited common
shares and unlimited special shares.
The holders of API Group Common Shares will be entitled to one vote at meetings
of shareholders for each share held and to receive dividends as and when
declared by the board of directors. In the event of voluntary or involuntary
liquidation, dissolution or winding-up of API Group, after payment of all
outstanding debts, the remaining assets of API Group available for distribution
will be distributed to the holders of the API Group Common Shares. The holders
of the API Group Common Shares will have no pre-emptive, redemption or
conversion rights.
The special shares will rank on a parity with any other preferred shares with
respect to dividends and any return of capital in the event of the liquidation,
dissolution or winding up of API Group. Holders of special shares will not be
entitled to receive notice of or vote at meetings of shareholders, except where
required under applicable law.
Fully Diluted Share Capital Table
The following table sets out the number of API Group Common Shares proposed to
be outstanding on a fully diluted basis immediately following the Reorganization
and Acquisition.
Number of Shares Percentage of Total
---------------- -------------------
Outstanding IL Common Shares as at May
31, 2001 (assuming implementation of the
Consolidation) 4,393,007 40.33%
IL Common Shares to be issued pursuant
to the Acquisition 6,500,000 59.67%
TOTAL 10,893,007 100%
- --------------------
(1) All of the currently outstanding stock options and warrants of IL will be
cancelled prior to the completion of the Acquisition in accordance with the
terms of the Acquisition, other than 30,000 options held by Elizabeth Kirkwood,
and 680,000 warrants held by Ming Capital Enterprises Inc. IL has also agreed to
issue warrants to the investment advisor to acquire up to 250,000 Units, each
such warrant exercisable at US$0.40 to acquire one (1) Unit for a period of
twenty four months from the date of issue.
Dividend Policy
The payment of dividends by API Group will be a matter to be determined from
time to time by the board of directors of API Group. It is anticipated that
earnings, if any, will initially be retained to finance further operations,
development and acquisitions.
Auditors and Registrar and Transfer Agent
It is expected that the auditors of API Group will be BDO Seidman LLP, Chartered
Accountants, New York. The current auditors of IL are BDO Dunwoody LLP,
Chartered Accountants, Royal Bank Plaza, P.O. Box 32, Toronto, Ontario M5J 2J8.
See "InvestorLinks.com Inc. - Auditors."
16
The registrar and transfer agent for API Group Common Shares will be Equity
Transfer Services Inc., Richmond Adelaide Centre, 120 Adelaide Street West,
Suite 420, Toronto, Ontario M5H 4C3, the current registrar and transfer agent of
IL. See "Investorlinks.com Inc- Registrar and Transfer Agent."
INVESTORLINKS.COM INC.
General
IL was amalgamated under the laws of the Province of Ontario by
Certificate of Amalgamation issued May 1, 1993. IL's offices are located at 2
Adelaide Street West, Suite 301, Toronto, Ontario M5H 1L6. IL is a reporting
issuer in Ontario, British Columbia and Alberta, and is registered as a foreign
reporting issuer with the US Securities and Exchange Commission. IL has a 100%
wholly owned subsidiary IL Data Canada, Inc., incorporated under the laws of the
Province of Ontario by Certificate of Incorporation issued May 10, 2000. IL Data
Canada, Inc., has a 100% owned subsidiary IL Data Corporation, Inc. which was
incorporated under the laws of the State of Nevada by Articles of Incorporation
dated February 22, 2000. IL Data Corporation, Inc. owns and operates the
internet financial website www.investorlinks.com. The website is a resource and
---------------------
directory portal provider that has assembled financial content on the Internet.
The website offers coverage of the financial markets, technical analysis tools
and an array of financial data for the online searcher of financial information.
No Relationship to API Insiders
None of the directors or officers of IL are directors or officers of API, and
none of the directors or officers of API are directors or officers of IL.
Management
The following table sets forth the name, municipality of residence, position(s)
held with IL and principal occupations within the five preceding years of each
of the directors and officers of IL.
Name and Municipality Position(s) Held with Principal Occupations During
of Residence IL the Past Five Years
James C. Cassina President and Director President and CEO of Energy Power Systems Limited
Toronto, Ontario since July 1998 and Director since September 1996.
President of Core Financial Enterprises Inc.
Sandra J. Hall Secretary and Director Comptroller of IL from September 1996 to June 2000.
Ajax, Ontario Director of IL since April 2000 and Secretary IL since
June 8, 2000. Secretary, Director and Vice President of
Corporate Affairs of Energy Power Systems Limited.
Elizabeth J. Kirkwood Director President of HuCamp Mines Limited since May 2001.
Toronto, Ontario President and CEO of Investorslinks.com Inc. until June
2000
Richard Lachcik Director Partner in the law firm Macleod Dixon LLP for the last
Oakville, Ontario three years and previous to that a Partner in the law firm
Weir Foulds LLP.
STATEMENT OF EXECUTIVE COMPENSATION
Ontario securities law requires that a "Statement of Executive Compensation" in
accordance with the Securities Act (Ontario) be included in this Circular. IL
is required to disclose information about the
17
compensation paid to, or earned by IL's Chief Executive Officer and each of the
other four most highly compensated executive officers of IL earning more than
$100,000 in total salary and bonus for the fiscal year ended April 30, 2000. The
only executive officer of IL for whom disclosure is required is Ms. Elizabeth J.
Kirkwood, the President and Chief Executive Officer of IL until June 2000. The
following addresses the applicable items identified.
Summary Compensation Table
The following table sets forth certain information with respect to the
compensation of Ms. Kirkwood, President and Chief Executive Officer of IL (1),
for the financial years ended April 30, 2000, April 30, 1999 and April 30 1998.
Annual Compensation Long Term
------------------- Compensation
------------
Year Salary Bonus Other Annual Securities under All other
-------------------------------------- Compensation Options/Granted Compensation
----------------------------------------------------------------
2000 $85,000 Nil $18,000/(2)/ 30,000/50,000/(3)/ Nil
1999 $85,000 Nil $24,000/(2)/ 60,000/0/(4)/ Nil
1998 $83,649 Nil $24,000/(2)/ 60,000/0 Nil
____________________________
Notes:
(1) Ms. Kirkwood resigned as President and Chief Executive Officer effective
June 6, 2000 and Mr. Romaine Gilliland was appointed President and Chief
Executive Officer on the same date. Mr. Gilliland resigned as President and
Chief Executive Officer on April 10, 2001. Mr. James Cassina was appointed
President on April 10, 2001.
(2) These amounts represent management fees paid and accrued by the then 64%
owned subsidiary of IL, First Strike Diamonds Inc. (formerly: Vertex
Ventures Inc.).
(3) On August 3, 1999, IL granted to Ms. Kirkwood stock options to acquire up
to 50,000 common shares of IL, exercisable at $0.30 expiring on August 3,
2002. Of these options, Ms. Kirkwood exercised 20,000 on February 22, 2000
and the balance of 30,000 stocks options remain unexercised.
(4) On August 3, 1999, Ms. Kirkwood released stock options to acquire 50,000
common shares and 10,000 common shares exercisable at $17.00 and $10.00
respectively.
Long-Term Incentive Plan Awards
IL did not have a long-term incentive plan (the definition of "long-term
incentive plan" contained in the Securities Act (Ontario) expressly excludes a
stock option plan) during the financial year ended April 30, 2000.
Stock Options/SAR Grants
In 1995 a stock option plan was authorized for directors, officers and
employees. The terms of the plan restricts options granted at any point in time
to 10% of the outstanding shares of IL. Also, no optionee can be granted options
of more than 5% of the outstanding common shares of IL at one point in time. The
maximum term of any option granted is five years.
During the financial year ended April 30, 2000, IL granted to Ms. Kirkwood,
stock options to acquire 50,000 common shares of IL, exercisable at $0.30 per
share expiring August 3, 2002. On February 22, 2000 Ms.
18
Kirkwood exercised stock options to acquire 20,000 common shares at $0.30 per
share and Ms. Kirkwood continues to hold the balance of 30,000 stock options.
Aggregated Option/SAR Exercises and Financial Year-End Option/SAR Values
The following table discloses the number and value of exercised and unexercised
options held by Ms. Kirkwood during the last completed financial year:
- ----------------------------------------------------------------------------------------------------------
Unexercised Value of Unexercised in-
Options/SARs at the-Money Options/SARs
Securities Aggregate April 30, 2000 at April 30, 2000
Acquired on Value Exercisable/ Exercisable/
Name Exercise Realized Unexercisable Unexercisable
- ----------------------------------------------------------------------------------------------------------
Elizabeth J. Kirkwood 20,000 $60,000 30,000/0 $ 90,000
- ----------------------------------------------------------------------------------------------------------
Employment Contracts
There is no employment contract between IL or any of its subsidiaries and Ms.
Kirkwood. As well, there is no compensatory plan or arrangement with respect to
Ms. Kirkwood which results or will result from the resignation, retirement or
any other termination of employment of Ms. Kirkwood's employment with IL and its
subsidiaries or from a change of control of IL or any of its subsidiaries or a
change in Ms. Kirkwood's responsibilities following a change of control.
IL entered into an agreement with Crossbeam.com for services provided, under
which IL pays $2,000 per month. Elizabeth Kirkwood is an officer, director and
owns 90% of Crossbeam.com.
Under a verbal agreement with 1014620 Ontario Inc., a company controlled by
Elizabeth Kirkwood (she holds 75% of the shares), IL pays the amount of $2,000
per month for accounting services.
Effective June 6, 2000, Mr. Frank Kollar the Chairman of IL, entered into a two-
year employment contract with IL's wholly owned subsidiary, IL Data Corporation,
Inc., to act as its President and Chief Operating Officer at an annual
compensation of US $60,000. On March 7, 2001 Mr. Kollar resigned as Chairman and
a director of IL and his employment contact was terminated. IL and Mr. Kollar
entered into a six month consulting agreement until August 31, 2001. Under the
consulting agreement IL has agreed to compensate Mr. Kollar US $10,000 per
month.
Effective June 6, 2000, Mr. Romaine Gilliland, the President and Chief Executive
Officer of IL, entered into a two-year employment contract with IL's wholly
owned subsidiary, IL Data Corporation, Inc., to act as its Secretary-Treasurer
and Chief Financial Officer at an annual compensation of US $60,000. On April
10, 2001 Mr. Gilliland resigned as President, Chief Executive Office and a
Director and his employment contact was terminated.
Sandra J. Hall, Secretary and Director of IL is paid $2,000 per month for
corporate secretarial services.
Principal Shareholder
As at the date of this Information Circular and to the knowledge of the
directors and officers of IL, no person beneficially owns, directly or
indirectly, or exercises control or direction over, more than 10% of the issued
and outstanding IL Common Shares
19
As at the date of this Information Circular, the directors and officers of IL as
a group beneficially own, directly or indirectly, or exercise control or
direction over 669,435 IL Common Shares, representing 5% of the issued and
outstanding IL Common Shares.
Price Range and Trading Volume
The IL Common Shares are listed and posted for trading on CDNX. The following
table sets forth the reported high and low sale prices and volume of trading of
the IL Common Shares for the calendar periods indicated.
High Low Volume
---- --- ------
($) ($)
2000
December $0.05 $0.05 850
2001
January $0.76 $0.05 117,130
February $0.46 $0.46 11,150
March $0.30 $0.25 2,360
April $0.30 $0.25 207
May $0.25 $0.30 1,041,110
June $0.25 $0.15 50,263
July (to July 26, 2001) $0.15 $0.10 6,797
IL's Common Shares are currently listed for trading in the United States on the
National Association of Securities Dealers, Over The Counter Bulletin Board
under the symbol "IVLKF".
CDNX, a market where the IL Common Shares are listed for trading in Canada, has
a policy which requires that "reverse take-over" transactions such as the
Acquisition require pre-approval, including a review of the Information Circular
prior to mailing to the shareholders of IL. Due to business and time issues in
completing the transaction, management of IL has determined that there is not
sufficient time to comply with the CDNX policy, but that it is in the best
interests of IL to seek approval from its shareholders for the Acquisition. As a
result, there is no assurance that a public market for IL common shares will
continue on CDNX following the Acquisition.
Share Issuances
No IL Common Shares have been issued or sold by IL during the twelve months
preceding the date of this Information Circular other than as set out in the
following table:
Date Number of Shares Issued Price per Share Total Consideration
---- ----------------------- --------------- -------------------
August 8, 2000 680,000 US $2.25 US $1,530,000
August 9, 2000 600,000 $0.35 $ 210,000
August 9, 2000 44,444 US $2.25 US $ 100,000
________________________
Legal Proceedings
IL know of no actual threatened or pending legal proceedings to which IL is or
is likely to be a party or of which any of its properties are or are likely to
be the subject of, other than the following.
IL entered into an agreement dated August 2, 2000, with Stockhouse Media
Corporation ("Stockhouse") for the provision of services, by Stockhouse, to be
paid by certain share issuances and cash reimbursements by IL. Stockhouse, by
letter dated May 23, 2001 and July 18, 2001 has claimed a breach of the
agreement and requested the delivery of 144,000 common shares of IL, along with
cash expenses of US$26,561.90.
20
Stockhouse has given notice of its termination of the said agreement and has
reserved its rights with respect to said termination. IL has served notice on
Stockhouse that IL considers Stockhouse to be in breach of the said agreement
and IL is currently investigating the remedies available to it.
Material Contracts
Except for contracts entered into in the ordinary course of business, there are
no contracts entered into by IL not previously disclosed prior to the date
hereof which may reasonably be regarded as presently material, other than the
Letter of Intent and the Agreement.
Auditors
The auditors of IL are BDO Dunwoody LLP ("BDO"), Chartered Accountants, Royal
Bank Plaza, P.O. Box 32, Toronto, Ontario M5J 2J8.
================================================================================
RELIANCE BY IL ON API FOR
INFORMATION RELATING TO API
IL has relied solely upon the management of API to provide it with the
information relating to API set forth under the heading "API ELECTRONICS INC."
and elsewhere in this Information Circular.
================================================================================
API ELECTRONICS INC.
General
API Electronics, Inc. ("API") is a manufacturer and supplier of high-reliability
semiconductors and microelectronic circuits for military, aerospace, and
commercial applications. Established in 1981 as a New York state corporation,
API has maintained a significant presence in the semiconductor industry for the
past 20 years. API currently occupies a 15,000-sq-ft manufacturing facility in
Hauppauge, New York, which it owns. All aspects of API's semiconductor
manufacturing process are completed on site at this location.
In continuous operation for the past 20 years, API restructured its management
team in 1992. Since 1991 API has maintained an above average growth rate through
developing innovations for discontinued technologies and acquiring companies
that supply niche products. API has dealt with a number of electronics
manufacturers and electronic systems designers and has met their need for
relatively small runs of high-quality parts with closely defined functional
capabilities. API's operations and facilities are designed specifically to fill
this role.
