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
Date of Report (Date of earliest event reported) July 19, 2005
ON THE GO HEALTHCARE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 333-61538 98-0231687
- --------------- -------------------- -------------------
(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification
Incorporation) No.)
85 Corstate Avenue, Unit #1
Concord, Ontario
Canada L4K 4Y2
---------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (905) 760-2987
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS.
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER
AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
On July 19, 2005, we entered into an agreement with to purchase all of the
issued and outstanding shares of Infinity Technologies Inc. stock in exchange
for $3,120,000.00 (Canadian dollars). The purchase price will be paid in a
combination of shares of restricted stock, cash and a promissory note for
$500,000. The promissory note pays no interest and will be paid in three
equal payments on January 15, 2006, February 15, 2006 and March 15, 2006.
The foregoing description of the terms and conditions of the acquisition and
promissory note are qualified in their entirety by, and made subject to, the
more complete information set forth in the Memorandum of Agreement and
Promissory Note included on Form 8-K filed July 22, 2005 as Exhibits 2.1 and
4.1, respectively, and incorporated herein by reference.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of businesses acquired:
The financial statements required by this item are included herewith.
(b) Pro forma financial information:
The financial statements required by this item are included herewith.
(c) Exhibits:
EXHIBIT NUMBER DESCRIPTION
2.1 Memorandum of Agreement between the Company and Elaine Abate, John
Abate, Gerhard Schmid, Frank Abate, 1066865 Ontario Inc, and Infinity
Technologies Inc., dated July 19, 2005 (included as Exhibit 2.1 to the
Form 8-K filed on July 22, 2005, and incorporated herein by reference).
4.1 Promissory Note between the Company and Elaine Abate, John Abate, and
Gerhard Schmid, dated July 19, 2005(included as Exhibit 4.1 to the
Form 8-K filed on July 22, 2005, and incorporated herein by reference).
23.1 Consent of Independent Auditors
SIGNATURE
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.
On The Go Healthcare, Inc
Date: September 29, 2005
By: /s/ Stuart Turk
------------------------------------
Stuart Turk
Chief Executive Officer and President
INFINITY TECHNOLOGIES INC.
Financial Statements
December 31, 2004
(Canadian Dollars)
INFINITY TECHNOLOGIES INC.
INDEX
December 31, 2004
(Canadian Dollars)
Page
INDEPENDENT AUDITORS' REPORT ..............................................F1
FINANCIAL STATEMENTS
Balance Sheet - Statement I ...............................................F2
Statement of Operations - Statement II ....................................F3
Statement of Shareholders' Equity - Statement III .........................F4
Statement of Cash Flows - Statement IV ....................................F5
NOTES TO FINANCIAL STATEMENTS ........................................F6 - F9
Index Unaudited June 30, 2005 Financial Statements........................F10
Index Unaudited Pro Forma Consolidated Balance Sheet and
Statement of Loss July 31, 2005.........................................F19
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders of
Infinity Technologies Inc.
We have audited the accompanying balance sheets of Infinity Technologies Inc.
as at December 31, 2004 and 2003 and the statements of operations,
shareholders' equity 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 audit.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). These standards require that we
plan and perform the audit accounting to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We
believe that 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 the Company as at
December 31, 2004 and 2003 and the results of its operations and its cash
flows for each of the two years then ended in conformity with accounting
principles generally accepted in the United States of America.
