-----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, BRNPk8Mrx0Q0FFf4cM7iN7F6t9Z97q8uFmN2bU/LCPdOU85Wjx7h0SNaQtRc9aMi +vBOMffJ6laLQBDvMeEuPg== 0001414905-09-000063.txt : 20090828 0001414905-09-000063.hdr.sgml : 20090828 20090827205703 ACCESSION NUMBER: 0001414905-09-000063 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20090826 FILED AS OF DATE: 20090828 DATE AS OF CHANGE: 20090827 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Gamecorp Ltd. CENTRAL INDEX KEY: 0001040702 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS AMUSEMENT & RECREATION [7990] IRS NUMBER: 000000000 FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-29320 FILM NUMBER: 091041011 BUSINESS ADDRESS: STREET 1: 144 FRONT STREET WEST STREET 2: SUITE 700 CITY: TORONTO STATE: A6 ZIP: M5J 2L7 BUSINESS PHONE: 4162168659 MAIL ADDRESS: STREET 1: 144 FRONT STREET WEST STREET 2: SUITE 700 CITY: TORONTO STATE: A6 ZIP: M5J 2L7 FORMER COMPANY: FORMER CONFORMED NAME: EIGER TECHNOLOGY INC DATE OF NAME CHANGE: 20000118 FORMER COMPANY: FORMER CONFORMED NAME: ALEXA VENTURES INC DATE OF NAME CHANGE: 19970610 6-K 1 gggform6k-august27_2009.htm gggform6k-august27_2009.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 6-K
 
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
 
For the month of August, 2009
 
Commission File No. 0-29320
 
GAMECORP LTD.
(Exact name of Registrant as specified in its charter)
 
 
144 Front Street West, Suite 700
Toronto, Ontario M5J 2L7
(Address of principal executive offices)
 

 
 
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
 
x Form 20-F   ¨ Form 40-F
 
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨
 
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨
 
 
Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
 
Yes ¨ No x
 
 
If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- _________
 


 
 

 


 
 

 
 

 

 
SUBMITTED HEREWITH
 
 
 
Exhibits
 
     
99.1
 
Financial Statements for the Quarterly Period Ended June 30, 2009
99.2
 
Management's Discussion & Analysis for the Quarterly Period Ended June 30, 2009
99.3
 
Form 52-109F2 - Certification of Interim Filings (CEO)
99.4
 
Form 52-109F2 - Certification of Interim Filings (CFO)
     
     
     
 
 

 
 

 


 

 

 
 
SIGNATURES
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
Gamecorp Ltd.
 
(Registrant)
     
Date:  August 27, 2009
By:
/s/ Gary N. Hokkanen
 
 Name:
Gary N. Hokkanen
 
 Title:
Chief Financial Officer
 
 
 
 
 

 


EX-99.1 2 gggfs-august27_2009.htm gggfs-august27_2009.htm
 


 

 

 
GAMECORP LTD. (FORMERLY EIGER TECHNOLOGY, INC.)
AND SUBSIDIARIES
 
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTH PERIODS ENDED JUNE 30, 2009
(EXPRESSED IN CANADIAN DOLLARS)
 

 

 

 

 

 

 
Unaudited, prepared by Management
(Stated in Canadian Dollars)

The unaudited interim consolidated financial statements of Gamecorp Ltd. (the “Company”) have not been reviewed by the auditors of the Company. This notice is being provided in accordance with section 4.3(3)(a) of the National Instrument 51-102 Continuous Disclosure Obligations.
 


 
 

 


 
CONTENTS
 

 
Consolidated Balance Sheets 3
 
Consolidated Statements of Operations 4
 
Consolidated Statements of Cash Flows 5
 
Notes to Consolidated Financial Statements 6 - 22

 
2

 


 
GAMECORP LTD. AND SUBSIDIARIES
Consolidated Balance Sheets


ASSETS
 
June 30,
2009
(unaudited)
   
September 30, 2008
(audited)
 
Current
           
Cash and cash equivalents
  $ 11,000     $ -  
Short term investments
    -       15,000  
Accounts receivable
    15,000       57,000  
Prepaid expenses and sundry assets
    -       8,000  
Notes receivable (note 4)
    25,000       156,000  
Total Current Assets
  $ 51,000     $ 236,000  
Equipment (note 6)
    35,000       41,000  
Advance to Corporation (note 7)
    -       7,000  
Investments (note 8)
    1,370,000       1,976,000  
Notes Receivable (note 4)
    -       14,000  
Due from Related Parties (note 9)
    588,000       -  
Assets of discontinued operations (note 5)
    -       527,000  
Total Long-Term Assets
    1,993,000       2,565,000  
Total Assets
  $ 2,044,000     $ 2,801,000  
LIABILITIES
               
Current
               
Bank indebtedness
  $ -     $ 30,000  
Accounts payable and accrued charges
    622,000       205,000  
Due to related parties (note 9)
    228,000       10,000  
Notes payable (note 11)
    552,000       605,000  
Total Current Liabilities
    1,402,000       850,000  
              -  
Total Liabilities
  $ 1,402,000     $ 850,000  
Commitments and Contingencies (note 13)
               
                 
SHAREHOLDERS’ EQUITY
               
Share Capital (note 15)
    45,285,000       44,286,000  
Contributed Surplus (note 15c)
    1,278,000       1,278,000  
Unissued Share Liability (note 10)
    100,000       800,000  
Deficit
    (46,021,000 )     (44,600,000 )
Accumulated Other Comprehensive Income
    -       187,000  
Total Shareholders’ Equity
    642,000       1,951,000  
Total Liabilities and Shareholders’ Equity
  $ 2,044,000     $ 2,801,000  



   
APPROVED ON BEHALF OF THE BOARD
 
“JOHN G. SIMMONDS” (Director)
 
“STEPHEN DULMAGE” (Director)
 


(The accompanying notes are an integral part of these consolidated financial statements.)
 
 

 
3

 

GAMECORP LTD. AND SUBSIDIARIES
Consolidated Statements of Operations
For the three and nine months ended June 30


   
For the Three Months
Ended June
30, 2009
   
For the Nine Months
Ended June 30, 2009
   
For the Three Months Ended June 30, 2008
   
For the Nine Months Ended June 30, 2008
 
Revenues
  $ 62,000     $ 182,000     $ 94,000     $ 245,000  
Expenses
                               
  General and administrative
    265,000       816,000       296,000       762,000  
  Amortization of property and equipment
    2,000       6,000       3,000       8,000  
Total Expenses
    267,000       822,000       299,000       770,000  
Loss from Operations
    (205,000 )     (640,000 )     (205,000 )     (525,000 )
Other Income (Expense)
                               
Interest expense
    (3,000 )     (12,000 )     -       -  
Fair value adjustment to derivative financial instrument (note 12)
    1,000       14,000       -       3,404,000  
Gain on disposal of investments
(notes 5 and 9)
    31,000       31,000       -       657,000  
Equity share of loss of investee
    (127,000 )     (430,000 )     (60,000 )     (132,000 )
Writedown of advance to corporation (note 7)
    -       (5,000 )     -       -  
Foreign exchange gain (loss)
    (131,000 )     150,000       -       -  
Total Other Income (Expense)
    (229,000 )     (252,000 )     (60,000 )     3,929,000  
Earnings (Loss) from Continuing Operations
    (434,000 )     (892,000 )     (265,000 )     3,404,000  
Earnings (Loss) from Discontinued Operations (no tax effect) (note 5)
    -       (529,000 )     20,000       27,000  
Net Earnings (Loss)
    (434,000 )     (1,421,000 )     (245,000 )     3,431,000  
Deficit – beginning of period
    (45,587,000 )     (44,600,000 )     (43,752,000 )     (47,428,000 )
Deficit – end of period
  $ (46,021,000 )   $ (46,021,000 )   $ (43,997,000 )   $ (43,997,000 )
Earnings (Loss)Per Weighted Average Number of Shares Outstanding – Basic
                               
 Continuing Operations
  $ (0.057 )   $ (0.109 )   $ (0.063 )   $ 0.806  
 Net Earnings (Loss)
  $ (0.057 )   $ (0.173 )   $ (0.058 )   $ 0.810  
Weighted Average Number of Shares
Outstanding – Basic
    8,207,015       7,551,943       4,230,205       4,233,764  
                                 
Other Comprehensive Income:
                               
Net Earnings (Loss)
  $ (434,000 )   $ (1,421,000 )   $ (245,000 )   $ 3,431,000  
Add: Unrealized holding gain (loss) on marketable securities
    100,000       (187,000 )     (30,000 )     (30,000 )
                                 
Other Comprehensive Income (Loss)
  $ (334,000 )   $ (1,608,000 )   $ (275,000 )   $ 3,401,000  
                                 

(The accompanying notes are an integral part of these consolidated financial statements.)
 
