TITAN TRADING ANALYTICS INC.
CONSOLIDATED
FINANCIAL STATEMENTS
OCTOBER 31,1996
Collins
Barrow
Chartered Accountants
Suite 800
1030 West Georgia Street
Vancouver, Canada
V6E 3B9
AUDITORS' REPORT
To the Shareholders of
Titan Trading Analytics Inc.
We have audited the consolidated balance sheets of Titan Trading
Analytics Inc. as at October 31, 1996 and 1995 and the consolidated
statements of operations and deficit and changes in financial
position for the 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. Those standards require that we plan and
perform an audit to obtain reasonable assurance whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation.
In our opinion, these consolidated financial statements present
fairly, in all material respects, the financial position of the
company as at October 31, 1996 and 1995 and the results of its
operations and changes in financial position for the years then
ended in accordance with generally accepted accounting principles.
As required by the Company Act (B.C.), we report that, in our
opinion, these principles have been applied on a consistent basis.
/S/ Collins Barrow
CHARTERED ACCOUNTANTS
Vancouver, Canada
January 23, 1997
A member of
Moores
Rowland Collins Barrow
An association of independent is a Partnership of
accounting firms throughout the world Incorporated Professionals
TITAN TRADING ANALYTICS INC.
(Incorporated under the laws of British Columbia)
CONSOLIDATED BALANCE SHEET
OCTOBER 31, 1996
ASSETS 1996 1995
------ ---- ----
Current assets
Cash and short-term investments $ 1,590,589 $ 873,552
Accounts receivable 9,244 12,681
Prepaid expenses 13,238 39,285
----------- ---------
1,613,071 925,518
----------- ---------
Software and systems development (note 3) 107,105 --
Capital assets (note 4) 56,617 51,720
----------- ---------
$ 1,776,793 $ 997,238
----------- ---------
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities $ 33,244 $ 22,798
----------- ---------
SHAREHOLDERS' EQUITY
Share subscriptions received (note 5) 140,000 30,000
Share capital (note 5) 2,229,312 1,314,901
Deficit (625,763) (390,461)
----------- ---------
1,743,549 954,440
----------- ---------
$ 1,776,793 $ 977,238
----------- ---------
Approved by the Directors
/S/ Michael Gossland, Director
/S/ Michael Paauwe, Director
See accompanying notes to the consolidated financial
statements.
TITAN TRADING ANALYTICS INC.
CONSOLIDATED STATEMENT OF OPERATIONS AND DEFICIT
FOR THE YEAR ENDED OCTOBER 31,1996
1996 1995
---- ----
Revenue
Software sales $ 21,213 $ 11,165
Interest and other income 35,290 9,490
-------- --------
56,503 20,655
-------- --------
Expenses
Advertising, marketing and promotion 65,159 45,252
Amortization 37,228 11,104
Bank charges 1,811 768
Consulting fees -- 30,000
Demonstration and testing 57,934 6,633
Management fees 34,364 34,160
Office 10,118 12,735
Professional fees 8,669 12,587
Rent 6,330 5,715
Research and development (note 6) 7,436 154,809
Salaries and benefits 43,750 9,977
Telephone 5,060 3,434
Travel 13,946 8,884
--------- ---------
291,805 336,058
--------- ---------
Net loss for the year (235,302) (315,403)
Deficit, beginning of the year (390,461) (75,058)
--------- ---------
Deficit, end of the year $ (625,763) $ (390,461)
--------- ---------
Net loss per share for the year (note 8) $(.03) $(.78)
------ ------
See accompanying notes to the consolidated financial
statements.
TITAN TRADING ANALYTICS INC.
CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION
FOR THE YEAR ENDED OCTOBER 31,1996
1996 1995
---- ----
Cash from operating activities
Net loss for the year $ (235,302) $ (315,403)
Item not involving cash
Amortization 37,228 11,104
--------- ---------
(198,074) (304,299)
Net change in non-cash working
capital balances 39,930 (32,020)
--------- ---------
(158,144) (336,319)
--------- ---------
Cash used in investing activities
Acquisition of capital assets (19,295) (39,786)
Software and system development (129,935) --
--------- ---------
(149,230) (39,786)
--------- ---------
Cash from financing activities
Share subscriptions received and
issuance of common shares 1,165,500 1,168,900
Share issue costs (141,089) --
--------- ---------
1,024,411 1,168,900
--------- ---------
Increase in cash during the year 717,037 792,795
Cash and short-term investments,
beginning of the year 873,552 80,757
--------- ---------
Cash and short-term investments,
end of the year $ 1,590,589 $ 873,552
--------- ---------
See accompanying notes to the consolidated financial
statements.
TITAN TRADING ANALYTICS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 1996
1. General information
The company develops and markets financial software systems.