/s/Danziger & Hochman
---------------------
Toronto, Ontario Danziger & Hochman
September 16, 2005 Chartered Accountants
F1
INFINITY TECHNOLOGIES INC. Statement I
Balance Sheet
As at December 31, 2004 and 2003
(Canadian Dollars)
2004 2003
------------ -----------
ASSETS
Current
Cash $ 35,709 $ -
Accounts receivable 5,125,714 5,411,486
Prepaid expenses - 24,654
Inventories 189,926 274,185
Deferred tax asset (note 5) - 43,600
------------ -----------
5,351,349 5,753,925
------------ -----------
Property and equipment (note 3) 153,821 98,586
$5,505,170 $5,852,511
============ ===========
LIABILITIES
Current
Bank indebtedness (note 4) $ - $ 715,843
Accounts payable and accrued liabilities 4,288,100 3,979,123
Current portion of long-term debt (note 6) 67,200 67,200
------------ -----------
4,355,300 4,762,166
Long-term debt (note 6) 22,400 89,600
Due to related parties (note 7) 89,500 89,500
------------ -----------
4,467,200 4,941,266
------------ -----------
SHAREHOLDERS' EQUITY - Statement III
Capital stock (note 8) 100 100
Retained earnings 1,037,870 911,145
------------ -----------
1,037,970 911,245
------------ -----------
$5,505,170 $ 5,852,511
============ ===========
Contingent liability (note 10)
F2
INFINITY TECHNOLOGIES INC. Statement II
Statement of Operations
For the Years Ended December 31, 2004 and 2003
(Canadian Dollars)
2004 2003
------------ -----------
Sales $24,426,801 $26,413,258
Cost of sales 21,253,866 23,109,445
------------ -----------
Gross profit 3,172,935 3,303,813
Operating costs
Selling and sales support 943,794 1,055,379
General and administrative 1,956,871 1,768,523
Advertising and promotion 56,316 47,376
Amortization of property and equipment 45,629 38,026
------------ -----------
3,002,610 2,909,304
------------ -----------
Income before income taxes 170,325 394,509
------------ -----------
Income taxes - current 43,600 130,586
------------ -----------
Net income for the year $ 126,725 $ 263,923
============ ===========
Net income per share $ 1,267.25 $ 2,639.23
============ ===========
Weighted average number of common shares
outstanding (note 11) 100 100
============ ===========
F3
INFINITY TECHNOLOGIES INC. Statement III
Statement of Shareholders' Equity
For the Years Ended December 31, 2004 and 2003
(Canadian Dollars)
Common Retained
Stock Earnings Total
----- ----------- -----------
Balance, December 31, 2002 $ 100 $ 647,222 $ 647,322
Net income for the year - Statement II - 263,923 263,923
----- ----------- -----------
Balance, December 31, 2003 100 911,145 911,245
Net income for the year - Statement II - 126,725 126,725
----- ----------- -----------
Balance, December 31, 2004 $ 100 $ 1,037,870 $ 1,037,970
===== ==========- ===========
F4
INFINITY TECHNOLOGIES INC. Statement IV
Statement of Cash Flows
For the Years Ended December 31, 2004 and 2003
(Canadian Dollars)
2004 2003
------------ ---------
CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
Net income for the year - Statement II $ 126,725 $263,923
Adjustments to reconcile net income to net
cash provided by operating activities
Amortization of property and equipment 45,629 38,026
Accounts receivable 285,772 (582,440)
Deferred tax asset 43,600 130,586
Income taxes payable - ( 36,803)
Prepaid expenses 24,654 ( 7,356)
Inventories 84,259 ( 70,718)
Accounts payable and accrued liabilities 308,977 (550,739)
------------ ---------
Net cash provided by (used in) operating activities 919,616 (815,521)
------------ ---------
CASH FLOWS USED IN INVESTING ACTIVITIES
Purchase of property and equipment (100,864) ( 8,867)
------------ ---------
Net cash (used in) investing activities (100,864) ( 8,867)
------------ ---------
CASH FLOWS PROVIDED BY (USED IN) FINANCING
ACTIVITIES
Repayment of long-term debt ( 67,200) ( 44,800)
------------ ---------
Net cash provided by (used in) financing activities ( 67,200) ( 44,800)
------------ ---------
NET INCREASE (DECREASE) IN CASH DURING THE YEAR 751,552 (869,188)
CASH (BANK INDEBTEDNESS), BEGINNING OF YEAR (715,843) 153,345
------------ ---------
CASH (BANK INDEBTEDNESS), END OF YEAR $ 35,709 ($715,843)
============ =========
F5
INFINITY TECHNOLOGIES INC.
Notes to Financial Statements
As at December 31, 2004
(Canadian Dollars)
1. BACKGROUND INFORMATION
Nature of Operations
The Company was incorporated on March 10, 1988 under the Ontario
Business Corporations Act and is a wholly-owned subsidiary of 1066865
Ontario Inc. The Company is in the business of computer hardware and
software sales, service and consulting.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Principles
The Company's accounting and reporting policies conform to generally
accepted accounting principles and industry practice in the United
States. The financial statements are prepared in Canadian dollars.
Fair Value of Financial Instruments
The Company's estimate of the fair value of cash, accounts receivable,
bank indebtedness, accounts payable and accrued liabilities, long term
debt and due to related parties approximates the carrying value.
Inventories
Inventories are stated at the lower of cost (determined on a weighted
average basis) and replacement cost. Inventories are comprised of
finished goods.
Property and equipment
Property and equipment are stated at the lower of cost, net of
accumulated amortization and net recoverable amount. Property and
equipment are amortized over their estimated useful lives. The
annual rates and methods used are as follows:
Furniture 20% declining balance
Equipment 30% declining balance
Computer hardware 30% declining balance
Computer software 30% declining balance
Leasehold improvements straight-line over the lease term
Income Taxes
The Company accounts for its income taxes under the liability method
specified by Statement of Financial Accounting Standards (SFAS) No.109,
Accounting for Income Taxes. Deferred tax assets and liabilities are
determined based on the difference between the financial statement and
tax bases of asset and liabilities as measured by the enacted tax rates
which will be in effect when these differences reverse. Deferred tax
expense is the result of changes in deferred tax assets and
liabilities.
