-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CJWDadAKjgoUAS2GaQFAk0N68DdjBTZFofk+Z+2uAklGQIYiEZg/0gEoQRJVE2zb HWKVJky+0Iv9qOP6JIigKQ== 0000898432-03-000843.txt : 20030827 0000898432-03-000843.hdr.sgml : 20030827 20030827172358 ACCESSION NUMBER: 0000898432-03-000843 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 16 CONFORMED PERIOD OF REPORT: 20030630 FILED AS OF DATE: 20030827 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IVP TECHNOLOGY CORP CENTRAL INDEX KEY: 0001011601 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-30397 FILM NUMBER: 03869294 BUSINESS ADDRESS: STREET 1: 54 VILLAGE CENTRE STREET 2: MISSISSAUGA PLACE CITY: TORONTO ONTARIO M5E STATE: A6 ZIP: 0000 BUSINESS PHONE: 9053069343 MAIL ADDRESS: STREET 1: 54 VILLAGE CENTRE MISSISSAUGA PLACE STREET 2: ONTARIO CANADA 10QSB 1 ivp_form10qsb.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (MARK ONE) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2003 -------------------------------------------- [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACT IVP TECHNOLOGY CORPORATION (EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER) NEVADA 65-6998896 ---------- ---------- (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 2275 LAKESHORE BLVD WEST, SUITE 401, TORONTO, ONTARIO M8V 3Y3 CANADA -------------------------------------------------------------------- (Address of principal executive offices) (416) 255-7578 -------------- (Issuer's telephone number) (Former name, former address and former fiscal year, if changed since last report) APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Check whether the registrant filed all documents and reports required to be filed by Section l2, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes [ ] No [ ] APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 234,996,914 shares of common stock, $.001 par value, were outstanding on June 30, 2003 Transitional Small Business Disclosure Format (Check one): Yes [ ] No [x] PART I- FINANCIAL INFORMATION ITEM 1. Consolidated Financial Statements Condensed Consolidated Balance Sheets as of June 30, 2003 (Un-audited) and December 31, 2002 (Audited) Condensed Consolidated Statement of Operations for the Three Months and Six Months Ended June 30, 2003 and June 30, 2002, (Unaudited) Condensed Consolidated Statements of Stockholders' Deficiency for the Six Months ended June 30, 2003 Condensed Consolidated Statements Of Cash Flows For The Six Months Ended June 30, 2003 And 2002 (Unaudited) Notes To Condensed Consolidated Financial Statements As Of June 30, 2003 (Unaudited) ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PART II- OTHER INFORMATION ITEM 1. Legal Matters ITEM 2. Changes in Securities ITEM 3. Defaults Upon Senior Securities ITEM 4. Submission of Matters to a Vote of Security Holders ITEM 5. Other information ITEM 6. Subsequent Events, Exhibits and Reports on Form 8-K 2 IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2003 3 IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES CONTENTS PAGE 1 CONDENSED CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2003 (UNAUDITED) AND DECEMBER 31, 2002 PAGE 2 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2003 AND 2002 (UNAUDITED) PAGES 3 - 4 CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY FOR THE SIX MONTHS ENDED JUNE 30, 2003 (UNAUDITED) PAGES 5 - 6 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002 (UNAUDITED) PAGES 7 - 26 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2003 (UNAUDITED) 4 IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS ASSETS ------
June 30, 2003 December 31, (Unaudited) 2002 ------------ -------------- CURRENT ASSETS Cash $ 754 $ 63,162 Accounts receivable, less allowance for doubtful accounts of $43,970 as of June 30, 2003 and December 31, 2002 44,073 17,165 Inventory - - Prepaid expenses and other current assets 146,843 34,610 ------------ -------------- Total Current Assets 191,670 114,937 ------------ -------------- FIXED ASSETS Plant, property and equipment 195,016 173,246 Accumulated depreciation (117,422) (79,688) ------------ -------------- Total Fixed Assets 77,594 93,558 ------------ -------------- OTHER ASSETS License agreement - software, net of accumulated amortization of $535,209 and $356,806 as of June 30, 2003 and December 31, 2002, respectively 178,404 356,806 Deferred consulting 149,177 - Other assets - 71,816 ------------ -------------- Total Other Assets 327,581 428,622 ------------ -------------- TOTAL ASSETS $ 596,845 $ 637,117 - ------------ ============ ============== LIABILITIES AND STOCKHOLDERS' DEFICIENCY ---------------------------------------- CURRENT LIABILITIES Accounts payable $ 680,872 $ 657,402 Accrued liabilities 91,371 169,679 Taxes payable 155,371 32,150 Other current liabilities 2,856 134,088 Accrued interest 11,909 14,974 Due to factor - - Leases payable, current portion 20,154 - Net liabilities of discontinued operations - 1,417,619 Note payable, current portion 689,020 104,020 Common stock to be issued 18,000 3,617,746 Convertible preferred stock to be issued, short-term - 4,779,662 Due to related parties 76,427 369,226 ------------ ------------- Total Current Liabilities 1,745,980 11,296,566 ------------ ------------- LONG-TERM LIABILITIES Convertible debentures - 150,000 Lease payable, long-term 15,855 25,570 Convertible preferred stock to be issued, long-term - 3,584,747 ------------ ------------- Total Long-Term Liabilities 15,855 3,760,317 ------------ ------------- TOTAL LIABILITIES 1,761,835 15,056,883 - ----------------- ------------ ------------- STOCKHOLDERS' DEFICIENCY Preferred stock, $0.001 par value, 50,000,000 shares authorized, none issued and outstanding - - Common stock, $0.001 par value, 500,000,000 and 150,000,000 shares authorized, 234,996,914 and 99,449,261 shares issued and outstanding as of June 30, 2003 and December 31, 2002, respectively 234,997 99,449 Additional paid in capital 35,114,270 20,870,864 Accumulated deficit (35,430,951) (35,248,562) Less: treasury stock (11,000,000 shares) (770,000) - Other comprehensive income - exchange gain (103,494) 80,795 Less deferred equity line commitment fees (134,812) (222,312) Less deferred compensation and licensing fee (75,000) - ------------ ------------- Total Stockholders' Deficiency (1,164,990) (14,419,766) ------------ ------------- TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ 596,845 $ 637,117 - ---------------------------------------------- ============ =============
See accompanying notes to condensed consolidated financial statements 5 IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS ----------------------------------------------- (UNAUDITED)
For The Three For The Three For The Six For The Six Months Ended Months Ended Months Ended Months Ended June 30, 2003 June 30, 2002 June 30, 2003 June 30, 2002 ------------------- ------------------- ----------------- --------------- NET SALES $ 82,300 $ 90,000 $ 231,009 $ 90,000 ------------------- ------------------- ----------------- --------------- COST OF SALES Product costs - - 100,931 - Development costs - 1,030 - 1,030 Distribution and other costs including amortization 93,207 549,579 186,189 1,002,113 ------------------- ------------------- ----------------- --------------- Total Cost of Sales 93,207 550,609 287,120 1,003,143 ------------------- ------------------- ----------------- --------------- GROSS PROFIT (LOSS) (10,907) (460,609) (56,111) (913,143) ------------------- ------------------- ----------------- --------------- OPERATING EXPENSES Salaries and wages 157,573 - 235,974 - Stock-based compensation 656,922 - 656,922 - Consulting fees 45,256 330,980 93,930 349,980 Legal and accounting 57,996 165,877 153,874 211,974 Management fees - 52,452 - 89,408 General and administrative expenses 198,470 150,100 392,367 281,886 Financial advisory fees - 150,000 30,708 150,000 Research and development - - 108 - Amortization and depreciation 10,353 6,935 18,722 66,935 ------------------- ------------------- ----------------- --------------- Total Operating Expenses 1,126,570 856,344 1,582,605 1,150,183 ------------------- ------------------- ----------------- --------------- LOSS FROM OPERATIONS (1,137,477) (1,316,953) (1,638,716) (2,063,326) ------------------- ------------------- ----------------- --------------- OTHER INCOME (EXPENSE) Gain on early extinguishment of debt - 96,334 - 96,334 Interest income 1,354 42 6,497 42 Interest expense (148,778) (54,218) (227,130) (66,145) Foreign exchange gain (loss) 1,006 (11,272) 14,074 (11,272) ------------------- ------------------- ----------------- --------------- Total Other Income (Expense) (146,418) 30,886 (206,559) 18,959 ------------------- ------------------- ----------------- --------------- LOSS FROM CONTINUING OPERATIONS (1,283,895) (1,286,067) (1,845,275) (2,044,367) DISCONTINUED OPERATIONS (SEE NOTE 2): Loss from discontinued operations - (211,959) (733,123) (211,959) Gain on sale of discontinued operations 2,396,009 - 2,396,009 - ------------------- ------------------- ----------------- --------------- Total Discontinued Operations 2,396,009 (211,959) 1,662,886 (211,959) ------------------- ------------------- ----------------- --------------- NET INCOME (LOSS) $ 1,112,114 $ (1,498,026) $ (182,389) $ (2,256,326) - ----------------- =================== =================== ================= =============== (LOSS) PER COMMON SHARE FROM CONTINUING OPERATIONS - BASIC AND DILUTED $ (0.01) $ (0.01) $ (0.02) $ (0.02) =================== =================== ================= =============== GAIN (LOSS) PER COMMON SHARE FROM DISCONTINUED OPERATIONS - BASIC $ 0.02 $ (0.00) $ 0.02 $ (0.00) =================== =================== ================= =============== GAIN (LOSS) PER COMMON SHARE FROM DISCONTINUED OPERATIONS -DILUTED $ 0.02 $ (0.00) $ 0.01 $ (0.00) =================== =================== ================= =============== NET INCOME (LOSS) PER COMMON SHARE - BASIC $ 0.01 $ (0.01) $ (0.00) $ (0.03) =================== =================== ================= =============== NET INCOME (LOSS) PER COMMON SHARE - DILUTED $ 0.01 $ (0.01) $ (0.00) $ (0.03) =================== =================== ================= =============== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC 115,200,027 113,191,285 107,531,237 83,421,414 =================== =================== ================= =============== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - DILUTED 133,678,287 113,191,285 114,394,419 83,421,414 =================== =================== ================= ===============
See accompanying notes to condensed consolidated financial statements 6 IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY FOR THE SIX MONTHS ENDED JUNE 30, 2003 -------------------------------------- (UNAUDITED)
Additional Preferred Stock Common Stock Paid-In Accumulated Shares Amount Shares Amount Capital Deficit ------------ --------- ------------- -------- ------------ --------------- Balance, December 31, 2002 - $ - 99,449,261 $ 99,449 $ 20,870,864 $ (35,248,562) Stock issued for services and settlements - - 73,123,249 73,123 1,831,675 - Stock issued for cash - - 12,424,404 12,425 512,575 - Stock issued to former shareholders of Ignition Entertainment, Ltd. 3,500,000 3,500 15,000,000 15,000 11,930,656 - Conversion of preferred stock to common stock (3,500,000) (3,500) 35,000,000 35,000 (31,500) - Stock to be received from the sale of Ignition Entertainment, Ltd. - - - - - - Deferred cost recognized - - - - - - Net loss for the period - - - - - (182,389) Cumulative translation adjustment - - - - - - Comprehensive loss - - - - - - ------------ --------- ------------- -------- ------------ --------------- BALANCE, JUNE 30, 2003 - $ - 234,996,914 $ 234,997 $ 35,114,270 $ (35,430,951) - ---------------------- ============ ======== ============= ======== ============ ===============
See accompanying notes to condensed consolidated financial statements 7 IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY FOR THE SIX MONTHS ENDED JUNE 30, 2003 -------------------------------------- (UNAUDITED)
Deferred Deferred Compensation Equity and Line Other Treasury Licensing Commitment Comprehensive Stock Fees Fees Income Total ---------- ------------ ------------ ------------- ----------- Balance, December 31, 2002 - $ - $ (222,312) $ 80,795 $ (14,419,766) Stock issued for services and settlements - (75,000) - - 1,829,798 Stock issued for cash - - - - 525,000 Stock issued to former owners of Ignition Entertainment, Ltd. - - - - 11,949,156 Conversion of preferred stock to common stock - - - - - Stock received from the sale of Ignition Entertainment, Ltd. (770,000) - - - (770,000) Deferred cost recognized - - 87,500 - 87,500 Net loss for the period - - - - (182,389) Cumulative translation adjustment - - - (184,289) (184,289) ----------- Comprehensive loss - - - - (366,678) ---------- ------------ ------------ ----------- ----------- BALANCE, JUNE 30, 2003 (770,000) $ (75,000) $ (134,812) $ (103,494) $ (1,164,990) - ---------------------- ========== ============ ============ =========== ===========
See accompanying notes to condensed consolidated financial statements 8 IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ----------------------------------------------- (UNAUDITED)
For The Six For The Months Six Months Ended June Ended June 30, 2003 30, 2002 ------------- ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (182,389) $ (2,256,326) Adjustments to reconcile net loss to net cash used in operating activities: Gain on sale of discontinued operations (2,396,009) - Amortization and depreciation 18,722 66,935 Amortization of licensing agreements 178,402 905,067 Amortization of consulting agreements and commitment fees 113,323 123,001 Interest expense on beneficial conversion - 64,286 Gain on early extinguishment of debt - (96,334) Decrease in deferred tax asset 71,816 - Stock issued for commitment fees and penalties 22,800 - Stock issued for compensation 618,880 - Stock issued for financing costs 129,500 - Stock issued for services 12,500 517,782 Changes in operating assets and liabilities, net of effects of discontinued operations: Decrease (increase) in accounts receivable (89,973) 159,702 Decrease in inventory 304,783 3,529 Increase in prepaid expenses and other current assets (125,789) (136,678) Increase in other assets - (26,218) Increase (decrease) in accounts payable (83,409) 73,511 Decrease in accrued liabilities (162,333) - Increase in taxes payable 171,214 56,448 Decrease in other current liabilities (69,430) - Decrease in accrued interest (3,065) (26,956) ------------- ------------ Net Cash Used In Operating Activities (1,470,457) (572,251) ------------- ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Cash received from acquisition - 1,132,039 Cash paid from sale of discontinued operations (160) - Cash paid for licensing agreement - (713,610) Purchases of fixed assets (10,906) (77,779) ------------- ------------ Net Cash (Used In) Provided By Investing Activities (11,066) 340,650 ------------- ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of notes payable (690,000) - Proceeds from notes payable 1,174,146 979,801 Proceeds from convertible debentures - 150,000 Proceeds from related parties 174,221 238,363 Proceeds from factors 116,503 12,037 Proceeds from issuance of common stock 525,000 - Payment on leases (4,179) - ------------- ------------ Net Cash Provided By Financing Activities 1,295,691 1,380,201 ------------- ------------ EFFECT OF FOREIGN EXCHANGE RATES (90,499) 27,863 ------------- ------------ NET INCREASE IN CASH FOR THE PERIOD (276,331) 1,176,463 CASH - BEGINNING OF PERIOD 277,085 232 ------------- ------------ CASH - END OF PERIOD $ 754 $ 1,176,695 - -------------------- ============= ============
See accompanying notes to condensed consolidated financial statements 9 IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ----------------------------------------------- (UNAUDITED)
For The For The Six Months Six Months Ended Ended June 30, 2003 June 30, 2002 ------------- ------------- SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for interest $ 36,945 $ - ============= ============ Cash paid for taxes $ - $ - ============= ============ SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: Equipment purchased under capital leases $ 33,095 $ - ============= ============ Acquisition of Ignition Entertainment Ltd. $ - $ 1,132,039 ============= ============ Common and preferred stock issued to satisfy common and preferred stock to be issued for the acquisition of Ignition $ 11,949,156 $ - ============= ============ Common stock issued for deferred consulting expenses $ 250,000 $ - ============= ============ Common stock issued for payment of accrued bonuses $ 31,250 $ - ============= ============ Common stock issued for payment of commitment fees $ - $ 350,000 ============= ============ Common stock issued for payment of debt and accrued interest thereon $ - $ 223,773 ============= ============ Common stock issued for payment of amounts due to related parties $ 824,869 $ - ============= ============ Common stock issued for payment of common stock to be issued $ 15,000 $ 50,000 for services ============= ============
See accompanying notes to condensed consolidated financial statements 10 IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2003 ------------------- (UNAUDITED) NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION - ------ ----------------------------------------------------------- (A) ORGANIZATION ---------------- The consolidated financial statements of IVP Technology Corporation d.b.a. ActiveCore Technologies, Inc. (formally Mountain Chef, Inc.) and consolidated subsidiaries (the "Company") include the accounts of the parent, IVP Technology Corporation, incorporated in the State of Nevada on February 11, 1994, and its subsidiaries: Springboard Technology Solutions, Inc. d.b.a. ActiveCore Technologies, Ltd. ("Springboard"), a Canadian company; and Erebus Corporation, an inactive company. The Company was granted an extra-provincial license by the Province of Ontario on June 20, 1995 to carry on business in Ontario, Canada. Prior to 1998, the Company was involved with various unsuccessful activities relating to the sale of technology products before becoming inactive by the end of 1997. The Company began negotiations with a third party in 1998 to become an exclusive distributor of software and therefore is considered to have re-entered the development stage on January 1, 1998. Activities from inception of development stage included raising capital and negotiations and acquisition of software distribution licenses. On January 1, 2002, the Company began operations and emerged from the development stage. The Company operates two units, enterprise and consumer. The enterprise unit develops, markets, licenses, installs and services data solutions. The consumer unit develops and publishes interactive software games designed for mobile phones, other handheld devices, web-sites, personal computers and video game consoles. The consumer unit also distributes games, hardware and accessories developed or manufactured by third parties. (B) BASIS OF PRESENTATION ------------------------- The condensed consolidated financial statements included herein have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted as allowed by such rules and regulations. The Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed consolidated financial statements be read in conjunction with the December 31, 2002 audited consolidated financial statements and the accompanying notes thereto included in the Company's 10-KSB. While management believes the procedures followed in preparing these condensed consolidated financial statements are reasonable, the accuracy of the amounts are in some respects dependent upon the facts that will exist, and procedures that will be accomplished by the Company later in the year. 11 IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2003 ------------------- (UNAUDITED) The management of the Company believes that the accompanying unaudited condensed consolidated financial statements contain all adjustments (including normal recurring adjustments) necessary to present fairly the operations and cash flows for the periods presented. The consolidated results of operations for the three and six months ended June 30, 2003 and 2002 are not necessarily indicative of the results to be expected for the full year. All material inter-company accounts have been eliminated in consolidation. (C) OPERATIONS OF THE COMPANY - GOING CONCERN --------------------------------------------- The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplates continuation of the Company as a going concern. The Company has a net loss of $182,389 and a negative cash flow from operations of $1,470,457 for the six months ended June 30, 2003. The Company also has a working capital deficiency of $1,554,310 and a stockholders' deficiency of $1,164,990. These matters raise substantial doubt about the Company's ability to continue as a going concern. Management's plan to continue in operation is to continue to attempt to raise additional debt or equity capital until such time the Company is able to generate sufficient operating revenue. In view of these matters, realization of certain of the assets in the accompanying condensed consolidated financial statements is dependent upon continued operations of the Company, which in turn is dependent upon the Company's ability to meet its financial requirements, raise additional capital, and the success of its future operations. Management believes that its ability to raise additional capital provides the opportunity for the Company to continue as a going concern. (D) RECLASSIFICATIONS --------------------- Certain reclassifications have been made to the previously reported statements to conform to the Company's current condensed consolidated financial statement format. (E) BUSINESS SEGMENTS --------------------- The Company applies Statement of Financial Accounting Standards No. 131 "Disclosures about Segments of an Enterprise and Related Information". However, management has determined that it is not practicable to provide geographic and product segment disclosures for revenues and long-lived assets because the Company sells its products to a large variety of locations in the Americas and Europe, and in many instances, these products are then resold through distributors. 12 (F) USE OF ESTIMATES -------------------- The preparation of financial statements in conformity with accounting principles generaly accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. The most significant estimates and assumptions relate to the recoverability of prepaid royalties and licencing, capitalized software development costs and other intangibles and the adequacy of allowances for returns, and doubtful accounts. Actual amounts could differ significantly from these estimates. (G) FAIR VALUE OF FINANCIAL INSTRUMENTS --------------------------------------- Statement of Financial Accounting Standards No. 107, "Disclosures about Fair Value of Financial Instruments", requires disclosures of information about the fair value of certain financial instruments for which it is practicable to estimate the value. For purposes of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties other than in a forced sale or liquidation. The carrying amounts of the Company's financial instruments, including cash, accounts receivable, accounts payable, accrued liabilities, taxes payable and other current laibilties approximate fair value because of their short maturities. The carrying amount of licensing agreements and investments approximate fair value based upon the recoverability of these assets. The carrying amount of the Company's lines of credit approximates fair value because the interest rates of the lines of credit are based on floating rates identified by reference to market rates. The carrying amounts of the Company's loans and notes payable and capital lease obligations approximate the fair value of such instruments based upon management's best estimate of interest rates that would be available to the Company for similar debt obligations. (H) EARNINGS (LOSS) PER SHARE ----------------------------- Basic earnings (loss) per common share is based on net loss divided by the weighted average number of common shares outstanding. For the three and six months ended June 30, 2002, common stock equivalents were not included in the calculation of diluted loss per share as their effect would be anti-dilutive. 13 (I) REVENUE RECOGNITION ----------------------- RISK AND UNCERTAINTIES ---------------------- A significant portion of all of the Company's net sales are derived from software publishing and distribution activities, which are subject to increasing competition, rapid technological change and evolving consumer preferences, often resulting in the frequent introduction of new products and short product lifecycles. Accordingly, the Company's profitability and growth prospects depend upon its ability to continually acquire, develop and market new, commercially successful software products and obtain adequate financing. If the Company is unable to continue to acquire, develop and market commercially successful software products, its operating results and financial condition could be materially adversely affected in the near future. REVENUE RECOGNITION ------------------- Publishing revenue is derived from the sale of internally developed interactive software titles or from the sale of titles licensed from third-party developers. Publishing revenue amounted to $1,087,906 and $407,326 for the six months ended June 30, 2003 and 2002, respectively. Publishing revenues have been reclassified to gain (loss) from discontinued operations on the accompanying condensed consolidated statement of operations in connection with the sale of Ignition Entertainment, Ltd. (See Note 2). Distribution revenue is derived from the sale of third-party interactive software titles, accessories and hardware. Distribution revenue amounted to $103,051 and $90,000 for the six months ended June 30, 2003 and 2002, respectively. Revenues from Services and Commercial Software sold under licenses were $127,958 and $0 in the six months ended June 30, 2003 and 2002, respectively. The Company had no Services or Commercial Software sales in the corresponding period of 2002, because it had not yet acquired Springboard Technology Solutions, a Services and Commercial Software producing subsidiary. The Company recognizes revenue in accordance with Statement of Position ("SOP") 97-2 "Software Revenue Recognition", as amended by SOP 98-9 "Modification of SOP 97-2 Software Revenue Recognition with respect to Certain Transactions." SOP 97-2 provides guidance on applying generally accepted accounting principles in recognizing revenue on software transactions. SOP 98-9 deals with the determination of vendor specific objective evidence ("VSOE") of fair value in multiple element arrangements, such as maintenance agreements sold in conjunction with software packages. The Company's consumer software transactions generally include only one element, the interactive software game or commercial software under license. The 14 IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2003 ------------------- (UNAUDITED) Company recognizes revenue when the price is fixed and determinable; there is persuasive evidence of an arrangement, the fulfillment of its obligations under any such arrangement and determination that collection is probable. Accordingly, revenue is recognized when title and all risks of loss are transferred to the customer, which is generally upon receipt by customer. The Company's payment arrangements with its customers provide primarily 60 day terms and to a limited extent with certain customers 30 or 90 day terms. The Company does not have any multi-element arrangements that would require it to establish VSOE for each element, nor does the Company have any sales activity that requires the contract method of accounting. The Company's distribution arrangements with customers generally do not give customers the right to return products; however, the Company at its discretion may accept product returns for stock balancing or defective products. In addition, the Company sometimes negotiates accommodations to customers, including price discounts, credits and product returns, when demand for specific products falls below expectations. The Company's publishing arrangements generally do not require the Company to accept product returns and provide price protection. The Company establishes a reserve for future returns and other allowances based primarily on its return policies, price protection policies and historical return rates. The Company may not have a reliable basis to estimate returns and price protection for certain customers or it may be unable to determine that collection of the receivable is probable. In such circumstances, the Company defers the revenues at the time of the sale and recognizes them when collection of the related receivable becomes probable or cash is received. Revenue from product sales is recognized when title passes to the customer, provided that: there are no uncertainties regarding customer acceptance; persuasive evidence of an arrangement exists; the sales price is fixed or determinable; and collectability is deemed probable. The Company provides for estimated product returns at the time of the product shipment, if necessary. In December 1999, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 101, Revenue Recognition in Financial Statements, which establishes guidance in applying generally accepted accounting principles to revenue recognition in financial statements and is effective beginning with the fourth quarter of the year ended December 31, 2000. The Company has determined that its existing revenue recognition practices comply with the requirements of SAB 101 for all periods presented. (J) RECENT ACCOUNTING PRONOUNCEMENTS ------------------------------------ In November 2002, the EITF reached a consensus on Issue 00-21, addressing how to account for arrangements that involve the delivery or performance of multiple products, services, and /or rights to use assets. Revenue arrangements with multiple deliverables are divided into separate units of accounting if the deliverables in the arrangement meet the following criteria: (1) the delivered item has 15 IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2003 ------------------- (UNAUDITED) value to the customer on a stand-alone basis; (2) there is objective and reliable evidence of the fair value of undelivered items; and (3) delivery of any undelivered items is probable. Arrangement consideration should be allocated among the separate units of accounting based on their relative fair values, with the amount allocated to the delivered item being limited to the amount that is not contingent on the delivery of additional items or meeting other specified performance conditions. The final consensus will be applicable to agreements entered into in fiscal periods beginning after June 15, 2003 with early adoption permitted. In December 2002, the Financial Accounting Standards Board issued Statement No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure - an amendment of FASB Statement No. 123," ("SFAS 148"). SFAS 148 amends FASB Statement No. 123, "Accounting for Stock Based Compensation" ("SFAS 123") and provides alternative methods for accounting for a change by registrants to the fair value method of accounting for stock-based compensation. Additionally, SFAS 148 amends the disclosure requirements of SFAS 123 to require disclosure in the significant accounting policy footnote of both annual and interim financial statements of the method of accounting for stock based-compensation and the related pro forma disclosures when the intrinsic value method continues to be used. The statement is effective for fiscal years beginning after December 15, 2002, and disclosures are effective for the first fiscal quarter beginning after December 15, 2002. In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities". SFAS No. 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities". The changes in SFAS No. 149 improve financial reporting by requiring that contracts with comparable characteristics be accounted for similarly. This statement is effective for contracts entered into or modified after June 30, 2003 and all of its provisions should be applied prospectively. In May 2003, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 150, "Accounting For Certain Financial Instruments with Characteristics of both Liabilities and Equity". SFAS No. 150 changes the accounting for certain financial instruments with characteristics of both liabilities and equity that, under previous pronouncements, issuers could account for as equity. The new accounting guidance contained in SFAS No. 150 requires that those instruments be classified as liabilities in the balance sheet. 