UNITED STATES SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
CURRENT REPORT
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-
16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
FOR FEBRUARY 7, 2003
-------------------
SHEP TECHNOLOGIES INC.
(FORMERLY INSIDE HOLDINGS INC.)
------------------------------------------
(Translation of registrant's name into English)
Suite 880, 609 Granville Street, Vancouver, B.C., Canada
---------------------------------------------------------
(Address of principal executive offices)
[Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.]
Form 20-F X Form 40-F
----- -----
[Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.]
Yes No X
--- ---
If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b):
THE COMPANY, A FOREIGN PRIVATE ISSUER DOMICILED IN CANADA, IS REQUIRED,
UNDER THE YUKON BUSINESS CORPORATIONS ACT AND THE BRITISH COLUMBIA SECURITIES
ACT AND RULES TO FILE WITH THE BRITISH COLUMBIA SECURITIES COMMISSION AND
THE YUKON TERRITORIES, FOR PUBLIC VIEWING, QUARTERLY AND ANNUAL FINANCIAL
STATEMENTS, AND OTHER INFORMATION, WHICH THE REGISTRANT DEEMS OF MATERIAL
IMPORTANCE TO STOCKHOLDERS.
THE COMPANY PROVIDES FINANCIAL STATEMENTS FOR THE PRIOR YEAR DATED DECEMBER 31,
2001 AS SUPPLEMENTARY INFORMATION FOR ITS SUBSIDIARY, SHEP LIMITED, WHICH WAS
ACQUIRED BY SHEP TECHNOLOGIES INC. IN SEPTEMBER 2002.
Copy of the News Release and SHEP Limited December 31, 2001 financial statements
as filed with the Yukon Territories and BC Securities Commission is attached
hereto and filed as Exhibit 1.1/1.2 to this filing on Form 6-K.
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
under-signed, thereunto duly authorized.
SHEP TECHNOLOIGES INC.
By: "Malcolm P. Burke"
-----------------------
Name: Malcolm P. Burke
Title: President and CEO
Date: February 7, 2003
<page>
Exhibit 1.1
News Release
February 7, 2003
SHEP Technologies Inc.
Provides Supplemental Information on its Subsidiary
February 7, 2003 - SHEP TECHNOLOGIES INC. (OTCBB: STLOF, BER: IH3) ("STI" or the
"Company"), a Canadian incorporated company with operations headquartered in the
UK, provides financial statements for the prior year dated December 31, 2001 as
supplementary information for its subsidiary, SHEP Limited, which was acquired
by SHEP Technologies Inc. in September 2002.
About SHEP Technologies Inc.
SHEP Technologies Inc. recently acquired SHEP Limited, a corporation based in
the Isle of Man with operations in Taunton, England and in the United States.
SHEP Limited has designed and developed proprietary energy technology for
application in global automotive and vehicle sectors.
The SHEP Technology System, using electronics and proprietary hydraulic pump
motors, captures otherwise lost kinetic energy generated during vehicle braking,
and utilizes this energy for vehicle acceleration during the inefficient low-
speed acceleration phase. Under a controlled test environment over the last 18
months at one of the world's largest automotive manufactures, significant fuel
savings, together with reduced engine and brake wear and tear were realized.
The system is intended to be equally applicable to delivery, service and
passenger vehicles of all sizes and variety. Optimal use of SHEP technology
is anticipated in high density urban traffic environment where acceleration
and braking cycles are frequent - accordingly buses, trucks, taxis and subway
systems could be ideal applications.
The Company anticipates licensing its "Stored Hydraulic Energy Propulsion"
(SHEP) to automotive manufacturers and their Tier One suppliers. Hydraulic
propulsion is being embraced by Original Equipment Manufacturers ("OEMs") in
the automotive industry. In particular, SHEP components are incorporated as an
integral part of one of North America's major auto producer's hydraulic launch
assist equipped development vehicles, which passed formal proof of concept in
December 2000.
