-----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, RU0mFtdYem1cJi/Te07jqR3QKAxCBdHJ3zX+58yYissajPb1bv1d/F0p1JmPs5VC D8oqgK6l1OR0iJWV7qIs2A== 0001144204-05-020406.txt : 20050630 0001144204-05-020406.hdr.sgml : 20050630 20050630171215 ACCESSION NUMBER: 0001144204-05-020406 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20050331 FILED AS OF DATE: 20050630 DATE AS OF CHANGE: 20050630 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ACTIVECORE TECHNOLOGIES INC CENTRAL INDEX KEY: 0001011601 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 000000000 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-30397 FILM NUMBER: 05929382 BUSINESS ADDRESS: STREET 1: 156 FRONT STREET WEST STREET 2: SUITE 210 CITY: TORONTO STATE: A6 ZIP: M5J 2L6 BUSINESS PHONE: 9053069343 MAIL ADDRESS: STREET 1: 156 FRONT STREET WEST STREET 2: SUITE 210 CITY: TORONTO STATE: A6 ZIP: M5J 2L6 FORMER COMPANY: FORMER CONFORMED NAME: IVP TECHNOLOGY CORP DATE OF NAME CHANGE: 20050106 FORMER COMPANY: FORMER CONFORMED NAME: ACTIVECORE TECHNOLOGIES, INC. DATE OF NAME CHANGE: 20050105 FORMER COMPANY: FORMER CONFORMED NAME: IVP TECHNOLOGY CORP DATE OF NAME CHANGE: 20000404 10QSB 1 v020582_10qsb.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 2005 Commission File No. 000-30486 ACTIVECORE TECHNOLOGIES, INC. ----------------------------- (Exact Name of Registrant as specified in its charter) NEVADA 65-6998896 - ---------------------------------- ------------------------------------ (State or Other Jurisdiction of (I.R.S. Employer Identification No.) Incorporation or Organization) 156 Front Street West, Suite 210, Toronto, Ontario, Canada M5J 2L6 ------------------------------------------------------------------ (Address of principal Executive Offices) (416) 252-6200 -------------- (Registrant's Telephone Number, Including Area Code) Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No |_| State the number of shares outstanding of each of the issuer's classes of common equities as of the latest practicable date: as of June 28, 2005, there were 65,272,611 outstanding shares of the issuer's common stock, par value $0.001. ACTIVECORE TECHNOLOGIES, INC. formerly IVP TECHNOLOGY CORPORATION FORM 10-QSB TABLE OF CONTENTS ----------------- Page ---- PART I.........................................................................3 ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS..................................3 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.........23 ITEM 3. CONTROLS AND PROCEDURES...........................................32 PART II.......................................................................33 ITEM 1. LEGAL PROCEEDINGS.................................................33 PART 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.......34 ITEM 3. DEFAULTS UPON SENIOR SECURITIES...................................35 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...............35 ITEM 5. OTHER INFORMATION.................................................35 ITEM 6. EXHIBITS..........................................................36 Signatures 2 PART I FINANCIAL INFORMATION ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS ACTIVECORE TECHNOLOGIES, INC. (FORMERLY IVP TECHNOLOGY CORPORATION.) As of March 31, 2005 INDEX TO FINANCIAL STATEMENTS
Page 4 Condensed Consolidated Balance Sheets as of March 31, 2005 (Unaudited) and December 31, 2004 Page 5 Condensed Consolidated Statements Of Operations For The Three Months Ended March 31, 2005 and 2004 (Unaudited) Page 6 Condensed Consolidated Statement Of Stockholders' Equity (Deficiency) for the Three Months Ended March 31, 2005 (Unaudited) Pages 7-8 Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2005 and 2004 (Unaudited) Pages 9-22 Notes to Condensed Consolidated Financial Statements as of March 31, 2005 (Unaudited)
3 ACTIVECORE TECHNOLOGIES, INC. AND SUBSIDIARIES (formerly IVP Technology Corporation) CONSOLIDATED BALANCE SHEETS (Unaudited) ASSETS
March 31, December 31, 2005 2004 --------------- --------------- CURRENT ASSETS Cash $ 7,693 $ 53,736 Accounts receivable, net 2,795,803 2,708,335 Other receivables 21,441 20,992 Prepaid expenses and other current assets 177,631 143,213 --------------- --------------- Total Current Assets 3,002,568 2,926,276 --------------- --------------- PROPERTY AND EQUIPMENT, NET 280,216 312,460 --------------- --------------- OTHER ASSETS Goodwill and other intangible assets, net 1,926,066 1,796,141 Investments at cost 262,648 262,648 Deferred consulting and financing expense 116,714 175,009 Deferred equity line commitment fees -- 16,092 --------------- --------------- Total Other Assets 2,305,428 2,249,890 --------------- --------------- TOTAL ASSETS $ 5,588,212 $ 5,488,626 =============== =============== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Bank Overdraft $ 126,215 $ 194,749 Accounts payable 966,565 955,407 Accrued liabilities 764,640 582,386 Taxes payable 1,003,193 957,011 Leases payable, current portion 19,603 22,093 Long-term debt, current portion 985,615 857,161 Due to related parties 166,711 132,364 Other current liabilities 281,552 27,247 --------------- --------------- Total Current Liabilities 4,314,094 3,728,418 --------------- --------------- LONG-TERM LIABILITIES Long-term debt 559,539 491,622 Leases Payable, long-term 25,583 30,447 --------------- --------------- Total Long-Term Liabilities 585,122 522,069 --------------- --------------- TOTAL LIABILITIES 4,899,216 4,250,487 --------------- --------------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Preferred stock, $.001 par value, 50,000,000 shares authorized Preferred Stock issued and outstanding Series A, 8,333.333 shares as of March 31, 2005 and December 31, 2004 respectively 8,333 8,333 Series B, 4,167,667 shares as of March 31, 2005 and December 31, 2004 respectively 4,168 4.168 Common stock, $0.01 par value, 500,000,000 shares authorized, 47,241,718 and 46,711,708 outstanding as of March 31, 2005 and December 31, 2004, respectively 472,417 467,117 Common stock to be returned (68,783) (68,783) Additional paid-in capital 39,265,606 39,137,498 Shares to be issued 176,000 0 Accumulated deficit (38,846,184) (37,892,002) Accumulated other comprehensive loss (196,823) (256,204) Subscription Receivable - Preferred -- (150,000) Deferred compensation (125,738) (11,988) --------------- --------------- Total Stockholders' Equity 688,996 1,238,139 --------------- --------------- TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 5,588,212 $ 5,488,626 =============== ===============
See accompanying notes to consolidated financial statements. 4 ACTIVECORE TECHNOLOGIES, INC. AND SUBSIDIARIES (formerly IVP TECHNOLOGY CORPORATION) CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
For the three For the three months ended months ended March 31, 2005 March 31, 2004 --------------- --------------- --------------- --------------- REVENUES $ 523,008 $ 194,495 --------------- --------------- --------------- --------------- COST OF SALES --------------- --------------- Direct wages 141,262 1,051 --------------- --------------- Amortization of licensing agreements and other costs 104,372 34,960 --------------- --------------- Total Cost of Sales 245,634 36,011 --------------- --------------- --------------- --------------- GROSS PROFIT 277,374 158,484 --------------- --------------- --------------- --------------- OPERATING EXPENSES --------------- --------------- Salaries and wages 373,025 408,100 --------------- --------------- Consulting fees 158,949 78,392 --------------- --------------- Research and development 55,000 55,000 --------------- --------------- Legal and accounting 78,575 26,097 --------------- --------------- General and administrative 397,781 216,719 --------------- --------------- Financial advisory fees 28,639 7,250 --------------- --------------- Amortization and depreciation 31,232 (1,967) --------------- --------------- --------------- --------------- Total Operating Expenses 1,123,201 789,591 --------------- --------------- --------------- --------------- LOSS FROM OPERATIONS (845,827) (631,107) --------------- --------------- --------------- --------------- OTHER INCOME (EXPENSE) --------------- --------------- Gain on early extinguishment of debt -- 2,000 --------------- --------------- Interest income 460 7,495 --------------- --------------- Interest expense (75,075) (33,232) --------------- --------------- Foreign exchange loss (33,740) (2,264) --------------- --------------- Total Other Expense (108,355) (26,001) --------------- --------------- --------------- --------------- LOSS FROM CONTINUING OPERATIONS (954,182) (657,108) --------------- --------------- --------------- --------------- Discontinued Operations: (See note 2): --------------- --------------- Loss from discontinued operations - SilverBirch Studios -- (130,569) --------------- --------------- Loss from discontinued operations - net -- (130,569) NET LOSS $ (954,182) $ (787,677) =============== =============== Preferred Stock Dividend 11,092 -- --------------- --------------- NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS $ (965,274) $ (787,677) --------------- --------------- LOSS PER COMMON SHARE FROM CONTINUING $ (0.02) $ (0.02) OPERATIONS-BASIC AND DILUTED =============== =============== LOSS PER COMMON SHARE FROM DISCONTINUED OPERATIONS - BASIC AND DILUTED $ (0.00) $ (0.00) =============== =============== NET LOSS PER COMMON SHARE - BASIC AND DILUTED $ (0.02) $ (0.02) =============== =============== WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC AND DILUTED 46,999,267 31,713,278 --------------- ---------------
See accompanying notes to consolidated financial statements. 5 ACTIVECORE TECHNOLOGIES, INC. AND SUBSIDIARIES (formerly IVP Technology Corporation) CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY) FOR THE THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED)
Common Stock to be Preferred Stock Issued / (Returned) ---------------------------------------- ------------------- Common Shares Amount Shares Amount Common Stock Series A Series A Series B Series B Shares Amount Shares Amount ------------------------------------------------------------------------------------- Balance, December 31, 2004 8,333,333 $ 8,333 4,167,667 $4,168 46,711,708 $ 467,117 (252,725) $(68,783) Stock issued for services 80,000 800 Stock Issued for compensation 400,000 4,000 Stock issued for beneficial owner roundup on reverse split 50,010 500 Stock to be issued on acquisition Deferred cost recognized Preferred stock subscription received Net loss for period Preferred Stock Dividend Cumulative translation adjustment Balance, March 31, 2005 8,333,333 $ 8,333 4,167,667 $4,168 47,241,718 $ 472,417 (252,725) $(68,783) Other Subscription Additional Comprehensive Receivable Shares Paid-In Accumulated Income Preferred to be Deferred Capital Deficit (Loss) Stock Issued Compensation Total ------------------------------------------------------------------------------------------ Balance, December 31, 2004 $39,137,498 $(37,892,002) $ (256,204) $(150,000) $ -- $ (11,988) 1,238,139 Stock issued for services 23,200 24,000 Stock Issued for compensation 116,000 (120,000) 0 Stock issued for beneficial owner roundup on reverse split 500 Stock to be issued on acquisition 176,000 176,000 Deferred cost recognized 6,250 6,250 Preferred stock subscription received 150,000 150,000 Net loss for period (954,182) (954,182) Preferred Stock Dividend (11,092) (11,092) Cumulative translation adjustment 59,381 59,381 Balance, March 31, 2005 $39,265,606 $(38,846,184) $ (196,823) $ -- $ 176,000 $(125,738) 688,996
See accompanying notes to consolidated financial statements. 6 ACTIVECORE TECHNOLOGIES, INC. AND SUBSIDIARIES (formerly IVP TECHNOLOGY CORPORATION) CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
2005 2004 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Loss for the period $(954,182) $(787,677) Adjustments to reconcile net loss from continuing operations to net cash used in operating activities: Depreciation 31,232 (1,967) Amortization of licensing agreement 28,623 6,220 Amortization of customer list 22,917 22,913 Amortization of deferred consulting fees 61,813 -- Amortization of customer contract 48,710 -- Stock issued for compensation -- 142,000 Stock issued for services -- 120,000 Amortization of deferred commitment fees 16,092 36,644 Changes in operating assets and liabilities: Decrease (increase) in receivables (96,003) 47,760 Decrease (increase) in prepaid expenses and other current assets (39,654) 199,015 (Increase) decrease in other assets -- (35,300) Increase (decrease) in accounts payable 12,690 (107,927) Increase (decrease) in accrued liabilities 222,058 (11,206) Increase (decrease) in taxes payable 52,522 90,351 Increase (decrease) in other current liabilities 289,216 37,598 Change in deferred compensation 24,000 -- Change in deferred consulting fees 3,107 -- --------- --------- Net Cash Used In Operating Activities (276,859) (241,576) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (3,472) (11,855) Acquisition of Disclosure Plus (60,600) -- --------- --------- Net Cash Used In Investing Activities (64,072) (11,855) --------- ---------
7
2005 2004 --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Advance of notes payable 27,261 -- Proceeds received from related parties 99,600 84,604 Repayments made to related parties (65,253) -- Proceeds from notes payable -- 250,000 Proceeds from bank overdraft 100,576 -- Preferred stock dividend (11,092) -- Proceeds from preferred shares subscription 150,000 -- Payment on leases (7,354) (4,515) --------- --------- Net Cash Provided By Financing Activities 293,738 330,089 --------- --------- FOREIGN EXCHANGE GAIN ON CASH HELD IN FOREIGN CURRENCY 1,150 8,222 --------- --------- NET INCREASE (DECREASE) IN CASH FOR THE PERIOD (46,043) 84,880 CASH - BEGINNING OF PERIOD 53,736 -- --------- --------- CASH - END OF PERIOD $ 7,693 $ 84,880 ========= ========= Non-Cash Transactions: Isuance of shares related to acquisition of Disclosureplus $ 176,000 $ -- Issuance of shares for consulting services to be rendered $ 120,000 $ --