 

 
4

 

GAMECORP LTD. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
   
For the Three Months Ended
June 30, 2009
   
For the Nine Months Ended
June 30, 2009
   
For the Three Months Ended
June 30, 2008
   
For the Nine Months Ended
June 30, 2008
 
Cash Flows from Operating Activities
                       
Net earnings (loss) from continuing operations
  $ (434,000 )   $ (892,000 )   $ (265,000 )   $ 3,404,000  
 Adjustments for:
                               
Amortization of property and equipment
    2,000       6,000       3,000       8,000  
Share of equity loss
    127,000       430,000       60,000       132,000  
Foreign exchange gain (loss)
    130,000       (150,000 )     -       -  
Write down of advance to corporation
    -       5,000       -       -  
Fair value adjustment on derivative financial instrument
    (1,000 )     (14,000 )     -       (3,404,000 )
Gain on disposal of investments
    (31,000 )     (31,000 )     -       (657,000 )
Changes in Non-Cash Working Capital:
                               
        Accounts receivable
    (10,000 )     42,000       37,000       (18,000 )
        Prepaid expenses and sundry assets
    1,000       8,000       3,000       (4,000 )
Accounts payables and accrued charges
    130,000       417,000       (147,000 )     (170,000 )
Net funds (used in) continuing operating activities
    (86,000 )     (179,000 )     (309,000 )     (709,000 )
Net earning (loss) from discontinued operations
    -       (529,000 )     20,000       27,000  
    Adjustments for:
                               
Assets and liabilities of discontinued operations
    -       529,000       (270,000 )     (729,000 )
Cash Flows from Investing Activities:
                               
Purchase of property and equipment
    -       -       (2,000 )     (2,000 )
(Increase) decrease in investments
    2,000       (21,000 )     (314,000 )     (900,000 )
Increase (decrease) in advances to/from related parties, net
    (231,000 )     (370,000 )     752,000       2,262,000  
Proceeds from sale of investments
    190,000       190,000       -       331,000  
Decrease in notes payable
    -       -       (385,000 )     (385,000 )
(Increase) decrease in note receivable
    23,000       148,000       154,000       (257,000 )
Net funds provided by (used in) investing activities
    (16,000 )     (53,000 )     205,000       1,049,000  
Cash Flows from Financing Activities:
                               
Bank indebtedness
    -       (30,000 )     (14,000 )     (6,000 )
Proceeds received on private placement
    100,000       300,000       375,000       375,000  
Repayment of notes payable
    (3,000 )     (42,000 )     -       -  
Decrease in short term investments
    -       15,000       -       -  
Net funds provided by financing activities
    97,000       243,000       361,000       369,000  
Net (Decrease) Increase in Cash
    (5,000 )     11,000       7,000       7,000  
Cash – beginning of period
    16,000       -       -       -  
Cash – end of period
  $ 11,000     $ 11,000     $ 7,000     $ 7,000  
Supplemental information provided in note 20.

(The accompanying notes are an integral part of these consolidated financial statements.)

 
 

 
5

 
GAMECORP LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
For the three and nine months ended June 30, 2009



 
1.       Organization and Nature of Business
 
Gamecorp Ltd. (the "Company" or "Gamecorp") was originally incorporated as Alexa Ventures Inc. on September 8, 1986 under the laws of British Columbia. Currently, the Company is in good standing, operating under the laws of Ontario. On May 28, 2008, the Company changed its name from Eiger Technology, Inc. to Gamecorp Ltd.  The Company is listed as an issuer on the CNSX and a foreign issuer on the NASD Over-the-Counter Bulletin Board.
 
The Company is an investment and merchant banking enterprise focused on the development of its investments. The Company’s current primary investments are in the Gaming and Technology sectors. InterAmerican Gaming, Inc. (“InterAmerican”) (formerly Racino Royale, Inc.), and Gate To Wire Solutions, Inc. (“Gate To Wire”) (formerly TrackPower, Inc.) are development stage enterprises involved in international gaming ventures. The Company has invested in Baymount Incorporated (“Baymount”), which is developing a gaming entertainment centre in Belleville, Ontario, and two portfolio non-core investments in Copernic Inc. (“Copernic”) and Gamtech International Inc. (“Gametech”). The Company has a legacy investment stake in Newlook Industries Corp. (“Newlook”), an enterprise with technology and telecommunications investments.
 
InterAmerican
 
InterAmerican is developing Latin American gaming opportunities through its subsidiaries InterAmerican Operations, Inc. and IAG Peru S.A.C.
 
As of June 30, 2009 the Company holds a 45.2% interest in InterAmerican. InterAmerican and the Company have certain common officers and directors.
 
Gate To Wire
 
Gate To Wire is being reorganized and will focus on distributing live horseracing signals in Latin America through a recently acquired license. On June 30, 2009, the Company holds a 16.9% ownership interest in Gate To Wire. Gate To Wire and the Company have certain common officers and directors.
 
Baymount
 
Baymount is redeveloping a horseracing and gaming facility in Canada. During the quarter ended June 30, 2009 the Company disposed of its investment in Baymount. Prior to the sale the Company held a less than 1% ownership interest in Baymount. Baymount and the Company have a common director.
 
Newlook
 
Newlook has made investments in renewable energy and telecommunications. As at June 30, 2009 the Company holds a 16.6% ownership interest in Newlook. Newlook and the Company have certain common officers and directors.
 


 
6

 
GAMECORP LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
For the three and nine months ended June 30, 2009



2.
Going Concern
 
The accompanying consolidated financial statements have been prepared on a going concern basis, in accordance with Canadian generally accepted accounting principles ("GAAP") and accounting principles generally accepted in the United States of America.
 
The going concern basis of presentation assumes that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities and contingencies in the normal course of operations.
 
There is doubt about the Company's ability to continue as a going concern as the Company has a working capital deficiency of $1,351,000 and an accumulated deficit of $46,021,000 as at June 30, 2009.  The Company's ability to continue as a going concern is dependent upon the Company's ability to raise additional capital, to increase management fees and interest income, and sustain profitable operations.  Should the Company be unable to continue as a going concern, it may be unable to realize the carrying value of its assets and to meet its liabilities as they become due.
 
The Company believes that future share issuance and increased management fees to existing and future investees will provide sufficient cash flow for it to continue as a going concern in its present form, however, there can be no assurances that the Company will achieve such results. Accordingly, the consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amount and classification of liabilities or any other adjustments that might be necessary should the Company be unable to continue as a going concern.
 
3.
Significant Accounting Policies
 
These consolidated financial statements have been prepared in accordance with Canadian GAAP which, except as noted in note 17, is consistent in all material respects with accounting principles generally accepted in the United States of America.  The principal accounting policies followed by the Company are as follows:
 
 
a)
Basis of Presentation
 
The accompanying consolidated financial statements include the accounts of Gamecorp and its subsidiaries are presented in Canadian dollars under the accrual method of accounting.  All significant intercompany transactions and balances have been eliminated upon consolidation.
 
The Company has the following subsidiaries:
 

Name of Corporation
% Ownership
Alexa Properties Inc.*
100%
ETIFF Holdings (BC) Ltd.*
100%
Club Connects Corp.*
100%
EigerNet Inc.*
58.4%
Applied Lighting Technologies Inc.*
75%
Energy Products International Ltd.*
75%
International Balast Corp.*
75%
Call Zone Canada Inc.*
100%
990422 Ontario Ltd.*
100%
* Inactive or holding company only

 
7

 
GAMECORP LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
For the three and nine months ended June 30, 2009


 
 
 
b)
Discontinued Operations
 
 
The Company has recognized the results of its investment in Newlook as discontinued operations. During fiscal 2007 the Company made a decision to dispose of its investment over time to focus on other gaming based opportunities.
 
 
c)
Short Term Investments
 
 
Short term investments are carried at the lower of cost or fair value and consist of guaranteed investment certificates.
 
 
d)
Equipment
 
Equipment is stated at cost.  Amortization, based on the estimated useful lives of the assets, is provided using the under noted annual rates and methods:
 

Furniture and fixtures                                                                  20%Declining balance
Computer equipment                                                                  30%Declining balance
 
 
e)
Investments
 
Investments in other entities are accounted for using the equity method or cost basis depending upon the level of ownership and/or the Company's ability to exercise significant influence over the operating and financial policies of the investee.
 
Equity Investments
 
Equity investments are recorded at original cost and adjusted periodically to recognize the Company's proportionate share of the investees' net income or losses after the date of investment. When net losses from an equity accounted for investment exceed its carrying amount, the investment balance is reduced to zero and additional losses are not provided for. The Company resumes accounting for the investment under the equity method when the entity subsequently reports net income and the Company's share of that net income exceeds the share of net losses not recognized during the period the equity method was suspended. Investments are written down only when there is clear evidence that a decline in value that is other than temporary has occurred. When an equity accounted for investee issues its own shares, the subsequent reduction in the Company's proportionate interest in the investee is reflected in income as a proportionate interest deemed dilution gain or proportionate interest loss on disposition.
 

 
Cost Investments
 
Investments are recorded at original cost and written down only when clear evidence that a decline in value, other than temporary, has occurred.

 
8

 
GAMECORP LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
For the three and nine months ended June 30, 2009


 
 
f)
Advertising Costs
 
The Company expenses advertising costs as incurred.
 
 
g)
Long-lived Asset Impairment
 
The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Recoverability is assessed based on the carrying amount of a long-lived asset compared to the sum of the future undiscounted cash flows expected to result from the use and the eventual disposal of the asset.  An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.  No impairments have been recorded.
 
 
h)
Financial Risk Management
 
The Company has exposure to credit risk, foreign exchange risk and liquidity risk. The Company has established policies and procedures to manage these risks, with the objective of minimizing any adverse effect that changes in these variables could have on the consolidated financial statements.
 
 
Credit Risk
 
The Company's financial assets that are exposed to credit risk consist primarily of accounts receivable and notes receivable. At June 30, 2009, the balance of accounts receivable was $15,000, the balance of notes receivable at cost was $26,000. Accounts receivable represent GST refunds, the collection of which has typically spanned abnormal periods of time. Notes receivable are secured by common shares of Newlook which had a fair value of $67,000 on June 30, 2009.
 
Foreign Exchange Risk
 
Foreign exchange risk arises from the extent of assets invested in U.S. dollars. The Company’s investment in Gate To Wire and InterAmerican are in U.S. dollars. At June 30, 2009, prior to adjustments for share of equity losses, the amount invested in InterAmerican at cost was US$894,000 and the amount invested in Gate To Wire at cost was US$393,000. A one cent change in the value of the U.S. dollar relative to the value of the Canadian dollar would result in a CAD$17,000 change in value of these investments. The Company monitors foreign exchange fluctuations and may execute hedges to counterbalance currency movements.
 
Liquidity Risk
 
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s approach to managing liquidity risk is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. The Company manages liquidity risk by closely monitoring changing conditions in its investees, participating in the day to day management and by forecasting cash flows from operations and anticipated investing and financing activities.
 