ON BEHALF OF THE BOARD OF DIRECTORS
"Malcolm P. Burke"
Malcolm P. Burke, President and Chief Executive Officer
Statements about the Company's future expectations, including future
revenues and earnings, and all other statements in this press release other
than historical facts, are "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, Section 21E of the Securities
Exchange Act of 1934, and as that term is defined in the Private Securities
Litigation Reform Act of 1995. The Company intends that such forward-looking
statements be subject to the safe harbors created thereby. Since these
statements involve risks and uncertainties and are subject to change at any
time, the Company's actual results could differ materially from expected
results.
For further information, please contact:
Malcolm P. Burke
Tel: 604-689-1515
website: www.shepinc.com
Exhibit 1.2
SHEP Limited
Financial Statements
SHEP LIMITED
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States Dollars)
DECEMBER 31, 2001
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Board of Directors of
SHEP Limited
(A Development Stage Company)
We have audited the accompanying consolidated balance sheets of SHEP Limited
as at December 31, 2001 and 2000 and the related consolidated statements of
operations, stockholders' equity (deficiency) and cash flows for the year
ended December 31, 2001, the period from the date of inception on January 6,
2000 to December 31, 2000 and the cumulative amounts from the date of inception
on January 6, 2000 to December 31, 2001. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards
in the United States of America. Those standards require that we plan and
perform an audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
the 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, these consolidated financial statements present fairly, in all
material respects, the consolidated financial position of the Company as at
December 31, 2001 and 2000 and the results of its operations and its cash flows
for the year ended December 31, 2001, the period from the date of inception on
January 6, 2000 to December 31, 2000 and the period from date of inception on
January 6, 2000 to December 31, 2001 in conformity with generally accepted
accounting principles in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has no established source of
revenue. This matter raises substantial doubt about its ability to continue as
a going concern. Management's plan in regard to this matter is also described
in Note 2. The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
Taunton, England Albert Goodman
June 19, 2002 Chartered Accountants
SHEP LIMITED
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
(Expressed in United States Dollars)
AS AT DECEMBER 31
==============================================================================
2001 2000
- ------------------------------------------------------------------------------
$ $
ASSETS
Current
Cash and cash equivalents 44,592 158,232
Accounts receivable 116 11,966
Inventory 6,237 -
-------- -------
Total current assets 50,945 170,198
Capital assets (Note 4) 44,846 54,169
-------- -------
Total assets 95,791 224,367
==============================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current liabilities
Accounts payable and accrued liabilities 24,930 3,943
Due to related parties (Note 5) 290,056 20,652
-------- -------
Total current liabilities 314,986 24,595
-------- -------
Stockholders' equity (deficiency)
Capital stock (Note 6)
Authorized
2,000 common shares with a par value
of $1.494 per share
Issued
1,000 common shares (2000 - 1,000) 1,494 1,494
Additional paid-in capital 522,038 522,038
Cumulative translation adjustment (5,618) -
Deficit accumulated during the development stage (737,109) (323,760)
-------- --------
Total stockholders' equity (deficiency) (219,195) 199,772
-------- --------
Total liabilities and stockholders' equity (deficiency) 95,791 224,367
===============================================================================
History and organization of the Company (Note 1)
The accompanying notes are an integral part of these consolidated financial
statements.
SHEP LIMITED
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in United States Dollars)
===============================================================================
Cumulative
Amounts From Period
Date of From Date of
Inception on Inception on
January 6, January 6
2000 to Year Ended 2000 to
December 31, December 31, December 31,
2001 2001 2000
- --------------------------------------------------------------------------------
$ $ $
SALES 374,836 374,836 -
--------- -------- ----------
COST OF GOODS SOLD
Subcontracting and parts 131,395 131,395 -
Consulting and labor 31,529 31,529 -
Freight and customs 2,365 2,365 -
-------- -------- ----------
165,289 165,289 -
-------- -------- ---------
Gross profit 209,547 209,547 -
-------- -------- ---------
EXPENSES
Amortization 20,924 12,625 8,299
Consulting 10,645 2,800 7,845
Management fees 183,538 108,863 74,675
Office and general 52,691 27,349 25,342
Professional fees 62,202 32,267 29,935
Rent 23,854 23,854 -
Research and development 399,906 234,127 165,779
Salaries and benefits 78,818 78,818 -
Travel and related 116,743 103,221 13,522
-------- -------- --------
(949,321) (623,924) (325,397)
-------- -------- --------
Loss before other items (739,774) (414,377) (325,397)
-------- -------- ---------
OTHER ITEMS
Interest income 2,665 1,028 1,637
-------- -------- ---------
Loss for the period (737,109) (413,349) (323,760)
==============================================================================
The accompanying notes are an integral part of these consolidated financial
statements.
