-----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, RH5rPTmubg+OsDzZL7cDmxBdpkGcMuDan63MFq61i8EkVJmWU11DqSOKDkZAnEEH rJkfxEYucMbrtSots4rW9A== 0000916641-01-501719.txt : 20020412 0000916641-01-501719.hdr.sgml : 20020412 ACCESSION NUMBER: 0000916641-01-501719 CONFORMED SUBMISSION TYPE: 20-F/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010430 FILED AS OF DATE: 20011130 FILER: COMPANY DATA: COMPANY CONFORMED NAME: API ELECTRONICS GROUP INC CENTRAL INDEX KEY: 0001022282 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 20-F/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-29142 FILM NUMBER: 1803517 BUSINESS ADDRESS: STREET 1: 505 UNIVERSITY AVE. STREET 2: STE 1400 TORONTO CITY: ONTARIO M5G 1X3 STATE: A6 BUSINESS PHONE: 8006062326 MAIL ADDRESS: STREET 1: 505 UNIVERSITY AVE. STREET 2: STE. 1400 TORONTO CITY: ONTARIO M5G 1X3 FORMER COMPANY: FORMER CONFORMED NAME: INVESTORLINKS COM INC DATE OF NAME CHANGE: 20000911 FORMER COMPANY: FORMER CONFORMED NAME: OPUS MINERALS INC DATE OF NAME CHANGE: 19991102 FORMER COMPANY: FORMER CONFORMED NAME: TNK RESOURCES INC DATE OF NAME CHANGE: 19960905 20-F/A 1 d20fa.txt AMENDMENT #1 TO THE FORM 20-F As filed with the Securities and Exchange Commission on November 30, 2001 - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 20-F/A (AMENDMENT NUMBER 1) (Mark One) [_] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended April 30, 2001 [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission file number: 0-29142 API ELECTRONICS GROUP INC. (formerly InvestorLinks.com Inc.) --------------------------------------------------------- (Exact name of Registrant as specified in its charter) Province of Ontario, Canada --------------------------------------------------------- (Jurisdiction of incorporation or organization) 505 University Ave., Suite 1400, Toronto, Ontario M5G 1X3 --------------------------------------------------------- (Address of principal executive offices) Securities registered or to be registered pursuant to Section 12(b) of the Act: None Securities registered or to be registered pursuant to Section 12(g) of the Act: Common Shares, no par value --------------------------------------------------------- (Title of Class) Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report: 13,179,020 Common Shares as of April 30, 2001 --------------------------------------------------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 [_] Inapplicable [_] Indicate by check mark which financial statement item the registrant has elected to follow: Item 17 [X] Item 18[_] Item 17 of the Form 20-F filed with the Securities and Exchange Commission on October 31, 2001 is hereby deleted in its entirety and replaced with the following: ITEM 17. FINANCIAL STATEMENTS As noted in Note 1 to the consolidated financial statements of the Company included with this Part III, Item 17 of the Annual Report, no comparative figures have been presented because IL Data Canada, Inc., the deemed acquiring company in a reverse take-over of the Company by IL Data Canada, Inc. effective June 6, 2000, was a newly incorporated company, having been incorporated on May 10, 2000. Because of the reverse take-over transaction described above, the Company has only been in operation since May 10, 2000, during and after the financial year ending April 30, 2001. In addition, as noted in Note 10(a) to the financial statements of the Company included with this Part III, Item 17 of the Annual Report, for purposes of accounting principles generally accepted in the United States ("US GAAP"), since IL Data Canada, Inc. had no operations, Investorlinks.com LLC, the company that owned and operated the Investment Web site www.InvestorLinks.com prior to the June 6, 2000 acquisition transactions, "would be considered the predecessor and audited information for the previous three years would normally be disclosed however, the operations of Investorlinks.com LLC have been closed and the previous information would not be relevant or informative." Because of the foregoing, financial statements for prior years is not included in this Annual Report. Selected financial data for prior years is, however, disclosed in the Company's 2000 Form 20-F Annual Report, available through the U.S. Securities and Exchange Commission's EDGAR database system. These financial statements which follow were prepared in accordance with Canadian Generally Accepted Accounting Principles ("Cdn GAAP") and are expressed in Canadian dollars. A