UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934.
June 3, 2004 0-30629
------------ -------
Date of Report (Date of earliest event reported) Commission File Number
SPEARHEAD LIMITED, INC.
-----------------------
(Exact name of registrant as specified in its charter)
Florida 59-1796257
------- ----------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
21218 St. Andrews Blvd., #509
Boca Raton, FL 33433
--------------------
(Address of Principal Executive Offices) (Zip Code)
(561) 912-9977
--------------
(Registrant's telephone number, including area code)
TOTAL FIRST AID, INC.
---------------------
(Former Name or Former Address, if Changed Since Last Report)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Effective on June 3, 2004, Spearhead Limited, Inc. (f/k/a Total First
Aid, Inc.), consummated its acquisition of all of the issued and outstanding
shares of capital stock of Progestic International Inc. and FSG Consultants
Inc., and on June 17, 2004, filed a Current Report on Form 8-K to disclose
completion of those acquisitions. The purpose of this filing is to amend the
Current Report on Form 8-K by filing certain financial statements and financial
information required by Regulation S-X and identified in Item 7 below.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL STATEMENTS AND EXHIBITS
(a) The following financial statements of the business acquired, for
the periods specified in Rule 3-05(b) of Regulation S-K, are filed herewith:
Progestic International Inc.
- ----------------------------
o Table of Contents to Financial Statements of Progestic
International, Inc.
o Report of Independent Chartered Accountants
o Statements of Earnings for the Years Ended September 30, 2003
and 2002
o Statements of Retained Earnings for the Years Ended September 30,
2003 and 2002
o Statements of Cash Flows the Years Ended September 30, 2003
and 2002
o Balance Sheet as of September 30, 2003 and 2002
o Notes to Financial Statements
FSG Consultants Inc.
o Table of Contents to Financial Statements of FSG Consultants Inc.
o Report of Independent Chartered Accountants
o Statements of Earnings for the Years Ended March 31, 2004 and 2003
o Statements of Retained Earnings for the Years Ended March 31, 2004
and 2003
o Statements of Cash Flows the Years Ended March 31, 2004 and 2003
o Balance Sheet as of March 31, 2004 and 2003
o Notes to Financial Statements
(b) The following pro forma financial information required by Article
11 of Regulation S-X is filed herewith:
o Introduction to Unaudited Pro Forma Consolidated Financial
Statements
o Unaudited Pro Forma Consolidated Balance Sheet at December 31, 2003
o Notes to Unaudited Pro Forma Consolidated Balance Sheet as at
December 31, 2003
o Unaudited Pro Forma Consolidated Statement of Profit (Loss) for
the Year Ended December 31, 2003
o Unaudited Pro Forma Consolidated Balance Sheet as at March 31, 2004
o Notes to Unaudited Pro Forma Consolidated Balance Sheet as at
March 31, 2004
o Notes to Unaudited Pro Forma Consolidated Statement of Profit
(Loss) for the Three Months Ended March 31, 2004
(c) Exhibits.
10.1 Share Purchase Agreement dated April 30, 2004 by and between
Total First Aid, Inc. and the Shareholders of Progestic
International Inc. (1)
10.2 Consulting Agreement dated effective June 3, 2004 by and
between Total First Aid, Inc., 6237819 Canada Inc. and Jean
LaBelle (2)
10.3 Share Purchase Agreement dated May 12, 2004 by and between
Total First Aid, Inc. and the Shareholders of FSG Consultants
Inc. (3)
10.4 Consulting Agreement dated effective June 3, 2004, by and
between Total First Aid, Inc., 6067425 Canada Inc. and Gilles
Caron
----------------------
(1) Incorporated by reference to Exhibit 10.1 to the Company's Current
Report on Form 8-K filed June 17, 2004.
(2) Incorporated by reference to Exhibit 10.2 to the Company's Current
Report on Form 8-K filed June 17, 2004.
(3) Incorporated by reference to Exhibit 10.3 to the Company's Current
Report on Form 8-K filed June 17, 2004.
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.
Dated: August 13, 2004 SPEARHEAD LIMITED, INC.
By: /s/ Michel L. Marengere
-----------------------------
Michel L. Marengere
Chief Executive Officer
PROGESTIC INTERNATIONAL INC.
US $ FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
Balance sheet 1
Statement of retained earnings 2
Statement of income 3
Statement of cash flows 4
Notes to financial statements 5 - 8
Please note: Balance sheet (and amortization) has been converted at the closing
rate Income statement has been converted at the average rate.
Average US 0.6833 0.6358
Closing US 0.7408 0.63
Auditors Report
To the Shareholders,
Progestic International Inc.
We have audited the balance sheet of Progestic International Inc. as at
September 30, 2003 and the statements of retained earnings, income and cash
flows for the year 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 audit.