16 IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2003 ------------------- (UNAUDITED) SFAS No. 150 affects the issuer's accounting for three types of freestanding financial instruments. One type is mandatorily redeemable shares, which the issuing company is obligated to buy back in exchange for cash or other assets. A second type includes put options and forward purchase contracts, which involves instruments that do or may require the issuer to buy back some of its shares in exchange for cash or other assets. The third type of instruments that are liabilities under this Statement is obligations that can be settled with shares, the monetary value of which is fixed, tied solely or predominantly to a variable such as a market index, or varies inversely with the value of the issuers' shares. SFAS No. 150 does not apply to features embedded in a financial instrument that is not a derivative in its entirety. Most of the provisions of Statement 150 are consistent with the existing definition of liabilities in FASB Concepts Statement No. 6, "Elements of Financial Statements". The remaining provisions of this Statement are consistent with the FASB's proposal to revise that definition to encompass certain obligations that a reporting entity can or must settle by issuing its own shares. This Statement shall be effective for financial instruments entered into or modified after May 31, 2003 and otherwise shall be effective at the beginning of the first interim period beginning after June 15, 2003, except for mandatorily redeemable financial instruments of a non-public entity, as to which the effective date is for fiscal periods beginning after December 15, 2003. The Company believes that the adoption of the above pronouncements will, not have a material effect on the Company's condensed consolidated financial position or results of operations. NOTE 2 DISCONTINUED OPERATIONS - ------ ----------------------- Effective April 1, 2003, the Company sold 100% of the issued shares and all assets and liabilities of Ignition Entertainment, Ltd. for the return of 11,000,000 shares of the Company's common stock. The transaction resulted in a gain of $2,396,009, which has been included in the condensed consolidated statements of operations for the three and six months ended June 30, 2003, as a gain on sale of discontinued operations. Upon execution of the sale agreement in June 2003, the Company issued 50,000,000 shares of its common stock to the former shareholders of Ignition Entertainment Ltd. in accordance with the original May 28, 2002 purchase agreement. Based upon the terms of the sale agreement, the Company converted all of the 3,500,000 shares of preferred stock to be issued, into 35,000,000 shares of common stock and accelerated the issuance of 15,000,000 shares of common stock to be issued. The issuance of the 50,000,000 shares of common stock in June 2003 relieved the Company's obligation as of April 1, 2003, to issue $11,949,156 in preferred and common stock under the original May 28, 2003 purchase agreement. The 50,000,000 shares were delivered, in trust, to an independent third party upon the execution of the sale 17 IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2003 ------------------- (UNAUDITED) agreement and will be distributed to the former owners. Immediately following the issuance of the 50,000,000 shares of the Company's common stock, the former shareholders will return 11,000,000 shares of common stock to the Company as proceeds for the sale of Ignition Entertainment Ltd. The 11,000,000 shares were valued at $770,000 based upon the fair market value of the stock on April 1, 2003, the effective date of the sale agreement (See Note 10). In connection with the sale agreement, the Company will retain rights to certain intellectual property and receive a source code licensing agreement for certain interactive software games developed by Ignition Entertainment Ltd. In addition to the source code licensing agreement, the Company will also receive a distribution agreement to distribute the interactive software games on a worldwide basis for a period of three years, renewable annually thereafter. The Company will pay Ignition Entertainment Ltd. a royalty fee of 30% of all gross revenues, less direct costs, from the sale, distribution or marketing of those game titles. As of June 30, 2003, the Company did not assign any value to the acquired intellectual property due to the uncertainty of obtaining financing to fund the conversion of acquired intellectual property into saleable products. Following is a summary of net liabilities and results of operations of Ignition Entertainment Ltd. as of April 1, 2003 and December 31, 2002 and for the period from January 1, 2003 through April 1, 2003 and for the three and six months ended June 30, 2002: As of As of April 1, December 31, 2003 2002 ------------- ---------------- Cash $ 160 $ 213,923 Accounts receivable, net 212,741 149,676 Inventory 78,955 383,738 Prepaid expenses 113,044 99,488 Property, plant and equipment, net 417,727 442,674 Other assets 24,963 - ------------- ---------------- Total Assets $ 847,590 $ 1,289,499 ------------- ---------------- Accounts payable 1,044,294 1,182,423 Accrued liabilities 134,058 240,833 Due to factor 211,249 94,746 Taxes payable 436,513 388,520 Translation adjustment 93,790 - Notes payable 129,366 80,220 Due to related parties 424,329 720,376 ------------- ---------------- Total Liabilities 2,473,599 2,707,118 ------------- ---------------- Net Liabilities of Discontinued Operations $ 1,626,009 $ 1,417,619 ============= ================ 18 IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2003 ------------------- (UNAUDITED) For the For the Period From Three and January 1, Six Months 2003 Through Ended June April 1, 2003 30, 2002 -------------- ------------ Revenues, net $ 1,087,906 $ 407,326 Cost of sales 960,501 382,716 ------------ ------------ Gross profit 127,405 24,610 Operating expenses 815,985 228,741 ------------ ------------ Loss from discontinued operations (688,580) (204,131) ------------ ------------ Other income (expense) (44,543) (7,828) ------------ ------------ Net loss from discontinued operations $ (733,123) $ (211,959) ============ ============ The results of operation for the three and six months ended June 30, 2002 are identical because Ignition Entertainment Ltd. was acquired in May 2002. NOTE 3 ACCOUNTS RECEIVABLE - ------ ------------------- The components of accounts receivable are as follows: June 30, December 2003 (Unaudited) 31, 2002 -------------- ------------- Unrestricted trade receivables $ 88,043 $ 61,135 Restricted trade receivables - - Allowance for doubtful accounts (43,970) (43,970) ---------- ---------- Accounts receivable, net $ 44,073 $ 17,165 ========== ========== Restricted trade receivables of $149,676 are collateral for the Company's secured borrowing facility that Ignition entered into in April 2002, which is included in net liabilities of discontinued operations as of December 31, 2002 (See Note 2). Unrestricted trade receivables consists primary of vendor receivables for enterprise software and information technology services sold by the Company and its Springboard subsidiary. NOTE 4 PREPAID EXPENSES AND OTHER CURRENT ASSETS - ------ ----------------------------------------- Prepaid expenses and other current assets as of June 30, 2003 and December 31, 2002 consist of: 19 IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2003 ------------------- (UNAUDITED) June 30, 2003 December (Unaudited) 31, 2002 -------------- ------------- Prepaid expenses $ 20,897 $ 14,763 GST receivable 20,258 18,002 Miscellaneous receivable, unrelated parties 105,417 - Other 271 1,845 -------------- ------------- Total $ 146,843 $ 34,610 ============== ============= NOTE 5 FIXED ASSETS - ------ ------------ As of June 30, 2003 and December 31, 2002, fixed assets consist of: June 30, 2003 December (Unaudited) 31, 2002 -------------- ------------- Computer equipment $ 118,802 $ 91,505 Office equipment and furniture 20,631 19,698 Computer software 6,577 13,546 Software development kits 45,367 45,367 Leasehold improvements 3,639 3,130 -------------- ------------- 195,016 173,246 Less accumulated depreciation and amoritization (117,422) (79,688) -------------- ------------- $ 77,594 $ 93,558 ============== ============= Depreciation expense from continuing operations for the three and six months ended June 30, 2003 amounted to $10,353 and $18,722, respectively. Depreciation expense from continuing operations for the three and six months ended June 30, 2002 amounted to $6,935 and $66,935, respectively. NOTE 6 NOTES PAYABLE - ------ ------------- During February 2003, upon the Company's SB-2 Registration becoming effective, the Company received $970,000 proceeds from the issuance of a $1 million promissory note to an investment banking company (the "Investment Banker"), net of a 3% cash fee of $30,000, which yields an effective interest rate of approximately 12% per annum. The promissory note is non-interest bearing and is to be paid in full within 95 calendar days. The Company has the discretion to repay the note either with the cash received from the issuance of stock under the Equity Line of Credit Agreement or with cash received from operations or 20 IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2003 ------------------- (UNAUDITED) other financing sources. If this note is not fully paid when due, the outstanding principal balance owed will be payable in full together with interest at the rate of 24% per annum or the highest rate permitted by law, if lower. See Note 7 below for partial repayment of this note. Proceeds received from the issuance of this note were used to repay the convertible debenture and note payable to the Investment Bankers. As of December 31, 2002, total outstanding principal and accrued interest payable on the convertible debenture and note payable was $155,487 and $15,000, respectively. NOTE 7 STOCKHOLDERS' DEFICIENCY - ------ ------------------------ On February 18, 2003, the Company issued 168,889 shares of common stock to the Investment Banker for payment of penalties for not completing the SB-2 filing by the due date of July 2, 2002 per the terms of the registration rights agreement entered into in connection with the Equity Line of Credit Agreement. These shares were valued at $0.13 per share or an aggregate of $21,956, representing the closing market value on the date of grant. On February 18, 2003, the Company issued 114,408 share of common stock to a consultant for payment of $15,000 of consulting services accrued at December 31, 2002 as common stock to be issued included in currently liabilities in the accompanying consolidated balance sheet as of December 31, 2002 and $5,000 of consulting services for January and February of 2003. These shares were valued at $0.13 per share representing the closing market value on the date of grant. During the six month period ended June 30, 2003, the Company issued 8,932,783 shares of common stock to the Investment Bankers for cash of $400,000 in connection with the Equity Line of Credit (See Note 6). The cash was applied against the $1 million promissory note payable to the Investment Bankers issued in February 2003. As of June 30, 2003, the remaining balance of the note payable to the Investment Banker totaled $600,000. On April 23, 2003, the Company issued 3,491,620 shares of common stock to the Investment Bankers for cash of $125,000 or $.036 per share. On May 28, 2003, the Company amended the Articles of Incorporation to increase the total number of authorized common and preferred stock to 500,000,000 and 50,000,000 shares, respectively. 21 IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2003 ------------------- (UNAUDITED) On June 24, 2003, the Company issued 17,804,976 shares of common stock to the President of the Company in lieu of cash in order to satisfy shareholder loans, expenses paid on behalf of the Company and accrued salaries included in the amounts due to related parties on the accompanying condensed consolidated balance sheets. These shares were valued at $.025 per share, or an aggregate of $445,124 representing the market value on the date of grant. On June 24, 2003, the Company issued 17,804,976 shares of common stock to a director of the Company in lieu of cash in order to satisfy shareholder loans, expenses paid on behalf of the Company and accrued salaries included in the amounts due to related parties on the accompanying condensed consolidated balance sheets. These shares were valued at $.025 per share, or an aggregate of $445,124 representing the market value on the date of grant. On June 24, 2003, the Company issued 1,250,000 shares of common stock to four employees of the Company for payment of accrued compensation and bonuses. These shares were valued at $.025 per share, or an aggregate of $31,250 representing the market value on the date of grant. On June 24, 2003, the Company issued 3,000,000 shares of common stock to certain directors of the Company for director services for the period from June 2003 to June 2004. These shares were valued at $.025 per share, or an aggregate of $75,000 representing the market value on the date of grant. As of June 30, 2003, the Company has deferred $75,000 included in total stockholders' deficiency as deferred compensation and licensing fee on the accompanying condensed consolidated balance sheets. On June 24, 2003, the Company issued 300,000 shares of common stock to an unrelated consultant having a value of $7,500 for consulting services. These shares were valued based upon the market value on the date of grant. On June 24, 2003, the Company issued 2,000,000 shares of common stock to an unrelated party in connection with an agreement to provide investor relations services. These shares were valued at $.025 per share, or an aggregate of $50,000 representing the market value on the date of grant. As of June 30, 2003, the Company has deferred approximately $33,000 included in deferred consulting expense on the accompanying condensed consolidated balance sheet. On June 24, 2003, the Company issued 5,000,000 shares of common stock to an unrelated consultant as consideration for an agreement to provide consulting services from June 2003 to June 2004. These shares were valued at $.025 per share, or an aggregate of $125,000 on the date of grant. 22 IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2003 ------------------- (UNAUDITED) On June 24, 2003, the Company issued 50,000,000 shares of common stock to the former shareholders of Ignition Entertainment, Ltd. in accordance with the original May 28, 2002 purchase agreement. The acquisition was made pursuant to the Company agreeing to issue 15,000,000 shares of common stock and 3,500,000 shares of preferred stock convertible into 35,000,000 shares of common stock; collectively valued at $0.23898 per share for a total purchase price of $11,949,155. The issuance of these 50,000,000 shares of common stock relieved $11,949,155 in preferred and common stock to be issued as of April 1, 2003. (See Note 2, Discontinued Operations for details on the acceleration of the issuance of these shares and the sale agreement of Ignition Entertainment Ltd.) On June 24, 2003, the Company issued 5,180,000 shares of common stock to two unrelated parties to obtain financing for the Company. Financing costs included in interest expense for the six months ended June 30, 2003 totaled $129,500 representing the market value on the date of grant. On June 24, 2003, the Company issued 500,000 shares of common stock that were released from escrow to an individual for services rendered from November 2002 to November 2003. The Board of Directors resolved that these shares are considered earned as of June 24, 2003. These shares were valued at $.025 per share, or an aggregate of $13,500 representing the market value on the date of grant. In 2002, the Company issued 50,000,000 shares of common stock to various officers and directors of the Company in accordance with the stock purchase agreement with International Technology Marketing ("ITM"). All shares were held in safekeeping pending the completion of an escrow agreement. As of December 31, 2002, 30,000,000 shares were earned and were released from escrow. The Company has accelerated the issuance of the final 20,000,000 shares from escrow. These 20,000,000 shares were released from escrow as stock-based compensation on June 30, 2003 and were valued at $.027, or an aggregate of $540,000 on the date of sale. NOTE 8 BASIC AND DILUTED EARNINGS (LOSS) PER SHARE - ------ ------------------------------------------- Basic and diluted earnings (loss) per share for the three and six months ended June 30, 2003 and 2002 are computed as follows:
For the Three Months For the Six Months Ended June 30, Ended June 30, 2003 2002 2003 2002 ---- ---- ---- ---- BASIC: CONTINUING OPERATIONS- Loss from continuing operations $ (1,283,895) $ (1,286,067) $ (1,845,275) $ (2,044,367) ============= ============== =============== ==============
23 IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2003 ------------------- (UNAUDITED) Weighted average shares outstanding 115,200,027 113,191,285 107,531,237 83,421,414 ============= ============== =============== ============== Basic (loss) per share from continuing operations (0.01) (0.01) (0.02) (0.02) ============= ============== =============== ============== For the Three Months For the Six Months Ended June 30, Ended June 30, 2003 2002 2003 2002 ---- ---- ---- ---- BASIC: DISCONTINUED OPERATIONS- Loss from discontinued operations $ - $ (211,959) $ (733,123) $ (211,959) Gain on sale of discontinued operations 2,396,009 - 2,396,009 - ------------- -------------- --------------- -------------- 2,396,009 (211,959) 1,662,886 (211,959) ============= ============== =============== ============== Weighted average shares outstanding 115,200,027 113,191,285 107,531,237 83,421,414 ============= ============== =============== ============== Basic gain (loss) per share from discontinued operations 0.02 (0.00) 0.02 (0.00) ============= ============== =============== ============== DILUTED COMPUTATION: CONTINUING OPERATIONS- Loss from continuing operations $ (1,283,895) $ (1,286,067) $ (1,845,275) $ (2,044,367) ------------- -------------- --------------- -------------- DISCONTINUED OPERATIONS- Loss from discontinued operations $ - $ (211,959) $ (733,123) $ (211,959) Gain on sale of discontinued operations $ 2,396,009 - 2,396,009 - ------------- -------------- --------------- -------------- 2,396,009 (211,959) 1,662,886 (211,959) ------------- -------------- --------------- -------------- Adjusted net income (loss) for earnings per share $ 1,112,114 $ (1,498,026) $ (182,389) $ (2,256,326) ============= ============== =============== ============== Weighted average shares outstanding 115,200,027 113,191,285 107,531,237 83,421,414 Plus: Conversion of Cornell notes payable as of the beginning of each quarter 18,478,260 - 6,863,182 - ------------- -------------- --------------- -------------- Diluted weighted average common shares 133,678,287 113,191,285 114,394,419 83,421,414 ============= ============== =============== ============== DILUTIVE PER SHARE AMOUNTS: Loss from continuing operations $ (0.01) $ (0.01) $ (0.02) $ (0.02) ============= ============== =============== ============== Gain (loss) per share from $ 0.02 $ (0.00) $ 0.01 $ (0.00) discontinued operations ============= ============== =============== ============== Net gain (loss) per share $ 0.01 $ (0.01) $ (0.00) $ (0.03) ============= ============== =============== ==============
24 IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2003 ------------------- (UNAUDITED) NOTE 9 EMPLOYEE STOCK OPTIONS - ------ ---------------------- Effective January 1, 2003, the Company adopted the disclosure requirements of SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure," which amends SFAS No. 123, "Accounting for Stock-Based Compensation" to provide transition methods for a voluntary change to measuring compensation cost in connection with employee options using a fair value based method. The Statement also amends the disclosure requirements of SFAS No. 123 to require prominent disclosures about the method of accounting for compensation cost associated with employee options, as well as the effect of the method used on reported results. The Company adopted the disclosure requirements of SFAS No. 148 and has not changed its method for measuring the compensation cost of share options. The Company continues to use the intrinsic value based method and does not recognize compensation expense for the issuance of employee options with an exercise price equal to or greater than the market price at the time of grant. The Company has not granted any options to employees during the six months ended June 30, 2003 and 2002. As a result, the adoption of SFAS No. 148 had no impact on the Company's results of operations or financial position and no pro forma information will be disclosed for the three and six months ended June 30, 2003 and 2002. NOTE 10 TREASURY STOCK - ------- -------------- Treasury stock is shown at cost and consists of 11,000,000 shares of common stock held in trust with an independent third party as of June 30, 2003. The value of the 11,000,000 shares received in connection with the sale of Ignition Entertainment, Ltd. was $770,000, representing the closing market value on the effective date of the sale. NOTE 11 AGREEMENTS - ------- ---------- (A) INVESTMENT BANKER EQUITY LINE OF CREDIT AGREEMENT ----------------------------------------------------- In April 2002, the Company entered into an Equity Line of Credit Agreement with the Investment Banker. Under this agreement, the Company may issue and sell to the Investment Banker common stock for a total purchase price of up to $10 million. Subject to certain conditions, the Company will be entitled to commence drawing down on the Equity Line of Credit when the common stock to be issued under the Equity Line of Credit is registered with the Securities and Exchange Commission and the registration statement is declared effective and will continue for two years thereafter. The purchase price for the shares will be equal to 92% of the market price, which is defined as the lowest closing bid price of the common stock during the five trading days following the notice date. The amount of each advance is subject to an aggregate monthly maximum advance amount of $425,000 in any thirty-day period. In no event shall the number of shares issuable to the Investment Banker, which causes them to own in excess of 9.9% 25 IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2003 ------------------- (UNAUDITED) of the then outstanding shares of the Company's common stock. The Company paid the Investment Banker a one-time fee equal to $330,000, payable in 3,032,000 shares of common stock. The Investment Banker is entitled to retain 3.0% of each advance. In addition, the Company entered into a placement agent agreement with a placement agent firm, a registered broker-dealer. Pursuant to the placement agent agreement, the Company paid a one-time placement agent fee of 100,000 shares of common stock, which were valued at $0.20 per share, or an aggregate of $20,000, on the date of issuance. The Company agreed to pay an unrelated consultant, a one-time fee of $200,000 for its work in connection with consulting the company on various financial matters. Of the fee, $75,000 was paid in cash with the balance paid in 1,040,000 shares of common stock. The termination date of this agreement is the earliest of: (1) the Investment Banker makes payment of Advances of $10,000,000, (2) any stop order or suspension of the effectiveness of the Registration Statement for an aggregate of fifty (50) Trading Days or (3) the Company shall at any time fail materially to comply with the requirements of the agreement and such failure is not cured within thirty (30) days after receipt of written notice from the Investment Banker or (4) the date occurring twenty-four (24) months after the Effective Date. Pursuant to the terms of the Equity Line of Credit Agreement, the Company was required to file with the SEC a registration statement covering the shares to be acquired by the Investment Banker. The 24-month term commences the effective date of the registration statement. During February 2003, the Company completed its registration statement in connection with the Equity Line of Credit Agreement. To induce the Investment Banker to execute and deliver the Equity Line of Credit Agreement, the Company agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations there under, or any similar successor statute (collectively, the "1933 Act"), and applicable state securities laws. During the commitment period, the Company shall not, without the prior written consent of the Investment Banker, issue or sell (i) any Common Stock without consideration or for a consideration per share less than the Bid price on the date of issuance or (ii) issue or sell any warrant, option, right, contract, call, or other security or instrument granting the holder thereof the right to acquire Common Stock without consideration or for a consideration per share less than the Bid Price on the date of issuance, provided, however, that the Investment Banker is given ten (10) days prior written notice and nothing in this section shall prohibit the issuance of shares of Common Stock pursuant to existing contracts or commitments, upon exercise of currently outstanding options or convertible securities, or in connection with any acquisition. 26 IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2003 ------------------- (UNAUDITED) On each advance date in the Company shall pay to the Investment Banker, directly from the gross proceeds held in escrow, an amount equal to three percent (3%) of the amount of each advance as a commitment fee. The Company has paid the Investment Banker a one-time commitment fee in the amount of 3,032,000 shares of common stock and warrants to purchase 265,000 shares of common stock of which a warrant to purchase 15,000 shares has an exercise price of $0.50 per share and a warrant to purchase 250,000 shares has an exercise price of $0.099 per share. These warrants vest immediately upon issuance. The value of the one-time commitment fee related to the issuance of common stock totaled approximately $350,000, which was computed based upon the market prices of the Company's common stock on the applicable issuance dates. The warrants issued in connection with the Equity Line of Credit Agreement for commitment fees were valued on the date of grant using the Black-Scholes option-pricing model, which computed a value of $6,107. The Company estimates the fair value of the warrants at the grant date by using the Black-Scholes option pricing model with the following weighted average assumptions used for this grant; no dividend yield for all years; expected volatility of 24.3%; risk-free interest rate of 4.74% and an expected life of five years. The commitment fees will be expensed ratably over the life of the Equity Line of Credit agreement and are included in stockholders' deficiency in the accompanying consolidated balance sheet as of June 30, 2003 and December 31, 2002. The Company has recognized commitment fees of approximately $87,500 and $133,795, which has been included in general and administrative expenses on the condensed consolidated statement of operations for the six months and year ended June 30, 2003 and December 31, 2002, respectively. (B) DEVELOPMENT AND DISTRIBUTION AGREEMENT ------------------------------------------ On February 10, 2003, the Company signed a development and distribution agreement with a distribution company for distribution of the Company's games and other applications for mobile phones and other handheld devices to the distribution company's mobile operator channels on a worldwide basis. Under the terms of the agreement, which sets forth an initial publication schedule consisting of 14 products. The Company may also sublicense and provide games and applications created by other developers to the distribution company for distribution to their mobile operators. Under the terms of the agreement, the Company will receive royalty payments as the developer for each sale of the Company's games and other applications. 27 IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2003 ------------------- (UNAUDITED) (C) HOSPITAL SERVICE AGREEMENT ------------------------------ On March 11, 2003, the Company has entered into a one-year data integration agreement with a large hospital (the "Customer") in the Toronto area. The Company will make an interfacing resource available to the Customer for a fixed number of days per week to provide general interfacing services as requested by the Customer. This agreement will automatically be renewed for one-year terms unless terminated by either party in accordance with the terms set forth in this agreement. (D) LETTER OF INTENT -------------------- On June 24, 2003, the Company entered into a Letter of Intent to acquire a minimum of 5% of the issued share capital of an unrelated company for the equivalent of $300,000 Canadian dollars ("CAD"). As part of the terms and conditions of this proposed purchase, the Company will issue 10,000,000 shares of unregistered common stock in the name of the potential acquiree. The Company will seek to register the 10,000,000 shares at its next available registration opportunity. Per the terms of the Letter of Intent, the shares will be sold in the open market to generate the funds (CAD $300,000) needed to acquire a 5% equity interest. If the sales of these shares does not satisfy the amount of funds required, the Company will pay from other sources, if available. If the sales of the shares exceed the minimum required amount, the Company may increase its interest in the acquiree or have any remaining unsold shares returned for cancellation or rescission. As of August 2003, the Company has not finalized this transaction. NOTE 12 SUBSEQUENT EVENTS - ------- ----------------- On July 10, 2003, the Company entered into a Letter of Intent to acquire the source code for a software product known as XML/Connector for the health care vertical from an unrelated company which is a Colorado and Toronto based software development company. As part of the terms and conditions, the Company will pay (CAD) $120,000 in cash in the form of a note payable. On August 1, 2003, the Company issued 500,000 shares of common stock to the acquiree. These shares were valued at $.033 per share representing the closing market value on the date of grant. In late July 2003, the Company and an unrelated U.S. based healthcare software distribution and integration company reached agreement to sell to the Company the personnel and assets of the data management services division of the U.S. company for an undisclosed amount of cash and shares. As of August 2003, this transaction has not been finalized. 28 IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2003 ------------------- (UNAUDITED) On July 31, 2003, the company announced that its wholly owned subsidiary ActiveCore Technologies Limited had received the first installment of $500,000 of a planned $2,000,000 term loan offering. Under the terms of the agreement, the first installment will accrue a 12% interest rate per annum and is repayable over a five-year term with no payments required in the first 12 months - the payments will be amortized over the remaining 48 months of the term loan. The loan is convertible into common stock of the Company at the rate of 4.5 shares for every 1 dollar of the loan balance due, excluding interest, remaining at the time of conversion. As additional consideration for the loan advance by the lender, the Company issued 500,000 warrants on July 30, 2003 to the lender for the purchase of 500,000 shares of common stock at a purchase price of $0.0312 per share. The fair value assigned to the warrant amounted to $0 and was determined using the Black-Scholes pricing model. The Company estimates the fair value of the warrant at the grant date by using the Black-Scholes option-pricing model with the following weighted average assumptions used for this grant; no dividend yield for all years; expected volatility of 9.3%; risk-free interest rate of 1.12%, and an expected life of 1 year. The warrants expire July 31, 2004. On August 5, 2003, the Company announced that it had acquired the rights to build a cell phone game based on the "Zorro" character and trademark from Zorro Productions Inc. of California. A license agreement was entered into whereby the Company shall pay no royalties on the first $50,000 of net sales and subsequently the Company and the licensor shall share equally a royalty of 50% on net sales. There shall be no minimum royalty. The Company also entered into an agreement with an unrelated company to source additional "name brand" properties for cell phone game production and issued this unrelated company 2,000,000 shares of common stock as a consulting fee. These shares were issued on August 1, 2003 and were valued at $.033 per share, representing the closing market value on the date of grant. In July 2003, the Company entered into a consulting agreement with an unrelated individual to provide services through June 2004. On August 1, 2003, the Company issued 150,000 shares of common stock to this consultant. These shares were valued at $.033 per share, representing the closing market value on the date of grant. On July 14, 2003, the Company entered into a consulting agreement with an unrelated individual to provide services through June 2004. On August 1, 2003, the Company issued 4,000,000 shares of common stock to this consultant as compensation for services to be rendered. These shares were valued at $.033 per share, representing the closing market value on the date of grant. In July 2003, the Company entered into employment agreements with two contractors related to cell phone game development and health care services. On August 1, 2003, each contractor was issued 500,000 shares of common stock as compensation in addition to ongoing salary costs. These shares were valued at $.033 per share, representing the closing market value on the date of grant. 29 IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2003 ------------------- (UNAUDITED) In July 2003, the Company issued 1,562,700 unregistered shares of common stock to an officer of the Company in lieu of cash in order to satisfy shareholder loans, expenses paid on behalf of the Company and accrued expenses. These shares were valued at $.033 per share, representing the closing market value on the date of grant. On August 6, 2003, the Company announced that it had signed a letter of intent to invest in E-communities UK Limited, a manager of 124 city portals in the UK. The Company also announced that it intends to purchase a 15% interest by September 30, 2003, subject to due diligence and Board approval. The purchase price is expected to be equal to 225,000 pounds sterling payable by issuance of the Company's common stock. As of August 2003, the Company has not finalized this agreement. 