reconciliation from Cdn GAAP to US GAAP is disclosed in Note 10 to the financial statements. The financial statements include the following: (i) Auditors' Report (ii) Consolidated Balance Sheet at April 30, 2001 (iii) Consolidated Statements of Operations and Deficit for the year ended April 30, 2001 (iv) Consolidated Statements of Changes in Cash Flow for the year ended April 30, 2001 (v) Summary of Significant Accounting Policies (vi) Notes to Consolidated Financial Statements Investorlinks.com Inc. Consolidated Financial Statements For the period ended April 30, 2001 (expressed in Canadian dollars) Investorlinks.com Inc. Consolidated Financial Statements For the period ended April 30, 2001 (expressed in Canadian dollars)
Contents ======================================================================== Auditors' Report 2 Consolidated Financial Statement Balance Sheet 3 Statement of Operations and Deficit 4 Statement of Cash Flows 5 Summary of Significant Accounting Policies 6 Notes to Financial Statements 8
================================================================================ Auditors' Report - -------------------------------------------------------------------------------- To the Shareholders of Investorlinks.com Inc. We have audited the consolidated balance sheet of Investorlinks.com Inc. as at April 30, 2001 and the consolidated statement of operations and deficit and cash flows for the period then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards in Canada and the U.S. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these financial statements present fairly, in all material respects, the financial position of the Company as at April 30, 2001 and the results of its operations and its cash flows for the period ended April 30, 2001 in accordance with Canadian generally accepted accounting principles in Canada. (signed) BDO Dunwoody LLP Chartered Accountants Toronto, Ontario August 3, 2001 (except Note 11, as to August 30, 2001) 2 ================================================================================ Investorlinks.com Inc. Consolidated Balance Sheet (expressed in Canadian dollars) April 30, 2001 - -------------------------------------------------------------------------------- (Comparative Figures Note 1) Assets Current Cash $ 1,085,123 Short term investments 1,170,156 Accounts receivable 34,774 Prepaid expenses 839 --------------- 2,290,892 Investments (Note 2) 144,412 Capital assets (Note 3) 130,105 Internet investment site cost (Note 1) 1 --------------- $ 2,565,410 =============================================================================== Liabilities and Shareholders' Equity Current Accounts payable $ 489,039 --------------- Shareholders' equity Contributed surplus 974,308 Share capital (Note 4) 3,639,652 Deficit (2,537,589) --------------- 2,076,371 --------------- $ 2,565,410 =============================================================================== On behalf of the Board: (signed) Sandra J. Hall, Director - -------------------------------------- (signed) James C. Cassina, Director - -------------------------------------- The accompanying summary of significant accounting policies and notes are an integral part of these financial statements. 3 =============================================================================== Investorlinks.com Inc. Consolidated Statement of Operations and Deficit (expressed in Canadian dollars) For the period May 10, 2000 to April 30, 2001 - ------------------------------------------------------------------------------- (Comparative Figures Note 1) Revenue Advertising revenue $ 98,220 Sponsorship newsletter 35,059 -------------- 133,279 -------------- Expenses Accounting 38,000 Administrative salaries and consulting 517,768 Advertising and promotion 32,368 Amortization 36,833 Automobile 23,839 Bad debts 49,803 Business development 555,842 Dues, licence and fees 7,053 Employees benefits 23,585 General and administrative 50,940 Insurance 3,264 Interest 11,908 Internet 80,755 Investor relations 145,968 Marketing 16,072 Occupancy costs 149,941 Other taxes 29,675 Outside services 94,642 Professional fees 216,486 Repairs and maintenance 3,805 Shareholder information and annual meeting 30,469 Telephone 23,156 Transfer agent fees 22,305 Travel 74,065 Write down of internet investment site cost 317,387 Write down of capital assets 61,689 -------------- 2,617,618 -------------- Loss before undernoted items (2,484,339) Interest income 109,803 Foreign exchange gain 99,698 Write down of marketable securities (262,751) -------------- Net loss for the period and deficit, end of period $ (2,537,589) =============================================================================== Loss per share (Note 5) $ (0.15) =============================================================================== The accompanying summary of significant accounting policies and notes are an integral part of these financial statements. 