We conducted our audit in accordance with Canadian 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 financial statements present fairly, in all material
respects, the financial position of Progestic International Inc. as at September
30, 2003 and the results of its operations and its cash flows for the year then
ended in accordance with Canadian generally accepted accounting principles.
Orleans, Ontario
December 17, 2003 GUINDON CHARRON
Chartered Accountants
PROGESTIC INTERNATIONAL INC. PAGE 1
BALANCE SHEET
AS AT SEPTEMBER 30, 2003
US $ US $
2003 2002
- ------------------------------------------------------------------------------------
CURRENT ASSETS
Accounts receivable (note 3) $ 883,502 $ 860,489
Income taxes recoverable 11,563 8,509
Work in progress (note 1) 144,131 112,090
Prepaid expenses 18,334 21,598
- ------------------------------------------------------------------------------------
1,057,530 1,002,686
- ------------------------------------------------------------------------------------
INVESTMENTS (NOTE 4) 67,088 66,882
DEFERRED DEVELOPMENT COSTS -- 90,088
CAPITAL ASSETS (NOTES 1 AND 5) 258,289 323,820
- ------------------------------------------------------------------------------------
$ 1,382,907 $ 1,483,476
====================================================================================
CURRENT LIABILITIES
Bank overdraft (note 7) $ 175,266 $ 111,618
Accounts payable and accrued liabilities 601,167 527,868
- ------------------------------------------------------------------------------------
776,433 639,486
- ------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Realized exchange gains or losses (41,628) 154
Capital stock (note 6) 691,755 620,149
(Deficit) Retained earnings (43,653) 223,687
- ------------------------------------------------------------------------------------
606,474 843,836
- ------------------------------------------------------------------------------------
$ 1,382,907 $ 1,483,476
====================================================================================
PROGESTIC INTERNATIONAL INC. PAGE 2
STATEMENT OF RETAINED EARNINGS
FOR THE YEAR ENDED SEPTEMBER 30, 2003
US $ US $
2003 2002
- --------------------------------------------------------------------------------
BALANCE - BEGINNING OF YEAR $ 223,687 $ 242,891
NET (LOSS) INCOME FOR THE YEAR (263,678) 18,634
- --------------------------------------------------------------------------------
(39,991) 261,525
DIVIDENDS (3,662) (37,838)
- --------------------------------------------------------------------------------
(DEFICIT) BALANCE - END OF YEAR $ (43,653) $ 223,687
================================================================================
PROGESTIC INTERNATIONAL INC. PAGE 3
STATEMENT OF INCOME
FOR THE YEAR ENDED SEPTEMBER 30, 2003
US $ US $
2003 2002
- --------------------------------------------------------------------------------
REVENUE
Fees $ 5,981,475 $ 6,172,440
- --------------------------------------------------------------------------------
EXPENSES
Direct service delivery 4,724,883 4,279,509
Marketing 549,992 546,106
Administration 606,653 818,183
Corporate 209,831 274,272
Amortization 168,594 225,802
Financing 15,155 28,360
- --------------------------------------------------------------------------------
6,275,108 6,172,232
NET (LOSS) INCOME BEFORE INCOME TAXES (293,633) 208
INCOME TAXES
Income taxes recovered (29,955) (18,426)
- --------------------------------------------------------------------------------
NET (LOSS) INCOME FOR THE YEAR $ (263,678) $ 18,634
================================================================================
PROGESTIC INTERNATIONAL INC. PAGE 4
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED SEPTEMBER 30, 2003
CASH PROVIDED BY (USED FOR)
US $ US $
2003 2002
- ---------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES
Net (loss) income for the year $(263,678) $ 18,634
Items not affecting cash:
Amortization 168,594 225,802
Net change in non cash working capital balances related to
operations (note 7) 18,455 (198,689)
- ---------------------------------------------------------------------------------------------------
CASH AND EQUIVALENTS (USED IN) FROM OPERATING
ACTIVITIES (76,629) 45,747
- ---------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Due to shareholders -- (37,758)
Redemption of capital stock 71,606 (40,973)
Realized exchange gains or losses (41,782) 154
Dividends (3,662) (37,838)
- ---------------------------------------------------------------------------------------------------
CASH AND EQUIVALENTS USED IN FINANCING ACTIVITIES 26,162 (116,415)
INVESTING ACTIVITIES
Decrease (increase) in investments (206) (56,124)
Investment in development costs -- (180,174)
Purchase of capital assets (12,975) (79,876)
CASH AND EQUIVALENTS USED IN INVESTING ACTIVITIES (13,181) (316,174)
- ---------------------------------------------------------------------------------------------------
DECREASE IN CASH AND EQUIVALENTS (63,648) (386,842)
(DEFICIT) CASH AND EQUIVALENTS - BEGINNING OF YEAR (111,618) 275,224
- ---------------------------------------------------------------------------------------------------
DEFICIT - END OF YEAR $(175,266) $(111,618)
===================================================================================================
Bank overdraft $(175,266) $(111,618)
===================================================================================================
PROGESTIC INTERNATIONAL INC. PAGE 5
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
1. SIGNIFICANT ACCOUNTING POLICIES
(A) ORGANIZATION
The Company was incorporated on September 29, 1994 under the Canada
Business Corporations Act and offers a broad range of management consulting and
computer services.