8 ACTIVECORE TECHNOLOGIES, INC. AND SUBSIDIARIES (formerly IVP TECHNOLOGY CORPORATION) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2005 (UNAUDITED) NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION Basis of Presentation and Going Concern The accompanying unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations for reporting on Form 10-QSB. Accordingly, certain information and disclosures required by generally accepted accounting principles for complete financial statements are not included herein. The interim statements should be read in conjunction with the financial statements and notes thereto included in the Company's latest Annual Report on Form 10-KSB. The results for the three months may not be indicative of the results for the entire year. Interim statements are subject to possible adjustments in connection with the annual audit of the Company's accounts for the fiscal year 2005, in the Company's opinion all adjustments necessary for a fair presentation of these interim statements have been included and are of a normal and recurring nature. The consolidated financial statements are expressed in United States dollars and have been prepared in accordance with accounting principles generally accepted in the United States of America. Our independent auditors have issued a going concern opinion on our consolidated financial statements as at December 31, 2004 that raise substantial doubt about our ability to continue as a going concern. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company has experienced negative cash flows from operations and has an accumulated deficit at March 31, 2005 of $38,846,184. The Company has funded its activities to date almost exclusively from debt and equity financings. Management's plan to continue operations is to raise additional debt or equity capital until such time as the Company is able to generate sufficient operating revenues through its new acquisitions. The Company's ability to continue as a going concern is dependent on its ability to raise additional debt and equity financing and to implement its business plan to market and sell its various enterprise software and services. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. 9 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION - (Continued) Recent Accounting Pronouncements In December 2004 the FASB issued SFAS No. 123 (revised 2004), Shares - Based Payment, ("SFAS No. 123 R"), which amends, "Accounting for Stock - Based Compensation, and supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees. SFAS No. 123 (R) required compensation expense to be recognized for all share - based payments made to employees based on the fair value of the award at the date of grant, eliminating the intrinsic value alternative allowed by SFAS No. 123. Generally, the approach to determining fair value under the original pronouncement has not changed. However, there are revisions to the accounting guidelines established, such as accounting for forfeitures that will change our accounting for stock-based awards in the future. SFAS No. 123 (R) must be adopted in the annual period beginning after June 15, 2005. The statement allows companies to adopt its provision using either of the following transition alternatives: (i) The modified prospective method, which results in the recognition of compensation expense using SFAS 123(R) for all share-based awards granted after the effective date and the recognition of compensation expense using SFAS 123 for all previously granted share - based awards that remain unvested at the effective date; or (ii) The modified retrospective method, which results in applying the modified prospective method and restating prior periods by recognizing the financial statement impact of share-based payments in a matter consistent with the pro forma disclosure requirements of SFAS No. 123. The modified retrospective method may be applied to all prior periods presented or previously reported interim periods of the year of adoption. The Company has not yet determined either the method of adoption or the impact that the new standard is expected to have on our financial statements. In December 2004, the FASB issued SFAS NO. 153, "Exchanges of Nonmonetary Assets - an amendment of APB Opinion No. 29." The statement addresses the measurement of exchanges of nonmonetary assets and eliminates the exception from fair value measurement for nonmonetary exchanges for similar productive assets and replaces it with an exception for exchanges that do not have commercial substance. SFAS No. 153 is effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The Company is Currently evaluating the impact of adopting this statement. 10 NOTE 2 DISCONTINUED OPERATIONS SilverBirch Studio Effective February 29, 2004, the Company entered into an agreement to sell certain assets and liabilities of the Company's cellular phone game and ring tone development group, SilverBirch Studios, and the web portals Recessgames.com, Bladeofzorro.com and Silverbirchstudios.com (collectively, the "Games Division") to SilverBirch Studios, Inc. SilverBirch Studios Inc. is majority owned by a former employee and officer of the Company. The purchase price consisted of the following: (a) A promissory note in the amount of $830,300 (CAD $1,000,000) payable in 10 monthly installments commencing March 31, 2005. The note bears interest at 12% per annum, to be paid on a monthly basis commencing on March 31, 2004. In February, 2005 the Company reached an agreement with SilverBirch Studios Inc. to amend the terms of the note to extend the repayment over 2 years commencing July 2005 and to take shares in lieu of interest cash payments for interest owing from September 2004 to June 30, 2005. The Company waived the penalty fee equal to 20% of the interest payment. The note is collateralized by a general security agreement in first position over all assets of SilverBirch (b) The Company will maintain a 5% equity interest in SilverBirch Studios Inc., with participation rights to maintain that 5% ownership rate. The Company determined that the value of the 5% interest is $0; (c) Under a royalty agreement with a 4-year term commencing on March 1, 2004. SilverBirch will pay the Company a royalty equal to 2% of the gross revenues of SilverBirch, payable on a quarterly basis during the term. The total royalty payments will be capped at a maximum of $1,079,300 (CAD $1,300,000). The Company has not received any royalties for the period ended December 31, 2004. (d) A non-exclusive grant of the right to use any games that were in the process of being created by the games division up until the effective date of the sales agreement for use in the Company's direct marketing and advertising operations on the basis of a royalty equal to normal commercial terms less 10%. Due to the fact that the recoverability of the note is dependent upon the future successful operations of the division sold, management determined that the recognition of the sales proceeds was not appropriate. Accordingly, the value of the note which amounted to $830,300 (CAD $1,000,000) has not been included in the consolidated results for the fiscal quarter ended March 31, 2004 and will be accounted for as cash receipts are received in fiscal 2005 and 2006. 11 NOTE 2 DISCONTINUED OPERATIONS - (Continued) SilverBirch Studios - (Continued) Following is a summary of the results of operations of the Games Division for the period from January 1, 2004 through February 29, 2004. 2004 ----------------- Salaries and wages $ 130,569 ----------------- Net loss from discontinued operations $ 130,569 ================= 12 NOTE 3 ACQUISITIONS Disclosureplus, Inc. On February 25, 2005, the Company acquired all the outstanding common stock of DisclosurePlus Inc. (DP) a privately held Canadian Corporation which provides publicly traded corporations with the foundation and tools to enhance the scope of corporate disclosure in-line with a standardized regulatory compliant web-based solution. Consideration for this acquisition represented 800,000 shares of the Company's restricted common stock valued at $176,000 in addition to $60,600 cash. The value allocated to the common share consideration and was based on the weighted average share price of the Company's common shares for the two trading days before, the day of, and the two days after the day the Company entered into the terms of the acquisition agreement. The total purchase price of $241,600 also includes $5,000 of other acquisition costs. The Company accounted for this acquisition using the purchase method of accounting in accordance with the provisions of SFAS No. 141, and accordingly, DP's operating results have been included in the Company's consolidated statement of operations from the acquisition date through to March 31, 2005. The Company acquired net tangible assets of $0, though the transaction provided the Company with intellectual property, customers, and a set of employees who had operated this business prior to the acquisition. The excess of the consideration given over the fair value of the net assets acquired ($241,600) has been recorded as goodwill and is not deductible for tax purposes. Given that this transaction was completed late in the quarter ended March 31, 2005, the Company has not yet completed its analysis of the intangible assets acquired. It is the Company's expectation that during the quarter ending June 30, 2005 it will adjust the following purchase price allocation to reflect the acquisition of certain intangible assets. The Company will account for the purchased goodwill in accordance with the provisions of SFAS 142. The Company's preliminary purchase price allocation recorded for the acquisition of DP is as follows: Purchase price $236,600 Acquisition - fees and expenses 5,000 -------- Goodwill $241,600 ======== The above purchase price allocation is subject to adjustment these adjustments may be material. Pro forma financial information giving effect to the acquisition of DP has not been provided on the basis that its results of operations for the three months ended March 31, 2005 and 2004 would not be material to the Company. NOTE 4 ACCOUNTS RECEIVABLE The components of accounts receivable, net, as of March 31, 2005 and December 31, 2004 consist of: 2005 2004 ----------- ----------- Trade receivables $ 2,931,116 $ 2,808,335 Imputed interest discount (91,343) (100,000) Allowance for doubtful accounts (43,970) -- ----------- ----------- Accounts receivable, net $ 2,795,803 $ 2,708,335 =========== =========== 13 NOTE 4 ACCOUNTS RECEIVABLE - (Continued) Trade receivables consist primarily of vendor receivables for enterprise software and information technology services sold. An imputed interest discount is included in the value of accounts receivable. NOTE 5 OTHER RECEIVABLES Other receivables, of $21,441 as at March 31, 2005 represents an advance made to a principal of Disclosureplus. NOTE 6 PROPERTY AND EQUIPMENT As of March 31, 2005 and December 31, 2004, property and equipment consisted of:
2005 2004 --------- --------- Computer equipment $ 500,004 $ 476,990 Office equipment and furniture 60,354 87,371 Computer software 33,045 33,378 Leasehold improvements 42,159 41,185 --------- --------- 635,562 638,924 --------- --------- Less accumulated depreciation and amortization (355,346) (326,464) --------- --------- Property and Equipment, net $ 280,216 $ 312,460 ========= =========
Depreciation expense for the three months ended March 31, 2005 and 2004 amounted to $31,232 and ($1,967) respectively. Assets held under capital lease in the amount of $64,584 (2004 - $64,584) with accumulated depreciation in the amount of $28,184 (2004 - $22,802) are included in computer equipment. 14 NOTE 7 GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill and other intangibles assets consisted of the following as of March 31, 2005 and December 31, 2004:
2005 2004 ----------- ----------- Other intangible assets subject to amortization: Customer contracts $ 1,010,572 $ 1,024,666 Customer lists 275,000 275,000 Capitalized software 115,703 115,701 Licenses 51,240 51,242 ----------- ----------- 1,452,515 1,466,609 ----------- ----------- Less: Accumulated amortization Customer contracts (146,129) (97,419) Customer lists (137,500) (114,583) Capitalized software (57,852) (48,210) Licenses (51,240) (32,259) ----------- ----------- Other intangible assets subject to amortization, net 1,059,794 1,174,138 Goodwill 866,272 622,003 ----------- ----------- Goodwill and other intangible assets, net $ 1,926,066 $ 1,796,141 =========== ===========
The changes in goodwill for the three months ended March 31, 2005 and year ended December 31, 2004 are as follows:
2005 2004 ----------- ----------- Balance, beginning of period $ 622,003 $ 100,000 Acquisitions 241,600 510,095 Effect of foreign exchange rate fluctuation 2,669 71,908 Purchase price allocation adjustments from prior acquisitions -- (60,000) ----------- ----------- Balance, end of period $ 866,272 $ 622,003 =========== ===========
15 NOTE 7 GOODWILL AND OTHER INTANGIBLE ASSETS Amortization expense for other intangible assets for the three months ended March 31, 2005 was $100,250 (2004 - $29,133). Estimated future amortization of other intangible assets based on balances existing at March 31, 2005 is as follows: Amount ---------- 2005 remainder of the year $ 239,807 2006 302,609 2007 204,933 2008 204,933 2009 107,512 ---------- Total $1,059,794 ========== NOTE 8 INVESTMENT On June 26, 2003, the Company purchased 300,000 common shares, equal to approximately 5% of the then issued share capital of ePocket, Inc. for 1,000,000 shares of the Company's common stock. The shares were valued at $0.25 per share or an aggregate of $250,000, representing the market value at the date of issuance. The investment in ePocket, Inc. is valued at cost in the accompanying consolidated balance sheet. NOTE 9 LONG-TERM DEBT Long-term debt as of March 31, 2005 and December 31, 2004 consists of the following:
2005 2004 ---------- ---------- Note payable to IBEW Local Union 105, five year term, no principal payments until August 2004, bearing interest at 12% (1) 500,000 500,000 Note payable to SCI Healthcare Group, unsecured (2) 114,207 130,915 Short term loans (3) 596,067 543,901 Bank term loan, seven year term with monthly equal principal payments, bearing interest at the Canadian prime plus 3% (4) 165,770 173,967 Bank term loan, 30 months term with monthly equal principal payments, bearing interest at the HSBC (Britain) Base Rate plus 4.5% 169,110 -- ---------- ---------- 1,545,154 1,348,783 Less current portion 985,615 857,161 ---------- ---------- Long term portion $ 559,539 $ 491,622 ---------- ----------
16 (1) On July 31, 2003, the Company's wholly owned subsidiary ActiveCore Technologies Limited, received a $500,000 term loan from the International Brotherhood of Electrical Workers union in Hamilton, Ontario, Canada. Under the terms of the agreement, the first year accrued interest at the rate of 12% and the principal was repayable over a five-year term with no principal nor interest payments required during the first 12 months, principal payments were to be amortized over the remaining 48 months of the loan. The loan was convertible into common stock of the Company at the rate of 4.5 shares for every 1 dollar of the loan balance, excluding interest, remaining at the time of conversion. As additional consideration for the loan, the Company issued warrants to the lender for the purchase of 50,000 shares of common stock at a purchase price of $0.312 per share which expired on July 31, 2004. The fair value assigned to the warrants amounted to $0. The Company estimated 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 loan is collateralized by substantially all of the assets of the subsidiary Company. During the year ended December 31, 2004 the Company and the union agreed to exchange the outstanding loan into manditorily redeemable convertible preferred shares (series C) in exchange for the note payable and the release of its security over ActiveCore Technologies Limited, one of the Company's Canadian subsidiaries. The series C shares were not issued as at March 31, 2005. Interest that accrues on the note until conversion to preferred shares will be satisfied by cash or the issuance of additional common shares. Once the note is converted to the series C preferred shares a dividend equal to 12% on the outstanding preferred share balance will be payable in cash or in the form of additional common shares. (2) The promissory note relating to the acquisition of SCI Healthcare Group bears interest at 10% and is payable in ten monthly installments commencing April 30, 2004. (3) During 2004, various arm's length parties loaned the Company, on a short term basis, funds to assist with working capital. (4) On August 17, 2004 one of the Company's Canadian subsidiaries obtained a term loan with a Canadian Chartered Bank in the amount of (CAD) $220,000. Under the terms of the agreement, the loan is repayable over a seven year term with principal and interest payments due monthly. Interest on the borrowings is the bank's prime rate plus 3%. As of March 31, 2005 the bank's prime rate was 4.25%. Future maturities of short and long-term notes payable as of March 31, 2005 are as follows: 2005 $ 901,333 2006 218,739 2007 218,739 2008 136,756 2009 26,095 2010 26,095 2011 17,397 ---------- $1,545,154 17 NOTE 10 DUE TO RELATED PARTIES The Company's officers and directors have loaned various amounts to the Company and its subsidiaries to meet operating cash flow requirements. The amounts due to related parties are non-interest bearing and have no specific repayment terms. The balances due them were $166,711 and $132,364 as of March 31, 2005 and December 31 2004, respectively, and are classified as current liabilities in the accompanying consolidated balance sheet. During 2004 Ardrossan Investments Inc. a Canadian Controlled Private Corporation owned and operated by the spouse of a former officer and director of the Company loaned the Company, on a short term basis, funds to assist with working capital, subsequent to the year end this loan was paid in full. NOTE 11 REVERSE STOCK SPLIT In order to satisfy the terms of the Cratos share purchase agreement (see note 18), the Company conducted a reverse split of its shares on a 10:1 basis effective March 1, 2005. All share information contained in this Form 10-Q has given effect to this transaction. NOTE 12 TAXES PAYABLE Activecore Technologies Limited, a Canadian subsidiary of ActiveCore Technologies, Inc. has a liability to the Canada Customs and Revenue Agency ("CCRA") for $440,995 including un-remitted payroll taxes in the approximate amount of $338,418, which is comprised of $255,418 for current payroll taxes, and $83,000 from a December 31, 2002 CCRA employee audit assessment whereby several contract employees were deemed to be eligible for statutory pension and unemployment premiums not previously recorded. The Company has accrued these liabilities together with appropriate interest and penalties. This liability is included in taxes payable in the current liabilities section of the accompanying consolidated balance sheet as of March 31, 2005. Since January 2005, the Company has been making monthly term payments of $44,137 per month. Failure to continue to make payments on a timely basis could result in an aggressive collection effort by the CCRA which could have a significant negative effect on the Company's operations. NOTE 13 COMMITMENTS AND CONTINGENCIES (a) On January 13, 2002, the Company canceled its "Power Audit" software distribution agreement with the licensor. In January 2003, the licensor commenced a proceeding in Ontario, Canada against the Company which was placed into abeyance and then revived in August 2003 alleging that the Company had infringed upon the copyright that the licensor maintained, and further that the Company had breached the distribution contract. The licensor has claimed punitive and exemplary damages of Canadian $4,000,000 and $1,000,000, respectively. The Company has retained legal counsel to defend itself on the basis that there is no merit to the case and even if there was merit, the time frame in which to bring an action in the contract has expired. Compulsory mediation has occurred in the case and no settlement was offered or agreement was arrived at during the mediation phase. The next step would normally be "examination for discovery" then on to a trial. The Company has not yet determined if it will counter-sue for return of all proceeds paid to Orchestral during the period of time between 1999 and 2001. Orchestral sent a settlement letter to the Company dated January 10, 2005 and has subsequently brought an Application before the Ontario courts to enforce the terms of the settlement letter. The court ordered that the settlement letter was enforceable and that $226,000 was owed by the Company to Orchestral. An appeal by the Company of this judgment is pending. An allocation of $226,000 has been made on the Company's financial statements for the punitive and exemplary damages, however, it maintains that the action is frivolous. 18 (b) On March 17, 2000, the Company entered into a consulting agreement with the former stockholder of an inactive reporting shell company that the Company acquired. The consulting agreement provides that one year after the execution of the agreement, ("reset date"), the 35,000 common shares issued by the Company to the former stockholder shall be increased or decreased based upon the average closing price of the Company's stock 30 days prior to the reset date, so the value of the 35,000 shares will equal $50,000. The average closing price of the stock was $14.87 per share. The Company is obligated to issue an additional 30,284 common shares to the consultant as an additional fee. In March 2004, the consultant filed a claim in the Superior Court of the District of Columbia against the Company seeking, among other things, the reset shares. The Company engaged legal counsel to vigorously defend itself against the claim. The Company believes the consultant is not entitled to the reset shares due to the SEC and regulatory problems relating to the acquisition of the shell company and as such has not provided any accrual for this matter in the accompanying consolidated financial statements. This case is proceeding to arbitration on August 26, 2005 which will take place in Washington, D.C. (c) From December 2003 to April 2004, the Company was engaged in discussions with certain major shareholders of Infolink Technologies Limited with regard to the potential acquisition of Infolink Technologies Ltd. a public company listed on the Toronto Stock Exchange venture board under the symbol "IFL". During the course of discussions, an offer to purchase was rebuffed by Cesar Correia, the former Chairman of the Board, President and CEO and 34% shareholder of Infolink. At the time, Mr. Correia was told that the Company would purchase another competitor to Infolink, C Comm Network Corporation. In May of 2004, the Company purchased C Comm. In July of 2004, an unrelated minority shareholder of Infolink commenced an action in Ontario alleging that Mr. Correia has mismanaged Infolink and amongst other things that he had inappropriately obtained funds from the company and converted them to his own purposes. The day prior to the court hearing with regard to the minority shareholder action, Mr. Correia together with Infolink Technology commenced a proceeding in the same Ontario court alleging unfair competition as a result of an alleged improper acquisition of confidential information from Infolink and numerous other causes of action. Meanwhile, the court appointed a monitor and investigator to look into the allegations against Mr. Correia. The court appointed monitor and investigator issued an interim report in October 2004 which found that several of the allegations against Mr. Correia were substantiated. Mr. Correia was removed from the position of Chairman, President and CEO of Infolink and is now an employee of Infolink with a reduced salary. The Company believes that Infolink as a corporate entity will not proceed with any action against the Company as the Company believes that the action was commenced as a defensive move by Mr. Correia and now that he has been removed from management of Infolink there is little basis for the action to continue. NOTE 14 COMMON AND PREFERRED SHARES Common Shares On February 9, 2005, the Company issued 400,000 restricted shares of Common stock to two directors as Director's fee. The fair value of these shares, based on the market value on the date they were issued was $.30 each. 80,000 restricted shares of Common stock were also issued to two outside parties to pay for services rendered to the Company. The Company has recorded, in its Consolidated Statement of Operations, an expense of $24,000 representing the fair market value of these shares on of the date they were issued. 19 During the three months ended March 31, 2005, the Company issued 50,010 restricted shares of Common stock for beneficial owner round up as a result of the reverse stock split on March 1, 2005. Preferred Shares The Company has issued or committed to issue three series of preferred shares: Series A and B On September 14, 2004, the board of directors authorized the issuance of 8,333,333 Series A and 4,167,667 Series B preferred shares which had a purchase price of $0.03 and $0.06, respectively totaling $500,000 of which $150,000 remains outstanding at December 31, 2004. With respect to the Series A shares, the Company may force conversion if the trading price of the Company's common shares exceeds $2.00 for 30 days. With regard to the Series B shares, the Company may force conversion if the trading price of the Company's common shares exceeds $4.00 for 30 days. These shares have a right of redemption whereby if the stock is not converted within 5 years, the Company, at its option, shall have the right to redeem all outstanding but unconverted shares of series A (same for B) Preferred Stock held by such person by paying to the holder thereof $0.30 (for B, $0.60) per share plus all accrued but unpaid dividends thereon, if any. These shares are not manditorily redeemable. The preferred shareholders will be paid a dividend at the rate of 10% per annum. Series C In 2004, the Company and the International Brotherhood of Electrical Worker's Union (See Note 9) agreed to convert the outstanding loan of $500,000 into Series C convertible preferred shares. The terms of the Series C preferred stock require the Company to redeem the preferred shares over 16 quarters, commencing on December 31, 2004. The Company shall have the option of paying the quarterly redemptions in the form of cash or common shares. Also the preferred shares with have a 12% annual dividend rate payable quarterly based on the number of preferred shares outstanding at the end of the quarter. As at March 31, 2005 the Series C preferred shares have yet to be issued. NOTE 15 WARRANTS The Company's Board of Directors has granted warrants to non-employees of the Company. The following is a summary of activity under these warrant arrangements. 20
Non-Employee Weighted Options and Average Warrants Exercise Price ------------ -------------- Warrants outstanding at December 31, 2003 88,000 1.47 Expired 51,500 0.45 Granted 400,000 0.18 ------- ----- Warrants outstanding at March 31, 2005 and December 31, 2004 436,500 $0.42 ======= =====