SHEP LIMITED
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
(Expressed in United States Dollars)
================================================================================
Deficit
Common Stock Accumulated
----------------- Additional During the Cumulative
Number of Paid-in Development Translation
Shares Amount Capital Stage Adjustment Total
- --------------------------------------------------------------------------------
$ $ $ $ $
Balance,
Jan 6 2000
(date of
inception) - - - - - -
Common stock
issued
for cash 1,000 1,494 522,038 - - 523,532
Loss for
the period - - - (323,760) - (323,760)
- --------------------------------------------------------------------------------
Balance,
Dec 31 00 1,000 1,494 522,038 (323,760) - 199,772
Cumulative
translation
adjustment - - - - (5,618) (5,618)
Loss for
the year - - - (413,349) - (413,349)
- --------------------------------------------------------------------------------
Balance,
Dec 31 01 1,000 1,494 522,038 (737,109) (5,618) (219,195)
================================================================================
The accompanying notes are an integral part of these consolidated financial
statements.
SHEP LIMITED
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in United States Dollars)
===============================================================================
Cumulative
Amounts From Period
Date of From Date of
Inception on Inception on
January 6, January 6
2000 to Year Ended 2000 to
December 31, December 31, December 31,
2001 2001 2000
- --------------------------------------------------------------------------------
$ $ $
CASH FLOWS FROM
OPERATING ACTIVITIES
Loss for the period (737,109) (413,349) (323,760)
Adjustment to reconcile loss to net
cash used in operating activities:
Amortization 20,924 12,625 8,299
Changes in non-cash working
capital items:
Decrease (increase) in accounts
receivable (116) 11,850 (11,966)
Increase in inventories (6,237) (6,237) -
Increase in accounts payable and
accrued liabilities 24,930 20,987 3,943
- ------------------------------------------------------------------------------
Net cash used in operating activities (697,608) (374,124) (323,484)
- --------------------------------------------------------------------------------
CASH FLOWS FROM
INVESTING ACTIVITIES
Acquisition of capital assets (65,770) (3,302) (62,468)
- --------------------------------------------------------------------------------
Net cash used in investing activities (65,770) (3,302) (62,468)
- --------------------------------------------------------------------------------
CASH FLOWS FROM
FINANCING ACTIVITIES
Issuance of capital stock for cash 523,532 - 523,532
Advances from related parties 290,056 269,404 20,652
- -------------------------------------------------------------------------------
Net cash provided by financing
Activities 813,588 269,404 544,184
- --------------------------------------------------------------------------------
Effect of exchange rate changes on
cash and cash equivalents (5,618) (5,618) -
- --------------------------------------------------------------------------------
Change in cash and cash equivalents
for the period 44,592 (113,640) 158,232
Cash and cash equivalents,
beginning of period - 158,232 -
- --------------------------------------------------------------------------------
Cash and cash equivalents,
end of period 44,592 44,592 158,232
================================================================================
Cash paid during the period for:
Interest expense - - -
Income taxes - - -
================================================================================
Supplemental disclosure with respect to cash flows (Note 9)
The accompanying notes are an integral part of these consolidated financial
statements.
SHEP LIMITED
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States Dollars)
DECEMBER 31, 2001
1. HISTORY AND ORGANIZATION OF THE COMPANY
The Company was incorporated on January 6, 2000 and commenced operations
on May 1, 2000. The Company was incorporated under the laws of the Isle of Man
Companies Acts (1931 to 1993) and is considered a development stage company in
accordance with Statement of Financial Accounting Standards ("SFAS") No. 7. The
Company plans to pursue opportunities in the development of hydraulic energy
transfer.
2. GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles in the United States of America applicable to a going
concern, which contemplates the realization of assets and liquidation of
liabilities in the normal course of business. Without realization of additional
capital, it would be unlikely for the Company to continue as a going concern.
The Company intends to obtain working capital in the short term by borrowing
funds from potential investors and from its parent company. The Company's
ability to continue as a going concern is dependent on additional cash
financings, and, ultimately, upon achieving profitable operations through the
development of its hydraulic energy transfer technology. These consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
=============================================================================
2001 2000
- -----------------------------------------------------------------------------
$ $
Deficit accumulated during the development stage (737,109) (323,760)
Working capital (deficiency) (264,041) 145,603
=============================================================================
3. SIGNIFICANT ACCOUNTING POLICIES
These financial statements have been prepared in conformity with generally
accepted accounting principles in the United States of America. The significant
account policies adopted by the Company are as follows:
Basis of consolidation
These consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiary, SHEP Technology, Inc. Significant intercompany
accounts and transactions have been eliminated upon consolidation.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles in the United States of America requires
management to make estimates and assumptions that affect the reported amount of
assets and liabilities and the disclosure of contingent assets and liabilities
expenses during the reporting period. Actual results could differ from these
estimates.
Cash and cash equivalents
Cash equivalents include highly liquid assets with an original maturity of
three months or less.
Inventory
Inventory is recorded at the lower of cost and net realizable value.
Capital assets
Capital assets are recorded at cost less accumulated amortization.
Amortization is provided by using the straight line method over the following
term:
Furniture and equipment - 5 years
Revenue recognition
The Company recognizes revenue from the sale of hydraulic energy transfer
technology when the technology products are sold, services are performed and
collection is reasonably assured.
Foreign currency translation
The Company's functional currency is UK Pounds Sterling. Assets and
liabilities have been translated at the rate of exchange prevailing at the
balance sheet date. Stockholders' equity has been translated at historical
rates. Revenues and expenses have been translated at the weighted average
rate during the period. Translation adjustments are disclosed as a separate
component of stockholders' equity.
Income taxes
Income taxes are provided in accordance with SFAS No. 109, "Accounting for
differences between financial and tax reporting and net operating loss carry-
forwards. Deferred tax expenses (benefits) result from the net change during
the period of deferred tax assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion or all
liabilities are adjusted for the effects of changes in tax laws and rates on
the date of enactment.
Recent accounting pronouncements
In July 2001, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 141, "Business Combinations", and SFAS No. 142, "Goodwill and Other
Intangible Assets." SFAS No. 141 requires that the purchase method of accounting
be used for all future business combinations and specifies criteria that
intangible assets acquired in a business combination must meet to be recognized
and reported apart from goodwill. SFAS No. 142 requires that goodwill and
intangible assets with indefinite useful lives no longer be amortized, but
instead tested for impairment at least annually in accordance with the
provisions of SFAS No. 142. SFAS No. 142 will also require that intangible
assets with estimable useful lives be amortized over their respective estimated
useful lives, and reviewed for impairment in accordance with SFAS No. 121.
In July 2001, FASB issued SFAS No. 143 "Accounting for Asset Retirement
Obligations" that records the fair value of the liability for closure and
removal costs associated with the legal obligations upon retirement or removal
of any tangible long-lived assets. The initial recognition of the liability
will be capitalized as part of the asset cost and depreciated over its estimated
useful life. SFAS 143 is required to be adopted effective January 1, 2003.
In October 2001, FASB issued Statement of Financial Accounting Standards No.
144, "Accounting for the Impairment on Disposal of Long-lived Assets", which
supersedes SFAS No. 121, "Accounting for the Impairment of Long-lived Assets
and for Long-lived Assets to be Disposed of". SFAS No. 144 requires that long-
lived assets that are to be disposed of by sale be measured at the lower of book
value or fair value less cost to sell. Additionally, SFAS No. 144 expands the
scope of discontinued operations to include all components of an entity with
operations that (1) can be distinguished from the rest of the entity and (2)
will be eliminated from the ongoing operations of the entity in a disposal
transaction. SFAS No. 144 is effective for financial statements issued for
fiscal years beginning after December 15, 2001, and, generally, its provisions
are to be applied prospectively.