30 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS BUSINESS OVERVIEW IVP Technology Corporation d.b.a. ActiveCore Technologies ("IVP Technology" or "ActiveCore" or the "Company") is a software developer, licensor, publisher, marketer, and distributor primarily in wireless markets and an IT services and software vendor in the healthcare vertical. Its operating staff provide products and services to certain segments of the wireless consumer software and enterprise IT marketplaces. ActiveCore Technologies is a registered Nevada corporation and has been publicly listed as IVP Technology Corporation (otcbb:TALL) on the over the counter market for four years. ActiveCore currently has its headquarters in Toronto, Ontario. For three years prior to new senior management taking over day to day control of the company, following the November 2001 approval by the shareholders of IVP of the purchase of International Technology Marketing, Inc., ActiveCore was solely focused on distributing an enterprise software product marketed under the "PowerAudit" name. Beginning in December 2001, the company acquired rights to distribute several additional enterprise software products from several other third party vendors. In May 2002, the Company also acquired 100% of the shares of Ignition Entertainment Limited, a UK based company engaged in the development, licensing, publishing, marketing and distribution of primarily platform (X-box, Playstation, GameCube and GameBoy) video games. A few weeks later in July 2002, IVP acquired 100% of the shares of Springboard Technology Solutions Inc. since renamed ActiveCore Technologies Limited, a Toronto based consumer and enterprise software development and IT services company. In the second quarter of 2003, with effect for accounting purposes from April 1, 2003, the company divested the operations of its UK based subsidiary to concentrate on games for mobile devices. ENTERPRISE DIVISION IVP's enterprise software division primarily operates through its wholly owned subsidiary, ActiveCore Technologies Limited, formerly Springboard, which was acquired on July 1, 2002 to develop, market, license and install data solutions and other applications for mid-size companies, large corporations and government agencies. A number of ActiveCore's clients are in the health care field thus, in-order to provide marketing focus for the health care sector clients, the company created the fictitious name of MDI Solutions ("MDI") to identify products and services specifically for the health care vertical. The MDI Solutions group has developed, and currently markets, two software products specific to the health care vertical namely "MD Link" and "MD Eye". IVP's other enterprise data solution offerings use Vaayu(TM), developed by ActiveCore, and Classifier(TM), Viper(TM) and iBos(TM), developed by several third party software companies. In addition to its enterprise operations ActiveCore also has an established wireless and web application development group which operates under the trade style of SilverBirch Studios. SilverBirch focuses on developing "handheld" applications most recently in the form of on-line games for web portals and mobile games for Java enabled mobile phones or Symbian OS devices. On a world wide basis "SilverBirch Studios" has been established as a Nevada registered trade name for ActiveCore Technologies Inc. ENTERPRISE SOFTWARE PRODUCTS The enterprise software division currently markets data solutions. These solutions are made up of separate software products that can operate on a stand-alone basis or integrate with other enterprise level software. The Company believes that these products provide enterprises with increased economy, efficiency and effectiveness when enterprises are faced with the necessity of obtaining data from the field, wherever that may be, and moving it into processes that take place in the front and back office environment through to business decision making levels. The enterprise software products currently represented by the Company are described below. THIRD PARTY VENDOR PRODUCTS CLASSIFIER(TM). On December 28, 2001, we entered into a two-year, non-exclusive licensing agreement to distribute the Classifier(TM) software program, developed by The Innovation Group, Plc. Subsequently, on September 30, 2002 we renegotiated the agreement with the Innovation Group, Plc to add another product, i-Bos(TM) (see product description herein), and relinquished the financial services industry vertical back to the Innovation Group, Plc. In the course of our contract renegotiation we also obtained the right, on a non-exclusive basis, to distribute both the Classifier(TM) and the i-Bos(TM) product in the UK market. Meanwhile we retained the right to sell such software 31 in the United States, Mexican and Canadian markets. Our distribution agreement allows us to earn up to a 100% margin on the wholesale price, provided certain minimum selling prices are met. We anticipate that the distribution agreement will be renewed on December 31, 2003. The Classifier(TM) product is a sophisticated business intelligence solution that provides data analysis benchmarking which can monitor on-going improvements on business activities, such as specific products, lines of business and other information of a business operation. The Classifier(TM) was designed to create and broadcast business intelligence knowledge views direct to decision makers over corporate Intranets and the Internet. The Classifier(TM) turns a database into a website, enabling more people to access data with a web browser. The Classifier(TM) incorporates a high-performance and powerful data analysis server, a web report publishing facility, versatile data transformation features and the ability to connect and extract data from multiple back office data sources. I-BOS(TM). On September 30, 2002, the Company obtained the non-exclusive right to market the Innovation Group, Plc's i-Bos(TM) product (Innovative Business Operating System) in North America and the United Kingdom to all verticals except financial services. I-Bos(TM) is an application development environment for business analysts. It is process and rule centric and allows analysts to build complete business applications for specific vertical markets without any programming knowledge in a language that is understood by that business sector. i-Bos(TM) is currently used primarily in financial services arenas, however it can be used in any process driven organization such as government, health care or any other organization where it is important that certain steps be taken prior to other operations being performed. VIPER(TM). On February 20, 2002, the company entered into an agreement with Smart Focus Limited, to resell its Viper(TM) suite of products which consists of Viper Analyze(TM) and Viper Visualize(TM), Viper Data Mining(TM), Viper CRM(TM), Viper Campaign Planner(TM) and Viper Smart Campaigner(TM). Pursuant to the license, ActiveCore will be entitled to a 15% commission on sales of Viper(TM) through customer opportunities created by ActiveCore. Smart Focus Limited will make sales representatives available to assist in sales presentations. The Company believes that Viper(TM) is a powerful, fast and easy-to-use analysis and visualization application designed for corporate marketing departments and those decision makers concerned with gross data from voluminous rows of customer information. Viper(TM) harnesses customer and transactional data from any touch-point or channel across any organization to create, build and maintain customer insight and customer intelligence. Viper(TM) is designed to empower enterprises to better understand, predict, manage and influence customer behavior. To date no sales of this product have materialized and ActiveCore is reviewing whether it wishes to continue maintaining a knowledge base in this product. INTERNALLY DEVELOPED PRODUCTS VAAYU(TM). Vaayu(TM) is a platform-independent software product that mobile-enables existing Enterprise Applications within an organization, allowing staff and field workers to remotely access internal data and systems through a variety of handheld and wireless devices, including Palm OS devices, RIM devices, handheld computers and other mobile devices. Recently the company obtained an exclusive source code agreement for XML/Connector from Karora Technologies Inc. which will allow ActiveCore to expand the use of Vaayu into the health care vertical where multiple legacy systems may be connected to Vaayu's mobile enablement capabilities. MD LINK. During the last fiscal year the company has also developed for its medical data integration business a software product that connects independent data systems within a healthcare organization, enabling connectivity and information sharing with stand-alone or legacy applications through industry protocols such as HL7 and XML. This capabilities of this product will also be improved as a result of the acquisition of the XML/Connector source code. MD EYE. MD Eye is a software product that monitors the runtime status of systems and interfaces within an interfacing environment, keeping watch over critical elements such as disk space usage, processor utilization, network connectivity, queue sizes and other IT system critical elements. This product is used in many of MDI Solutions services contracts to assist in monitoring systems and to automatically call for human intervention. ENTERPRISE SERVICES The primary services provided by the Enterprise Division are performed by staff that are on call or operate under contract as outsourced IT personnel in both the health care market and in the network solutions market. Network solutions staff are typically specialists in working with data networks, often 32 in high value professional office environments. Specialists in particular medical data structures are employed under the MDI Solutions banner for the health care market. CONSUMER DIVISION Since the divestiture of Ignition Entertainment Limited the Consumer Division has been reduced to two operating tradenames, specifically SilverBirch Studios and Recessgames.com under which ActiveCore develops and markets mobile and on-line games. On May 28, 2002, the Company acquired Ignition Entertainment Limited, a company organized in late 2001 under the laws of England and Wales, specializing in the design, development, licensing, publishing and distribution of personal computer and game console software and accessories. Effective April 1, 2003 the company divested Ignition and its operations have been recorded as discontinued operations for the current fiscal year. Ignition had been solely concerned with developing for the personal computer and video games platforms market. Through Ignition the company had development license agreements with Microsoft(TM), Nintendo(TM) and Sony(TM) to support its platform game development activities. The development of high quality platform video games is an expensive and time consuming process entailing long lead times and has substantial risk associated with picking the correct genres of games, correct timing for releases and is subject to retail acceptance in the market. With the divestiture of Ignition ActiveCore was able to rid itself of this business risk which had risen in the development of high quality platform video games is an expensive and time consuming process entailing long lead times and has substantial risk associated with picking the correct genres of games, correct timing for releases and is subject to retail acceptance in the market. With the divestiture of Ignition ActiveCore was able to rid itself of this business risk which had risen in a relatively short time period with the rapid development of the market space and the severe competition for retail shelf space. CURRENT EVENTS Subsequent to the fiscal year end on December 31, 2002 and to the company's last operational review included in the SB2 filing dated February 12, 2003 the company has made significant progress in both its consumer and in its enterprise divisions. CONSUMER DIVISION During the first quarter of 2003 IVP Technology signed a development and distribution agreement with Tira Wireless Inc. (www.tirawireless.com), for non-exclusive distribution of IVP's games and other applications for mobile phones and other handheld devices through to Tira's Mobile Operator/Carrier channels on a world wide basis. Tira distributes games and applications through AT&T Wireless, Nokia, Mobilkom Austria, End2End, Telecom1, Vodaphone, Vizzavi Portugal, Jamba and O2 which span the globe in terms of service to mobile subscribers. In addition to using Tira Wireless as a distributor and publisher, IVP has also executed a software distribution agreement with Handango, Inc. which firm distributes a wide range of mobile applications through its on-line web store. Handango is the leading publisher and platform for mobile software. Handango markets more than 25,000 applications from more than 8,000 Handango Software Partners through an extensive global distribution network of online, retail, and enterprise channels reaching more than five million mobile users each month. Handango provides its partners with worldwide distribution, marketing support, on-time payment processing, e-commerce services, product launch assistance and business development expertise. IVP's initial publication and release schedule for Java(TM) games consists of 14 entertainment products which have been created specifically for mobile phone platforms. During the second quarter of 2003 the company delivered 4 cell phone games to Tira which are now in various stages of the distribution cycle including replication for various phone models, acceptance testing by carriers and placement on wireless carrier game portals. ActiveCore's mobile games have been created by SilverBirch Studios, an internal development group. In addition to developing mobile applications, the SilverBirch group is currently completing work on a mobile phone game website "vortal" for a school age demographic segment to be initiated and marketed under the trade name "Recessgames.com". The Recessgames.com portal is scheduled for launch in late 2003. ENTERPRISE DIVISION The enterprise division has made steady progress with particular emphasis on the MDI Solutions group. In February 2003 the group received its first order for the MD Link product as an HL7 integration solution from Guelph General Hospital for current and future system interfaces within their facility. Due to the SARS outbreak in Toronto the installation of the MD Link product was not completed until the second quarter of 2003. In addition MDI Solutions has executed multiple contracts with four of the Toronto area's largest hospitals and has been awarded a short term contract for services at the Sault Area Hospital. Most of these contracts are for a combination of time, material and retained consulting services and have an initial term ranging from six to twelve 33 months with four automatically renewing for additional periods. The outbreak of SARS in Toronto which resulted in 44 deaths including a number of health care workers was concentrated in health care facilities. The business impact on ActiveCore was substantial as the company was faced with minimal revenues from its service contracts and prolonged collection periods during the later part of the first quarter and the entire second quarter. The financial repercussions of the outbreak have continued into the third quarter however the company believes that the fourth quarter will show improvement as various Toronto based hospitals catch up on integration issues and the movement of Toronto service personnel is again allowed in to US and other region health care facilities. The key health centers which are serviced by MDI under these contracts are Mount Sinai, a 462 bed hospital and critical care facility, located in downtown Toronto; St. Joseph's Health Centre, a 350 bed community service facility located in West Toronto; York Central Hospital, a 430 bed community hospital located in Toronto's North West region; and The Rouge Valley Health System, a two site 411 bed hospital health center, located in Toronto's Eastern region. The four health centers are amongst the ten largest hospitals in the Toronto area. ActiveCore has hired additional staff to service the anticipated growth in service contracts and is investing in marketing and sales personnel to obtain greater penetration in both the US and Canadian health care markets. The company is also in the process of negotiating the acquisition of a health care services group from a US based company which primarily operates along the eastern US. The Company expects that this acquisition, if completed, will begin to add revenues in the third quarter. If completed the services group will operate under the MDI trade name. The anticipated growth of the MDI Solutions Group and the enterprise division is expected to provide a rising level of recurring revenue to IVP. We anticipate that there will be continuing and substantial growth in the enterprise division in the future. ACQUISITIONS AND REORGANIZATIONS IVP Technology maintains an active interest in acquisitions and the reorganization of its component parts to better service clients of both its consumer and enterprise divisions. Investment in its existing operations augmented by growth through acquisitions is a key goal of company management as is the effective use of capital to drive acceptable returns on investment. At its annual general meeting of shareholders in Miami on May 28, 2003 ActiveCore shareholders gave consent to an increase in the authorized common shares from 150,000,000 to 500,000,000 shares. The increase in the number of authorized common shares was necessary to complete the issuance of shares to the original shareholders of Ignition and to provide sufficient room in its share structure to complete acquisitions using shares and for other equity and debt capital raising activities. It is management's belief that acquisitions and reorganizations ought to be undertaken when such activities are perceived to be accretive i.e. the cost of share dilution is offset by earnings in the future. RESULTS OF OPERATIONS THREE MONTHS ENDED JUNE 30, 2003 COMPARED WITH THE THREE MONTHS ENDED JUNE 30, 2002 REVENUES. During the three months ended June 30, 2003, we generated $82,300 in revenue in comparison to revenue of $90,000 in the corresponding period ended June 30, 2002. From a revenue source perspective in the second quarter of fiscal year 2003, $82,300 of revenue was generated by ActiveCore Technologies Limited from services work and product installation chiefly by the company's MDI group. The company accounted for the divestiture of Ignition Entertainment as discontinued operations with effect from April 1, 2003 therefore no revenue from Ignition UK was included in the results for the three months ended June 30, 2003. IVP Technology acquired Ignition on May 28, 2002 and did not acquire Springboard, now ActiveCore Technologies Limited, until July 1, 2002 consequently the revenue recorded in the second quarter of fiscal year 2002 was entirely generated by Ignition Entertainment Limited in the UK. During the second quarter of 2003 revenue from the MDI group was down substantially from what was expected as a result of the SARS outbreak in Toronto which constrained revenue earning opportunities within the existing hospital contracts and in terms of expanding our operations to other health care units in the US and Canada. COST OF SALES. Cost of sales was $93,207 for the three months ended June 30, 2003 versus $550,609 in the three months ended June 30, 2002. The principal cost of sales items in the second quarter 2003 consisted of amortization of the Classifier software license of $89,202 while the principal cost of sales in the second quarter ended June 30, 2002 was video game production costs in the Ignition operation in addition to the amortization of the classifier license. The company recorded amortization of prepaid licences of $92,982 related to IVP's Classifier(TM) and I-Bos(TM) distribution and license agreement in both the second quarter of 2003 and 2002. The result of the cost of sales components elaborated above led to a negative gross margin of $10,907 in the three months ended June 30, 2003 versus a negative gross margin of $460,609 in the three months ended June 30, 2003. 34 OPERATING EXPENSES. Total operating expenses for the three months ended June 30, 2003 were $1,126,570 versus $856,344 in the three months ended June 30, 2002. These expenses resulted in losses from operations of $1,137,477 in the most recent quarter and $1,316,953 in the quarter ended June 30, 2002. The largest components of second quarter fiscal year 2003 operating expenses were related to stock based compensation, salaries and wages and other general and administration expenses. These expenses are discussed below. ActiveCore's Canadian operations accounted for $157,573 in wages and salary costs which represented the cost of developers, data management staff, administration and sales and marketing staff. Salaries and wages include costs of all group insurance and various government programs. In the period ended June 30, 2002 there were no wage and salary costs incurred for operations as Ignition's figures have been removed and shown as discontinued operations and that subsidiary's US operation Ignition USA was not in place at the time. Stock based compensation of $656,922 in the second quarter ended June 30, 2003 includes $540,000 due to the acceleration of release of 20,000,000 shares that were formerly part of the acquisition terms of ITM in September 2001. In the quarter ended June 30 2002 there was no stock based compensation paid. Under the original ITM purchase agreement stock was to be released to the managers of ITM as sales revenue targets were met - at the time the original agreement was made it was anticipated by both the former directors of IVP and the owners of ITM that the stock issued in exchange for ITM acquisition would have been valued as at the date of the agreement and accounted for as a large goodwill value on the balance sheet. However during the company's prolonged SB 2 approval process it was determined that the common stock needed to be accounted for as at the quarter end in the each of the quarters where the original sales revenue targets were achieved. In practice this meant that regardless of how successful the company was in achieving increased sales, and regardless of how well the share price responded to the increased revenue, the company was likely to record large losses based on the valuation of the share releases at the time the revenues were recognized. In addition the recording of higher share compensation values was acting as a disincentive for management since management were likely to be taxed on the increased value of the stock received as it was being recognized as income rather than a one time capital gain over the original purchase price of the equity purchase in ITM. The other stock based compensation amounts consist of payments of $63,500 related to director's fees for the current year and $125,000 related to payment to a consultant for the next twelve months. No costs related to Ignition were recorded in the quarter as Ignition was divested with effect from April 1, 2003. In the second quarter of 2002 no stock based compensation was recorded as the managers of the company had not yet met the first milestone payment on the ITM compensation shares. General and Administrative expenses were $198,470 in the quarter ended June 30, 2003 versus $150,100 in the quarter ended June 30, 2002. In the most current quarter the largest component of G & A was write down of commitment fees on the equity line of credit and the cost associated with the retention of Hawk Associates as the company's new Investor Relations firm. Hawk has been retained at a rate of $7,000 per month in addition to a one time 2,000,000 unregistered stock grant. Consulting fees for the three months ending June 30, 2003 were $45,256 versus $330,980 in the quarter ended June 30, 2002. The fees in the second quarter ended June 30, 2003 reflect the cost of management's accrued salaries whereas, in the second quarter ended June 30, 2002, the costs reflected the value of various financial and marketing consultants who were assisting the company in making it ready for the SB2 filing and expanding its product set and sales opportunities. Legal and accounting expenses were $57,996 in the three months ended June 30, 2003 versus $165,877 in the three month period ended June 30, 2002. The decrease between the periods was primarily due to reduced audit fees as a result of the groundwork that had been laid during the company's extended SB 2 process. Likewise the Company had lower legal fees due to the end of the SB 2 process. Management fees and financial advisory fees in the period ended June 30, 2003 were nil versus $52,452 and $150,000 respectively in the quarter ended June 30, 2002. The financial advisory charges were directly related to the costs of retaining Danson Associates to assist in bringing the company up to SEC standards in accounting and finance, the contract with Danson Associates expired at the end of February 2003. In the quarter ended June 30, 2003 the company incurred deprecation charges of $10,353 versus $6,935 in the quarter ended June 30, 2002. These charges were related to primarily computer equipment in use in the company's offices. 35 OTHER INCOME/EXPENSES In the quarter ended June 30, 2002 the company realized a gain of $96,334 on the early extinguishment of debt related to the short term loan from DCD Group. In the quarter ended June 30, 2003 there was no corresponding event. Interest income from cash on deposit was $1,354 in the quarter ended June 30, 2003 versus $42 in the quarter ended June 30, 2002. Interest expense was much higher in the period ended June 30, 2003 at $148,778 than in the comparative period ended June 30, 2002 which was $54,218. In the current quarter the company incurred imputed interest charges related to the Equity Line of Credit and interest costs on the Berra term loan whereas in the quarter ended June 30, 2002 the interest expense was related to several term loans including the Berra note and a convertible debenture obtained from an unrelated party. The company recorded a foreign exchange gain of $1,006 for the three months ended June 30, 2003 as a result of the decline of the US dollar in relation to the Canadian Dollar. In the quarter ended June 30, 2002 the company had a foreign exchange loss of $11,272 in respect of the decline of the Canadian dollar versus the US dollar. NET LOSS FROM CONTINUING OPERATIONS. As a result of the items specified above, the Company incurred a net loss of $1,283,895 or 0.01 cent per share versus a loss of $1,286,067 or 0.02 cents per share in the second quarter of 2002. NET INCOME (LOSS) DISCONTINUED OPERATIONS The company recorded a net gain on discontinued operation from the sale of Ignition Entertainment Limited of $2,396,009 in the quarter ended June 30, 2003 versus a loss on discontinued operations of $211,959 for the quarter ended June 30, 2002. As a result of the divestiture of Ignition the company earned net income of $1,112,114 for the quarter ended June 30, 2003 versus a net loss of $1,498,026 in the quarter ended June 30, 2002. This resulted in a earnings per share of 1 cent per diluted share for the quarter ended June 30, 2003 versus a loss of 1 cent per share in the quarter ended June 30, 2002. LIQUIDITY AND CAPITAL RESOURCES Prior to December 31, 2001 the company financed its operations through a combination of convertible securities and the private placement of shares. In the fiscal year ended December 31, 2002 the company entered into several financing arrangements. These included an equity line of credit with Cornell Capital Partners LP for $10,000,000 and factoring and letter of credit facilities with DcD Group to assist in providing working capital for Ignition Entertainment Limited. This latter arrangement has been cancelled as at the quarter ended June 30, 2003. In the third quarter of 2003, the company obtained the first $500,000 tranche of a planned $2,000,000 term debt offering. With the divestiture of Ignition our need for cash to fund operations has been reduced substantially with most of the need to repay extended payables and to fund day to day operations until our product sales and service revenues are sufficient to meet operating costs and the costs of remaining a public company. As of June 30, 2003, our need for cash included satisfying $1,745,980 of current liabilities which consisted of accounts payable of $680,872, $91,371 of accrued liabilities, taxes payable of $155,371, and other current liabilities of $2,856, accrued interest of $11,909, the current portion of leases payable of $20,154, amounts payable to related parties of $76,427 and notes payable of $689,020. which includes an outstanding amounts to Berra, Cornell and a promissory note in the first quarter of 2003 for $221,824, which evidences the cash portion owed to a software licensor. The note will be repaid in nine equal installments of $25,203, commencing on June 1, 2003. As indicated in the liquidity section above the company subsequent to the quarter ended June 30, 2003 entered in to $500,000 term loan. In the quarter ended June 30, 2003 the only long term debt was the extended portion of leases payable of $15,855. The Company substantially reduced its short term and long term debt from the fiscal period ended December 31, 2002 through the issuance of the common shares that were due to the original shareholders of Ignition Entertainment and also from the conversion of shareholders loans, accrued expenses and unpaid salaries to several directors and officers. In the quarter ended June 30, 2003 Mr. MacDonald and Mr. Hamilton converted debts of $445,319.40 each into 17,804,976 restricted common shares each. Our independent accountants have issued a going concern opinion on our financial statements that raise substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent on our ability to raise additional bank or non-bank term and operating credit, 36 convertible debt, equity capital or access capital under the equity line and implement our business plan to market and sell our various enterprise software and services and our various consumer software titles through our wholly owned subsidiaries. At June 30, 2003 the Company had cash on hand of $754 versus $63,162 at the fiscal year end. In addition, as at the quarter end, certain shareholders have also supported the company to the extent of $76,427 and while there is no legal commitment for them to do so the company believes that certain shareholders will continue to support the company in a similar manner. These advances are shown in short term liabilities and they have no fixed terms for repayment. During February 2003, upon the Company's SB-2 registration becoming effective, the Company received $970,000 proceeds from the issuance of a $1 million promissory note to the Investment Bankers, net of a 3% cash fee of $30,000, which yields an effective interest rate of approximately 12% per annum. The promissory note is non-interest bearing and is to be paid in full within 95 calendar days. The Company has the discretion to repay the note either through cash received from the issuance of stock under the Equity Line of Credit Agreement or by cash from other sources. In connection with the note, the Company has agreed to escrow 10 requests for advances under the Equity Line of Credit Agreement in the amount not less than $100,000. The request will be held in escrow by an independent law firm, who will release such requests to the Investment Banker every 7 calendar days commencing on March 3, 2003 unless otherwise agreed between the Company and Cornell Capital. If this note is not fully paid when due, the outstanding principal balance owed will be payable in full together with interest at the rate of 24% per annum or the highest rate permitted by law, if lower. See below for partial repayment of this note. In April 2002, IVP Technology entered into an Equity Line of Credit Agreement with Cornell Capital Partners, L.P. Under this agreement, IVP Technology may issue and sell to Cornell Capital Partners common stock for a total purchase price of up to $10 million. Subject to certain conditions, IVP Technology will be entitled to commence drawing down on the Equity Line of Credit when the common stock to be issued under the Equity Line of Credit. On February 14, 2003 an SB2 that was filed by the company was declared effective by the SEC. Under the terms of the equity line of credit the company may provide notice to Cornell and Cornell will purchase from the company shares equal to 92% of the market price, which is defined as the lowest closing bid price of the common stock during the five trading days following the notice date. The amount of each advance is subject to an aggregate maximum advance amount of $425,000 in any thirty-day period Cornell Capital Partners is entitled to retain 3.0% of each advance. In April 2002, IVP Technology paid Cornell a one-time fee equal to $330,000, paid in the form of 3,032,000 shares of common stock. In addition, IVP Technology entered into a placement agent agreement with Westrock Advisors, Inc., a registered broker-dealer. Pursuant to the placement agent agreement, IVP Technology paid a one-time placement agent fee of 100,000 shares of common stock, which were valued at $0.20 per share, or an aggregate of $20,000, on the date of issuance. IVP Technology agreed to pay Danson Partners, LLC, a consultant, a one-time fee of $200,000 for its work in connection with consulting the company on various financial matters. Of the fee, $75,000 was paid in cash with the balance paid in 1,040,000 shares of common stock. To the end of June 2003, the Company has received under the Equity Line of Credit $525,000 in exchange for 12,424,404 shares of common stock. Except for the Equity Line of Credit, the company has no commitments for equity capital although the company continues to explore other funding alternatives in an effort to broaden its capital sources. The company anticipates that its cash needs over the next 12 months will consist of general working capital needs of $2,000,000, which would include the satisfaction of current liabilities of $1,745,980. As of June 30, 2003 the company had a working capital deficiency of $1,554,310. The company anticipates that its cash needs over the next 12 months will come primarily from a combination of operating credit lines, term loans, which may or may not be secured by assets, or contain conversion features which may lead to additional shares being issued, or the sale of equity under the Cornell equity line of credit. Draw downs on the equity line of credit may cause the share price to decline in value unless buyers are present to take up the supply of new shares entering the market. If the company is unable to obtain additional funding through our Equity Line of Credit facility or from other sources of debt and equity capital, then the failure to obtain this funding will have a material adverse effect on our business and this may force us to re-organize, reduce our investment in, or otherwise divest of one or more of our operations, or to reduce the cost of all operations to a lower level of expenditure which may have the effect of reducing our expected revenues and potentially net income in 2003 and 2004. 37 CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS The following chart sets forth IVP's contractual obligations and commercial commitments and the time frames for which such commitments and obligations come due.