(B) WORK IN PROGRESS
The amount is recorded at the lesser of cost and net realizable value.
(C) DEPRECIATION AND AMORTIZATION
Depreciation is calculated on the declining balance basis at the
following rates:
Office equipment 20%
Computer hardware 30%
Computer software 100%
Amortization of leasehold improvements is calculated using the straight
line basis over the term of the lease.
(D) INVESTMENTS
The company's investment in a subsidiary is accounted for on the basis
of the equity method. Under this method, the company's share of net income or
loss arising from the subsidiary, at its balance sheet date, is recognized
currently in the accounts. Cash drawings from the subsidiary are credited to the
investment account. Financial statements disclosing this investment on a
consolidated basis would not be materially different from the statement
presentation adopted and accordingly, consolidated statements are not prepared.
2. FINANCIAL INSTRUMENTS
The Corporation's financial instruments consist of cash and cash
equivalents, accounts receivable, work in progress, prepaid expenses,
investments and accounts payable and accrued liabilities. Unless otherwise
noted, it is management's opinion that the Corporation is not exposed to
significant interest rate of credit risk arising from these financial
instruments.
3. ACCOUNTS RECEIVABLE US $ US $
2003 2002
---------------------------------------
Trade $862,834 $847,747
Recoverable costs 20,668 12,742
---------------------------------------
$883,502 $860,489
=======================================
PROGESTIC INTERNATIONAL INC. PAGE 6
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
4. INVESTMENTS AND RELATED PARTY TRANSACTIONS US $ US $
2003 2002
----------------------------------------------------------------------
Shares in Progestic Consultants in Management and
informatics $ -- $ 441
Shares in Progestic USA Inc. -- 630
Cash advances to these related parties -- 9,687
Shares in Cybershop 9 8
Loan receivable from Cybershop 67,079 56,116
----------------------------------------------------------------------
$67,088 $66,882
======================================================================
Cash advances are non-interest bearing and are repayable on demand.
5. CAPITAL ASSETS
US $ US $
2003 2002
--------------------------------------------------------------------------
ACCUMULATED
COST DEPRECIATION
NET NET
--------------------------------------------------------------------------
Office equipment $ 322,131 $ 226,717 $ 95,414 $ 101,028
Computer hardware 557,202 476,677 80,525 92,238
Computer software 272,019 268,455 3,564 19,601
Leasehold improvements 250,656 171,870 78,786 110,953
--------------------------------------------------------------------------
$1,402,008 $1,143,719 $ 258,289 $ 323,820
==========================================================================
6. CAPITAL STOCK
AUTHORIZED:
- An unlimited number of Class A non-voting, non-cumulative, redeemable
and non- participating shares.
- An unlimited number of Class B voting (2 votes per share),
non-cumulative, redeemable and non-participating shares.
- An unlimited number of Class C voting (1 vote per share),
non-cumulative, redeemable and non-participating shares.
- An unlimited number of Class D, E, F and G voting (1 vote per share),
non- cumulative, participating shares.
- An unlimited number of Class H non-voting, cumulative dividend of 5%,
redeemable and non-participating shares.
PROGESTIC INTERNATIONAL INC. PAGE 7
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
6. CAPITAL STOCK (CONTINUED)
AUTHORIZED:
- An unlimited number of Class I non-voting, cumulative dividend of 4%
three years after issuance, redeemable, retractable and non-participating
shares.
- An unlimited number of Class J voting (1 vote per share),
non-cumulative, participating shares.
ISSUED: US $ US $
2003 2002
------------------------------------------------------
758 (963 in 2002) Class A shares $ 56,152 $ 60,673
856 (886 in 2002) Class H shares 634,121 558,216
100,000 Class I shares 741 630
1,000 Class J shares 741 630
------------------------------------------------------
$691,755 $620,149
======================================================
The Class H shares have a cumulative, but undeclared dividend amounting
to approximately $11,235 US.
7. OPERATING CREDIT
The Company has available a $ 315,000 US operating line of credit.
Credit arrangements are secured by a general assignment of book debts, a general
security agreement and personal guarantees of the four principal shareholders.