F6
INFINITY TECHNOLOGIES INC.
Notes to Financial Statements
As at December 31, 2004
(Canadian Dollars)
2. SUMMARY OF SIGNIFICANT ACCOUNT POLICIES (continued)
Comprehensive Income
The Company has adopted Statement of Financial Accounting Standards
No. 130 ("SFAS 130"), "Reporting Comprehensive Income", which
establishes standards for reporting and display of comprehensive
income, its components and accumulated balances. Comprehensive
income is defined to include all changes in equity except those
resulting from investments by owners or distributions to owners.
Among other disclosures, SFAS No. 130 requires that all items that
are required to be recognized under the current accounting standards
as a component of comprehensive income be reported in a financial
statement that is displayed with the same prominence as other
financial statements. Comprehensive income is displayed in the
statement of shareholder's equity and in the balance sheet as a
component of shareholder's equity.
Use of Estimates
The preparation of financial statements in conformity with United
States generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the year. Actual results
could differ from those estimates.
3. PROPERTY AND EQUIPMENT
Accumulated 2004 2003
Cost Amortization Net Net
Furniture $ 32,304 $ 21,699 $ 10,605 $ 13,256
Equipment 44,165 33,319 10,846 2,307
Computer hardware 201,209 107,756 93,453 24,214
Computer software 100,187 73,289 26,898 41,639
Leasehold improvements 29,467 17,448 12,019 17,170
-------- --------- --------- ---------
$407,332 $253,511 $153,821 $ 98,586
======== ========= ========= =========
4. BANK INDEBTEDNESS
The Company has an operating facility with the Royal Bank of Canada of
up to $650,000 bearing interest at the bank's prime lending rate
plus 2.25%. The facility is secured by a general security agreement
covering all assets of the Company and personal guarantees by two of
the Company's officers supported by bank deposits and real property.
As at December 31, 2004, the Company had drawn $nil (2003 - $235,000).
F7
INFINITY TECHNOLOGIES INC.
Notes to Financial Statements
As at December 31, 2004
(Canadian Dollars)
5. INCOME TAXES
The approximate income tax effect of the temporary differences
comprising the net deferred tax asset is approximately as follows:
2004 2003
-------- ---------
Non-capital losses carried forward $ - $ 198,256
Enacted tax rate - 22%
Deferred tax asset - 43,600
Less: Valuation allowance - -
-------- ---------
Net deferred tax asset $ - $ 43,600
======== =========
In assessing the realizability of future tax assets, management
considers whether it is more likely than not that some portion or all
of the future tax assets will not be realized. The ultimate
realization of future tax assets is dependent upon the generation of
future taxable income during the periods in which those temporary
differences become deductible. Management considers the scheduled
reversal of future tax liabilities, projected future taxable income
and tax planning strategies in making this assessment.
Reconciliation of the statutory Canadian federal income tax to the
Company's effective tax:
2004 2003
-------- ---------
Provision at federal statutory rate 22.1 24.1
Provincial taxes 14.0 12.5
Non-deductible expenses and other 3.4 5.3
Small business deduction (17.5) ( 8.8)
--------- ---------
Effective tax rate 22.0% 33.1%
========= =========
6. LONG-TERM DEBT
2004 2003
-------- ---------
Bank loan, secured, requiring monthly
principal repayments of $5,600 plus
interest, bearing interest at the
daily floating base interest rate
plus 3% per annum plus additional
interest in the form of a royalty
on sales equal to 0.0561% of its
gross sales, due April 2006. $ 89,600 $156,800
Less: Current portion 67,200 67,200
-------- --------
$ 22,400 $ 89,600
======== ========
The loan is secured by a general security agreement providing
subordinated security on all of the Company's assets, a joint and
several guarantees by two of the Company's officers for 25% of the
loan outstanding, the assignment of $400,000 life insurance on two of
the Company's officers, and the assignment of shareholder's loans
totaling $89,500 (note 7). During the year, principal repayments of
$67,200 were made on this loan and interest expense amounted to $11,364
(2003 - $17,356).
F8
INFINITY TECHNOLOGIES INC.
Notes to Financial Statements
As at December 31, 2004
(Canadian Dollars)
7. RELATED PARTY TRANSACTIONS
The amount of $89,500 (2003 - $89,500) due to the shareholders of the
parent company, 1066865 Ontario Inc., is non-interest bearing and has
no fixed repayment terms. The amount due to shareholders is
subordinated in accordance with an assignment of shareholder's loans.