4 =============================================================================== Investorlinks.com Inc. Consolidated Statement of Cash Flows (expressed in Canadian dollars) For the period May 10, 2000 to April 30, 2001 - ------------------------------------------------------------------------------- (Comparative Figures Note 1) Cash provided by (used in) Operating activities Net loss for the period $ (2,537,589) Adjustments to reconcile net loss to net cash provided by operating activities: Amortization 36,833 Write down of internet investment site cost 317,387 Write down of capital assets 61,689 Business development fees paid by issuance of shares 150,000 Write down of marketable securities 262,751 Changes in non-cash current assets and liabilities Increase in accounts payable 305,742 Decrease in accounts receivable and prepaid expenses 183,480 ------------ (1,219,707) ------------ Investing activities Proceeds on sale of investments 286,517 Short term investments (423,352) Purchase of IL Nevada and LLC, net of cash acquired (Note 1) (341,750) Purchase of capital assets (166,954) ------------ (645,539) ------------ Financing activities Issuance of common shares, net of issue costs 3,326,533 Treasury stock acquired (376,164) ------------ 2,950,369 ------------ Increase in cash during the period and cash, end of period $ 1,085,123 =============================================================================== The accompanying summary of significant accounting policies and notes are an integral part of these financial statements. 5 ================================================================================ Investorlinks.com Inc. Summary of Significant Accounting Policies (expressed in Canadian dollars) April 30, 2001 - -------------------------------------------------------------------------------- Nature of Business Investorlinks.com Inc. (the "Company" or "Investorlinks") was amalgamated under the laws of the Province of Ontario. During the year ended April 30, 2001, the Company divested itself of its mineral properties in Canada and Botswana. The Company then changed its business to owning and operating the Internet investment site www.investorlinks.com indirectly through --------------------- the acquisition of a U.S. subsidiary (see Note 1). Due to the prevailing market conditions, the Company subsequently closed the operations of its U.S. subsidiary and wrotedown the assets to its estimated net recoverable amounts. Subsequently, the Company plans to change its focus (see Note 11). Preparation of the financial statements in conformity with Canadian accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimated. Basis of Consolidation The consolidated financial statements include the accounts of the Company, and its wholly-owned subsidiaries IL Data Canada, Inc. ("IL Canada") and IL Data Corporation, Inc. ("IL Nevada"). Capital Assets Capital assets are recorded at cost less accumulated amortization. Amortization is provided on a declining balance basis as follows: Office equipment 20% Computer equipment 20% Internet Investment Site Cost The internet investment site cost is comprised of the cost of the website upon the acquisition by IL Canada less amortization and the write down of the assets to its estimated net recoverable amount. Long Term Investments Long term investments over which the Company does not exercise significant influence are recorded at cost less any write down for impairment that is other than temporary. 