As of March 31, 2005 and December 31, 2004, all warrants were fully vested and exercisable. NOTE 16 INCOME TAXES No provision for Federal, state and foreign income taxes has been recorded as the Company has net operating loss carry forwards to offset any net income for the three months ended March 31, 2005 and the year ended December 31, 2004. As of March 31, 2005, the Company has significant net operating loss carry forwards for income tax purposes available to offset future taxable income. The Company is in arrears on filing many of its statutory income tax filings and is therefore unable to determine the amount of such carry forwards at this time. Under the Tax Reform Act of 1986, the amounts of and benefits from net operating losses and capital losses carried forward may be impaired or limited in certain circumstances. Events, which may cause limitations in the amount of net operating losses that the Company may utilize in any one year, include, but are not limited to, a cumulative ownership change of more than 50% over a three-year period. Deferred tax assets as of March 31, 2005 and December 31, 2004 consist primarily of the tax effect of net operating loss carry forwards and amortization of intangibles. The Company has provided a full valuation allowance on the deferred tax assets as of March 31, 2005 and December 31, 2004 to reduce such deferred tax assets to zero, as it is management's belief that realization of such amounts is not considered more likely than not. NOTE 17 TOTAL COMPREHENSIVE INCOME (LOSS) The following table presents the Company's total comprehensive income (loss) for the three month periods ended March 31, 2005 and 2004 respectively:
2005 2004 --------- --------- Net loss for the period $(954,182) $(787,677) Other comprehensive income (loss) for the period 59,381 (8,222) --------- --------- Comprehensive net loss for the period $(894,801) $(795,899) ========= =========
21 NOTE 18 SUBSEQUENT EVENTS Acquisition of Cratos Technology Solutions Inc. Subsequent to March 31, 2005, the Company signed a share purchase agreement (the "Share Purchase Agreement") with Andrew Wickett ("Wickett") and Debbie Gracie-Smith ("Gracie-Smith"), the only shareholders of Cratos Technology Solutions Inc. ("Cratos"), pursuant to which the Company acquired all of the stock of Cratos in exchange for approximately CAD$2.6 million in cash and Company Common stock. Under the terms of the Share Purchase Agreement, the Company issued approximately 8.9 million shares of Common stock of the Company (the "Purchaser Shares") and will pay cash in the amount of CAD$200,000 to Wickett and Gracie-Smith in equal proportions. The per share stock consideration was USD$0.223 which is based on the 20 trading day average closing price of the Company's common stock determined at the time of execution of the Share Purchase Agreement. The purchase price is subject to an adjustment mechanism which will require (i) the Company to issue additional shares to Wickett and Gracie-Smith (in equal proportions) in the event Cratos' exceeds certain specified financial targets, and (ii) Wickett and Gracie-Smith to contribute back to the Company's treasury Purchaser Shares (in equal proportions) in the event Cratos' fails to achieve certain specified financial targets. Any future share consideration paid or received by the Company subject to the above arrangement will be recognized at fair value effective the date such amounts become determinable. In addition to the foregoing, the Company made a cash payment on behalf of Cratos to its primary supplier which equaled all amounts due to such supplier and which amounts represented receivables to Cratos. This supplier will also receive a specified number of bonus shares of the Company's common stock in consideration for its agreement to (i) enter into renewed agreements which Cratos, and (ii) terminate any existing security agreements between such party and Cratos as well as discharge any registered security and agree to subordinate any future security to that of any senior lender of the Company. Pursuant to the terms of the Share Purchase Agreement, each of Wickett and Gracie-Smith agreed to contractual lock-up and voting restrictions in respect of the Purchaser Shares. Specifically, the Purchaser Shares will be subject to a lock-up in accordance with the following release conditions: (i) 20% of the Purchaser Shares shall be released on the seventh business day following the closing date; (ii) 40% of the Purchaser Shares will be released on the first anniversary of the closing date; and (iii) 40% of the Purchaser Shares will be released on the second anniversary of the Closing Date. Each of Wickett and Gracie-Smith will also agree for a period of two years from the closing date to vote the Purchaser Shares in support of any recommendation made by the directors and/or management of the Company at any annual or special meeting of the Company. On April 30, 2005, Cratos secured a $1.75 million credit facility with a major Canadian bank. Amounts drawn on this facility bear interest at the prime rate plus 1.00% per annum. The facility is secured by a general security agreement against Cratos and by personal guarantees of two principals of the Company. The margin requirements of the facility restrict borrowing to 85% of effectively assigned and domestic unencumbered trade accounts receivables and insured non-domestic unencumbered trade account receivables. 22 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION Forward-Looking Statements and Associated Risks. This Report contains forward-looking statements. Such forward-looking statements include statements regarding, among other things, (a) the Company's projected sales and profitability, (b) the Company's growth strategies, (c) anticipated trends in the Company's industry, (d) the Company's future financing plans, (e) the Company's anticipated needs for working capital, (f) the Company's lack of operational experience, and (g) the benefits related to ownership of the Company's common stock. Forward-looking statements, which involve assumptions and describe the Company's future plans, strategies, and expectations, are generally identifiable by use of the words "may," "will," "should," "expect," "anticipate," "estimate," "believe," "intend," or "project" or the negative of these words or other variations on these words or comparable terminology. This information may involve known and unknown risks, uncertainties, and other factors that may cause the Company's actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed or implied by any forward-looking statements. These statements may be found under "Management's Discussion and Analysis of Financial Condition and Results of Operations" as well as in this Report generally. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks outlined under "Risk Factors" and matters described in this Report generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this Report will in fact occur as projected. Overview ActiveCore Technologies, Inc. ("ActiveCore" or the "Company") is a Nevada registered Company with its head office in Toronto, Canada, and operations in the USA and the UK. The Company operates within the enterprise software and services market in a sector which has been described by the Gartner Group as that group of vendors of software and services that sell and install "Smart Enterprise Suites" and related products. The Company has organized itself into two distinct divisions to deliver its products and services. The Systems Integration and Migration (SIM) division focuses on large projects in the financial services, insurance, healthcare, education and manufacturing industries. These projects are aimed at protecting the customer's investment in, improving the functionality of, and extending the life span of their existing information technology systems. The acquisition of Cratos subsequent to the end of the quarter ended March 31, 2005 is expected to begin to give this division critical mass. The Corporate Disclosure and Messaging (CDM) division is focused on working with these same and additional customers to provide them with a range of communication and information distribution based products that allow them to leverage existing corporate information and share it with their customers, employees and other stakeholders and facilitates their move towards a Smart Enterprise. The Company's products encompass application integration, application modernization, application migration, content management, vertical application portals, a corporate disclosure portal and an outbound corporate messaging portal. This product set gives ActiveCore the capability to deliver effective, efficient and economical integration, modernization, migration and corporate messaging services or complete solutions to clients seeking to enable or extend their existing systems to stakeholders and customers without wholesale changes to their systems. ActiveCore's products are designed to enable the Company's clients to extend the functions of their current systems, often called "legacy systems", by using the Company's integration, modernization and migration product sets that are sold and delivered by the SIM division. For organizations wanting to take the next step in achieving what ActiveCore terms "A Smart Enterprise" the Company offers its disclosure and messaging products that are sold and delivered by the CDM division. By concentrating on the improvement of the customers existing systems and providing an additional communication/messaging product layer the Company is able to offer its customers a cost effective way to rapidly improve the overall capability and extend the life of their existing information technology assets. 23 The two divisions of the Company have very different revenue models and it is important that this is clearly understood. In future quarters the company plans to provide more granular reporting by division so that shareholders can develop a better understanding of the Company's revenue sources and how the revenue mix within the two divisions affects the gross profit margin at a consolidated level. The SIM division derives it revenue from the sale of value added labor and software licenses. This division has repeat customers and maintenance revenue but to grow it must find new customers on a regular basis to replace revenue from completed projects. Projects in this division usually range from one to two years in length and can exceed one million dollars in value. These projects tend to have long sell cycles and are predominantly with large customers. The gross profit percentage of this division varies based on the mix of sales as product revenue tends to yield a higher margin than services revenue. The Company considers this division to be a "solutions provider", therefore, there will always be a mix of both product and service revenue but normally the mix will be weighted towards services. In this division the Company competes with a variety of System Integration "SI" vendors but has the advantage of having ownership of most of the products it uses to develop client specific and industry specific solutions. The CDM division of the Company derives it revenue from the sale of product based services and usually delivers these services via an Application Service Provider (ASP) model. The size of the individual sales in this division are much smaller than in the SIM division but the revenue generated by this division is recurring in nature. Contracts in this division can vary from a one time job to three years and the length is determined by the target customer. Customers that purchase the DisclosurePlus product set usually sign three year contracts that consist of an initial setup fee and monthly payments and once the customer has committed to use this product set they become long term customers. Customers that purchase the Messaging product set tend to sign shorter contracts or choose to use the service as required. This division has shorter sell cycles and employs both telephone and direct sales representatives. The gross profit percentage from this division will vary based on the mix of Messaging sales versus DisclosurePlus sales. DisclosurePlus sales will yield a higher margin once the division has reached a critical mass of repeat customers. The Company has set up a "service bureau" operation under the product identity "ActiveCast" to implement the Messaging ASP service whereby it offers broadcast services to customers on an outsourced basis using its own internal installation of ActiveLINK and DynaPortal. The Company is actively increasing the scope and revenue earning capacity of this operation by investing in fixed assets and personnel to grow the revenue and client base. The Company completed the DisclosurePlus acquisition in the first quarter to add additional revenue opportunities to this division and to increase the amount of recurring revenue for the overall Company. The Company continues to search for potential acquisition candidates that can expand the range of products and services that the Company can offer within the context of the CDM division. In this area of operations, the Company competes with such companies as Infolink Technologies Limited in Canada, J2 Global Communications, Inc., and Xpedite Corporation. The Company has developed a clear vision of how it intends to expand the business in the future. Expansion will accomplished by growing the SIM and the CDM divisions organically as well as developing markets via strategic acquisitions in either division. The Company will also expand its marketing program to increase the "upselling" and "cross selling" opportunities which naturally exist between the two divisions. The Company continues to hold a minority interest in two other companies and it expects these two holdings to yield benefits to ActiveCore during the balance of 2005. SilverBirch Studios, (previously divested by the Company - a 5% interest has been retained) is continuing to improve both its product catalogue and its financial position. The Company believes that SilverBirch will succeed and that the Company's investment is sound. The ePocket organization is currently completing a major round of funding that will allow it to enter the "electronic payment" market with a revolutionary product. The Company maintains strong business relationships with both companies. The Company also envisions significant benefits from the Cratos acquisition as the relationship and synergies between ePocket and ActiveCore become more developed. 