PAYMENTS DUE BY PERIOD TOTAL LESS THAN AFTER CONTRACTUAL OBLIGATIONS TOTAL 1 YEAR 1-3 YEARS 4-5 YEARS 5 YEARS Current Obligations $ 1,649,399 $ 1,649,399 $ -- $ -- $ -- Convertible Debenture -- -- -- -- -- Leases Payable 36,009 20,154 15,855 -- -- Due to Related Parties 76,427 76,427 -- -- -- Operating Leases -- -- -- -- -- Montpelier Consulting Agreement -- -- -- -- -- Officer Contracts -- -- -- -- -- Software Licensing Contracts -- -- -- -- -- ---------- ---------- --------- --------- ------- Total Contractual Cash Obligations $1,761,835 $1,745,980 $ 15,855 $ -- $ -- ========== ========== ========= ========= =======
CAPITAL RESOURCES Pursuant to the Equity Line of Credit, the company may periodically sell shares of common stock to Cornell Capital Partners, L.P. to raise capital to fund its working capital needs. The periodic sale of shares is known as an advance. The company may request an advance every 5 trading days. A closing will be held 7 trading days after such written notice at which time the company will deliver shares of common stock and Cornell Capital Partners, L.P. will pay the advance amount, less the 3% retention. The company may request advances under the Equity Line of Credit once the underlying shares are registered with the Securities and Exchange Commission. Thereafter, the company may continue to request advances until Cornell Capital Partners has advanced $10.0 million or two years after the effective date of the registration statement, whichever occurs first. The amount of each advance is subject to an aggregate maximum advance amount of $425,000 in any thirty-day period. The amount available under the Equity Line of Credit is not dependent on the price or volume of our common stock. The company registered 30,000,000 shares of common stock in connection with the Equity Line of Credit and upon conversion of the debentures. The company cannot predict the actual number of shares of common stock that will be issued pursuant to the Equity Line of Credit, in part, because the purchase price of the shares will fluctuate based on prevailing market conditions and the company has not determined the total amount of advances the company intends to draw. Nonetheless, if the company issued all 30,000,000 shares of common stock at a recent price of $0.04 per share (which assumes that no shares would need to be issued upon conversion of debentures), then the company would receive $1,200,000 under the Equity Line of Credit (after deducting a 3% retention payable to Cornell). This is $8,800,000 less than is available under the Equity Line of Credit. The company's stock price would have to rise substantially for us to have access to the full amount available under the Equity Line of Credit. These shares would represent 20% of our outstanding common stock upon issuance. Accordingly, the company would need to register additional shares of common stock in order to fully utilize the $10 million available under the Equity Line of Credit at the current price of $0.19 per share. At a recent price of $0.04 per share, the company would be required to issue 250,000,000 shares of common stock in order to fully utilize the $10.0 million available. In April 2002, IVP Technology raised $150,000 of gross proceeds from the issuance of convertible debentures. These debentures accrue interest at a rate of 5% per year and mature two years from the issuance date. The debentures are convertible at the holder's option any time up to maturity at a conversion price equal to the lower of (i) 120% of the closing bid price of the common stock as of the closing date (ii) 80% of the average closing bid price of the common stock for the 4 lowest trading days of the 5 trading days immediately preceding the conversion date. At maturity, IVP Technology has the option to either pay the holder the outstanding principal balance and accrued interest or to convert the debentures into shares of common stock at a conversion price equal to the lower of (i) 120% of the closing bid price of the common stock as of the closing date or (ii) 80% of the average closing bid price of the common stock for the 4 lowest trading days of the 5 trading days immediately preceding the conversion date. IVP Technology has the right to redeem the debentures upon 30 days notice for 120% of the amount redeemed. Upon such redemption, IVP Technology will issue the investor a warrant to purchase 10,000 shares of common stock at an exercise price of $0.50 per share for every $100,000 of debentures that are redeemed. As is further disclosed in the company's financial statements 38 the company redeemed this convertible debenture and accrued interest in February 2003. On January 31, 2002, the company entered into an interim financing agreement for (pound)600,000, (U.S.$856,334) on an unsecured basis with the European based venture capital and merchant banking firm DcD Holdings Limited. The loan bears an interest rate equal to the HSBC Bank base rate, minus 5% if that figure is positive, and interest is payable monthly. The loan was due on April 30, 2002. On May 1, 2002, the company converted the loan, plus accrued interest into 4,000,000 shares of our common stock. CONSOLIDATED STATEMENT OF CASH FLOWS Cash on the balance sheet of IVP Technology Corporation decreased from $63,162 in December 2002 to $754 on June 30, 2003. While there was a net loss on operations of $182,389 in the six months ended June 30, 2003, there were net non-cash expense adjustments of $(1,288,066). In the period ended June 30, 2002, the non-cash adjustments were $1,580,737 consisting of amortization of a portion of the Classifier license agreement and stock issued for services. NET CASH USED IN OPERATING ACTIVITIES Net cash used in operating activities was $1,470,457 for the six months ended June 30, 2003 and $572,251 for the six months ended June 30, 2003. The use of cash in operating activities was principally the result of net losses during both reporting periods although in 2002 cash was primarily used to maintain a public listing and to service the Classifier and Orchestral PowerAudit distribution agreements while in 2003 the company was carrying on an active business. NET CASH USED IN INVESTING ACTIVITIES Net cash used by investing activities was $11,066 related to an increase in fixed assets in the six months ended June 30, 2003. NET CASH PROVIDED BY FINANCING ACTIVITIES During the six months ended June 30, 2003 the company raised cash of $1,295,691 from financing activities and repaid a notes payable, the convertible debenture from Cornell Capital and made a reduction on certain items payable to employees or shareholders together with lease payments to yield a net decrease in cash of 276,331 cash. In the same period in 2002 the company completed one transaction which consisted of borrowing $856,334 from DCD group which was subsequently converted to shares in May 2002. CRITICAL ACCOUNTING POLICIES ORGANIZATION The consolidated financial statements of IVP Technology Corporation d.b.a. ActiveCore Technologies, Inc. (formally Mountain Chef, Inc.) and consolidated subsidiaries (the "Company") include the accounts of the parent, IVP Technology Corporation, incorporated in the State of Nevada on February 11, 1994, and its subsidiaries: Springboard Technology Solutions, Inc. d.b.a. ActiveCore Technologies, Ltd. ("Springboard"), a Canadian company; and Erebus Corporation, an inactive company. The Company was granted an extra-provincial license by the Province of Ontario on June 20, 1995 to carry on business in Ontario, Canada. Prior to 1998, the Company was involved with various unsuccessful activities relating to the sale of technology products before becoming inactive by the end of 1997. The Company began negotiations with a third party in 1998 to become an exclusive distributor of software and therefore is considered to have re-entered the development stage on January 1, 1998. Activities from inception of development stage included raising capital and negotiations and acquisition of software distribution licenses. On January 1, 2002, the Company began operations and emerged from the development stage. The Company operates two units, enterprise and consumer. The enterprise unit develops, markets, licenses, installs and services data solutions. The consumer unit develops and publishes interactive software games designed for mobile phones, other handheld devices, web-sites, personal computers and video game consoles. The consumer unit also distributes games, hardware and accessories developed or manufactured by third parties. 39 OPERATIONS OF THE COMPANY - GOING CONCERN The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplates continuation of the Company as a going concern. The Company has a net loss of $182,389 and a negative cash flow from operations of $1,470,457 for the six months ended June 30, 2003. The Company also has a working capital deficiency of $1,554,310 and a stockholders' deficiency of $1,164,990. These matters raise substantial doubt about the Company's ability to continue as a going concern. Management's plan to continue in operation is to continue to attempt to raise additional debt or equity capital until such time the Company is able to generate sufficient operating revenue. In view of these matters, realization of certain of the assets in the accompanying condensed consolidated financial statements is dependent upon continued operations of the Company, which in turn is dependent upon the Company's ability to meet its financial requirements, raise additional capital, and the success of its future operations. Management believes that its ability to raise additional capital provides the opportunity for the Company to continue as a going concern. REVENUE RECOGNITION RISK AND UNCERTAINTIES A significant portion of all of the Company's net sales are derived from software publishing and distribution activities, which are subject to increasing competition, rapid technological change and evolving consumer preferences, often resulting in the frequent introduction of new products and short product lifecycles. Accordingly, the Company's profitability and growth prospects depend upon its ability to continually acquire, develop and market new, commercially successful software products and obtain adequate financing. If the Company is unable to continue to acquire, develop and market commercially successful software products, its operating results and financial condition could be materially adversely affected in the near future. REVENUE RECOGNITION Publishing revenue is derived from the sale of internally developed interactive software titles or from the sale of titles licensed from third-party developers. Publishing revenue amounted to $1,087,906 and $407,326 for the six months ended June 30, 2003 and 2002, respectively. Publishing revenues have been reclassified to gain (loss) from discontinued operations on the accompanying condensed consolidated statement of operations in connection with the sale of Ignition Entertainment, Ltd. (See Note 2). Distribution revenue is derived from the sale of third-party interactive software titles, accessories and hardware. Distribution revenue amounted to $103,051 and $90,000 for the six months ended June 30, 2003 and 2002, respectively. Revenues from Services and Commercial Software sold under licenses were $127,958 and $0 in the six months ended June 30, 2003 and 2002, respectively. The Company had no Services or Commercial Software sales in the corresponding period of 2002, because it had not yet acquired Springboard Technology Solutions, a Services and Commercial Software producing subsidiary. The Company recognizes revenue in accordance with Statement of Position ("SOP") 97-2 "Software Revenue Recognition", as amended by SOP 98-9 "Modification of SOP 97-2 Software Revenue Recognition with respect to Certain Transactions." SOP 97-2 provides guidance on applying generally accepted accounting principles in recognizing revenue on software transactions. SOP 98-9 deals with the determination of vendor specific objective evidence ("VSOE") of fair value in multiple element arrangements, such as maintenance agreements sold in conjunction with software packages. The Company's consumer software transactions generally include only one element, the interactive software game or commercial software under license. The Company recognizes revenue when the price is fixed and determinable; there is persuasive evidence of an arrangement, the fulfillment of its obligations under any such arrangement and determination that collection is probable. Accordingly, revenue is recognized when title and all risks of loss are transferred to the customer, which is generally upon receipt by customer. The Company's payment arrangements with its customers provide primarily 60 day terms and to a limited extent with certain customers 30 or 90 day terms. The Company does not have any multi-element arrangements that would require it to establish VSOE for each element, nor does the Company have any sales activity that requires the contract method of accounting. 40 The Company's distribution arrangements with customers generally do not give customers the right to return products; however, the Company at its discretion may accept product returns for stock balancing or defective products. In addition, the Company sometimes negotiates accommodations to customers, including price discounts, credits and product returns, when demand for specific products falls below expectations. The Company's publishing arrangements generally do not require the Company to accept product returns and provide price protection. The Company establishes a reserve for future returns and other allowances based primarily on its return policies, price protection policies and historical return rates. The Company may not have a reliable basis to estimate returns and price protection for certain customers or it may be unable to determine that collection of the receivable is probable. In such circumstances, the Company defers the revenues at the time of the sale and recognizes them when collection of the related receivable becomes probable or cash is received. Revenue from product sales is recognized when title passes to the customer, provided that: there are no uncertainties regarding customer acceptance; persuasive evidence of an arrangement exists; the sales price is fixed or determinable; and collectability is deemed probable. The Company provides for estimated product returns at the time of the product shipment, if necessary. In December 1999, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 101, Revenue Recognition in Financial Statements, which establishes guidance in applying generally accepted accounting principles to revenue recognition in financial statements and is effective beginning with the fourth quarter of the year ended December 31, 2000. The Company has determined that its existing revenue recognition practices comply with the requirements of SAB 101 for all periods presented. RECENT ACCOUNTING PRONOUNCEMENTS In November 2002, the EITF reached a consensus on Issue 00-21, addressing how to account for arrangements that involve the delivery or performance of multiple products, services, and /or rights to use assets. Revenue arrangements with multiple deliverables are divided into separate units of accounting if the deliverables in the arrangement meet the following criteria: (1) the delivered item has value to the customer on a stand-alone basis; (2) there is objective and reliable evidence of the fair value of undelivered items; and (3) delivery of any undelivered items is probable. Arrangement consideration should be allocated among the separate units of accounting based on their relative fair values, with the amount allocated to the delivered item being limited to the amount that is not contingent on the delivery of additional items or meeting other specified performance conditions. The final consensus will be applicable to agreements entered into in fiscal periods beginning after June 15, 2003 with early adoption permitted. In December 2002, the Financial Accounting Standards Board issued Statement No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure - an amendment of FASB Statement No. 123," ("SFAS 148"). SFAS 148 amends FASB Statement No. 123, "Accounting for Stock Based Compensation" ("SFAS 123") and provides alternative methods for accounting for a change by registrants to the fair value method of accounting for stock-based compensation. Additionally, SFAS 148 amends the disclosure requirements of SFAS 123 to require disclosure in the significant accounting policy footnote of both annual and interim financial statements of the method of accounting for stock based-compensation and the related pro forma disclosures when the intrinsic value method continues to be used. The statement is effective for fiscal years beginning after December 15, 2002, and disclosures are effective for the first fiscal quarter beginning after December 15, 2002. In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities". SFAS No. 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities". The changes in SFAS No. 149 improve financial reporting by requiring that contracts with comparable characteristics be accounted for similarly. This statement is effective for contracts entered into or modified after June 30, 2003 and all of its provisions should be applied prospectively. In May 2003, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 150, "Accounting For Certain Financial Instruments with Characteristics of both Liabilities and Equity". SFAS No. 150 changes the accounting for certain financial instruments with characteristics of both liabilities and equity that, under previous pronouncements, issuers could account for as equity. The new accounting guidance contained in SFAS No. 150 requires that those instruments be classified as liabilities in the balance sheet. SFAS No. 150 affects the issuer's accounting for three types of freestanding financial instruments. One type is mandatorily redeemable shares, which the issuing company is obligated to buy back in exchange for cash or other assets. A second type includes put options and forward purchase contracts, which involves instruments that do or may require the issuer to buy back some of its shares in exchange for cash or other assets. The third type of instruments that are liabilities under this Statement is obligations that can be settled with 41 shares, the monetary value of which is fixed, tied solely or predominantly to a variable such as a market index, or varies inversely with the value of the issuers' shares. SFAS No. 150 does not apply to features embedded in a financial instrument that is not a derivative in its entirety. Most of the provisions of Statement 150 are consistent with the existing definition of liabilities in FASB Concepts Statement No. 6, "Elements of Financial Statements". The remaining provisions of this Statement are consistent with the FASB's proposal to revise that definition to encompass certain obligations that a reporting entity can or must settle by issuing its own shares. This Statement shall be effective for financial instruments entered into or modified after May 31, 2003 and otherwise shall be effective at the beginning of the first interim period beginning after June 15, 2003, except for mandatorily redeemable financial instruments of a non-public entity, as to which the effective date is for fiscal periods beginning after December 15, 2003. The Company believes that the adoption of the above pronouncements will, not have a material effect on the Company's condensed consolidated financial position or results of operations. 42 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Not applicable. ITEM 2. CHANGES IN SECURITIES RECENT SALES OF UNREGISTERED SECURITIES The Company made the following issuances of unregistered securities since January 1, 2003. On August 5, 2003, the Company announced that it had acquired the rights to build a cell phone game based on the "Zorro" character and trademark from Zorro Productions Inc. of California. A license agreement was entered into whereby the Company shall pay no royalties on the first $50,000 of net sales and subsequently the Company and the licensor shall share equally a royalty of 50% on net sales. There shall be no minimum royalty. The Company also entered into an agreement with an unrelated company to source additional "name brand" properties for cell phone game production and issued this unrelated company 2,000,000 shares of common stock as a consulting fee. These shares were issued on August 1, 2003 and were valued at $.033 per share, representing the closing market value on the date of grant. On July 31, 2003, the company announced that its wholly owned subsidiary ActiveCore Technologies Limited had received the first installment of $500,000 of a planned $2,000,000 term loan offering. Under the terms of the agreement, the first installment will accrue a 12% interest rate per annum and is repayable over a five-year term with no payments required in the first 12 months - the payments will be amortized over the remaining 48 months of the term loan. The loan is convertible into common stock of the Company at the rate of 4.5 shares for every 1 dollar of the loan balance due, excluding interest, remaining at the time of conversion. As additional consideration for the loan advance by the lender, the Company issued 500,000 warrants on July 30, 2003 to the lender for the purchase of 500,000 shares of common stock at a purchase price of $0.0312 per share. The fair value assigned to the warrant amounted to $0 and was determined using the Black-Scholes pricing model. The Company estimates the fair value of the warrant at the grant date by using the Black-Scholes option-pricing model with the following weighted average assumptions used for this grant; no dividend yield for all years; expected volatility of 9.3%; risk-free interest rate of 1.12%, and an expected life of 1 year. The warrants expire July 31, 2004. On July 14, 2003, the Company entered into a consulting agreement with an unrelated individual to provide services through June 2004. On August 1, 2003, the Company issued 4,000,000 shares of common stock to this consultant as compensation for services to be rendered. These shares were valued at $.033 per share, representing the closing market value on the date of grant. On July 10, 2003, the Company entered into a Letter of Intent to acquire the source code for a software product known as XML/Connector for the health care vertical from an unrelated company which is a Colorado and Toronto based software development company. As part of the terms and conditions, the Company will pay (CAD) $120,000 in cash in the form of a note payable. On August 1, 2003, the Company issued 500,000 shares of common stock to the acquiree. These shares were valued at $.033 per share representing the closing market value on the date of grant. In July 2003, the Company entered into a consulting agreement with an unrelated individual to provide services through June 2004. On August 1, 2003, the Company issued 150,000 shares of common stock to this consultant. These shares were valued at $.033 per share, representing the closing market value on the date of grant. In July 2003, the Company entered into employment agreements with two contractors related to cell phone game development and health care services. On August 1, 2003, each contractor was issued 500,000 shares of common stock as compensation in addition to ongoing salary costs. These shares were valued at $.033 per share, representing the closing market value on the date of grant. In July 2003, the Company issued 1,562,700 unregistered shares of common stock to an officer of the Company in lieu of cash in order to satisfy shareholder loans, expenses paid on behalf of the Company and accrued expenses. These shares were valued at $.033 per share, representing the closing market value on the date of grant. 43 During the six month period ended June 30, 2003, the Company issued 8,932,783 shares of common stock to the Investment Bankers for cash of $400,000 in connection with the Equity Line of Credit (See Note 6). The cash was applied against the $1 million promissory note payable to the Investment Bankers issued in February 2003. As of June 30, 2003, the remaining balance of the note payable to the Investment Banker totaled $600,000. On June 24, 2003, the Company issued 17,804,976 shares of common stock to the President of the Company in lieu of cash in order to satisfy shareholder loans, expenses paid on behalf of the Company and accrued salaries included in the amounts due to related parties on the accompanying condensed consolidated balance sheets. These shares were valued at $.025 per share, or an aggregate of $445,124 representing the market value on the date of grant. On June 24, 2003, the Company issued 17,804,976 shares of common stock to a director of the Company in lieu of cash in order to satisfy shareholder loans, expenses paid on behalf of the Company and accrued salaries included in the amounts due to related parties on the accompanying condensed consolidated balance sheets. These shares were valued at $.025 per share, or an aggregate of $445,124 representing the market value on the date of grant. On June 24, 2003, the Company issued 1,250,000 shares of common stock to four employees of the Company for payment of accrued compensation and bonuses. These shares were valued at $.025 per share, or an aggregate of $31,250 representing the market value on the date of grant. On June 24, 2003, the Company issued 3,000,000 shares of common stock to certain directors of the Company for director services for the period from June 2003 to June 2004. These shares were valued at $.025 per share, or an aggregate of $75,000 representing the market value on the date of grant. As of June 30, 2003, the Company has deferred $75,000 included in total stockholders' deficiency as deferred compensation and licensing fee on the accompanying condensed consolidated balance sheets. On June 24, 2003, the Company issued 300,000 shares of common stock to an unrelated consultant having a value of $7,500 for consulting services. These shares were valued based upon the market value on the date of grant. On June 24, 2003, the Company issued 2,000,000 shares of common stock to an unrelated party in connection with an agreement to provide investor relations services. These shares were valued at $.025 per share, or an aggregate of $50,000 representing the market value on the date of grant. As of June 30, 2003, the Company has deferred approximately $33,000 included in deferred consulting expense on the accompanying condensed consolidated balance sheet. On June 24, 2003, the Company issued 5,000,000 shares of common stock to an unrelated consultant as consideration for an agreement to provide consulting services from June 2003 to June 2004. These shares were valued at $.025 per share, or an aggregate of $125,000 on the date of grant. On June 24, 2003, the Company issued 50,000,000 shares of common stock to the former shareholders of Ignition Entertainment, Ltd. in accordance with the original May 28, 2002 purchase agreement. The acquisition was made pursuant to the Company agreeing to issue 15,000,000 shares of common stock and 3,500,000 shares of preferred stock convertible into 35,000,000 shares of common stock; collectively valued at $0.23898 per share for a total purchase price of $11,949,155. The issuance of these 50,000,000 shares of common stock relieved $11,949,155 in preferred and common stock to be issued as of April 1, 2003. (See Note 2, Discontinued Operations for details on the acceleration of the issuance of these shares and the sale agreement of Ignition Entertainment Ltd.) On June 24, 2003, the Company issued 5,180,000 shares of common stock to two unrelated parties to obtain financing for the Company. Financing costs included in interest expense for the six months ended June 30, 2003 totaled $129,500 representing the market value on the date of grant. On June 24, 2003, the Company issued 500,000 shares of common stock that were released from escrow to an individual for services rendered from November 2002 to November 2003. The Board of Directors resolved that these shares are considered earned as of June 24, 2003. These shares were valued at $.025 per share, or an aggregate of $13,500 representing the market value on the date of grant. On May 28, 2003, the Company amended the Articles of Incorporation to increase the total number of authorized common and preferred stock to 500,000,000 and 50,000,000 shares, respectively. 44 On April 23, 2003, the Company issued 3,491,620 shares of common stock to the Investment Bankers for cash of $125,000 or $.036 per share. In 2002, the Company issued 50,000,000 shares of common stock to various officers and directors of the Company in accordance with the stock purchase agreement with International Technology Marketing ("ITM"). All shares were held in safekeeping pending the completion of an escrow agreement. As of December 31, 2002, 30,000,000 shares were earned and were released from escrow. The Company has accelerated the issuance of the final 20,000,000 shares from escrow. These 20,000,000 shares were released from escrow as stock-based compensation on June 30, 2003 and were valued at $.027, or an aggregate of $540,000 on the date of sale. On February 18, 2003, the Company issued 168,889 shares of common stock to the Investment Banker for payment of penalties for not completing the SB-2 filing by the due date of July 2, 2002 per the terms of the Equity Line of Credit Agreement. These shares were valued at $0.13 per share or an aggregate of $21,956, representing the closing market value on the date of grant. On February 18, 2003, the Company issued 114,408 share of common stock to a consultant for payment of $15,000 of consulting services accrued at December 31, 2002 as common stock to be issued included in currently liabilities in the accompanying consolidated balance sheet as of December 31, 2002. These share were valued at $0.13 per share representing the closing market value on the date of grant. During March 2003, the Company issued 2,155,964 shares of common stock to the Investment Bankers for cash of $150,000 or $.07 per share, in connection with the Equity Line of Credit. With respect to the sale of unregistered securities referenced above, all transactions were exempt from registration pursuant to Section 4(2) of the Securities Act of 1933 (the "1933 Act"), and Regulation D promulgated under the 1933 Act. In each instance, the purchaser had access to sufficient information regarding IVP Technology so as to make an informed investment decision. More specifically, IVP Technology had a reasonable basis to believe that each purchaser was an "accredited investor" as defined in Regulation D of the 1933 Act and otherwise had the requisite sophistication to make an investment in IVP Technology's securities. ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On May 28, 2003, the Company held its 2002 annual shareholders meeting. At the meeting, Brian MacDonald, Peter Hamilton and J. Stephen Smith were elected to the board of directors. In addition, the shareholders voted to increase the Company's authorized common stock to 500,000,000 shares. In connection with the re-election of the directors, there were 73,111,302 shares voted in favor of the directors, no votes against and 130,830 abstentions. In connection with the increase in authorized common stock, there were 71,390,374 shares voted in favor, 1,847,758 votes against and 4,000 abstentions. ITEM 5. OTHER INFORMATION Not applicable. 45
