UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Amendment No.1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): July 9, 2004
PENDER INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)
Delaware 000-50045 33- 0823179
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification No.)
incorporation)
123 Commerce Valley Drive East, Suite 300, Thornhill, Ontario, Canada
(Address of principal executive offices)
L3T 4Y3
(Zip Code)
Registrant's telephone number, including area code: (416) 666-2021
1445 Marpole Avenue, Suite 409, Vancouver, BC, Canada V6H 1S5
(Former name or former address, if changed since last report)
ITEM 2.01. ACQUISITION OR DISPOSITION OF ASSETS.
On July 9, 2004 Pender International, Inc., a Delaware corporation (Pender)
acquired 100% of the stock of IMM Investments Inc., an Ontario corporation
(IMM), thus making IMM a wholly owned subsidiary of Pender. Pender acquired IMM
from KJ Holding Inc. (KJ), an Ontario Corporation, by issuing KJ 3,000,000
unregistered common shares of Pender in exchange for 100% of the issued and
outstanding stock in IMM.
As a result of this acquisition, KJ now holds 36.523% of
Pender's issued and outstanding common stock. Further, KJ is wholly owned by
Kalano Jang, the father of Kalson Jang who is Chairman of Pender's Board of
Directors. Minh Ngoc Pham President and a Director of IMM and is also the
Secretary and Treasurer and a Director of Pender.
IMM owns approximately 14% of the stock of Armistice Resources Ltd.
(Armistice) a Canadian mining company that has interests in mining properties
near Kirkland Lake, Ontario. IMM also holds warrants that (if excercised) would
increase IMM's position in Armistice to approximately 25% of the outstanding
stock of Armistice. Each warrant entitles the holder to subscribe for one Common
Share at a price of $0.20 (Canadian Dollars) per Common Share from the date of
issue until the first anniversary of the date upon which Armistice's common
shares are listed for trading on a recognized North American stock exchange. IMM
acquired its interest in Armistice on June 30, 2004 through a Private Placement
offering made by Armistice in the Province of Ontario. IMM invested a total of
$2,000,000 Canadian Dollars in that Private Placement.
The interests Armistice holds near Kirkland Lake are in the Virginiatown
Gold Project, 100 Government Rd. West in Virginiatown, Ontario. Armistice is a
reporting issuer in Ontario, B.C., Alberta, and Quebec. However, the securities
of Armistice are subject to a cease trade order issued by the Ontario Securities
Commission on June 6, 2003, as well as similar orders from the B.C. and Alberta
Securities Commissions. The cease trade order has been partially revoked in
Ontario to permit the raising of $7,000,000 Canadian Dollars.
Armistice intends to commence rehabilitation of its mining properties
including mine dewatering and safety re-certification procedures if it can
obtain sufficient working capital.
The description contained in this Item 2.01 of the transactions affected
under the Acquisition Agreement is qualified in its entirety by reference to the
full text of the Agreement, which is included as Exhibit 2.1 hereto.
2
A copy of the press release issued by Pender International, Inc. is
attached hereto as Exhibit 99.1 and is hereby incorporated by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of business acquired.
The audited and interim unaudited financial statements of IMM Investments
Inc. required by this item are included herein.
(b) Pro forma financial information.
The pro forma financial information required by this item is included
herein.
IMM INVESTMENTS INC.
(A DEVELOPMENT STAGE COMPANY)
INTERIM FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2004 AND 2003
CONTENTS
Report of Independent Registered Public Accounting Firm 1
Balance Sheets 2
Statements of Operations 3
Statements of Cash Flows 4
Notes to Interim Financial Statements 5 - 8
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholder of
IMM Investments Inc.
We have reviewed the accompanying balance sheet of IMM
Investments Inc. (A Development Stage Company), as at June 30,
2004 and the related statements of operations for the six-month
periods ended June 30, 2004 and 2003, and the statements of cash
flows for the six-month periods ended June 30, 2004 and 2003.
These interim financial statements are the responsibility of the
Company's management.
We conducted our review in accordance with the standards of
the Public Company Accounting Oversight Board (United States). A
review of interim financial information consists principally of
applying analytical procedures and making inquiries of persons
responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance
with the standards of the Public Company Accounting Oversight
Board, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole. Accordingly,
we do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the interim financial
statements referred to above for them to be in conformity with
accounting principles generally accepted in the United States of
America.
We have previously audited, in accordance with the standards
of the Public Company Accounting Oversight Board (United States),
the balance sheets of IMM Investments Inc. as at December 31,
2003 and 2002, and the related statements of operations,
stockholder's deficiency, and cash flows for the years then ended
[not presented herein], and in our report dated November 19, 2004
we expressed an unqualified opinion on those financial
statements. In our opinion, the information set forth in the
accompanying balance sheet as of December 31, 2003, is fairly
stated, in all material respects, in relation to the balance
sheet from which it has been derived.