6 ================================================================================ Investorlinks.com Inc. Summary of Significant Accounting Policies (expressed in Canadian dollars) April 30, 2001 - -------------------------------------------------------------------------------- Foreign Currency Translation Balances of the Company denominated in foreign currencies and the accounts of its foreign subsidiary (an integrated operation) are translated to Canadian dollars as follows: At the transaction date, each asset, liability, revenue or expense is translated into Canadian dollars by the use of the exchange rate in effect at that date. At the year end date, monetary assets and liabilities are translated into Canadian dollars by using the exchange rate in effect at that date and the resulting foreign exchange gains and losses are included in income in the current period. Financial Instruments Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest rate, currency or credit risks arising from its financial instruments. The carrying amounts of the Company's current financial instruments approximate fair value because of the short term maturity of these instruments. The fair value of the investments is disclosed in Note 1. Included in short term investments are three GICs in the amount of $1,170,156 (includes a GIC of US$ 377,704) with interest ranging from 3.85% to 4.33% maturing from June 1, 2001 to July 3, 2001. Also, included in cash is $1,000,000 on deposit with a brokerage firm earning interest at 6% per annum. Stock Compensation Plan The Company has three stock-based compensation plans, which are described in Note 4. No compensation expense is recognized for these plans when stock or stock options are issued to employees. Any consideration paid by employees on exercise of stock options or purchase of stock is credited to share capital. If stock or stock options are repurchased from employees, the excess of the consideration paid over the carrying amount of the stock or stock option is charged to retained earnings. Income Taxes The Company accounts for income taxes under the asset and liability method. Under this method, future income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial reporting and tax bases of assets and liabilities and available loss carry forwards. A valuation allowance is established to reduce deferred tax assets if it is more likely than not that all or some portions of such deferred tax assets will not be realized. 7 ================================================================================ Investorlinks.com Inc. Notes to Consolidated Financial Statements (expressed in Canadian dollars) April 30, 2001 - -------------------------------------------------------------------------------- 1. Business Acquisitions (a) IL Canada's acquisition of IL Nevada/ IL Nevada's acquisition of LLC. On May 10, 2000, IL Canada was incorporated and issued 6,800 common shares for $10,052 cash. On June 6, 2000, IL Canada acquired all of the issued shares of IL Nevada, a Nevada corporation that was incorporated on June 2, 2000 for $10,052 (US $6,800) cash. On June 6, 2000, IL Nevada acquired the unincorporated business, Investorlinks.com LLC ("LLC"), a company whose business focus was owning and operating the internet investment site www.investorlinks.com --------------------- from a person who became a director of the Company and the director's spouse for $443,490 (US $300,000) cash. The net assets acquired at fair value were as follows:
IL Nevada LLC ============================ Cash $ 10,052 $ 8,131 Current assets - 101,238 Capital assets - 38,436 Current liabilities - (32,134) ============================ Net assets 10,052 115,671 Consideration 10,052 443,490 ============================ Excess of consideration given over net assets acquired (1) $ - $ 327,819 ============================
(1) The excess of consideration given over the net assets of LLC acquired is attributed to the cost of the internet investment site. 8 ================================================================================ Investorlinks.com Inc. Notes to Consolidated Financial Statements (expressed in Canadian dollars) April 30, 2001 - -------------------------------------------------------------------------------- 1. Business Acquisitions (continued) (b) The Company's Acquisition of IL Canada On June 6, 2000, after the above business acquisitions, the Company acquired all of the issued shares of IL Canada for consideration of 6,800,000 common shares of the Company having a stated value of $1,700,000. As a result of this transaction, the original shareholders of IL Canada owned 47% of the issued shares of the Company. The business combination has been accounted for as a reverse take-over of the Company by IL Canada. IL Canada is deemed to be the acquirer because: (i) the directors of IL Canada became the majority of the Company's directors; (ii) the management of IL Canada became the management of the Company; (iii) the major block of shares is held by the Company's chairman of the board