In April 2002, FASB issued Statements off Financial Accounting Standards No.
145 "Rescission of FASB No. 4, 44, and 64, Amendment of FASB Statement No. 13,
and Technical Corrections". SFAS No. 145 eliminates the requirement that gains
and losses from the extinguishment of debt be aggregated and, if material,
classified as an extraordinary item, net of the related income tax effect
and eliminates the inconsistency between the accounting for sale-leaseback
transactions and certain lease modifications that have economic effects that are
similar to sale-leaseback transactions and certain lease modification that have
economic effects that are similar to sale-leaseback transactions. Generally SFAS
No. 145 is effective for transactions occurring after May 15, 2002.
In June 2002, FASB issued No. 146 "Accounting for Costs Associated with Exit
or Disposal Activities" that nullifies Emerging Issues Task Force Issue No. 94-3
("EITF Issue 94-3") "Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (Including Certain Costs Incurred
in Restructuring)". SFAS No. 146 requires that a liability for a cost associated
with an exit or disposal activity be recognized when the liability is incurred,
whereby EITF Issue 94-3 had recognized the liability at the commitment date to
an exit plan. The provisions of this statement are effective for exit or
disposal activities that are initiated after December 31, 2002 with earlier
application encouraged.
The adoption of these new pronouncements is not expected to have a material
effect on the Company's consolidated financial position or results of
operations.
Disclosure about segments of an enterprise and related information
The Company uses the management approach model for segment reporting.
The management approach model is based on the way a company's management
organizes segments within the Company for making operating decisions and
assessing performance. Reporting segments are based on products and services,
geography, legal structure, management structure, or any other manner in which
the management disaggregates a company.
4. CAPITAL ASSETS
===============================================================================
2001 2000
-------------------------------------------------------
Net Net
Accumulated Book Accumulated Book
Cost Amortization Value Cost Amortization Value
- --------------------------------------------------------------------------------
$ $ $ $ $ $
Furniture and
Equipment 65,770 20,924 44,846 62,468 8,299 54,169
================================================================================
5. DUE TO RELATED PARTIES
Amounts due to related parties consist of:
===============================================================================
2001 2000
- -------------------------------------------------------------------------------
$ $
Due to parent company - Ifield Technologies Limited 119,803 20,652
Due to related company - Eurocapital Markets Limited 99,392 -
Due to related company - Marshalsea Hydraulics Limited 40,861 -
Due to related company - SHEP Technologies, Inc. 30,000 -
------- ------
290,056 20,652
Amounts due to related parties are unsecured, non-interest bearing and have
no fixed terms of repayment.
6. CAPITAL STOCK
The Company's authorized capital stock consists of 2,000 shares of common
stock, with a par value of $1.494 per share. All shares of common stock have
equal voting rights and,when validly issued and outstanding, are entitled to one
non-cumulative vote per share in all matters to be voted upon by stockholders.
The shares of common stock have no pre-emptive, subscription, conversion or
Redemption rights and may be issued only as fully paid and non-assessable
shares. Holders of the common stock are entitled to equal rateable rights to
dividends and distributions with respect to the common stock, as may be declared
by the Board of Directors out of funds legally available.
On January 6, 2000, the Company issued 1,000 shares of common stock for
proceeds of $523,532.
Additional paid-in capital
The excess of proceeds received for shares of common stock over their par
value of $1.494, less share issue costs, is credited to additional paid-in
capital.