/s/ SF PARTNERSHIP, LLP
---------------------------
Toronto, Canada CHARTERED ACCOUNTANTS
November 22, 2004
- 1 -
IMM INVESTMENTS INC.
(A DEVELOPMENT STAGE COMPANY)
Balance Sheets
June 30, 2004 and December 31, 2003
(Stated in Canadian Dollars)
2004 2003
(Unaudited) (Audited)
ASSETS
Investment in Armistice Resources Ltd.
(notes 1 and 4) $ 2,000,000 $ -
Incorporation Cost $ 1,712 $ 1,712
---------------------------
$ 2,001,712 $ 1,712
===========================
LIABILITIES
Bank indebtedness $ 514 $ -
Accounts payable and accrued charges 10,000 5,000
Advances from shareholder (note 5) 1,711 1,711
---------------------------
12,225 6,711
---------------------------
STOCKHOLDER'S EQUITY (DEFICIENCY)
Capital Stock (note 6) 2,000,001 1
Deficit Accumulated During the Development Stage (10,514) (5,000)
---------------------------
1,989,487 (4,999)
---------------------------
$ 2,001,712 $ 1,712
===========================
APPROVED ON BEHALF OF THE BOARD
/s/ Minh-Ngoc Pham
- -------------------------------
Director
(The accompanying notes are an integral part of these financial statements)
- 2 -
IMM INVESTMENTS INC.
(A DEVELOPMENT STAGE COMPANY)
Statements of Operations
Six Months Ended June 30, 2004 and 2003
Unaudited
(Stated in Canadian Dollars)
November 16,
2000 (Inception)
to December 31,
2004 2003 2004
Revenue $ - $ - $ -
Expenses
General and administrative 5,514 - 10,514
---------------------------------------
Net Loss $ (5,514) $ - $ (10,514)
=======================================
(The accompanying notes are an integral part of these financial statements)
- 3 -
IMM INVESTMENTS INC.
(A DEVELOPMENT STAGE COMPANY)
Statements of Cash Flows
Six Months Ended June 30, 2004 and 2003
Unaudited
(Stated in Canadian Dollars)
November 16,
2000 (Inception)
to June 30,
2004 2003 2004
Cash Flows from Operating Activities
Net loss $ (5,514) $ - $ (10,514)
Adjustments to reconcile net
loss to net cash used in
operating activities
Accounts payable 5,000 - 10,000
---------------------------------------
(514) - (514)
---------------------------------------
Cash Flows from Investing Activities
Investment in Armistice
Resources Ltd. (2,000,000) - (2,000,000)
Incorporation cost - - (1,712)
---------------------------------------
(2,000,000) - (2,001,712)
---------------------------------------
Cash Flows from Financing Activities
Bank indebtedness, net 514 - 514
Proceeds from issuance of
common shares 2,000,000 - 2,000,001
Proceeds of advances from
shareholder - - 1,711
---------------------------------------
2,000,514 - 2,002,226
---------------------------------------
Net Change in Cash - - -
Cash - beginning of year - - -
---------------------------------------
Cash - end of year $ - $ - $ -
=======================================
Supplemental Disclosure of Cash Flow Information:
Interest paid $ - $ -
--------------------------
Income taxes paid $ - $ -
--------------------------
(The accompanying notes are an integral part of these financial statements)
- 4 -
IMM INVESTMENTS INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to Interim Financial Statements
June 30, 2004 and 2003
Unaudited
(Stated in Canadian Dollars)
1. Company History and Operations
IMM Investments Inc. (the "Company") was incorporated under
the laws of the Province of Ontario, Canada on November 16,
2000. The Company has been inactive since incorporation and in
accordance with Statement of Financial Accounting Standards
("SFAS") No.7, "Accounting and Reporting by Development Stage
Enterprises", is considered a development stage company.
On June 30, 2004, the Company entered into a brokered private
placement to acquire 20,000,000 units of Armistice Resources
Ltd. ("Armistice") at a price of $0.10 per unit for a total
cost of $2,000,000. The units were comprised of one common
share and one common share purchase warrant. Each warrant
entitles the Company to subscribe for one common share at a
price of $0.20 per common share from the date of issue until
the first anniversary of the date upon which Armistice common
shares are listed for trading on a recognized North American
stock exchange and thereafter at $0.25 per common share until
the second anniversary of the listing date, at which time the
warrant will expire. This purchase resulted in the Company
acquiring a 14.4% interest in the company. The Company is
accounting for this investment using the cost method.
2. Going Concern
These financial statements have been prepared in accordance
with accounting principles generally accepted in the United
States of America with the assumption that the Company will be
able to realize its assets and discharge its liabilities in
the normal course of business.
The Company is in the development stage of operations. Its
planned principal operations have not commenced and it has not
generated any revenues since inception. The Company's
continuation as a going concern is uncertain and dependant
upon obtaining additional sources of financing to sustain its
operations and successfully bringing about an acquisition and
achieving future profitable operations, the outcome of which
cannot be predicted at this time. In the event the Company
cannot obtain the necessary funds, it will be unlikely that
the Company will be able to continue as a going concern.