The Company has recently been reorganized and moved in a new business direction. At June 30, 2009, there is doubt about the Company’s ability to continue as a going concern primarily due to its history of losses and a $1,351,000 working capital deficit. The Company’s ability to

 
9

 
GAMECORP LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
For the three and nine months ended June 30, 2009


 
improve the liquidity of its investees is important however, the development of future operations and the success of its investments is also dependant upon the investee’s ability to raise funds independently.
 
 
i)
Revenue Recognition
 
Operating revenues are recognized when they are earned, specifically, when services are provided, products are delivered to customers, persuasive evidence of an arrangement exists, amounts are fixed or determinable, and collectibility is reasonably assured. The Company's principal sources of revenue are management fees from investees and interest income from loans provided recognized on an accrual basis.
 
 
Revenues are recognized upon approval by regulatory authority as a result grant income is recognized subsequent to the race date; whereas, wagering revenues are recognized on the race  date.
 
 
j)
Income Taxes
 
 
The Company accounts for and measures future tax assets and liabilities in accordance with the asset and liability method. Under this method, future tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Future tax assets and liabilities are measured using enacted or substantively enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on future tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment or substantive enactment of the change. When the future realization of income tax assets does not meet the test of being more likely than not to occur, a valuation allowance in the amount of the potential future benefit is taken and no net asset is recognized.
 
 
k)
Earnings (Loss) Per Share
 
 
Basic earnings (loss) per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding during the period. The computation of diluted earnings (loss) per share, according to the treasury stock method, assumes that any proceeds from the exercise of dilutive stock options and warrants would be used to repurchase common shares at the average market price during the period, with the incremental number of shares being included in the denominator of the diluted earnings (loss) per share calculation. The diluted earnings (loss) per share calculation assumes the conversion, exercise or contingent issuance of securities only when such conversion, exercise or issuance would have a dilutive effect on earnings (loss) per share. Stock options and share purchase warrants outstanding are not included in the computation of diluted loss per share if their inclusion would be anti-dilutive.
 
l)         Use of Estimates
 
The preparation of financial statements in conformity with Canadian generally accepted accounting principles 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 date of the financial statements and the reported amounts of revenues and expenses

 
10

 
GAMECORP LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
For the three and nine months ended June 30, 2009


 
during the reporting period.  Actual results could differ from those estimates.  These estimates are reviewed periodically, and, as adjustments become necessary, they are reported in earnings in the period in which they become known.
 
 
m)
Stock Based Compensation
 
The Company accounts for stock based compensation which includes the issuance of options of equity instruments using the fair value method. The estimated fair value is amortized to expense over the period in which the related services are rendered, which is usually the vesting period of the options. All outstanding options are classified as contributed surplus within shareholders’ equity and carried at their fair value.
 
 
n)
Foreign Currency Translation
 
Monetary items denominated in foreign currencies are translated into Canadian dollars at the foreign currency exchange rate in effect at each balance sheet date. Non-monetary items in foreign currencies are translated into Canadian dollars at historical rates of exchange except for those carried at market which are translated at the foreign currency exchange rate in effect at each balance sheet date. Revenues and expenses denominated in foreign currencies are translated into Canadian dollars at the weighted average foreign current exchange rate for the year. Translation gains and losses are included in determining net earnings.
 
4.       Notes Receivable

   
June 30,
2009
   
September 30, 2008
 
 
Former optionees
    25,000       170,000  
Total
    25,000       170,000  
Less : current portion
    (25,000 )     (156,000 )
Long term
  $ -     $ 14,000  
 
Former Optionees
 
On March 31, 2008, the Company sold 3,702,000 Newlook common shares to former optionees who had previously held an option to acquire the Newlook securities (note 5). The purchase price was $586,000 being the same price per share as the cancelled option exercise price. In payment, the third parties provided non-interest bearing promissory notes totaling $586,000 with varying repayment dates between March 8, 2009 and March 8, 2010. On June 30, 2009 there remained $26,000 outstanding under the notes receivable. The notes receivable are secured by 258,000 Newlook common shares which had a fair value of $67,000 on June 30, 2009. The Company has determined the fair value of the notes receivable at June 30, 2009 to be $25,000 and accordingly recorded a $1,000 gain to income during the three month period ended June 30, 2009. Year to date June 30, 2009 the Company has recorded a $3,000 gain to income associated with the notes receivable.

 
11

 
GAMECORP LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
For the three and nine months ended June 30, 2009


 
5.               Discontinued Operations
 
The Company regards its investment in Newlook as discontinued operations and has done so since fiscal 2007.

During fiscal 2008, options to acquire 1,970,000 Newlook shares were exercised in March 2008, for proceeds of $269,000 resulting in a gain of $189,000 being recorded. Also in March 2008, the optionees agreed to acquire 3,702,000 Newlook common shares formerly under option (note 4) and the Company agreed to pay a $0.30 cancellation fee on 4,178,000 options (note 11), which effectively cancelled all remaining options granted. The Company recorded a gain of $409,000 as a result of the disposal of 3,702,000 shares. The Company acquired a further 1,105,500 Newlook common shares for cash proceeds of $731,000.
 
The Company recorded $529,000 as its share of Newlook losses during the nine month period ended June 30, 2009 effectively writing down the Company’s investment to $nil.
 
During the quarter ended June 30, 2009, the Company sold 609,500 Newlook common shares for net proceeds of $161,000. As the Newlook shares were written down to $nil in the prior period the Company recognized a gain to the full extent of the proceeds received.
 
On June 30, 2009, the Company held 4,884,000 Newlook common shares representing a 16.6% interest.
 
The operations of Newlook are presented in the consolidated financial statements as discontinued operations as follows:

   
Three
months
ended June 30, 2009
   
Nine months ended June 30, 2009
   
Three
months
ended June 30, 2008
   
Nine
months
ended June
30, 2008
 
Share of earnings (loss) of equity accounted investee
    -       (529,000 )     20,000       27,000  
Income taxes
    -       -       -       -  
(Loss) from discontinued operations
    -       (529,000 )     20,000       27,000  

 
Assets presented in the consolidated balance sheets include the following assets of discontinued operations:
 
   
June 30,
2009
   
September 30, 2008
 
Current assets
  $ -     $ -  
Investments
    -       527,000  
Assets of discontinued operations
  $ -     $ 527,000  
 


 
12

 
GAMECORP LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
For the three and nine months ended June 30, 2009


 
6.
Equipment

   
 
Cost
   
Accumulated
Amortization
   
June
30, 2009
Net
Book Value
   
September 30,2008
Net
Book Value
 
Furniture and fixtures
  $ 144,000       111,000     $ 33,000     $ 38,000  
Computer equipment
    5,000       3,000       2,000       3,000  
    $ 149,000       114,000     $ 35,000     $ 41,000  
 
7.        Advance to Corporation

   
June 30,
2009
   
September 30, 2008
 
             
Advance to Lexatec VR Systems Inc.
  $ -     $ 7,000  
 
The advance noted above is non-interest bearing, has no specific terms of repayment and is secured by a pledge of reciprocal shareholdings. During the nine month period ended June 30, 2009 the Company recorded a $5,000 write down of the advance to the fair value of the security. The underlying security consisted of 23,190 shares of the Company’s common stock which were returned to the Company for cancellation in February 2009.
 
8.        Investments
 
 
a)
InterAmerican
 
The Company recorded $332,000 as its share of InterAmerican losses during the nine month period ended June 30, 2009 ($102,000 during the three month period ended June 30, 2009).
 
On June 30, 2009, the Company held 30,662,600 InterAmerican common shares valued at $938,000, representing a 45.2% interest.
 
 
b)
Gate To Wire
 
Effective October 1, 2008, the Company changed from accounting for its investment in Gate To Wire from available-for-sale treatment to equity accounting.
 
During the nine month period ended June 30, 2009, the Company acquired an additional 90,000 Gate To Wire common shares for cash payment totaling $11,000.
 
The Company also recorded $98,000 as its share of Gate To Wire losses during the nine month period ended June 30, 2009 ($25,000 during the three month period ended June 30, 2009).
 
On June 30, 2009, the Company held 4,690,000 Gate To Wire common shares valued at $432,000, representing a 16.9% interest.

 
13

 
GAMECORP LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
For the three and nine months ended June 30, 2009


c)        Baymount
 
 
The Company accounted for its investment in Baymount as an available-for-sale investment measured at fair value.  Unrealized gains or losses were recorded in accumulated other comprehensive income within shareholders’ equity.
 
 
The Company purchased 1,501,000 Baymount common shares representing a 1% ownership interest. The Company paid $150,000 in cash to acquire the shares. There were approximately 139,000,000 Baymount shares outstanding.
 
 
During the three month period ended June 30, 2009, the Company disposed of its investment in Baymount for net proceeds of $22,000 and accordingly recorded a loss on disposal of $128,000.
 
 
At March 31, 2009, management determined that the fair value of the Baymount investment was $53,000 and accordingly had recorded a $98,000 unrealized loss in accumulated other comprehensive income. As a result of the disposition the unrealized loss in accumulated other comprehensive income was reversed during the current period.
 
 
d)
Copernic
 
 
The Company accounted for its investment in Copernic as an available-for-sale investment measured at fair value.  Unrealized gains or losses are recorded in accumulated other comprehensive income within shareholders’ equity.
 
 
On April 6, 2009, the Company disposed of its investment in 19,300 Copernic common shares for net proceeds of $4,000. The Company paid $4,000 in cash to acquire the shares and accordingly no gain or loss was recorded on disposition.
 
 
e)
Gametech
 
 
The Company accounted for its investment in Gametech as an available-for-sale investment measured at fair value.  Unrealized gains or losses are recorded in accumulated other comprehensive income within shareholders’ equity.
 