8. CAPITAL STOCK
Authorized
Unlimited common shares, voting
Unlimited Series A, preferred shares, non-voting, with a 9%
non-cumulative dividend
Unlimited Series B, preferred shares, non-voting
Issued
2004 2003
----- -----
100 common shares (2003 - 100) $100 $100
===== =====
9. LEASE COMMITMENTS
The Company is committed under operating leases for an automobile and
certain equipment. The aggregate minimum annual rentals under these
arrangements are approximately as follows:
2005 $14,000
2006 $12,000
10. CONTINGENT LIABILITY
A legal action has been initiated against the Company for breach of a
rental agreement in the amount of $82,000. The ultimate outcome and
loss are not determinable at this time. An amount of $30,000 has been
provided for in these financial statements with respect to this claim.
Any additional loss, if any, sustained on the ultimate resolution of
this claim will be accounted for in the year of settlement.
11. BASIC NET INCOME PER SHARE
Basic net income per share figures are calculated using the weighted
average number of common shares outstanding computed on a daily basis.
F9
INFINITY TECHNOLOGIES INC.
Unaudited Financial Statements
June 30, 2005
(Canadian Dollars)
INFINITY TECHNOLOGIES INC.
INDEX
June 30, 2005
(Canadian Dollars)
Page
FINANCIAL STATEMENTS
Unaudited Balance Sheet - Statement I ....................................F11
Unaudited Statement of Operations - Statement II .........................F12
Unaudited Statement of Shareholders' Equity - Statement III ..............F13
Unaudited Statement of Cash Flows - Statement IV .........................F14
NOTES TO FINANCIAL STATEMENTS ......................................F15 - F18
F10
INFINITY TECHNOLOGIES INC. Statement I
Unaudited Balance Sheet
As At June 30, 2005
(Canadian Dollars)
June 30, December 31,
2005 2004
------------ -----------
ASSETS
Current
Cash $ 517,430 $ 35,709
Accounts receivable 3,356,196 5,125,714
Income taxes recoverable 36,238 -
Prepaid expenses 18,564 -
Inventories 370,479 189,926
------------ -----------
4,298,907 5,351,349
Property and equipment (note 3) 153,137 153,821
------------ -----------
$4,452,044 $ 5,505,170
============ ===========
LIABILITIES
Current
Accounts payable and accrued liabilities $3,570,206 $ 4,288,100
Current portion of long-term debt (note 6) 56,000 67,200
------------ -----------
3,626,206 4,355,300
Long-term debt (note 6) - 22,400
Due to related parties (note 7) 89,500 89,500
------------ -----------
3,715,706 4,467,200
------------ -----------
SHAREHOLDERS' EQUITY - Statement III
Capital stock (note 8) 100 100
Retained earnings 736,238 1,037,870
------------ -----------
736,338 1,037,970
------------ -----------
$4,452,044 $ 5,505,170
============ ===========
F11
INFINITY TECHNOLOGIES INC. Statement II
Unaudited Statement of Operations
For The Six Months Ended June 30, 2005
(Canadian Dollars)
For The Six For The
Months Ended Year Ended
June 30, 2005 Dec. 31, 2004
------------- -------------
Sales $ 11,987,614 $ 24,426,801
Cost of sales 10,234,049 21,253,866
------------- -------------
Gross profit 1,753,565 3,172,935
------------- -------------
Operating costs
Selling and sales support 521,558 943,794
General and administrative 1,528,495 1,956,871
Advertising and promotion 15,816 56,316
Amortization of property and equipment 25,566 45,629
------------- -------------
2,091,435 3,002,610
------------- -------------
Income before income taxes (337,870) 170,325
------------- -------------
Income taxes - current (36,238) 43,600
------------- -------------
Net income (loss) for the period ($ 301,632) $ 126,725
============= ============
Net income (loss) per share for the period ($ 3,016.32) $ 1,267.25
============= ============
Weighted average number of common shares
outstanding (note 9) 100 100
============= ============
F12
INFINITY TECHNOLOGIES INC. Statement III
Unaudited Statement of Shareholders' Equity
For the Six Months Ended June 30, 2005
(Canadian Dollars)
Common Retained
Stock Earnings Total
----- ----------- -----------
Balance, December 31, 2003 100 911,145 911,245
Net income for the year - Statement II - 126,725 126,725
----- ----------- -----------
Balance, December 31, 2004 100 1,037,870 1,037,970
Net income (loss) for the period - Statement II - ( 301,632) ( 301,632)
----- ----------- -----------
Balance, June 30, 2005 $ 100 $ 736,238 $ 736,338
===== =========== ===========
F13
INFINITY TECHNOLOGIES INC. Statement IV
Unaudited Statement of Cash Flows
For the Six Months Ended June 30, 2005
(Canadian Dollars)
For The Six For The