The accompanying financial statements do not include any
adjustments that might result from the eventual outcome of the
uncertainty described above.
- 5 -
IMM INVESTMENTS INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to Interim Financial Statements
June 30, 2004 and 2003
Unaudited
(Stated in Canadian Dollars)
3. Summary of Significant Accounting Policies
Basis of Financial Statement Presentation
The accompanying unaudited interim financial statements have
been prepared in accordance with accounting principles
generally accepted in the United States of America for interim
financial information and the requirements of item 310 (b) of
Regulation S-B. Accordingly, certain information and
disclosures normally included in financial statements prepared
in accordance with accounting principles generally accepted in
the United States of America have been condensed or omitted
pursuant to the rules and regulations of the Securities and
Exchange Commission. The financial statements reflect all
adjustments (consisting only of normal recurring adjustments),
which, in the opinion of management, are necessary for a fair
presentation of the results for the periods presented. There
have been no significant changes of accounting policy since
December 31, 2003. The results from operations for the interim
periods are not indicative of the results expected for the
full fiscal year or any future period.
4. Investment in Armistice Resources Ltd.
On June 30, 2004, the Company purchased a 14.4% interest in
Armistice Resources Ltd, a Canadian public company, whose
common shares are currently under a cease trade order. As it
is impracticable to estimate the fair value of this
investment, the investment is carried at its original cost of
$2,000,000. At June 30, 2004, the total assets reported by
Armistice Resources Ltd. were $9,508,000 and the common
stockholders' equity was $8,562,454, revenues were $nil, and
net loss was $(426,579).
5. Advances from Shareholder
These advances are non-interest bearing, unsecured and have no
specified terms of repayment.
- 6 -
IMM INVESTMENTS INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to Interim Financial Statements
June 30, 2004 and 2003
Unaudited
(Stated in Canadian Dollars)
6. Capital Stock
Authorized
Unlimited Common shares, no par value
Unlimited Class A special shares, no par value, voting,
non-cumulative, and redeemable
Unlimited Class B special shares, no par value, non-voting,
non-cumulative, and redeemable
Unlimited Class C special shares, no par value, non-voting,
non-cumulative, and redeemable
2004 2003
Issued
100 Common shares (2003 - 1) $2,000,001 $ 1
=========================
The redemption value of the Class A, B and C special shares
have not been determined by the Board of Directors.
On June 25, 2004, the Company issued 99 common shares to KJ
Holdings in exchange for $2,000,000 in cash.
- 7 -
IMM INVESTMENTS INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to Interim Financial Statements
June 30, 2004 and 2003
Unaudited
(Stated in Canadian Dollars)
7. Income Taxes
The Company accounts for income taxes in accordance with SFAS
No. 109, "Accounting for Income Taxes". SFAS No. 109
prescribes the use of the liability method whereby deferred
tax asset and liability account balances are determined based
on differences between financial reporting and tax bases of
assets and liabilities and are measured using the enacted tax
rates. The effect of future changes in tax laws or rates are
not anticipated.
Under SFAS No. 109 income taxes are recognized for the
following: a) amount of tax payable for the current year, and
b) deferred tax liabilities and assets for future tax
consequences of events that have been recognized differently
in the financial statements than for tax purposes.
The Company's current income taxes is as follows:
2004 2003
Expected income tax recovery at
the statutory rates of 36.62%
(2003 - 36.62%) $ (2,019) $ -
Valuation allowance 2,019 -
-------------------------
Provision for income taxes $ - $ -
=========================
As of June 30, 2004, the Company had approximately
$10,000 net operating loss carryforwards for income tax
reporting purposes, which will expire in 2014. No tax benefit
has been reported in these interim financial statements,
because the Company believes there is a 50% or greater chance
the carryforwards will expire unused. Accordingly, the
potential tax benefits of the loss carryforwards are offset
by a valuation allowance of the same amount.
8. Subsequent Events
On July 9, 2004, the Shareholder and Director of the Company
approved the sale of all the issued and outstanding shares of
the Company to Pender International Inc. in exchange for
3,000,000 common shares of Pender International Inc. The
Company is now a wholly owned subsidiary of Pender
International Inc.
- 8 -
IMM INVESTMENTS INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2003 AND 2002
CONTENTS
Report of Independent Registered Public Accounting Firm 1
Balance Sheets 2
Statements of Changes in Stockholder's Deficiency 3
Statements of Operations 4
Statements of Cash Flows 5
Notes to Financial Statements 6 - 12
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholder of
IMM Investments Inc.
We have audited the accompanying balance sheets of IMM Investments Inc.