 
On April 6, 2009, the Company disposed of its investment in 2,300 Gametech common shares for net proceeds of $3,000. The Company paid $5,000 in cash to acquire the shares and accordingly has recorded a loss on disposal of $2,000. As a result of the sale the Company has reversed a $2,000 unrealized loss in accumulated other comprehensive income during the current period.
 
 
f)
Investment activity during the nine month period ended June 30, 2009 can be summarized as follows:
   
Equity share of (loss)
   
(Loss) on disposal of shares
   
Carrying value
   
Other comprehensive
(loss)
 
InterAmerican
  $ (332,000 )   $ -     $ 938,000     $ -  
Gate To Wire
    (98,000 )     -       432,000       -  
Baymount
    -       (128,000 )     -       -  
Copernic
    -       -       -       -  
Gametech
    -       (2,000 )     -       -  
Total
  $ (430,000 )   $ (130,000 )   $ 1,370,000     $ -  
 
 
14

 
9.       Due from/to Related Parties
 
Amounts due from related parties are as follows:

   
June 30,
2009
   
September 30, 2008
 
InterAmerican
  $ 333,000     $ -  
Gate To Wire
    255,000       -  
Total
  $ 588,000     $ -  
 
Amounts due from related parties were unsecured and had no specific repayment dates. Interest accrued on the amounts from Newlook at Canada Revenue Agency’s prescribed annual interest rate plus 2% per annum. Amounts due from InterAmerican were non-interest bearing.
 
Amounts due to related parties are as follows:

   
June 30,
2009
   
September 30, 2008
 
Newlook and subsidiaries
  $ 91,000     $ 10,000  
Officers and/or directors
    137,000       -  
Total
  $ 228,000     $ 10,000  
 
Amounts due to Newlook bear interest at the Canadian Revenue Agency’s prescribed rate, are unsecured and have no specific repayment dates. Amounts due to officers and directors are non-interest bearing other than a $75,000 portion which bears interest at 12% per annum.
 
10.       Unissued Share Liability
 
On June 1, 2009, the Company received $100,000 from a related party investor under a $0.10 common share private placement. The related party investor is an entity which has and officer and director who is also a director of the Company. Subsequent to June 30, 2009, the Company issued 1,000,000 common shares to the investor.
 
During fiscal 2008, the Company received $560,000 in cash from investors under a $0.25 per share common stock share subscriptions and issued common stock in lieu of a $240,000 promissory note. As of September 30, 2008, the private placement had not yet closed and accordingly the Company recorded a total of $800,000 unissued share liability. The Company was obligated to issue 3,200,000 common shares to settle this liability.
 
On November 10, 2008, the Company closed the private placement by issuing 4,000,000 common shares at $0.25 per share.
 
11.
Notes Payable
 
On March 31, 2008, the Company agreed to issue non-interest bearing promissory notes to certain former Newlook option holders totaling $1,253,000 representing a cancellation fee of $0.30 per

 
15

 
GAMECORP LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
For the three and nine months ended June 30, 2009


 
option on 4,178,000 cancelled Newlook options (note 5). Pursuant to the terms of the note, the Company is obligated to pay $251,000 on the first day of the month for 5 consecutive months beginning May 1, 2008. The Company did not make payments as originally contemplated, however as of September 30, 2008, the Company reduced the promissory notes with cash payments totaling $398,000 and a credit of $240,000, to a note holder who agreed to subscribe for common shares. On June 30, 2009, the Company remains in default and $573,000 is unpaid under these promissory notes. At June 30, 2009, the fair value of the notes payable was $552,000, the same value as at March 31, 2009 and accordingly the Company did not record a fair value gain or loss in income during the current period.
 
12.
Derivative Financial Instrument
 
During fiscal 2007, the Company issued call options to third party investors to acquire 14,000,000 common shares of the Company’s investment in Newlook exercisable at $0.10 per share expiring in
tranches of 2,000,000 shares on each of March 18, 2007, September 18, 2007, March 18, 2008,
September 18, 2008, March 18, 2009, September 18, 2009 and March 18, 2010.
 
On September 28, 2007, the Company cancelled options to acquire 900,000 common shares issued in January 2007 and reissued the options to Wireless Age Communications, Inc., a majority owned subsidiary of Newlook at an exercise price of $0.40 per share.
 
Prior to the end of the 2007 fiscal year, 4,000,000 of the options were exercised and at September 30, 2007, options to purchase 10,000,000 Newlook common shares were outstanding.
 
In March 2008, 1,970,000 options were exercised, 3,702,000 options were effectively cancelled by the sale of the underlying shares to the optionee (note 4) and 4,178,000 options were cancelled in exchange for a $0.30 fee per option (note 11). The derivative financial instrument was effectively cancelled and accordingly the Company recorded a $3,404,000 gain in the statement of operations in 2008, representing the final adjustment or extinguishment of the derivative financial instrument.
 
13.
Commitments and Contingencies
 
A claim outstanding against various related parties, including the Company, by a former employee for wrongful dismissal, alleging breach of contract, punitive and aggravated damages and costs was settled by Newlook during the current period. The Company was released from involvement in the claim.

 
16

 
GAMECORP LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
For the three and nine months ended June 30, 2009


 
14.
Financial Instruments
 
The Company has classified its financial instruments as follows:
 

   
June 30, 2009
   
September 30, 2008
 
   
Carrying amount
   
Fair
value
   
Carrying
amount
   
Fair
Value
 
Financial assets
                       
Short term investments, held for trading measured at fair value
  $ -     $ -     $ 15,000     $ 15,000  
Accounts receivable, held-for trading measured at fair value
    15,000       15,000       57,000       57,000  
Notes receivable, held-for-trading measured at fair value
    26,000       25,000       175,000       170,000  
Due from related parties, loans and receivables measured at
amortized cost
    588,000       588,000       -       -  
Investments, available-for-sale measured at fair value
    -       -       624,000       810,000  
Advance to corporation, held-for-trading measured at fair value
    -       -       16,000       7,000  
    $ 629,000     $ 628,000     $ 887,000     $ 1,059,000  
Financial liabilities
                               
Bank indebtedness, other financial liability measured at amortized cost
  $ -     $ -     $ 30,000     $ 30,000  
Accounts payable and accrued charges, other financial liability measured at amortized cost
    622,000       622,000       205,000       205,000  
Due to related parties, other financial liability measured at amortized cost
    228,000       228,000       10,000       10,000  
Notes payable, held-for-trading measured at fair value
    573,000       552,000       615,000       605,000  
    $ 1,423,000     $ 1,402,000     $ 860,000     $ 850,000  
 
Held-for-trading assets and liabilities are carried at fair value. Loans and receivables assets and other financial liabilities are initially measured at fair value and subsequently measured at amortized cost using the effective interest method. For accounts receivable, due from or to related parties, bank indebtedness, accounts payable and accrued charges and liabilities of discontinued operations, the carrying amounts approximate fair value because of the short maturity of these instruments. Notes receivable and payables which are non-interest bearing are carried at fair value.
 
 
17

 
The year to date fair value adjustments to financial instruments are summarized as follows:

   
June 30, 2009
   
June 30, 2008
 
Derivative financial instrument – note 12
  $ -     $ 3,404,000  
Notes receivable – note 4
    3,000       -  
Notes payable – note 11
    11,000       -  
Total gain
  $ 14,000     $ 3,404,000  
 
15.
Share Capital
 
Authorized: 100,000,000 Common Shares without par value
 
On June 24, 2008, the Company completed a share consolidation on a one post-consolidation common share for ten pre-consolidation common shares.
 
On November 10, 2008, the Company closed a non-brokered private placement of $1,000,000 by issuing 4,000,000 common shares at $0.25 per share.
 
On February 9, 2009, Lexatec VR Systems Inc. returned to the Company 23,190 shares of the Company’s common stock for cancellation (note 7).
 
Issued:

 
   
Nine Months Ended
June 30, 2009
   
Fiscal Year
2008
 
   
No. of Shares
   
Amount
   
No. of Shares
   
Amount
 
Beginning of period
    4,230,205       44,397,000       42,430,174     $ 44,397,000  
Issued in private placement
    4,000,000       1,000,000       -       -  
Reissued treasury shares
    -       (22,000 )     -       -  
Cancelled prior to consolidation
    -       -       (128,125 )     -  
Cancelled due to consolidation
    -       -       (42,302,049 )     -  
Issued due to consolidation
    -       -       4,230,205       -  
Cancelled
    (23,190 )     (1,000 )     -       -  
End of period
    8,207,015       45,374,000       4,230,205       44,397,000  
Treasury shares
    -       -       (4,112 )     (22,000 )
Warrants
            (89,000 )     -       (89,000 )
      8,207,015       45,285,000       4,226,093     $ 44,286,000  
 


 
18

 
GAMECORP LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
For the three and nine months ended June 30, 2009


 
 
a)    Stock Options
 
The Company awards unconditional stock options to employees, officers, directors and others at the recommendation of the Chief Executive Officer (“CEO”) under an incentive stock plan (the "Plan").  Options are granted at the fair market value of the shares on the day granted, and vest over various terms.  Compensation expense is recognized when options are issued.
 
Stock options outstanding on June 24, 2008 were adjusted for a common share consolidation based on one post-consolidation common share for each ten pre-consolidation common shares. Through the share consolidation 2,371,000 options with a weighted average exercise price (“WAEP”) price of $0.65 were cancelled and replaced by 237,100 with a WAEP of $6.46.
 
The following is a continuity schedule of outstanding options for the reporting periods.
 