Business of API
API's reputation is that of a preferred supplier of custom replacement parts for
critical, fixed-design systems. Such niche products include Varactor tuning
diodes, specialty suppressor diodes for the relay market, and custom
microelectronic hybrid circuits designed, built and tested to customer
specifications. API also manufactures power and small-signal transistors,
silicon rectifiers, zener diodes, high-voltage diodes, and resistor/capacitor
networks. All microelectronic products are manufactured using semiconductor,
hybrid, and surface-mount technologies or a combination. All methods and
processes are controlled and monitored by our Quality Assurance programs.
Applications for these semiconductor products include: Telecommunications,
Aerospace, Military Defense Systems, Automated Test Equipment, Computing
Equipment, Medical Equipment, Robotics, Instrumentation
21
and Automotive Systems. API currently serves a broad group of customers falling
into four main categories: Hybrid Circuit, Power and Small-Signal Transistor,
Varactor Tuning Diode, and Value-Added Distribution.
API's major customers in the above-mentioned fields include: Lockheed-Martin,
Honeywell, Raytheon, Northrop Grumman Litton, Alcatel, Deutsch Relays,
Tektronix, BAE Systems, Racal, Ball Aerospace, Defense Supply Center and various
contract manufacturers in the US, Canada, and around the world.
Management
The following table sets forth the name, municipality of residence, position(s)
with API and principal occupations within the five preceding years of each of
the directors and officers of API:
Name and Position(s) Held Principal Occupations
Municipality of Residence with API During the Past Five Years
Phillip DeZwirek Chairman Chairman, CEO and Director of CECO Environmental Corp.
Toronto, Ontario since August 1979; Director of Kirk & Blum and kbd/Technic
since 1999; President of Can-Med Technology, Inc. d/b/a
Green Diamond Corp. since 1990.
Thomas W. Mills President and Chief President and Chief Operating Officer of API Electronics Inc.
Kings Park, NY Operating Officer since 1981.
Jason DeZwirek Secretary and Treasurer Vice President and Director of CECO Environmental Corp.
Toronto, Ontario since February, 1994 and Secretary of CECO since February
20, 1998. Since October 1999 a Founder and the President of
kaboose.com Inc.
Joanne E. Mills Secretary Secretary of API.
Kings Park, NY
Jerry Roth (Rabinowitz) Vice President of Sales and With API since 1998. His previous employment includes:
Great Neck, NY Marketing ACI Electronics, Inc., 1997-1998, as Marketing Director; and
Knight Electronics, Inc., 1998-1999, as Vice President of
Sales.
Robert Alini Director of Operations With API since 1998. His previous employment includes
Levittown, NY Component Technology, Inc., 1990-1996, as President; and
Semtex, Inc., 1996-1998, as Director of Operations.
Refer to the disclosure under "Description of API Group - Management of API
Group" for a brief biography of each of the above individuals, other than the
following:
Joanne E. Mills is the Secretary of API Electronics, Inc. and has been with The
Company since 1990. She is currently Human Resources Director. Some of her
duties include administering the Health and Dental Plans, the 401k Retirement
Plan, Payroll direction, Insurance Plans, and other various administrative
functions.
Jerry Roth (Rabinowitz) currently holds the position of Vice President of Sales
and Marketing for API Electronics, Inc. He has been employed in the electronics
industry since 1965 and has specialized in the Semiconductor segment since 1969.
His background includes holding management positions in sales, marketing,
purchasing, and inventory control. With the Company since 1998, Jerry holds a
degree in Business Management and also holds a Certificate in Engineering. His
previous employment includes: ACI Electronics, Inc., 1997-1998, as Marketing
Director; and Knight Electronics, Inc., 1998-1999, as Vice President of Sales.
22
Robert Alini currently holds the position of Director of Operations for API
Electronics, Inc. Robert has been involved in Semiconductor manufacturing for
over 22 years. He has also been the President of his own semiconductor
manufacturing company. His background also includes management positions in
process engineering, production control, quality control/assurance, project
management, wafer fabrication, and plant management. Robert holds a degree in
Electrical Engineering and is also MCSE certified. His previous employment
includes: Component Technology, Inc., 1990-1996, as President; and Semtex, Inc.,
1996-1998, as Director of Operations.
Executive Compensation
API pays Thomas Mills a yearly salary of US $91,000, and a car allowance of US
$6,600. Jerry Roth is paid an annual amount of US $109,200. Robert Alini
receives a yearly salary of US $78,000. Joanne Mills earns US $28,600 per year,
and receives a car allowance of US $7,300. API does not pay any further
compensation to its executive officers or directors.
No Relationship to IL Insiders
None of the directors or officers of API are directors or officers of IL and
none of the directors or officers of IL are directors or officers of API.
Indebtedness of Directors and Officers
No director or officer of API, or associate or affiliate of any such director or
officer, is or has been indebted to API.
Shareholders
There are 197 API Common Shares issued and outstanding. To the knowledge of the
directors and officers of API, no person or company beneficially owns, directly
or indirectly, or exercises control or direction over, more than 10% of the
outstanding API Common Shares other than Phillip DeZwirek and Jason DeZwirek,
through their indirect ownership of 50.1% of Green Diamond Corp. API does not
have outstanding, and will not have outstanding prior to the completion of the
Acquisition, any stock options, warrants or other rights to purchase API Common
Shares.
The directors and officers of API as a group beneficially own, directly or
indirectly, or exercise control or direction over, 100 API Common Shares,
representing 50.50% of the issued and outstanding API Common Shares.
Share Issuances
API has issued the following API Common Shares since its incorporation:
Date Number of Shares Issued Price per Share Total
---- ----------------------- --------------- -----
Consideration
-------------
November 17, 1981 85 US $4,077.20 US $346,562
November 17, 1981 5 US $4,077.20 US $20,386
November 17, 1981 10 US $4,077.20 US $40,772
July 1, 2001 3.96 US $13,043.63 US $51,653
July 1, 2001 10.1475 US $13,043.63 US $132,360
July 1, 2001 16.5825 US $13,043.63 US $216,296
July 1, 2001 16.5825 US $13,043.63 US $216,296
July 1, 2001 16.5825 US $13,043.63 US $216,296
23
July 1, 2001 16.5825 US $13,043.63 US $216,296
July 1, 2001 16.5825 US $13,043.63 US $216,296
July 1, 2001 16.5825 US $13,043.63 US $216,296
-------
197
---
Summary and Analysis of Financial Operations
The following summary sets out certain financial information with respect to API
for the periods indicated. This information and the discussion which follows
should be read in conjunction with the audited financial statements of API for
the year ended May 31, 2001 attached to this Information Circular as Schedule
"E".
Net sales for 2001 and 2000 were $2,653,040 and, $1,786,864 respectively. This
represents a 33% increase in the year 2001 compared to the year 2000. This
increase can be attributed to a change in key personnel and an expansion of our
products sold to the Relay marketplace. The Relay marketplace is experiencing
growth at this time, which in turn also increased sales of existing products.
Gross profit increased $436,526 in fiscal year 2001. As a percentage of sales,
gross profit was 27.49% for fiscal year 2001 compared to 16.3% in fiscal year
2000. This increase was due to better utilization of current manufacturing
capabilities and the increase in sales.
Operating expenditures decreased 4% to $546,240 in fiscal 2001 from $571,945 in
fiscal 2000. This reduction was primarily due to a decrease in both general and
administrative and decreases in selling expenses. As a result operating income
increased to $181,016 during fiscal 2001 from an operating loss of $281,215
during fiscal 2000.
Other (income) and expenses increased 220% to $78,623 during fiscal 2001 from
$24,595 during the previous period. This was primarily due to an increase in
interest expense that was incurred as a result of higher debt loads.
As a result of the forgoing net income increased to $102,101 during fiscal 2001
from a net loss of $305,810 in the previous period.
Changes made in the Company's management structure in the sales, engineering,
and production departments in 2000 and 2001 have enabled the company to expand
products such as Transient Voltage Suppressors and Timer Circuits, allowing
further inroads into the Relay marketplace.
Estimated revenues from these products over the next 3 years are expected to
increase substantially. This market, like any other, is dependent on customer
(government or commercial ) OEM procurement, and fluctuating orders.
Adverse changes could result from any number of factors. These include economic
conditions, dependence upon certain customers or markets, dependence on
suppliers, retaining key personnel, the ability to hire additional qualified
personnel to sustain growth and the level of U.S. military
Interest of Management and Others in Material Transactions
Other than as disclosed elsewhere in this Information Circular, no director or
officer of API or any person or corporation owning more than 10% of the
outstanding API Common Shares or any associate or affiliate of any of them, had
or has any material interest, direct or indirect, in any transaction since the
incorporation of API, or in any proposed transaction, that has materially
affected or would materially affect API.
24
Material Contracts
Except for contracts entered into in the ordinary course of business, the only
contracts that API has entered into in the last two years or will enter into on
or before the date of completion of the Acquisition that may reasonably be
regarded as material, copies of which may be inspected at the offices of Weir
Foulds LLP (counsel to IL) located at Suite 1600, The Exchange Tower, 130 King
Street West, Toronto, Ontario M5X 1J5 during normal business hours until the
closing date of the Acquisition and for 30 days thereafter, are as follows:
1. API has received a line of credit from European American Bank ("EAB").
The line of credit is in the amount of US $300,000 and is evidenced by a master
note dated July 10, 2001 that expires August 31, 2001. If API pays US $50,000
to EAB before August 31, 2001, then EAB has agreed to extend the line of credit
for one year. The line of credit bears interest at the annual rate of prime, as
announced by EAB from time to time, plus one-half percent (1/2%).
API also has received a term loan from EAB in the principal amount of US
$61,000. The term loan is evidenced by a commercial note dated December 29, 2000
and accrues interest at the per annum rate of ten percent (10%). Principal
payments of US $1,016.00 are due monthly. Interest also is paid monthly on this
loan. The loan matures on December 31, 2005.
Pursuant to a General Security Agreement, dated September 30, 1998, all
amounts owed to EAB by API are secured by all personal property of API.
Phillip DeZwirek, a shareholder, officer and director of API who has loaned
funds to API from time to time, has subordinated his debt to API's obligations
to EAB. All obligations of API to EAB have been guaranteed by Phillip DeZwirek
and Thomas W. Mills, API's President, which guarantees are evidenced by separate
guarantee agreements entitled Guaranty of All Liability and dated September 30,
1998.
2. API is indebted to Phillip DeZwirek as at May 31, 2001 in the
principal amount of US $42,000, and interest of US $1,575. He has advanced a
further US $50,000 to API effective June 26, 2001. The loans are due July, 2002
and bear interest at the rate of 10 % per annum.
Legal Proceedings
API knows of no actual, threatened or pending legal proceedings to which API is
or is likely to be a party or of which any of its properties are or are likely
to be the subject.
Auditors
The auditors of API are Perry Colletti, Chartered Accountant. 17 Conklin Street,
Farmingdale, New York, 11735.
Transfer Agent and Registrar
API has no agent to transfer or register API Common Shares. The share register
is maintained by API.
RISK FACTORS
The Acquisition, as described in this Information Circular, is subject to a
number of risks. IL Shareholders should carefully consider the following risk
factors and all other information contained in this Information Circular before
approving the Acquisition:
25
1. API Group will be dependent upon a small number of key personnel. The loss
of the services of one or more of such personnel could have a material
adverse effect on API Group. API Group's success will depend in large part
on the efforts of these individuals. It is not currently proposed that
there will be any long-term employment agreements or key-man insurance in
respect of API Group's key personnel. API Group will face intense
competition for qualified personnel, and there can be no assurance that API
Group will be able to attract and retain such personnel.
2. An investment in API must be considered speculative due to the nature of
its business and the relatively early stage of the development of its
current operations. In evaluating API and its business, prospective
investors should carefully consider the other information contained in this
Information Circular.
3. API has limited operational history and earnings. API has experienced
losses in some of its recent financial years. API expects to experience
significant fluctuations in future quarterly results that may be caused by
many factors, including (i) the pace of development of its business; (ii)
changes in the level of marketing and other operating expenses to support
future growth; (iii) competitive factors; and (iv) general economic
conditions.
4. The future revenue growth of API will depend in large part on its ability
to successfully expand its sales force and its customer support capability.
API may not be able to successfully manage the expansion of such functions
or to recruit and train additional sales, consulting and client/customer
support personnel. If API is unable to hire and retain additional sales
personnel, it may not be able to increase its revenues to the extent
necessary to ensure profitability. If API is unable to hire trained
consulting and client/customer support personnel it may be unable to meet
client or customer demands. API is not likely to be able to increase its
revenues in the event API fails to expand its sales force or its consulting
and client/customer support staff. Even if API is successful in expanding
its sales force and client/customer support capability, the expansion may
not result in revenue growth.
5. API Group may require additional financing in order to, without limitation,
support further expansion, develop new or enhanced services or products,
respond to competitive pressures, acquire complementary businesses or
technologies, or take advantage of unanticipated opportunities. The ability
of API Group to arrange such financing in the future will depend in part
upon the prevailing capital market conditions, as well as the business
performance of API Group and API. There can be no assurance that API Group
will be successful in its efforts to arrange additional financing on terms
satisfactory to API Group. If additional financing is raised by the
issuance of shares from treasury of API Group, control of API Group may
change and shareholders may suffer additional dilution. If adequate funds
are not available, or are not available on acceptable terms, API Group and
API may not be able to take advantage of opportunities, or otherwise
respond to competitive pressures and remain in business.
6. API may be subject to growth-related risks, including capacity constraints
and pressure on its internal systems and controls. The ability of API to
manage its growth effectively will require it to continue to implement and
improve its operational and financial systems and to expand, train and
manage its employee base. The inability of API to deal with this growth
could have a material adverse impact on its business, operations and
prospects.
7. API's manufacturing processes are highly complex, require advanced and
costly equipment and are continuously being modified in an effort to
improve yields and product performance. Impurities or other difficulties in
the manufacturing process can lower yields. API's operations could be
materially adversely affected if production at its facility were
interrupted for any reason. There can be no assurance that API will not
experience manufacturing difficulties in the future.
26
8. If a fire, natural disaster or any other event prevents API Electronics,
Inc. from operating the factory for more than a few days, API's revenue and
financial condition could be severely impacted. If API subcontracts a
portion of its fabrication to outside foundries, there are a number of
foundries which, given appropriate lead times, could meet some of API
Electronics' needs. However, API cannot guarantee that it will be able to
meet its customers' required delivery schedules. Because of the unique
nature of the manufacturing processes, it would be difficult for API
Electronics, Inc. to arrange for independent suppliers to make wafers in a
short period of time API Electronics, Inc. believes that it has sufficient
manufacturing capacity to meet its near term plans although prolonged
problems with any specific piece of equipment could cause API Electronics,
Inc. to miss its goals.