(A Development Stage Company) as at December 31, 2003 and 2002 and the
related statements of changes in stockholder's deficiency, operations, and
cash flows 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 audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require
that we 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 consolidated 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. We believe our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of IMM Investments
Inc. as at December 31, 2003 and 2002 and the results of its operations and
comprehensive loss, changes in stockholder's deficiency and cash flows for
the years then ended in conformity with accounting principles generally
accepted in the United States of America.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company is in the development stage of operations.
Its planned principal operations have not commenced and it has not generated
any revenues since inception. These factors raise substantial doubt about
the Company's ability to continue as a going concern. Management's plans
regarding these matters are also described in Note 2. The financial
statements do not include any adjustments that might result from the outcome
of this uncertainty.
/s/ SF PARTNERSHIP, LLP
-----------------------------
Toronto, Canada CHARTERED ACCOUNTANTS
November 19, 2004
- 1 -
IMM INVESTMENTS INC.
(A DEVELOPMENT STAGE COMPANY)
Balance Sheets
December 31, 2003 and 2002
(Stated in Canadian Dollars)
2003 2002
ASSETS
Incorporation Cost $ 1,712 $ 1,712
==========================
LIABILITIES
Accounts payable and accrued charges $ 5,000 $ -
Advances from shareholder (note 4) $ 1,711 $ 1,711
--------------------------
$ 6,711 $ 1,711
--------------------------
STOCKHOLDER'S DEFICIENCY
Capital Stock (note 5) 1 1
Deficit Accumulated During the Development Stage (5,000) -
--------------------------
(4,999) 1
--------------------------
$ 1,712 $ 1,712
==========================
APPROVED ON BEHALF OF THE BOARD
/s/ Minh-Ngoc Pham
- -------------------------------
Director
(The accompanying notes are an integral part of these financial statements)
- 2 -
IMM INVESTMENTS INC.
(A DEVELOPMENT STAGE COMPANY)
Statements of Changes in Stockholder's Deficiency
>From Date of Inception (November 16, 2000) to December 31, 2003
(Stated in Canadian Dollars)
Deficit
Paid in Accumulated
Number Capital in During the Total
of Capital excess of Development Stockholder
Shares Stock Par Value Stage Deficiency
-------- --------------------------------------------
Balance, November 16, 2000 - $ - $ - $ - $ -
Common shares issued 1 1 - - 1
-------- --------------------------------------------
Balance, December 31, 2000 1 $ 1 $ - $ - $ 1
======== ============================================
Balance, December 31, 2001 1 $ 1 $ - $ - $ 1
======== ============================================
Balance, December 31, 2002 1 1 $ - $ - $ 1
======== ============================================
Net Loss - - - (5,000) (5,000)
-------- --------------------------------------------
Balance, December 31, 2003 1 $ 1 $ - $ (5,000) $ (4,999)
======== ============================================
(The accompanying notes are an integral part of these financial statements)
- 3 -
IMM INVESTMENTS INC.
(A DEVELOPMENT STAGE COMPANY)
Statements of Operations
Years Ended December 31, 2003 and 2002
(Stated in Canadian Dollars)
November 16,
2000 (Inception)
to December 31,
2003 2002 2003
Revenue $ - $ - $ -
Expenses
General and administrative 5,000 - 5,000
---------------------------------------
Net Loss $ (5,000) $ - $ (5,000)
=======================================
(The accompanying notes are an integral part of these financial statements)
- 4 -
IMM INVESTMENTS INC.
(A DEVELOPMENT STAGE COMPANY)
Statements of Cash Flows
Years Ended December 31, 2003 and 2002
(Stated in Canadian Dollars)
November 16,
2000 (Inception)
to December 31,
2003 2002 2003
Cash Flows from Operating Activities
Net loss $ (5,000) $ - $ (5,000)
Adjustments to reconcile net loss
to net cash used in operating
activities
Accounts payable and accrued
charges 5,000 - 5,000
----------------------------------------
- - -
----------------------------------------
Cash Flows from Investing Activities
Incorporation cost - - (1,712)
----------------------------------------
Cash Flows from Financing Activities
Proceeds from issuance of common
shares - - 1
Proceeds of advances from
shareholder - - 1,711
----------------------------------------
- - 1,712
----------------------------------------
Net Increase in Cash - - -
Cash - beginning of year - - -
----------------------------------------
Cash - end of year $ - $ - $ -
========================================
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for:
Interest paid $ - $ -
------------------------
Income taxes paid $ - $ -
------------------------
(The accompanying notes are an integral part of these financial statements)
- 5 -
IMM INVESTMENTS INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to Financial Statements
December 31, 2003 and 2002
1. Company History and Operations
IMM Investments Inc. (the "Company") was incorporated under the laws of
the Province of Ontario, Canada on November 16, 2000. The Company has been
inactive since incorporation and in accordance with Statement of Financial
Accounting Standards ("SFAS") No.7, "Accounting and Reporting by Development
Stage Enterprises", is considered a development stage company.
2. Going Concern
These financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America
with the assumption that the Company will be able to realize its assets
and discharge its liabilities in the normal course of business.