   
No. of Options
   
3Q 2009 WAEP
   
No. of Options
   
Fiscal 2008 WAEP
 
Beginning of period
    237,100     $ 6.46       2,791,000     $ 0.63  
Expired
    (119,600 )     (9.02 )     420,000       (0.55 )
Cancelled
    -       -       (2,371,000 )     (0.65 )
Issued
    -       -       237,100       6.46  
                                 
End of period
    117,500     $ 4.00       237,100     $ 6.46  
 
                                        
The total proceeds that would be generated upon exercise of all issued and outstanding options is approximately $470,000.
 
b) Warrants
 
The Company issued warrants to acquire 10,710,000 common shares during fiscal 2007. The warrants were included in units issued of one common share and three purchase warrants.
 
 
Warrants outstanding on June 24, 2008 were adjusted for a common share consolidation based on one post-consolidation common share for each ten pre-consolidation common shares. Through the share consolidation, warrants to acquire 7,140,000 common shares with a WAEP of $0.63 were cancelled and replaced with 714,000 warrants with a WAEP of $6.25.
 
The following is a continuity schedule of outstanding warrants for the nine month period ended June 30, 2009.
 

 
   
No. of Warrants
   
WAEP
 
September 30, 2008
    714,000     $ 6.25  
Expired
    (357,000 )     5.00  
June 30, 2009
    357,000     $ 7.50  

 

 
19

 
GAMECORP LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
For the three and nine months ended June 30, 2009



 
The following table summarizes purchase warrants information outstanding as at March 31, 2009.
 
No. Outstanding
Expiry Date
Exercisable Date
WAEP
357,000
May 7, 2010
May 7, 2009
7.50
 
c) Contributed Surplus
 
Contributed surplus opening balance consisted of stock-based compensation only and the closing balance represents stock-based compensation of $1,189,000 and $89,000 representing the fair value of warrants issued during fiscal 2007 as part of financing.
 
16.       Related Party Transactions
 
All transactions within the corporate group are in the normal course of business and are recorded at the exchange value agreed to by the related parties.  Inter-company transactions and balances are eliminated upon consolidation.
 
Service fees charged by directors, officers or corporations owned by management personnel during the nine month period ended June 30, 2009 totaled $458,000 (2008 - $355,000).
 
Management fees earned from investees during the period totaled $180,000 (2008 - $180,000) and interest income earned from investees during the current period was $2,000 (2008 - $65,000).
 
Included in accounts payable are payables to directors, officers or corporations owned by management personnel of $406,000 (Sep. 2008 - $105,000).
 
17.
Reconciliation between Canadian and United States Generally Accepted Accounting Principles
 
These consolidated financial statements have been prepared in accordance with Canadian GAAP which differs in certain respects from U.S. GAAP. There were no material differences between Canadian and U.S. GAAP.
 
18.       Changes in Accounting Policies

Effective September 1, 2007, the Company adopted the recommendations of the Canadian Institute of Chartered Accountants (“CICA”) Handbook section 3855: Financial Instruments - Recognition and Measurement (“CICA 3855”). CICA 3855 establishes standards for recognizing and measuring financial instruments, including the accounting treatment for the changes in the fair value. As required by CICA 3855, and consistent with the accounting policy for the investments used to prepare the prior year’s consolidated financial statements, investments continue to be presented at fair value. As permitted by CICA 3855, the Company’s other financial assets and liabilities continue

 
20

 
GAMECORP LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
For the three and nine months ended June 30, 2009


to be presented at amortized cost which approximates the adoption of CICA 3855. The adoption did not have an impact on the financial statements in the prior or current year.
 
On September 1, 2007, the Company adopted CICA Handbook Section 1506 “Accounting Changes” which prescribes the criteria for changing accounting policies, together with the accounting treatment and disclosure of changes in the accounting policies, changes in accounting estimates and the correction of errors. The standard did not affect the Company’s consolidated financial position, results of operations or cash flows.
 
19.       Recent Accounting Pronouncements
 
 
a)
International Financial Reporting Standards
 
 
The CICA plans to converge Canadian Generally Accepted Accounting Principle with International Financial Reporting Standards (“IFRS”) effective January 1, 20011 for publicly accountable enterprises. The transition date of January 1, 2011 for the Company will require restatement for comparative purposes of amounts reported by the Company for the year ended December 31, 2010. While the Company has begun assessing the adoption of IFRS for 2011, the financial reporting impact of the transition to IFRS has not been determined at this time.
 
 
b)
Goodwill and Intangible Assets
 
 
In 2008, the CICA issued Handbook Section 3064, Goodwill and Intangible Assets ("CICA 3064"). CICA 3064, which replaces Section 3062, Goodwill and Intangible Assets, and Section 3450, Research and Development Costs, establishes standards for the recognition, measurement and disclosure of goodwill and intangible assets. This new standard is effective for the interim and annual financial statements for periods commencing January 1, 2009. The standard will not significantly impact the Company’s financial statements.
 
20.       Supplemental Cash Flow Disclosure
 
During the nine month periods ending June 30, 2009 and 2008, the Company had cash flows arising from interest and income taxes paid as follows:

   
2009
   
2008
 
Interest paid
  $ 12,000     $ -  
                 
Income taxes paid
  $ -     $ -  
 
During the nine month periods ending June 30, 2009 and 2008 the Company did not have any non-monetary transactions.

 
21

 
GAMECORP LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
For the three and nine months ended June 30, 2009


 
21.
Economic Dependence

A substantial portion of the Company's revenue is derived from management fees charged to investees. The following management fees are recorded in the consolidated financial statements:

   
June 30, 2009
   
June 30, 2008
 
InterAmerican
  $ 135,000     $ 135,000  
Gate to Wire
    45,000       45,000  
    $ 180,000     $ 180,000  
 
22.       Segmented Information
 
In 2009 and 2008 the Company operated in only one segment known as corporate. All assets and liabilities in these financial statements belong to Gamecorp.
 
23.
Comparative Figures
 
Interest income during the three and nine month period ended June 30, 2008 has been reclassified as revenue in order to conform to the current year’s financial statement presentation. In addition, weighted average number of shares outstanding for the period ended June 30, 2008, have been restated to reflect the share consolidation (note 15).
 
24.
Subsequent Events

On July 9, 2009, the Company issued 1,000,000 common shares under a private placement at $0.10 per common share.

On July 13, 2009, the Company announced that it intended to acquire Grandvue Inc. and an 18% secured convertible promissory note issued by Function Mobile Inc., from Newlook, in exchange for 2 million Newlook common shares held by the Company. Grandvue has provided equipment lease financing to a subsidiary of the Company’s investee InterAmerican. The transaction is subject to regulatory and board of director approval and as of the date of these financial statements has not closed.

On August 7, 2009, the Company held its 2009 annual general meeting and reelected John Simmonds, Jason Moretto, Stephen Dulmage, Neil Romanchych and Graham Simmonds as directors of the Company. In addition SF Partnership LLP was appointed auditors of the Company and the directors of the Company were authorized to increase the authorized number of common shares from 100,000,000 to 125,000,000.


 
EX-99.2 3 gggmda-august27_2009.htm gggmda-august27_2009.htm
 


 


 
 
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 FOR THE THREE AND NINE MONTH PERIODS ENDED JUNE 30, 2009
August 26, 2009

The following discussion and analysis of operating results and financial position is supplementary to, and should be read in conjunction with the unaudited financial statements for the three and nine month periods ended June 30, 2009 of Gamecorp Ltd. (formerly Eiger Technology, Inc.) (“Gamecorp” or the “Company”).  The consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) in Canada. All monetary amounts are expressed in Canadian dollars.

FORWARD-LOOKING INFORMATION

The discussion and analysis and other sections of this report contain forward-looking statements. These forward-looking statements, by their nature, necessarily involve risks and uncertainties that could cause results to differ materially from those contemplated. Management considers the assumptions on which these forward-looking statements are based to be reasonable at the time the statements were prepared, but cautions the reader that they could cause actual results to differ materially from those anticipated.

COMPANY PROFILE

Gamecorp Ltd.

Gamecorp Ltd. was originally incorporated as Alexa Ventures Inc. on September 8, 1986 under the laws of British Columbia. Currently, the Company is in good standing, operating under the laws of Ontario.  Gamecorp is an investment and merchant banking enterprise focused on the development of its investments. The Company’s current key investments are in the gaming and technology sectors. InterAmerican Gaming, Inc. (“InterAmerican”) (National Association of Securities Dealers Over-the-Counter-Bulletin-Board, “OTCBB”: IAGM) (formerly Racino Royale, Inc.), and Gate To Wire Solutions, Inc. (“Gate To Wire”) (OTCBB: GWIR) (formerly TrackPower, Inc.) are development stage enterprises involved in international gaming ventures. The Company previously invested in Baymount Incorporated (“Baymount”) (TSX Venture: BYM), which is developing a gaming entertainment centre in Belleville, Ontario and disposed of its investment during the three month period ended June 30, 2009. Gamecorp has a legacy investment stake in Newlook Industries Corp. (“Newlook”) (TSX Venture Exchange: NLI), an enterprise with technology investments. During the quarter ended June 30, 2009, the Company disposed of non-strategic investments in Copernic Inc. and Gametech International Inc.

In general, the Company participates in the early-stage development of gaming projects. Gamecorp provides management, administration, early funding and other assistance to its investees. Strategic leadership of the Company is provided by the Company’s Chief Executive

 
1

 

Officer, John G. Simmonds. Mr. Simmonds has extensive business experience in sourcing, reorganizing and operating businesses in various operating segments.

Gamecorp is a public company listed as symbol “GGG” on the Canadian National Stock Exchange (CNSX) and as “GAIMF” on the OTCBB.

Gamecorp’s corporate office is located at 144 Front Street West, Suite 700, Toronto, Ontario, M5J 2L7 and has four executive staff members being the officers of the Company. As of June 30, 2009, there were 8,207,015 common shares outstanding.

As of June 30, 2009, the Company held a 45.2% ownership position in InterAmerican and a 16.9% ownership position in Gate To Wire. The Company’s ownership interest in Newlook was 16.6% at June 30, 2009.

