SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE YEAR ENDED NOVEMBER 30, 2001
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RIPPED CANADA ARTISTS INC.
-------------------------
ONTARIO
56 TEMPERANCE STREET
6TH FLOOR
TORONTO, ONTARIO M5H 3V5
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 416.363.2114
INDICATE BY CHECK MARK THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED TO BE
FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE
PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED
TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO FILING REQUIREMENTS FOR THE
PAST 90 DAYS.
YES X NO
------- -------
THE NUMBER OF SHARES OUTSTANDING OF REGISTRANT'S COMMON STOCK, PAR VALUE $0.01,
ON NOVEMBER 30, 2001 WAS 4,757,238.
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Ripped Canada Artists Inc.
Financial Statements
November 30,2001
Page
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Auditor's Report to the Shareholders 2
Balance Sheet 3
Statement of Loss and Deficit 4
Statement of Cash Flows 5
Notes to Financial Statements 6 - 10
Wm. Andrew Campbell C.A. Tel.: (416) 363 - 6273
56 Temperance Street, 6th. `Floor, Fax: (416) 363 - 9982
Toronto, Ontario
M5H - 3V5
- --------------------------------------------------------------------------------
To the Shareholders of:
Ripped Canada Artists Inc.
(Formerly: Findore Gold Resources Inc.)
I have audited the balance sheets of Ripped Canada Artists Inc. as at November
30, 2001 and 2000 and the statements of loss and deficit 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 an audit in accordance with generally accepted auditing standards in
Canada. Those standards require that I plan and perform an audit to obtain
reasonable assurance whether the financial statements are free from 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 my opinion these financial statements present fairly, in all material
respects, the financial position of the Company as at November 30, 2001 and 2000
and the results of its operations and the cash flows for the year ended in
accordance with generally accepted accounting principles.
Signed "Wm. Andrew Campbell"
Chartered Accountant
Toronto, Ontario
April 19, 2002
2
Ripped Canada Artists Inc.
Balance Sheet
As at November 30, 2001 and 2000
ASSETS
------
2001 2000
------------- --------------
CURRENT
Cash $ 3,150 $ 765
Accounts receivable 3,012 337
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6,162 1,102
------------- --------------
OTHER
Organization costs 7,947 16,447
Investment in private companies (note 4) 100,000 75,000
Investment in TV, Film and Video productions (note 5) 516,886 416,061
Oil and gas interests (note 6) 45,000 45,000
Mining claims and deferred exploration expenditures (note 3) - 254,527
------------- --------------
669,833 807,035
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$ 675,995 $ 808,137
============= ==============
LIABILITIES
-----------
CURRENT
Accounts payable and accrued liabilities $ 48,299 $ 44,113
Loans and advances from related parties (Note 7) 171,714 80,274
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Total Liabilities 220,013 124,387
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SHAREHOLDERS EQUITY
-------------------
SHARE CAPITAL (Note 8) 1,285,071 1,160,071
DEFICIT (Page 4) (829,089) (476,321)
-------------- ---------------
455,982 683,750
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$ 675,995 $ 808,137
============= ==============
Approved on behalf of the Board:
Signed: "Drew Currah" :Director
----------------------------------------------------
Signed: "Ben Fuschino" :Director
----------------------------------------------------
See accompanying notes to financial statements
Refer to Auditor's Report appearing on Page 2
3
Ripped Canada Artists Inc.
Statement of Loss and Deficit
For the Year Ended November 30, 2001 and 2000
2001 2000
------------ -------------
Income
Revenue from disk sales $ 12,300 $ -
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Office, general and administrative
Management fees, salaries and benefits 60,000 25,885
Legal and audit 5,000 19,850
Office, general and administration 9,816 11,109
Rent 6,750 10,000
Transfer agent's fees 3,450 8,827
Consulting fees 6,792 5,503
Travel, entertainment and investor relations 4,283 4,324
Amortization 8,500 8,500
------------ -------------
104,591 93,998
------------ -------------
Loss before the under noted item (92,291) (93,998)
Write down of mining claims and deferred exploration expenditures (260,477) (20,000)
------------- --------------
Net Loss for the Year (352,768) (113,998)
Deficit, Beginning of Year (476,321) (362,323)
------------- --------------
DEFICIT, END OF YEAR $ (829,089) $ (476,321)
============= ==============
NET LOSS PER SHARE $ (0.05) $ (0.05)
============ =============
See accompanying notes to financial statements
Refer to Auditor's Report appearing on Page 2
4
Ripped Canada Artists Inc.