24 Market Positioning Summary The Company's "Smart Enterprise Suite" The Company provides organizations of all sizes with the capability to integrate, enable, and extend their "legacy systems" to connect to and communicate with their customers, employees and stakeholders. Therefore, the Company's products and services facilitate the creation of the "Smart Enterprise". The Company's products encompass application integration, application modernization, application migration, content management, vertical application portals, a corporate disclosure portal and an outbound corporate messaging portal. In addition the Company delivers its DisclosurePlus and ActiveCast product sets via an "Application Service Provider" (ASP) model using a Company hosted corporate messaging service bureau. The Company's products can be sold individually or as a combination to form customized solutions based on the customers' most immediate need. This approach allows the customer to deal with information technology problems in a tactical manner and can often alleviate customer capital expenditure restrictions. ActiveLINK is the Company's core application integration product and is used to create solutions that integrate disparate databases and applications, creating a hub through which legacy system functionality can be enabled and extended. The other products owned by the Company are Net. Visual, ActiveCast, DisclosurePlus and MD LINK. In addition the Company sells and services third party products that complete its "Smart Enterprise Suite". These include DynaPortal, Caravel, and Micro Focus. ActiveCore normally sells its products and services to companies that want to improve their existing "legacy systems", however, the Company has also identified three other target markets: software resellers, independent software vendors and system integrators. MDI Solutions sells a vertically optimized version of ActiveLINK known as MD LINK to health care facilities to support their systems integration needs. The MDI group also sells consulting support services for other integration products resulting in recurring income from support contracts. The MDI acquisition provided the Company with the knowledge to vertically enhance ActiveLINK and create MD LINK. ActiveCast, the Company's corporate messaging software product is sold to companies that want to extract data from internal "legacy systems" and use it for outbound messaging. These opportunities have short sales cycles resulting in rapid cash flow and recurring revenue from organizations sending information to dedicated lists. This product is also directly marketed to all companies that need to communicate "stand alone" information to their customers, employees and stakeholders. The C Comm acquisition provided the base product from which ActiveCast evolved. Twincentric is primarily involved in system modernization and the migration of RPG and Cobol based "legacy systems" to Java for clients using IBM AS 400 and Bull Computer platforms. The modernization work is achieved using the Company owned product known as Net. Visual and the migration work is achieved using a third party product known as Caravel. DisclosurePlus provides corporations with a standard methodology for reporting and distributing information related to public disclosure required by public companies. This division is adding additional products to their offering to expand the functionality available within the DisclosurePlus product. Cratos is a technology solution provider that focuses on payment solutions for the financial services industry and on the migration of mainframe systems to a Microsoft environment. Its expertise in various payment technologies is well known globally as evidenced by its blue chip customers. Cratos uses the Micro Focus product set to perform system migrations for large customers and they have a well trained consulting group that manages and delivers complex payment integration projects. There is an opportunity to introduce several of the Company owned products into Cratos projects. 25 Recent Developments In the MDI Solutions group, further progress has been made in the development of the MD LINK product and the company has recently released version 4.0 of this product and plans to release version 4.1 at the end of June 2005. During the last few months, the Company has obtained several orders for the new version of MD LINK which should be shipped in June 2005 or in July 2005. The Company expects the number of product sales to rise during the balance of 2005 and this is a direct result of the new product features and the marketing efforts of this group in 2004 and early 2005. In the Company's ActiveCore and ActiveCast business lines, the Company is continuing to obtain additional clients. On the ActiveCast side of operations, the Company is also adding additional sales personnel to accelerate the rollout of the Company's innovative messaging portal product. This division has generated new revenue in the first quarter and continues to improve the margins on this business. We expect revenues to continue to increase throughout the remainder of 2005. During the quarter ended March 31, 2005, the Company continued to make relatively large investments in equipment and new staff in this area of the business and the Company expects that during the balance of 2005 revenues should continue to increase. The Company's Twincentric division has begun to execute on a large services contract that was won in the first quarter of 2005 and to date this contract is on schedule. This contract is valued at approximately $4,000,000 USD over the next 5 years and the UK operation may grow in head count in 2005 to support this and other planned contracts that this division continues to pursue. This division will also review new products that are now available to it through synergies resulting from the Cratos acquisition and will study applicability of these products in the UK market. During the second quarter the Company also plans to determine whether ActiveCast and or DisclosurePlus can be deployed to the UK market via the TwinCentric group. The Company continues to acquire new organizations and completed the acquisition of DisclosurePlus in the first quarter of 2005 and completed the acquisition of Cratos subsequent to the end of the quarter. These acquisitions will add significant revenue to the Company during the balance of 2005. The DisclosurePlus group is actively selling the DisclosurePlus product and once we add the "press release" product to their offering sales will accelerate at an even quicker pace. The Company expects the SilverBirch Studios relationship to evolve through the second and third quarters and the Company is confident that the outstanding receivable from SilverBirch will be addressed successfully in 2005. SilverBirch Studios have received several new development contracts from major entertainment companies and should continue to improve their revenue picture over the next two quarters. Acquisitions and Reorganizations The Company maintains an active interest in acquisitions and the reorganization of its component parts to better service clients. The Company has undertaken an internal restructuring to facilitate better customer service, increased sales and reduced costs. Investment in its existing operations augmented by growth through acquisitions is a key goal of management as is the effective use of capital to drive acceptable returns on investment. The following paragraphs briefly describe recent acquisitions and reorganizations that have occurred. Acquisition of DiscosurePlus Prior to being acquired by the Company, DiscosurePlus operated as a private company developing its intellectual property and test marketed its product to several clients before agreeing to be acquired by ActiveCore. On February 25, 2005, the Company entered into a purchase and sale agreement with the shareholders of DisclosurePlus whereby the Company paid 800,000 shares of the Company's common stock representing $176,000 plus $60,600 cash for a total value of $236,600 for 100% of the DisclosurePlus common shares. In connection with this acquisition the Company also entered into management contracts with Gord Sutton and Dean Peloso. 26 DisclosurePlus offers a unique set of products to the public company market. These products are offered as an ASP model and are targeted at public companies that want to provide better disclosure of corporate information to their shareholders, customers and other stakeholders. This division will also add press release dissemination to the product set later this year which is expected to have a positive impact on revenue opportunities. Acquisition of Cratos Technology Solutions Prior to being acquired by the Company, Cratos operated as a private company providing technical consulting services and mainframe migration to companies in the financial services sector in many countries. Subsequent to the quarter ended March 31, 2005, the Company entered into a purchase and sale agreement with the shareholders of Cratos Solutions whereby the Company paid 9,421,030 shares of the Company's common stock in addition to cash consideration of $162,420 representing total consideration of $2,072,627 in exchange for 100% of the shares of Cratos. In conjunction with this acquisition the Company paid CAD $458,000 of debt owed to SQL Tech. by Cratos along with 3,403,227 Common Shares of ActiveCore. The Company also arranged a bank credit facility that was personally secured by the senior mangers of ActiveCore. Cratos is a service based company that specializes in providing project management and delivery to large companies in the financial service, education and insurance market place. This division was purchased based on a multiple of the average of the past three years EBITDA and is currently trending ahead of original projections. Going Concern The accompanying Consolidated Financial Statements have been prepared on the basis that the Company is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company incurred a loss from operations of $845,827 for the three months ended March 31, 2005. The company incurred negative cash flow from operations of $276,859 for the three months ended March 31, 2005, and has a working capital deficiency of $1,311,526 at March 31, 2005. There is no guarantee that the Company will continue as a going concern and will likely still incur a going concern note as at December 31, 2005. The Consolidated Financial Statements do not include any adjustments that might result from the outcome of this uncertainty. Management's plan to continue operations is to raise additional debt or equity capital until such time as the Company is able to generate sufficient operating revenues through its new acquisitions. Critical Accounting Policies The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make a wide variety of estimates and assumptions that affect (i) the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, and (ii) the reported amounts of revenues and expenses during the reporting periods covered by the financial statements. The Company's management routinely makes judgments and estimates about the effect of matters that are inherently uncertain. As the number of variables and assumptions affecting the future resolution of the uncertainties increases, these judgments become even more subjective and complex. The Company has identified certain accounting policies that are most important to the portrayal of its current financial condition and results of operations. Several of those critical accounting policies are noted in the following paragraphs. (A) Principles of Consolidation The Condensed Consolidated Financial Statements include the accounts of the Company and its subsidiaries. All significant inter-company transactions and balances have been eliminated in consolidation. 27 (B) Basis of Presentation The Condensed Consolidated Financial Statements are expressed in United States dollars and have been prepared in accordance with generally accepted accounting principles ("GAAP") in the U.S. (C) Foreign Currency Transactions Assets and liabilities of foreign subsidiaries, whose functional currency is the local currency, are translated at year-end exchange rates. Capital accounts are re-measured into U.S. dollars at the acquisition date rates. Income and expense items are translated at the average rates of exchange prevailing during the year. The adjustments resulting from translating the financial statements of such foreign subsidiaries are recorded as a component of accumulated other comprehensive income (loss) in stockholders' deficiency. Foreign currency transaction gains or losses are reported in results of operations. (D) Use of Estimates The preparation of financial statements in conformity with GAAP 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. Actual amounts could differ significantly from these estimates. (E) Fair Value of Financial Instruments 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 liabilities 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. (F) Profit (Loss) Per Common Share Basic income or loss per common share is based on net income or loss divided by the weighted average number of common shares outstanding. Common stock equivalents were not included in the calculation of diluted loss per share as their effect would be anti-dilutive for the three months ended March 31, 2005. Common stock equivalents were not included in the calculation of diluted income per share for the three months ended March 31, 2005 since the exercise price of all common stock equivalents were greater than the average stock price for the period. Results of Operations Results of Operations for the Three Month Period Ended March 31, 2005 Compared to the Same Period Ended March 31, 2004 Revenues During the three months ended March 31, 2005 the Company generated $523,008 in revenue from the sale of products and services versus $194,495 in revenue from product and services in the same three month period ended March 31, 2004. From a revenue source perspective, the vast majority of this revenue was service related,while product related revenue represented only a small percentage of the total. In the three months ended March 31, 2004, $194,495 of revenue was generated from services work and product installation chiefly by the Company's MDI group. 