InterAmerican

InterAmerican is a development stage entity whose business objective is to invest in international gaming development opportunities. InterAmerican acquired InterAmerican Gaming, Corp. which is involved in Latin American and Caribbean gaming opportunities.

On April 22, 2009, InterAmerican announced it had entered into a non-binding Letter of Intent (“LOI”) with Signature Gaming Management Peru, S.A.C.("SGM").

SGM, a private entity formed to pursue gaming opportunities in Peru, has entered into certain agreements with the Jockey Club of Arequipa ("JCA") located in Arequipa, Peru, including management of the newly constructed Carro Colorado Racetrack and leasing space in the JCA-owned Social Club, located in the historical city center of Arequipa..

The SGM agreement for the leased space at the Social Club is for the purpose of operating slot machines and conducting race and sports wagering. The LOI intends for IAG to provide up to USD$500,000 in project financing for which it will receive controlling interest in SGM, a loan with a security interest in both SGM and the JCA agreements, be the exclusive provider of gaming equipment on a fee per unit per day basis and receive certain management and incentive fees.

Gate To Wire

Gate To Wire is a development stage entity whose business strategy and direction is to develop and operate a horseracing video distribution venture in international markets.

Gate To Wire and InterAmerican often market their business opportunities in a coordinated manner.

Baymount

Baymount is a development stage entity that is seeking and developing opportunities within the Canadian horseracing industry. Baymount’s objective is to create entertainment destinations for consumers while providing investors an opportunity to participate in the growth of Canadian gaming at racetracks.


 
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Baymount has an agreement with the Belleville Agricultural Society to build a facility to relocate Quinte Exhibition and Raceway in Belleville, Ontario.

The Company disposed of its investment in Baymount during the three month period ended June 30, 2009.

Newlook

Newlook is a merchant banking entity assembling investments in renewable energy and technology opportunities in Canada. The operations of Newlook have been categorized as discontinued operations. The Company intends to dispose of its investment in Newlook in order to generate capital for investment in gaming opportunities.

During June 2007, Newlook acquired a 53% ownership interest in Wireless Age Communications, Inc. (“Wireless Age”), a public entity trading on the OTCBB under the symbol “WLSA”. Wireless Age operated retail cellular stores in Western Canada and distributed two-way radio products and other ancillary communications products in Canada. On January 9, 2009, operating subsidiaries (Wireless Age Communications Ltd. and Wireless Source Distribution Ltd.) of Newlook’s majority owned subsidiary Wireless Age Communications, Inc. were placed into receivership.

Newlook also sells a portfolio of products and services through its wholly-owned subsidiary, Onlinetel Corp. (“Onlinetel”), in Canada. Newlook has disposed of substantially all of its Onlinetel businesses and currently reflects those operations as discontinued operations. Newlook has also provided loans to development stage entities in the photo luminescent signage and safety way guidance systems sector and in the mobile marketing solutions business arena.

Newlook recently executed an agreement with PowerPlay Energy Corp. to acquire the exclusive rights to participate in plasma gasification and renewable energy projects within Canada.

SELECTED ANNUAL INFORMATION

Summarized selected consolidated financial information with respect to the Company for the three month period ended June 30, 2009 and 2008 is as follows:

   
2009
   
2008
 
             
Total revenues
    62,000       94,000  
(Loss) from continuing operations
    (434,000 )     (265,000 )
Earnings from discontinued operations
    -       20,000  
Net (loss)/earnings
    (434,000 )     (245,000 )
                 
(Loss) per share from continuing operations
    (0.057 )     (0.063 )
Earnings per share from discontinued operations
    -       0.005  
(Loss) per share
    (0.057 )     (0.058 )
                 
Total assets
    2,044,000       3,176,000  
Total liabilities
    1,402,000       1,639,000  
Shareholders’ equity
    642,000       1,537,000  
                 
Cash dividends declared
    -       -  


 
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RESULTS OF OPERATIONS

For the Three Month Period Ended June 30, 2009 compared to 2008

Continuing Operations

The Company recorded a loss from continuing operations of $434,000 during the three month period ended June 30, 2009 compared to a loss of $265,000 during the comparative period in the prior year. The primary reason for the increase in loss arises from foreign exchange translation losses associated with the Company’s investments some of which are denoted in US dollars and increased level of losses in equity accounted investees.

Revenues of continuing operations during the three month period ended June 30, 2009 were $62,000 compared to $94,000 during the comparative period in the prior year. The revenues of the Company for the current period are management fees charged to its investees and consisted of $45,000 charged to InterAmerican and $15,000 to Gate To Wire and miscellaneous interest of $2,000. Management expects as some of its investees achieve a revenue generating stage, management fees will be increased to levels where they would be sufficient to fully offset cash operating expenses. Although the global financial crisis has delayed development plans InterAmerican and Gate To Wire are entities that are expected to begin to generate revenues during late 2009 or early 2010.

General and administrative expenses were $265,000 during the period ended June 30, 2009 down from $296,000 during the comparative period in the prior year. The Company is intimately involved in the development of its investments and compensates its officers for strategic leadership and hires consultants, either directly in the investee or at the Gamecorp level, to assist in the development of investee projects. General and administrative expenses during the three month period ended June 30, 2009 included management fees to executive management of $117,000, consulting costs of approximately $63,000, directors fees of $20,000, accounting fees of $13,000, travel costs of $11,000 and miscellaneous costs of $41,000. General and administrative expenses during the three month period ended June 30, 2008 included management fees to executive management of $134,000, consulting fees of $45,000, legal and accounting costs of $33,000, investor relations costs of $13,000 and miscellaneous expenses of $71,000. Management expects the general and administrative expenses to trend higher during fiscal 2009 as projects of investees become more material.

Amortization of equipment totaled $2,000 in the current period and $3,000 during the comparative prior year period. The Company’s equipment primarily represents furniture, fixtures and data processing equipment at the corporate office in Toronto. As the Company is an investment and merchant banking undertaking, management does not expect significant investment in capital equipment.

The Company recorded other expenses totaling $229,000 in the three month period ended June 30, 2009 compared to $60,000 in 2008. The reason for the increase is primarily attributable to foreign exchange translation losses.

Interest expense (including bank charges) during the current period was $3,000 compared to $Nil during the prior period. Interest expense arises from amounts loaned to the Company by Newlook.

 
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During the three month period ended June 30, 2009 the Company recorded a $1,000 gain associated with the fair value adjustment of a non-interest bearing note receivable issued by former optionees (note 4).

During the three month period ended June 30, 2009, the Company recorded $31,000 as a gain from disposal of investments. The Company sold 609,500 Newlook common shares for net proceeds of $161,000. The Newlook shares were carried at $Nil and therefore the full amount of the proceeds received represented a gain. The Company also sold; 1) 1,501,000 Baymount common shares for net proceeds of $22,000 and recorded a loss of $128,000 on disposal of these shares, and 2) 2,300 Gametech common shares for net proceeds of $3,000 and recorded a loss of $2,000 on the transaction. Lastly, the Company sold 19,300 Copernic common shares for proceeds of $4,000 at cost and recorded no gain or loss on the sale.

The Company recorded $102,000 equity share of InterAmerican losses during the three month period ending June 30, 2009 and $25,000 equity share of Gate To Wire losses. The Company holds approximately 45.2% of InterAmerican and 16.9% of Gate To Wire at June 30, 2009. During the comparative period in the prior year the Company recorded $60,000 of its share of InterAmerican losses.

The Company recorded foreign exchange losses of $131,000, during the three month period ended June 30, 2009 and $Nil during the comparative period in the prior year. Foreign exchange losses are incurred upon the translation of US dollar assets converted into Canadian dollars during a period of Canadian dollar strengthening vis-à-vis the US dollar. The Company does not hedge this translation risk.

As a result of the costs incurred partially offset by management fees, the Company incurred a loss from continuing operations of $434,000 during the three month period ended June 30, 2009, substantially higher than the prior period. As described above management is hopeful that the gap between costs incurred that are not recovered from charges to investees will decrease in the future. Operating costs that are not recovered are paid from the proceeds of the sale of investments; however the business of the Company is not to spend gains arising from the disposal of investments on cash operating costs but rather on development of new investments.

Loss per share from continuing operations during the three month period ended June 30, 2009 were $0.057 compared to $0.063 in the comparative period in the prior year.

Discontinued Operations

As described earlier in this report, during fiscal 2007, management made the decision to dispose of its investment in Newlook. For this reason, the operating results of Newlook have been regarded as discontinued operations in the consolidated statement of operating results.  The Company recorded $Nil as its share of Newlook loss during the three months ended June 30, 2009, as a result of the investment being written down to $Nil in prior periods.

During the three month period ended June 30, 2008, the Company recorded $20,000 as its share of Newlook equity earnings.

Earnings (loss) per share from discontinued operations during the three month period ended June 30, 2009 was $Nil and $0.005 earnings per share in the prior period.

 
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For the Nine Month Period Ended June 30, 2009 compared to 2008

Continuing Operations

The Company recorded a loss from continuing operations of $892,000 during the nine month period ended June 30, 2009 compared to earnings of $3,404,000 during the comparative period in the prior year. The primary reason for the substantial earnings in the prior period arises from $3,404,000 of fair value adjustments to a derivative financial instrument.

Revenues of continuing operations during the nine month period ended June 30, 2009 were $182,000 compared to $245,000 during the comparative period in the prior year. The revenues of the Company for the current period are management fees charged to its investees consisting of $135,000 charged to InterAmerican and $45,000 to Gate To Wire and miscellaneous interest income of $2,000. Management expects as some of its investees achieve a revenue generating stage, management fees will be increased to levels where they would be sufficient to fully offset cash operating expenses. InterAmerican and Gate To Wire are entities that are expected begin to generate revenues during late 2009 or early 2010. Revenues during the comparative period in the prior year were also from management fees and interest income from related parties.