The Company is in the development stage of operations. Its planned
principal operations have not commenced and it has not generated any
revenues since inception. The Company's continuation as a going concern is
uncertain and dependant upon obtaining additional sources of financing to
sustain its operations and successfully bringing about an acquisition and
achieving future profitable operations, the outcome of which cannot be
predicted at this time. In the event the Company cannot obtain the
necessary funds, it will be unlikely that the Company will be able to
continue as a going concern.
The accompanying financial statements do not include any adjustments that
might result from the eventual outcome of the uncertainty described above.
- 6 -
IMM INVESTMENTS INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to Financial Statements
December 31, 2003 and 2002
3. Summary of Significant Accounting Policies
The accounting policies of the Company are in accordance with accounting
principles generally accepted in the United States of America and their
basis of application is consistent with that of the previous year.
Outlined below are those policies considered particularly significant:
a) Unit of Measurement
The Canadian currency is being used as the unit of measurement in
these financial statements.
b) Use of Estimates
In preparing the Company's financial statements, management is
required to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosures of contingent
assets and liabilities at the dates of the financial statements, and
the reported amounts of revenues and expenses during the reporting
periods. Actual results could differ from those estimates.
c) Incorporation Cost
Incorporation cost is recorded at cost and is not amortized as its
life is deemed to be indefinite. The cost is tested annually for
impairment in accordance with SFAS No. 142, "Goodwill and Other
Intangible Assets". The impairment test consists of comparing the fair
value of the incorporation cost with its carrying amount. If the
carrying amount exceeds the fair value, an impairment loss is
recognized in an amount equal to the excess. As of December 31, 2003
and 2002, no impairment losses have been identified.
d) Income Taxes
The Company accounts for income taxes pursuant to SFAS No. 109,
"Accounting for Income Taxes". Deferred tax assets and liabilities are
recorded for differences between the financial statement and tax basis
of the assets and liabilities that will result in taxable or
deductible amounts in the future based on enacted tax laws and rates.
Valuation allowances are established when necessary to reduce deferred
tax assets to the amount expected to be realized. Income tax expense
is recorded for the amount of income tax payable or refundable for the
period increased or decreased by the change in deferred tax assets and
liabilities during the period.
- 7 -
IMM INVESTMENTS INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to Financial Statements
December 31, 2003 and 2002
3. Summary of Significant Accounting Policies (cont'd)
e) Fair Value of Financial Instruments
The estimated fair value of financial instruments has been determined
by the Company using available market information and valuation
methodologies. Considerable judgment is required in estimating fair
value. Accordingly, the estimates may not be indicative of the
amounts the Company could realize in a current market exchange. As of
December 31, 2003 and 2002, the carrying value of accounts payable and
accrued charges and advances from shareholder approximate their fair
value due to the short-term maturity of such instruments.
f) Comprehensive Income
The Company adopted SFAS No. 130, "Reporting Comprehensive Income.",
which establishes standards for reporting and presentation of
comprehensive income and its components in a full set of financial
statements. Comprehensive income is presented in the statements of
operations, and consists of net income and unrealized gains (losses)
on available for sale marketable securities; foreign currency
translation adjustments and changes in market value of future
contracts that qualify as a hedge; and negative equity adjustments
recognized in accordance with SFAS 87. SFAS No. 130 requires only
additional disclosures in the financial statements and does not affect
the Company's financial position or results of operations. As of
December 31, 2003 and 2002, the Company did not have items relating to
comprehensive income.
g) Concentration of Credit Risk
SFAS No. 105, "Disclosure of Information About Financial Instruments
with Off-Balance Sheet Risk and Financial Instruments with
Concentration of Credit Risk", requires disclosure of any significant
off-balance sheet risk and credit risk concentration. The Company
does not have significant off-balance sheet risk or credit
concentration.
h) Segment Reporting
SFAS No. 131 "Disclosures about Segments of an Enterprise and Related
Information" establishes standards for the manner in which public
enterprises report segment information about operating segments. The
Company is in the development stage and has no reportable segments.
- 8 -
IMM INVESTMENTS INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to Financial Statements
December 31, 2003 and 2002
3. Summary of Significant Accounting Policies (cont'd)
i) Recent Accounting Pronouncements
In January 2003, the Financial Accounting Standards Board ("FASB")
issued FASB Interpretation No. 46, "Consolidation of Variable Interest
Entities", an interpretation of ARB No. 51, ("FIN 46"). The FASB
issued a revised FIN 46 in December 2003 which modifies and clarifies
various aspects of the original interpretations. A Variable Interest
Entity ("VIE") is created when (i) the equity investment at risk is
not sufficient to permit the entity to finance its activities without
additional subordinated financial support from other parties or (ii)
equity holders either (a) lack direct or indirect ability to make
decisions about the entity, (b) are not obligated to absorb expected
losses of the entity or (c) do not have the right to receive expected
residual returns of the entity if they occur. If an entity is deemed
to be a VIE, pursuant to FIN 46, an enterprise that absorbs a majority
of the expected losses of the VIE is considered the primary
beneficiary and must consolidate the VIE. For VIEs created before
January 31, 2003, FIN 46 was deferred to the end of the first interim
or annual period ending after March 15, 2004. The adoption of FIN 46
did not have a material impact on the financial position or results of
operations of the Company.