9. API Electronics, Inc. purchases most of its raw materials, including
silicon wafers, on a purchase order basis from a number of vendors. If any
subcontractors or vendors are unable to provide these services or materials
in the future, the relationships with API Electronics, Inc.'s customers
could be seriously affected and its revenues, financial condition and cash
flows could be severely damaged.
10. Although API seeks to reduce its dependence on sole and limited source
suppliers both for services and for materials, disruption or financial,
operational, production or quality assurance difficulties at any of these
sources could occur and cause API Electronics, Inc. to have severe delivery
problems.
A portion of API's sales are to military and aerospace markets which are
subject to the business risks of changes in governmental appropriations and
changes in national defense policies and priorities. All of API's contracts
with prime U.S. Government contractors contain customary provisions
permitting termination at any time at the convenience of the U.S.
Government or the prime contractors upon payment to API for costs incurred
plus a reasonable profit. Certain contracts are also subject to price re-
negotiation in accordance with U.S. Government sole source procurement
provisions.
27
APPROVAL AND CERTIFICATE OF IL
The contents and sending of this Information Circular have been
approved by the board of directors of IL. The foregoing constitutes full, true
and plain disclosure of all material facts relating to the securities of IL,
assuming the completion of the Acquisition. In addition, the foregoing contains
no untrue statement of a material fact and does not omit to state a material
fact that is required to be stated or that is necessary to make a statement not
misleading in the light of the circumstances in which it was made.
DATED: July 27, 2001
James C. Cassina (signed) Sandra J. Hall (signed)
Richard J. Lachcik (signed) Elizabeth J. Kirkwood (signed)
ON BEHALF OF THE BOARD OF DIRECTORS
(signed) James C. Cassina
Director
CERTIFICATE OF API
The foregoing, as it relates to API, constitutes full, true and plain disclosure
of all material facts relating to the securities of API.
DATED: July 27, 2001
Thomas W. Mills (signed) Joanne E. Mills (signed)
ON BEHALF OF THE BOARD OF DIRECTORS
Thomas W. Mills (signed) Joanne E. Mills (signed)
Director Director
28
SCHEDULE "A"
APPROVAL OF ACQUISITION
BE IT RESOLVED THAT:
1. The acquisition (the "Acquisition") by InvestorLinks.com Inc. (the
"Corporation") of all of the issued and outstanding common shares of API
Electronics Inc. ("API") on the terms and conditions of the Agreement dated
July 27, 2001 described in the management information circular of the
Corporation dated July 27, 2001, be and is hereby authorized and approved;
2. The issuance by the Corporation pursuant to the Acquisition Agreement of
6,500,000 Units in the capital of the Corporation (post-consolidation) for
the purchase by the Corporation of the 197 issued and outstanding Common
Shares in API be and the same is hereby authorized, approved and consented
to; and
3. Any one officer or director of the Corporation be and is hereby authorized
for and on behalf of the Corporation to execute and deliver all such
instruments and documents and to perform and do all such acts and things as
may be deemed advisable in such individual's discretion for the purpose of
giving effect to the Acquisition and this resolution.
A
SCHEDULE "B"
SPECIAL RESOLUTION RELATING TO:
-------------------------------
CONSOLIDATION OF COMMON SHARES
------------------------------
WHEREAS it is considered advisable to consolidate the issued and
outstanding common shares of the Corporation on a one (1) for three (3) basis;
NOW THEREFORE BE IT RESOLVED AS A SPECIAL RESOLUTION THAT:
1. The Articles of the Corporation be amended to consolidate (the
"Consolidation") the issued and outstanding common shares in the
capital of the Corporation (the "Pre-Consolidation Shares") by
changing each of the issued and outstanding Pre-Consolidation Shares
of the Corporation into one-third (1/3) of a common share in the
capital of the Corporation (the "Post-Consolidation Shares").
2. No fractional Post-Consolidation Shares shall be issued in connection
with the Consolidation and, in the event that a Shareholder would
otherwise be entitled to receive a fractional Post-Consolidation Share
upon such Consolidation, a number of Post-Consolidation Shares to be
issued to such Shareholder shall be rounded up to the nearest whole
number of shares.
3. Any director or officer of the Corporation be and is hereby authorized
to do all things and execute all instruments necessary or desirable to
give effect to this special resolution including, without limitation,
to deliver Articles of Amendment under the Business Corporations Act
(Ontario).
4. Notwithstanding that this special resolution has been duly passed by
the shareholders of the Corporation, the directors of the Corporation
be, and they are hereby authorized and empowered to revoke this
special resolution at any time prior to the issue of a Certificate of
Amendment giving effect to the amendment to the Articles of the
Corporation set forth above and to determine not to proceed with the
amendment without further approval of the shareholders of the
Corporation.
5. Any one director or officer of the Corporation is hereby authorized
and empowered for and in the name of and on behalf of the Corporation
to execute or to cause to be executed, whether under the corporate
seal of the Corporation or otherwise, and to deliver or to cause to be
delivered all such documents and instruments, and to do or to cause to
be done all such other acts and things, as in the opinion of such
director or officer may be necessary or desirable in order to carry
out the intent of this special resolution.
C
SCHEDULE "C"
SPECIAL RESOLUTION RELATING TO:
-------------------------------
CHANGE OF NAME
--------------
WHEREAS it is considered advisable to change the name of the
Corporation as hereinafter provided;
NOW THEREFORE BE IT RESOLVED AS A SPECIAL RESOLUTION THAT:
1. The name of the Corporation be changed to API ELECTRONICS GROUP INC.,
or such other name as may be approved by the Board of Directors of the
Corporation and as may be satisfactory to the Director appointed under
the Business Corporations Act (Ontario); and
2. Any director or officer of the Corporation be and they are hereby
authorized on behalf of the Corporation to deliver Articles of
Amendment to the Ministry of Consumer and Commercial Relations and to
execute all documents and do all things necessary or advisable in
connection with the foregoing; provided, however, that the directors
of the Corporation are hereby authorized to revoke or amend the
foregoing special resolution in whole or in part without further
approval of the shareholders of the Corporation at any time prior to
the endorsement by the Director under the Business Corporations Act
(Ontario) of the Certificate of Amendment of Articles.
C
====================================================================================================================================
API Electronics Group Inc.
PRO FORMA CONSOLIDATED BALANCE SHEET
(Unaudited)
As at May 31, 2001
- ------------------------------------------------------------------------------------------------------------------------------------
Unaudited Audited Audited Pro Forma
Investorlinks.com API Electronics API Electronics Adjustment Unaudited Pro
Inc. (Cdn$) Inc. (US$) Inc. (Cdn$) (Note 3) Forma (Cdn$)
--------------------------------------------------------------------------------------
ASSETS
Current
Cash $ 1,017,578 $ 41,073 $ 63,487 - $ 1,081,065
Short term investments 1,170,156 - - - 1,170,156
Accounts receivable and prepaid expenses 124,667 351,476 543,276 - 667,943
Inventory - 1,277,399 1,974,476 - 1,974,476
--------------------------------------------------------------------------------------
2,312,401 1,669,948 2,581,239 - 4,893,640
Property and equipment 124,447 707,700 1,093,892 - 1,218,339
Deposits 841 2,080 3,215 - 4,056
Marketable securities 144,412 - - - 144,412
Goodwill - 10,552 16,310 - 16,310
--------------------------------------------------------------------------------------
$ 2,582,101 $ 2,390,280 $ 3,694,656 $ - $ 6,276,757
--------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities $ 497,073 $ 341,215 $ 527,416 (2) $ 50,000 $ 1,074,489
Loans payable bank - current - 354,346 547,713 - 547,713
Current maturities of capital lease
obligation - 10,440 16,137 - 16,137
--------------------------------------------------------------------------------------
497,073 706,001 1,091,266 50,000 1,638,339
Loan payable - bank - 43,717 67,573 - 67,573
Capital lease obligations - 4,258 6,582 - 6,582
Convertible promissory note - 1,265,492 1,956,071 (3) (1,956,071) -
Due to stockholder - 43,575 67,354 - 67,354
--------------------------------------------------------------------------------------
497,073 2,063,043 3,188,846 (1,906,071) 1,779,848
Shareholders' Equity
Share capital 4,613,960 407,820 630,367 (1) (4,613,960)
(1) 2,085,028
(3) 1,956,071 4,671,466
Foreign exchange translation adjustment 43,958 - - (1) (43,958) -
Deficit (2,572,890) (80,583) (124,557) (1) 2,572,890
(2) (50,000) (174,557)
--------------------------------------------------------------------------------------
2,085,028 327,237 505,810 1,906,071 4,496,909
--------------------------------------------------------------------------------------
$ 2,582,101 $ 2,390,280 $ 3,694,656 - $ 6,276,757
--------------------------------------------------------------------------------------
================================================================================
API Electronics Group Inc.
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
(Unaudited)
As at May 31, 2001
- --------------------------------------------------------------------------------
Note 1. The accompanying unaudited pro forma consolidated balance sheet
has been prepared by management from the unaudited balance sheet as at
May 31, 2001 of Investorlinks.com Inc. ("Investorlinks" or the
"Company") and the audited balance sheet as at May 31, 2001 of API
Electronics Inc. ("API") stated in US dollars and converted to
Canadian Dollars at the Bank of Canada nominal rate as of May 31,
2001. All information below has been stated in Canadian dollars unless
otherwise noted. In the opinion of the management of Investorlinks and
API, this pro forma consolidated balance sheet includes all
adjustments necessary for fair presentation in accordance with
Canadian generally accepted accounting principals. The pro forma
consolidated balance sheet may not be indicative of the financial
position that actually would have occurred if the events reflected
therein had been in effect on the dates indicated nor of the financial
position which may be obtained in the future.
This pro forma consolidated balance sheet should be read in
conjunction with the audited financial statements of API for the year
ended May 31, 2001 and the Investorlinks audited financial statements
for the year ended April 30, 2000, unaudited interim financial
statements for the periods ended July 31, 2000, October 31, 2000 and
January 31, 2001 included elsewhere in this Information Circular.
Management of the Company has presented unaudited May 31, 2001
financial statements. The April 30, 2001 Investorlinks audit has not
been completed and the January 31, 2001 financial statements do not
reflect significant transactions undertaken by the Company.
Note 2. The pro forma consolidated balance sheet as at May 31, 2001 gives
effect to the following transactions, all of which will become
effective on the date of the acquisition as if, for illustrative
purposes only, the Effective Date of the Acquisition was May 31, 2001.
(a) Amendments to the Articles of Incorporation consolidating the
issued and outstanding common shares of Investorlinks on a one
(1) for three (3) basis.
(b) The acquisition of all of the issued and outstanding common
shares of API by Investorlinks for 6,500,000 post consolidated
Units at US $0.40 per unit, each unit consisting of one Common
share and 1/2 of one Series A Common Share Purchase Warrant
exercisable at US $0.45 exercisable for a period of eighteen (18)
months from the date of issue and 1/2 of one Series B Common
Share Purchase Warrant exercisable at US $0.75 for a period of
twenty four (24) months from the date of issue.
(c) The accrual of $50,000 for professional fees and expenses
relating to the cost of the transactions.
(d) A change in the Company's name to API Electronics Group Inc., or
such other name the Directors may determine and may be acceptable
to applicable authorities.
(e) Application of reverse take-over accounting results in the
following:
i) API is deemed to be the acquirer for accounting purposes; its
assets and liabilities are included in the consolidated balance
sheet at their carrying values.
ii) The consolidated balance sheet combines the assets and
liabilities of Investorlinks as an acquisition under the purchase
method of accounting. The net assets acquired as at May 31,
2001 are summarized as follows:
Cash & short term investments $ 2,187,734
Other current assets 125,508
Capital assets 124,447
Marketable securities 144,412
Current liabilities (497,073)
-----------
Consideration attributed to the
stated capital of the shares issued $ 2,085,028
-----------
Stated Capital - Investorlinks
- ------------------------------
Authorized: Unlimited common shares
Unlimited special shares
Issued: Shares Consideration
------ -------------
Pre forma as at May 31, 2001 13,179,020 $ 4,613,960
Share consolidation (note 2a) (8,786,013) $ -
---------- -----------
Pro forma as at May 31, 2001 4,393,007 $ 4,613,960
---------- -----------
Stated Capital - API
- --------------------
Authorized: Unlimited common shares 100,000 at US$0.01 par value per share
Issued: Shares Consideration
------ -------------
Pre forma as at May 31, 2001 100 $ 630,367
Shares issued on conversion of
promissory note 97 $ 1,956,071
---------- -----------
Pro forma as at May 31, 2001 197 $ 2,586,438
---------- -----------
Stated Capital - Pro Forma API Electronics Group Inc.
- ----------------------------------------------------
Authorized: Unlimited common shares
Unlimited special shares
Issued: Shares Consideration
------ -------------
Pre forma as at May 31, 2001 4,393,007 $ 2,586,438
Shares issued on reverse
transaction (see note 2b) 6,500,000 $ 2,085,028
---------- -----------
Pro forma as at May 31, 2001 10,893,007 $ 4,671,466
---------- -----------
Common Share Purchase Warrants
. 1/2 of one Series A Common Share Purchase Warrant exercisable at US
$0.45 exercisable for a period of eighteen (18) months from the date
of issue
. 1/2 of one Series B Common Share Purchase Warrant exercisable at US
$0.75 for a period of twenty four (24) months from the date of issue
. 226,666 Common Share Purchase Warrants Exercisable at US $9.00
Common Share Purchase Options
. 10,000 common share purchase options to acquire Common shares
exercisable at $0.90 expiring August 3, 2002
. 9,000 common share purchase options to acquire Common shares
exercisable at US$2.55 expiring August 29, 2001.
. 45,000 common share purchase options to acquire Common shares
exercisable at US$2.55 expiring July 26, 2001.
Note 3. Pro Forma Adjustments
1.) Gives effect to the acquisition of Investorlinks by API
2.) Gives effect to the accrual of acquisition costs of $50,000
3.) Gives effect to the conversion of the Convertible Promissory
Note by API that occurred subsequent to the year-end May 31,
2001
CONTENTS
Page
----
Accountants' Audit Report 3
Financial Statements
Balance Sheet 4-5
Statement of Income and
Retained Earnings 6
Statement of Cash Flows 7
Notes to Financial Statements 8-13
Supplementary Information 14-18
2
PERRY COLLETTI
Certified Public Accountants
17 Conklin Street
Farmingdale, New York 11735
(516) 843-0219 fax (516) 249-2761
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
API Electronics, Inc.