28 During the first quarter of 2005 the revenue increase over the prior year was a direct result of several decisions taken by the Company. The decision to enter the corporate messaging market created a new revenue stream that did not exist in March 2004. The decision to acquire TwinCentric in the second quarter of 2004 created a new revenue stream that was not present in the first quarter of 2004. The decision to acquire DisclosurePlus in the first quarter of 2005 added new revenue that did not exist in the first quarter of 2004. As evidenced by the above, the Company has undergone a major transformation over the past 12 months due to the acquisitions that it has made. These integration of these acquisitions are progressing well and they represent the main reason for the additional revenue in the first quarter. There were no large Source Code deals in the first quarter of 2005 and DisclosurePlus and ActiveCast generated less revenue than planned due to our delayed acquisition of IFL. The IFL transaction is still active and we anticipate that revenue from this transaction will occur later in the year. With the Company's second quarter acquisition of Cratos, the Company has begun segregating all activities into two divisions known as the SIM division and the CDM division, in future quarters the Company plans to provide more visibility of the revenue mix by each of these divisions. This quarter a majority of the revenue came from professional services. Cost of Sales Cost of sales for the three month period ended March 31, 2005 were $245,634, which consisted of direct wages paid to consulting services staff of $141,262, and amortization of software licensing agreements of $104,372. In the period ended March 31, 2004, cost of sales was $36,011 and consisted of the same cost elements. The principal cost of sales items in the first quarter of 2004 consisted of amortization of software license agreements. As a result of the cost of sales components discussed above, the March 31, 2005 three month period led to a positive gross margin of $277,374 versus a positive gross margin of $158,484 in the three months ended March 31, 2004. This increase in positive gross margins is expected to continue as the Company expands its software sales efforts in the U.S., Europe and other regions. Gross Profit will continue to increase in future quarters as the full impact of recent acquisitions takes effect. Operating Expenses Total operating expenses for the three months ended March 31, 2005 were $1,123,201 versus $789,591 in the three months ended March 31, 2004. After expenses, the Company recognized a loss from operations of $845,827 in the three months ended March 31, 2005 versus a loss from operations of $631,107 in the same quarter ended March 31, 2004. The largest components of first quarter 2005 fiscal year expenses and of first quarter fiscal year 2004 operating expenses were related to salaries and wages, consulting fees, legal and accounting and other general and administration expenses. These expenses are discussed below. In the three months ended March 31, 2005, the Company expended $373,025 in salaries and wages versus $408,100 in the three months ended March 31, 2004. Salaries and wages in 2005 represent the cost of administration and sales and marketing staff except for certain contractors who are shown as consulting costs. Consulting fees for the three months ending March 31, 2005 were $158,949 versus $78,392 in the first quarter ended March 31, 2004. The Company moved some direct wage personnel to contract in the first quarter of 2005 which accounts for the increase. 29 Research and Development costs for the first three months ending March 31, 2005 were $55,000 which represents the labor costs associated with three full time developers working on Company owned products. Legal and accounting expenses for the three months ended March 31, 2005 were $78,575, which was higher than the $26,097 recorded in the three months ended March 31, 2004. The expenses incurred in the first quarter reflect in part the ongoing legal costs associated with actions by Orchestral and Infolink. For the three months ended March 31, 2005, the Company incurred general and administrative expenses of $397,781 as opposed to $216,719 in the quarter ended March 31, 2004. The large increase from 2004 to 2005 is related to the fact that we have made several acquisitions since the 2004 first quarter and the Company has a much larger infrastructure as a result of these acquisitions. In the quarter ended March 31, 2005, the Company spent $28,639 for financial advisory fees compared to $7,250 for the same services in the same period of the prior year. The primary reason for the increase in 2005 was due to a $25,000 loan fee paid to Zorba Financial Services. In the quarter ended March 31, 2005, the Company incurred depreciation charges of $31,232 on equipment versus ($1,967) in the quarter ended March 31, 2004. These charges were related primarily to the addition of computer equipment and other depreciable assets in use in the Company's offices in Canada and the UK. Other Income/Expenses In the quarter ended March 31, 2005, the Company recorded interest received of $460. In the corresponding quarter ended March 31, 2004, the Company earned $7,495 from one month of interest on the SilverBirch promissory note. In the quarter ended March 31, 2005, the Company expended $75,075 in financial interest which was significantly higher than the $33,232 expensed in the first quarter ended March 31, 2004 due to the term loan incurred by C COMM in the first quarter. Foreign exchange losses were $33,740 in the first quarter ended March 31, 2005 compared to $2,264 in the first quarter ended March 31, 2004 as a result of the fluctuation of the U.S. dollar relative to the UK pound and the Canadian dollar. Income (Loss) From Operations The Company had a loss of $845,827 for the three months ended March 31, 2005 compared to a loss of $631,107 for the three months ended March 31, 2004. This increase is predominantly due to increased infrastructure costs associated with the acquisition of DisclosurePlus and Cratos. We anticipate that the Company will improve these operating results in the coming quarter through the consolidation and integration of these new acquisitions and through the growth of the businesses. Discontinued Operations In the quarter ended March 31, 2005, the Company did not record any discontinued operations results related to SilverBirch Studios. Net Loss The Company recorded a net loss for the three months ended March 31, 2005 of $954,182 versus a net loss of $787,677 for the same period in the previous year. Earnings per share for the first quarter was (0.02) versus (0.02) in the same period of 2004. Liquidity and Capital Resources At March 31, 2005, the Company's need for cash included satisfying $4,314,094 of current liabilities, which consisted of accounts payable of $966,565, bank indebtedness in various operating loans of $126,215, $764,640 of accrued liabilities, taxes payable of $1,003,193, current lease obligations of $19,603, the current portion of notes payable, including accrued interest of $985,615, indebtedness to related parties of $166,711 and other current liabilities of $281,552. At March 31, 2005, the Company had a working capital deficiency of $1,311,526. 30 Our ability to continue as a going concern is dependent on the Company's ability to raise additional funding from expansion of our bank facility, an equity injection, a convertible loan and increased sales revenue. At March 31, 2005, the Company had $7,693 cash on hand. In addition, certain shareholders have also supported the Company by foregoing salaries and expense reimbursement from time-to-time or converting shareholders loans to equity. 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. The Company anticipates that its cash needs over the next 12 months will consist of general working capital needs of $3,000,000 Canadian, which would include the satisfaction of current liabilities of $4,314,094. As of March 31, 2005, the Company's net working capital deficiency increased from $802,142 at December 31, 2004 to a deficiency of $1,311,526. The Company anticipates that its cash needs over the next 12 months will be met by primarily from a combination of term debt, equipment loans and leases for expansion purposes, proceeds from the sale of assets, profits, operating credit lines, and term loans. If the Company is unable to obtain additional funding sources of debt and equity capital, then the failure to obtain this funding will have a material adverse effect on the Company's business and this may force the Company to reorganize, reduce its investment in, or otherwise divest of one or more of the Company's operations, or to reduce the cost of all operations to a lower level of expenditure which may have the effect of reducing the Company's expected revenues and net income in 2005 and 2006. Consolidated Statement of Cash Flows Cash on the unaudited consolidated balance sheet decreased from $53,736 in the period ended December 31, 2004 to $7,693 at March 31, 2005. Net Cash Used in Operating Activities For the three months ended March 31, 2005, the Net Cash used in operating activities was $276,859 versus $241,576 in the three month period ended March 31, 2004. In the three months ended on March 31, 2005, cash used in operating activities was primarily a result of the Company's net loss for the period. This net loss was partially mitigated by changes in working capital items including an increase in accounts receivable of $99,476, a decrease in accrued liabilities of $222,058 and an increase in other current liabilities of $289,216. Net Cash Provided in Investing Activities Net cash used in investing activities was $64,072, primarily as a result of the acquisition of DisclosurePlus. Net Cash Provided by Financing Activities Net cash provided by financing activities was $293,738 in the three months ended March 31, 2005 versus $330,089 for the same period in 2004. In the three months ended March 31, 2005, the Company received from preferred share subscription $150,000, and additional proceeds of $100,576 from the bank overdraft. Certain Business Risk Factors A significant portion of the Company's net sales are derived data integration services and from sale of enterprise software, which are subject to increasing competition, rapid technological change and evolving customer preferences, often resulting in the frequent introduction of new products and short product lifecycles. Accordingly, the Company's profitability and growth 31 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. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reported periods. The most significant estimates and assumptions relate to the recoverability of capitalized software development costs and other intangibles, realization of deferred income taxes, and doubtful accounts. Actual amounts could differ significantly from these estimates. ITEM 3. CONTROLS AND PROCEDURES (A) Evaluation of Disclosure Controls and Procedures As of the end of the period covered by this Quarterly Report on Form 10-QSB, the Company carried out an evaluation, under the supervision and with the participation of the Company's Chief Executive Officer and Acting Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rules 13a - 15(e) promulgated under the Securities Exchange Act of 1934, as amended. The Company's disclosure controls and procedures are designed to provide a reasonable level of assurance of achieving the Company's disclosure control objectives. The Company's Chief Executive Officer and Acting Chief Financial Officer have concluded that the Company's disclosure controls and procedures are effective at this reasonable assurance level as of the period covered. (B) Changes in Internal Controls Over Financial Reporting In connection with the evaluation of the Company's internal controls during the Company's quarter ended March 31, 2005, the Company's Chief Executive Officer and Acting Chief Financial Officer have determined that there are no changes to the Company's internal controls over financial reporting that has materially affected, or is reasonably likely to materially effect, the Company's internal controls over financial reporting. 