8. NET CHANGE TO NON CASH WORKING CAPITAL BALANCES RELATED TO
OPERATIONS
CASH PROVIDED BY (USED FOR): US $ US $
2003 2002
------------------------------------------------------------------
Accounts receivable $ (23,013) $ (6,929)
Work in progress (32,041) (45,915)
Prepaid expenses 3,264 (970)
Accounts payable and accrued liabilities 73,299 (88,562)
Income taxes recoverable (3,054) (56,313)
------------------------------------------------------------------
$ 18,455 $(198,689)
==================================================================
PROGESTIC INTERNATIONAL INC. PAGE 8
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
9. COMMITMENTS
The Company has three lease agreements. Office space in Ottawa is
leased under the terms of an agreement that extends to April 30, 2005 with
minimum annual rent of approximately $173,300 US. Office space in Winnipeg is
leased under the terms of an agreement that extends to February, 2004 with
minimum rent of $10,850 US. Office space in Toronto is leased under the terms of
an agreement that expires July 31, 2005 with minimum annual rent of
approximately $22,800 US.
10. TAX BENEFITS AVAILABLE
The financial statements do not reflect potential tax reductions
available through the application of losses carried forward against future years
earnings otherwise subject to income taxes. Losses, totalling $ 223,100 US would
expire in the year 2010.
FSG CONSULTANTS INC.
AUDITORS' REPORT
AND FINANCIAL STATEMENTS
MARCH 31, 2004
Statement of earnings 1
Retained Earnings 2
Cash Flows 3
Balance sheet 4
Notes 5-8
AUDITORS' REPORT
To the Shareholders of
FSG Consultants Inc.
We have audited the statements of earnings and retained earnings and cash flows
of FSG Consultants Inc. for the year ended on March 31, 2004 and the balance
sheet as at that date. 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 audit.
We conducted our audit in accordance with Canadian 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 financial statements present fairly, in all material
respects, the financial position of FSG Consultants Inc. as at March 31, 2004
and the results of its operations and its cash flows for the year then ended in
accordance with Canadian generally accepted accounting principles.
LEMIRE MORIN TRAMBLAY CHARTERED ACCOUNTANTS
Chartered Accountant (General Partnership)
Gatineau (Quebec)
July 15th, 2004
FSG CONSULTANTS INC.
STATEMENT OF EARNINGS
YEAR ENDED MARCH 31, 2004
(in United States dollars)
2004 2003
----------- -----------
SALES $ 2,782,245 $ 3,301,712
COST OF SALES 2,365,999 2,705,337
----------- -----------
GROSS MARGIN 416,246 596,375
----------- -----------
OPERATING EXPENSES
Amortization 11,222 8,902
Doubtful accounts (10,347) 1,526
Business entertainment 16,203 11,940
Equipment rental 3,953 4,903
Insurance 3,793 6,210
Interest and bank charges 2,506 2,095
Interest and penalties 61 475
Life insurance 3,795 1,873
Office supplies 11,033 17,412
Maintenance and repairs 1,545 4,881
Professionnal fees 4,157 15,606
Publicity and promotion 2,487 22,865
Rent 24,511 20,119
Salaries and benefits 296,548 367,728
Taxes, licences and permits 74 2,162
Telecommunications 11,112 13,129
Training 2,016 15,443
Travel 6,987 19,125
Vehicle 23,746 12,460
----------- -----------
415,402 548,854
----------- -----------
OPERATING PROFIT 844 47,521
OTHER INCOME 2,523 0
----------- -----------
EARNINGS BEFORE TAXES 3,367 47,521
CURRENT INCOME TAXES 4,462 12,936
----------- -----------
NET (LOSS) EARNINGS $ (1,095) $ 34,585
=========== ===========
1
FSG CONSULTANTS INC.
RETAINED EARNINGS
YEAR ENDED MARCH 31, 2004
(in United States dollars)
2004 2003
--------- ---------
RETAINED EARNINGS - BEGINNING OF YEAR $ 158,096 $ 168,885
NET (LOSS) EARNINGS (1,095) 34,585
DIVIDEND 0 (45,374)
--------- ---------
RETAINED EARNINGS - END OF YEAR $ 157,001 $ 158,096
========= =========
2
FSG CONSULTANTS INC.
CASH FLOWS
YEAR ENDED MARCH 31, 2004
(in United States dollars)
2004 2003
--------- ---------
OPERATING ACTIVITIES
Net (loss) earnings $ (1,095) $ 34,585
Items not requiring an outlay of cash:
Amortization 11,222 8,902
--------- ---------
10,127 43,487
Net changes in non-cash working capital
items 101,562 157,604
--------- ---------
111,689 201,091
--------- ---------
FINANCING ACTIVITIES
Dividend (15,397) (29,287)
Share redemption - class B (105,287) 0
Share issue - class B 0 6,913
--------- ---------
(120,684) (22,374)
--------- ---------
INVESTING ACTIVITIES
Acquisition of fixed assets (13,062) (26,735)
--------- ---------
(13,062) (26,735)
--------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 43,976 (7,128)
INCREASE (DECREASE) IN CASH 21,919 144,855
BANK OVERDRAFT - BEGINNING (9,696) (154,551)
--------- ---------
CASH (BANK OVERDRAFT) - ENDING (note 2) $ 12,223 $ (9,696)
========= =========
Cash flows related to interest and taxes are as follows:
Interest and bank charges $ 2,566 $ 2,095
========= =========
Interest received $ 2,523 $ 0
========= =========
Income taxes paid (received) $ (13,692) $ 40,686
========= =========
3
FSG CONSULTANTS INC.