I have audited the accompanying balance sheet of API Electronics, Inc. as of May
31, 2001 and 2000 and the related statements of income and retained earnings,
and cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. My responsibility is to express an
opinion on these financial statements based on my audit.
I conducted my audits in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about 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.
I believe that my audits provide a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of API Electronics, Inc. as of May 31,
2001 and 2000 and the results of its operations and its cash flows for the years
then ended, in conformity with generally accepted accounting principles.
Very truly yours,
"Perry Colletti"
Certified Public Accountant
3
Farmingdale, NY
July 14, 2001
A P I ELECTRONICS, INC.
BALANCE SHEET
MAY 31, 2001
ASSETS 2001 2000
------ ---- ----
CURRENT ASSETS
CASH 41,073 81,163
ACCOUNTS RECEIVABLE NET 340,383 266,287
INVENTORY 1,277,399 972,926
PREPAID EXPENSES 11,094 5,879
--------- ---------
TOTAL CURRENT ASSETS 1,669,949 1,326,255
--------- ---------
PROPERTY, PLANT & EQUIPMENT
NET OF ACCUMULATED DEPRECIATION
AND AMORTIZATION 881,700 803,430
--------- ---------
OTHER ASSETS
SECURITY DEPOSITS 2,080 2,080
GOODWILL NET OF AMORTIZATION 10,552 21,104
--------- ---------
TOTAL OTHER ASSETS 12,632 23,184
--------- ---------
TOTAL ASSETS 2,564,281 2,152,869
========= =========
4
A P I ELECTRONICS, INC.
BALANCE SHEET
MAY 31, 2001
LIABILITIES & STOCKHOLDERS' EQUITY 2001 2000
---------------------------------- ---- ----
CURRENT LIABILITIES
ACCOUNTS PAYABLE 271,618 221,796
ACCRUED EXPENSES 69,598 53,277
LOANS PAYABLE BANK - CURRENT 354,346 403,146
EQUIPMENT LOAN PAYABLE - CURRENT 36,000 0
CURRENT MATURITIES OF CAPITAL LEASE OBLIGATION 10,440 10,440
--------- ---------
TOTAL CURRENT LIABILITIES 742,002 688,659
OTHER LIABILITIES
LOAN PAYABLE - BANK 43,717 0
EQUIPMENT LOAN PAYABLE 138,000 0
CAPITAL LEASE OBLIGATIONS LESS CURRENT PORTION 4,258 10,680
CONVERTIBLE PROMISSORY NOTE 1,265,492 0
DUE TO STOCKHOLDER 43,575 1,228,394
--------- ---------
TOTAL LIABILITIES 2,237,044 1,927,733
--------- ---------
STOCKHOLDERS' EQUITY
COMMON STOCK 100 100
ADDITIONAL PAID IN CAPITAL 407,720 407,720
RETAINED EARNINGS (80,583) (182,684)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 327,237 225,136
--------- ---------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY 2,564,281 2,152,869
========= =========
5
A P I ELECTRONICS, INC.
STATEMENT OF INCOME AND RETAINED EARNINGS
YEAR ENDED MAY 31,
SALES 2001 2000
- ----- ---- ----
NET SALES 2,653,040 1,786,864
COST OF SALES 1,930,582 1,496,134
--------- ---------
GROSS PROFIT 722,458 290,730
--------- ---------
OPERATING EXPENSES
- ------------------
SELLING EXPENSES 246,844 254,351
GENERAL & ADMINISTRATIVE 300,598 317,594
--------- ---------
TOTAL 547,442 571,945
--------- ---------
OPERATING INCOME 175,016 (281,215)
OTHER INCOME & EXPENSES
- -----------------------
OTHER INCOME (13,719) (2,862)
INTEREST EXPENSE 86,342 27,457
--------- ---------
TOTAL 72,623 24,595
--------- ---------
INCOME BEFORE TAXES 102,393 (305,810)
PROVISION FOR TAXES 292 0
--------- ---------
NET INCOME 102,101 (305,810)
RETAINED EARNINGS BEGINNING (182,684) 123,126
--------- ---------
RETAINED EARNINGS END (80,583) (182,684)
========= =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
6
A P I ELECTRONICS, INC.
STATEMENTS OF CASH FLOWS
YEAR ENDED MAY 31,
2001 2000
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME (LOSS) 102,101 (305,810)
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION 120,132 108,243
CAPITALIZED INTEREST 38,673 0
(INCREASE) DECREASE IN CURRENT ASSETS:
ACCOUNTS RECEIVABLE (74,096) (36,449)
INVENTORY (304,473) (206,468)
PREPAID EXPENSES (5,215) 44,979
OTHER ASSETS 0 5,000
INCREASE (DECREASE) IN CURRENT LIABILITIES:
ACCOUNTS PAYABLE 49,822 129,860
ACCRUED EXPENSES 16,321 8,975
---------- ---------
NET CASH PROVIDED BY OR (USED) FOR
OPERATING ACTIVITIES (56,735) (251,670)
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
PURCHASES OF MACHINERY & EQUIPMENT (187,850) (57,628)
---------- ---------
NET CASH PROVIDED BY OR (USED) FOR
INVESTING ACTIVITIES (187,850) (57,628)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
PRINCIPLE PAYMENTS ON CAPITAL LEASES (6,422) (8,444)
CONVERTIBLE PROMISSORY NOTE 1,265,492 0
STOCKHOLDER LOANS (1,265,492) 0
STOCKHOLDER LOANS 42,000 100,000
EQUIPMENT LOAN 180,000
PRINCIPLE PAYMENTS ON EQUIPMENT LOAN (6,000)
PRINCIPLE PAYMENTS ON BANK LOAN (5,083) 261,000
---------- ---------
NET CASH PROVIDED BY OR (USED) FOR
INVESTING ACTIVITIES 204,495 352,556
---------- ---------
NET INCREASE OR (DECREASE) IN CASH (40,090) 43,258
CASH BEGINNING OF YEAR 81,163 37,905
---------- ---------
CASH END OF YEAR 41,073 81,163
========== =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
7
API ELECTRONICS, INC.
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2001 AND 2000
Note 1 - General and Summary of Significant Accounting Policies
API Electronics, Inc. (hereinafter "API" or the Company), is a manufacturer of
power transistors, small signal transistors, tuning diodes, hybrid circuits,
resistor/capacitor networks, diodes and other critical elements of advanced
military, industrial, commercial and medical systems. The Company conducts its
operations in a 15,000 sq.-ft. facility in Hauppauge, New York, which it owns.
Cash
- ----
The Company, during the normal course of business, occasionally maintains
balances at a commercial bank in excess of the $100,000 limit insured by the
Federal Deposit Insurance Corporation.
Accounts Receivable and Revenue
- -------------------------------
Accounts receivable are uncollateralized and consist principally of amounts due
from the U. S. Department of Defense, U.S. Department of Defense subcontractors,
and commercial / industrial users. The approximate percentages are as follows:
2001 2000
---- ----
Accounts Receivable:
U.S. Department of Defense 5% 25%
U.S. Department of Defense
Subcontractors 54% 30%
Commercial / industrial users 41% 45%
Revenue:
U.S. Department of Defense 22% 18%
U.S. Department of Defense
Subcontractors 44% 35%
Commercial / industrial users 34% 47%
Inventories
- -----------
Inventories are stated at the lower-of-cost or market, cost is determined using
the first-in, first-out method.
8
API ELECTRONICS, INC.
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2001 AND 2000
Note 1 - General and Summary of Significant Accounting Policies (continued)
Depreciation and Amortization
- -----------------------------
The Company's building is being depreciated using the straight-line method over
a period of 20 years. Depreciation of furniture and equipment is provided for in
amounts sufficient to relate the cost of the depreciable assets to operations
over their estimated services lives, (ranging from three to ten years) utilizing
the straight-line method.
The excess of cost over assets acquired is being amortized over five years.
Amortization charged to expense in the accompanying financial statements was
$10,532 and $10,532 in 2001 and 2000, respectively.
Income Taxes
- ------------
Deferred tax assets and liabilities are determined based on the difference
between the financial statement and tax basis of assets and liabilities as
measured by the enacted tax rates which will be in effect when these differences
reverse. Deferred tax expense is the result of changes in deferred tax assets
and liabilities. The principal types of differences between assets and
liabilities for financial statement and tax return purposes are inventory,
accumulated depreciation and allowance for uncollectible accounts.
A deferred tax asset is also recorded for cumulative investment tax credits and
net operating losses being carried forward for tax purposes. Deferred tax
assets, if any, are presented net of a valuation allowance.
Advertising Costs
- -----------------
The Company's policy is to expense advertising costs as incurred. Advertising
expense, included in selling expenses in the accompanying financial statements
was $12,767 and $13,157 for the years ending May 31, 2001 and 2000,
respectively.
Estimates
- ---------
The presentation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. No estimates were made whose
change in the near term would have a material effect on the financial
statements.
9
API ELECTRONICS, INC.
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2001 AND 2000
Note 1 - General and Summary of Significant Accounting Policies (continued)
Joint Venture Agreement
- -----------------------
On March 16, 2001, API entered into a joint venture agreement with Crystalonics,
Inc. (Crystalonics) a Massachusetts Corporation located in Burlington
Massachusetts for use and sale of semi-conductor equipment. The agreement took
effect on April 1, 2001.
Under the terms of the agreement:
Crystalonics agreed to transfer all of the wafer fab, assembly, and test
equipment located in Burlington Massachusetts to the API's plant located in
Hauppauge, New York. The companies will share moving and installation costs.
API agrees to pay Crystalonics, $180,000 over the next five years for the
equipment.
Crystalonics will pay $6,000 per month to API for expenses of the API plant. The
$6,000 per month includes rent, utilities, gasses used in manufacturing, and all
other expenses except labor and materials used to make a part. The companies
agree that $3,000 of the aforementioned $6,000 will be credited to pay off the
$180,000 debt on the wafer fab, assembly, and test equipment.
Work performed at API by or for Crystalonics will be invoiced, billed and paid
to Crystalonics and finished products will be the sole property of Crystalonics.
Work performed at API by or for API will be invoiced, billed and paid to API and
finished products will be the sole property of API.
Crystalonics has an option to terminate the agreement on 180 days written notice
during the first year of the agreement, and 60 days written notice during years
two through five. Upon termination, API may keep the wafer fab equipment
provided said equipment has been paid for in full. Crystalonics shall remove
test and assembly equipment.
Upon conclusion of five years, API has the option to purchase the Crystalonics
business for terms mutually agreed upon by all of the parties to the agreement.
10
API ELECTRONICS, INC.
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2001 AND 2000
Note 2 - Property, Plant and Equipment
Property, plant, and equipment consist of the following:
Description 2001 2000
---- ----
Land and building $ 597,606 $ 597,606
Furniture and fixtures 6,751 6,751
Machinery and equipment 921,000 913,150
Leasehold improvements 15,329 15,329
----------- -----------
1,540,686 1,532,836
Less accumulated depreciation and
amortization 832,986 729,406
----------- -----------
$ 707,700 $ 803,430
=========== ===========
Included in machinery and equipment is $42,001 in 2001 and $42,001 in 2000 of
property held under capital leases.
Depreciation and amortization expense amounted to $120,132 and $108,243 for the
years ended 2001 and 2000, respectively; of this amount $96,106 and $86,594 was
charged to cost of sales in the accompanying financial statements in 2001 and
2000, respectively.
The Company is the lessee of various computer equipment under a capital lease
expiring in 2003. The assets and liabilities under capital leases are recorded
at the lower of the present value of the minimum lease payments or the fair
value of the asset. The assets are depreciated over the lower of their related
lease terms over their estimated productive lives. Depreciation of assets under
capital leases are included in depreciation expense for 2001 and 2000.
Note 3 - Inventories
Inventories consist of:
May 31,
2001 2000
---- ----
Finished goods $ 723,855 $ 619,257
Finished goods distribution inventory 142,944 0
Work-in-process 151,500 110,158
Raw materials 259,100 243,511
----------- ---------
Total $ 1,277,399 $ 972,926
=========== =========
11
API ELECTRONICS, INC.
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2001 AND 2000
Note 4 - Debt
A description of the Company's debt is presented below:
Lines of Credit
- ---------------
In September 1998, the Company established a relationship with a financial
institution for a $350,000 working capital line of credit and $100,000 equipment
line of credit. These credit facilities are evidenced by notes and are secured
by substantially all the Company's assets in addition to being guaranteed by the
Company's two principal stockholders as well as the subordination of loans due
them. Interest at prime plus 1/2% is due monthly on the working capital line of
credit.
Loan balances are as follows:
May 31,
2001 2000
---- ----
Working capital line of credit $ 342,146 $ 403,146
Equipment line of credit 55,917 0
--------- ---------
Total $ 398,063 $ 403,146
========= =========
Current portion $ 354,346 $ 403,146
========= =========
On July 10, 2001 the Company paid the bank $50,000 and the Working capital line
of credit was renewed to August 31, 2001. If the Company pays the bank an
additional $50,000, by August 31, 2001, the note will be renewed for one year.
On December 29, 2000 the Company signed a $61,000 term loan with the bank
payable in 60 monthly installments of $1,016.66. Interest at 10% is due monthly
on the unpaid balance.
Capitalized Leases
- ------------------
Minimum future lease payments under capital leases as of May 31, for each of the
next two years are:
2002 10,440
2003 4,258
--------
Total minimum lease payments 14.698
Less: Amount representing interest 2,892
--------
Present value of net minimum lease
payments $ 11,806
========
12
API ELECTRONICS, INC.
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2001 AND 2000
Note 4 - Debt - (continued)
Interest rates on capitalized leases are approximately 9% and are imputed based
on the Company's incremental borrowing rate at the inception of each lease.
Stockholder Loans
- -----------------
During the normal course of business, the Company receives advances from a
stockholder. The advances bear interest at nine percent and have no fixed
maturity date. During the years ended May 31, 2001 and 2000, the Company
incurred $38,673 and $0 interest on these advances respectively.
Equipment Loan Payable - Crysyalonics
- -------------------------------------
On March 16, 2001, API entered into a joint venture agreement with Crystalonics
(see note 1 for details).
The $180,000 loan is non-interest bearing and is payable over five years in
monthly installments of $3,000.
Loan balances are as follows:
May 31,
2000 2001
---- ----
Equipment loan payable $174,000 $ 0
-------- ------
Current portion $ 36,000 $ 0
-------- ------
Note 5 - Commitments and Contingencies
The following is a schedule by years of approximate future minimum rental
payments under operating leases that have remaining non-cancelable lease terms
in excess of one year as of May 31, 2001:
Period Ended May 31,
--------------------
2002 26,855
2003 22,752
2004 12,553
Included in selling expenses are rental charges on these leases of $22,648 and
$22,572 for the periods ended May 31, 2001 and 2000, respectively.