32 PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS James Cassidy and TPG Corporation In March of 2000, the Company entered into an agreement (the "TPG Agreement") with TPG Capital Corporation ("TPG"). Under the TPG Agreement, TPG provided advice and other services to ActiveCore with respect to the acquisition of Erebus Corporation (the "Erebus Acquisition"). The Company pursued the Erebus Acquisition to, among other things, maintain its listing eligibility on the Over the Counter Bulletin Board ("OTCBB"). TPG was the sole stockholder of Erebus Corporation and the Company believes that James Cassidy was a controlling stockholder of TPG. Under the Erebus Acquisition, the Company purchased Erebus, a non-active entity with securities registered under the Securities Exchange Act of 1934, as amended, to, among other things, retain its listing status on the OTCBB. At that time, the Company was at risk of losing its listing eligibility under a new national Association of Securities Dealers ("NASD") listing requirement. Loss of listing eligibility would have resulted in the Company trading in the Pink Sheets. Management and the board of directors at that time determined that such a development would be detrimental to its stockholders and other investors. The Company consummated the Erebus Acquisition in March of 2000. Under the TPG Agreement, the Company paid to TPG 200,000 shares of the Company's common stock, then worth $500,000, and $200,000 in cash. In addition, the TPG Agreement contains a reset provision which obligates the Company to issues additional shares of its common stock so that the total number of shares issued to TPG under the TPG Agreement had a value of $500,000 as of the first anniversary of the effective date of the TPG Agreement. Based on the relative share prices of the Company common stock as of March of 2000 and March of 2001, if the Company was required to satisfy the reset provision, the Company would be required to issue to TPG an additional 3,028,378 shares of its common stock ("Reset Shares"). The Company does not believe that TPG is entitled to the Reset Shares. Based on public records, in June of 2001, TPG and Mr. Cassidy reached a settlement agreement with the SEC with respect to securities fraud and disclosure violations alleged by the SEC in connection with transactions substantially similar to the Erebus Acquisition. Neither Mr. Cassidy nor TPG admitted or denied the allegations. A description of the settlement is contained in SEC Litigation Release No. 17023, dated June 4, 2001. Although the Company has maintained its listing status on the OTCBB, the Company has experienced significant regulatory problems in connection with the Erebus Acquisition that are related to the allegations underlying the settlement between TPG and Mr. Cassidy and the Securities and Exchange Commission. These problems have resulted in significant delay and expense to the Company. In March of 2004, Mr. Cassidy, as assignee of TPG's rights under the TPG Agreement, filed a claim in the Superior Court of the District of Columbia against the Company seeking, among other things, the Reset Shares. The Company has engaged a law firm to vigorously defend it against the claim. During the quarter ended March 31, 2005 the action was withdrawn and the Company and Mr. Cassidy agreed to enter into arbitration on the matter and this is now in process with the arbitration board currently being established. Arbitration is expected to begin in April 2005. No contingent liability has been allocated for any eventual loss on the action. Pursuant to Rule 405 promulgated under the Securities Act of 1933, as amended, the Company believes that Mr. Cassidy may be deemed to be a "promoter" of the Company. The Company has no ongoing business relationship with Mr. Cassidy and he is not employed by the Company in any manner. 33 This case is proceeding to arbitration on August 26, 2005 which will take place in Washington, D.C. Orchestral Corporation Orchestral Corporation commenced a proceeding in Ontario court in January of 2003, which was subsequently placed into abeyance, then revived in August of 2003, against the Company and its Canadian subsidiary, ActiveCore Limited (formerly Springboard Technologies Inc.) to the effect that they had infringed upon the copyright that Orchestral maintained in PowerAudit and further that the Company had breached the distribution contract between Orchestral and the Company with respect to termination and non-payment of support costs with regard to the distribution of Power Audit. Orchestral has claimed punitive and exemplary damages of Canadian $4,000,000 and Canadian $1,000,000, respectively. The Company has retained counsel and is defending the action on the basis that the Company believes that there is no merit to the case and in the event that there was merit, the time frame in which to bring an action in the contract has expired. Compulsory mediation has occurred in the case and no settlement was offered or agreement was arrived at during the mediation phase. The next step would normally be "examination for discovery" then on to a trial. The Company has not yet determined if it will counter-sue for return of all proceeds paid to Orchestral during the period of time between 1999 and 2001. Orchestral sent a settlement letter to the Company dated January 10, 2005 and has subsequently brought an Application before the Ontario courts to enforce the terms of the settlement letter. The court ordered that the settlement letter was enforceable and that $226,000 was owed by the Company to Orchestral. An appeal by the Company of this judgment is pending. An allocation of $226,000 has been made on the Company's financial statements for the punitive and exemplary damages, however, it maintains that the action is frivolous. Cesar Correia and InfoLink Technologies Ltd. From December 2003 to April 2004, the Company was engaged in discussions with certain major shareholders of Infolink Technologies Limited with regard to the potential acquisition of Infolink Technologies Ltd., a public company listed on the TSX Venture Exchange under the symbol "IFL". During the course of discussions, an offer to purchase was rebuffed by Cesar Correia, the former Chairman of the Board, President and CEO and 34% shareholder of Infolink. At the time, Mr. Correia was told that the Company would purchase another competitor to Infolink, C Comm Network Corporation. In May 2004, the Company purchased C Comm. In July 2004, an unrelated minority shareholder of Infolink commenced an action in Ontario alleging that Mr. Correia has mismanaged Infolink and amongst other things that he had inappropriately obtained funds from the company and converted them to his own purposes. The day prior to the court hearing with regard to the minority shareholder action, Mr. Correia together with Infolink Technology commenced a proceeding in the same Ontario court alleging unfair competition as a result of an alleged improper acquisition of confidential information from Infolink and numerous other causes of action. Meanwhile, the court appointed a monitor and investigator to look into the allegations against Mr. Correia. The court appointed monitor and investigator issued an interim report in October 2004 which found that several of the allegations against Mr. Correia were substantiated. Mr. Correia was removed from the position of Chairman, President and CEO of Infolink and is now an employee of Infolink with a reduced salary. The Company believes that Infolink as a corporate entity will not proceed with any action against the Company as the Company believes that the action was commenced as a defensive move by Mr. Correia and now that he has been removed from management of Infolink there is little basis for the action to continue. PART 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS On February 9, 2005, the board of directors authorized the issuance of 40,000 restricted common shares of stock from treasury to unrelated parties (Shai Stern) and an additional 40,000 restricted common shares of stock from treasury to (Seth Farbman) of Vintage Filings, LLC in order to receive long term discounted pricing for issuance of ActiveCore press releases. 34 On February 9, 2005, the board of directors authorized the issuance 400,000 restricted common shares of stock from treasury as board compensation to two independent members of the board. Stephen Lewis received 200,000 common shares and Steven Smith received 200,000 common shares. Effective March 1, 2005, the Company completed a reverse split of the common shares on a 1 for 10 ratio and this resulted in the issuance from treasury of the following share amounts in respect of "round-up" for beneficial owners of the common shares: (i) to Cede & Co of 49,997 common shares; (ii) to ADP Clearing of 9 common shares; and (iii) to RBC Dominion Securities of 6 common shares. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 5. OTHER INFORMATION None. 35 ITEM 6. EXHIBITS (a) Exhibits:
Exhibit No. Description Location - ----------- ----------- -------- 2.1 Agreement and Plan of Reorganization dated March Incorporated by reference to Exhibit 4.1 to IVP 21, 2000 between IVP Technology Corporation and Technology's Form 8-K12G3 filed on April 19, 2000 Erebus Corporation 3.1 Certificate of Amendment of Articles of Incorporated by reference to Exhibit 3.1 to IVP Incorporation 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 3.4 Certificate of Amendment to Articles of Provided herewith Incorporation 3.5 Certificate of Designation for Series A Incorporated by reference to Exhibit 10.2 to IVP Convertible Preferred Stock Technology's Form 8-K filed with the SEC on September 20, 2004 3.6 Certificate of Designation for Series B Incorporated by reference to Exhibit 10.3 to IVP Convertible Preferred Stock Technology's Form 8-K filed with the SEC on September 20, 2004 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 IVP Agreement dated as of May 31, 2000 between the Technology's Form 10-QSB filed on September 24, Registrant and Orchestral Corporation 2000 10.5 Service Bureau Arrangement Agreement dated Incorporated by reference to Exhibit 10.5 to IVP September 28, 2000 between the Registrant and Technology's Form 10-QSB filed on November 14, E-RESPONSES.COM 2000 10.6 Stock Purchase Agreement dated September 17, 2001 Incorporated by reference to Exhibit 10.6 to IVP among the Registrant, International Technology Technology's Form 10-KSB filed on April 15, 2002 Marketing, Inc., Brian MacDonald, Peter Hamilton, Kevin Birch, Sherry Bullock, and Geno Villella 10.7 Agreement dated May 15, 2000 between the Incorporated by reference to Exhibit 10.7 to IVP Registrant and Rainbow Investments International Technology's Form 10-KSB filed on April 15, 2002 Limited 10.8 Employment Agreement dated August 30, 2001 between Incorporated by reference to Exhibit 10.8 to IVP International Technology Marketing, Inc. and Brian Technology's Form 10-KSB filed on April 15, 2002 J. MacDonald 10.9 Agreement dated February 12, 2002 between the Incorporated by reference to Exhibit 10.9 to IVP Registrant and SmartFOCUS Limited Technology's Form 10-KSB filed on April 15, 2002
36
Exhibit No. Description Location - ----------- ----------- -------- 10.10 Warrant Agreement dated May 15, 2000 between the Incorporated by reference to Exhibit 10.10 to IVP Registrant and Rainbow Investments International Technology's Form 10-KSB filed on April 15, 2002 Limited 10.11 Convertible Promissory Note dated May 2000 between Incorporated by reference to Exhibit 10.11 to IVP the Registrant and Rainbow Investments Technology's Form 10-KSB filed on April 15, 2002 International Limited 10.12 Software Distribution Agreement dated December 28, Incorporated by reference to Exhibit 10.12 to IVP 2001 between the Registrant and TIG Acquisition Technology's Form 10-KSB filed on April 15, 2002 Corporation 10.13 Loan Agreement dated January 16, 2002 between the Incorporated by reference to Exhibit 10.13 to IVP Registrant and DCD Holdings Limited 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 IVP dated May 3, 2002 between the Registrant and Technology's Form S-8 filed with the SEC on May Vanessa Land 3, 2002 10.15 Reserved 10.16 Employment Agreement dated August 30, 2001 between Incorporated by reference to Exhibit 10.16 to IVP International Technology Marketing, Inc. and Geno Technology's Form 10-KSB filed on April 15, 2002 Villella 10.17 Employment Agreement dated August 30, 2001 between Incorporated by reference to Exhibit 10.18 to IVP International Technology Marketing, Inc. and Peter Technology's Form 10-KSB filed on April 15, 2002 J. Hamilton 10.18 Loan and Security Agreement dated July 30, 2001 Incorporated by reference to Exhibit 10.20 to IVP among the Registrant, Clarino Investments Technology's Form 10-KSB filed on April 15, 2002 International Ltd., and Berra Holdings Ltd. 10.19 Warrant Agreement dated April 3, 2002 between the Incorporated by reference to Exhibit 10.27 to IVP Registrant and Cornell Capital Partners L.P. Technology's Form 10-KSB filed on April 15, 2002 10.20 Equity Line of Credit Agreement dated April 3, Incorporated by reference to Exhibit 10.28 to IVP 2002 between the Registrant and Cornell Capital Technology's Form 10-KSB filed on April 15, 2002 Partners L.P. 10.21 Registration Rights Agreement dated April 3, 2002 Incorporated by reference to Exhibit 10.29 to IVP between the Registrant and Cornell Capital Technology's Form 10-KSB filed on April 15, 2002 Partners, L.P. 10.22 Escrow Agreement dated April 3, 2002 among the Incorporated by reference to Exhibit 10.30 to IVP Registrant, Cornell Capital Partners, L.P., Butler Technology's Form 10-KSB filed on April 15, 2002 Gonzalez, and First Union National Bank 10.23 Securities Purchase Agreement dated April 3, 2002 Incorporated by reference to Exhibit 10.31 to IVP among the Registrant and the Buyers Technology's Form 10-KSB filed on April 15, 2002
37