General and administrative expenses were $816,000 during the period ended June 30, 2009 up from $762,000 during the prior period. The increase in general and administrative costs is attributable to rising levels of consulting, travel and legal costs associated with the development of new gaming initiatives. The Company is intimately involved in the development of its investments and compensates its officers for strategic leadership and hires consultants, either directly in the investee or at the Gamecorp level, to assist in the development of investee projects. General and administrative expenses during the nine month period ended June 30, 2009 included management fees to executive management of $351,000, consulting costs of approximately $194,000, directors’ fees of $63,000, accounting fees of $53,000, travel costs of $44,000 and miscellaneous costs of $111,000. General and administrative expenses during the nine month period ended June 30, 2008 included management fees to executive management of $355,000, consulting fees of $106,000, legal and accounting costs of $64,000, wages and benefits of $62,000 investor relations costs of $39,000 and miscellaneous expenses of $136,000. Management expects the general and administrative expenses to trend higher during fiscal 2009 as projects of investees become more material.

Amortization of equipment totaled $6,000 in the current period and $8,000 in the prior period. The Company’s equipment primarily represents furniture, fixtures and data processing equipment at the corporate office in Toronto. As the Company is an investment and merchant banking undertaking, management does not expect significant investment in capital equipment.

The Company recorded other expenses totaling $252,000 in the nine month period ended June 30, 2009, compared to other income totaling $3,929,000 in 2008. The primary reason for the substantial income in the prior period is during fiscal 2008, the Company issued call options to third party investors to acquire 14,000,000 common shares of the Company’s investment in Newlook exercisable at $0.10 per share expiring in tranches of 2,000,000 shares on each March 18, 2007, March 18, 2008, September 18, 2008, March 18, 2009, September 18, 2009

 
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and March 18, 2010.  The Company recorded income of $3,404,000 during the nine month period ended June 30, 2008 representing changes in fair value. In addition the Company recorded a gain of $657,000 on the disposal of investments in the prior period.

Interest expense (including bank charges) during the current period was $12,000 compared to $Nil during the prior period. Interest expense arises from amounts loaned to the Company by Newlook.

During the nine month period ended June 30, 2009 the Company recorded a $14,000 gain associated with the fair value adjustment of a non-interest bearing note receivable issued by former optionees and a $3,404,000 gain in the prior period associated with the fair value of a non-interest bearing note payable issued to certain other former optionees.

During the nine month period ended June 30, 2009 and 2008, the Company recorded losses of $5,000 and $Nil, respectively, on the write down of an advance to a corporation.

During the nine month period ended June 30, 2009, the Company recorded $31,000 as a gain from disposal of investments. The Company sold 609,500 Newlook common shares for net proceeds of $161,000. The Newlook shares were carried at $Nil and therefore the full amount of the proceeds received represented a gain. The Company also sold; 1) 1,501,000 Baymount common shares for net proceeds of $22,000 and recorded a loss of $128,000 on disposal of these shares, and 2) 2,300 Gametech common shares for net proceeds of $3,000 and recorded a loss of $2,000 on the transaction. Lastly, the Company sold 19,300 Copernic common shares for proceeds of $4,000 at cost and recorded no gain or loss on the sale.

The Company recorded a $332,000 equity share of InterAmerican losses during the nine month period ending June 30, 2009, and $98,000 equity share of Gate To Wire losses. The Company holds approximately 45.2% of InterAmerican and 16.9% of Gate To Wire at June 30, 2009.

The Company recorded foreign exchange gains of $150,000, during the nine month period ended June 30, 2009 and $Nil during the comparative period in the prior year. Foreign exchange gains are incurred upon the translation of US dollar assets converted into Canadian dollars during a period of Canadian dollar weakening vis-à-vis the US dollar. The Company does not hedge this translation risk.

As a result of the costs incurred partially offset by management fees, the Company incurred a loss from continuing operations of $892,000 during the nine month period ended June 30, 2009, substantially higher than the prior period. As described above management is hopeful that the gap between costs incurred that are not recovered from charges to investees will decrease in the future. Operating costs that are not recovered are paid from the proceeds of the sale of investments; however the business of the Company is not to spend gains arising from the disposal of investments on cash operating costs but rather on development of new investments.

Loss per share from continuing operations during the nine month period ended June 30, 2009 was $0.109 compared to earnings per share of $0.806 in the comparative period in the prior year. Management does not anticipate earnings per share levels of 2008 to be repeated in fiscal 2009 as substantially all of the earnings were associated with fair value adjustments to financial instruments.

 
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Discontinued Operations

As described earlier in this report, during fiscal 2007, management made the decision to dispose of its investment in Newlook. For this reason, the operating results of Newlook have been regarded as discontinued operations in the consolidated statement of operating results.  The Company recorded $529,000 as its share of Newlook loss during the nine months ended June 30, 2009. During the nine month period ended June 30, 2008, the Company recorded $27,000 of equity earnings of Newlook.

Loss per share from discontinued operations during the nine month period ended June 30, 2009 was $0.064 and $0.004 earnings in the previous period.


SUMMARY OF QUARTERLY RESULTS

The following table presents selected financial data of the Company for its last eight quarters as reported in the particular period:

$000s
(except EPS)
                                               
Quarter
    Q3       Q2       Q1       Q4       Q3       Q2       Q1       Q4  
Fiscal Yr.
    2009       2009       2009       2008       2008       2008       2008       2007  
                                                                 
Revenue
    62       60       60       65       94       115       37       -  
                                                                 
Income (loss) before unusual items
    (434 )     (313 )     (145 )     (1,021 )     (265 )       5,261       (1,592 )       737  
                                                                 
Net income (loss)
    (434 )     (834 )     (153 )     (603 )     (245 )     5,263       (1,587 )     1,356  
                                                                 
EPS (LPS) before unusual items
    (0.057 )     (0.063 )     (0.023 )     (0.237 )     (0.063 )     1.24       (0.38 )     0.29  
                                                                 
Earnings (loss) per share
    (0.057 )     (0.101 )     (0.025 )     (0.142 )     (0.058 )     1.24       (0.37 )     0.28  


LIQUIDITY

The most significant assets of the Company are its investments. The carrying amount of these investments at June 30, 2009 was $1,370,000. In addition the Company holds notes receivable, valued at $25,000 from former optionees and other various assets including amounts due from related parties of $588,000.

On June 30, 2009, the Company held 30,662,600 InterAmerican common shares valued at $938,000, representing a 45.2% interest.

In January 2008, the Company acquired 2,000,000 Gate To Wire common shares for $200,000 and on September 30, 2008, the Company converted cash advances made to Gate To Wire of $273,000 into 2,600,000 common shares.  During the current period the Company

 
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acquired an additional 90,000 shares for a cash payment of $11,000. On June 30, 2009, the Company held 4,690,000 valued at $432,000, representing an 16.9% interest.

At September 30, 2008, the Company held investments in Baymount, Copernic and Gametech, all of which were disposed of in the current period.

In prior years the Company consolidated Newlook but during fiscal 2007 the Company deconsolidated Newlook and began to account for this investment using the equity method. As of June 30, 2009, the Newlook investment balance was $Nil.

Management is in the process of liquidating the Newlook investment in order to generate capital to reinvest in InterAmerican and Gate To Wire. These entities are development stage enterprises requiring additional cash investment.

Total liabilities were $1,402,000 at June 30, 2009 up substantially from $850,000 at September 30, 2008. The increase is primarily attributable to increases in amounts due to related parties and increases in accounts payable and accrued charges.

Accounts payable and accrued charges increased from $205,000 at September 30, 2008 to $622,000 at June 30, 2009. The increase arose from a higher level of business activity associated with the development of business gaming investment opportunities.

Amounts due to related parties as at June 30, 2009 were $228,000 up $218,000 from September 30, 2008. Amounts due to related parties were unsecured and had no specific repayment dates. Interest accrued on the amounts at Canada Revenue Agency’s prescribed annual interest rate plus 2% per annum.

On March 31, 2008, the Company agreed to issue non-interest bearing promissory notes to certain former Newlook option holders totaling $1,253,000 representing a cancellation fee of $0.30 per option on 4,178,000 cancelled Newlook options. Pursuant to the terms of the note, the Company is obligated to pay $251,000 on the first day of the month for 5 consecutive months beginning May 1, 2008. The Company did not make payments as originally contemplated, however as of September 30, 2008, the Company reduced the promissory notes with cash payments totaling $398,000 and a credit of $240,000, to a note holder who agreed to subscribe for common shares. On June 30, 2009, the Company remains in default and $573,000 is unpaid under these promissory notes. At June 30, 2009, the fair value of the notes payable was $552,000.

During fiscal to 2008, the Company received approval to issue up to 4,000,000 additional common shares at $0.25 per share for total proceeds of $1,000,000 under a non-brokered private placement. At September 30, 2008, the Company received subscriptions totaling $800,000 and recorded such amount as unissued share liability within shareholders’ equity. On November 10, 2008, the Company closed the full $1,000,000 private placement.

As of June 30, 2009, the Company held $100,000 pending closing of a common share private placement of 1,000,000 common shares at $0.10 per share.

The Company’s consolidated financial statements for the period ended June 30, 2009 have been prepared on a going concern basis, in accordance with Canadian generally accepted accounting principles and accounting principles generally accepted in the United States of

 
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America. The going concern basis of presentation assumes that the Company will continue in operations for the foreseeable future and will be able to realize its assets and discharge its liabilities and contingencies in the normal course of operations.

There is doubt about the Company's ability to continue as a going concern as the Company has a working capital deficit of $1,351,000 and an accumulated deficit of $46,021,000 as at June 30, 2009. The Company's ability to continue as a going concern is dependent upon the Company's ability to raise additional capital, to realize on its agreements to dispose of investments and sustain profitable operations. Should the Company be unable to continue as a going concern, it may be unable to realize the carrying value of its assets and to meet its liabilities as they become due.