ITEM 6. SUBSEQUENT EVENTS, EXHIBITS AND REPORTS ON FORM 8-K (A) EXHIBITS. 2.1 Agreement and Plan of Reorganization dated March 21, Incorporated by reference to Exhibit 4.1 to 2000 between IVP Technology Corporation and Erebus IVP Technology's Form 8-K12G3 filed on Corporation April 19, 2000 3.1 Certificate of Amendment of Articles of Incorporation Incorporated by reference to Exhibit 3.1 to IVP Technology's Form 10-KSB filed on April 15, 2002 3.2 Bylaws Incorporated by reference to Exhibit 3.2 to IVP Technology's Amendment No. 2 to the Form SB-2 filed on November 14, 2002 3.3 Certificate of Amendment of Articles of Incorporation Provided herewith 4.4 Description of Securities Incorporated by reference to Exhibit 4.4 to IVP Technology's Form S-8 filed on July 23, 2001 10.4 Second Amending Agreement to Software Distribution Incorporated by reference to Exhibit 10.4 to Agreement dated as of May 31, 2000 between the IVP Technology's Form 10-QSB filed on Registrant and Orchestral Corporation September 24, 2000 10.5 Service Bureau Arrangement Agreement dated September Incorporated by reference to Exhibit 10.5 to 28, 2000 between the Registrant and E-RESPONSES.COM IVP Technology's Form 10-QSB filed on November 14, 2000 10.6 Stock Purchase Agreement dated September 17, 2001 Incorporated by reference to Exhibit 10.6 to among the Registrant, International Technology IVP Technology's Form 10-KSB filed on Marketing, Inc., Brian MacDonald, Peter Hamilton, April 15, 2002 Kevin Birch, Sherry Bullock, and Geno Villella 10.7 Agreement dated May 15, 2000 between the Registrant Incorporated by reference to Exhibit 10.7 to and Rainbow Investments International Limited IVP Technology's Form 10-KSB filed on April 15, 2002 10.8 Employment Agreement dated August 30, 2001 between Incorporated by reference to Exhibit 10.8 to International Technology Marketing, Inc. and Brian J. IVP Technology's Form 10-KSB filed on MacDonald April 15, 2002 10.9 Agreement dated February 12, 2002 between the Incorporated by reference to Exhibit 10.9 to Registrant and SmartFOCUS Limited IVP Technology's Form 10-KSB filed on April 15, 2002 10.10 Warrant Agreement dated May 15, 2000 between the Incorporated by reference to Exhibit 10.10 to Registrant and Rainbow Investments International IVP Technology's Form 10-KSB filed on Limited April 15, 2002 10.11 Convertible Promissory Note dated May 2000 between Incorporated by reference to Exhibit 10.11 to the Registrant and Rainbow Investments International IVP Technology's Form 10-KSB filed on Limited April 15, 2002 46 10.12 Software Distribution Agreement dated December 28, Incorporated by reference to Exhibit 10.12 to 2001 between the Registrant and TIG Acquisition IVP Technology's Form 10-KSB filed on Corporation April 15, 2002 10.13 Loan Agreement dated January 16, 2002 between the Incorporated by reference to Exhibit 10.13 to Registrant and DCD Holdings Limited IVP Technology's Form 10-KSB filed on April 15, 2002 10.14 Agreement for the Provision of Marketing Services Incorporated by reference to Exhibit 10.1 to dated May 3, 2002 between the Registrant and Vanessa IVP Technology's Form S-8 filed with the SEC Land on May 3, 2002 10.15 Reserved 10.16 Employment Agreement dated August 30, 2001 between Incorporated by reference to Exhibit 10.16 to International Technology Marketing, Inc. and Geno IVP Technology's Form 10-KSB filed on Villella April 15, 2002 10.17 Employment Agreement dated August 30, 2001 between Incorporated by reference to Exhibit 10.17 to International Technology Marketing, Inc. and Kevin IVP Technology's Form 10-KSB filed on Birch April 15, 2002 10.18 Employment Agreement dated August 30, 2001 between Incorporated by reference to Exhibit 10.18 to International Technology Marketing, Inc. and Peter J. IVP Technology's Form 10-KSB filed on Hamilton April 15, 2002 10.19 Employment Agreement dated August 30, 2001 between Incorporated by reference to Exhibit 10.19 to International Technology Marketing, Inc. and Sherry IVP Technology's Form 10-KSB filed on Bullock April 15, 2002 10.20 Loan and Security Agreement dated July 30, 2001 among Incorporated by reference to Exhibit 10.20 to the Registrant, Clarino Investments International IVP Technology's Form 10-KSB filed on Ltd., and Berra Holdings Ltd. April 15, 2002 10.21 Consulting and Advisory Extension Agreement dated Incorporated by reference to the Exhibit to February 14, 2001 between the Registrant and Barry IVP Technology's Form 10-QSB filed on May 21, Gross D/B/A Gross Capital Associates 2001 10.22 Letter Agreement dated June 28, 2001, between the Incorporated by reference to Exhibit 4.1 to Registrant and Andris Gravitis IVP Technology's Form S-8 filed on July 23, 2001 10.23 Letter Agreement dated June 28, 2001, between the Incorporated by reference to Exhibit 4.2 to Registrant and Thomas Chown IVP Technology's Form S-8 filed on July 23, 2001 10.24 Letter Agreement dated May 30, 2001, between the Incorporated by reference to Exhibit 4.3 to Registrant and Ruffa & Ruffa, P.C. for Modification IVP Technology's Form S-8 filed on July 23, of Retainer Agreement 2001 10.25 Consulting Agreement dated September 1, 2000 between Incorporated by reference to Exhibit 13.1 to the Registrant and Barry Gross d/b/a Gross Capital IVP Technology's Form 10-KSB filed on July 5, Associates 2001 10.26 Consulting and Advisory Agreement dated September 25, Incorporated by reference to Exhibit 13.2 to 2000 between the Registrant and Koplan Consulting IVP Technology's Form 10-KSB filed on July 5, Corporation 2001 47 10.27 Warrant Agreement dated April 3, 2002 between the Incorporated by reference to Exhibit 10.27 to Registrant and Cornell Capital Partners LP IVP Technology's Form 10-KSB filed on April 15, 2002 10.28 Equity Line of Credit Agreement dated April 3, 2002 Incorporated by reference to Exhibit 10.28 to between the Registrant and Cornell Capital Partners LP IVP Technology's Form 10-KSB filed on April 15, 2002 10.29 Registration Rights Agreement dated April 3, 2002 Incorporated by reference to Exhibit 10.29 to between the Registrant and Cornell Capital Partners, IVP Technology's Form 10-KSB filed on LP April 15, 2002 10.30 Escrow Agreement dated April 3, 2002 among the Incorporated by reference to Exhibit 10.30 to Registrant, Cornell Capital Partners, LP, Butler IVP Technology's Form 10-KSB filed on Gonzalez, and First Union National Bank April 15, 2002 10.31 Securities Purchase Agreement dated April 3, 2002 Incorporated by reference to Exhibit 10.31 to among the Registrant and the Buyers IVP Technology's Form 10-KSB filed on April 15, 2002 10.32 Escrow Agreement dated April 3, 2002 among the Incorporated by reference to Exhibit 10.32 to Registrant, the Buyers, and First Union National Bank IVP Technology's Form 10-KSB filed on April 15, 2002 10.33 Debenture Agreement Dated April 3, 2002 between the Incorporated by reference to Exhibit 10.33 to Registrant and Cornell Capital Partners LP IVP Technology's Form 10-KSB filed on April 15, 2002 10.34 Investor Registration Rights Agreement dated April 3, Incorporated by reference to Exhibit 10.34 to 2002 between the Registrant and the Investors IVP Technology's Form 10-KSB filed on April 15, 2002 10.35 Placement Agent Agreement dated April 3, 2002 among Incorporated by reference to Exhibit 10.35 to the Registrant, Westrock Advisors, Inc. and Cornell IVP Technology's Form 10-KSB filed on Capital Partners LP April 15, 2002 10.36 Letter Agreement dated February 20, 2002 between the Incorporated by reference to Exhibit 10.36 to Registrant and Buford Industries Inc. IVP Technology's Form 10-KSB filed on April 15, 2002 10.37 Letter Confirmation Agreement dated July 21, 2001 Incorporated by reference to Exhibit 10.37 to between the Registrant and Buford Industries Inc. IVP Technology's Form 10-KSB filed on April 15, 2002 10.38 Consulting Agreement dated March 1, 2002 between the Incorporated by reference to Exhibit 10.38 to Registrant and Danson Partners LLC IVP Technology's Form 10-KSB filed on April 15, 2002 10.39 Term Sheet between the Registrant and Cornell Capital Incorporated by reference to Exhibit 10.39 to Partners, LP Increasing the Commitment under the IVP Technology's Form SB-2 filed on May 15, Equity Line of Credit to $10 million 2002 10.40 Consulting Agreement dated February 12, 2002 between Incorporated by reference to Exhibit 10.40 to the Registrant and Danson Partners LLC IVP Technology's Form SB-2 filed on May 15, 2002 48 10.41 Escrow Agreement dated as of May 15, 2002 among the Incorporated by reference to Exhibit 10.41 to Registrant, Brian MacDonald, Peter Hamilton, Kevin IVP Technology's Form SB-2 filed on May 15, Birch, Sherry Bullock, and Gino Villella 2002 10.42 Termination letter dated June 13, 2002 between the Incorporated by reference to Exhibit 10.42 to Registrant and Orchestral Corporation IVP Technology's Form 10-QSB filed on August 19, 2002 10.43 Acquisition Agreement dated as of May 28, 2002 Incorporated by reference to Exhibit 10.43 to regarding the purchase of Ignition Entertainment IVP Technology's Form 10-QSB filed on August 19, 2002 10.44 Consulting Agreement dated as of June 1, 2002 Incorporated by reference to Exhibit 10.44 to Ignition Entertainment Limited and Montpelier IVP Technology's Form 10-QSB filed on August Limited 19, 2002 10.45 Amendment to Equity Line of Credit Agreement dated Incorporated by reference to Exhibit 10.45 to May 2002 between IVP Technology and Cornell Capital IVP Technology's Amendment No. 2 to the Form Partners SB-2 filed on November 14, 2002 10.46 Letter of Credit Facility dated as of April 10, 2002 Incorporated by reference to Exhibit 10.46 to between Revelate Limited and Ignition Entertainment IVP Technology's Amendment No. 2 to the Form Limited SB-2 filed on November 14, 2002 10.47 Debenture dated as of June 14, 2002 between Revelate Incorporated by reference to Exhibit 10.47 to Limited and Ignition Entertainment Limited IVP Technology's Amendment No. 2 to the Form SB-2 filed on November 14, 2002 10.48 Standard Conditions for Purchase of Debts dated May Incorporated by reference to Exhibit 10.48 to 23, 2002 between DCD Factors PLC and Ignition IVP Technology's Amendment No. 2 to the Form Entertainment Limited SB-2 filed on November 14, 2002 10.49 All Assets Debenture dated as of May 23, 2002 between Incorporated by reference to Exhibit 10.49 to DCD Factors PLC and Ignition Entertainment Limited IVP Technology's Amendment No. 2 to the Form SB-2 filed on November 14, 2002 10.50 Memorandum of Agreement dated as of July 1, 2002 Incorporated by reference to Exhibit 10.50 to between Springboard Technology Solutions Inc. and IVP IVP Technology's Amendment No. 2 to the Form Technology SB-2 filed on November 14, 2002 10.51 Heads of Agreement dated as of December 28, 2001 and Incorporated by reference to Exhibit 10.51 to amended on September 30, 2002 between TiG Acquisition IVP Technology's Amendment No. 2 to the Form Corporation and IVP Technology SB-2 filed on November 14, 2002 10.52 MDI Solutions Services Agreement (Interface Incorporated by reference to Exhibit 10.1 to Development Retainer Services) between Medical Data IVP Technology's Form 8-K filed with the SEC Integration Solutions group and Mount Sinai Hospital on April 1, 2003 entered into March 11, 2003 (Contract No. MDI02008) 10.53 MDI Solutions Services Agreement (Interface Incorporated by reference to Exhibit 10.2 to Development Retainer Services) between Medical Data IVP Technology's Form 8-K filed with the SEC Integration Solutions group and Mount Sinai Hospital on April 1, 2003 entered into March 11, 2003 (Contract No. MDI02009) 49 10.54 MDI Solutions Services Agreement (Interface Incorporated by reference to Exhibit 10.3 to Development Retainer Services) between Medical Data IVP Technology's Form 8-K filed with the SEC Integration Solutions group and Rouge Valley Health on April 1, 2003 System entered into September 12, 2002 (Contract No. MDI02003) 10.55 MDI Solutions Services Agreement (Interface Incorporated by reference to Exhibit 10.4 to Development Retainer Services) between Medical Data IVP Technology's Form 8-K filed with the SEC Integration Solutions group and Rouge Valley Health on April 1, 2003 System entered into September 12, 2002 (Contract No. MDI02004) 10.56 MDI Solutions Services Agreement (Interface Incorporated by reference to Exhibit 10.5 to Development Retainer Services) between Medical Data IVP Technology's Form 8-K filed with the SEC Integration Solutions group and York Central Hospital on April 1, 2003 entered into September 13, 2002 (Contract No. MDI02006) 10.57 MDI Solutions Services Agreement (Interface Incorporated by reference to Exhibit 10.6 to Development Retainer Services) between Medical Data IVP Technology's Form 8-K filed with the SEC Integration Solutions group and York Central Hospital on April 1, 2003 entered into September 13, 2002 (Contract No. MDI02007) 10.58 MDI Solutions Services Agreement (Interface Incorporated by reference to Exhibit 10.7 to Development Retainer Services) between Medical Data IVP Technology's Form 8-K filed with the SEC Integration Solutions group and St. Joseph's Medical on April 1, 2003 Centre entered into March 18, 2003 (Contract No. MDI03001) 10.59 MDI Solutions Services Agreement (Interface Incorporated by reference to Exhibit 10.8 to Development Retainer Services) between Medical Data IVP Technology's Form 8-K filed with the SEC Integration Solutions group and St. Joseph's Medical on April 1, 2003 Centre entered into March 18, 2003 (Contract No. MDI03002-Expires March 31, 2004) 10.60 MDI Solutions Services Agreement (Interface Incorporated by reference to Exhibit 10.9 to Development Retainer Services) between Medical Data IVP Technology's Form 8-K filed with the SEC Integration Solutions group and St. Joseph's Medical on April 1, 2003 Centre entered into March 18, 2003 (Contract No. MDI03002-Expires June 11, 2004) 10.61 Intentionally omitted Intentionally omitted 10.62 Developer and Distribution Agreement dated as of Incorporated by reference to Exhibit 10.1 to February 10, 2003 between the Company and Tira the Company's Form 8-K filed with the SEC on Wireless, Inc. February 27, 2003. 10.63 Letter of Intent dated as of July 10, 2003 Provided herewith between the Company and Karora 10.64 Promissory Note dated as of July 30, 2003 Provided herewith 10.65 Warrant Certificate dated as of July 30, 2003 Provided herewith 10.66 Conversion Privilege of Lender Provided herewith 10.67 General Security Agreement dated as of July 30, Provided herewith 2003 10.68 Guarantee Agreement dated as of July 30, 2003 Provided herewith 10.69 Consulting Agreement dated as of June 3, 2003 Provided herewith between the Company and Rodger J. Cowwan 10.70 Agreement dated as of May 1, 2003 between the Provided herewith Company and Hawk Associates, Inc. 10.71 Letter of Intent dated as of June 16, 2003 Provided herewith between the Company and ePocket Inc. 10.72 Consulting Agreement dated as of July 14, 2003 Provided herewith between the Company and Gerald Campbell 10.73 Letter of Intent dated as of June 16, 2003 Provided herewith between the Company and SCI Healthcare Group, Inc. 10.74 Merchandising License Agreement dated as of Provided herewith July 21, 2003 between the Company and Zorro Productions, Inc. 50 31.1 Certification re: Section 302 Provided herewith 32.1 Certification re: Section 906 Provided herewith
(B) REPORTS ON FORM 8-K. On August 8, 2003, the Company announced that it had entered into a Letter of Intent with E Communities UK Limited. On June 3, 2003, the Company announced that it intended to sell Ignition Entertainment. On April 1, 2003, the Company announced that its Medical Data Integration Solutions Group entered into service agreements with four Toronto hospitals. On February 27, 2003, the Company announced it entered into an agreement with Tira Wireless. 51 SIGNATURES Pursuant to the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. REGISTRANT: IVP TECHNOLOGY CORPORATION /S/ BRIAN MACDONALD August 27, 2003 - ----------------------------------------------------- By: Brian MacDonald President, Chief Executive Officer and Acting Chief Financial Officer 52 EX-3 3 ex-3_3.txt EXHIBIT 3.3 EXHIBIT 3.3 ----------- CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION OF ACTIVECORE TECHNOLOGIES, INC. ActiveCore Technologies, Inc., a Nevada corporation ("Corporation") by its President and Secretary, does hereby certify that a meeting of the Shareholders was duly called and held on the 28th day of May, 2003, at which meeting a quorum of the Shareholders was present in person or by proxy, and that by the affirmative vote of the holders of shares entitling them to exercise at least a majority of the voting power, being approximately seventy-six percent (76%) of the voting power of the Corporation, the following amendment to the Articles of Incorporation was adopted to supersede and take the place of the existing Article and any prior amendments thereto: Article 3 of the Articles of Incorporation is hereby amended by deleting Article 3 and adding a new Article 3, which shall read as follows: ARTICLE 3. SHARES OF STOCK --------------- (A) CLASSES OF STOCK. The Corporation is authorized to issue two classes of stock to be designated, respectively, "Common Stock" and "Preferred Stock." The total number of shares that the corporation is authorized to issue is Five Hundred and Fifty Million (550,000,000) shares, each with a par value of $0.001 Per share. Five Hundred Million (500,000,000) shares shall be Common Stock and Fifty Million (50,000,000) shares shall be Preferred Stock. (B) RIGHTS, PREFERENCES AND RESTRICTIONS OR PREFERRED STOCK. The Preferred Stock authorized by these Articles of Incorporation may be issued from time to time in one or more series. The Board of Directors of this Corporation is hereby authorized, within the limitations and restrictions prescribed by law or stated in these Articles of Incorporation, and by filing a certificate pursuant to applicable law of the State of Nevada, to provide for the issuance of Preferred Stock in series and (i) to establish from time to time the number of shares to be included in each such series; (ii) to fix the voting powers, designations, powers, preferences and relative, participating, optional or other rights of the shares of each such series and the qualifications, limitations of restrictions thereof, including but not limited to the fixing or alteration of the dividend rights, dividend rate, conversion rights, conversion rates, voting rights, rights and terms of redemption (including sinking fund provisions), the redemption price or prices and the liquidation preferences of any wholly unissued series of shares of Preferred Stock; and (iii) to increase or decrease the number of shares of any series subsequent to the issue of shares of that series, but not below the number of shares of such series then outstanding. In case the number of shares of any series shall be so decreased, the shares constituting such decrease shall resume the status, which they had prior to the adoption of the resolution originally fixing the number of shares of such series. (C) RIGHTS OF COMMON STOCK. The Common Stock authorized by these Articles of Incorporation shall be equal in all respects to every other share of the common stock of the corporation. IN WITNESS WHEREOF, this Certificate of Amendment of Articles of Incorporation of ActiveCore Technologies, Inc. has been executed this 17th day of June, 2003. - ------------------------------------------ Brian J. MacDonald, Its President - ------------------------------------------ Graham Lowman, Its Acting Secretary 2 EX-10 4 ex-10_63.txt EXHIBIT 10.63 EXHIBIT 10.63 ------------- [IVP LETTERHEAD] July 10th, 2003 TO: Mr. Peter Mcbride Karora Technologies, Inc. Toronto, Ontario LETTER OF INTENT The intent of this letter ("letter") is to summarize the result of recent discussions between the management of Karora and IVP Technology Corporation ("IVP") together (the "Parties") with respect to IVP's proposal to acquire a SOURCE CODE LICENSE for the product known as XML/CONNECTOR. Therefore, the principal purpose of this letter is to document the terms, in general, under which the transaction would take place subject to due diligence on the part of IVP and the approval of IVP's board of directors. It is understood by both parties that in the preparation of legal agreements that will give effect to this transaction certain arrangements to maximize the tax benefit or other benefits to both parties may need to be undertaken. Each of IV P and Karora will undertake to accommodate each other's requirements to the fullest extent possible provided however that neither company will knowingly fail to comply with any regulation or statute in either Canada or the US. PRINCIPAL TERMS AND CONDITIONS The principal terms and conditions for the proposed purchase of the Source Code License of XML/CONNECTOR are: o The source code license is exclusive in the Health Care vertical world wide o The source code license cannot be sold by IVP to a customer or any other vendor unless it is sold with the company o Karora cannot compete in the Health Care vertical nor sell a source code license to any other party that may compete with IVP Technology in the health care vertical. o A first right of refusal to buy any other vertical or the IPR o Karora to provide 5 days of no charge developer support o Karora to provide up to 120 hours of developer consulting at 50.00 Canadian dollars/hr o 500,000 common shares, these shares would be unregistered and subject to rule 144 of the SEC, will be granted to Karora o Cash payment of 120,000 Canadian dollars in the form of a note payable with terms of o 10,000 Canadian dollars already advanced o 10,000 Canadian dollars already advanced o 10,000 Canadian dollars on July 30th, 2003 o 40,000 Canadian dollars by Aug. 30th 2003 o 50,000 Canadian dollars by September 30, 2003 2 II. LOCK UP AND CONFIDENTIALITY It is hereby expressly agreed that Karora and any of its shareholders, managers or advisors will not engage in a process of seeking any other buyer for the source code. Karora also undertakes to refrain from discussing the potential acquisition of XML/Connector with any of IVP's competitors except as agreed to by IVP. III. ASSUMED CLOSING DATE: July 25, 2003 IV. CONDITIONS: The purchase of Karora's XMLConnector (Source Code) shall be subject to due diligence by IVP and its agents and the approval of IVP's board of directors and subject to counsel input from both IVP and Karora's legal and accounting advisors. SHARES: The shares provided as partial consideration in this transaction will initially be unregistered and subject to rule 144 of the SEC. CONFIDENTIALITY: IVP and Karora will undertake to use every effort to maintain the confidential nature of the proposed transaction pending mutual agreement as to any announcement however it is acknowledged that IVP must disclose the pending purchase as a result of SEC requirements however in any such announcements transaction details concerning cash and shares will not be provided. LITIGATION: To the best of knowledge of IVP and Karora, there is no action, claim or demand or other proceedings pending or threatened before any court or other administrative agency, which would materially and adversely affect Karora or IVP's right to access and use the source code to XMLConnector. DEFINITIVE DOCUMENTATION: It is understood that consummation of the transaction contemplated herein will be subject to the preparation; execution and delivery of a promissory note and a source code license agreement or such other documentation as may be deemed appropriate (the "Agreement") by legal and accounting counsel to IVP and Karora. APPLICABLE LAW: the Agreement to be consummated to give effect to the transaction herein shall be governed by and construed and interpreted in accordance with the laws of the Province of Ontario. As IVP is a public corporation traded on a recognized stock market in the United States and is a reporting entity within the United States of America in case of difference in 3 the regulatory treatment of financial, securities and accounting matters the laws and regulations of the US shall apply. ALL NOTICES under this Letter should be sent to: IVP TECHNOLOGY CORPORATION AT: Brian J. MacDonald, President and CEO 2275 Lakeshore Boulevard West Suite 401, Toronto, Ontario M8V 3Y3 Karora: Mr. Peter McBride President and CEO 30806 Tanoa Rd Evergeen, CO 80439 Date this /s/ 22 day of July 2003. ------ ---- EXECUTED: IVP TECHNOLOGY CORPORATION KARORA /s/ [Brian MacDonald] /s/ [Illegible Signature] - -------------------------------------- -------------------------------------- 4 EX-10 5 ex-10_64.txt EXHIBIT 10.64 EXHIBIT 10.64 ------------- PROMISSORY NOTE PRINCIPAL AMOUNT $ 500,000.00 U.S. 1. PRINCIPAL AMOUNT: For value received, ACTIVECORE TECHNOLOGIES LTD. (the "Borrower") of 2275 Lakeshore Blvd. W., Ste. 401, Toronto, Ontario M8V 3Y3, hereby promises to pay to or to the order of INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS LOCAL UNION 105 its successors and assigns (the "Lender") at Toronto, Ontario (or at such other place as the lender may from time to time designate by notice in writing to the Borrower) the aggregate principal amount of $ 500,000.00 U.S., (the "Principal Amount") on the following terms: (a) the term of this loan (the "term") shall be for a period of five (5) years from the date of closing; (b) no principal repayments shall be required for the first year of the term commencing from the date of closing but interest at the rate of 12% will be due at the end of the first year of the term; following the expiry of the first year of the term hereunder, the principal balance then outstanding shall be amortized over the f remaining four (4) years of the term and be repayable in forty-eight (48) equal monthly instalments of principal together with accrued interest payable in arrears at the end of each year of the term hereunder; (c) interest shall be fixed over the said five year term at the rate of 12% per annum; (d) the outstanding balance may be prepaid at anytime during the term hereof without notice or bonus, provided that a minimum payment of 12% interest per annum for the first year of the term is paid, or has been paid, to the Lender. 2. CLOSING DATE: The "Closing Date" hereunder shall be that date on which the loan proceeds are advanced to the Borrower, or to the Borrower's solicitor in trust, following release of the proceeds from any escrow or trust relationship. 3. AMENDMENTS: No amendment, modification or waiver of any provision of this promissory note or consent to any departure by the Borrower from any provision of this promissory note is effective unless it is in writing and signed by the Lender and then the amendment, modification, waiver or consent shall be effective only in respect of the specific instance and for the specific purpose for which it is given. 2 4. APPLICABLE LAW: This promissory note shall be governed by and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein. The parties agree that any action under or for the enforcement of this promissory note may be brought in the courts of the Province of Ontario, and the parties attorn to the exclusive jurisdiction of those courts. 5. WAIVER OF BENEFITS: The Borrower hereby waives the benefits of demand and presentment for payment, notice of non-payment, protest and notice of protest of this promissory note. 6. SECURITY OF LENDER: (a) The repayment of this promissory note, and all sums for principal and interest due hereunder shall be secured by a first position General Security Agreement over all assets of the Borrower in favour of the Lender, excluding leased equipment. (b) The Borrower and the Lender acknowledge and agree that further loan advances to the Borrower from other Lenders are contemplated and that such additional loan advances shall also be secured under the said General Security Agreement granted by the Borrower in favour of the Lender, such further advances to rank pari passu with the existing loan advance up to a maximum amount of $2,000,000.00 U.S. in total indebtedness from all Lenders. IN WITNESS WHEREOF the Borrower has executed this promissory note as of the 30th day of July, 2003. ACTIVECORE TECHNOLOGIES LTD. Per /s/ [Brian MacDonald] -------------------------------- Authorized d Signing Officer 2 EX-10 6 ex-10_65.txt EXHIBIT 10.65 EXHIBIT 10.65 ------------- 500,000 Common Share Purchase Warrants - ------- WARRANT CERTIFICATE WHEREAS the undersigned holder (the "Lender") of this Warrant Certificate has made a loan advance of $500,000.00 U.S. to Activecore Technologies Ltd. (the "Borrower"), a corporation incorporated under the laws of the Province of Ontario and a wholly-owned subsidiary of IVP TECHNOLOGY CORPORATION, (the "Corporation") a public corporation of the State of Nevada in the United States of America; AND WHEREAS in consideration of the aforesaid loan advance by the Lender to the Borrower pursuant to a Term Sheet For Secured Financing accepted the 25th day of July, 2003, it was agreed that the Corporation would provide common share purchase warrants to the undersigned holder in accordance with the terms and conditions set out hereinafter; NOW THEREFORE, in consideration of the aforesaid loan advance by the Lender to the Borrower, and such other good and valuable consideration, THIS IS TO CERTIFY THAT, for value received, the Corporation agrees, subject to the terms and conditions hereinafter expressed, to sell and deliver to the holder of this Warrant Certificate one fully paid and non-assessable common share of the Corporation for each warrant represented hereby, together with the execution of the Subscription Form attached hereto. The following are the terms and conditions hereof: (1) WARRANT PROVISION: The holder of this Certificate shall be entitled to 500,000 common share purchase warrants based on one (1) warrant to purchase one (1) share of IVP Technology Corporation for each one U.S. Dollar advanced to the Borrower. (2) WARRANT EXERCISE PRICE: Each warrant is exercisable and exchangeable into one (1) common share of the Corporation at the closing price of the common shares of the Corporation on the closing date plus a 20% premium above such closing price. (3) WARRANT EXPIRY DATE: All warrants included under this Certificate shall expire at the close of business 365 days following the loan closing date. (4) REGISTERED STOCK: If the warrants hereunder are exercised in whole or in part, any common shares obtained as a result of the exercise thereof shall be made tradable one year after the date of closing of the loan transaction. (5) CONSOLIDATION, SUBDIVISION OR RECLASSIFICATION OF COMMON SHARES: If the Corporation between the date hereof and the Warrant Expiry Date consolidates its common shares into a lesser number of shares, subdivides its common shares into a greater number of shares, or reclassifies its common shares, then if and when the right to purchase is exercised, the bearer hereof shall have the right to receive such number of common shares as if the bearer hereof had exercised the right to purchase hereunder before such event occurred. (6) PAYMENT OF PURCHASE PRICE: Payment of the purchase price shall be made by certified cheque, bank draft or money order to the order of the Corporation. (7) NOT A SHAREHOLDER: The holding of this Warrant Certificate shall not constitute the holder thereof as a shareholder of the Corporation. (8) EXERCISABLE IN WHOLE OR IN PART: The holder of this Certificate may subscribe for and purchase any lesser number of common shares than the number of common shares provided for purchase under this Certificate and in such event shall be entitled to receive a new Certificate or Certificates representing the balance of warrants evidenced by this Certificate. DATED this 30th day of July, 2003. Issued To as of the date hereof: INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS LOCAL UNION 105. Authorized on July 30, 2003 by IVP TECHNOLOGY CORPORATION. per /s/ Brian MacDonald --------------------------------- Chairman and CEO Brian MacDonald 2 (4) REGISTERED STOCK: If the warrants hereunder are exercised in whole or in part, any common shares obtained as a result of the exercise thereof shall be made tradable one year after the date of closing of the loan transaction. (5) CONSOLIDATION, SUBDIVISION OR RECLASSIFICATION OF COMMON SHARES: If the Corporation between the date hereof and the Warrant Expiry Date consolidates its common shares into a lesser number of shares, subdivides its common shares into a greater number of shares, or reclassifies its common shares, then if and when the right to purchase is exercised, the bearer hereof shall have the right to receive such number of common shares as if the bearer hereof had exercised the right to purchase hereunder before such event occurred. (6) PAYMENT OF PURCHASE PRICE: Payment of the purchase price shall be made by certified cheque, bank draft or money order to the order of the Corporation. (7) NOT A SHAREHOLDER: The holding of this Warrant Certificate shall not constitute the holder thereof as a shareholder of the Corporation. (8) EXERCISABLE IN WHOLE OR IN PART: The holder of this Certificate may subscribe for and purchase any lesser number of common shares than the number of common shares provided for purchase under this Certificate and in such event shall be entitled to receive a new Certificate or Certificates representing the balance of warrants evidenced by this Certificate. DATED this 30th day of July, 2003. Issued To as of the date hereof: INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS LOCAL UNION 105. Authorized on July 30, 2003 by IVP TECHNOLOGY CORPORATION. per /s/ Brian MacDonald ---------------------------------- Chairman and CEO Brian MacDonald 3 EX-10 7 ex-10_66.txt EXHIBIT 10.66 EXHIBIT 10.66 ------------- CONVERSION PRIVILEGE OF LENDER WHEREAS INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS LOCAL UNION 105 (the "Lender") has made a loan advance of $500,000.00 U.S. by way of a Promissory Note dated the 30th day of July, 2003, to ACTIVECORE TECHNOLOGIES LTD. (the "BORROWER"), a wholly-owned subsidiary of IVP TECHNOLOGY CORPORATION, (the "CORPORATION"); In consideration of said loan advance by the Lender to the Borrower, and such other good and valuable consideration, the Corporation does hereby undertake and agree with the Lender as follows: (1) During the first two (2) years of the term of the loan advance under the Promissory Note, at the sole option of the Lender, the Lender shall have the right to convert the outstanding balance due under the Promissory Note, excluding interest, into common shares of the Corporation at a conversion rate of 4.5 common shares for every U.S. dollar of the loan balance outstanding at the date of exercise of the conversion right. (2) The parties acknowledge and agree that the converted common shares shall become free trading common shares one (1) year after the loan advance date. In the event that the conversion privilege is exercised after one year from the date of the loan advance, then the converted common shares shall immediately become free trading. DATED this /s/ 30th day of July, 2003. INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS LOCAL UNION 105 ----------------------------------------------- Name: Title: ----------------------------------------------- Name: Title: ----------------------------------------------- Name: Title: IVP Technology Corporation /s/ Brian Macdonald ----------------------------------------------- Authorized Signing Officer Brian MacDonald EX-10 8 ex-10_67.txt EXHIBIT 10.67 EXHIBIT 10.67 ------------- GENERAL SECURITY AGREEMENT (ONTARIO) 1. PARTIES TO THIS SECURITY AGREEMENT ACTIVECORE TECHNOLOGIES LTD. 2275 Lakeshore Blvd. W., Suite 401, Toronto, ON M8V 3Y3 (hereinafter referred to as "DEBTOR") - and - INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS LOCAL UNION 105 685 Nebo Road, Hannon, ON L0R 1P0 (hereinafter referred to as "SECURED PARTY") 2. CREATION OF SECURITY INTEREST WHEREAS the Secured Party has provided financing to the Debtor pursuant to the terms of a Promissory Note dated the 30th day of July, 2003; AND WHEREAS it is contemplated that other Lenders may make loan advances to the Debtor to rank pari passu with the existing loan advance up to a maximum of $2,000,000.00 U.S. in total advances from all Lenders; (1) For value received and as a general and continuing collateral security for the payment of Indebtedness (as defined below), including any ultimate unpaid balance thereof, owed to the Secured Party and to secure the performance of the obligations under this security agreement or any Related Documents, the Debtor hereby grants to the Secured Party a security interest in all the Debtor's personal property as defined in the Personal Property Security Act, R.S.O. 1990, c. P.10 (the "PPSA"), and in the undertaking of the Debtor, which shall constitute Collateral, whether now owned or hereafter acquired directly or indirectly by the Debtor, whether now existing or hereafter arising, save and except any leased equipment of the Debtor, which leased equipment shall be excluded from the security provided hereunder. (2) Without limiting the foregoing, but for greater certainty, Collateral includes all of the following: (a) all Collateral described in the schedules attached to this security agreement and incorporated by reference in this security agreement; (no schedules attached); (b) all patents, trade marks, copyrights and other industrial and intellectual property; and (c) all statutory licences, quotas and other transferable rights, including an equitable right in the Collateral assigned or charged under the security agreement which might otherwise at law be incapable of being collateral creating a security interest. (3) Any reference to "Collateral" shall, unless the context requires otherwise, be deemed a reference to "Collateral or any part thereof". (4) This security interest shall not apply to, and Collateral shall not include leased equipment, or the last day of the term of any lease or agreement therefor but upon the enforcement of the security interest the Debtor shall stand possessed of such last day in trust to assign the same to any person acquiring such term. 3. DEFINITIONS (1) All phrases which are defined in the PPSA and not otherwise defined in this security agreement shall have the meaning ascribed by the PPSA, provided always that the term "goods" shall never include "consumer goods" of the Debtor as that term is defined in the PPSA. (2) "Indebtedness" shall mean all liabilities of every kind and description of the Debtor to the Secured Party, whether now or hereafter owed or any fixture advance, whether direct, indirect, contingent, and whether the Debtor be bound alone or with others and whether as principal or guarantor. (3) "Related Documents" shall mean the promissory notes, loan agreements, account agreements, guaranties, trust deeds, mortgages, other security agreements or any other documents executed in connection with this security agreement or Indebtedness or related to its operation or administration, whether already existing or executed now or later. 4. RIGHTS AND OBLIGATIONS OF DEBTOR 4.1 TITLE. The Debtor warrants and covenants that it holds title or has rights in the Collateral sufficient for a security interest to attach to the Collateral. 4.2 POSSESSION AND USE OF COLLATERAL. Subject to paragraph 6.2, until default or unless otherwise agreed with the Secured Party, the Debtor may deal with Collateral in the ordinary course of the Debtor's business in any manner consistent with the provisions of this security agreement. Except for inventory sold or accounts collected in the ordinary course of the Debtor's business the Debtor shall not sell or otherwise transfer the Collateral. All proceeds of the Collateral, whether or not arising in the ordinary course of the Debtor's business, will be received by the Debtor as trustee for the Secured Party and will be immediately paid to the Secured Party pursuant to the fiduciary obligation as trustee. The Debtor shall not encumber or permit the Collateral to be encumbered without the prior written consent of the Secured Party, other than by this security agreement. 2 4.3 REMOVAL OF COLLATERAL. The Collateral (or to the extent the Collateral consists of intangible property such as accounts, the records concerning the Collateral) is located at the address of the Debtor shown above. Except in the ordinary course of the Debtor's business, the Debtor shall not remove the Collateral from its location without the prior written consent of the Secured Party, which shall not be unreasonably withheld. 