who held the major block of shares of IL Canada and who, with his spouse, owned LLC; and (iv) prior to the business acquisition by the Company of IL Canada there was no major block of shares of the Company held by any one person. Investorlink's assets and liabilities are included in the consolidated balance sheet at the carrying value. The net assets acquired at fair value of the Company as at June 6, 2000 are as follows: Cash $ 93,609 Short term investments 746,804 Marketable securities 696,933 Current assets 117,855 Capital assets 9,553 Current liabilities (151,163) --------------- Consideration attributed to the stated capital of the shares issued $ 1,513,591 ---------------
No comparatives figures have been presented as IL Canada, the deemed acquiring company, was a newly incorporated company. (c) Share Repurchase The Company purchased 4,890,000 common shares back from the shareholders of IL Canada for US $0.05 per share. 9 ================================================================================ Investorlinks.com Inc. Notes to Consolidated Financial Statements (expressed in Canadian dollars) April 30, 2001 - -------------------------------------------------------------------------------- 2. Investments
2001 --------------- 91,706 common shares of Oil Springs Energy Corp. (quoted market value: 2001 - $2,751); at written down amount $ 2,751 4,000,000 common shares of Stroud Resources Ltd., at written down amount (representing 10% of the outstanding common shares: quoted market value: 2001 - $140,000), 140,000 30,174 common shares of Maxill Inc., at cost (quoted market value: 2001 - $3,071) 1,661 --------------- $ 144,412 ===============
The quoted market value may not be indicative of the fair value of the investments since the volume of trading is low. It is not practical to establish fair value by other means. - -------------------------------------------------------------------------------- 3. Capital Assets
2001 ---------------------------------- Accumulated Cost Amortization Office equipment $ 107,009 $ 10,701 Computer equipment 38,614 4,817 --------------------------------- $ 145,623 $ 15,518 ================================= Net book value $ 130,105 =============
- -------------------------------------------------------------------------------- 4. Share Capital (a)Authorized Unlimited non-participating, redeemable, voting preference shares Unlimited common shares 10 ================================================================================ Investorlinks.com Inc. Notes to Consolidated Financial Statements (expressed in Canadian dollars) April 30, 2001 - -------------------------------------------------------------------------------- 4. Share Capital (continued) (b) Issued common shares
Number of Shares Consideration Pre-acquisition common shares for Investorlinks Balance, April 30, 2000 6,944,576 $ 6,222,102 Exercise of option 300,000 75,000 Exercise of warrants 300,000 105,000 ---------------------------- Balance, June 6, 2000 7,544,576 $ 6,402,102 ============================ Pre-acquisition common shares for IL Canada Common shares issued upon incorporation for cash and the balance June 6, 2000 6,800 $ 10,052 ============================ Issued from the date of the "reverse take-over" Share capital is comprised of the number of issued and outstanding shares of Investorlinks and the stated capital of IL Canada 7,544,576 $ 10,052 Shares issued upon the "reverse take-over" (Note 1) 6,800,000 1,513,591 Shares issued upon the exercise of warrants 3,000,000 1,050,000 Shares issued pursuant to private placement for cash (i) 680,000 2,266,481 Shares issued for services and held in escrow (ii) 44,444 150,000 Shares acquired for cancellation by the Company (iii) (4,890,000) (1,350,472) ---------------------------- Balance, April 30, 2001 13,179,020 $ 3,639,652 ============================