13
API ELECTRONICS, INC.
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2001 AND 2000
Note 5 - Commitments and Contingencies - (continued)
401(k) Plan
- -----------
During 1998, the Company adopted a 401(k) deferred compensation arrangement.
Under the provision of the plan, the Company is required to match 50% of
employee contributions up to a maximum of 3% of the employee's eligible
compensation. Employees may contribute up to a maximum of 15% of eligible
compensation. The plan requires employer contributions to be funded monthly and
employee amounts weekly. The Company may also make discretionary contributions
up to a total of 15% of eligible compensation. During the year ended May 31,
2001 and 2000, the Company incurred $17,425 and $15,341 as its obligation under
the terms of the plan. Of this amount $17,425 and $15,341 has been charged to
general and administrative expenses for 2001 and 2000 respectively.
Note 6 - Related Party Transactions
On June 1, 1999 a principal stockholder of the company to whom the Company owed
$1,128,394, forgave interest due to him on his outstanding principal loan
balance for the year ended May 31, 2000.
On September 30, 2000 the Company signed a demand promissory note with the
principal stockholder in the amount of $1,265,492. Under the demand promissory
note, interest does not accrue on the unpaid balance unless and until there is
an event of default. The principal stockholder assigned the note to a third
party payee. The note had not been in default.
On April 1, 2001 the Company exchanged with the payee of the demand promissory
note for a convertible note. Under the convertible note, the unpaid principal is
due and payable on April 1, 2006 (Maturity). Interest does not accrue on the
unpaid balance unless and until there is an event of default. The outstanding
principal, but not unpaid and accrued interest on this convertible note, if any,
shall at the option of the payee, convert into that number of Conversion
Securities (as defined below) that equal, after issuance, 49% of the then
outstanding shares of capital stock of the Company on the date specified by the
Payee by notice to the Company. "Conversion Securities" shall mean common stock
of the company.
On July 1, 2001 the holder of the convertible note converted the note into
Conversion Securities, and the Company issued 49% of the outstanding shares of
capital stock of the Company to the holder of the convertible note on that date.
14
SUPPLEMENTARY INFORMATION
15
PERRY COLLETTI
Certified Public Accountants
17 Conklin Street
Farmingdale, New York 11735
(516) 843-0219 fax (516) 249-2761
Report of Independent Certified Public Accountants
On Supplementary Information
Board of Directors
API Electronics, Inc.
My audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole of API Electronics, Inc. as of and for the
years ended May 31, 2001 and 2000, which are presented in the preceding section
of this report. The accompanying supplementary information is presented for
purposes of additional analysis and is not a required part of the basic
financial statements. Such information has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in my
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
Very truly yours,
"Perry Colletti"
Certified Public Accountant
Farmingdale, NY
July 14, 2001
16
Investorlinks.com Inc.
(Formerly Opus Minerals Inc.)
Consolidated Financial Statements
For the years ended April 30, 2000, 1999 and 1998
(expressed in Canadian dollars)
Investorlinks.com Inc.
(Formerly Opus Minerals Inc.)
Consolidated Financial Statements
For the years ended April 30, 2000, 1999 and 1998
(expressed in Canadian dollars)
Contents
================================================================================
Auditors' Report 2
Consolidated Financial Statements
Balance Sheets 3
Statements of Operations and Deficit 4
Statements of Cash Flows 5
Summary of Significant Accounting Policies 6
Notes to Financial Statements 8
================================================================================
Auditors' Report
- --------------------------------------------------------------------------------
To the Shareholders of
Investorlinks.com Inc.
(Formerly Opus Minerals Inc.)
We have audited the consolidated balance sheets of Investorlinks.com Inc.
(formerly Opus Minerals Inc.) as at April 30, 2000 and 1999 and the consolidated
statements of operations and deficit and cash flows for each of the three years
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 audits.
We conducted our audits in accordance with generally accepted auditing standards
in Canada. 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, 2000 and 1999
and the results of its operations and its cash flows for each of the three years
in the period ended April 30, 2000 in accordance with generally accepted
accounting principles in Canada.
(signed) BDO Dunwoody LLP
Chartered Accountants
Toronto, Ontario
July 28, 2000, except Note 11, as to August 8, 2000
2
================================================================================
Investorlinks.com Inc.
(Formerly Opus Minerals Inc.)
Consolidated Balance Sheets
(expressed in Canadian dollars)
April 30 2000 1999
- --------------------------------------------------------------------------------
Assets
Current
Cash $ 19,819 $ 123,990
Short term investments 743,148 888,913
Accounts receivable 85,262 34,377
Prepaid expenses 12,552 236
-------------------------------
860,781 1,047,516
Investments (Note 1) 576,430 407,163
Mineral properties (Note 2) - 3,293,887
Capital assets (Note 3) 9,553 5,494
-------------------------------
$ 1,446,764 $ 4,754,060
================================================================================
Liabilities and Shareholders' Equity
Current
Accounts payable $ 70,012 $ 209,830
-------------------------------
Shareholders' equity
Share capital (Note 4) 6,222,102 5,491,102
Contributed surplus 17,060 17,060
Deficit (4,862,410) (963,932)
-------------------------------
1,376,752 4,544,230
-------------------------------
$ 1,446,764 $ 4,754,060
================================================================================
On behalf of the Board:
(signed) "Romaine E. Gilliland"
- ------------------------------------- Director
(signed) "Sandra J. Hall"
- ------------------------------------- Director
The accompanying summary of significant accounting policies and notes are an
integral part of these financial statements.
3
====================================================================================================
Investorlinks.com Inc.
(Formerly Opus Minerals Inc.)
Consolidated Statements of Operations and Deficit
(expressed in Canadian dollars)
For the years ended April 30 2000 1999 1998
- ----------------------------------------------------------------------------------------------------
Revenue
Interest income $ 39,043 $ 76,282 $ 112,086
Foreign exchange gain (loss) (5,198) 7,308 -
----------------------------------------------
33,845 83,590 112,086
----------------------------------------------
Expenses
Administrative salaries and consulting 111,366 79,951 90,810
Amortization 1,310 1,374 1,717
General and administrative 139,900 141,558 255,439
Insurance 7,991 8,676 8,401
Investor relations 116,313 88,255 338,846
Professional fees 91,361 175,954 101,386
Shareholder information and annual meeting 99,396 92,756 146,173
Transfer agent fees 17,266 25,859 18,594
Travel 15,769 30,417 72,619
Write down of investment - 22,010 244,195
Write down of marketable securities - - 490
Write down of mineral properties 2,952,815 21,509 8,814,621
----------------------------------------------
3,553,487 688,319 10,093,291
----------------------------------------------
Loss before undernoted items (3,519,642) (604,729) (9,981,205)
Non-controlling interest in net loss
of subsidiary - - 238,643
----------------------------------------------
Net loss for the year (3,519,642) (604,729) (9,742,562)
Deficit, beginning of year (963,932) (12,714,493) (2,971,931)
Dividends (378,836) - -
Reduction to stated capital (Note 4(b)) - 12,355,290 -
----------------------------------------------
Deficit, end of year $ (4,862,410) $ (963,932) $ (12,714,493)
=====================================================================================================
Loss per share (Note 5) $ (0.64) $ (0.16) $ (2.62)
=====================================================================================================
The accompanying summary of significant policies and notes are an integral part
of these financial statements.
4
===========================================================================================================================
Investorlinks.com Inc.
(Formerly Opus Minerals Inc.)
Consolidated Statements of Cash Flows
(expressed in Canadian dollars)
For the years ended April 30 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------
Cash provided by (used in)
Operating activities
Net loss for the year $ (3,519,642) $ (604,729) $ (9,742,562)
Adjustments to reconcile net loss to net cash
provided by operating activities
interest in subsidiary
Non-controlling interest in
loss of subsidiary - - (238,643)
Amortization 1,310 1,374 1,717
Write down of investments - 22,010 244,685
Write down of mineral properties 2,952,815 21,509 8,814,621
Changes in non-cash current assets and liabilities
Increase (decrease) in accounts payable (139,818) 30,276 (192,140)
Decrease (increase) in other assets (1,910) 2,384 (22,808)
--------------------------------------------------------------
(707,245) (527,176) (1,135,130)
--------------------------------------------------------------
Investing activities
Advances - - 38,801
Mineral properties and exploration expenditures (268,322) (825,104) (2,815,412)
Short term investments 145,765 1,253,117 3,363,325
Investments acquired - (400,000) -
Purchase of capital assets (5,369) - -
--------------------------------------------------------------
(127,926) 28,013 586,714
--------------------------------------------------------------
Financing activities
Issuance of common shares, net of issue costs 731,000 400,000 462,500
--------------------------------------------------------------
Decrease in cash during the year (104,171) (99,163) (85,916)
Cash, beginning of year 123,990 223,153 309,069
--------------------------------------------------------------
Cash, end of year $ 19,819 $ 123,990 $ 223,153
===========================================================================================================================
The accompanying summary of significant policies and notes are an integral part
of these financial statements.
5
================================================================================
Investorlinks.com Inc.
(Formerly Opus Minerals Inc.)
Summary of Significant Accounting Policies
(expressed in Canadian dollars)
April 30, 2000 and 1999
- --------------------------------------------------------------------------------
Nature of Business Investorlinks.com Inc. (the "Company") was
incorporated under the laws of Ontario. The
Company's business focus was in Botswana and
Canada as disclosed in Note 2. During the
year, the Company divested itself of its
mineral properties and has changed its
business focus subsequently (See Note 11(b)).
Preparation of the financial statements in
conformity with generally 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, TNK Resources Area 1
(Proprietary) Limited, as well as Area 2 and
Area 3, up to April 11, 2000 the date the
wholly-owned subsidiaries were sold (See Note
2(b)). The consolidated financial statements
also include the 64.1% subsidiary up to April
11, 2000 when its interest was diluted to
26.3%. After April 11, 2000 the investment is
recorded on the equity method. The investment
was sold subsequent to year end (Note 10(d)).
Its former 64.1% owned subsidiary was First
Strike Diamonds Inc. (formerly Vertex
Ventures Inc.).
Mineral Properties Mining claims are carried at cost until they
are brought into production at which time
they are depleted on a unit-of-production
basis. Exploration expenditures relating to
mining claims are deferred until the mining
claims are brought into production at which
time they are depleted on a unit-of-
production basis or the balance thereof
written off should the property be disproven
by exploration or abandoned. These assets are
not intended to represent present or future
value.
Capital Assets Capital assets are recorded at cost less
accumulated amortization. Amortization is
provided on computer equipment on a 20%
declining balance basis.
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
================================================================================
Investorlinks.com Inc.
(Formerly Opus Minerals Inc.)
Summary of Significant Accounting Policies
(expressed in Canadian dollars)
April 30, 2000 and 1999
- --------------------------------------------------------------------------------
Foreign Currency Translation Foreign currency accounts 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 long term
investments is disclosed in Note 1.
Included in short term investments is a term
deposit in the amount of $718,803 (1999 -
$863,334) with an interest rate of 5%
maturing in April 2001 and a GIC in the
amount of $24,345 (1999 - $25,579) with an
interest rate of 4.50% maturing March 2001
which secures four letters of credit to
guarantee work commitments (see Note 2(b)).
On May 29, 2000 assessment reports for the
work completed were filed and the letters of
credit were returned.
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.
7
=============================================================================================================
Investorlinks.com Inc.
(Formerly Opus Minerals Inc.)
Notes to Consolidated Financial Statements
(expressed in Canadian dollars)
April 30, 2000 and 1999
- -------------------------------------------------------------------------------------------------------------
1. Investments
2000 1999
--------------------------
At Cost
91,706 common shares of Oil Springs Energy Corp.
(cost $215,510; quoted market value: 2000 - $9,172;
1999 - $5,502) $ 5,502 $ 5,502
4,000,000 common shares of Stroud Resources Ltd. ("Stroud")
(representing 12.6% of the outstanding common shares:
quoted market value: 2000 - $420,000; 1999 - $640,000) 399,600 399,600
400,000 common share purchase warrants of Stroud, exercisable
for one common share for each warrant at $0.15 per share,
expiring May 15, 2000 400 400
30,174 common shares of Maxill Inc.
(quoted market value: 2000 - $6,035: 1999 - $3,017) 1,661 1,661
At Equity
2,800,000 shares of First Strike Diamonds Inc., a former
subsidiary 169,267 -
--------------------------
$ 576,430 $ 407,163
==========================
The quoted market value may not be indicative of the fair value of the
investments since the market for these shares is not well established. It is
not practical to establish fair value by other means.
- -------------------------------------------------------------------------------------------------------------
2. Mineral Properties
For the year ended April 30, 2000
--------------------------------------------------------------------------------
Opening Closing
Balance Expenditures Write Down Balance
Botswana - Gope Area
Acquisition $ 133,800 $ - $ - $ 133,800
Exploration 3,080,831 49,956 (2,914,587) 216,200
Less: disposition (350,000)
Canadian Properties
Acquisition 52,500 - - 52,500
Exploration 26,756 218,366 (38,228) 206,894
Less: disposition - - - (259,394)
--------------------------------------------------------------------------------
Total $ 3,293,887 $ 268,322 $ (2,952,815) $ -
================================================================================
The reduction in mineral property values is a result of the Company selling
the properties to First Strike Diamonds Inc. (formerly Vertex Ventures Inc.)
during the year (See Note 2(b)).
8
================================================================================
Investorlinks.com Inc.
(Formerly Opus Minerals Inc.)
Notes to Consolidated Financial Statements
(expressed in Canadian dollars)
April 30, 2000 and 1999
- --------------------------------------------------------------------------------
2. Mineral Properties (continued)
For the year ended April 30, 1999
---------------------------------------------------------------------------------
Opening Closing
Balance Expenditures Write Down Balance
Botswana - Gope Area
Acquisition $ 133,800 $ - $ - $ 133,800
Exploration 2,348,991 731,840 - 3,080,831
Botswana - Middlepits Area
Exploration - 21,508 (21,508) -
Canadian Properties
Acquisition - 52,500 - 52,500
Exploration - 26,756 - 26,756
Indonesia - Marunda Wahau
Acquisition 1 - (1) -
---------------------------------------------------------------------------------
Total $ 2,482,792 $ 832,604 $ (21,509) $ 3,293,887
=================================================================================
(a) During the 1999 fiscal year, the Company entered into an Option Agreement
(the "Agreement") to acquire a 50% undivided interest in six unpatented
mining claims located west of Thunder Bay, Ontario, known as the Wolf Lake
Prospect.