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments With Characteristics of Both Liabilities and
Equity", which requires issuers to classify as liabilities the
following three types of freestanding financial instruments: (1)
mandatory redeemable financial instruments, (2) obligations to
repurchase the issuer's equity shares by transferring assets; and (3)
certain obligations to issue a variable number of shares. The Company
adopted SFAS No. 150 for the year ended December 31, 2003. The
adoption of SFAS No. 150 did not have a material impact on the
financial position or results of operations of the Company.
In December 2003, the SEC issued Staff Accounting Bulletin ("SAB") No.
104, "Revenue Recognition" which supersedes SAB 101, "Revenue
Recognition in Financial Statements." SAB 104's primary purpose is to
rescind the accounting guidance contained in SAB 101 related to
multiple element revenue arrangements, superseded as a result of the
issuance of EITF 00-21. The Company adopted the provisions of SAB No.
104 for the year ended December 31, 2003. The adoption of SFAS No.104
did not have a material impact on the financial position or results of
operations of the Company.
In December 2003, a revision of SFAS No. 132, "Employers' Disclosures
about Pensions and Other Postretirement Benefits" was issued, revising
disclosures about pension plans and other post retirements benefits
plans and requiring additional disclosures about the assets,
obligations, cash flows, and net periodic benefit cost of defined
benefit pension plans and other defined benefit postretirement plans.
The revision of SFAS No. 132 did not have a material impact on the
Company's financial statements.
- 9 -
IMM INVESTMENTS INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to Financial Statements
December 31, 2003 and 2002
4. Advances from Shareholder
These advances are non-interest bearing, unsecured and have no specified
terms of repayment.
5. Capital Stock
Authorized
Unlimited Common shares, no par value
Unlimited Class A special shares, no par value,
voting, non-cumulative, and redeemable
Unlimited Class B special shares, no par value,
non-voting, non-cumulative, and
redeemable
Unlimited Class C special shares, no par value,
non-voting, non-cumulative, and
redeemable
2003 2002
Issued
1 Common share $ 1 $ 1
==========================
The redemption value of the Class A, B and C special shares have not
been determined by the Board of Directors.
- 10 -
IMM INVESTMENTS INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to Financial Statements
December 31, 2003 and 2002
6. Income Taxes
The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes". SFAS No. 109, prescribes the use of the
liability method whereby deferred tax asset and liability account balances
are determined based on differences between financial reporting and tax
bases of assets and liabilities and are measured using the enacted tax
rates. The effect of future changes in tax laws or rates are not
anticipated.
Under SFAS No. 109 income taxes are recognized for the following: a)
amount of tax payable for the current year, and b) deferred tax
liabilities and assets for future tax consequences of events that have
been recognized differently in the financial statements than for tax
purposes.
The Company's current income taxes is as follows:
2003 2002
Expected income tax recovery at the
statutory rates of 36.62% (2002 - 36.62%) $ (1,831) $ -
Valuation allowance 1,831 -
--------------------------
Provision for income taxes $ - $ -
==========================
As of December 31, 2003, the Company had approximately $5,000 net
operating loss carryforwards for income tax reporting purposes.
- 11 -
IMM INVESTMENTS INC.
(A DEVELOPMENT STAGE COMPANY)
Notes to Financial Statements
December 31, 2003 and 2002
7. Subsequent Events
On June 25, 2004, the Company issued 99 common shares in exchange for
$2,000,000 in cash.
On June 30, 2004, the Company entered into a brokered private placement to
acquire 20,000,000 units of Armistice Resources Ltd. ("Armistice") at a
price of $0.10 per unit for a total cost of $2,000,000. The units were
comprised of one common share and one common share purchase warrant. Each
warrant entitles the Company to subscribe for one common share at a price
of $0.20 per common share from the date of issue until the first
anniversary of the date upon which Armistice common shares are listed for
trading on a recognized North American stock exchange and thereafter at
$0.25 per common share until the second anniversary of the listing date,
at which time the warrant will expire. This purchase resulted in the
Company acquiring a 14.4% interest in the company. The Company intends to
account for this investment using the cost method.
On July 9, 2004, the Shareholder and Director of the Company approved the
sale of all the issued and outstanding shares of the Company to Pender
International Inc. in exchange for 3,000,000 common shares of Pender
International Inc. The Company is now a wholly owned subsidiary of Pender
International Inc.
- 12 -
PENDER INTERNATIONAL INC.