The Company believes that future shares issuance and proceeds received from the divestiture of its investments will provide sufficient cash flow for it to continue as a going concern in its present form, however, there can be no assurances that the Company will achieve such results. Accordingly, the consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amount and classification of liabilities or any other adjustments that might be necessary should the Company be unable to continue as a going concern.

CAPITAL RESOURCES

The business objective of the Company is fund early stage development of gaming opportunities and to participate in the management of the investees. The philosophy is to dispose of mature investments at a gain and utilize the cash proceeds in the development of future operations within an investee. At this point in time, the Company is slowly disposing of its investment in Newlook, organizing additional equity private placements and obtaining loans primarily from related parties to fund the development of the gaming ventures. The Company occasionally disposes of a portion of its gaming investments in order to generate investment capital also.

The current global financial crisis has created significant capital resource issues for the Company. The Company’s investees that are focused on Latin American gaming opportunities have also been affected by the financial crisis. However, management believes that the roll out of operations is somewhat flexible and the Company’s investments can be accelerated or delayed as management sees fit. There is a risk that management will pass on favourable opportunities due to the perceived impact of the financial crisis.

However, none of potential sources for capital are certain and management although confident of the potential, cannot assure shareholders and interested parties that they will in fact be able to finance the Company going forward.

OFF-BALANCE SHEET ARRANGEMENTS

Gamecorp had no off-balance sheet arrangements as at June 30, 2009.


 
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TRANSACTIONS WITH RELATED PARTIES

All transactions within the corporate group listed in notes 9 and 16 of the consolidated financial statements, are in the normal course of business and are recorded at the carrying value.  Management fees charged by officers, corporations owned by officers and related party corporations providing management services to the Company, during the current quarter, totaled $117,000.

PROPOSED TRANSACTIONS

The Company has no proposed asset or business acquisition or disposition that the board of directors or senior management has decided to proceed with at the present time.

CRITICAL ACCOUNTING ESTIMATES

The Company’s consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles ("GAAP") which, except as noted in note 3 of the consolidated financial statements for the three month period ended December 31, 2008, are consistent in all material respects with accounting principles generally accepted in the United States of America. The critical accounting policies followed by the Company are as follows:

Fair Value of Financial Instruments

Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from the financial instruments. The fair value of the financial instruments approximates their carrying values, unless otherwise noted.

Investments

Investments in other entities are accounted for using the equity method or cost basis depending upon the level of ownership and/or the Company's ability to exercise significant influence over the operating and financial policies of the investee. Equity investments of this nature are recorded at original cost and adjusted periodically to recognize the Company's proportionate share of the investees' net income or losses after the date of investment. When net losses from an equity accounted for investment exceed its carrying amount, the investment balance is reduced to zero and additional losses are not provided for. The Company resumes accounting for the investment under the equity method when the entity subsequently reports net income and the Company's share of that net income exceeds the share of net losses not recognized during the period the equity method was suspended. Investments are written down only when there is clear evidence that a decline in value that is other than temporary has occurred. When an equity accounted for investee issues its own shares, the subsequent reduction in the Company's proportionate interest in the investee is reflected in income as a deemed dilution gain proportionate interest in or loss on disposition.


 
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Use of Estimates

The preparation of financial statements in conformity with Canadian generally accepted accounting principles 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 date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.  These estimates are reviewed periodically, and, as adjustments become necessary, they are reported in earnings in the period in which they become known.

CHANGES IN ACCOUNTING POLICIES

Financial Instruments

On October 1, 2006, the Company adopted three new accounting standards that were issued by the Canadian Institute of Chartered Accountants (“CICA”): Handbook Section 1530, Comprehensive Income, Handbook Section 3855, Financial Instruments – Recognition and Measurement, and Handbook Section 3865, Hedges and related amendments to Handbook Section 3251, Equity. The Company adopted the three standards and amendments prospectively.

Comprehensive Income
Section 1530 introduces Comprehensive Income, which consists of net income and other comprehensive income (“OCI”). OCI represents changes in shareholders’ equity during a period arising from transactions and other events with non-owner sources and includes unrealized gains and losses on financial assets classified as available-for-sale, unrealized foreign currency translation gains and losses arising from self-sustaining foreign operations, net of hedging activities, and changes in the fair value of the effective portion of cash flow hedging instruments. The Company did not have transactions or events that would have been recorded in OCI or Accumulated Other Comprehensive Income in these audited consolidated financial statements.

Financial Instruments – Recognition and Measurement
Section 3855, establishes standards for recognizing and measuring financial assets, financial liabilities and non financial derivatives, including the presentation of any resulting gains and losses.

All financial instruments are required to be measured at fair value on initial recognition. Measurement in subsequent periods depends on whether the financial instrument has been classified as held-for-trading, available-for-sale, held-to-maturity, loans and receivables and other liabilities.

Financial assets and financial liabilities classified as held-for-trading are required to be measured at fair value with gains and losses recognized in net income.

Available-for-sale financial assets are required to be measured at fair value with unrealized gains and losses recognized in OCI.


 
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Financial assets classified as held-to-maturity, loans and receivables and financial liabilities (other than those held-for-trading) are required to be measured at amortized cost.

The classifications above do not apply to investments where the Company has significant influence that are accounted for using the equity method.

Derivative instruments must be recorded on the balance sheet at fair value. Changes in fair value are required to be recognized in net income.

FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS

Earnings and cash flow are subject to volatility stemming mainly from movements in the U.S./Canadian dollar exchange rate and interest rates.  The Company does not hedge its foreign currency as it deals almost exclusively in the domestic currency.

OTHER MD&A REQUIREMENTS

 
Disclosure of Outstanding Share Data

As at June 30, 2009, the Company had authorized 10,000,000 common shares without par value and had 8,207,015 common shares issued and outstanding. The Company has received approval for a private placement of 1,000,000 common shares at $0.10 per share

If all options and warrants were exercised and the Company closed the proposed private placements,  the number of common shares outstanding would be 9,681,515.

OUTLOOK

Management believes the Company is well positioned with its gaming and technology investments to generate strong returns for shareholders. The Company believes that prudent gaming investments will generate substantial gains. However, the gaming investments are capital intensive and will require incremental financing to ensure success. The Company continues to fund the development of its gaining investee’s businesses; primarily through repayment of related party debts, additional related party loans and equity private placements. The Company plans to dispose of certain legacy technology investment over the medium term. However, the recent bankruptcy proceedings within Newlook may have an affect on the proceeds realized from the disposal of this investment in the near term. The Company also contemplates raising funds through debt and/or equity instruments to fund the initial development of the gaming ventures. Management has observed a significant tightening of availability of credit for gaming ventures. Multiples of forecasted earnings before interest, taxes, depreciation and amortization have fallen and only smaller transactions at extremely low multiples appear to be being completed. A substantial and material risk exists that debt markets will not provide funding for the Company’s investee projects and the Company will be pressured to contribute more to these projects.

The Company’s management is participating closely in the development of the gaming ventures and will be compensated for services provided. The Company’s business model for investment or merchant banking will serve as platform to develop and grow other types of invests in the future.

Factors that could change the outlook for the Company include changes in regulatory restrictions in which the Company plans to make investments or general economic and financial market conditions. Some acquisition opportunities have recently been declined due to a perceived declining value in acquisition assets that has caused management to adopt a wait and see approach.
EX-99.3 4 gggceocert-august27_2009.htm gggceocert-august27_2009.htm



 
Form 52-109F2 - Certification of Interim Filings


I, John G. Simmonds, Chief Executive Officer, certify that:

1. I have reviewed the interim filings (as this term is defined in Multilateral Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings) of Gamecorp Ltd., (the issuer) for the interim period ending June 30, 2009;

 
2. Based on my knowledge, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings;

3. Based on my knowledge, the interim financial statements together with the other financial information included in the interim filings fairly present in all material respects the financial condition, results of operations and cash flows of the issuer, as of the date and for the periods presented in the interim filings;

4. The issuer's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures and internal control over financial reporting for the issuer, and we have:

 
(a) designed such disclosure controls and procedures, or caused them to be designed under our supervision, to provide reasonable assurance that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which the interim filings are being prepared; and

 
(b) designed such internal control over financial reporting, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP; and

 
5. I have caused the issuer to disclose in the interim MD&A any change in the issuer's internal control over financial reporting that occurred during the issuer's most recent interim period that has materially affected, or is reasonably likely to materially affect, the issuer's internal control over financial reporting.


Date: August 26, 2009

 

signed

John G. Simmonds
 
John G. Simmonds
Chief Executive Officer
EX-99.4 5 gggcfocert-august27_2009.htm gggcfocert-august27_2009.htm
 



 
Form 52-109F2 - Certification of Interim Filings


I, Gary N. Hokkanen, Chief Financial Officer, certify that:

1. I have reviewed the interim filings (as this term is defined in Multilateral Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings) of Gamecorp Ltd., (the issuer) for the interim period ending June 30, 2009;

 
2. Based on my knowledge, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings;

3. Based on my knowledge, the interim financial statements together with the other financial information included in the interim filings fairly present in all material respects the financial condition, results of operations and cash flows of the issuer, as of the date and for the periods presented in the interim filings;

4. The issuer's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures and internal control over financial reporting for the issuer, and we have:

 
(a) designed such disclosure controls and procedures, or caused them to be designed under our supervision, to provide reasonable assurance that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which the interim filings are being prepared; and

 
(b) designed such internal control over financial reporting, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP; and

 
5. I have caused the issuer to disclose in the interim MD&A any change in the issuer's internal control over financial reporting that occurred during the issuer's most recent interim period that has materially affected, or is reasonably likely to materially affect, the issuer's internal control over financial reporting.


Date: August 26, 2009

signed

  “Gary N. Hokkanen”
 
Gary N. Hokkanen
Chief Financial Officer


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