Under the terms of the Agreement, the Company was required to make cash
payments of $100,000, issue 100,000 common shares and incur $100,000 on or
before December 31, 1999 and $100,000 on or before July 31, 2000 in
exploration expenditures.
Management of the Company decided not to proceed with the Agreement and
respectively, the cash payment of $25,000, the 25,000 common shares issued
February 3, 1999 with an ascribed value of $7,500 and exploration
expenditures in the amount of $5,728 have been written off during the year.
(b) The Company entered into an acquisition agreement (the "Agreement") with
First Strike Diamonds Inc. ("First Strike") (formerly Vertex Ventures Inc.)
dated January 17, 2000. Under the terms of the agreement, the Company
transferred to First Strike its entire 50% interest in 5 exploration
permits and numerous staked claims covering an area of approximately
770,000 acres, together with all associated samples and data on Baffin
Island, Nunavut, and its wholly-owned subsidiaries which own a 100%
interest in diamond exploration licences in Botswana, covering an area of
approximately 3,917 square kilometres. The fair market value of the
exploration licences was determined by an independent third party to be
$325,000 for the Baffin Island prospect and $350,000 for the Botswana
prospect. The Company also agreed to convert $265,000 owing by First Strike
into shares of First Strike. The total consideration for the prospects and
the conversion of debt amounted to $940,000 payable through the issuance of
6,266,667 common shares of First Strike at the rate of $0.15 per share,
pursuant to the agreement.
As of the date of the Agreement the Company was the largest shareholder of
First Strike holding approximately 64% of the then issued and outstanding
common shares. Accordingly, the transaction was approved by the majority of
the minority votes cast at an annual and special meeting of the
shareholders of First Strike held on February 21, 2000.
The transaction was recorded at the carrying amounts. The Botswana
properties were written down to their fair value prior to the transfer. The
Canadian properties were transferred at their carrying amount of $259,394.
9
================================================================================
Investorlinks.com Inc.
(Formerly Opus Minerals Inc.)
Notes to Consolidated Financial Statements
(expressed in Canadian dollars)
April 30, 2000 and 1999
- --------------------------------------------------------------------------------
2. Mineral Properties (continued)
On April 11, 2000 the Company issued a dividend-in-kind of the 6,266,667
common shares of First Strike to shareholders of record of the Company on
March 1, 2000.
- --------------------------------------------------------------------------------
3. Capital Assets
2000 1999
-------------------------------------------------------
Accumulated Accumulated
Cost Amortization Cost Amortization
Computer equipment $ 14,647 $ 5,094 $ 9,278 $ 3,784
=======================================================
Net book value $ 9,553 $ 5,494
==========================================
- --------------------------------------------------------------------------------
4. Share Capital
(a) Authorized
Unlimited non-participating, redeemable, voting preference shares
Unlimited common shares
2000 1999
------------------------------------------------------------------------------------
Number of Number of
(b) Issued - Common shares Shares Consideration Shares Consideration
Balance, beginning of year 38,043,008 $ 5,491,102 37,618,008 $ 17,438,892
Consolidation of
share capital (i) (34,238,432) - - -
Private placement (ii), net of
issue costs of $61,000 3,000,000 689,000 - -
Exercise of stock options 140,000 42,000 - -
Reduction of deficit (iii) - - - (12,355,290)
Issued per Wolf Lake
Property agreement - - 25,000 7,500
Issued per Joint Venture
agreement (iv) - - 400,000 400,000
------------------------------------------------------------------------------------
Balance, end of year 6,944,576 $ 6,222,102 38,043,008 $ 5,491,102
====================================================================================
(i) Pursuant to Articles of Amendment dated May 18, 1999 the Company
consolidated its issued share capital on a 1 for 10 basis reducing
the number of issued and outstanding common shares to 3,804,576.
10
================================================================================
Investorlinks.com Inc.
(Formerly Opus Minerals Inc.)
Notes to Consolidated Financial Statements
(expressed in Canadian dollars)
April 30, 2000 and 1999
- --------------------------------------------------------------------------------
4. Share Capital (continued)
(ii) On October 13, 1999 the Company completed an equity financing of
$750,000 through a private placement of 3,000,000 units at $0.25 per
unit issued to arms length third parties. Each unit consists of one
common share and one common purchase warrant exercisable at $0.35 on
or before April 28, 2002. The Company issued to the Agent, 300,000
compensation options to acquire 300,000 units at $0.25 per unit. Each
unit consists of one common share and one common share purchase
warrant exercisable at $0.35 on or before October 28, 2001.
(iii) A reduction in the stated capital of the Company's common shares of
$12,355,290 was approved by way of special shareholders resolution
dated October 30, 1998.
(iv) In 1998, the Company entered into a subscription agreement, pursuant
to Joint Venture agreements with DeBeers Prospecting Botswana
(Proprietary) Limited, for 800,000 units of the Company at $1.00 per
unit. Each unit consisted of one common share and one common share
purchase warrant, entitling the holder to purchase an additional
share of the Company. All of the units have been issued in exchange
for $400,000 in 1999 and $400,000 in 1998.
(c) Warrants
Warrants outstanding, beginning of year 800,000
Granted 3,300,000
Forfeited (760,000)
----------
Warrants outstanding, end of year 3,340,000
==========
As at April 30, 2000 the following warrants are outstanding:
Number of Shares for Exercise Expiry
Outstanding Warrants Price Date
40,000 1 for 1 $ 15.00 June 30, 2000
3,000,000 1 for 1 $ 0.35 April 28, 2002
300,000 1 for 1 $ 0.35 October 28, 2001
(d) Stock Options
2000 1999
-------------------------
Options outstanding, beginning of year 1,275,000 2,025,000
Granted 630,000 -
Exercised (140,000) -
Forfeited (1,135,000) (750,000)
-------------------------
Options outstanding, end of year 630,000 1,275,000
=========================
11
================================================================================
Investorlinks.com Inc.
(Formerly Opus Minerals Inc.)
Notes to Consolidated Financial Statements
(expressed in Canadian dollars)
April 30, 2000 and 1999
- --------------------------------------------------------------------------------
4. Share Capital (continued)
As at April 30, 2000 the following stock options are outstanding:
Number of Fiscal Year Exercise Expiry
Issued to Outstanding Granted Price Date
Director 30,000 2000 $ 0.30 August 3, 2002
Consultants 300,000 2000 $ 0.90 November 15, 2001
Agent 300,000 2000 $ 0.25 October 28, 2001
- --------------------------------------------------------------------------------
5. Loss Per Share
The loss per share figures have been calculated using the weighted average
number of common shares outstanding during the respective fiscal periods.
Exercise of outstanding stock options and warrants would be anti-dilutive.
The weighted average number of common shares outstanding reflects the
reverse stock split for all years.
- --------------------------------------------------------------------------------
6. Supplementary Cash Flow Information
In 2000, the Company transferred its mineral properties in exchange for
4,500,000 shares of First Strike Diamonds Inc. (formerly Vertex Ventures
Inc.), a former subsidiary, for $609,394.
In 2000, the Company agreed to convert $265,000 owing by First Strike into
1.766,666 shares of First Strike.
In 1999, the Company issued 25,000 common shares for $7,500 pursuant to the
Wolf Lake Property Agreement (Note 2(b)).
In 2000, the Company paid a dividend in kind (See Note 2(b)) to its
shareholders.
- --------------------------------------------------------------------------------
7. Related Party Transactions
In addition to the transfer of property described in Note 2(b), during the
year, the Company had the following related party transactions:
2000 1999 1998
--------------------------
(a) Management fees
Paid or payable to companies whose director
is an officer and director of the Company
Included in exploration expenditures $ - $ - $ 12,000
Included in operations 18,000 24,000 12,000
Office rent 39,000 42,000 42,000
Accounting and administrative support 26,200 27,600 27,600
(b) Legal fees paid to a law firm whose partner
is a former director of the Company 16,600 50,890 44,331
(c) Consulting fees for exploration services
rendered by a former director 14,784 44,060 58,093
12
================================================================================
Investorlinks.com Inc.
(Formerly Opus Minerals Inc.)
Notes to Consolidated Financial Statements
(expressed in Canadian dollars)
April 30, 2000 and 1999
- --------------------------------------------------------------------------------
7. Related Party Transactions (continued)
Included in accounts receivable is $53,753 owing from First Strike Diamonds
Inc., a former subsidiary of the Company.
- --------------------------------------------------------------------------------
8. Segmented Information
The Company has been engaged directly or indirectly through subsidiaries in
the exploration of precious metals in various geographic locations. The
Company does not have reportable operating segments.
The Company's revenue and mineral properties and capital assets have been
identified based on geographic areas as follows:
Canada Botswana
---------------------------------
For the year ended April 30, 2000
Revenue $ 33,845 $ -
Mineral properties and capital assets 9,553 -
=================================
For the year ended April 30, 1999
Revenue $ 83,590 $ -
Mineral properties and capital assets 84,750 3,214,631
=================================
For the year ended April 30, 1998
Revenue $ 112,086 $ -
Mineral properties and capital assets 6,886 2,482,791
=================================
- --------------------------------------------------------------------------------
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, 2000, 1999 and 1998, due to uncertainties as to the
Company's ability to utilize its net operating losses and other benefits
available for tax purposes amounting to $11,538,000 (1999 - $11,725,000;
1998 - $11,145,857) which would result in a deferred tax asset of
$5,032,876 (1999 - $5,231,695; 1998 - $ 4,973,281).
The net operating loss carry forwards in the amount of approximately
$3,865,300 are available to be applied against future taxable income. The
right to claim these losses expires $73,600 in 2002, $272,500 in 2003,
$1,710,800 in 2004, $848,400 in 2005, $480,400 in 2006 and $479,600 in 2007.
The Company also has approximately $7,575,700 in foreign exploration expenses
which are available to be applied against future income for income tax
purposes.
13
================================================================================
Investorlinks.com Inc.
(Formerly Opus Minerals Inc.)
Notes to Consolidated Financial Statements
(expressed in Canadian dollars)
April 30, 2000 and 1999
- --------------------------------------------------------------------------------
10. Subsequent Events
(a) (i) In connection with the October 1999 private placement financing,
2,400,000 common share purchase warrants were exercised on July 6,
2000 for total proceeds of $840,000. On May 25, 2000, pursuant to
the exercise of the agent's compensation options and common share
purchase warrants the Company issued 600,000 common shares for
total proceeds of $180,000.
(ii) A further 600,000 common share purchase warrants were exercised on
August 8, 2000 for total proceeds of $210,000.
(b) On June 6, 2000, the Company acquired all of the shares of IL Data
Canada, Inc. ("IL Canada") for 6,800,000 common shares of the Company at
an attributed value of $1,700,000. The transaction will be accounted for
as a reverse takeover with IL Canada, the legal subsidiary of the
Company, deemed to be the acquirer. IL Canada, incorporated in the
province of Ontario, owns 100% of IL Data Corporation, Inc.,
incorporated in the state of Nevada, which through a series of
transactions owns and operates the Internet investment site
www.investorlinks.com.
(C) On June 26, 2000, the Company granted the following common share
purchase options:
Number of
Issued to Outstanding Exercise Price Expiry Date
Directors 553,000 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) 225,000 US $2.55 June 30, 2005
Consultant (4) 150,000 US $2.55 June 30, 2002
(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 on June 26,
2001.
(4) On June 26, 2000, the Company amended a Consulting agreement dated
November 15, 1999 pursuant to which the consultant will provide
ongoing investor relations activities to the Company. Under the
terms of the amended agreement the Consultants monthly fee was
increased to $20,000 per month and 150,000 common share purchase
options were granted at an exercise price of US $2.55 expiring June
30, 2002.
(d) In June 2000, the Company sold 2,800,000 shares of First Strike Diamonds
Inc. (a former subsidiary) in the market for total proceeds of $278,600.
(e) Pursuant to Articles of Amendment dated July 25, 2000, the Company
changed its name from Opus Minerals Inc. to Investorlinks.com Inc.
14
================================================================================
Investorlinks.com Inc.
(Formerly Opus Minerals Inc.)
Notes to Consolidated Financial Statements
(expressed in Canadian dollars)
April 30, 2000 and 1999
- --------------------------------------------------------------------------------
10. Subsequent Events (continued)
(f) The Company entered into a strategic alliance services agreement,
effective August 2, 2000 with a global financial content firm to
provide business development services. As consideration for the
services to be provided over twenty-nine months following the
effective date, the Company will 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. Under the terms of the agreement the Company released
66,667 earned common shares with a value of US $150,000 on August 9,
2000.
(g) 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 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.
15
================================================================================
NEW INTERNATIONAL INFOPET SYSTEMS LTD.
NINE MONTH FINANCIAL STATEMENTS
NINE MONTH PERIOD ENDED - JULY 31, 2000
UNAUDITED
================================================================================
NEW INTERNATIONAL INFOPET SYSTEMS LTD. 2.
BALANCE SHEET
- --------------------------------------------------------------------------------
PERIOD ENDING NOTES JULY 31/00
JULY 31/99 ----- ----------
----------
(9 months) (9 months)
---------- ----------
ASSETS
- ------
CURRENT
Cash $ 463.00 2,210.50
INVESTMENTS IN INTERNATIONAL
INFOPET SYSTEMS INC. 100.00 100
----------- --------------
$ 563.00 $ 2,310.50
=========== ==============
LIABILITIES
- -----------
CURRENT
Accounts payable and accrued
liabilities $ 14,513 13,613.00
Loan
Advances from related 3
companies 310.031 301.031
----------- --------------
$ 324.544 $ 323,644
=========== ==============
SHAREHOLDERS' EQUITY
- ---------------------
CAPITAL STOCK 4
2,671,000 Common shares until Feb/97 $ 1,586.504
1,586,504 -- 1,068,400 Common shares after Feb/97 -
CONTRIBUTED SURPLUS DEFICIT 224,527 224,527
(2,135,012) (2,132,364.50)
(323,981) (321,333.50)
----------- --------------
$ 563.00 $ 2,310.50
=========== ==============
E. & O. E.
See Accompanying Notes
NEW INTERNATIONAL INFOPET SYSTEMS LTD. 3.
STATEMENT OF LOSS AND DEFICIT
- --------------------------------------------------------------------------------
9 MONTHS 9 MONTHS
ENDING ENDING
JULY 31/00 JULY 31/99
-------------- --------------
SUNDRY INCOME $ $ 187.25
-------------- --------------
NIL
- -----
EXPENSES
Executive office rent - -
Management fees - -
Bank Charges 46.50 49.25
Office and general 711.85 624.50
Professional Fees 974.20 -
-------------- --------------
1,732.55 673.75
-------------- --------------
NET PROFIT (LOSS) (1,732.55) (486.50)
DEFICIT, beginning of year (2,134,996.55) (2,131.878)
-------------- --------------
DEFICIT, end of year (2,132,364.50) (2,135,012.55
============== ==============
See Accompanying Notes
NEW INTERNATIONAL INFOPET SYSTEMS LTD. 4.