(i) On August 8, 2000 the Company completed a private placement with an arm's length third party and issued 680,000 units at US $2.25 for net proceeds of $2,266,481 (US $1,530,000). Each unit consists of one common share and one common share purchase warrant exercisable at US $3.00 expiring on August 8, 2002. (ii) The Company entered into a strategic alliance services agreement, effective August 2, 2000 with a global financial content firm ("the Firm") to provide business development services. As consideration for the services to be provided over twenty-nine months following the effective date, the Company was to release common shares on the basis of one common share for each US $2.25 of services provided for a total of up to 1,500,000 common shares for total consideration of US $3,375,000. Subsequent, to the year end the Firm claimed a breach of the agreement and requested payment of 144,000 common shares and cash expenses of US$ 26,562 (total cost $525,843). The Firm has given notice of its termination of the agreement. It is the position of the Company that it is the Firm that is in breach of the agreement and has so responded to the Firm. The Company issued 44,444 common shares with a value of $150,000 and accrued for services based on invoices to date totalling $405,842. (iii) The Company purchased 4,890,000 common shares back from the shareholders of IL Canada for US $0.05 per share for a total of $376,164. The Company acquired the shares at a discount of $974,308 from the average paid in capital resulting in contributed surplus. 11
============================================================================================================ Investorlinks.com Inc. Notes to Consolidated Financial Statements (expressed in Canadian dollars) April 30, 2001 - ------------------------------------------------------------------------------------------------------------ 4. Share Capital (continued) (c) Warrants Warrants outstanding, April 30, 2000 3,340,000 Exercised (3,300,000) Expired (40,000) Issued pursuant to private placement 680,000 ----------- Warrants outstanding, April 30, 2001 680,000 ===========
As at April 30, 2001 the following warrants are outstanding and exercisable:
Number of Shares for Exercise Expiry Outstanding Warrants Price Date 680,000 1 for 1 US $ 3.00 August 8, 2002
(d) Stock Options
Number of Weighted Options Average Exercise Price US$ ---------------------------- Options outstanding, April 30, 2000 630,000 0.37 Granted 961,000 2.55 Exercised (300,000) 0.16 Forfeited (920,000) 1.91 ---------------------------- Options outstanding, April 30, 2001 371,000 2.60 ============================
As at April 30, 2001 the following stock options are outstanding of which 203,000 are exercisable at April 30, 2001:
Number Issued to Outstanding Exercise Price Expiry Date Director 30,000 Cdn. $0.30 August 3, 2002 Directors 173,000 US $2.55 June 30, 2005 Employees (1) 24,000 US $2.55 June 30, 2005 Consultant (2) 9,000 US $2.55 June 30, 2005 Advisory Board (3) 135,000 US $2.55 June 30, 2005
(1) The employees common share purchase options vest at a rate of 1/3 per year for three years on June 26, 2001, June 26, 2002 and June 26, 2003. (2) The consultants common share purchase options vest at a rate of 1/3 per year for three years on June 26, 2001, June 26, 2002 and June 26, 2003. (3) The advisory board common share purchase options vest 45,000 on June 26, 2001 and the 90,000 vest 1/3 per year for three years on June 26, 2001, June 26, 2002 and June 26, 2003. Subsequently to April 30, 2001, 278,000 of these options have been forfeited and expired. 12
============================================================================================================ Investorlinks.com Inc. Notes to Consolidated Financial Statements (expressed in Canadian dollars) April 30, 2001 - ------------------------------------------------------------------------------------------------------------ 5. Loss Per Share The loss per share figures have been calculated using the weighted average number of common shares outstanding during the fiscal period. Exercise of outstanding stock options and warrants would be anti-dilutive. - ----------------------------------------------------------------------------------------------------------- 6. Supplementary Cash Flow Information 2001 --------------- Cash paid for interest $ 11,908 - ----------------------------------------------------------------------------------------------------------- 7. Related Party Transactions The Company had the following related party transactions: 2001 ------------- (a) Amounts paid to companies whose director is a director of the Company Office rent $ 12,500 Accounting and administrative support 38,000 Website hosting and maintenance 1,600 (b) Consulting fees paid pursuant to a consulting agreement with a former director of the Company for US $10,000 per month to August 31, 2001 30,227 (c) Consulting fees to a director included in accounts payable 25,000 (d) Accounting fees paid to a former director and officer of the Company 8,795 The related party transactions are recorded at the exchange amount.