BALANCE SHEET
MARCH 31, 2004
(in United States dollars)
2004 2003
-------- --------
ASSETS
CURRENT ASSETS
Bank $ 12,223 $ 0
Accounts receivable (note 3) 477,205 572,412
Income tax receivable 455 17,140
Prepaid expenses 1,446 534
-------- --------
491,329 590,086
FIXED ASSETS (NOTE 4) 34,603 29,588
-------- --------
$525,932 $619,674
======== ========
LIABILITIES
CURRENT LIABILITIES
Bank overdraft $ 0 $ 9,696
Accounts payable and accrued charges (note 5) 326,562 323,086
Deferred income 6,840 4,427
Dividend payable 0 15,397
-------- --------
333,402 352,606
-------- --------
SHAREHOLDERS' EQUITY
CAPITAL STOCK (NOTE 8) 38 94,095
CUMULATIVE TRANSLATION ADJUSTMENTS (NOTE 8) 35,491 14,877
RETAINED EARNINGS 157,001 158,096
-------- --------
192,530 267,068
-------- --------
$525,932 $619,674
======== ========
4
FSG CONSULTANTS INC.
NOTES
MARCH 31, 2004
(in United States dollars)
- --------------------------------------------------------------------------------
NOTE 1 - NATURE OF THE CORPORATION ACTIVITIES
The corporation was incorporated under the Canada Business Corporations
Act on June 1, 1995 and operates a consulting business.
- --------------------------------------------------------------------------------
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
These financial statements are prepared in accordance with generally
accepted accounting principles of Canada and take into Consideration
the following accounting policies:
AMORTIZATION
Amortization of capital assets is calculated on the basis of the
diminishing balance method, at the following rates:
Office equipment 20%
Computer equipment 30%
Software 30%
Acquisitions of the current year are amortized at half the current
rate.
STATEMENT OF CASH FLOWS
Bank overdraft is defined as bank overdraft and excludes bank loans.
MARKET VALUE OF FINANCIAL INSTRUMENTS
Book values of accounst receivable, income tax receivable, deferred
income, dividend payable and accounts payable and accrued charges
approximate their market valuse since they represent financial
instruments to be transacted in the short term.
FOREIGN CURRENCY TRANSLATION
The Canadian dollar is the measurement currency of the Company's
operations.
For reporting purposes, the operations are translated in United States
dollars using the current rate method. Under this methor, all assets
and liabilities are translated at the year-end rate of exchange rate
and all revenue and expense items are translated at the average rate of
exchange for the year. The resulting translation adjustment is recorded
as a separate component of shareholders' equity.
5
FSG CONSULTANTS INC.
NOTES
MARCH 31, 2004
(in United States dollars)
- --------------------------------------------------------------------------------
NOTE 3 - ACCOUNTS RECEIVABLE
2004 2003
--------- ---------
Customers $ 482,380 $ 587,255
Taxes receivable 5,235 3,994
Security deposit 1,030 920
Allowance for doubtful accounts (11,439) (19,757)
--------- ---------
$ 477,205 $ 572,412
========= =========
- --------------------------------------------------------------------------------
NOTE 4 - FIXED ASSETS
2004 2003
----------------------------------- -------
Accumulated Net book Net book
Cost amortization value value
----------------------------------- -------
Office equipment $13,998 $ 7,710 $ 6,288 $ 4,287
Computer equipment 55,018 34,825 20,193 21,674
Software 7,355 4,017 3,337 0
Leasehold improvements 5,980 1,196 4,785 3,627
------- ------- ------- -------
$82,351 $47,748 $34,603 $29,588
======= ======= ======= =======
- --------------------------------------------------------------------------------
NOTE 5 - ACCOUNTS PAYABLE AND ACCRUED CHARGES
2004 2003
-------- --------
Trade payables $312,253 $313,871
Salaries payable 14,309 9,214
-------- --------
$326,562 $323,086
======== ========
- --------------------------------------------------------------------------------
NOTE 6 - COMMITMENTS
The company holds two operating leases for vehicles. The monthly
instalments are $1,483 plus taxes. These contracts expire in June 2006
and May 2007.