Months Ended Year Ended
June 30, 2005 Dec.31, 2004
------------- ------------
CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
Net income (loss) for the period - Statement II ($301,632) $ 126,725
Adjustments to reconcile net income
to net cash provided by operating activities
Amortization of property and equipment 25,566 45,629
Accounts receivable 1,769,518 285,772
Deferred tax asset - 43,600
Income taxes recoverable (36,238) -
Prepaid expenses (18,564) 24,654
Inventories (180,553) 84,259
Accounts payable and accrued liabilities (717,895) 308,977
----------- ----------
Net cash provided by (used in) operating activities 540,202 919,616
----------- ----------
CASH FLOWS USED IN INVESTING ACTIVITIES
Purchase of property and equipment ( 24,881) (100,864)
----------- ----------
Net cash (used in) investing activities ( 24,881) (100,864)
----------- ----------
CASH FLOWS PROVIDED BY (USED IN) FINANCING
ACTIVITIES
Repayment of long-term debt ( 33,600) ( 67,200)
----------- ----------
Net cash provided by (used in) financing activities ( 33,600) ( 67,200)
----------- ----------
NET INCREASE IN CASH DURING THE PERIOD 481,721 751,552
CASH (BANK INDEBTEDNESS), BEGINNING OF PERIOD 35,709 (715,843)
----------- ----------
CASH, END OF PERIOD $ 517,430 $ 35,709
=========== ==========
F14
INFINITY TECHNOLOGIES INC.
Notes to Unaudited Financial Statements
As at June 30, 2005
(Canadian Dollars)
1. BACKGROUND INFORMATION
Nature of Operations
The Company was incorporated on March 10, 1988 under the Ontario
Business Corporations Act and is a wholly-owned subsidiary of
1066865 Ontario Inc. The Company is in the business of computer
hardware and software sales, service and consulting.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Principles
The Company's accounting and reporting policies conform to generally
accepted accounting principles and industry practice in the United
States. The financial statements are prepared in Canadian dollars.
Fair Value of Financial Instruments
The Company's estimate of the fair value of cash, accounts receivable,
bank indebtedness, accounts payable and accrued liabilities, long
term debt and due to related parties approximates the carrying value.
Inventories
Inventories are stated at the lower of cost (determined on a weighted
average basis) and replacement cost. Inventories are comprised of
finished goods.
Property and equipment
Property and equipment are stated at the lower of cost, net of
accumulated amortization and net recoverable amount. Property and
equipment are amortized over their estimated useful lives. The
annual rates and methods used are as follows:
Furniture 20% declining balance
Equipment 30% declining balance
Computer hardware 30% declining balance
Computer software 30% declining balance
Leasehold improvements straight-line over the lease term
Income Taxes
The Company accounts for its income taxes under the liability method
specified by Statement of Financial Accounting Standards (SFAS)
No. 109, Accounting for Income Taxes. Deferred tax assets and
liabilities are determined based on the difference between the
financial statement and tax bases of asset and liabilities as
measured by the enacted tax rates which will be in effect when
these differences reverse. Deferred tax expense is the result
of changes in deferred tax assets and liabilities.
F15
INFINITY TECHNOLOGIES INC.
Notes to Unaudited Financial Statements
As at June 30, 2005
(Canadian Dollars)
2. SUMMARY OF SIGNIFICANT ACCOUNT POLICIES (continued)
Comprehensive Income
The Company has adopted Statement of Financial Accounting
Standards No. 130 ("SFAS 130"), "Reporting Comprehensive
Income", which establishes standards for reporting and display
of comprehensive income, its components and accumulated balances.
Comprehensive income is defined to include all changes in equity
except those resulting from investments by owners or distributions
to owners. Among other disclosures, SFAS No. 130 requires that all
items that are required to be recognized under the current accounting
standards as a component of comprehensive income be reported in a
financial statement that is displayed with the same prominence as
other financial statements. Comprehensive income is displayed in
the statement of shareholder's equity and in the balance sheet as
a component of shareholder's equity.
Use of Estimates
The preparation of financial statements in conformity with United
States generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the year. Actual results
could differ from those estimates.