NOTES TO FINANCIAL STATEMENTS
NINE MONTHS ENDING - JULY 31, 2000
________________________________________________________________________________
___
1. SIGNIFICANT ACCOUNTING POLICIES:
Investment
The investment in International Infopet Systems Inc. represents 33.3% of
its issued and outstanding shares. The company exercises significant
influence over International Infopet Systems Inc.. This investment was
accounted for on the equity basis. Since acquisition, there has been a
permanent decline in the value of this investment. As a result, it has been
written down to a nominal amount of $100. In the event that the company
becomes profitable, any increase in value will be recorded where realized.
2. INVESTMENT
The company owns 1,000 common shares representing a one-third interest in
International Infopet Systems Inc., a privately owned company registered in
Delaware, United States.
3. RELATED PARTY TRANSACTIONS
The company's president, Mr. Jack Greenberg, owns 35.4% of the issued and
outstanding common shares of the company and 62.96% of the issued and
outstanding common shares (in trust) of International Infopet Systems Inc..
The following company is also wholly-owned by the company's president:
Dapaul Management Limited ("Dapaul")
Amounts due to Dapaul are unsecured, non-interest bearing and repayable on
demand.
Dapaul Management Limited has paid liabilities on behalf of the company.
The balance owing to Dapaul Management Limited is unsecured, non-interest
bearing and repayable on demand.
857710 Ontario Limited, a company controlled by a prior director and prior
officer acquired the debts previously owed to Prenor Financial Corporation,
Trade Equity Corporation, CYA Enterprises Inc. and Mr. A. Kondrat. This
debt is unsecured, non-interest bearing and without definite terms of
repayment.
5.
NEW INTERNATIONAL INFOPET SYSTEMS LTD.
NOTES TO FINANCIAL STATEMENTS
NINE MONTHS ENDING - JULY 31, 2000
________________________________________________________________________________
___
3. RELATED PARTY TRANSACTIONS (CONT'D)
Amounts due to related parties are as follows:
Apr 30/00 Apr 30/99
--------- ---------
Dapaul Management Limited
(as trustee) $ 277 586 $ 275 086
857710 Ontario Limited 32 445 32 445
--------- -----------
$ 310 031 $ 307 531
========= ===========
4. NAME CHANGE AND CAPITAL STOCK CONSOLIDATION
Authorized
The Company is authorized by its Articles of Incorporation to issue an
unlimited number of voting, non-participating, redeemable, special
preference shares and an unlimited number of common shares without par
value.
On February 26, 1997 the Company changed its name to "New International
Infopet Systems Ltd." pursuant to Articles of Amendment. In addition, as
authorized at the annual and special meeting of July 26, 1996, the Company
consolidated all of its common shares on basis of 2.5 old common shares for
one new common share of the Corporation.
5. ECONOMIC DEPENDENCE
The company has no current source of income and is thus economically
dependent on the related parties, discussed in Note 3, for funding required
to meet its obligations as they normally become due.
6. INCOME TAXES
The company has approximately $129,381 of non-capital loss carry forwards
which may be used to reduce future years' taxable income. These losses
expire as follows:
2000 48 240
2001 29 996
2002 30 184
2003 15 448
2005 4 111
2006 1 402
--------
$129 381
========
NEW INTERNATIONAL INFOPET SYSTEMS LTD. 6.
NOTES TO FINANCIAL STATEMENTS
NINE MONTHS ENDING - JULY 31, 2000
================================================================================
7. CONTINGENT LIABILITIES
(a) Director's Loan
On April 16, 1991 the director who advanced $20,000 to the company
commenced a legal action to recover the funds advanced. The action
included a claim for $444,600 to recover funds advanced to related
companies and/or Jack Greenberg. However, at the time of the advances,
the company was not a related party to these transactions. The company
strenuously denies the allegations. Legal counsel is unable to
evaluate this action.
(b) Lawsuits - Contingent Liability
On April 16, 1991 the company was named as a co-defendant in two
separate legal actions of $57,500 and $50,000 respectively, to recover
funds advanced to related companies and/or Mr. Greenberg.
However, at the time of these advances, the company was not a related
party to these transactions. The company strenuously denies the
allegations. Legal counsel is unable to evaluate these actions.
(c) Lawsuits - Contingent Liability
On June 17, 1991, the company was named a co-defendant in a legal
action of $40,000 to recover funds allegedly advanced to Mr. Greenberg
in trust.
However, at the time of the advance, the company was not a related
party to this transaction. Legal counsel is unable to evaluate this
action.
NEW INTERNATIONAL INFOPET SYSTEMS LTD. 7.
NOTES TO FINANCIAL STATEMENTS
NINE MONTHS ENDING - JULY 31, 2000
================================================================================
8. STATEMENT OF CHANGES IN FINANCIAL POSITION
A statement of changes in financial position has been omitted as it would
not provide additional meaningful information not readily determinable from
other financial information provided.
InvestorLinks.com
================================================================================
CONSOLIDATED BALANCE SHEET
(Unaudited)
As at October 31, 2000
================================================================================
ASSETS
Current
Cash $ 1,060,397
Short term investments 2,412,172
Accounts receivable and prepaid expenses 146,532
--------------------------
3,619,101
Property and equipment 168,998
Deposits 5,343
Investments 418,333
Organization costs 3,507
Internet investment site costs 371,700
--------------------------
$ 4,586,982
==========================
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued liabilities $ 148,158
--------------------------
Shareholders' Equity
Share Capital 5,063,410
Foreign Exchange Translation Adjustment 29,392
Deficit (653,978)
--------------------------
4,438,825
--------------------------
$ 4,586,982
==========================
The accompanying notes are an integral part of these unaudited consolidated
financial statements.
================================================================================
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
For the six month period ended October 31, 2000
- --------------------------------------------------------------------------------
Revenue
Advertising and sponsorship $ 79,566
Interest income 40,487
-----------------
120,053
Expenses
Amortization 6,614
Depreciation 4,856
General and administrative 232,110
Insurance 2,340
Interest 11,636
Investor relations 78,693
Business development 223,286
Professional fees 72,985
Salaries and consulting 188,396
Shareholder information and annual meeting 21,251
Transfer agent fees 9,583
-----------------
851,750
-----------------
Loss for the period before the undernoted item 731,698
Unrealized foreign exchange gain (77,719)
=================
Net loss for the period $ 653,978
-----------------
Net loss per share $ 0.04
-----------------
The accompanying notes are an integral part of these unaudited consolidated
financial statements.
------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
For the six month period ended October 31, 2000
------------------------------------------------------------------------
Cash provided by (used in)
Operating activities
Net loss for the period $ (653,978)
Add items not requiring an outlay of cash
Amortization 6,614
Depreciation 4,856
Unrealized gain on foreign exchange 29,392
Shares issued for business development 223,286
--------------
(389,830)
Net changes in non-cash working capital
Decrease in accounts receivable 72,561
Decrease in accounts payable and accrued liabilities (35,139)
--------------
(352,408)
--------------
Investing activities
Proceeds from sale of marketable securities 278,600
Short term investments (1,665,368)
Purchase of capital assets (123,043)
Web site design (48,988)
Organization costs (3,829)
Leasehold improvements (4,008)
--------------
(1,566,636)
==============
Financing activities
Deposits (5,343)
Repayment of loan payable (458,273)
Issuance of common shares 3,316,481
--------------
2,852,865
==============
Increase in cash 933,821
Cash, beginning of period 126,576
--------------
Cash, end of period $ 1,060,397
==============
The accompanying notes are an integral part of these unaudited consolidated
financial statements.
INVESTORLINKS.COM INC.
Notes to Unaudited Consolidated Financial Statements
For the Six Months Ended October 31, 2000
On July 25, 2000 the Company amended its Articles and changed its name from Opus
Minerals Inc. to Investorlinks.com Inc.
1. Basis of Presentation
These financial statements include the accounts of Investorlinks.com Inc.
("Investorlinks" or the "Company") and its wholly owned subsidiary IL Data
Canada, Inc. "IL Canada", a Canadian company, who owns IL Data Corporation, Inc.
(IL Nevada") who owns and operates the Internet investment site
www.investorlinks.com. All dollar amounts referred to herein are Canadian
- ---------------------
Dollars unless indicated otherwise.
2. Business Acquisitions and Combination
On June 6, 2000, the following transactions occurred:
(a) Business Acquisitions
(i) IL Canada, a newly incorporated inactive company, acquired all of the
issued shares of IL Nevada, a newly incorporated inactive company for US
$6,800 cash.
(ii) IL Nevada acquired the unincorporated business, InvestorLinks.com LLC
("LLC") from a person who became a director of the Company and the
director's spouse for US $300,000 cash.
The net assets acquired at fair value are as follows:
-------------------------------------------------------------------------------------------------------------------------
IL Nevada Investorlinks.com LLC
US Dollars US Dollars
-------------------------------------------------------------------------------------------------------------------------
Cash $ 6,800 $ 5,500
Current Assets - 68,483
Capital Assets - 26,500
Current Liabilities - (21,737)
--------- ------------
Net Assets 6,800 78,746
Consideration 6,800 300,000
--------- ------------
Excess of consideration given over net assets acquired /(1)/ $ - $ 221,254
========= ============
-------------------------------------------------------------------------------------------------------------------------
/(1)/ The excess of consideration given over the net assets of LLC
acquired is attributed to the cost of the Internet investment site.
(b) Business Combination
On June 6, 2000, after the business acquisitions referred to in Note 2(a),
Investorlinks 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.
After this transaction, the shareholders of IL Canada owned 47% of the issued
shares of Investorlinks. The business combination has been accounted for as a
reverse take-over of Investorlinks by IL Canada.
Application of reverse take-over accounting results in the following:
(i) IL Canada is deemed to be the acquirer for accounting purposes; its
assets and liabilities are included in the consolidated balance sheet at
their carrying values.
(ii) The consolidated balance sheet combines the assets and liabilities of
Investorlinks as an acquisition under the purchase method of accounting.
The net assets acquired at fair value as at June 6, 2000 are as follows:
----------------------------------------------------------------------------------------------
Canadian Dollars
----------------------------------------------------------------------------------------------
Cash and short term investments $ 840,413
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
============
----------------------------------------------------------------------------------------------
3. Share Capital
(a) Authorized
Unlimited non-participating, redeemable, voting preference shares
Unlimited common shares
(b) Issued
Preference Shares - Nil
Common shares issued prior to the reverse takeover:
---------------------------------------------------------------------------
Investorlinks Number of Shares Stated Capital
---------------------------------------------------------------------------
Balance at April 30, 2000 6,944,576 $ 6,222,102
Options exercised 300,000 75,000
Warrants exercised 300,000 105,000
----------- ------------
Balance at June 5, 2000 7,544,576 $ 6,402,102
=========== ============
---------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
IL Canada Number of Stated
Shares Capital
----------------------------------------------------------------------------------------------
Common shares issued upon incorporation for
cash and balance as at June 6, 2000 6,800 $ 10,052
----------------------------------------------------------------------------------------------
Common shares issued from the date of the reverse takeover:
- ------------------------------------------------------------------------------------------------------------------------------------
Number of Stated
Investorlinks Shares Capital
- ------------------------------------------------------------------------------------------------------------------------------------
Balance as at date of reverse take-over/(1)/ 7,544,576 $ 10,052
Issued on acquisition 6,800,000 1,513,591
Warrants exercised 3,000,000 1,050,000
Issued per Private placement 680,000 2,266,481
Issued per strategic alliance service agreement (Note 7) 1,500,000 5,168,813
---------- ----------
19,524,576 10,008,937
Shares to be released (Note 7) (1,433,333) (4,945,527)
---------- ------------
Balance as at October 31, 2000 18,091,243 $ 5,063,410
========== ============
- ------------------------------------------------------------------------------------------------------------------------------------
(1) The balance as at the date of the reverse take-over consists of the
number of shares issued in the Company and the stated capital of IL Canada.
(c) Common Share Purchase Options
Options outstanding, beginning of period 630,000
Granted 961,000
Exercised (300,000)
---------
Options outstanding, end of period 1,291,000
=========
At October 31, 2000 the following common share purchase options are
outstanding:
---------------------------------------------------------------------------------------------------------
Number of Outstanding Exercise Price
Issued to Expiry Date
---------------------------------------------------------------------------------------------------------
Director 30,000 $0.30 August 3, 2002
Consultants 300,000 $0.90 November 15, 2001
Directors 553,000 US $2.55 June 30, 2005
Employees 24,000 US $2.55 June 30, 2005
Consultant 9,000 US $2.55 June 30, 2005
Advisory Board 225,000 US $2.55 June 30, 2005
Consultant 150,000 US $2.55 June 30, 2002
---------------------------------------------------------------------------------------------------------
(d) Common Share Purchase Warrants
Warrants outstanding, beginning of period 3,340,000
Issued 680,000
Exercised (3,300,000)
Expired (40,000)
----------
Warrants outstanding, end of period 680,000
==========
At October 31, 2000 the following common share purchase warrants are
outstanding:
---------------------------------------------------------------------------------------
Number of Outstanding Shares for Exercise Expiry
Warrants Price Date
---------------------------------------------------------------------------------------
680,000 1 for 1 US $3.00 August 8, 2002
---------------------------------------------------------------------------------------
4. Comparative Financial Statements
There are no comparative financial statements as IL Canada, the acquiring
company, was a newly incorporated inactive company.
5. Loss Per Share
The loss per share figure has been calculated using the weighted average
number of common shares outstanding during the period. Exercise of common
share purchase options and common share purchase warrants would be anti-
dilutive.
6. Segmented Information
The Company owns and operates the Internet investment site
www.investorlinks.com indirectly through its subsidiary. The Company's
---------------------
revenue and capital assets, net of depreciation, have been identified based
on geographic areas as follows:
-------------------------------------------------------------------------------------------------------
For the period ended October 31, 2000 Canada United States
------------------------------------------------------------------------------------------------------
Revenue $ 35,703 $ 84,350
Capital assets, net $ 9,553 $ 159,445
------------------------------------------------------------------------------------------------------
7. Supplementary Cash Flow Information
The Company entered into a strategic alliance service agreement, effective
August 2, 2000 with a global financial content firm to provide business
development services. As consideration for the services to be provided over
twenty-nine months following the effective date, the Company will 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. Under the terms of the agreement the
Company released 66,667 earned common shares with a value of US $150,000 on
August 9, 2000. The remaining 1,433,333 shares to be released will be in
lots of 66,667 shares or US $150,000 of services rendered.