2. Significant accounting policies
a) Consolidation - The financial statements include the
accounts of the company and of its wholly-owned subsidiary, Titan
Trading Corp.
b) Research and development - Research costs are expensed when
incurred. Development costs are expensed when incurred unless a
commercial product is developed for which adequate resources exist
to market the product in which case they are capitalized as
software and systems development.
c) Software and systems development - Software and systems
development costs are amortized on a straight line basis over a
three year period from the commencement of production.
d) Capital assets - Capital assets are recorded at cost and
amortized at the following annual rates:
Computer equipment - 30% declining balance
Furniture and equipment - 20% declining balance
Copyrights and trademarks - 20% straight line
e) Foreign currency translation - Foreign currency
transactions are translated using the temporal method, whereby:
i) monetary items are translated at the rate of exchange in
effect at the balance sheet date;
ii) non-monetary items are translated at historical exchange
rates; and
iii) revenue and expense items are translated at the average
rate of exchange for the year.
3. Software and systems development
1996 1995
---- ----
Cost $ 129,935 $ --
Accumulated amortization (22,830) --
--------- ----------
$ 107,105 $ --
--------- ----------
Software and system development cost is comprised of:
Computer services $ 5,800
Contract services 94,250
Other 15,585
Rent 4,200
Salaries 10,100
---------
$ 129,935
---------
TITAN TRADING ANALYTICS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31,1996
4. Capital assets
1996
--------------------------------------
Accumulated
Cost Amortization Net
-------- ------------ ---------
Computer equipment $ 68,376 $ 25,829 $ 42,547
Copyrights and trademarks 10,000 2,000 8,000
Furniture and equipment 7,808 1,738 6,070
-------- -------- ---------
$ 86,184 $ 29,567 $ 56,617
-------- -------- ---------
1995
--------------------------------------
Accumulated
Cost Amortization Net
-------- ------------ ---------
Computer equipment $ 52,643 $ 14,345 $ 38,298
Copyrights and trademarks 10,000 -- 10,000
Furniture and equipment 4,246 824 3,422
-------- ------------ ---------
$ 66,889 $ 15,169 $ 51,720
-------- ------------ ---------
5. Share capital
1996 1995
Authorized ---- ----
100,000,000 common shares,
without par value
Issued
8,416,001 (1995 - 4,114,001)
common shares $ 2,229,312 $ 1,314,901
----------- -----------
During the year the company issued 1,302,000 common shares for
$1,025,500 and issued 3,000,000 common shares for $30,000 pursuant
to share subscriptions received in 1995.
During 1995 the company issued 4,114,000 common shares for
$1,314,900.
The following options and warrants remain outstanding:
Directors, officers and employee stock options for 830,000
common shares exercisable at $.90 per share to July 2001.
Warrants for 125,000 common shares exercisable at $.90 per
share to July 1997 and $1.05 per share to July 1998.
The 3,000,000 common shares issued during the year are held in
escrow with their release being subject to regulatory approval.
TITAN TRADING ANALYTTCS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 1996
5. Share capital - continued
Subsequent to October 31, 1996 the company issued 316,000 common
shares and 158,000 share purchase warrants for $442,400. The share
purchase warrants are exercisable at a price of $1.50 per share to
December 1997 and at $1.75 per share to June 1998.
$140,000 of the share subscriptions was received prior to October
31, 1996.
6. Research and development
1996 1995
---- -----
Computer services and software $ -- $ 10,709
Contract services 6,250 115,000
Other 1,186 19,500
Product research -- 6,100
Rent -- 3,500
------- ---------
$ 7,436 $ 154,809
------- ---------
7. Income taxes
The financial statements do not reflect the potential tax
reductions which may be available through the application of losses
of $597,000 carried forward against future years' earnings
otherwise subject to income taxes.
The losses expire as follows:
2001 $ 65,000
2002 314,000
2003 218,000
--------
$597,000
--------
8. Loss per share
The loss per share is calculated on the basis of the weighted
average number of shares outstanding during the year.
TITAN TRADING ANALYTICS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 1996
9. Related party transactions
Included in the statement of operations and deficit are the
following transactions with officers and directors and related
individuals:
1996 1995
---- ----
Expenses
Consulting fees $ -- $ 30,000
Management fees $ 34,032 $ 32,600
Office $ -- $ 2,300
Rent $ 4,200 $ 4,200
Research and development $ 6,250 $ 57,500
Software and systems development includes $98,450 of amounts paid
to officers and directors.
Share issue costs include $18,000 paid to an officer and director.
During 1995 the company purchased copyrights, trademarks, and other
rights under an agreement for $20,000 from a director.
At October 31, 1996 $3,515 (1995 - $6,427) due to officers and
directors is included in accounts payable and accrued liabilities.
The company has entered into written contract services agreements
with officers requiring the company to pay aggregate monthly fees
of not less than $12,000 to November 1998 and additional amounts if
not renewed at that time.
10. Comparative figures
The comparative figures have been restated where applicable to
conform with the current year's presentation.