3. PROPERTY AND EQUIPMENT
June 30, Dec. 31,
Accumulated 2005 2004
Cost Amortization Net Net
Furniture $ 32,304 $ 22,760 $ 9,544 $ 10,605
Equipment 44,165 34,946 9,219 10,846
Computer hardware 224,591 124,024 100,567 93,453
Computer software 101,687 77,324 24,363 26,898
Leasehold improvements 29,467 20,023 9,444 12,019
--------- ------------ --------- ---------
$ 432,214 $279,077 $ 153,137 $ 153,821
========= ============ ========= =========
4. BANK INDEBTEDNESS
The Company has an operating facility with the Royal Bank of Canada of
up to $650,000 bearing interest at the bank's prime lending rate plus
2.25%. The facility is secured by a general security agreement
covering all assets of the Company and personal guarantees by two
of the Company's officers supported by bank deposits and real property.
As at June 30, 2005, the Company had drawn $nil
(December 31, 2004 - $nil).
F16
INFINITY TECHNOLOGIES INC.
Notes to Unaudited Financial Statements
As at June 30, 2005
(Canadian Dollars)
5. INCOME TAXES
The approximate income tax effect of the temporary differences
comprising the net deferred tax asset is approximately as follows:
June 30, 2005 Dec. 31, 2004
------------- -------------
Non-capital losses carried forward $ 168,031 $ -
------------- -------------
Enacted tax rate - 30.7%
Deferred tax asset $ 51,586 $ -
Less: Valuation allowance 51,586 -
------------- -------------
Net deferred tax asset $ - $ -
============= =============
In assessing the realizability of future tax assets, management
considers whether it is more likely than not that some portion or all
of the future tax assets will not be realized. The ultimate
realization of future tax assets is dependent upon the generation of
future taxable income during the periods in which those temporary
differences become deductible. Management considers the scheduled
reversal of future tax liabilities, projected future taxable income
and tax planning strategies in making this assessment.
Reconciliation of the statutory Canadian federal income tax to the
Company's effective tax:
June 30, 2005 Dec. 31, 2004
------------- -------------
Provision at federal statutory rate 22.1 22.1
Provincial taxes 14.0 14.0
Non-deductible expenses and other 3.4 3.4
Small business deduction ( 8.8) (17.5)
-------------- -------------
Effective tax rate 30.7% 22.0%
============== =============
6. LONG-TERM DEBT
June 30, 2005 Dec. 31, 2004
------------- -------------
Bank loan, secured, requiring monthly
principal repayments of $5,600 plus
interest, bearing interest at the
daily floating base interest rate
plus 3% per annum plus additional
interest in the form of a royalty
on sales equal to 0.0561% of its
gross sales, due April 2006. $ 56,000 $ 89,600
Less: Current portion 56,000 67,200
------------- ------------
$ - $ 22,400
============= ============
The loan is secured by a general security agreement providing
subordinated security on all of the Company's assets, a joint and
several guarantees by two of the Company's officers for 25% of the loan
outstanding, the assignment of $400,000 life insurance on two of the
Company's officers, and the assignment of shareholder's loans totaling
$89,500 (note 7). During the period, principal repayments of $33,600
were made on this loan and interest expense amounted to $6,986
(December 31, 2004 - $11,364).
F17
INFINITY TECHNOLOGIES INC.
Notes to Unaudited Financial Statements
As at June 30, 2005
(Canadian Dollars)
7. RELATED PARTY TRANSACTIONS
The amount of $89,500 (2003 - $89,500) due to the parent company,
1066865 Ontario Inc., is non-interest bearing and has no fixed
repayment terms. The amount is subordinated in accordance with an
assignment of shareholder's loans.
8. CAPITAL STOCK
Authorized
Unlimited common shares, voting
Unlimited Series A, preferred shares, non-voting, with a
9% non-cumulative dividend
Unlimited Series B, preferred shares, non-voting
Issued
June 30, 2005 Dec.31, 2004
------------- ------------
100 common shares (December 31, 2004 - 100) $100 $100
============= ============
9. BASIC NET INCOME PER SHARE
Basic net income per share figures are calculated using the weighted
average number of common shares outstanding computed on a daily basis.
F18
ON THE GO HEALTHCARE, INC.
Unaudited Pro Forma Consolidated
Balance Sheet and Statement of Loss
July 31, 2005
(United States Dollars)
Page
FINANCIAL STATEMENTS
INDEX
Unaudited Pro Forma Consolidated Balance Sheet
As At July 31, 2005......................................................F20
Unaudited Pro Forma Consolidated Statement of Loss
For The Year Ended July 31, 2005........................................F20
Unaudited Pro Forma Consolidation of On The Go Healthcare Inc.
and Infinity Technologies Inc. Balance Sheets
As At July 31, 2005 ..................................................F21
Unaudited Pro Forma Consolidation of On The Go Healthcare Inc.
and Infinity Technologies Inc. Statement of Loss
For The Year Ended July 31, 2005 .....................................F22
NOTES TO THE PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS..............F23 - F24
REPORT .....................................................................F25
F19
SCHEDULE B
ON THE GO HEALTHCARE, INC.