4.4 SECURITIES AS COLLATERAL. Where Collateral includes securities, the Secured Party may require the Debtor to transfer such securities into the Secured Party's name so that the Secured Party may appear of record as the sole owner of the securities. Until default, the Debtor may retain by way of proxy the voting and dividend rights attached to any such securities and the Secured Party will facilitate exercise of those dividend and voting rights. 4.5 PRESERVATION OF RIGHTS AND COLLATERAL. The Debtor shall defend its own and the Secured Party's rights in the Collateral against the claims and demands of all persons. The Debtor shall maintain the Collateral in a condition and state of repair that preserves the value of the Collateral, reasonable wear and tear excluded. The Debtor will not commit or permit damage to or destruction of the Collateral and will effect repair if it occurs. The Debtor shall procure and maintain policies of fire and other casualty insurance covering the Collateral on the basis and in at least the amount described above on terms satisfactory to the Secured Party and with loss payable to the Secured Party and Debtor jointly. 4.6 MATERIAL CHANGES IN INFORMATION. The Debtor shall notify the Secured Party promptly of: (a) any material change in the information contained in this agreement (including the schedules hereto) relating to the Debtor, the Debtor's business or Collateral, including any address change or establishment of an additional place of business; (b) the details of any change in name of the Debtor; (c) the details of any significant acquisition of Collateral; (d) the details of any claims or litigation affecting the Debtor or Collateral; (e) any loss of or damage to Collateral; (f) any default by any account debtor in its obligations with respect to Collateral. 4.7 DEBTOR'S CONDUCT. The Debtor will conduct its business and affairs in a proper and efficient manner, in accordance with applicable law and keep records in accordance with generally accepted accounting procedures. The Debtor shall pay all charges, such as taxes, assessments, claims, liens and encumbrances relating to the Collateral or the Debtor's business and affairs when the same become due. The Debtor will deliver to the Secured Party promptly such information concerning Collateral, the Debtor and the Debtor's business and affairs as the Secured Party may reasonably request. 3 4.8 PROTEST. The Debtor waives protest of any instrument constituting Collateral at any time held by the Secured Party on which the Debtor is in any way liable and, subject to the notice requirements of the PPSA, notice of any other action taken by the Secured Party. 4.9 JOINT AND SEVERAL LIABILITY. If more than one Debtor executes this security agreement the obligations of such Debtors hereunder shall be joint and several. 5. EVENTS OF DEFAULT The Debtor shall be in default under this security agreement or Related Documents upon occurrence of any of the following: (a) Non-payment when due, whether by acceleration or otherwise, of Indebtedness. (b) Failure to comply within seven days after written notice from the Secured Party demanding compliance with any provision contained in this security agreement or Related Documents and if compliance is not practically possible, failure to take steps that will produce compliance as soon as is reasonably practical. (c) Any warranty, representation or statement made or famished to the Secured Party by or on behalf of the Debtor proves in any material respect to have been false when made or furnished. (d) Bankruptcy or insolvency of the Debtor; the filing against the Debtor of a petition in bankruptcy; the making of an authorized assignment for the benefit of creditors by the Debtor; the appointment of a receiver, trustee, monitor, or liquidator for the Debtor or for any assets of the Debtor; or the institution by or against the Debtor of any type of insolvency proceeding or creditor rearrangement. (e) Death or declaration of incompetency of the Debtor (if the Debtor is an individual) or cessation of the Debtor's viability as a going business concern (if the Debtor is not an individual), which includes the cessation or threat by the Debtor to cease to carry on in the normal course of the Debtor's business or any material part thereof. (f) On the occurrence of such other events where the Secured Party considers in good faith and on commercially reasonable grounds that the Collateral is in jeopardy or that the Secured Party's position is insecure. 6. SECURED PARTY RIGHTS AND OBLIGATIONS 6.1 GENERAL RIGHTS. In addition to the rights granted herein, the Secured Party may enforce any other rights and remedies it may have at law or in equity, and specifically shall have all rights and remedies of a Secured Party under the PPSA. All rights and remedies of the Secured Party are cumulative and one or more of these rights may be exercised independently or in combination from time to time, including marshalling. 6.2 COLLECTION OF DEBTS FORMING PART OF COLLATERAL. The Secured Party may direct account debtors of the Debtor to make all payments owing to the Debtor on Collateral subject to the security interest directly to the Secured Party, by 4 notifying such account debtors of the Secured Party's interest, either before or after default. 6.3 INSPECTION OF COLLATERAL AND RIGHT OF ACCESS. The Secured Party shall have the right at any time to confirm the existence and state of the Collateral in any manner the Secured Party may consider appropriate and the Debtor agrees to furnish all assistance as the Secured Party may reasonably request in connection therewith. The Debtor grants to the Secured Party or its agents access to all places where Collateral may be located and to all premises occupied by the Debtor for the purposes of inspection or obtaining possession. 6.4 RECEIVERS AND OTHERS. The Secured Party may appoint by instrument or by application to a court of competent jurisdiction a receiver or other person to act on its behalf before or after default or in any insolvency or like proceeding (receiver includes a receiver-manager). The appointee has all the powers of the Secured Party under this security agreement. In addition, on instructions from the Secured Party, the receiver shall be entitled to carry on the business of the Debtor with all the powers that the Debtor would have to operate its business for such time as the receiver determines it advisable and in the best interest of the Secured Party. The Secured Party is not liable for any act or omission by a receiver appointed or selected by a court. 6.5 ACCELERATION. The Secured Party may declare all or any part of Indebtedness which is not by its terns payable on demand to be immediately due and payable on the occurrence of any default. 6.6 POSSESSION AND DISPOSITION OF COLLATERAL. The Secured Party may take possession or constructive possession of, collect, demand, sue on, enforce, recover and receive Collateral and give binding receipts and discharges therefor. The Secured Party in possession may use Collateral as it sees fit, subject to the duty of reasonable care contained in the PPSA providing that any income from Collateral is applied to the Debtor's account. Upon default, the Secured Party may also sell, lease or otherwise dispose of Collateral in any commercially reasonable manner. 6.6 POSSESSION AND DISPOSITION OF COLLATERAL. The Secured Party may take possession or constructive possession of, collect, demand, sue on, enforce, recover and receive Collateral and give binding receipts and discharges therefor. The Secured Party in possession may use Collateral as it sees fit, subject to the duty of reasonable care contained in the PPSA providing that any income from Collateral is applied to the Debtor's account. Upon default, the Secured Party may also sell, lease or otherwise dispose of Collateral in any commercially reasonable manner. 6.7 COSTS. The Debtor agrees to pay all charges, including solicitors', auditors', receivers' or like persons' costs and remuneration or other expenses reasonably incurred by the Secured Party or other party appointed by the Secured Party in operating the Debtor's accounts and in preparing or enforcing this security agreement. Such sums shall constitute a future advance increasing the Indebtedness hereunder. 5 6.8 DEFICIENCIES. The failure of the Secured Party to receive full payment or satisfaction of Indebtedness through its rights and remedies herein provided shall not in any way release the Debtor from the obligation to satisfy any deficiency, including any costs of realization. 6.9 WAIVERS. (1) No variation, amendment (except for any schedules which may be added hereto pursuant to the provisions of this agreement) or waiver of any provision of this security agreement shall be effective unless made by written agreement executed by the parties to this security agreement. (2) No delay or omission by the Secured Party in exercising any right or remedy hereunder or with respect to any Indebtedness shall operate as a waiver of that right or remedy and no single or partial exercise of any right or remedy shall preclude any other exercise of cumulative rights and remedies. (3) The Secured Party may remedy any default or perform any duty of the Debtor hereunder or with respect to any Indebtedness in any reasonable manner without waiving the default remedied and without waiving any other prior or subsequent default by the Debtor. 6.10 NOTICE OF INTENTION TO REALIZE. Prior to realization, there is an obligation on the Secured Party to deliver a notice of intention to realize to the Debtor under s.244 of the BANKRUPTCY AND INSOLVENCY ACT. Any events which trigger default, including those within paragraph 5(d), shall be deferred as required by that legislation. Valid service of this notice will occur upon sending of the notice to the address herein or as changed by the Debtor through paragraph 4.6. Pursuant to the PPSA where applicable, the Secured Party shall also give notice in writing in the appropriate time period to (a) the Debtor; (b) every person who is known by the Secured Party, before the date that the notice is served on the Debtor, to be the owner of the collateral or an obligator who may owe payment or performance of the obligation secured; (c) every person who has a security interest who has a security interest in the collateral and whose interest (i) was perfected by possession, the continuance of which was prevented by the Secured Party who has taken possession of the collateral, or (ii) is perfected by registration before the date the notice is served on the Debtor; and (d) every person with an interest in the collateral who has delivered a written notice to the Secured Party of the interest in the collateral before the date that the notice is served on the Debtor. This notice shall include the content stipulated by s. 63(5) of the PPSA. 7. ADDITIONAL LOAN ADVANCES The Borrower and the Lender acknowledge and agree that further loan advances by other Lenders to the Borrower are contemplated and that such further advances will also be covered under the security of this General Security Agreement, such further advances to rank pari passu with the existing loan advance up to a maximum amount of indebtedness of $2,000,000.00 U.S. in total advances from all Lenders. 6 8. SUBORDINATION No action by the Secured Party shall constitute a subordination of its security interest to any other interest in the Collateral unless such subordination is effected by an agreement in writing, titled "Subordination Agreement", signed by the Secured Party. 9. SUCCESSOR INTERESTS This security agreement shall enure to the benefit of and be binding on the parties hereto and their respective heirs, executors, administrators, successors and assigns. 10. APPLICABLE LAW This security agreement and Related Documents shall be governed by the laws of the Province of Ontario. 11. TERMINATION This security agreement shall remain in full force and effect until the Indebtedness has been paid and written notice of discharge by the Secured Party is received by the Debtor. 12. ACKNOWLEDGMENT OF DEBTOR The Debtor hereby acknowledges receipt of a copy of this security agreement. IN WITNESS WHEREOF the Debtor has executed this security agreement this 30th day of July, 2003. ACTIVECORE TECHNOLOGIES LTD. Per: /s/ [Brian Macdonald] -------------------------------- Authorized Signing Officer 7 EX-10 9 ex-10_68.txt EXHIBIT 10.68 EXHIBIT 10.68 THIS GUARANTEE AGREEMENT made this 30th day of July, 2003. BETWEEN: IVP TECHNOLOGY CORPORATION (hereinafter called "GUARANTOR") OF THE FIRST PART AND INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS LOCAL UNION 105 (hereinafter called "LENDER") OF THE SECOND PART WHEREAS the Lender has advanced the sum of $500,000.00 U.S. to ActiveCore Technologies Ltd. (the "Borrower"), a wholly-owned subsidiary of IVP Technology Corporation, (the "Guarantor"), pursuant to the provisions of a Promissory Note made by the Borrower in favour of the Lender dated the 30th day of July, 2003; NOW THEREFORE, in consideration of the loan advance made by the Lender to the Borrower, and such other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the parties hereto, the Guarantor does hereby covenant and agree with the Lender as follows: (1) The Guarantor hereby unconditionally guarantees to the Lender the due and punctual payment and performance by the Borrower of all present and future debts, liabilities and obligations of the Borrower arising out of the funds advanced by the Lender to the Borrower pursuant to the provisions of the Promissory Note; (2) The Lender shall not be bound to seek or exhaust its recourse against the Borrower before being entitled to payment from the Guarantor under this agreement; (3) The recourse of the Lender against the Guarantor hereunder shall be limited to the sum of $500,000.00 U.S. plus accrued interest as set out in the Promissory Note; (4) The Lender, may from time to time (i) renew, terminate and otherwise vary any of the terms and conditions of any loans, advances, credit or financial accommodation made to the Borrower; (ii) grant extensions of time and other indulgences, take and give up securities, accept compositions, proposals and arrangements, grant releases and discharges, full, partial, conditional or otherwise, perfect or fail to perfect any securities, release any property charged by any securities and otherwise deal or fail to deal with the Borrower and others (including, without limitation, any other guarantors) and securities; and (iii) apply all monies received from the Borrower or other persons or from any securities, upon such part of the guaranteed obligations; all as the Lender may see fit, without prejudice to or in any way limiting or lessening the liability of the Guarantor under this agreement and without obtaining the consent of or giving notice to the Guarantor. No delay on the Lender's part in the exercise of any right or remedy shall operate as a waiver thereof; (5) All present and future debts, liabilities and obligations of the Borrower to the Guarantor are hereby postponed to the payment of the guaranteed obligations hereunder; save and except that the Borrower may continue to deal with the Guarantor in the normal course until notice of default with respect to the payment obligations under the Promissory Note has been received from the Lender; (6) This agreement shall enure to the benefit of and be binding upon the respective legal representatives, successors and assigns of the Guarantor and the Lender, and shall be governed by and construed in accordance with the laws of the Province of Ontario; (7) Any demand or notice to be given by any party hereto to the other party shall be in writing and may be given by personal delivery or by prepaid registered mail addressed as follows: (a) to the Guarantor at: 2275 Lakeshore Blvd. West Suite 401 Toronto, ON M8V 3Y3 (b) to the Lender at: 685 Nebo Road Hannon, ON LOR 1P0. and if given by registered mail shall be deemed to have been received by the party to whom it was addressed on the date falling four (4) business days following the date upon which it is sent by registered mail and has been deposited in the post office with postage and cost of registration prepaid and if personally delivered to an adult person during normal business hours, when so delivered. Provided that any of the above-named parties may change the address designated from time to time, by notice in writing to the other party hereto. (8) The Guarantor acknowledges and agrees that until the Borrower's indebtedness to the Lender hereunder, or any other subsequent Lender(s), has been repaid in full with interest, it will not guarantee any further indebtedness of the Borrower or of the indebtedness of any other Lender on a cumulative basis in excess of a total amount of $2,000,000.00 U.S. 2 IN WITNESS WHEREOF the parties hereto have executed this Guarantee Agreement. IVP TECHNOLOGY CORPORATION Per:_____________________________ President (Brian MacDonald) INTERNATIONAL ROTHERHOOD OF ELECTRICAL WORKERS LOCAL UNION 105 ____________________________ _________________________________ Witness Name: Title: ____________________________ _________________________________ Witness Name: Title: ____________________________ _________________________________ Witness Name: Title: 3 EX-10 10 ex-10_69.txt EXHIBIT 10.69 EXHIBIT 10.69 ------------- This Consulting Agreement is made as of the 3rd day of June, 2003 BETWEEN: RODGER J. COWAN, Consultant, of the City of Toronto in the Province of Ontario (hereinafter referred to as "Cowan") OF THE FIRST PART AND IVP TECHNOLOGY CORPORATION, a corporation incorporated pursuant to the laws of the State of Nevada (hereinafter referred to as "IVP") OF THE SECOND PART WHEREAS IVP is involved in negotiations involving a number of strategic alliances and/or acquisitions; and WHEREAS Cowan can facilitate the process of negotiation by consulting with the management of IVP in the areas of strategic planning and marketing in the field of entertainment software distribution; NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises, the mutual agreements and covenants herein contained and for other good and valuable consideration now paid by each of the parties hereto to the other (the receipt and sufficiency of which is hereby acknowledged), the parties hereto agree as follows: 1. APPOINTMENT ----------- IVP hereby engages Cowan and Cowan agrees to render services to IVP as a consultant upon the terms and conditions hereinafter set forth. 2. TERM ---- The term of this Consulting Agreement shall begin as of the date of this Agreement, and shall terminate on June 1st, 2004, unless earlier terminated in accordance with paragraph 7 herein or extended as agreed to between parties. 3. SERVICES -------- During the term of this Agreement; Cowan shall provide advice to, undertake for and consult with IVP concerning management, marketing, consulting, strategic planning, corporate organization and structure, financial matters in connection with the operation of the businesses of IVP, expansion of services, acquisitions and business opportunities, and shall review and advise IVP regarding its overall progress, needs and condition. Cowan agrees to provide on a timely basis the following enumerated services contemplated thereby: (a) The implementation of short-range and long-term strategic planning to fully develop and enhance IVP's domestic marketing plan as it relates specifically to entertainment software including, without limiting the generality of the foregoing, the identification of potential sources of distribution in North America; (b) Advise IVP relative to the recruitment and employment of key executives consistent with the efficient marketing of 1VP's products and services; and (c) Assistance with regard to the identification, evaluation, structuring, negotiating and closing of joint ventures, strategic alliances, business acquisitions and advice with regard to the ongoing managing and operating of such acquisitions upon consummation thereof. 4. DUTIES OF IVP ------------- IVP shall provide Cowan, on a regular and timely basis, with all approved data and information about it, its subsidiaries, its management, its products and services and its operations as shall be reasonably requested by Cowan, and shall advise Cowan of any facts which would effect the accuracy of any data and information previously supplied pursuant to this paragraph. IVP shall promptly supply Cowan with full and complete copies of financial reports, all filings with all federal and state securities agencies; with full and complete copies of all stockholder reports; with all data and information supplied by any financial analyst, and with all brochures or other sales materials relating to its products or services. 5. COMPENSATION ------------ In consideration for the provision of the consulting services described in paragraph 3 hereinabove, IVP will issue and deliver five million (5,000,000) shares of IVP's Common Stock to Cowan (the "Shares"). The parties hereto agree that the Shares shall be issued to Cowan on a fully paid and non-assessable basis in consideration for services rendered by Cowan to IVP and that the Shares shall bear the appropriate legend restricting the transfer of the Shares as required by Rule 144 as promulgated pursuant to the terms of the Securities Act of 1933. Expenses relating to any activities undertaken by Cowan under this Consulting Agreement will be charged to IVP at cost on a monthly basis. Travel and accommodation terms will be mutually agreed upon prior to the activity being undertaken. Expenses will be invoiced and payment due within thirty (30) days of receipt of an invoice. 6. REPRESENTATION AND INDEMNIFICATION ---------------------------------- IVP shall be deemed to have made a continuing representation of the accuracy of any and all facts, material information and data which it supplies to Cowan and acknowledges its awareness that Cowan will rely on such continuing 2 representation in disseminating such information and otherwise performing its advisory functions. Cowan in the absence of notice in writing from IVP will rely on the continuing accuracy of material, information and data supplies to IVP. Cowan represents that he has knowledge of and is experienced in providing the aforementioned services. 7. LIMITATION OF LIABILITY ----------------------- In the event that either party shall be liable to the other pursuant to the terms of this Consulting Agreement for any failure to perform in connection with this Consulting Agreement, that party's liability shall be limited as follows: (a) All liabilities in contract and tort for direct loss shall be limited to the actual value of the shares paid in the year of the claim; and (b) All liabilities in contract and in tort for incidental, indirect, special or consequential damages including, but not limited to, loss of revenues or profits shall be excluded. 8. CONFIDENTIAL INFORMATION ------------------------ Each party may use the information received from the other party pursuant to this Consulting Agreement and may provide such information to their respective employees as applicable for their use only in connection with the Agreement. Each party agrees that it shall use the same means it uses to protect its own confidential and proprietary information to prevent the disclosure and to protect the confidentiality of-both i. written information received from the other party which is marked or identified as "confidential", ii. written or verbal information which is of its nature confidential; and iii. oral or visual information identified as confidential at the time of disclosure which is reduced to written form and provided to the other in such written form promptly after such oral or visual disclosure, The foregoing shall not prevent either party from disclosing Information that is: iv. already known by the recipient party prior to the disclosure thereof with no obligation of confidentiality; v. publicly known or becomes publicly known not due to any unauthorized act of the recipient party; vi. rightfully received from a third party; vii. independently developed by the recipient party without use of the other party's Information; 3 viii.disclosed without similar restrictions by the party owning the Information to any third party; ix. approved by the other party for disclosure; or x. required to be disclosed pursuant to a governmental or legal requirement provided that the disclosing party gives to the other party written notice of such requirement prior to any such disclosure. Upon expiration or termination of the Consulting Agreement or upon written request of the party providing the Information, the other party shall return all copies of the Information to the providing party or certify in writing that all copies of the Information have been destroyed. Either party may return the Information, or any part of it, to the other party at any time. Each party makes no warranty, express, or implied, with respect to the Information. Neither party shall be liable to the other or to any other person hereunder for amounts representing loss of profits or loss of business or indirect, consequential or punitive damages of the other party or of such other person in connection with the provision or use of the Information hereunder. Nothing contained in this Agreement shall be construed as granting or conferring any rights by license or otherwise in the Information. Each party acknowledges and agrees that the Information is the confidential and/or proprietary and/or trade secret information of the other and the unauthorized use or disclosure of the Information could cause irreparable harm and significant injury to the other party for which that other party would have no adequate remedy at law. Therefore each party shall have the right, in addition to any other rights it may have at law or in equity, to seek and obtain immediate injunctive relief in respect of any breach or potential breach of this Consulting Agreement by the other. The provisions of this Clause 6 shall survive the expiry or termination for whatever reason of this Consulting Agreement. 9. MISCELLANEOUS ------------- TERMINATION: This Consulting Agreement may be terminated by either Party upon written notice to the other Party for any reason which shall be effective five (5) business days from the date of such notice. This Consulting Agreement shall be terminated immediately upon written notice for material breach of this Consulting Agreement. MODIFICATION: This Consulting Agreement sets forth the entire understanding of the Parties with respect to the subject matter hereof. This Consulting Agreement may be amended only in writing signed by both Parties. COUNTERPARTS: This consulting agreement may be executed in any number of counterparts by original or facsimile signature by the authorized officer of IVP and Cowan each of which counterparts, when executed and delivered, shall be an 4 original but such counterparts together shall constitute one and the same instrument. NOTICES: Any notice required or permitted to be given hereunder shall be in writing and shall be mailed or otherwise delivered in person or by facsimile transmission at the address of such Party set forth above or to such other address or facsimile telephone number as the Party shall have furnished in writing to the other Party. WAIVER: Any waiver by either Party of a breach of any provision of this Consulting Agreement shall not operate as or be construed to be a waiver of any other breach of that provision or of any breach of any other provision of this Consulting Agreement. The failure of a Party to insist upon strict adherence to any term of this Consulting Agreement on one or more occasions will not be considered a waiver or deprive that Party of the right thereafter to insist upon adherence to that term of any other term of this Consulting Agreement. SEVERABILITY: If any provision of this Consulting Agreement is invalid, illegal, or unenforceable, the balance of this Consulting Agreement shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances. DISAGREEMENTS: Any dispute or other disagreement arising from or out of this Consulting Agreement shall be submitted to arbitration under the rules of the American Arbitration Association and the decision of the arbiter(s) shall be enforceable in any court having jurisdiction thereof. Arbitration shall occur only in the State of Nevada. The interpretation and the enforcement of this Agreement shall be governed by Nevada Law as applied to residents of the State of Nevada relating to contracts executed in and to be performed solely within the State of Nevada. In the event any dispute is arbitrated, the prevailing Party (as determined by the arbiter(s)) shall be entitled to recover that Party's reasonable attorney's fees incurred (as determined by the arbiter(s)). IN WITNESS THEREOF, this Consulting Agreement has been executed by the Parties as of the date first above written. IVP TECHNOLOGY CORPORATION ______________________________________ Brian Mac Donald President and CEO ___________________________ ______________________________________ Witness Rodger J. Cowan 5 EX-10 11 exhibit10_70.txt EXHIBIT 10.70 EXHIBIT 10.70 Hawk Associates, Inc. 204 Ocean Drive Tavernier, FL 33070 Tel: (305) 852-2383 Fax: (305) 852-2378 - -------------------------------------------------------------------------------- Frank N. Hawkins, Chief Executive Officer Julie W. Marshall, President info@hawkassociates.com ----------------------- AGREEMENT made as of May 1, 2003 (the "Effective Date") between Hawk Associates, Inc., a Florida investor relations firm having its place o1 business at 204 Ocean Drive, Tavernier, FL 33070 (hereinafter referred to as "Hawk") and IVP Technology Corporation with an address at 2275 Lakeshore Blvd, West Suite 401, Toronto Ontario, M8V 3Y3 Canada (herein after referred to as the "Company"). WITNESSETH: WHEREAS, Hawk is engaged in the business of providing investor relations, financial media relations and other appropriate consulting and advisory services; and WHEREAS, the Company is desirous of entering into an agreement utilizing Hawk services and expertise; and WHEREAS, the Company desires to accept such a relationship upon the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, it is agreed as follows: 1. The Company desires to retain the services of Hawk as an independent contractor to provide investor relations consulting and advisory services it numerous areas and Hawk desires to accept such engagement by Company pursuant to the terms and conditions of this Agreement. These areas include providing the following services, but are not limited to: o Development of Investor/Media Relations Wall Street Branding Strategy o Creation and Regular Updating of Investment Profiles o Hawk Associates Website Virtual Investor Kit/Virtual Media Kit o Email Alerts o Drafting and Management of Press Releases o Road Shows/Investor Meetings o PowerPoint Investor Presentation o Quarterly Conference Calls (as appropriate) o Crisis Management Consulting (as appropriate) o Development and Maintenance of Investor/Media Email and Contact Database o IR Presenter and Virtual Roadshows (as appropriate) o Annual Reports/Quarterly Reports to Shareholders (as appropriate) o Expanded Company Backgrounder or Fact Sheets o Mailings to Targeted Members of the Investment Community and Media (as appropriate) o Handling of Investor Information Queries 2. In consideration for such services, Company will provide the following compensation to Hawk: A. Upon the signing of this agreement, Hawk will be issued 2,000,000 shares of Company 144 Restricted common stock. B. Hawk will be paid a retainer fee of $6,600 per month. In addition, Hawk will be reimbursed for normal out of pocket operating expenses such as phones, faxes, Fedexes, routine printing and routine postage incurred by Hawk on behalf of Company. These expenses will be invoiced at a rate of $400 per month. All billings will be two months in advance and will be paid by wire transfer to Hawk Associates. These cash payments will begin with an initial payment of $14,000 representing the first two-months of the retainer and basic expenses. The next invoice covering the retainer will be issued on July 1, 2003 and will cover the following two months. All subsequent billings will be two months in advance with travel expenses and other non-routine expenses billed monthly in arrears. C. Company shall reimburse Hawk and its representatives for such reasonable out-of-pocket expenses as Hawk may incur in connection with the rendition of the services. Such items shall include, but not be limited to, all travel related expenses for Hawk to visit the Company facilities as well as entertainment expenses incurred with financial analysts, fund managers, brokers, potential investors, members of the media and/or financing candidates. D. Third party vendor expenses such as design fees, printing costs and related materials, database acquisitions, PR Newswire fees, conference calls and special promotions will be billed directly to Company by the vendors. It is mutually agreed that Hawk will not benefit financially from a markup of these services. 2 3. Equity Fundraising If requested, Hawk will provide professional presentation of the company's materials and introduction of the Company to potential funding sources. The packaging will include a professionally presented business model and a PowerPoint presentation as well as CEO coaching and presentation practice as needed. A. Hawk will circulate the Company's applicable materials to investors and/or investment banking/venture capital related resources and contacts interested in investing in enterprises similar to the Company and provide introductions to appropriate investment bankers and other potential funding sources. B. Upon successful placement and/or sourcing of Equity capital an Equity Capital Placement fee of Two and a half Percent (2.5%) of the capital raised and/or placed on behalf of Company will be paid to Hawk. C. In respect of any transaction between Company and an individual or entity that was introduced directly or indirectly by Hawk prior to a termination hereof which occurs within two (2) years from the termination or expiration of this Agreement, the Company shall pay to Hawk or Hawk's nominee(s) the Success Fees due Hawk, as outlined in Section 3B of this Agreement. This Section shall survive any termination of this Agreement. D. All fees to Hawk will be due upon funding as received by Company. 4. The initial term ("Term") of this Agreement shall be for a period commencing on the Effective Date hereof and ending on October 31, 2003. Effective November 1, 2003, this contract will automatically renew for a period of 30 days every successive 30 days. After September 30, 2003, either party will have the right to terminate this agreement with 30 days notice. 5. Any controversy between the parties hereto involving the construction or application of any payments owed to Hawk as part of this Agreement, or any claims arising out of or relating to this Agreement or the breach hereof or thereof, will be submitted to and settled by final and binding arbitration in Islamorada FL, in accordance with the rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. In the event of any arbitration under this Agreement the prevailing party shall be entitled to recover from the losing party reasonable expenses, attorneys' fees and costs incurred therein or in the enforcement or collection of any judgment or award rendered therein. The "prevailing party" means the party determined by, the arbitrator to have most nearly prevailed, even if such party did not prevail in all matters, not necessarily the one in whose favor a judgment is rendered. 6. All proprietary information furnished to Hawk by Company shall be deemed to be confidential and shall be kept in strict confidence under appropriate safeguards. Company agrees that the Hawk website and profiles are protected by applicable copyright laws and will not be copied or otherwise used by Company without the written permission of Hawk. 3 7. This consulting agreement, acceptable to both parties and representing the full and final execution of this document, contains the full agreement of the parties hereto concerning the subject matter hereof and shall not be modified, altered, changed or terminated except pursuant to a writing signed by all of the parties. 