7. RELATED PARTY TRANSACTIONS
The Company entered into transactions with related parties as follows:
a) Paid or accrued project management fees of $108,863 (2000 - $74,675) to
its parent company, Ifield Technology Limited.
b) Paid or accrued rent of $14,798 (2000 - $Nil) to its parent company, Ifield
Technology Limited.
c) Paid or accrued research and development costs of $Nil (2000 - $165,779) to
its parent company, Ifield Technology Limited.
d) Paid or accrued office and general costs of $Nil (2000 - $22,403) to its
parent company, Ifield Technology Limited.
e) Paid or accrued travel and accommodation costs of $Nil (2000 - $4,875) to
its parent company, Ifield Technology Limited.
f) Paid or accrued professional and secretarial fees of $3,919 (2000 - $5,451)
to a company controlled by two persons who are directors of the Company.
These transactions are in the normal course of operations and are measured
at the exchange amount, which is the amount of consideration established and
agreed to by the related parties.
8. INCOME TAXES
Reconciliation of income tax expense at statutory rates with the reported
income tax expense is as follows:
==============================================================================
2001 2000
- ------------------------------------------------------------------------------
$ $
Loss before income taxes (413,349) (323,760)
==============================================================================
Expected income tax recovery (140,539) (110,078)
Foreign tax differences 100,310 73,427
Unrecognized benefit of operating loss carry-forwards 40,229 36,651
- -----------------------------------------------------------------------------
Income tax recovery - -
=============================================================================
Significant components of the Company's deferred tax assets based on
statutory tax rates are as follows:
===============================================================================
2001 2000
- -------------------------------------------------------------------------------
$ $
Deferred tax assets:
Tax value of loss carryforwards 76,880 36,651
Valuation allowance (76,880) (36,651)
- ------------------------------------------------------------------------------
- -
==============================================================================
The Company has approximately $769,000 of operating loss carryforwards in
the Isle of Man which expire beginning in 2005.
The Company has provided a valuation allowance against its deferred tax
assets given that it is in the development stage and it is more likely than not
that these benefits will not be realized.
9. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS
There were no significant non-cash transactions for the year ended December
31, 2001 and for the period ended December 31, 2000.
10. FINANCIAL INSTRUMENTS
The Company's financial instruments consist of cash and cash equivalents,
accounts receivable, accounts payable and accrued liabilities and due to related
parties. Unless otherwise noted, it is management's opinion that the Company is
not exposed to significant interest, currency or credit risks arising from these
financial instruments. The fair value of these financial instruments
approximate their carrying values, unless otherwise noted.
Financial Risk
The Company is exposed to financial risk arising from fluctuations in
foreign exchange rates and the degree of volatility in these rates. The Company
does not use derivative instruments to reduce its exposure to foreign currency
risk.
11. SEGMENTED INFORMATION
The Company operates in one business segment being the development of
hydraulic energy transfer technology. The Company's operations are conducted in
two geographic segments being the Isle of Man and the United States of America.
Sales totaling $372,318 (2000 - $nil) were made to one customer in the United
States. This represented 99% of the Company's total sales.
===============================================================================
2001 2000
--------------------------------------------------------
Geographic Segments USA UK Total
USA UK Total
- -------------------------------------------------------------------------------
$ $ $ $ $ $
Summary Information:
Total assets 55,171 40,620 95,791 - 224,367 224,367
Revenues 374,836 - 374,836 - - -
Net income (loss) 10,931 (424,280) (413,349) - (323,760) (323,760)
===============================================================================
12. SUBSEQUENT EVENTS
Inside Holdings Inc. Letter of Intent
Subsequent to year end, the Company entered into a letter of intent with
Inside Holdings Inc. ("Inside"), Ifield Technology Limited, Eurocapital Markets
Limited. and Marshalsea Hydraulics Limited Executive Pension Scheme dated May
22, 2002 to be acquired by Inside in exchange for 10,600,000 new common shares
(52.1%) of Inside., a publicly traded company on the OTC Bulletin Board. The
transaction would be accounted for as a recapitalization of Inside with control
of Inside being transferred to shareholders of the Company.
Acquisition of SHEP Technologies, Inc.
Subsequent to the year end, on June 3, 2002, the Company acquired all of
the issued and outstanding shares of SHEP Technologies, Inc., a Delaware
company, for cash consideration of $1.00.