Statement of Changes in Cash Flow
For the Year Ended November 30, 2001 and 2000
2001 2000
------------- -------------
Cash provided by (Used in):
Operating Activities
Net (loss) for the year $ (352,768) $ (113,998)
Add: item not affecting cash:
Amortization 8,500 8,500
Write down of mining claims and deferred exploration expenditures 260,477 20,000
------------- -------------
(83,791) (85,498)
Changes in non cash operating working capital balances (Note 9) 1,511 27,677
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(Used in) Operating Activities (82,280) (57,821)
-------------- --------------
Financing Activities
Issuance of common shares for cash 12,500 482,850
Loans and advances from related parties 91,440 33,657
------------- -------------
Provided by Financing Activities 103,940 516,507
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Investing Activities
Investment in film production (13,325) (416,061)
Additions to organization costs - (17,000)
Additions to mining claims and deferred exploration expenditures (5,950) (27,563)
-------------- --------------
(Used in) Investing Activities (19,275) (460,624)
-------------- --------------
Decrease in Cash 2,385 (1,938)
Cash, beginning of year 765 2,703
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CASH, END OF YEAR $ 3,150 $ 765
============= =============
See accompanying notes to financial statements
Refer to Auditor's Report appearing on Page 2
5
Ripped Canada Artists Inc.
Notes to Financial Statements
November 30, 2001
1. Nature of Business and Going Concern Considerations
Ripped Canada Artists Inc (formerly: Findore Gold Resources Ltd.)
(Herein the "Company") was incorporated on June 19, 1997 under the
Ontario Business Corporations Act. The Company is listed for trading
on the Canadian Unlisted Board ("CUB").
During the fiscal year ended November 30, 2000, the Company decided to
change its primary business focus from investing in resource related
activities to TV, Film and Video production and distribution
activities. The Company is in the process of disposing of its resource
related assets on a timely basis.
The Company's ability to continue on a going concern basis, which
contemplates the payment of its liabilities as they become due is
dependent upon its ability to generate sufficient cash from new
equity, operations and other means to pay its liabilities and
ultimately become profitable on its TV, Film and Video productions and
distribution.
2. Summary of Significant Accounting Policies
(a) Measurement uncertainty
The preparation of financial statements in conformity with generally
accepted accounting principles require management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure or contingent assets and liabilities at the
date of the financial statements and reported amounts of revenue and
expenses during the reporting period. Actual results could differ from
those estimates. The assets and liabilities, which require management
to make significant estimates and assumptions in determining carrying
values, include mining properties and deferred exploration
expenditures.
(b) Mineral exploration properties
Costs of acquisitions of mining properties and all deferred
exploration expenditures less related recoveries are capitalized. The
Company follows the cost reduction method in accounting for option
payments received whereby the proceeds received reduce expenditures on
the related property. When the amounts received exceed expenditures,
the related property's carrying value is reduced to $1 and the excess
is recorded as income.
The costs of properties, which are abandoned or impaired in value, are
written down in the year of abandonment or impairment.
Upon commencement of commercial production, all related deferred
property acquisition; exploration and development expenditures will be
amortized and matched with future revenues.
The amounts capitalized represent costs to be charged to operations in
the future and do not necessarily reflect the present or future values
of the particular properties.
Administration expenses are charged to operations in the year
incurred.
(c) Oil and gas interests
The Company follows the successful effort method of accounting for oil
and gas properties. Under this method the initial acquisition and
start up costs together with the cost of drilling, equipping and
developing successful wells are capitalized. Exploration expenditures
on dry holes are charged to operations.
6
Ripped Canada Artists Inc.
Notes to Financial Statements
November 30, 2001
3. Summary of Significant Accounting Policies (continued):
(d) Financial instruments-
The carrying value of all of the Company's financial instruments
included in the working capital approximates their fair values since
these instruments have short-term maturity dates.
(e) Loss per share-
The loss per share is computed on the basis of the weighted average
number of shares outstanding during the year.
(f) Investment in Film, TV and Video productions
Certain of the Company's mineral exploration activities are conducted
jointly with others. These financial statements reflect only the
Company's proportionate interest in such activities
(g) Organization costs
Organization costs are recorded at cost. Amortization is being
provided using the straight-line basis over a three-year period.
(h) Stock-based compensation
The Company has a stock option plan. No compensation expense is
recognized for this plan when stock options are issued to directors
and employees. Any consideration paid by directors and employees on
exercise of stock options is credited to share capital . (i) Income
taxes
On January 1, 2000, the Company adopted the liability method of
accounting for income taxes in accordance with the recommendations of
the Canadian Institute of Chartered Accountants. The recommendations
have been applied retroactively, with no significant effect on the
accounts of prior years. Future income tax relates to the expected
consequences of differences between the carrying amount of balance
sheet items and their corresponding tax values. Future tax assets are
recognized only to the extent that, in the opinion of management, it
is more likely than not that the future income tax assets will be
realized. Future income tax assets and liabilities are adjusted for
the effect of changes in tax laws and rates on the date of enactment
or substantive enactment.