Unaudited Pro Forma Consolidated
Balance Sheet and Statement of Loss
July 31, 2005
(United States Dollars)
ON THE GO HEALTHCARE, INC.
Unaudited Pro Forma Consolidated Balance Sheet
As At July 31, 2005
(United States Dollars)
ASSETS
Current $ 5,938,658
Property and equipment 459,634
Investment in Vital Products Inc. 245,902
Intangibles 2,362,625
-------------
$ 9,006,819
-------------
LIABILITIES
Current $ 7,556,725
Advances from related parties 62,170
-------------
7,618,895
-------------
SHAREHOLDERS' EQUITY
Share capital 11,691
Additional paid in capital 5,517,570
Deficit (4,141,337)
-------------
1,387,924
-------------
$ 9,006,819
-------------
Unaudited Pro Forma Consolidated Statement of Loss
For The Year Ended July 31, 2005
(United States Dollars)
REVENUE $ 24,097,843
-------------
EXPENSES
Cost of sales 20,695,457
General and administrative 3,511,364
Amortization 60,466
Income tax (recovery) (26,110)
-------------
24,241,177
-------------
NET LOSS FOR THE YEAR ($ 143,334)
-------------
F20
SCHEDULE C
ON THE GO HEALTHCARE, INC.
Unaudited Pro Forma Consolidation of On The Go Healthcare Inc. and Infinity
Technologies Inc.
Balance Sheets
As At July 31, 2005
(United States Dollars)
On The Go Infinity Consolidation
Healthcare Technologies Adjustment Final
Inc. Inc. Dr Cr Balance
----------------------------------------------------
ASSETS
Current
Cash $1,584,914 $ 95,198 $1,680,112
Receivables 851,821 2,684,996 3,536,817
Prepaid expenses
and deposits 60,802 20,569 81,371
Taxes receivable - 26,752 26,752
Due from Vital Products
Inc. 105,581 - 105,581
Inventory 33,030 474,995 508,025
---------------------- -----------
2,636,148 3,302,510 5,938,658
Property and equipment 337,708 121,926 459,634
Other assets
Investment in Vital
Products Inc. 245,902 245,902
Intangibles 1,206,427 1,975,870 819,672 2,362,625
---------------------- -----------
$4,426,185 $3,424,436 $9,006,819
====================== ===========
LIABILITIES
Current
Payables and accruals $4,228,199 $2,799,428 $7,027,627
Bank loans - 45,902 45,902
Due to shareholder - 73,360 73,360
Note payable - - 409,836 409,836
---------------------- -----------
4,228,199 2,918,690 7,556,725
Advances from related parties - 62,170 62,170
---------------------- -----------
4,228,199 2,980,860 7,618,895
---------------------- -----------
SHAREHOLDERS' EQUITY
DEFICIENCY
Share capital 11,556 82 82 135 11,691
Additional paid in capital 4,167,705 - 1,349,865 5,517,570
Retained earnings(deficit) (3,981,275) 443,494 603,556 (4,141,337)
---------------------- -----------
197,986 443,576 1,387,924
---------------------- -----------
$4,426,185 $3,424,436 $9,006,819
====================== ===========
F21
ON THE GO HEALTHCARE, INC.
Unaudited Pro Forma Consolidation of On The Go Healthcare, Inc.
and Infinity Technologies Inc.
Statement of Loss
For The Year Ended July 31, 2005
(United States Dollars)
On The Go Infinity Consolidation
Healthcare, Technologies Adjustment Final
Inc. Inc. Dr Cr Balance
REVENUE $4,199,546 $19,898,297 $24,097,843
----------------------- -----------
EXPENSES
Cost of sales 3,811,395 16,884,062 20,695,457
General and administrative 412,667 3,098,697 3,511,364
Amortization - 60,466 60,466
Income tax provision
(recovery) - (26,110) (26,110)
----------------------- -----------
4,224,062 20,017,115 24,241,177
----------------------- -----------
NET LOSS FOR THE YEAR ($24,516) ($118,818) ($143,334)
======================= ===========
F22
ON THE GO HEALTHCARE, INC.
Notes to the Unaudited Pro Forma Consolidated Financial Statements
For Business Acquisition Report
For The Securities and Exchange Commission
As At July 31, 2005
(United States Dollars)
1. BASIS OF PRESENTATION
The accompanying unaudited pro forma consolidated balance sheet as at
July 31, 2005 and the unaudited pro forma statement of loss of On The
Go Healthcare, Inc. for the year ended July 31, 2005 have been prepared
to give effect to the purchase of Infinity Technologies Inc. as at
August 1, 2004. In the opinion of On The Go Healthcare, Inc.'s
management, the unaudited pro forma consolidated balance sheet and
unaudited pro forma statement of loss include all adjustments necessary
for the fair presentation of the transaction in accordance with
the requirements of the Securities Exchange Commission.