The commitment for the operating lease of a photocopier is $281 per
month, expiring in September 2005.
The company has a commitment for an operating lease building known as
196A Papineau, Gatineau, Quebec. The monthly payments are $1,144 plus
taxes ending August 31, 2008. The rent includes real estate taxes,
electricity, heating and air conditioning.
6
FSG CONSULTANTS INC.
NOTES
MARCH 31, 2004
(in United States dollars)
- --------------------------------------------------------------------------------
NOTE 7 - BANK INDEBTEDNESS
The bank indebtedness consists of a line of credit secured by an
assignment of accounts receivable.
- --------------------------------------------------------------------------------
NOTE 8 - CAPITAL STOCK
AUTHORIZED:
an unlimited number without par value of the following:
Class "A", voting, participating.
Class "B", voting, non participating, with dividend and
redeemable.
Class "C", non voting, non participating, with dividend and
redeemable.
Class "D", non voting, non participating, with dividend and
redeemable.
Class "E", non voting, non participating, with dividend and
redeemable.
Class "F", non voting, non participating, with dividend and
redeemable.
Class "G", non voting, non participating, with fixed dividend
of 8% per year non-cumulative and redeemable.
ISSUED : 2004 2003
------- -------
2 000 000 Class "A" shares $ 38 $ 34
0 Class " B " shares ( 138,063 in 2003) 0 94,061
------- -------
$ 38 $94,095
======= =======
The Company redeemed all issued Class " B " shares for cash in the
amount of $105,287.
CUMULATIVE TRANSLATION ADJUSTMENTS
The change in the cumulative translation adjustment represents the net
unrealized foreign exchange gain on translation of the Canadian dollar
denominated accounts to US dollars for reporting purposes.
- --------------------------------------------------------------------------------
NOTE 9 - FINANCIAL ESTIMATES
Management has to make estimates and assumptions which have an impact
on amounts recorded as assets and liabilities, and on informations
provided with regard to contingent assets and liabilities at the date
of the financial statements and on amounts recorded as revenues and
expenses for the period. These estimates are reviewed on a recurring
basis and when ajustments are required, they are recorded in the
results of the year during which these changes are brought to
management.
7
FSG CONSULTANTS INC.
NOTES
MARCH 31, 2004
(in United States dollars)
- --------------------------------------------------------------------------------
NOTE 10. RELATED PARTY TRANSACTIONS
During the year, a shareholder provided office space to the company and
was paid rent in the amount of $9,091. The transaction was concluded in
the normal course of business at the exchange amount.
- --------------------------------------------------------------------------------
NOTE 11 - SUBSEQUENT EVENT
On June 3, 2004, 100% of the voting shares of the company have been
acquired by another Corporation.
8
INTRODUCTION TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Acquisition of Progestic International Inc. and FSG Consulting Inc.
On June 3, 2004, SPEARHEAD LIMITED, INC. (the "Company") acquired all of the
issued and outstanding capital stock of Progestic International Inc.
("Progestic") and FSG Consultants Inc. ("FSG"). Each of the acquired companies
is a Canadian corporation engaged in providing information technology-related
consulting services.
The Company acquired all of the issued and outstanding capital stock of
Progestic for a purchase price consisting of cash in the amount of CDN$500,000
and the issuance of 863,824 shares of the Company's common stock. Concurrently
the Company acquired all of the issued and outstanding capital stock of FSG for
a purchase price consisting of cash in the amount of CDN$350,000 and the
issuance of 558,235 shares of the Company's common stock.
Unaudited Pro forma Consolidated Balance Sheet
as at December 31, 2003
Spearhead
Limited, Inc.
Progestic
International
Inc. FSG
Spearhead FSG Consulting Inc.
Limited, Progestic Consulting Pro forma
Inc. International Inc. Combined
Balance Inc. Balance Balance Balance
Sheet At Sheet At Sheet At Sheet At
December 31, September 30, March 31, December 31,
2003 2003 2004 2003
--------------------------------------------------------
Current assets:
Cash and cash equivalents $337,491 67,088 12,223 416,802 (1),(2),(3),(4)
Accounts receivable - trade 1,537,534 1,027,633 477,205 3,042,372
Prepaid expenses 79,313 29,897 1,901 111,111
-------------------------------------------------------
Total current assets 1,954,338 1,124,618 491,329 3,570,285
Property and equipment, net 27,748 258,289 34,603 320,640
Goodwill 1,555,682 1,555,682 (2),(3),(4)
-------------------------------------------------------
Total assets $3,537,768 1,382,907 525,932 5,446,607
=======================================================
Current liabilities
Bank loans 3,857 175,266 179,123
Acccounts payable and accrued expenses 1,682,375 601,167 326,562 2,610,104
Deferred income 6,840 6,840
Loans payable shareholders (1),(2),(3),(4)
Income taxes payable 92,162 92,162
-------------------------------------------------------
Total current liabilities 1,778,394 776,433 333,402 2,888,229
Dividends payable - class A 380,888 380,888
-------------------------------------------------------
Total liabilities 2,159,282 776,433 333,402 3,269,117
Stockholders' equity
Capital stock 1,635,143 691,755 38 2,326,936 (2),(3)
Retained earnings (deficit) (243,173) (43,653) 157,001 (129,825)(2),(3)
Accumulated comprehensive income (13,484) (41,628) 35,491 (19,621)(2),(3)
-------------------------------------------------------
Total stockholders equity 1,378,486 606,474 192,530 2,177,490
----------------------------------------------------------------------
Total liabilities and stockholders' equity $3,537,768 1,382,907 525,932 5,446,607
======================================================================
[restubbed table]
Spearhead
Limited, Inc.