7
Ripped Canada Artists Inc.
Notes to Financial Statements
November 30, 2001
3. Mining claims and deferred exploration expenditures
2001 2000
------------ -------------
Goldfeast Property -50% interest in 46 claims
Townships of Godfrey, Carscullen and Bristol, District of Cochrane, Ontario
Mining claims $ - $ 85,135
Deferred exploration expenditures - 161,849
------------ -------------
$ - $ 246,974
============ =============
Townships of Godfrey, Carscullen and Bristol
--------------------------------------------
The Company has an option to acquire a 50% working interest in the
property, known as the "Goldfeast Property" which consists of 46
claims. In order to earn its interest the Company paid $40,000 and
agreed to issue 200,000 common shares (issued).
4. Investment in private companies
On November 7, 2000 the Company issued 250,000 ($75,000) common shares
to acquire a 30% interest in Axelblabe Entertainment Ltd. (a Private
Ontario Corporation), which is in the business of producing and
distributing TV, Film and Video production rights.
On July 16, 2001 the Company issued 100,000 ($25,000) common shares to
acquire a 20% interest in Biopress Inc. (A Private Ontario
Corporation), which is in the business of farm waste management.
5. Investment in TV, Film and Video Productions
The Company participates in 3 TV and Film Productions whereby it can
earn a participation of up to 20% of net revenue earned from the sale
and lease of film rights.
6. Oil and Gas interests
The Company owns a 100% interest in oil and gas leases (#549910079) on
640 acres of land in N.E. Alberta. On November 7, 2000, the Company
signed a letter of agreement with an unrelated party, to sell its
investment, however to date of the auditor's report the requirement
for recognizing any gain or loss on the transaction have not been met,
accordingly, the investment has been recorded at cost.
7. Related Party Transactions
The advances from related parties are interest free and have no fixed
repayment terms. A Company controlled by the President was paid
$60,000; (2000; $24,000) for management services provided and $6,750
and $10,000 in 2000 for office rent.
8
Ripped Canada Artists Inc.
Notes to Financial Statements
November 30, 2001
8. Share Capital
a) Authorized- An unlimited number of Common shares
- An unlimited number of Class A shares, without par value,
non-voting
- An unlimited number of Class B shares, without par value,
non-voting
b) Issued: Number $
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Common Shares
Balance, November 30, 1999 1,882,988 557,221
------------- -------------
Issued for property 100,000 20,000
Issued in settlement of debt 93,750 18,750
Issued on acquisition of film rights 625,000 437,500
Issued on exercise of employee stock options 368,000 81,600
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Issued in 2000 1,186,750 602,850
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Balance, November 30, 2000 3,069,738 1,160,071
Issued for private company 100,000 25,000
Issued on acquisition of film and video tape rights 650,000 87,500
Issued on exercise of employee stock options 937,500 12,470
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Issued in 2001 1,687,500 124,970
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Balance: November 30, 2001 4,757,238 $ 1,285,071
============= =============
Officers, directors and employee stock option plan
Under a management and key employee incentive option plan the Company
has granted to certain officers, directors and key employees, stock
options to purchase up to 10% of the issued and outstanding common
shares of the Company at any given time.
As at November 30, 2001, options were outstanding to purchase up to
65,000 at prices between $0.25 and $0.35 per share until March
27,2006.
9. Changes in Non-Cash Operating Working Capital Balances
2001 2000
------------- -------------
Cash provided by (used for):
Accounts receivable $ (2,675) $ 637
Accounts payable and accrued liabilities 4,186 27,040
------------ -------------
$ 1,511 $ 27,677
============ =============
9
Ripped Canada Artists Inc.
Notes to Financial Statements
November 30, 2001
10. Future income taxes:
The Company's effective income tax rate differs from the amount that
would be computed by applying the federal and provincial statutory
rate of 43% (2000-43%) to the net loss for the year. The reason for
the difference is as follows:
2001 2000
------------- -----------
Income tax recovery based on statutory rate $ (152,000) $ (49,000)
Unrecorded tax benefit of losses 152,000 49,000
------------ -----------
$ - $ -
============ ===========
The Company has non-capital losses for income tax purposes of $
401,000 the benefit of which has not been reflected in these financial
statements. Unless sufficient taxable income is earned, these losses
will expire in the following years:
2004 23,000
2005 133,000
2006 68,000
2007 85,000
2008 92,000
-----------
$ 401,000
===========
11. Comparative figures
Certain figures shown in the year 2000 have been reclassified to
conform to the method adopted for the current year.
10