13 ================================================================================ Investorlinks.com Inc. Notes to Consolidated Financial Statements (expressed in Canadian dollars) April 30, 2001 - -------------------------------------------------------------------------------- 8. Segmented Information The Company owns and operates an Internet investment site engaged indirectly through its subsidiary. The Company does not have reportable operating segments. The Company's revenue and capital assets have been identified based on geographic area as follows: United States Canada --------------------------- For the period ended April 30, 2001 Revenue $ 133,279 $ - Capital assets (1) 122,463 7,642 (1) Subsequent to the year end, substantially all of the capital assets in the United States were transferred to Canada and the US operations were closed. - -------------------------------------------------------------------------------- 9. Income Taxes The difference between income taxes computed at the combined statutory rate and the income tax provision reflected in the statement of operations is primarily due to a full valuation allowance against deferred tax assets. The Company has provided a full valuation allowance against deferred tax assets at April 30, 2001, due to uncertainties as to the Company's ability to utilize its net operating losses and other benefits available for tax purposes amounting to approximately $13,500,000 which would result in a deferred tax asset of approximately $5,800,000. The net operating loss carry forwards in the amount of approximately $6,000,000 are available to be applied against future taxable income. The right to claim these losses expires $70,000 in 2002, $270,000 in 2003, $1,710,000 in 2004, $850,000 in 2005, $480,000 in 2006, $1,320,000 in 2007 and $1,300,000 in 2008. The Company also has approximately $7,500,000 in foreign exploration expenses which are available to be applied against future income for income tax purposes. 14 ================================================================================ Investorlinks.com Inc. Notes to Consolidated Financial Statements (expressed in Canadian dollars) April 30, 2001 - -------------------------------------------------------------------------------- 10. Generally Accepted Accounting Principles In Canada and the United States The Company's accounting policies do not differ materially from accounting principles generally accepted in the United States ("US GAAP") except as follows: (a) Business Acquisition For US purposes since IL Canada had no operations LLC would be considered the predecessor and audited information for the previous three years would normally be disclosed however, the operations of LLC have been closed and the previous years information would not be relevant or informative. Also, for US purposes (Note 1) the excess of consideration given over the net assets would not have been recorded as internet investment site but, rather shown as a distribution to the owners of the predecessor LLC. Therefore, the only difference at April 30, 2001 is that for Canadian purposes the internet investment site was written off to deficit in the amount of $327,819 (Note 1) would have reduced the share capital for US purposes. (b) Portfolio Investments Under accounting principles generally accepted in Canada ("Canadian GAAP"), gains (losses) in shares of public companies are not recognized until investments are sold unless there is deemed to be an impairment in value which is other than temporary. Under US GAAP, such investments are recorded at market value and the unrealized gains and losses other than those arising from permanent impairment are recognized as a separate item in the shareholder's equity section of the balance sheet. (c) Stock Options Under US GAAP (FAS 123), stock options granted to consultants are recognized as an expense based on their fair value at the date of grant. Under Canadian GAAP the options are disclosed and no compensation expense is recorded. The calculation for the compensation is based on the Black-Scholes option pricing model with the assumption that no dividends are to be paid on common shares, a weighted average volatility factor for the Company's share price of 85.0%, a weighted average risk free interest rate of 5.0% and a life of 2 to 4 years. The Company follows APB 25 for options granted to employees. For employees, compensation expense is recognized under the intrinsic value method. Under this method, compensation cost is the excess, if any, of the quoted market price at grant date over the exercise price. Such expense is reflected over the service period; if for prior services, expensed at date of grant; if for future services, expensed over vesting period. The exercise price of the stock options outstanding to employees is equal or exceeds the market value of the shares at the date granted, therefore, no compensation expense is recognized for US GAAP purposes. (d) Contributed Surplus Under US GAAP, the consideration paid for the repurchase of shares (Note 4(b)(iii)) would have reduced share capital and no amounts recorded as contributed surplus. 15