_____________________________________________________
InvestorLinks.com
- --------------------------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET
(Unaudited)
As at January 31, 2001
- --------------------------------------------------------------------------------------------------
ASSETS
Current
Cash $ 415,772
Short term investments 2,422,599
Accounts receivable and prepaid expenses 115,999
==================
2,954,370
Property and equipment 171,923
Deposits 5,247
Marketable securities 158,333
Internet investment site costs 385,177
------------------
$ 3,675,050
==================
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued liabilities $ 87,914
==================
Shareholders' Equity
Share capital 5,063,410
Foreign exchange translation adjustment 17,752
Deficit (1,494,026)
------------------
3,587,136
------------------
$ 3,675,050
==================
- --------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
For the nine month period ended January 31, 2001
- --------------------------------------------------------------------------------------------------
Revenue
Advertising and sponsorship $ 109,899
Interest income 77,090
------------------
186,989
Expenses
Amortization 9,836
Business development 223,286
Depreciation 14,132
General and administrative 465,632
Insurance 2,689
Interest 14,565
Investor relations 160,831
Marketing 15,961
Organization costs written off 3,248
Professional fees 172,988
Salaries and consulting 329,231
Shareholder information and annual meeting 29,153
Transfer agent fees 18,410
Write down of marketable securities 260,000
------------------
1,719,962
==================
Loss for the period before the undernoted item 1,532,973
Unrealized foreign exchange gain (38,947)
------------------
Net loss for the period $ 1,494,026
==================
Net loss per share $ 0.08
==================
The accompanying notes are an integral part of these unaudited consolidated
financial statements.
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
For the nine month period ended January 31, 2001
- --------------------------------------------------------------------------------
Cash provided by (used in)
Operating activities
Net loss for the period $(1,494,026)
Add items not requiring an outlay of cash
Amortization 9,329
Depreciation 14,151
Unrealized gain on foreign exchange 17,752
Shares issued for business development 223,286
-----------
(1,229,508)
Net changes in non-cash working capital
Decrease in accounts receivable 103,123
Decrease in accounts payable and accrued liabilities (95,384)
-----------
(1,221,769)
===========
Investing activities
Proceeds from sale of marketable securities 278,600
Marketable securities written down to fair market value 260,000
Short term investments (1,675,794)
Purchase of capital assets (133,410)
Web site design (67,456)
Leasehold improvements (3,936)
-----------
(1,341,996)
===========
Financing activities
Deposits (5,247)
Repayment of loan payable (458,273)
Issuance of common shares 3,316,481
-----------
2,852,961
===========
Increase in cash 289,196
Cash, beginning of period 126,576
===========
Cash, end of period $ 415,772
===========
The accompanying notes are an integral part of these unaudited consolidated
financial statements.
INVESTORLINKS.COM INC.
Notes to Unaudited Consolidated Financial Statements
For the Nine Months Ended January 31, 2001
On July 25, 2000 the Company amended its Articles and changed its name from Opus
Minerals Inc. to Investorlinks.com Inc.
1. Basis of Presentation
These financial statements include the accounts of Investorlinks.com Inc.
("Investorlinks" or the "Company") and its wholly owned subsidiary IL Data
Canada, Inc. "IL Canada", a Canadian company, who owns IL Data Corporation, Inc.
("IL Nevada ") who owns and operates the Internet investment site
www.investorlinks.com. All dollar amounts referred to herein are Canadian
- ---------------------
Dollars unless indicated otherwise.
2. Business Acquisitions and Combination
On June 6, 2000, the following transactions occurred:
(a) Business Acquisitions
(i) IL Canada, a newly incorporated inactive company, acquired all of the issued
shares of IL Nevada, a newly incorporated inactive company for US $6,800
cash.
2. Business Acquisitions and Combination (Con't.)
(ii) IL Nevada acquired the unincorporated business, InvestorLinks.com LLC
("LLC") from a person who became a director of the Company and the
director's spouse for US $300,000 cash.
The net assets acquired at fair value are as follows:
------------------------------------------------------------------------------------------------------
IL Nevada - US Dollars Investorlinks.com LLC - US
Dollars
------------------------------------------------------------------------------------------------------
Cash $ 6,800 $ 5,500
Current Assets - 68,483
Capital Assets - 26,500
Current Liabilities - (21,737)
-------- ---------
Net Assets 6,800 78,746
Consideration 6,800 300,000
-------- ---------
Excess of consideration given over net $ - $ 221,254
-------- ---------
assets acquired /(1)/
---------------------------------------------------------------------------------------------------
/(1)/ The excess of consideration given over the net assets of LLC
acquired is attributed to the cost of the Internet investment site.
(b) Business Combination
On June 6, 2000, after the business acquisitions referred to in Note 2(a),
Investorlinks 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.
After this transaction, the shareholders of IL Canada owned 47% of the issued
shares of Investorlinks. The business combination has been accounted for as a
reverse take-over of Investorlinks by IL Canada.
Application of reverse take-over accounting results in the following:
(i) IL Canada is deemed to be the acquirer for accounting purposes; its
assets and liabilities are included in the consolidated balance sheet at
their carrying values.
(ii) The consolidated balance sheet combines the assets and liabilities of
Investorlinks as an acquisition under the purchase method of accounting.
The net assets acquired at fair value as at June 6, 2000 are as follows:
---------------------------------------------------------------------------------------------------
Canadian Dollars
---------------------------------------------------------------------------------------------------
Cash and short term investments $ 840,413
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
-----------
---------------------------------------------------------------------------------------------------
3. Share Capital
(a) Authorized
Unlimited non-participating, redeemable, voting preference shares
Unlimited common shares
(b) Issued
Preference Shares - Nil
Common shares issued prior to the reverse takeover:
-------------------------------------------------------------------------------------------
Investorlinks Number of Shares Stated Capital
-------------------------------------------------------------------------------------------
Balance at April 30, 2000 6,944,576 $ 6,222,102
Options exercised 300,000 75,000
Warrants exercised 300,000 105,000
--------- ---------
Balance at June 5, 2000 7,544,576 $ 6,402,102
--------- ---------
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
IL Canada Number of shares Stated Capital
-------------------------------------------------------------------------------------------
Common shares issued upon incorporation for
cash and balance as at June 6, 2000 6,800 $ 10,052
-------------------------------------------------------------------------------------------
3. Share Capital (Con't.)
Common shares issued from the date of the reverse takeover:
-----------------------------------------------------------------------------------------------------------
Investorlinks Number of Shares Stated Capital
-----------------------------------------------------------------------------------------------------------
Balance as at date of reverse take-over /(1)/ 7,544,576 $ 10,052
Issued on acquisition 6,800,000 1,513,591
Warrants exercised 3,000,000 1,050,000
Issued per Private placement 680,000 2,266,481
Issued per strategic alliance service agreement (Note 7) 1,500,000 5,168,813
----------- ------------
19,524,576 10,008,937
Shares to be released (Note 7) (1,433,333) (4,945,527)
----------- ------------
Balance as at January 31, 2001 18,091,243 $ 5,063,410
=========== ============
-----------------------------------------------------------------------------------------------------------
(1) The balance as at the date of the reverse take-over consists of the
number of shares issued in the Company and the stated capital of IL
Canada.
(c) Common Share Purchase Options
Options outstanding, beginning of period 630,000
Granted 961,000
Exercised (300,000)
---------
Options outstanding, end of period 1,291,000
=========
At January 31, 2001 the following common share purchase options are
outstanding:
------------------------------------------------------------------------------------------
Issued to Number of Outstanding Exercise Price Expiry Date
------------------------------------------------------------------------------------------
Director 30,000 $0.30 August 3, 2002
Consultant 300,000 $0.90 November 15, 2001
Directors 553,000 US $2.55 June 30, 2005
Employees 24,000 US $2.55 June 30, 2005
Consultant 9,000 US $2.55 June 30, 2005
Advisory Board 225,000 US $2.55 June 30, 2005
Consultant 150,000 US $2.55 June 30, 2002
------------------------------------------------------------------------------------------
(d) Common Share Purchase Warrants
Warrants outstanding, beginning of period 3,340,000
Issued 680,000
Exercised (3,300,000)
Expired (40,000)
----------
Warrants outstanding, end of period 680,000
==========
At January 31, 2001 the following common share purchase warrants are
outstanding:
---------------------------------------------------------------------------------------
Number of Outstanding Shares for Warrants Exercise Price Expiry Date
---------------------------------------------------------------------------------------
680,000 1 for 1 US $3.00 August 8, 2002
---------------------------------------------------------------------------------------
4. Comparative Financial Statements
There are no comparative financial statements as IL Canada, the acquiring
company, was a newly incorporated inactive company.
5. Loss Per Share
The loss per share figure has been calculated using the weighted average number
of common shares outstanding during the period. Exercise of common share
purchase options and common share purchase warrants would be anti-dilutive.
6. Segmented Information
The Company owns and operates the Internet investment site www.investorlinks.com
---------------------
indirectly through its subsidiary. The Company's revenue, net loss, and capital
assets, net of depreciation, have been identified based on geographic areas as
follows:
-----------------------------------------------------------------------
For the period ended January 31, 2001 Canada United States
-----------------------------------------------------------------------
Revenue $ 72,261 $ 114,728
Net loss $ 783,882 $ 710,144
Capital assets, net $ 9,553 $ 162,370
-----------------------------------------------------------------------
7. Supplementary Cash Flow Information
The Company entered into a strategic alliance service agreement, effective
August 2, 2000 with a global financial content firm to provide business
development services. As consideration for the services to be provided over
twenty-nine months following the effective date, the Company will 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. Under the terms of the agreement the Company released 66,667 earned
common shares with a value of US $150,000 on August 9, 2000. The remaining
1,433,333 shares to be released will be in lots of 66,667 shares or US $150,000
of services rendered.
8. Subsequent Events
(a) Effective February 28, 2001 the Company and an Investor Relations Consultant
mutually agreed to terminate an agreement dated November 15, 1999, and
amended on June 26, 2000. As a result, 150,000 common share purchase options
exercisable at US $2.55 per share and 300,000 common share purchase options
exercisable at $0.90 per share will expire on March 30, 2001.
(b) On March 7, 2001 the Company acquired for cancellation 4,890,000 common
shares in its capital from certain shareholders for US $0.05 per share,
settled employment contracts and cancelled 470,000 stock options exercisable
at US $2.55 per share.
-----------------------------------------------------------------
2 Adelaide Street West, Suite 301, Toronto, Ontario M5H 1L6
INVESTORLINKS.COM INC.
Suite 301, 2 Adelaide Street West
Toronto, Ontario M5H 1L6
FORM OF PROXY SOLICITED BY THE MANAGEMENT OF
INVESTORLINKS.COM INC. FOR USE AT THE SPECIAL MEETING OF
SHAREHOLDERS TO BE HELD ON AUGUST 30, 2001.
The undersigned shareholder(s) of INVESTORLINKS.COM INC. (the
"Corporation") hereby appoint(s) in respect of all of his or her shares of the
Corporation James C. Cassina, President of the Corporation, or failing him,
Sandra J. Hall, Secretary of the Corporation, or in lieu of the foregoing
___________ as nominee of the undersigned, with power of substitution, to
attend, act and vote for the undersigned at the annual and special meeting of
shareholders of the Corporation (the "Meeting ") to be held on the 30th day of
August, 2001, and any adjournment or adjournments thereof, and direct(s) the
nominee to vote the shares of the undersigned in the manner indicated below:
1. TO VOTE FOR ( ) AGAINST ( ) the acquisition by the Corporation of all
of the issued and outstanding common shares of API Electronics Inc. in
exchange for 6,500,000 Units at US$0.40 per Unit, each Unit consisting
of one Common Share and 1/2 of one Series A Common Share Purchase
Warrant exercisable at US$0.45 per share for a period of eighteen
months from the date of issue and 1/2 of one Series B Common Share
Purchase Warrant exercisable at US$0.75 for a period of two years from
the date of issue.
2. TO VOTE FOR ( ) AGAINST ( ) a special resolution authorizing a
consolidation of the Corporation's authorized common shares on the
basis that every three (3) common shares will be converted into one
(1) common share.
3. TO VOTE FOR ( ) AGAINST ( ) a special resolution authorizing a change
of the Corporation's name to API Electronics Group Inc., or such other
name as may be approved by the board of directors of the Corporation
and applicable regulatory authorities.
This proxy revokes and supersedes all proxies of earlier date.
If any amendments or variations to matters identified in the Notice of
the Meeting are proposed at the Meeting or if any other matters properly come
before the Meeting, this proxy confers discretionary authority to vote on such
amendments or variations or such other matters according to the best judgment of
the person voting the proxy at the Meeting.
DATED the day of , 2001.
__________________________________
Signature of Shareholder(s)
__________________________________
Print Name
(see notes on back of this page)
NOTES:
(1) This form of proxy must be dated and signed
by the appointor or his attorney authorized in
writing or, if the appointer is a body corporate,
this form of proxy must be executed by an officer
or attorney thereof duly authorized. If the proxy
is not dated, it will be deemed to bear the date
on which it was mailed.
(2) The shares represented by this proxy will be
voted or withheld from voting in accordance with
the instructions of the shareholder on any ballot
that may be called for.
(3) A SHAREHOLDER HAS THE RIGHT TO APPOINT A
PERSON (WHO NEED NOT BE A SHAREHOLDER) TO ATTEND
AND ACT FOR HIM OR HER ON HIS OR HER BEHALF AT THE
MEETING OTHER THAN THE PERSONS DESIGNATED IN THE
ENCLOSED FORM OF PROXY. SUCH RIGHT MAY BE
EXERCISED BY STRIKING OUT THE NAMES OF THE PERSONS
DESIGNATED IN THIS FORM OF PROXY AND BY INSERTING
IN THE BLANK SPACE PROVIDED FOR THAT PURPOSE THE
NAME OF THE DESIRED PERSON OR BY COMPLETING
ANOTHER FORM OF PROXY AND, IN EITHER CASE,
DELIVERING THE COMPLETED AND EXECUTED PROXY TO THE
CORPORATION C/O EQUITY TRANSFER SERVICES INC.,
RICHMOND ADELAIDE CENTRE, SUITE 420, 120 ADELAIDE
STREET WEST, TORONTO, ONTARIO, M5H 4C3, AT ANY
TIME PRIOR TO 4:00 P.M. (TORONTO TIME) ON THE 29TH
DAY OF AUGUST, 2001.
(4) IN THE ABSENCE OF INSTRUCTIONS TO THE
CONTRARY, THE PERSONS NAMED IN THIS FORM OF PROXY
WILL VOTE FOR EACH OF THE MATTERS IDENTIFIED IN
THIS PROXY.
(5) This proxy ceases to be valid one year from
its date.
(6) If your address as shown is incorrect, please
give your correct address when returning this
proxy.