Progestic
International Inc.
FSG
Consulting Inc.
Pro forma
Consolidated
Balance Sheet
Eliminating At December 31,
Entries 2004
-------------------
Current assets:
Cash and cash equivalents 0 $416,802
Accounts receivable - trade 3,042,372
Prepaid expenses 111,111
----------------
Total current assets 3,570,285
Property and equipment, net 320,640
Goodwill 1,187,409 2,743,091
----------------
Total assets $6,634,016
================
Current liabilities
Bank loans 179,123
Acccounts payable and accrued expenses 80,337 2,529,767
Deferred income 6,840
Loans payable shareholders 860,000 860,000
Income taxes payable 92,162
----------------
Total current liabilities 3,667,892
Dividends payable - class A 380,888
----------------
Total liabilities 4,048,780
Stockholders' equity
Capital stock 514,957 2,841,893
Retained earnings (deficit) (113,348) (243,173)
Accumulated comprehensive income 6,137 (13,484)
----------------
Total stockholders equity 2,585,236
-----------------------------
Total liabilities and stockholders' equity $6,634,016
=============================
Notes to unaduited pro forma consolidated financial statements
As At December 31, 2003
Debit Credit
---------------------------
-1-
Cash 860,000
Loans payable stockholders 860,000
To record loan proceeds which were used in acquistions
-2-
Capital stock - Spearhead Limited, Inc. 732,250
Capital stock - Progestic International 691,755
Retained earnings - Progestic 43,653
Accumlated comprehensive income 41,628
Cash 349,997
Goodwill 475,773
To record acquisition of Progestic International Inc.
-3-
Capital stock - Spearhead Limited, Inc. 474,500
Capital stock - FSG Inc. 38
Retained earning - FSG International 157,001
Accumulated comprehensive income 35,491
Cash 262,070
Goodwill 544,040
To record acquisition of FSG Consulting Inc.
-4-
Goodwill 167,596
Cash 247,933
A/P 80,337
To record additional costs of acquisition
Unaudited Pro forma Consolidated Statement of Profit (loss)
for the year ended December 31, 2003
Spearhead Limited,
Inc. Progestic
Spearhead Progestic International
Limited, Inc. International FSG FSG Consulting
Profit (loss) Inc. Profit Consulting Inc. Inc. Pro forma
For year (loss) Profit Consolidated
ended For Year (loss) Profit (loss)
December 31, September 30, March 31, December 31,
2003 2003 2004 2003
--------------------------------------------------------------------------------
Consulting revenue $1,378,070 5,981,475 2,782,245 $10,141,790
Direct expenses 1,258,123 4,724,883 2,365,999 8,349,005
--------------------------------------------------------------------------------
Gross margin 119,947 1,256,592 416,246 1,792,785
Selling, general & administrative expenses 337,201 1,550,225 412,879 2,300,305
Gain on sale of subsidiary 189,912 189,912
(Gain) loss from discontinued operations (189,546) (189,546)
--------------------------------------------------------------------------------
Income before income taxes (217,620) (293,633) 3,367 (507,886)
Income taxes 25,553 (29,955) 4,462 60
--------------------------------------------------------------------------------
Net income (loss) ($243,173) (263,678) (1,095) ($507,946)
================================================================================
Per share data:
Basic and diluted
net income (loss) ($0.015)
=========================
Average number of shares outstanding 34,677,285
=========================
Unaudited Pro forma Consolidated Balance Sheet
as at March 31, 2004
Spearhead
Limited, Inc.
Progestic
International
Inc. FSG
Spearhead FSG Consulting Inc.