======================================================================================================== Investorlinks.com Inc. Notes to Consolidated Financial Statements (expressed in Canadian dollars) April 30, 2001 - -------------------------------------------------------------------------------------------------------- 10. Generally Accepted Accounting Principles in Canada and the United States (continued) (d) The impact of the foregoing on the financial statements is as follows: 2001 ------------- Total assets Canadian GAAP $ 2,565,410 Unrealized gain on investments 1,410 Internet investment site (1) ------------- Total assets US GAAP $ 2,566,819 ============= Total liabilities Canadian and US GAAP $ 489,039 ============= Shareholders' equity Canadian GAAP $ 2,076,371 Writedown of internet investment site 317,387 Amortization on internet investment site 10,431 Distribution of capital (327,819) Unrealized gain on investments US GAAP 1,410 ------------- Total shareholders' equity US GAAP $ 2,077,780 ============= 2001 ------------- Net loss per Canadian GAAP $ (2,537,589) Internet investment site 327,818 Consulting expense (136,500) ------------- Net loss US GAAP (2,346,271) Unrealized gain on investments 1,410 ------------- Comprehensive net loss US GAAP $ (2,344,861) ============= Loss per share US GAAP $ (0.14) ============= Weighted average number of shares outstanding 17,338,092 ============= Pro-forma loss per share (1) $ (0.41) =============
(1) The pro-forma loss per share takes into consideration the consolidation of shares as disclosed in the subsequent event (Note 11(a)). 16 ================================================================================ Investorlinks.com Inc. Notes to Consolidated Financial Statements (expressed in Canadian dollars) April 30, 2001 - -------------------------------------------------------------------------------- 11. Subsequent Events (a) Business Acquisition On August 30, 2001, the shareholders approved the acquisition of all of the issued and outstanding common shares of API Electronics, Inc. ("API") by the issuance of 6,500,000 post-consolidation units at US $0.40 per unit. Each unit consists of one common share and 1/2 of one Series A common share purchase warrant exercisable at US $0.45 for a period of eighteen months from date of issue and 1/2 of one Series B common share purchase warrant exercisable at US $0.75 for a period of 2 years from date of issue. (b) Name Change and Share Consolidation The shareholders approved the name change to API Electronics Group Inc. and the consolidation of the authorized common shares on the basis that every three (3) pre-consolidation common shares will be converted into one (1) post-consolidation common share. (c) Advisory Services On June 26, 2001, the Company entered into an advisory agreement with respect to the acquisition. Upon completion of the acquisition, the Company agreed to issue broker warrants to the investment advisor to acquire up to 250,000 units each such broker warrant exercisable at US$ 0.40 to acquire one unit for a period of 24 months from date of issue. (d) Stock Options and Warrants (i) On August 1, 2001, the Company granted to two directors 150,000 pre-consolidation common share purchase options to acquire 150,000 common shares exercisable at US $0.15 and the grant of 150,000 pre-consolidation common share purchase options to acquire 150,000 common shares at US $0.25 expiring July 31, 2006. (ii) Upon the acquisition, all stock options and warrants outstanding at year end have been terminated other than 30,000 pre- consolidation director options referred to in Note 4(d), the 300,000 pre-consolidation options referred to in Note 11 (d)(i) and 680,000 pre-consolidation warrants referred to in Note 4(c). (iii) The Company is obligated to grant to each of the new three API directors 50,000 post-consolidation common share purchase options to acquire 50,000 common shares exercisable at US $0.45 and the grant of 50,000 post-consolidation common share purchase options to acquire 50,000 common shares exercisable at US $0.75 for a period of five years from the date of issue. 17 Pursuant to the requirements of Section 12 of the Securities Act of 1934, the Registrant certifies that it meets all of the requirements for filing on Form 20-F and has duly caused this Annual Report on Form 20-F, Amendment Number 1, to be signed on its behalf by the undersigned, thereunto authorized. Dated at Hauppauge, New York, United States of America, this 30/th/ day of November 2001. API ELECTRONICS GROUP INC. By: /s/ Thomas W. Mills ------------------------ Thomas W. Mills, President -----END PRIVACY-ENHANCED MESSAGE-----