PRO-FORMA CONSOLIDATED
FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2004
UNAUDITED
CONTENTS
Pro-Forma Consolidated Balance Sheet 1
Pro-Forma Consolidated Statement of Stockholders' Equity 2
Pro-Forma Consolidated Statement of Operations 3 - 4
Notes to Pro-Forma Consolidated Financial Statements 5 - 7
PENDER INTERNATIONAL INC.
Pro-Forma Consolidated Balance Sheet
(Stated in United States Dollars)
June 30, 2004
Unaudited
Historical
-----------------------
IMM Pender Pender Pender
Investments Intl Intl Intl
Inc. Inc. Pro-Forma Inc.
June 30, June 30, Pro-Forma June 30, Dec. 31,
2004 2004 Adjustments 2004 2003
-----------------------------------------------------------
ASSETS
Current
Cash $ - $ 477 $ (382) $ 95 $ 11
-----------------------------------------------------------
Investment in
Armistice
Resources Ltd. 1,486,989 - (548,703) 938,286 -
Incorporation cost 1,273 - (470) 803 -
Investment in IMM
Investments Inc. - 930,000 (930,000) - -
-----------------------------------------------------------
$ 1,488,262 $ 930,477 $(1,479,555) $ 939,184 $ 11
===========================================================
LIABILITIES
Current
Bank
indebtedness $ 382 $ - $ (382) $ - $ -
Accounts
payable 7,435 30,000 - 37,435 -
Advances from
shareholder 1,272 - - 1,272 -
Notes Payable - 5,000 - 5,000 5,000
Notes payable
- related
party - 6,800 - 6,800 3,020
-----------------------------------------------------------
9,089 41,800 (382) 50,507 8,020
-----------------------------------------------------------
STOCKHOLDERS'
EQUITY
Capital Stock 1,486,990 821 (1,486,990) 821 21
Paid in Capital - 926,579 - 926,579 26,879
Accumulated Other
Comprehensive
Income (Loss) 20 - (20) - -
Accumulated Deficit (7,837) (38,723) 7,837 (38,723) (35,409)
-----------------------------------------------------------
1,479,173 888,677 (1,479,173) 888,677 (8,009)
-----------------------------------------------------------
$ 1,488,262 $ 930,477 $(1,479,555) $ 939,184 $ 11
===========================================================
(The accompanying notes are an integral part of
these pro-forma consolidated statements)
- 1 -
PENDER INTERNATIONAL INC.
Pro-Forma Consolidated Statement of Stockholders' Equity
(Stated in United States Dollars)
Six Months Ended June 30, 2004
Unaudited
Historical
----------------------------
IMM Pender Pender
Investments Intl Intl
Inc. Inc. Pro-Forma
June 30, June 30, Pro-Forma June 30,
2004 2004 Adjustments 2004
-----------------------------------------------------------
Accumulated Deficit
- beginning
of period $ (3,717) $ (35,409) $ 3,717 $ (35,409)
Net Loss (4,120) (3,314) 4,120 (3,314)
-----------------------------------------------------------
Accumulated Deficit
- end of period $ (7,837) $ (38,723) $ 7,837 $ (38,723)
===========================================================
(The accompanying notes are an integral part of
these pro-forma consolidated statements)
- 2 -
PENDER INTERNATIONAL INC.
Pro-Forma Consolidated Statement of Operations
(Stated in United States Dollars)
Six Months Ended June 30, 2004
Unaudited
Historical
----------------------------
IMM Pender Pender
Investments Intl Intl
Inc. Inc. Pro-Forma
June 30, June 30, Pro-Forma June 30,
2004 2004 Adjustments 2004
-----------------------------------------------------------
Expenses
General and
administrative $ 4,120 $ 3,314 $ - $ 7,434
-----------------------------------------------------------
Operating Loss (4,120) (3,314) - (7,434)
-----------------------------------------------------------
Net Loss $ (4,120) $ (3,314) $ - $ (7,434)
===========================================================
Loss per Share -
Basic and fully
Diluted - -
===========================================================
Weighted Average
Number of Shares
- Basic and
Fully Diluted 5,214,000 8,214,000
===========================================================
(The accompanying notes are an integral part of
these pro-forma consolidated statements)
- 3 -
PENDER INTERNATIONAL INC.
Pro-Forma Consolidated Statement of Operations
(Stated in United States Dollars)
For the Year Ended December 31, 2003
Unaudited
Historical
----------------------------
IMM Pender Pender
Investments Intl Intl
Inc. Inc. Pro-Forma
December 31, December 31, Pro-Forma December 31,
2003 2003 Adjustments 2003
-----------------------------------------------------------
Expenses
General and
administrative $ 3,855 $ 5,832 $ - $ 9,687
-----------------------------------------------------------
Operating Loss (3,855) (5,832) - (9,687)
-----------------------------------------------------------
Other
Interest expense - 255 - 255
-----------------------------------------------------------
Net Loss $ (3,855) $ (6,087) $ - $ (9,942)
===========================================================
Loss per Share -
Basic and fully
Diluted - -
===========================================================
Weighted Average
Number of Shares
- Basic and
Fully Diluted 5,214,000 8,214,000
===========================================================
(The accompanying notes are an integral part of
these pro-forma consolidated statements)
- 4 -
PENDER INTERNATIONAL INC.