8. This agreement shall be binding upon and inure to the benefit of the respective heirs, executors, administrators, successors and assigns of the parties below. 9. The validity of this agreement shall be determined in accordance with the internal laws of the State of Florida. 10. Any and all notices, requests, demands or other communications hereunder shall be in writing, and deemed given and received if delivered personally or sent by certified or registered mail, postage prepaid, return receipt requested to each of the parties hereto at the addresses hereinabove first written or such other addresses as may from time to time be designated by any of them in writing. IN WITNESS WHEREOF, the Company and Hawk have executed and delivered this agreement as of the day an year first above written. By: -------------------------------------- Frank N. Hawkins, Jr. CEO Hawk Associates, Inc. Dated: -------------------------- THE UNDERSIGNED HAVE READ AND HEREBY CONSENT AND AGREE TO THE TERMS OF THE FOREGOING AGREEMENT. By: ----------------------------- Brian McDonald, President and CEO IVP Technology Corporation cc: Julie W. Marshall; President, Hawk Associates, Inc. 4 EX-10 12 exhibit10_71.txt EXHIBIT 10.71 EXHIBIT 10.71 ivp technology June 16, 2003 Mr. Peter Turk, President ePocket Inc. 257 Adelaide Street West, 6th Floor Toronto, Ontario LETTER OF INTENT The intent of this letter ("letter") is to summarize recent discussions between the management of ePocket Inc. ("ePocket" or "Vendor") and IVP Technology Corporation ("IVP") together (the "Parties") with respect to IVP's proposal to acquire a minimum of 5% of the issued share capital of ePocket Inc. which for greater certainty will be equivalent to CAD 300,000. Therefore, the principal purpose of this letter is to document the terms, in general, under which the transaction would take place subject to due diligence on the part of the Parties, the approval of the Parties' board of directors; and any agency in the United States that may have a regulatory interest in the proposed transaction. It is understood by both parties that in the preparation of legal agreements that will give effect to this transaction certain arrangements to maximize the tax benefit or other benefits to both parties may need to be undertaken. Each of IVP and e Pocket will undertake to accommodate each other's requirements to the fullest extent possible provided however that neither company will knowingly fail to comply with any regulation or statute in the US. PRINCIPAL TERMS AND CONDITIONS The principal terms and conditions for the proposed purchase of a minimum of 5% of ePocket Inc are: o An executed share subscription agreement and shareholders agreement for CAD 300,000 funds for which shall be obtained as follows: - IVP will cause the issuance of a share certificate for 10 million shares of IVP Technology Corporation which will be in unregistered form in the name of ePocket Inc. - IVP will seek to register the 10 million shares at its next available registration' opportunity which will likely be an SB 2 filing in late August 2003. - Once registered the shares will be placed in to an escrow agent account whereby shares will be sold into the open market to generate funds which will be used to pay amounts related to a share subscription agreement to be signed. - The share subscription agreement shall call for funds to be paid from the sale of IVP Technology shares or from other sources if available. - Once the minimum amount of funds required to complete the share subscription agreement has been raised - on terms as mutually agreed, IVP may increase its shareholding in ePocket if it appears that the allotment of the 10 million shares for ePocket will generate additional funds. If IVP determines that it does not wish to purchase additional shares in ePocket the remaining shares from the escrow agent will be returned to IVP for cancellation and rescission. o ePocket and IVP will enter into a modified technology joint venture and marketing agreement which will include a development agreement whereby IVP will develop for use with the ePocket software a wireless phone application for ePocket's electronic cash process - the terms of the development agreement shall be negotiated separately from the equity purchase agreement provided that the investment will not occur if the terms of the development and technology joint venture agreement are not satisfactory to both parties. II. LOCK UP AND CONFIDENTIALITY It is hereby expressly agreed that ePocket and any of its shareholders, managers or advisors will not engage in a process of seeking a similar agreement with another technology company until the earlier of September 15, 2003 or cessation of negotiations. III. ASSUMED CLOSING DATE: June 30, 2003 IV. CONDITIONS: The purchase of ePocket shall be subject to due diligence by both parties and their respective agents and the approval of the Parties' board of directors. SHARES: The common shares provided as partial consideration in this transaction will be subject to rule 144 of the SEC until such time as they become registered by reference to an SEC registration filing. CONFIDENTIALITY: IVP and ePocket will undertake to use every effort to maintain the confidential nature of the proposed transaction pending mutual agreement as to any announcement and the terms of the existing Non-Disclosure Agreement dated May 21, 2003 shall remain in full force and effect. It is acknowledged that IVP may have to disclose the pending purchase as a result of SEC requirements. If disclosure is required, the parties will make a joint announcement approved by both parties and their respective counsel. IVP further undertakes not to initiate any conversations or contacts with competitors prior to closing the acquisition of ePocket. LITIGATION: To the best of knowledge of IVP and ePocket, there is no action, claim or demand or other proceedings pending or threatened before any court or other administrative agency, which would materially and adversely affect ePocket or IVP. CONDUCT: An undertaking by ePocket that, pending the closing of the transaction contemplated herein, ePocket shall have conducted business only in the ordinary course and there shall have occurred no Toronto, Ontario, M5H 1X9. Dated this ___ 24th __________ day of _______ June _____ 2003. EXECUTED: IVP Technology Corporation ePocket Inc. - ---------------------------------- ------------------------------------ EX-10 13 exhibit10_72.txt EXHIBIT 10.72 EXHIBIT 10.72 This Consulting Agreement is made as of the14th day of July, 2003 BETWEEN: GERALD CAMPBELL, Consultant, of the City of Toronto in the Province of Ontario (hereinafter referred to as "Campbell") OF THE FIRST PART AND IVP TECHNOLOGY CORPORATION, d.b.a. ActiveCore Technologies, a corporation incorporated pursuant to the laws of the State of Nevada (hereinafter referred to as "IVP") OF THE SECOND PART WHEREAS IVP is involved in negotiations involving a number of strategic alliances and/or acquisitions in the medical data integration field; and WHEREAS Campbell can facilitate the process of negotiation by consulting with the management of IVP in the areas of strategic planning and marketing in the field of medical data integration; NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises, the mutual agreements and covenants herein contained and for other good and valuable consideration now paid by each of the parties hereto to the other (the receipt and sufficiency of which is hereby acknowledged), the parties hereto agree as follows: 1. APPOINTMENT IVP hereby engages Campbell and Campbell agrees to render services to IVP as a consultant upon the terms and conditions hereinafter set forth. 2. TERM The term of this Consulting Agreement shall begin as of the date of this Agreement, and shall terminate on June 30th, 2004, unless earlier terminated in accordance with paragraph 7 herein or extended as agreed to between parties. 3. SERVICES During the term of this Agreement, Campbell shall provide advice to, undertake for and consult with IVP concerning management, marketing, consulting, strategic planning, corporate organization and structure, financial matters in connection with the operation of the businesses of IVP, expansion of services, acquisitions and business opportunities, and shall review and advise IVP regarding its overall progress, needs and condition. Campbell agrees to provide on a timely basis the following enumerated services contemplated thereby: (a) The implementation of short-range and long-term strategic planning to fully develop and enhance IVP's domestic marketing plan as it relates specifically to medical data integration including, without limiting the generality of the foregoing, the identification of potential service providers and other sources of product distribution in North America; (b) Advise IVP relative to the recruitment and employment of key executives consistent with the efficient marketing of IVP's products and services; and (c) Assistance with regard to the identification, evaluation, structuring, negotiating and closing of joint ventures, strategic alliances, business acquisitions and advice with regard to the ongoing managing and operating of such acquisitions upon consummation thereof. 4. DUTIES OF IVP IVP shall provide Campbell, on a regular and timely basis, with all approved data and information about it, its subsidiaries, its management, its products and services and its operations as shall be reasonably requested by Campbell, and shall advise Campbell of any facts which would effect the accuracy of any data and information previously supplied pursuant to this paragraph. IVP shall promptly supply Campbell with full and complete copies of financial reports, all filings with all federal and state securities agencies; with full and complete copies of all stockholder reports; with all data and information supplied by any financial analyst, and with all brochures or other sales materials relating to its products or services. 5. COMPENSATION In consideration for the provision of the consulting services described in paragraph 3 hereinabove, IVP will issue and deliver four million (4,000,000) shares of IVP's Common Stock to Campbell (the "Shares"). The parties hereto agree that the Shares shall be issued to Campbell on a fully paid and non-assessable basis in consideration for services rendered by Campbell to IVP and that the Shares shall bear the appropriate legend restricting the transfer of the Shares as required by Rule 144 as promulgated pursuant to the terms of the Securities Act of 1933. Expenses relating to any activities undertaken by Campbell under this Consulting Agreement will be charged to IVP at cost on a monthly basis. Travel and accommodation terms will be mutually agreed upon prior to the activity being undertaken. Expenses will be invoiced and payment due within thirty (30) days of receipt of an invoice. 6. REPRESENTATION AND INDEMNIFICATION IVP shall be deemed to have made a continuing representation of the accuracy of any and all facts, material information and data which it supplies to Campbell and acknowledges its awareness that Campbell will rely on such continuing representation in disseminating such information and otherwise performing its advisory functions. Campbell in the absence of notice in writing 2 from IVP will rely on the continuing accuracy of material, information and data supplies to IVP. Campbell represents that he has knowledge of and is experienced in providing the aforementioned services. 7. LIMITATION OF LIABILITY In the event that either party shall be liable to the other pursuant to the terms of this Consulting Agreement for any failure to perform in connection with this Consulting Agreement, that party's liability shall be limited as follows: (a) All liabilities in contract and tort for direct loss shall be limited to the actual value of the shares paid in the year of the claim; and (b) All liabilities in contract and in tort for incidental, indirect, special or consequential damages including, but not limited to, loss of revenues or profits shall be excluded. 8. CONFIDENTIAL INFORMATION Each party may use the information received from the other party pursuant to this Consulting Agreement and may provide such information to their respective employees as applicable for their use only in connection with the Agreement. Each party agrees that it shall use the same means it uses to protect its own confidential and proprietary information to prevent the disclosure and to protect the confidentiality of both i. written information received from the other party which is marked or identified as "confidential", ii. written or verbal information which is of its nature confidential; and iii. oral or visual information identified as confidential at the time of disclosure which is reduced to written form and provided to the other in such written form promptly after such oral or visual disclosure, The foregoing shall not prevent either party from disclosing Information that is: iv. already known by the recipient party prior to the disclosure thereof with no obligation of confidentiality; v. publicly known or becomes publicly known not due to any unauthorized act of the recipient party; vi. rightfully received from a third party; vii. independently developed by the recipient party without use of the other party's Information; 3 viii.disclosed without similar restrictions by the party owning the Information to any third party; ix. approved by the other party for disclosure; or x. required to be disclosed pursuant to a governmental or legal requirement provided that the disclosing party gives to the other party written notice of such requirement prior to any such disclosure. Upon expiration or termination of the Consulting Agreement or upon written request of the party providing the Information, the other party shall return all copies of the Information to the providing party or certify in writing that all copies of the Information have been destroyed. Either party may return the Information, or any part of it, to the other party at any time. Each party makes no warranty, express or implied, with respect to the Information. Neither party shall be liable to the other or to any other person hereunder for amounts representing loss of profits or loss of business or indirect, consequential or punitive damages of the other party or of such other person in connection with the provision or use of the Information hereunder. Nothing contained in this Agreement shall be construed as granting or conferring any rights by license or otherwise in the Information. Each party acknowledges and agrees that the Information is the confidential and/or proprietary and/or trade secret information of the other and the unauthorized use or disclosure of the Information could cause irreparable harm and significant injury to the other party for which that other party would have no adequate remedy at law. Therefore each party shall have the right, in addition to any other rights it may have at law or in equity, to seek and obtain immediate injunctive relief in respect of any breach or potential breach of this Consulting Agreement by the other. The provisions of this Clause 6 shall survive the expiry or termination for whatever reason of this Consulting Agreement. 9. MISCELLANEOUS TERMINATION: This Consulting Agreement may be terminated by either Party upon written notice to the other Party for any reason which shall be effective five (5) business days from the date of such notice. This Consulting Agreement shall be terminated immediately upon written notice for material breach of this Consulting Agreement. MODIFICATION: This Consulting Agreement sets forth the entire understanding of the Parties with respect to the subject matter hereof. This Consulting Agreement may be amended only in writing signed by both Parties. COUNTERPARTS: This consulting agreement may be executed in any number of counterparts by original or facsimile signature by the authorized officer of IVP 4 and Campbell each of which counterparts, when executed and delivered, shall be an original but such counterparts together shall constitute one and the same instrument. NOTICES: Any notice required or permitted to be given hereunder shall be in writing and shall be mailed or otherwise delivered in person or by facsimile transmission at the address of such Party set forth above or to such other address or facsimile telephone number as the Party shall have furnished in writing to the other Party. WAIVER: Any waiver by either Party of a breach of any provision of this Consulting Agreement shall not operate as or be construed to be a waiver of any other breach of that provision or of any breach of any other provision of this Consulting Agreement. The failure of a Party to insist upon strict adherence to any term of this Consulting Agreement on one or more occasions will not be considered a waiver or deprive that Party of the right thereafter to insist upon adherence to that term of any other term of this Consulting Agreement. SEVERABILITY: If any provision of this Consulting Agreement is invalid, illegal, or unenforceable, the balance of this Consulting Agreement shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances. DISAGREEMENTS: Any dispute or other disagreement arising from or out of this Consulting Agreement shall be submitted to arbitration under the rules of the American Arbitration Association and the decision of the arbiter(s) shall be enforceable in any court having jurisdiction thereof. Arbitration shall occur only in the State of Nevada. The interpretation and the enforcement of this Agreement shall be governed by Nevada Law as applied to residents of the State of Nevada relating to contracts executed in and to be performed solely within the State of Nevada. In the event any dispute is arbitrated, the prevailing Party (as determined by the arbiter(s)) shall be entitled to recover that Party's reasonable attorney's fees incurred (as determined by the arbiter(s)). IN WITNESS THEREOF, this Consulting Agreement has been executed by the Parties as of the date first above written. IVP Technology Corporation ----------------------------------- Brian MacDonald Chairman and CEO - ------------------------------- ----------------------------------- Witness Gerald Campbell EX-10 14 ex-10_73.txt EXHIBIT 10.73 EXHIBIT 10.73 ------------- ivp technology June 16, 2003 Mr. Thomas S. Rohrer SCI Healthcare Group, Inc. 8510 Egret Lakes Lane West Palm Beach, FL 33412 LETTER OF INTENT The intent of this letter ("letter") is to summarize recent discussions between the management of SCI Healthcare Group, Inc. ("SCI" or "Vendor") and IVP Technology Corporation ("IVP") together (the "Parties") with respect to IVP's proposal to acquire substantially all of the assets (excluding cash and cash equivalents) and service agreements for the Lindsay Division of SCI consulting business - for ease of use ("Newco"). Therefore, the principal purpose of this letter is to document the terms, in general, under which the transaction would take place subject to due diligence on the part of the Parties, the approval of the Parties' board of directors; approval of Cornell Capital Partners LP within twenty (20) days from the date of this letter and approval from any regulatory agency in the United States that may have a regulatory-interest in the proposed transaction. It is understood by both parties that in the preparation of legal agreements that will give effect to this transaction certain arrangements to maximize the tax benefit or other benefits to both parties may need to be undertaken. Each of IVP and NEWCO will undertake to accommodate each other's requirements to the fullest extent possible provided however that neither company will knowingly fail to comply with any regulation or statute in the US. PRINCIPAL TERMS AND CONDITIONS The principal terms and conditions for the proposed purchase of 100% of the assets An equivalent number of shares equal to USD 200,000, based on the average closing bid price of IVP Technology Corporation shares thirty (30) days prior to and two days following the date of closing ("IVP Shares"). At the time of closing the shares will be restricted from trading by rule 144 for a period of one year from date of issuance. If IVP registers any Shares within the one (1) year period immediately after Closing, then it shall include the IVP Shares in the registration thereby shortening the holding period. A cash payment of USD 200,000 US dollars at Closing: o Non-compete agreements signed by all employees restricting certain competitive activities for a period of one (1) year o Retention agreements signed for and with all employees o Assignment of all material contracts with suppliers and customers or other acceptable assurance of business continuity o Retention of Mr. Thomas Rohrer as commission only salesperson on a non-exclusive basis o Assignment and retention of all material strategic partnership or reseller/integration agreements with ISV's or other suppliers/referral or other business component o SCI to provide a copy of web based resume system for use by NEWCO in "AS IS" condition and a copy of the contact management data base Ms. Rhonda Lindsay to be appointed as GM of NEWCO and to be provided with a 3 year employment contract which will detail performance criteria for which she will be entitled to earn shares in IVP Technology. II. LOCK UP AND CONFIDENTIALITY It is hereby expressly agreed that SCI and any of its shareholders, managers or advisors will not engage in a process of seeking any other buyer until the earlier of July 31, 2003 or cessation of negotiations. SCI also undertakes to refrain from discussing the potential acquisition with any of IVP's competitors except as agreed to by IVP for said period. If IVP and SCI have not completed the acquisition by August 30, 2003 then this letter of intent shall terminate, with the exception of the confidentiality provisions, non-solicitation provisions. III. ASSUMED CLOSING DATE: August 30, 2003 IV. CONDITIONS: The purchase of SCI shall be subject to due diligence by both parties and their respective agents, the approval of the Parties' board of directors, Cornell Capital Partners LLP, within thirty (30) days from the date of this letter the US SEC authorities and shareholders if applicable and subject to counsel input from both IVP and SCI's legal and accounting advisors. SHARES. The common shares provided as partial consideration in this transaction will be subject to rule 144 of the SEC.: 2 EMPLOYMENT OF EXISTING EMPLOYEES. IVP will offer 24 month employment agreements to all existing employees of NEWCO on terms equal to those in existence at SCI. Employment will commence on the closing date. CONFIDENTIALITY. IVP and SCI will undertake to use every effort to maintain the confidential nature of the proposed transaction pending mutual agreement as to any announcement and the terms of the existing Non-Disclosure Agreement dated May 23, 2003 shall remain in full force and effect. It is acknowledged that IVP may have to disclose the pending purchase as a result of SEC requirements. If disclosure is required, the parties will make a joint announcement approved by both parties and their respective counsel. IVP further undertakes not to initiate any conversations or contacts with competitors prior to closing the acquisition of NEWCO. LITIGATION. To the best of knowledge of IVP and SCI, there is no action, claim or demand or other proceedings pending or threatened before any court or other administrative agency, which would materially and adversely affect SCI or IVP. CONDUCT. An undertaking by SCI that, pending the closing of the transaction contemplated herein, SCI shall have conducted Lindsay Division business only in the ordinary course and there shall have occurred no material adverse change to SCI's Lindsay Division business or activities. DEFINITIVE DOCUMENTATION. It is understood that consummation of the transaction contemplated herein will be subject to-the preparation; execution and delivery of a purchase and sale agreement and such other documentation as may be deemed appropriate (the "Agreement") by legal and accounting counsel to IVP and SCI. Accordingly, this letter with the exception of the confidentiality and nonsolicitation provisions shall be a non-binding expressions of intent. APPLICABLE LAW. The Agreement to be consummated to give effect to the transaction herein shall be governed by and construed and interpreted in accordance with the laws of the State of New Jersey and any actions with regard thereto shall be brought only within the Federal or state courts within the State of New Jersey. As IVP is a public corporation traded on a recognized stock market in the United States and is a reporting entity within the United States of America in case of difference in the regulatory treatment of financial, securities and accounting matters the laws and regulations of the US shall apply. NON-SOLICITATION. IVP agrees on behalf of itself and all its affiliates not to solicit or hire any employees of SCI during the period of negotiations and one (1) year thereafter with the exception of those employees solicited and/or hired at the time of Closing. In addition, IVP agrees during the period of negotiations and one (1) year thereafter not to solicit the business of any client of SCI it learned about or was provided confidential information about during negotiations or the due diligence procedure. 3 ALL NOTICES under this Letter should be sent to: IVP TECHNOLOGY CORPORATION at: Brian J. MacDonald, President and CEO 2275 Lakeshore Boulevard West Suite 401, Toronto, Ontario M8V 3Y3 SCI HEALTHCARE GROUP INC. Mr. Tom Rohrer Executive Vice President 8510 Egrets Lake Lane West Palm Beach, Florida 33412 With a copy to: Marc D. Freedman Freedman & Gersten, LLP 777 Terrace Avenue-Fifth Floor Hasbrouck Heights, NJ 07604 Dated this 26th day of June 2003. EXPENSES: Each party shall bear its own expenses and attorneys' fees in connection with the preparation of this letter and the negotiation of the contemplated transaction. EXECUTED: IVP Technology Corporation SCI Healthcare Group Inc. /S/ PETER HAMILTON /S/ THOMAS S. ROHRER - ------------------------------ ------------------------------- /S/ EXECUTIVE VICE PRESIDENT /S/ EXECUTIVE VICE PRESIDENT /S/ PETER HAMILTON /S/ THOMAS ROHRER 4 EX-10 15 exhibit10_74.txt EXHIBIT 10.74 EXHIBIT 10.74 MERCHANDISING LICENSE AGREEMENT THIS AGREEMENT is made by and between Zorro Productions, Inc., 125 University Avenue, Berkeley, California 94710, U.S.A. (Licensor) and IVP Technology Corporation, 2275 Lakeshore Blvd. West, Suite 401, Toronto, Ontario, Canada M8V3Y3 (Licensee). WHEREAS, the Licensor is the owner of all, right, title and interest in and to various trademarks and designs of "ZORRO" (hereinafter collectively referred to as the "Licensed Marks") and to the copyrights in various literary works, illustrations and designs (hereinafter referred to as the "Licensed Designs"); and WHEREAS, the Licensee desires to use the Licensed Marks and Licensed Designs on or in association with the manufacture, offering for sale, sale, advertising, promotion, and distribution of certain products identified in Schedule A attached hereto (the "Licensed Products") worldwide (the "Licensed Territory"); and WHEREAS, the Licensor is willing to grant the Licensee the right to use the Licensed Marks and Licensed Designs on the Licensed Products in the Licensed Territory in accordance with the terms and conditions recited herein. NOW, THEREFORE, in consideration of the mutual promises, covenants and conditions herein contained, it is hereby agreed as follows: 1. GRANT OF LICENSE The Licensor hereby grants to the Licensee a non-exclusive, non-transferable, non-assignable license, without the right to grant sub-licenses, to use the Licensed Marks and Licensed Designs solely on and/or in association with the manufacture, offering for sale, sale, advertising, promotion, shipment and distribution of the Licensed Products solely within the Licensed Territory according to all the terms and conditions of this Agreement and of Schedule A, attached hereto. Licensee may not sublicense or permit any unauthorized use of the Licensed Designs and Licensed Marks in any area other than the Licensed Territory and Licensee will not knowingly sell any Licensed Products to persons or entities who intend or are likely to resell them outside the Licensed Territory. 2. TERM This Agreement shall commence and be as of date of its execution ("Effective Date") and shall run from the Effective Date hereof for the Term recited in Schedule A attached hereto (the "Term") unless sooner terminated pursuant to a provision of this Agreement. 3. ROYALTY PROVISIONS (a) Licensee agrees to pay Licensor the Royalty recited in Schedule A attached hereto based on Licensee's Net Sales (as hereinafter defined) of the Licensed Products (the "Actual Royalty"). (b) Actual Royalty payments shall be made by the Licensee to the Licensor on all Licensed Products sold, shipped and/or distributed by the Licensee, based upon the Licensee's normal distribution, shipment and sales activities. (c) Where the invoiced price for any Licensed Products is less than the usual net sales price for such Licensed Products, as established by Licensee, sold to third parties in the course of the Licensee's normal distribution, shipment and sales activities, the Actual Royalty payment shall be based upon the Licensee's usual net sales price. (d) For the Term of this Agreement the Licensee agrees to pay the Licensor a non-refundable, "Minimum Royalty" in the amount recited in Schedule A attached hereto. Of the Minimum Royalty, the Licensee agrees to pay to the Licensor a non-refundable advance against Royalties (the "Advance") in the amount recited in Schedule A, which is due and payable upon execution of this Agreement. Actual Royalty payments based on Net Sales made during the Term of this Agreement shall be credited against the Minimum Royalty due for the Term in which such Net Sales were made. (e) "Net Sales" shall mean Licensee's total gross revenues derived from the sales of Licensed Products from all sources. However, on total revenues from Licensee's own website, Licensee shall be permitted to deduct Twenty percent (20%) for overhead to Licensee's benefit and the remaining Eighty percent (80%) of those revenues shall be Net Sales. 4. STATEMENTS AND PAYMENTS (a) Within three (3) days following receipt of payment of royalties from third parties, Licensee shall provide to Licensor a complete and accurate statement of Net Sales of Licensed Products for the relevant distribution period by that third party. Licensee shall provide Licensor with complete and accurate monthly statements of Net Sales of the Licensed Products distributed from its own website. The Licensee shall include the following: Information as to the number, description and gross selling price of the Licensed Products distributed and/or sold by the Licensee, information as to discounts given and returns actually credited and any other further information which the Licensor may from time to time request. Such statements shall be furnished to the Licensor whether or not any Licensed Products have been distributed and/or sold and whether or not Actual Royalties have been earned during the preceding calendar month. (b) The amount payable to Licensor according to the Licensee's monthly statements (or statements provided at lesser intervals) shall be paid simultaneously with the submission of such statements. In no event shall the amount credited for quantity discounts and returns during the calendar month exceed the Licensee's Royalty obligations for such calendar month or be used as a credit against past or future Royalty obligations of the Licensee. Such amounts shall be paid over to licensor, less any credits for returns, in the next accounting. 2 (c) The Licensee's statements and all amounts payable to the Licensor by the Licensee shall be submitted in accordance with notice provisions in Paragraph 22 below. Receipt of statements and payments by the party set forth therein shall constitute a valid discharge of the Licensee's obligations to make such statements and payments. This shall, however, not entail any modification to the provisions of Paragraph 5 - Audit Rights hereunder, (d) The receipt and/or acceptance by the Licensor of any of the statements furnished or Royalties paid hereunder to the Licensor (or the cashing of any Royalty checks paid hereunder) shall not preclude the Licensor from questioning the correctness thereof at any time and, in the event that any inconsistencies or mistakes are discovered in such statements or payments, they shall, within thirty days of discovery, be rectified by the Licensee and the appropriate payment shall be made by Licensee. (e) All payments made hereunder shall be in United States currency drawn on a United States bank, unless otherwise specifically agreed by the parties. (f) Time is of the essence with respect to all payments to be made hereunder by the Licensee. Interest at a rate of one and one-half percent (1-1/2%) per month shall accrue on any amount due the Licensor hereunder from and after the date upon which the payment is due until the date of receipt of payment by Licensor. 5. AUDIT RIGHTS (a) The Licensee will keep accurate books of account and records at its principal place of business in respect of all transactions relating to the license granted herein. The Licensor and its duly authorized representatives shall have the right, at all reasonable hours of the day, to audit the Licensee's books of account and records and all other documents and material in the possession or under the control of the Licensee with respect to the subject matter and the terms of this Agreement and to make copies and extracts thereof. In the event that any such audit reveals an underpayment by the Licensees, the Licensee shall immediately remit payment to the Licensor in the amount of such underpayment with interest calculated at the rate of one percent (1 %) per month calculated from the date such payment(s) were actually due until the date when such payment is, in fact, actually received by Licensor. Further, in the event that any such underpayment is greater than five per cent (5%) of the amount of a statement in any calendar quarter, the Licensee shall reimburse the Licensor for the costs and expenses of such audit including, but not limited to, reasonable legal fees incurred in connection therewith. (b) Upon demand by the Licensor, but not more frequently than once annually, the Licensee shall, at its own cost, furnish the Licensor with a detailed statement, prepared by an independent certified public accountant of the Licensee's choice and acceptable to the Licensor, setting forth the number of Licensed Products manufactured during the time period extending from the later of the Effective Date of this Agreement or the date of any previous statement up to and including the date of the statement and also setting forth the pricing information of all Licensed Products (including the number and description of the Licensed Products) shipped, distributed and/or sold by the Licensee during the aforementioned time period. 3 (c) All books of account and records of the Licensee covering all transactions relating to this Agreement shall be retained by the Licensee for at least two (2) years after the expiration or termination of this Agreement for possible audit by the Licensor. 6. LIABILITY INSURANCE Licensee shall maintain a policy of general and products liability insurance with policy limits of no less than one million dollars ($1,000,000) combined single limit, with a deductible amount not to exceed ten thousand dollars ($10,000,000) for each single occurrence of bodily injury and/or of property damage which may arise out of Licensee's execution of this Agreement. 