Exhibit No. Description Location - ----------- ----------- -------- 10.24 Escrow Agreement dated April 3, 2002 among the Incorporated by reference to Exhibit 10.32 to IVP Registrant, the Buyers, and First Union National Technology's Form 10-KSB filed on April 15, 2002 Bank 10.25 Debenture Agreement Dated April 3, 2002 between Incorporated by reference to Exhibit 10.33 to IVP the Registrant and Cornell Capital Partners L.P. Technology's Form 10-KSB filed on April 15, 2002 10.26 Investor Registration Rights Agreement dated Incorporated by reference to Exhibit 10.34 to IVP April 3, 2002 between the Registrant and the Technology's Form 10-KSB filed on April 15, 2002 Investors 10.27 Placement Agent Agreement dated April 3, 2002 Incorporated by reference to Exhibit 10.35 to IVP among the Registrant, Westrock Advisors, Inc. and Technology's Form 10-KSB filed on April 15, 2002 Cornell Capital Partners L.P. 10.28 Letter Agreement dated February 20, 2002 between Incorporated by reference to Exhibit 10.36 to IVP the Registrant and Buford Industries Inc. Technology's Form 10-KSB filed on April 15, 2002 10.29 Letter Confirmation Agreement dated July 21, 2001 Incorporated by reference to Exhibit 10.37 to IVP between the Registrant and Buford Industries Inc. Technology's Form 10-KSB filed on April 15, 2002 10.30 Consulting Agreement dated March 1, 2002 between Incorporated by reference to Exhibit 10.38 to IVP the Registrant and Danson Partners LLC Form 10-KSB filed on April 15, 2002 10.31 Consulting Agreement dated February 12, 2002 Incorporated by reference to Exhibit 10.40 to IVP between the Registrant and Danson Partners LLC Technology's Form SB-2 filed on May 15, 2002 10.32 Escrow Agreement dated as of May 15, 2002 among Incorporated by reference to Exhibit 10.41 to IVP the Registrant, Brian MacDonald, Peter Hamilton, Technology's Form SB-2 filed on May 15, 2002 Kevin Birch, Sherry Bullock, and Gino Villella 10.33 Termination letter dated June 13, 2002 between the Incorporated by reference to Exhibit 10.42 to IVP Registrant and Orchestral Corporation Technology's Form 10-QSB filed on August 19, 2002 10.34 Acquisition Agreement dated as of May 28, 2002 Incorporated by reference to Exhibit 10.43 to IVP regarding the purchase of Ignition Entertainment Technology's Form 10-QSB filed on August 19, 2002 10.35 Consulting Agreement dated as of June 1, 2002 Incorporated by reference to Exhibit 10.44 to IVP Ignition Entertainment Limited and Montpelier Technology's Form 10-QSB filed on August 19, 2002 Limited 10.36 Equity Line of Credit Agreement dated May 2002 Incorporated by reference to Exhibit 10.45 to IVP between IVP Technology and Cornell Capital Technology's Amendment No. 2 to the Form SB-2 Partners, L.P. filed on November 14, 2002 10.37 Letter of Credit Facility dated as of April 10, Incorporated by reference to Exhibit 10.46 to IVP 2002 between Revelate Limited and Ignition Technology's Amendment No. 2 to the Form SB-2 Entertainment Limited filed on November 14, 2002
38
Exhibit No. Description Location - ----------- ----------- -------- 10.38 Debenture dated as of June 14, 2002 between Incorporated by reference to Exhibit 10.47 to IVP Revelate Limited and Ignition Entertainment Limited Technology's Amendment No. 2 to the Form SB-2 filed on November 14, 2002 10.39 Standard Conditions for Purchase of Debts dated Incorporated by reference to Exhibit 10.48 to IVP May 23, 2002 between DCD Factors PLC and Ignition Technology's Amendment No. 2 to the Form SB-2 Entertainment Limited filed on November 14, 2002 10.40 All Assets Debenture dated as of May 23, 2002 Incorporated by reference to Exhibit 10.49 to IVP between DCD Factors PLC and Ignition Entertainment Technology's Amendment No. 2 to the Form SB-2 Limited filed on November 14, 2002 10.41 Memorandum of Agreement dated as of July 1, 2002 Incorporated by reference to Exhibit 10.50 to IVP between Springboard Technology Solutions Inc. and Technology's Amendment No. 2 to the Form SB-2 IVP Technology filed on November 14, 2002 10.42 Heads of Agreement dated as of December 28, 2001 Incorporated by reference to Exhibit 10.51 to IVP and amended on September 30, 2002 between TiG Technology's Amendment No. 2 to the Form SB-2 Acquisition Corporation and IVP Technology filed on November 14, 2002 10.43 MDI Solutions Services Agreement (Interface Incorporated by reference to Exhibit 10.1 to IVP Development Retainer Services) between Medical Technology's Form 8-K filed with the SEC on April Data Integration Solutions group and Mount Sinai 1, 2003 Hospital entered into March 11, 2003 (Contract No. MDI02008) 10.44 MDI Solutions Services Agreement (Interface Incorporated by reference to Exhibit 10.2 to Development Retainer Services) between Medical Technology's Form 8-K filed with the SEC on April Data Integration Solutions group and Mount Sinai 1, 2003 Hospital entered into March 11, 2003 (Contract No. MDI02009) 10.45 MDI Solutions Services Agreement (Interface Incorporated by reference to Exhibit 10.3 to IVP Development Retainer Services) between Medical Technology's Form 8-K filed with the SEC on April Data Integration Solutions group and Rouge Valley 1, 2003 Health System entered into September 12, 2002 (Contract No. MDI02003) 10.46 MDI Solutions Services Agreement (Interface Incorporated by reference to Exhibit 10.4 to IVP Development Retainer Services) between Medical Technology's Form 8-K filed with the SEC on April Data Integration Solutions group and Rouge Valley 1, 2003 Health System entered into September 12, 2002 (Contract No. MDI02004) 10.47 MDI Solutions Services Agreement (Interface Incorporated by reference to Exhibit 10.5 to IVP Development Retainer Services) between Medical Technology's Form 8-K filed with the SEC on April Data Integration Solutions group and York Central 1, 2003 Hospital entered into September 13, 2002 (Contract No. MDI02006)
39
Exhibit No. Description Location - ----------- ----------- -------- 10.48 MDI Solutions Services Agreement (Interface Incorporated by reference to Exhibit 10.6 to IVP Development Retainer Services) between Medical Technology's Form 8-K filed with the SEC on April Data Integration Solutions group and York Central 1, 2003 Hospital entered into September 13, 2002 (Contract No. MDI02007) 10.49 MDI Solutions Services Agreement (Interface Incorporated by reference to Exhibit 10.7 to IVP Development Retainer Services) between Medical Technology's Form 8-K filed with the SEC on April Data Integration Solutions group and St. Joseph's 1, 2003 Medical Centre entered into March 18, 2003 (Contract No. MDI03001) 10.50 MDI Solutions Services Agreement (Interface Incorporated by reference to Exhibit 10.8 to IVP Development Retainer Services) between Medical Technology's Form 8-K filed with the SEC on April Data Integration Solutions group and St. Joseph's 1, 2003 Medical Centre entered into March 18, 2003 (Contract No. MDI03002-Expires March 31, 2004) 10.51 MDI Solutions Services Agreement (Interface Incorporated by reference to Exhibit 10.9 to IVP Development Retainer Services) between Medical Technology's Form 8-K filed with the SEC on April Data Integration Solutions group and St. Joseph's 1, 2003 Medical Centre entered into March 18, 2003 (Contract No. MDI03002-Expires June 11, 2004) 10.52 Share Purchase Agreement between Twincentric Incorporated with this filing Limited and ActiveCore entered into on June 21, 2004 for the purchase of 100% of the issued shares of Twincentric Limited by ActiveCore. 10.53 Call Agreement between George Theodore and 1543472 Incorporated by reference to Exhibit 10.1 to IVP Ontario Inc. and IVP entered into on July 31, 2004 Technology's Form 8-K filed with the SEC on for the potential purchase of 8,000,000 shares of September 20, 2004 Infolink Technologies Ltd. in exchange for 16,000,000 shares of IVP. 10.54 Subscription Agreement between D & M Investments Incorporated by reference to Exhibit 10.1 to IVP and ActiveCore with regard to the purchase of Technology's Form 8-K filed with the SEC on Series A and Series B Convertible Preferred shares September 20, 2004 of IVP 10.55 Preferred share designation for Series A and Incorporated by reference to Exhibit 10.2 to IVP Series B preferred shares of IVP Technology's Form 8-K filed with the SEC on September 20, 2004 10.56 Results of Annual General Meeting of Shareholders Incorporated by reference to IVP Technology's held on November 29, 2004 From 8-K filed with the SEC on December 2, 2004 10.57 Press release and copy of letter of resignation of Incorporated by reference to ActiveCore's form 8K Brian MacDonald filed with the SEC on January 17, 2005 10.58 Press release, notice of previous auditors and Incorporated by reference to ActiveCore's form 8K statement by Company with respect to engagement of and subsequent amendments on February 17, 2005 new auditors field with the SEC on February 17,2005
40
Exhibit No. Description Location - ----------- ----------- -------- 10.59 Press release with regard to pending acquisition Incorporated by reference to ActiveCore's 8K of Cratos Technology Solutions Inc., announcement filed with the SEC on February 17, 2005 of a reverse split in shares and potential change in stock symbol 10.60 Purchase and sale agreement with respect to the Incorporated by reference to ActiveCore's 8K shares of DisclosurePlus Inc. acquired by the filed with the SEC on March 8, 2005 Company on March 8, 2005 10.61 Purchase and sale agreement with respect to the Incorporated by reference to ActiveCore's 8K shares of Cratos Technology Solutions Inc. filed with the SEC on March 23, 2005. acquired by the company on March 23, 2005 14.1 Code of Ethics Incorporated by reference as an Exhibit to IVP Technology's Form 10-KSB filed with the SEC May 7, 2004 Certification by Chief Executive Officer pursuant Provided herewith 31.1 to 15 U.S.C. Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Certification by Acting Chief Financial Officer Provided herewith 31.2 pursuant to 15 U.S.C. Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Certification by Chief Executive Officer pursuant Provided herewith 32.1 to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Certification by Acting Chief Financial Officer Provided herewith 32.2 pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
41 SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ACTIVECORE TECHNOLOGIES, INC. June <>, 2005 By: /s/ Peter J. Hamilton --------------------------- Acting Chief Financial Officer June <>, 2005 By: /s/Peter J. Hamilton --------------------------- President and Chief Executive Officer 42 EX-31.1 2 v020582_ex31-1.txt EXHIBIT 31.1 OFFICER'S CERTIFICATE PURSUANT TO SECTION 302 OF SARBANES-OXLEY ACT OF 2002* I, Peter J. Hamilton, President and Chief Executive Officer, certify that: 1. I have reviewed this quarterly report of ActiveCore Technologies, Inc., formerly IVP Technology Corporation, on Form 10-QSB for the period ending March 31, 2005; 2. Based on my knowledge, this quarterly 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 quarterly 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 quarterly 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant 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 registrant, 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 registrant'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 registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant'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 registrant's auditors and the audit committee of the registrant'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 registrant'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 registrant's internal control over financial reporting. Date: June <>, 2005 By: /s/ Peter J. Hamilton --------------------- Name: Peter J. Hamilton Title: President and Chief Executive Officer *The introductory portion of paragraph 4 of the Section 302 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-31.2 3 v020582_ex31-2.txt EXHIBIT 31.2 OFFICER'S CERTIFICATE PURSUANT TO SECTION 302 OF SARBANES-OXLEY ACT OF 2002* I, Peter J. Hamilton, Acting Chief Financial Officer, certify that: 1. I have reviewed this quarterly report of ActiveCore Technologies, Inc. formerly IVP Technology Corporation on Form 10-QSB for the period ending March 31, 2005; 2. Based on my knowledge, this quarterly 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 quarterly 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 quarterly 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant 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 registrant, 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 registrant'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 registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant'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 registrant's auditors and the audit committee of the registrant'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 registrant'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 registrant's internal control over financial reporting. Date: June <>, 2005 By: /S/ Peter J. Hamilton --------------------------- Peter J. Hamilton Acting Chief Financial Officer *The introductory portion of paragraph 4 of the Section 302 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-32.1 4 v020582_ex32-1.txt 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 ActiveCore Technologies, Inc. formerly IVP Technology Corporation (the "Company") on Form 10-QSB for the period ending March 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), each of the undersigned herby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in his capacity as an officer of the Company, that: 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: June <>, 2005 By: /s/ Peter J. Hamilton --------------------- Name: Peter J. Hamilton Title: President and Chief Executive 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 ActiveCore Technologies, Inc. formerly IVP Technology Corporation and will be retained by ActiveCore Technologies, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. EX-32.2 5 v020582_ex32-2.txt EXHIBIT 32.2 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 ActiveCore Technologies, Inc. (the "Company") on Form 10-QSB for the period ending March 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), each of the undersigned herby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in his capacity as an officer of the Company, that: 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: June <>, 2005 By: /s/ Peter J. Hamilton --------------------------- Peter J. Hamilton 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 ActiveCore Technologies, Inc. formerly IVP Technology Corporation and will be retained by ActiveCore Technologies, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----