Notes to Pro-Forma Consolidated Financial Statements
June 30, 2004
1. Basis of Presentation
These unaudited pro forma consolidated financial statements present the pro
forma financial position and results of operations of the company based upon
historical financial information after giving effect to the transaction and
adjustments as follows:
a) On July 9, 2004 Pender International, Inc. ("Pender") acquired 100% of
IMM Investments Inc. ("IMM"), thus making IMM a wholly owned subsidiary
of Pender. Pender acquired IMM from KJ Holding Inc. ("KJ"), an Ontario
Corporation, by issuing KJ 3,000,000 restricted shares of Pender in
exchange for 100% of the issued and outstanding common shares of IMM.
Pender is accounting for this acquisition using the purchase method of
accounting as if it had occurred at June 30, 2004 for these unaudited
pro forma consolidated financial statements. Pender has recorded the
investment in IMM, the issuance of shares and the accrual for
transaction costs as if it had occurred at June 30, 2004.
The consideration given by Pender and the net assets acquired are as
follows:
Consideration given by Pender:
3,000,000 shares at a fair value of
$0.30 per share $ 900,000
Transaction costs 30,000
-----------
930,000
-----------
Net Assets of IMM at Fair Value
Investment in Armistice Resources Ltd 1,486,989
Incorporation cost 1,273
Less: bank overdraft (382)
Less: accounts payable (7,435)
Less: advances from shareholder (1,272)
-----------
1,479,173
-----------
Excess of purchase price over fair value of assets $ (549,173)
-----------
As the excess results in negative goodwill, in accordance with
Statement of Financial Accounting Standards No. 141 ("Business
Combinations"), the excess was allocated on a pro rata basis to reduce
the values assigned to the acquired assets. The following assets of IMM
were reduced accordingly:
Investment in Armistice Resources Ltd. $ 548,703
Incorporation cost 470
-----------
$ 549,173
-----------
- 5 -
PENDER INTERNATIONAL INC.
Notes to Pro-Forma Consolidated Financial Statements
June 30, 2004
1. Basis of Presentation (cont'd)
b) IMM maintains its books and records in Canadian dollars. Balance
sheet accounts are translated using closing exchange rates in effect at
the balance sheet date. Income and expense accounts are translated
using an average exchange rate prevailing during each reporting
period. No representation is made that the Canadian dollar could have
been, or could be, converted into United States dollars at the rates
on the respective dates and or at any other certain rates. Adjustments
resulting from the translation are included in the accumulated other
comprehensive income (loss) in stockholders' equity.
c) The financial statements of Pender and IMM are prepared in accordance
with accounting principles generally accepted in the United States of
America.
The pro-forma consolidated financial statements are based on the balance
sheets of the following:
a) IMM as at June 30, 2004 (unaudited).
b) Pender as at June 30, 2004 (unaudited) and December 31, 2003
(audited).
The pro-forma consolidated financial statements include the statement of
operations for the following:
a) IMM for the six months ended June 30, 2004 (unaudited) and the year
ended December 31, 2003 (audited).
b) Pender for the six months ended June 30, 2004 (unaudited) and for the
year ended December 31, 2003 (audited).
The pro-forma consolidated balance sheet as at June 30, 2004 gives effect
to the transactions as at June 30, 2004 and the pro-forma statement of
operations for the six months ended June 30, 2004 and year ended December
31, 2003 gives effect to the transactions as if they had taken place at the
beginning of each period.
The pro-forma consolidated financial statements are not necessarily
indicative of the actual results that would have occurred had the proposed
transactions occurred on the dates indicated and not necessarily indicative
of future operations or financial position.
- 6 -
PENDER INTERNATIONAL INC.
Notes to Pro-Forma Consolidated Financial Statements
June 30, 2004
2. Pro-Forma Adjustments
To record the consolidation of Pender and IMM including:
a) Eliminating the bank indebtedness of IMM and against the bank balance of
Pender.
b) Eliminating the investment account of IMM on Pender's books, share
capital and deficit of IMM and allocating the negative goodwill against
the assets of IMM on a pro rata basis.
- 7 -
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (Continued)
(c) Exhibits.
2.1 Acquisition Agreement, dated as of July 9, 2004. *
99.1 Press Release dated July 13, 2004 by Pender International, Inc. *
* Previously Filed.
===========================================================
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 hereunto duly authorized.
PENDER INTERNATIONAL, INC.
Date: December 3, 2004 /s/ Michael Ciavarella
------------------------------
Name: Michael Ciavarella
Title: President
===========================================================
3
EXHIBIT INDEX
2.1 Acquisition Agreement, dated as of July 9, 2004. *
99.1 Press Release dated July 13, 2004 by Pender International, Inc. *
* Previously Filed.
4