The On The Go Healthcare Inc. financial statements do not include the
childcare division which was discontinued and sold during the year.
The unaudited pro forma consolidated financial statements are prepared
for illustrative purposes only and may not be indicative of the
financial position or operating results that would have occurred if
the acquisition had been completed on August 1, 2004.
Furthermore, the reported unaudited pro forma consolidated statement
of loss is not necessarily indicative of the operating results that
may be obtained by On The Go Healthcare, Inc.
2. PRO FORMA ADJUSTMENTS AND ASSUMPTIONS
a) On The Go Healthcare, Inc. does not include the childcare division
which was discontinued and sold during the year.
b) The financial statements of On The Go Healthcare, Inc. and Infinity
Technologies Inc. have been converted to United States dollars at
a foreign exchange rate of .8196 United States dollars to Canadian
dollars.
c) The following table summarizes the fair value of the assets
acquired and liabilities assumed of Infinity Technologies Inc.
Current assets $ 3,523,694
Property and equipment 125,511
-----------
Total assets acquired 3,649,205
Less: Liabilities assumed 3,045,649
-----------
Net assets acquired $ 603,556
===========
F23
ON THE GO HEALTHCARE, INC.
Notes to the Unaudited Pro Forma Consolidated Financial Statements
For Business Acquisition Report
For The Securities and Exchange Commission
As At July 31, 2005
(United States Dollars)
2. PRO FORMA ADJUSTMENTS AND ASSUMPTIONS (continued)
d) The aggregate purchase price is $2,579,508 (Cdn$3,120,000)
compensated by issuing 1,350,000 common shares (restricted) valued
at $1 per share amounting to $1,350,000, $409,836 (Cdn$500,000)
promissory note commencing January 15, 2006 and $819,672
(Cdn$1,000,000) paid on closing.
e) The value of the intangibles was determined to be the difference
between the purchase price of $2,579,508 for the net assets less
the allocated values of the items noted above.
f) The consolidated adjustment is as follows:
Dr Cr
Deficit $ 603,556
Intangibles 1,975,870
Share capital 82
Share capital $ 135
Additional paid in capital 1,349,865
Note payable 409,836
Intangibles 819,672
F24
To the Shareholders of
On The Go Healthcare, Inc.
We have read the accompanying unaudited pro forma consolidated balance sheet of
On The Go Healthcare, Inc. as at July 31, 2005 and the unaudited pro forma
consolidated statement of loss for the year ended July 31, 2005, and have
performed the following procedures.
1. Compared the figures in the columns captioned "On The Go Healthcare, Inc." to
the internal unaudited financial statements of On The Go Healthcare, Inc. as
at July 31, 2005 and found them to be in agreement.
2. Compared the figures in the columns captioned "Infinity Technologies Inc."
to the internal unaudited financial statements of On The Go Healthcare, Inc.
as at July 31, 2005 and found them to be in agreement.
3. Made enquiries of certain officials of On The Go Healthcare, Inc. who have
responsibility for financial and account matters about:
a) The basis for determination of the pro forma adjustments; and
b) Whether the unaudited pro forma consolidated financial statements
comply as to form in all material respects with the requirements of
the Securities Exchange Commission.
The officials:
a) Described to us the basis for determination of the pro forma
adjustments; and
b) Stated that the unaudited pro forma consolidated financial statements
comply as to form in all material respects with the requirements of
the Securities Exchange Commission.
4. Recalculated the application of the pro forma adjustments to the aggregate
of the amounts in the columns captioned "On The Go Healthcare, Inc." and
"Infinity Technologies Inc." as at July 31, 2005 and for the year then
ended and found the amounts in the column captioned "Final Balance" to
be arithmetically correct.
A pro forma financial statement is based on management's assumptions and
adjustments, which are inherently subjective. The foregoing procedures
are substantially less than either an audit or review, the objective of
which is the expression of assurance with respect to management's
assumptions, the pro forma adjustments and the application of the
adjustments to the historical financial information. Accordingly, we
express no such assurance. The foregoing procedures would not necessarily
reveal matters of significance to the unaudited pro forma consolidated
financial statements, and we therefore, make no representations about the
sufficiency of the procedures for the purposes of a reader of such
statements.
/s/ Danziger & Hochman
- ----------------------
Danziger & Hochman
Chartered Accountants
September 28, 2005
Toronto, Ontario
F25