7. QUALITY The quality of the Licensed Products as well as the quality of all promotional and advertising which includes the Licensed Marks and Licensed Designs (the "Promotional Material") shall be of the highest standard and of such style, appearance and quality as to be adequate and suited to their exploitation to the best advantage and to the protection and enhancement of the Licensed Marks and Licensed Designs and goodwill pertaining thereto, and shall be in full conformance with all applicable laws and regulations. Approval by Licensor shall be prima facia evidence of the sufficiency of quality of that item vis-a-vis parties. 8. MARKING REQUIREMENTS (a) Licensee shall mark permanently and legibly all such information as is required by law and by this Agreement and as advised by Licensor from time to time on all Licensed Products and Promotional Material. Licensor's initial marking requirements as specified in Schedule A, attached hereto, shall appear at least once on each Licensed Product and on each piece of Promotional Material. (b) The Licensee shall use no other markings, legends and/or notices on or in association with Promotional Material other than as specified in Schedule A and such other markings, legends and/or notices as may from time to time be specified by the Licensor, without first obtaining the Licensor's prior express written approval. (c) Should Licensee use its own trade mark or trade name on or in relation to the Licensed Products or Promotional Material, such use shall be such as to avoid the creation or appearance of joint rights or a joint trade mark, by suitable spatial separation one from the other and by distinctive script and type face. (d) Licensee shall be required to use at least one of Licensor's logos on the Licensed Products. Exemplars of possible logos are specified in Schedule A to this Agreement. The specific logo used will be agreed upon between Licensor and Licensee. 9. APPROVALS, QUALITY CONTROL (a) The Licensee may not manufacture, use, offer for sale, advertise, promote, and/or distribute any Licensed Products or any Promotional Material 4 relating to the Licensed Products until it has received written approval of same in the manner provided herein from the Licensor. Such approval may be granted or withheld as the Licensor, in its sole discretion, may determine, except that such approval shall not be unreasonably withheld. Should the Licensor fail to approve in writing any of the submissions furnished it by the Licensee within fourteen (14) days from the date of submission thereof, such failure shall be considered to be a disapproval thereof. (b) Before commencing or authorizing third parties to commence the design or development of Licensed Products or of Promotional Material which have not been previously approved in writing by the Licensor, the Licensee shall submit at its own cost to the Licensor, for approval, as description of the concept of the same, including full information on the nature and function of-the proposed item and a general description of how the Licensed Marks, Licensed Designs and other material will be used thereon. The Licensee shall next submit at its own cost to the Licensor, for approval, complete layouts and descriptions of the proposed Licensed Products and/or Promotional Material showing exactly how and where the Licensed Designs, Licensed Marks and any other artwork and wording will be used. Thereafter, the Licensee shall submit at its own cost to the Licensor, for approval, pre-production models or prototype samples of the proposed Licensed Products and/or Promotional Material. The Licensee shall not proceed beyond any of the above stages where approval is required without first securing the prior express written approval of the Licensor. Licensor shall provide its approval or disapproval, as required by this paragraph, within fourteen (14) days of request. Should the Licensor fail to approve in writing any of the submissions furnished it by the Licensee within fourteen (14) days from the date of submission thereof, such failure shall be considered to be a disapproval thereof. (c) To assure that the provisions of this Agreement are being observed, the Licensee will allow the Licensor or its designers to enter the Licensee's premises and/or the premises where the Licensed Products are being manufactured during regular business hours and upon reasonable notice, for the purpose of inspecting the Licensed Products and the Promotional Material relating to the Licensed Products and the facilities in which the Licensed Products and/or Promotional Material are being manufactured and in which the Licensed Products are packaged. (d) In the event that the quality standards and/or trademark, patent, industrial design and/or copyright usage and marking requirements hereinabove referred to are not met or, in the event that said quality standards and/or trademark, patent, industrial design and/or copyright usage and marking requirements are not maintained throughout the period of manufacture, offering for sale, advertising, promotion and/or distribution of any Licensed Products hereunder, then, upon receipt of written notice from the Licensor, the Licensee shall immediately discontinue any and all manufacture, offering for sale, sale, advertising, promotion and distribution of the Licensed Products in connection with which the said quality standards and/or trademark, patent, industrial design and/or copyright usage and marking requirements have not been met. (e) Licensor shall have the right to approve in writing all the financial terms of all third party distribution agreements at the time of negotiations with such third parties. 5 10. ARTWORK (a) The form and content of all artwork as used by the Licensee shall be subject to the prior express written approval of the Licensor prior to its use by the Licensee. If the Licensee desires to use artwork previously approved by the Licensor on a different Licensed Product or on different Promotional Material, the Licensee shall first submit samples of such proposed use to the Licensor for approval thereof. Such approval may be granted or withheld as the Licensor, in its sole discretion, may determine except that such approval shall not be unreasonably withheld. Should the Licensor fail to approve in writing any of the submissions furnished it by the Licensee within fourteen (14) days from the date of submission thereof, such failure shall be considered to be a disapproval thereof. (b) All artwork and designs of the Licensed Designs and Licensed Marks, or any reproductions thereof, shall, notwithstanding their creation or use by the Licensee, be and remain the property of the Licensor who shall be entitled to use and license to use such artwork and designs, subject to the provisions of this Agreement. (c) If Licensee wishes to use artwork prepared by Licensor, Licensee will pay Licensor's customary charges therefor. 11. OWNERSHIP OF RIGHTS (a) Subject to the provisions of this Agreement between Licensor and Licensee, Licensor is the sole and exclusive owner of all right, title and interest in and to the Licensed Designs and Licensed Marks. (b) Nothing contained in this Agreement shall be construed as an assignment to the Licensee of any right, title and/or interest in and to the Licensed Designs or Licensed Marks, it being understood that all right, title and interest relating thereto are expressly reserved by the Licensor except for the rights being Licensed hereunder. (c) No license as to any products other than the Licensed Products and only in the Licensed Territory is being granted hereunder and Licensor reserves for use as it may determine all rights of any kind other than the rights herein licensed to the Licensee. Licensee recognizes that Licensor may already have entered into, and may, in the future, enter into License agreements with respect to the Licensed Designs and Licensed Marks for products which fall into the same general product category as one or more or the Licensed Products and which may be similar to as one or more of the Licensed Products in terms of use, function, or otherwise, and Licensee hereby expressly concedes that the existence of said Licenses does not and shall not constitute a breach of this Agreement by Licensor. (d) The Licensee shall not use the Licensor's name, or the Licensed Designs and Licensed Marks other than as permitted hereunder and, in particular, shall not incorporate the Licensor's name, or the Licensed Designs or Licensed Marks in the Licensee's corporate or business name in any manner whatsoever. The Licensee agrees that in using the Licensed Designs and Licensed Marks, it will in no way represent that it has any rights, title and/or interest in or to the Licensed Marks and Licensed Designs other than those expressly granted under the terms of this Agreement. The Licensee further agrees that it will not use or authorize the use, either during or after the Term of this Agreement, of any configuration, trade mark, trade name or other designation confusingly similar to the Licensor's name or the Licensed Marks and license designs. (e) During the Term of this Agreement and thereafter, the Licensee shall not contest or otherwise challenge or attack the Licensor's rights in the Licensed Designs and Licensed Marks or the validity of the License being granted herein. 12. GOOD WILL AND PROMOTIONAL VALUE (a) The Licensee recognizes the value of the good will associated with the Licensed Marks and Licensed Designs and acknowledges that as between the Licensor and the Licensee, the Licensed Designs and Licensed Designs and all rights therein and the good will pertaining thereto, belong exclusively to the Licensor. The Licensee further recognizes and acknowledges that the Licensed Designs and Licensed Marks have acquired secondary meaning in the mind of the public. (b) The Licensee agrees that its use of the Licensed Marks and Licensed Designs shall inure to the benefit of the Licensor and that the Licensee shall not, at any time, acquire any rights in the Licensed Designs or Licensed Marks by virtue of any use it may make of the same. (c) The Licensee acknowledges that the Licensor is entering into this Agreement not only in consideration of the Royalties paid hereunder but also for the promotional value to be secured by the Licensor for the Licensed Marks and Licensed Designs as a result of the manufacture, offering for sale, sale, advertising, promotion, shipment and distribution of the Licensed Products by the Licensee. Accordingly, the Licensee acknowledges that its failure to manufacture, offer for sale, advertise, promote, ship and distribute the Licensed Products in accordance with the provisions of this Agreement or to fulfill the Licensee's obligations under the provisions hereof will result in immediate and irreparable damages to the Licensor in connection with promotion of the Licensed Designs and Licensed Marks and that the Licensor will have no adequate remedy at law for the failure by the Licensee to abide by such provisions of this Agreement. The Licensee further agrees that in the event of any breach by the Licensee, the Licensor, in addition to all other remedies available to it hereunder, shall be entitled to injunctive relief against any such breach as well as such other relief as any court with jurisdiction may deem just and proper. 13. INTELLECTUAL PROPERTY PROTECTION (a) The License granted hereunder is conditioned upon the Licensee's full and complete compliance with the provisions of the trademark, patent, industrial design and copyright laws of the United States. Licensee shall advise Licensor at least thirty (30) days in advance of the first distribution of each Licensed Product. The Licensee shall also keep records of and advise Licensor in writing of the date when each Licensed Product is first sold in the Licensed Territory. (b) The Licensor has the right, but not the obligation, to obtain appropriate trademark, patent, industrial design and/or copyright protection for the marks and designs, the Licensed Products and/or the Promotional Material. 7 (c) The Licensee agrees to cooperate with the Licensor in protecting and defending the Licensed Designs and Licensed Marks. In the event that any claim or problem arises with respect to the protection of the Licensed Marks and Licensed Designs in the Licensed Territory, the Licensee shall promptly advise the Licensor in writing of the nature and extent of same. The Licensor has no obligation to take any action whatsoever in the event that any claim or problem arises with respect to the protection of the Licensed Marks and Licensed Designs. The Licensor shall have the option, however, of proceeding with counsel of its own choice. Alternatively, the Licensor may, at the Licensor's own expense, have the Licensee proceed on its behalf with respect to any such claim or problem, provided, however, that the Licensor's prior express written permission shall be obtained by the Licensee prior to incurring any costs chargeable to the Licensor in connection therewith. (d) The Licensee agrees that it shall not at any time apply for any copyright, trademark, industrial design or patent protection which would affect the Licensor's or Licensor's grantor's rights in the Licensed Marks or Licensed Designs or file any document with any government authority or take any other action which could affect the Licensor's ownership of the Licensed Marks or Licensed Designs or aid or abet anyone else in doing so. 14. INFRINGEMENTS (a) The Licensee agrees to assist the Licensor in the enforcement of any rights of the Licensor in the Licensed Marks and Licensed Designs. The Licensor, if it so desires, may commence or prosecute any claim or suits in its own name or in the name of the Licensee or join the Licensee as a party thereto. The Licensee agrees to notify the Licensor in writing of any infringements or imitations by third parties of the Licensed Marks or Licensed Designs, the Licensed Products and/or the Promotional Material which may come to the Licensee's attention. The Licensor shall have sole right to determine whether or not any action shall be taken on account of any such infringement or imitation. (b) With respect to all claims and suits for infringement, including suits in which the Licensee is joined as a party, the Licensor shall have the sole right to employ counsel of its choosing and to direct the handling of the litigation and any settlement thereof. (c) With respect to any and all claims and suits involving products liability and other "non-infringement" matters, Licensee's insurance carrier shall retain all usual rights to choose counsel, settle claims, etc. Licensee agrees to keep Licensor fully informed of any claims and further agrees to name Licensor as an additionally insured individual on such policies of insurance. 15. INDEMNIFICATION The Licensee hereby agrees to defend, indemnify and hold harmless during the Term and for five (5) years after termination or expiration of this Agreement, the Licensor, its officers, directors, agents, Licensees, employees, partners and/or any of its related entities against any and all claims, demands, causes of action and judgments arising out of Licensee's design, manufacture, distribution, shipment, advertising, promotion, offering for sale and/or sale of the Licensed Products and/or the Promotional Material. With respect to the foregoing indemnity, the Licensee agrees to defend and hold the Licensor harmless at no cost or expense to the Licensor whatsoever including, but not limited to, legal fees and court costs. The Licensor shall have the right to defend any such action or proceeding with counsel of its own selection. 16. EXPLOITATION BY THE LICENSEE (a) The Licensee shall commence distribution and sale of all of the Licensed Products in commercially reasonable quantities in the Licensed Territory on or before the Initial Distribution date recited in Schedule A attached hereto. (b) During the Term of this Agreement, the Licensee will continue to diligently and continuously distribute and sell all of the Licensed Products within the Licensed Territory and it will use its best efforts to make and maintain adequate arrangements for the distribution, shipment and sale necessary to meet the demand for all such Licensed Products in the Licensed Territory. In the event Licensee shall determine it in its best interest to stop manufacturing and distributing a product, the rights to which are licensed to Licensee herein, into any country in the territory, Licensee may elect to terminate its license in and to that product only and the rights to the same shall revert to Licensor. Nothing herein shall be deemed to in any manner cancel or terminate Licensee's rights to manufacture and sell any remaining products which are the subject matter herein. (c) The Licensee agrees that the Licensed Products will be sold and distributed outright, at a competitive price that does not exceed the price generally and customarily charged the trade by the Licensee. Licensee shall not grant exclusivity to any purchaser of Licensed Products without the prior written consent of Licensor. In the event that the Licensed Products are distributed by a third party, as part of a bundle including other of Licensee's products, Licensee shall assure that the Licensed Products shall be treated as a most favored nation and be accorded the best terms offered by the third party within that bundle. 17. PREMIUMS, PROMOTIONS AND SECONDS (a) The Licensee agrees not to offer for sale, advertise, promote, distribute and/or use for any purpose whatsoever and/or permit any third party to offer for sale, advertise, promote, distribute and/or use for any purpose whatsoever any Licensed Products and/or Promotional Material relating to the Licensed Products which fail to meet the specifications and/or quality standards and/or trademark, patent, industrial design and/or copyright usage and marking requirements of this Agreement. (b) Licensor may purchase from Licensee, at Licensee's cost, such number of units of any Licensed Products as Licensor may from time to time specify. Licensor represents and warrants that Licensor shall not, under any circumstances, resell to any person, firm or corporation. 18. ASSIGNABILITY AND SUB-LICENSING (a) The License granted hereunder is personal to the Licensee and shall not be assigned by any act of the Licensee or by operation of taw. The Licensee shall have the right to grant sublicenses with the Licensor's prior express written approval. (b) Notwithstanding any of the foregoing, the Licensee may subcontract out any of the work and/or manufacturing of the licensed products, on written notice to Licensor, provided Licensee remains liable for quality control for all products. 19. TERMINATION The following termination rights are in addition to the termination rights provided elsewhere in this Agreement: (a) Immediate Right of Termination. The Licensor has the right to immediately terminate this Agreement by giving written notice to the Licensee if the Licensee does any of the following: (i) Manufactures, offers for sale, sells, advertises, promotes, distributes and/or uses in any way any Licensed Product and/or Promotional Material without having the prior written approval of the Licensor as provided for by the provisions of this Agreement or continues to manufacture, offer for sale, advertise, promote, distribute and/or use in any way any Licensed Product and/or Promotional Material after receipt of notice from the Licensor disapproving of same; (ii) Becomes subject to any voluntary or involuntary order of any governmental agency involving the recall of any of the Licensed Products and/or Promotional Material because of safety, health or other hazards or risks to the public; (iii) It or its controlling shareholders or any of its officers, directors or employees take any actions in connection with the manufacture, offering for sale, sale, advertising, promotion and/or distribution of the Licensed products and/or the Promotional Material which damages or reflects adversely upon the Licensor or the Licensed Designs and Licensed Marks; (iv) Breaches any of the provisions of this Agreement relating to the unauthorized assertion of rights in the Licensed Designs and Licensed Marks; (v) Two or more times during a twelve-month period fails to make timely payment of Royalties when due or fails to make timely submission of Royalty statements when due; (vi) Breaches any of the provisions of this Agreement prohibiting the Licensee from assigning, transferring, sublicensing or otherwise encumbering this Agreement or any of its rights or obligations thereunder; and (vii) Fails to obtain or maintain public or product liability insurance as required by this Agreement. (b) Right to Terminate a Portion of This Agreement. The Licensor has the right to terminate the portion(s) of this Agreement relating to any Licensed Product(s) and any countries of the Licensed Territory in connection with which the Licensee, for any reason, fails to commence sale and distribution of any such Licensed Product(s) in any such portion in accordance with the terms of 10 this Agreement upon thirty (30) days written notice, if Licensee fails to cure said breach during the thirty (30) day period. (c) Right to Terminate on Notice. This Agreement may be terminated by either party upon thirty (30) days written notice to the other party in the following events, provided that during the thirty (30) day period, the defaulting party fails to cure the breach: (i) The Licensor has the right to terminate the portion(s) of this Agreement relating to any Licensed Products and any portion of the Licensed Territory if the Licensee, for any reason after the commencement of sale and distribution of such Licensed Products in such Licensed Territory, fails to continue to sell and distribute such Licensed Products in commercially acceptable quantities in the Licensed Territory; (ii) The Licensor has the right to terminate this Agreement if the Licensee violates any of its obligations under this Agreement including its payment obligations; (iii) The Licensor has the right to terminate this Agreement if the Licensee fails to pay its Minimum Royalty obligations; (iv) The Licensor has the right to terminate this Agreement if the Licensee files a petition in bankruptcy or is adjudicated a bankrupt or insolvent, or makes an assignment for the benefit of creditors, or an arrangement pursuant to any bankruptcy law, or if the Licensee discontinues its business or if a receiver is appointed for the Licensee or for the Licensee's business and such receiver is not discharged within thirty (30) days; (v) Either party shall have the right to terminate this Agreement in the event that the other party commits a material breach of any other provision of this Agreement and said material breach is not cured within the thirty (30) day notice period. 20. POST-TERMINATION AND EXPIRATION RIGHTS AND OBLIGATIONS (a) If this Agreement is terminated under subparagraphs 19(a) and/or 19(b), the Licensee and its receivers, representatives, trustees, agents, administrators, successors and/or permitted assignees of the Licensee shall have no right to manufacture, offer for sale, advertise, promote and/or distribute Licensed Products or to use in any way any Promotional Material relating to the Licensed Products. (b) Upon termination or expiration of this Agreement, notwithstanding anything to the contrary herein, all Royalties on sales and/or distributors theretofore made shall become immediately due and payable and no Advance or Minimum Royalty paid to Licensor shall be refunded. (c) After termination or expiration of this Agreement under any provision other than subparagraphs 19(a) and/or 19(b), the Licensee may dispose of all Licensed Products which are on hand or in the process of manufacture at the time notice of termination is received or upon the expiration of the then in effect Term for a period of ninety (90) days after notice of termination or such expiration, as the case may be, provided that the Advances and Royalties with respect to that period are paid and the appropriate statements are furnished for 11 that period. During such ninety (90) day period, the Licensor may itself use or license the use of the Licensed Designs and Licensed Marks in any manner at any time anywhere in the world as the Licensor sees fit. (d) After the expiration or termination of this Agreement, all rights granted to the Licensee shall forthwith revert to the Licensor who shall be free to license others to use the Licensed Designs and Licensed Marks in connection with the manufacture, offering for sale, sale, advertising, promotion and/or distribution of the Licensed Products and the Licensee shall refrain from further use of the Licensed Designs and Licensed Marks or any further reference to the Licensed Designs and Licensed Marks, either directly or indirectly, in connection with the manufacture, offering for sale, sale, advertising, promotion and/or distribution of the Licensee's products. The Licensee shall further turn over to the Licensor all materials which reproduce the Licensed Products and/or Promotional Material relating to the Licensed Products or shall give the Licensor satisfactory evidence of their destruction. The Licensee shall be responsible to the Licensor for any damages caused by the unauthorized use by the Licensee or by others of such reproduction materials which are not turned over to the Licensor. (e) The Licensee acknowledges that its failure to cease the manufacture, offering for sale, sale, advertising, promotion of the Licensed Products and/or use in any way of the Promotional Material relating to the Licensed Products at the termination or expiration of this Agreement will result in immediate and irreparable damage to the Licensor and to the rights of any subsequent licensee of the Licensor. The Licensee acknowledges and admits that there is no adequate remedy at law for failure to cease such activities and the Licensee agrees that in the event of such failure, the Licensor shall be entitled to equitable relief by way of injunctive relief and such other relief as any court with jurisdiction may deem just and proper. 21. REPRESENTATIONS AND WARRANTIES (a) Licensor represents and warrants that it is the sole owner of all right, title and interest in and to various trademarks, various designs of "ZORRO" and similar marks, and various "ZORRO" related copyrights, in the various illustrations and designs which are the subject matter herein. (b) Licensee represents and warrants that it has full right and authority to enter into this Agreement and to perform in accordance with the terms and conditions contained herein. 22. NOTICES All notices or other communications required or desired to be sent to either party shall be in writing and the party to be served shall be addressed as follows: 12 Licensor: John Gertz, President Zorro Productions, Inc. 125 University Avenue Berkeley, California 94710 USA Fax: (510) 548-0264 e-mail: Jgertz@zorro.com ---------------- Licensee: Brian MacDonald, CEO IVP Technology Corporation 2275 Lakeshore Blvd. West, Suite 401 Toronto, Ontario Canada M8V 3Y3 Fax: 1(416) 252-4578 e-mail: bmacdonald@ivptechnology.com ---------------------------- Any such notice, served by either party, may be served personally or by depositing the same addressed as herein provided, postage prepaid, return receipt requested, or by telex, telegram or telecopier, charges prepaid to the above-recited addresses. Three (3) business days from the date of mailing shall be deemed to be the date of service. One (1) business day from the date of overnight air courier shall be deemed to be the date of service for courier handled notices. Either party may change such address by notice in writing to the other party. 23. RELATIONSHIP OF THE PARTIES This Agreement does not create a partnership or joint venture between the parties and the Licensee shall have no power to obligate or bind the Licensor in any manner whatsoever. 24. ARBITRATION (a) Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be settled by binding arbitration administered by the American Arbitration Association in accordance with its Commercial Arbitration Rules and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. (b) The parties shall choose a single arbitrator from the panel of arbitrators provided by the American Arbitration Association. (c) The place of arbitration shall be Berkeley, California. 13 (d) The prevailing party shall be entitled to an award of reasonable attorney's fees. Each party shall bear its own costs and expenses and an equal share of the arbitrator's and administrative fees of arbitration. (e) Except as may be required by law, neither a party nor the arbitrator may disclose the existence, content or results of any arbitration hereunder without the prior written consent of both parties. 25. APPLICABLE LAW AND DISPUTE This Agreement shall be governed by the laws of the State of California, United States of America and the parties hereby submit to the jurisdiction of the State of California, including any Federal courts located therein, should any Federal jurisdiction requirements exist, in any action brought to enforce this Agreement. 26. HEADINGS The headings used in connection with the paragraphs and subparagraphs of this Agreement are inserted only for purposes of reference. Such headings shall not be deemed to govern, limit, modify or in any other manner affect the scope, meaning or intent of the provisions of this Agreement or any part thereof nor shall such headings otherwise be given any legal affect. 27. WAIVER (a) No waiver by either party of a breach or a default hereunder shall be deemed a waiver by such party of a subsequent breach of default of like or similar nature. (b) Resort by the Licensor to any remedies referred to in this Agreement or arising by reason of a breach of this Agreement by the Licensee shall not be construed as a waiver by the Licensor of its right to resort to any and all other legal and equitable remedies available to the Licensor. 28. SURVIVAL OF THE RIGHTS Notwithstanding anything to the contrary contained herein, such obligations which remain executory after expiration of the Term of this Agreement shall remain in full force and affect until discharged by performance and such rights as pertain thereto shall remain in force until their expiration. 29. SEVERABILITY In the event that any term or provision of this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other term or provision and this Agreement shall be interpreted and construed as if such term or provision, to the extent the same shall have been held to be invalid, illegal or unenforceable, had never been contained herein. 14 30. COUNTERPARTS This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same Agreement. Counterparts, however, must be executed within thirty (30) days of the first signature to be affixed to this document or the Agreement shall be null and void. 31. ENTIRE AGREEMENT This Agreement represents the entire understanding between the parties hereto with respect to the subject matter hereof and this Agreement supersedes all previous representations, understandings or Agreements, oral or written, between the parties with respect to the subject matter hereof and cannot be modified except by a written instrument signed by the parties hereto. By their execution below, the parties hereto have agreed to all of the terms and conditions of this Agreement. LICENSOR: ZORRO PRODUCTIONS, INC. /s/John Gertz - ----------------------------------- John Gertz, President Date: /s/ July 21, 2003 LICENSEE: IVP TECHNOLOGY CORPORATION /s/Brian MacDonald - ----------------------------------- Brian MacDonald, Chairman and CEO Date: /s/ July 14, 2003 15 SCHEDULE A Licensee: IVP Technology Corporation Licensee Address: 2275 Lakeshore Blvd. West, Suite 401 Toronto, Ontario, Canada M8V 3Y3 Licensee Contact: Brian MacDonald, CEO Licensee Telephone: 1 (416) 255-7578 Licensee Fax: 1 (416) 252-4578 Licensee e-mail: bmacdonald@ivptechnology.com 1. License Designs: The various designs of "ZORRO" as shall be determined, from time to time, and as further attached hereto as the same are created and/or supplied. 2. License Product: The following Licensed Products form part of this Agreement: One downloadable cell phone game distributed by Tira Wireless, IVP and other wireless distributors and various websites under terms to be approved by Licensor. 3. Term: The term of this Agreement shall commence on the date executed by both parties and shall extend until March 31, 2004. In the event that Licensor receives at least Seventy-five Thousand Dollars (US$75,000), this Agreement will automatically renew to permit a second game to be developed and distributed during a second term, which shall expire on October 30, 2004. In the event that Licensor receives at least Seventy-five Thousand Dollars (US$75,000) from the second game, the Agreement will automatically renew to permit a third game to be developed and distributed during a third term which shall expire on March 31, 2005. In the event that Licensor does not receive at least Seventy-five Thousand Dollars (US$75,000) from the first generation cell phone game, Licensee shall have a six month right of first negotiation on cell phone downloadable game license. 4. Currency: The currency used shall be U.S. Dollars. 5. Royalty Rate: Licensee shall pay no royalties on the first Fifty Thousand dollars (US$50,000) of Net Sales. Subsequently, Licensee and Licensor shall share equally a royalty of Fifty percent (50%) on Net Sales. 6. Minimum Royalty: There shall be no minimum royalty. 7. Advance: There shall be no advance. 8. Initial Distribution: The Licensee shall commence distribution of the first generation of all Licensed Products on or before October 15, 2003. In the event that additional games are developed, the release dates for the second and third games shall be not later than March 31, 2004 and September 30, 2004, respectively. 9. Marking Requirements: The Licensor's initial marking requirements are: (C)200(_) Zorro Productions, Inc., All Rights Reserved ZORRO(R) In addition, Licensee shall be required to use at least one of the following logos on the Licensed Products. The specific logo used will be agreed upon between Licensor and Licensee. 17 EX-31 16 ex-31_1.txt EXHIBIT 31.1 EXHIBIT 31.1 OFFICER'S CERTIFICATE PURSUANT TO SECTION 302 I, Brian MacDonald, certify that:] 1. I have reviewed this form 10-QSB for the quarter ended June 30, 2003 of IVP Technologies, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; 4. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15 (e)) for the small business issuer and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Omitted; (c) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. Date: August 27, 2003 By: /S/ BRIAN MACDONALD ------------------------------------ Brian MacDonald President, Chief Executive Officer and Acting Chief Financial Officer The introductory paragraph of Section 4 of this certification that refers to the certifying officers' responsibility for establishing and maintaining internal control over financial reporting for the company, as well as paragraph 4(b), have been omitted in accordance with Release No. 33-8238 (June 5, 2003) because the compliance period has been extended for small business issuers until the first fiscal year ending on or after April 15, 2005. EX-32 17 ex-32_1.txt EXHIBIT 32.1 EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of IVP Technology, Inc. (the "Company") on Form 10-QSB for the period ended June 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), each of the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company. Date: August 27, 2003 By: /S/ BRIAN MACDONALD --------------------- Brian MacDonald, President, Chief Executive Officer and Acting Chief Financial Officer A signed original of this written statement required by Section 906, or other document authentications, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Celerity Systems, Inc. and will be retained by Celerity Systems, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----