Limited, Progestic Consulting Pro forma
Inc. International Inc. Combined
Balance Inc. Balance Balance Balance
Sheet At Sheet At Sheet At Sheet At
March 31, March 31, March 31, March 31,
2004 2004 2004 2004
--------------------------------------------------------
Current assets:
Cash $343,131 66,424 12,223 421,778 (1),(2),(3),(4)
Accounts receivable - trade 1,797,729 1,143,090 477,660 3,418,479
Prepaid expenses 101,415 31,752 1,446 134,613
--------------------------------------------------------
Total current assets 2,242,275 1,241,266 491,329 3,974,870
Property and equipment, net 38,645 167,590 34,603 240,838
Goodwill 1,555,682 1,555,682 (2),(3),(4)
--------------------------------------------------------
Total assets $3,836,602 1,408,856 525,932 5,771,390
========================================================
Current liabilities
Bank loans 147,123 147,123
Acccounts payable and accrued expenses 1,675,500 567,423 326,562 2,569,485 (4)
Deferred income 6,840 6,840
Loans payable shareholders (1),(2),(3),(4)
Income taxes payable 844 844
--------------------------------------------------------
Total current liabilities 1,676,344 714,546 333,402 2,724,292
Dividends payable - class A 376,587 376,587
--------------------------------------------------------
Total liabilities 2,052,931 714,546 333,402 3,100,879
Stockholders' equity
Capital stock 2,226,651 678,451 38 2,905,140 (2),(3)
Retained earnings (deficit) (432,538) 15,859 157,001 (259,678)(2),(3)
Accumulated comprehensive income (10,442) 35,491 25,049 (2),(3)
--------------------------------------------------------
Total stockholders equity 1,783,671 694,310 192,530 2,670,511
------------------------------------------------------------------------
Total liabilities and stockholders' equity $3,836,602 1,408,856 525,932 5,771,390
========================================================================
[restubbed table]
Spearhead
Limited, Inc.
Progestic
International Inc.
FSG
Consulting Inc.
Pro forma
Consolidated
Balance Sheet
Eliminating At March 31,
Entries 2004
-------------------
Current assets:
Cash 0 $421,778
Accounts receivable - trade 3,418,479
Prepaid expenses 134,613
-------------------
Total current assets 3,974,870
Property and equipment, net 240,838
Goodwill 1,187,409 2,743,091
-------------------
Total assets $6,958,799
===================
Current liabilities
Bank loans 147,123
Acccounts payable and accrued expenses 124,333 2,445,152
Deferred income 6,840
Loans payable shareholders 860,000 860,000
Income taxes payable 844
-------------------
Total current liabilities 3,459,959
Dividends payable - class A 376,587
-------------------
Total liabilities 3,836,546
Stockholders' equity
Capital stock 528,261 3,433,401
Retained earnings (deficit) (41,028) (300,706)
Accumulated comprehensive income (35,491) (10,442)
-------------------
Total stockholders equity 3,122,253
---------------------------------
Total liabilities and stockholders' equity 0 $6,958,799
=================================
Notes to unaduited pro forma consolidated financial statements
As At March 31, 2004
Debit Credit
----------------------------
-1-
Cash 860,000
Loans payable stockholders 860,000
To record loan proceeds which were used in acquistions
-2-
Capital stock - Spearhead Limited, Inc. 732,250
Capital stock - Progestic International 678,451
Retained earnings - Progestic 71,977
Accumlated comprehensive income 0
Cash 349,997
Goodwill 475,773
To record acquisition of Progestic International Inc. 1,154,224 1,154,224
-3-
Capital stock - Spearhead Limited, Inc. 474,500
Capital stock - FSG Inc. 38
Retained earning - FSG International 157,001
Accumulated comprehensive income 35,491
Cash 262,070
Goodwill 544,040
To record acquisition of FSG Consulting Inc.
-4-
Goodwill 167,596
Cash 247,933
Retained earnings 43,996
A/P 124,333
To record additional costs of acquisition
Unaudited Pro forma Consolidated Statement of Profit (loss)
for the three months ended March 31, 2004
Spearhead Limited,
FSG Inc. Progestic
Consulting Inc. International Inc.
Spearhead Progestic Profit FSG Consulting
Limited, Inc. International (loss) Inc. Pro forma
Profit (loss) Inc. Profit March 31, Consolidated
(loss) 2004 Profit (loss)
--------------------------------------------------------------
Consulting revenue $ 2,271,926 1,518,130 1,723,608 $ 5,513,664
Direct expenses 2,075,906 1,105,990 1,461,560 4,643,456
--------------------------------------------------------------
Gross margin 196,020 412,140 262,048 870,208
Selling, general & administrative expenses 385,385 295,311 239,806 920,502
--------------------------------------------------------------
Income before income taxes (189,365) 116,829 22,242 (50,294)
Income taxes -- -- 7,239 7,239
--------------------------------------------------------------
Net income (loss) ($ 189,365) 116,829 15,003 ($ 57,533)
==============================================================
Per share data:
Basic and diluted
net income (loss) ($0.002)
============
Average number of shares outstanding 38,114,561
=============